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HomeMy WebLinkAboutVLAWMO Annual Financial Report 2004VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION ANNUAL FINANCIAL REPORT December 31, 2004 - This page intentionally left black - VLAWMO Al Roleck Director of Finance City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 June 16, 2005 Dear Mr. Roleck: Members Gem Lake Lino Lakes North Oaks St. Paul Regional Water Service Vadnais Heights White Bear Lake White Bear Township The Vadnais Lake Area Water Management Organisation (VLAWMO) in order to provide clear reporting to our member communities and to comply with Minnesota Statute 103B.231, has conducted an independent audit of its financial records for fiscal year 2004. The financial report is furnished for your information. Please contact the VLAWMO office with questions or comments, 651-429-8522 or office@a,vlawmo.org. Sincerely, Sirt-141-"* Stephanie McNamara Administration / Wetland Specialist 4701 Highway 61, White Bear Lake, MN 55110; 651-429-8522, Fax: 651-429-8500 website: www.vlawmo.org; email: office@vlawmo.org VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION TABLE OF CONTENTS Ref No. Page No. INTRODUCTORY SECTION Organization 3 FINANCIAL SECTION Independent Auditor's Report 7 Basic Financial Statements: Government -Wide Financial Statements: Statement of Net Assets Statement 1 12 Statement of Activities Statement 2 13 Fund Financial Statements: Balance Sheet - Governmental Funds Statement 3 14 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Statement 4 15 Notes to Financial Statements 17 Required Supplementary Information: Budgetary Comparison Schedule - General Fund Statement 5 30 Budgetary Comparison Schedule - Note to RSI 31 Individual Fund Statements: General Fund: Comparative Balance Sheet Comparative Statement of Revenue, Expenditures, and Changes in Fund Balance OTHER REPORTS Statement 6 Statement 7 32 33 Independent Auditor's Report on Compliance With Minnesota Legal Compliance Audit Guide For Local Government 37 - This page intentionally left blank - INTRODUCTORY SECTION 1 - This page intentionally left blank - 2 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION ORGANIZATION December 31, 2004 Name Board of Commissioners: Dana Vanderbosch Jeff McDowell Mark Burch Steve Haselmann John Youngstrom Mark Bigelbach Paul Emeott Position Chair Vice Chair Commissioner Commissioner Commissioner Commissioner Commissioner Governmental Unit White Bear Township City of Lino Lakes City of White Bear Lake St. Paul Regional Water Services City of North Oaks City of Vadnais Heights City of Gem Lake 3 - This page intentionally left blank - 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 11 FINANCIAL SECTION 5 - This page inteationafly Left blank - 6 HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT To the Board of Commissioners Vadnais Lake Area Water Management Organization White Bear Lake, Minnesota We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Vadnais Lake Area Water Management Organization as of and for the year ended December 31, 2004 which collectively comprise the WMO's basic financial statements as listed in the table of contents. These fmancial statements are the responsibility of the Vadnais Lake Area Water Management Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund and the aggregate remaining fund information of the Vadnais Lake Area Water Management Organization as of December 31, 2004, and the respective changes in fmancial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 9 to the basic fmancial statements, the Vadnais Lake Area Water Management Organization adopted the provisions of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements — and Management 's Discussion and Analysis — for State and Local Governments: Statement 37, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments: Omnibus, and Statement 38, Certain Financial Statement Note Disclosures, as of January 1, 2004. This results in a change in the format and content of the basic financial statements. 4810 White Bear Parkway White Bear Lake, Minnesota 55110 651 426 7000 651 426 5004 Fax www.hlbtr.com 1303 South Frontage Road Suite 13 Hastings, Minnesota 55033 651 480 4990 651 426 5004 Fax HLB Tautges Redpath, Ltd. is a member of IILB Intemational, a world-wide organization of accounting firms and business advisors. - This page intentionally left Wank - The WMO has not presented the Management's Discussion and Analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be a part of, the basic fmancial statements. The budgetary comparison information on pages 30 through 31, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Vadnais Lake Area Water Management Organization's basic financial statements. The introductory section, individual fund statements and supplementary financial information as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic fmancial statements. The individual fund statements and supplementary fmancial information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects, in relation to the basic fmancial statements taken as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion it. April 11, 2005 kis HLB TAUTGES REDPATH, LTD. Certified Public Accountants 1 - This page intentionally left blank - i i 1 i i i 1 1 1 10 1 BASIC FINANCIAL STATEMENTS 11 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION STATEMENT OF NET ASSETS December 31, 2004 Statement 1 Assets: Cash and investments Total assets Governmental Activities $234,677 234,677 Liabilities: Accounts payable 327 Escrow deposits payable 29,574 Due to other governments 5,926 Contracts payable 51,276 Total liabilities 87,103 Net assets: Unrestricted Total net assets 147,574 $147,574 The accompanying notes are an integral part of these financial statements. 