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CITY OF LAKE ELMO, MINNESOTA MANAGEMENT’S DISCUSSION AND ANALYSIS DECEMBER 31, 2023 15 Our discussion and analysis of the City of Lake Elmo’s financial performance provides an overview of the City’s financial activities for the year ended December 31, 2023. Please read it in conjunction with the independent auditor’s report on page 11 and the City’s financial statements, which begin on page 26. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of the City of Lake Elmo exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $170,695,558 (net position). The unrestricted portion of net position, the portion used to meet the City’s ongoing obligations to citizens and creditors, is $35,000,611. • The City’s total net position increased $19,697,043 as a result of this year’s operations. • As of the close of the current fiscal year, the City of Lake Elmo’s governmental funds reported a combined ending fund balance of $20,685,436 which is a decrease of $3,750,158 in comparison with the prior year. The overall unassigned fund balance is $8,427,607. • At the end of the current fiscal year, unrestricted fund balance for the General Fund was $8,920,580, which is 143 percent of total 2023 General Fund expenditures and 110 percent of budgeted 2024 General Fund expenditures. The City’s Fund Balance policy is to maintain an unassigned fund balance in the General Fund of an amount that is not less than 50 percent to 60 percent of the next year’s budgeted expenditures of the General Fund. • In the City’s business-type activities, revenues decreased $5,022,857 (24.71 percent) and program expenses increased $1,258,097 (19.95 percent). These changes are discussed in greater detail throughout the following pages. • Total cost of all of the City’s governmental activities’ departments increased $1,720,576 (or 10.58 percent) in aggregate. • The City’s General Fund generated more revenue than budgeted of $345,081, excluding transfers in from other funds. Expenditures were less than budgeted by $1,034,906, excluding transfers to other funds. See additional details on page 72. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities (on pages 26 and 27) provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Fund financial statements start on page 28. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information about the City’s most significant funds.