12 L L VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION STATEMENT OF ACTIVITIES For The Year Ended December 31, 2004 Statement 2 Expenses Functions/Programs Net (Expense) Revenue and Program Revenues Changes in Operating Capital Net Assets Charges For Grants and Grants and Governmental Services Contributions Contributions Activities Government activities: General government $66,076 $57,790 $5,402 $ - ($2,884) Projects 559,050 - 473,000 - (86,050) Total government activities $625,126 $57,790 $478,402 $ - (88,934) General revenues: Unrestricted investment earnings 300 Miscellaneous other 1,880 Total general revenues 2,180 Change in net assets Net assets - beginning Net assets - ending (86,754) 234,328 $147,574 The accompanying notes are an integral part of these financial statements. 13 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2004 Statement 3 General Assets Cash and investments $234,677 '-Q r. Total assets Liabilities and Fund Balances $234,677 Liabilities: Accounts payable $327 Escrow deposits payable 29,574 Due to other governments 5,926 Contracts payable 51,276 Total liabilities 87,103 Fund balances: Unreserved: Designated for cash flow Designated for Lambert Creek Project Total fund balances 29,296 118,278 147,574 Total liabilities and fund balances $234,677 The accompanying notes are an integral part of these financial statements. 14 s L VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For The Year Ended December 31, 2004 Statement 4 General Revenues: Intergovernmental: Member assessments $57,790 Grants 478,402 Charges for services 1,040 Investment income 300 Other revenue 840 Total revenues 538,372 Expenditures: Salaries 50,408 Payroll processing 539 Office expenses 2,937 Technical consulting 1,074 Audit 2,900 Insurance 2,567 Training 470 Legal 719 Information systems 3,527 Education 200 Projects 559,050 Miscellaneous 735 Total expenditures 625,126 Revenues over (under) expenditures Fund balance - January 1 l LFund balance - December 31 i L (86,754) 234,328 $147,574 The accompanying notes are an integral part of these financial statements. 15 - This page intentionally left blank - 1 1 1 T 1 '! I� 7 1 16 1 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Vadnais Lake Area Water Management Organization conform to generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of significant accounting policies. A. FINANCIAL REPORTING ENTITY The Vadnais Lake Area Water Management Organization was created in the exercise of joining powers to meet the requirements of the Metropolitan Surface Water Management Act, re -codified as Minnesota Statutes chapters 103B and 103D. Its general purpose is to establish an organization to jointly and cooperatively develop a water management plan and program to (1) protect, preserve, and use natural surface and groundwater storage and retention systems; (2) minimize capital expenditures necessary to correct flooding and water quality problems; (3) identify and plan for means to effectively protect and improve surface and groundwater quality; (4) establish more uniform local policies and official controls for surface water, wetland, and groundwater management; (5) prevent erosion of soil into surface water systems; (6) promote groundwater recharge; (7) protect and enhance fish and wildlife habitat and water recreational facilities, and secure other benefits associated with the proper management of surface ground water, and be in accordance with the Act. The Organization is governed by a Board of Commissioners which consists of seven members, one from each of the following participating governmental units: City of North Oaks City of White Bear Lake St. Paul Regional Water Services City of Lino Lakes White Bear Township City of Vadnais Heights City of Gem Lake All property of the Organization is owned by the members entities in proportion to the total contribution of each participating governmental unit as required by the previous annual budget. The accounting policies of the Organization conform to generally accepted accounting principles as applicable to governmental units. 17 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 Component units are legally separate entities for which the Organization (primary government) is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is fmancially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit's governing body, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. Based on these criteria, there are no organizations considered to be component units of the Organization. B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or business -type activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or business type activity. Taxes and other items not included among program revenues are reported instead as general revenues. Separate fmancial statements are provided for governmental funds. Major individual governmental funds are reported as separate columns in the fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. 18 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 For this purpose, the government considers all revenues, except reimbursement grants, to be available if they are collected within 60 days of the end of the current fiscal period. Reimbursement grants are considered available if they are collected within one year of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Intergovernmental revenues, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the goverment. The government reports the following major governmental funds: General Fund is the general operating fund of the Organization. It is used to account for fmancial resources to be used for general administrative expenditures and for the construction and maintenance of projects of common benefit to the Organization. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in the government -wide financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The government has elected not to follow subsequent private -sector guidance. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are transactions that would be treated as revenues, expenditures or expenses if they involved external organizations, such as buying goods and services or payments in lieu of taxes, are similarly treated when they involve other funds of the Organization. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues When both restricted and unrestricted resources are available for an allowable use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. D. BUDGETS AND BUDGETARY ACCOUNTING The Board of Commissioners adopts a budget for the general government operations of the Organization on an annual basis. During the budget year, supplemental appropriations and deletions are or may be authorized by the Board. The modified accrual basis of accounting is used by the Organization for budgeting data. All appropriations end with the fiscal year for which they were made. 19 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 r-. The Organization monitors budget performance and all amounts over budget have been approved by the Board through the disbursement approval process. '' The Organization prepares a revenue and expenditure budget for its General Fund. Encumbrance accounting, under which purchase orders, contracts, and other commitments of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the Organization. E. CASH AND INVESTMENTS Cash and investment balances from all funds are pooled and invested to the extent available in authorized investments. Investment income is allocated to individual funds on the basis of the fund's equity in the cash and investment pool. Investments are stated at fair value, based upon quoted market prices. Investment income is accrued at the balance sheet date. F. INVENTORIES The original cost of materials and supplies has been recorded as expenditures at the time of purchase. The Organization does not maintain significant amounts of inventories of materials and supplies. G. CAPITAL ASSETS Capital assets, which include property, plant, equipment and infrastructure assets (e.g., storm water, man holes, control structures, and similar items), are reported in the governmental activities columns in the goverment -wide financial statements. Capital assets are defined by the goverment as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. GASB Statement No. 34 requires the Organization to report and depreciate new infrastructure assets effective with the beginning of the current year. Infrastructure assets include lake improvements, dams and drainage systems. Neither their historical cost nor related depreciation has historically been reported in the fmancial statements. For governmental entities with total annual revenues of less than $10 million for the fiscal year ended December 31, 1999 the retroactive reporting of infrastructure is not required under the provisions of GASB Statement No. 34. The Organization has elected to implement the general provisions of GASB Statement No. 34 in the current year and has elected not to report infrastructure assets acquired in years prior to 2004. VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 H. LONG-TERM OBLIGATIONS In the government -wide financial statements long-term debt is reported as a liability in the applicable governmental activities fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are immaterial and are expensed in the year of bond issuance. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. I. FUND EQUITY In the fund financial statements, governmental funds report reservations of fund balance for amounts not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. J. INTERFUND TRANSACTIONS Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. K. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual results could differ from such estimates. L. COMPENSATED ABSENCES Vested or accumulated vacation leave and other benefit amounts that are expected to be liquidated with expendable available financial resources are reported as an expenditure and a fund liability of the governmental fund that will pay it. No expenditure is reported for these amounts. At December 31, 2004, the amount of accumulated vacation leave was immaterial to the financial statements and is not reported. 21 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 M. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS In the fund financial statements, the governmental funds are reported using the modified accrual basis of accounting. Under this method, governmental funds report only current assets and current liabilities. In the government -wide financial statements, all funds are reported using the accrual basis of accounting. The governmental funds of the WMO do not have any long-term assets or liabilities. Therefore, no reconciling terms are noted. Note 2 DEPOSITS AND INVESTMENTS A. DEPOSITS In accordance with Minnesota Statutes, the WMO maintains deposits at those depository banks authorized by the Board, all of which are members of the Federal Reserve System. Minnesota Statutes require that all WMO deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral includes the following: a) United States government treasury bills, treasury notes, treasury bonds; b) Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation service available to the goverment entity; c) General obligation securities of any state or local government with taxing powers which is rated "A" or better by a national bond rating service, or revenue obligation securities of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; d) Unrated general obligation securities of a local government with taxing powers may be pledged as collateral against funds deposited by that same local government entity: e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc. or Standard & Poor's Corporation; and f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. At year end the carrying amount of the WMO's deposits was $234,677 and the bank balance was $234,677. Minnesota Statutes require that all of the WMO's deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not 22 �L VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 covered by insurance or bonds (140% in the case of mortgage notes pledged). At December 31, 2004, the Organization's deposits were entirely insured by the FDIC or collateral. B. INVESTMENTS Minnesota Statutes authorize the WMO to invest in the following: a) Direct obligations or obligations guaranteed by the United States or its agencies, its instrumentalities or organizations created by an act of congress, excluding mortgage -backed securities defined as high risk. b) Shares of investment companies registered under the Federal Investment Company Act of 1940 and whose only investments are in securities described in (a) above, general obligation tax-exempt securities, or repurchase or reverse repurchase agreements. c) Obligations of the State of Minnesota or any of its municipalities as follows: 1) any security which is a general obligation of any state or local government with taxing powers which is rated "A" or better by a national bond rating service; 2) any security which is a revenue obligation of any state or local government with taxing powers which is rated "AA" or better by a national bond rating service; and 3) a general obligation of the Minnesota housing finance agency which is a moral obligation of the State of Minnesota and is rated "A" or better by a national bond rating agency. d) Bankers acceptance of United States banks eligible for purchase by the Federal Reserve System. e) Commercial paper issued by United States corporations or their Canadian subsidiaries, of the highest quality, and maturing in 270 days or less. f) Repurchase or reverse repurchase agreements with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; certain Minnesota securities broker -dealers; or, a bank qualified as a depositor. g) General obligation temporary bonds of the same governmental entity issued under section 429.091, subdivision 7; 469.178, subdivision 5; or 475.61, subdivision 6. The Organization did not invest in any of the above listed investments during 2004. VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2004 as previously reported was as follows: Beginning Beginning Balance, Ending Balance Restated» as Restated Increases Decrease Balance Governmental activities: Capital assets, being depreciated: Office equipment $5,740 ($5,740) $ (1) Restated for change in capitalization threshold as of January 1, 2004. During the year ended December 31, 2004, the Organization board changed the capital asset policy. This policy increased the capitalization threshold to $5,000. This change has resulted in the Organization adjusting their capital asset listing to only include assets that comply with the amended policy. Note 4 RELATED PARTY TRANSACTIONS REVENUE The Organization assesses each member entity on a yearly basis to provide funds to operate the Organization's business. Revenue from assessments to members in 2004 is as follows: 2004 Revenue City of North Oaks $16,990 City of White Bear Lake 13,003 St. Paul Regional Water Services 1,965 City of Lino Lakes 1,751 White Bear Township 6,600 City of Vadnais Heights 15,834 City of Gem Lake 1,647 Total $57,790 24 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION NOTES TO FINANCIAL STATEMENTS December 31, 2004 Note 5 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full-time and certain part-time employees of the WMO are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) which is cost -sharing, multiple -employer retirement plan. This plan is established and administered in accordance with Minnesota Statute, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF. That report may be obtained by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103-2088 or by calling (651)296-7460 or 1-800-652-9026. B. FUNDING POLICY Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The Organization makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 9.10% and 5.10%, respectively, of their annual covered salary. The Organization is required to contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF members and 5.53% for Coordinated Plan PERF members. The WMO's contributions for the years ending December 30, 2004, 2003 and 2002 were $2,746, $2,433 and $2,056, respectively. 25 VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION GENERAL FUND BALANCE SHEET December 31, 2004 With Comparative Amounts For December 31, 2003 Assets Cash and investments $234,677 $305,236 Total assets $234,677 $305,236 Liabilities and Fund Balance Statement 6 2004 2003 Liabilities: Accounts payable $327 $4,136 Escrow deposits payable 29,574 29,484 Due to other governments 5,926 37,288 Contracts payable 51,276 Total liabilities 87,103 70,908 Fund balance: Unreserved: Designated for cash flow 29,296 Designated for Lambert Creek Project 118,278 204,328 Designated for Whitaker Weir Project - 30,000 Total fund balance 147,574 234,328 Total liabilities and fund balance $234,677 $305,236 Ir 32 L L L L } L VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION GENERAL FUND STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE For The Year Ended December 31, 2004 With Comparative Amounts For The Year Ended December 31, 2003 Statement 7 2004 2003 Revenue: Intergovernmental: Member assessments $57,790 $46,900 Grants 478,402 136,500 Charges for services 1,040 1,040 Investment income 300 501 Other 840 Total revenue 538,372 184,941 Expenditures: Salaries Payroll processing Office expenses Technical consulting Audit Insurance Training Legal Information systems Education Projects Miscellaneous Total expenditures Revenue over (under) expenditures Fund balance - January 1 Fund balance - December 31 50,408 46,360 539 539 2,937 3,089 1,074 651 2,900 5,000 2,567 2,441 470 415 719 - 3,527 1,722 200 - 559,050 17,093 735 1,121 625,126 78,431 (86,754) 106,510 234,328 127,818 $147,574 $234,328 33 II Z - This page intentionally kft blank - s OTHER REPORTS 35 - This page intentionally Left blank - 1 1 T z 1 i a t 1 1 36 L HLB Tautges Redpath, Ltd. Certified Public Accountants and Consultants INDEPENDENT AUDITOR`S REPORT ON COMPLIANCE WITH MINNESOTA LEGAL COMPLIANCE AUDIT GUIDE FOR LOCAL GOVERNMENT To the Board of Commissioners Vadnais Lake Area Water Management Organization White Bear Lake, Minnesota We have audited the general purpose fmancial statements of the Vadnais Lake Area Water Management Organization, as of and for the year ended December 31, 2004 and have issued our report thereon dated April 11, 2005. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government promulgated by the State Auditor pursuant to Minnesota Statutes Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, and claims and disbursements. Our study included all of the listed categories. The results of our tests indicate that for the items tested, the Vadnais Lake Area Water Management Organization complied with the material terms and conditions of applicable legal provisions. This report is intended solely for the information and use of the Vadnais Lake Area Water Management Organization and management and is not intended to be and should not be used by anyone other than these specified parties. April 11, 2005 4-(1-8 T;g44 HLB TAUTGES REDPATH, LTD. Certified Public Accountants 4810 White Bear Parkway White Bear Lake, Minnesota 55110 651 426 7000 651 426 5004 Fax www.hlbtr.com 1303 South Frontage Road Suite 13 Hastings, Minnesota 55033 651 480 4990 651 426 5004 Fax HLB Tautges Redpath, Ltd. is a member of IILB International, a world-wide organization of accounting firms and business advisors. - This page intentionally left blank - 38