HomeMy WebLinkAbout2011 Annual Comprehensive Financial Report
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2011
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CITY OF LAKE ELMO, MINNESOTA
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS
FOR THE YEAR ENDED DECEMBER 31, 2011
Page No.
INTRODUCTORY SECTION
Elected and Appointed Officials 7
FINANCIAL SECTION
Independent Auditor’s Report 11
Management’s Discussion and Analysis 15
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets 29
Statement of Activities 30
Fund Financial Statements
Governmental Funds
Balance Sheet 34
Reconciliation of the Balance Sheet to the Statement of Net Assets 37
Statement of Revenues, Expenditures and Changes in Fund Balances 38
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances to the Statement of Activities 40
General Fund
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 41
Proprietary Funds
Statements of Net Assets 42
Statements of Revenues, Expenses and Changes in Fund Net Assets 46
Statements of Cash Flows 48
Fiduciary Funds
Statement of Fiduciary Net Assets 52
Notes to the Financial Statements 53
Required Supplementary Information
Schedule of Funding Progress for the Postemployment Benefit Plan 79
Schedule of Funding Progress for the Lake Elmo Volunteer Firefighter's Relief Association Pension Plan 79
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet 82
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 83
Nonmajor Special Revenue Funds
Combining Balance Sheet 84
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 85
Nonmajor Capital Projects Funds
Combining Balance Sheet 86
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 88
Internal Service Funds
Combining Statements of Net Assets 90
Combining Statements of Revenues, Expenditures, and Changes in Fund Net Assets 92
Combining Statements of Cash Flows 94
General Fund
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 96
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CITY OF LAKE ELMO, MINNESOTA
ANNUAL FINANCIAL REPORT
TABLE OF CONTENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2011
Page No.
FINANCIAL SECTION - CONTINUED
Combining and Individual Fund Financial Statements and Schedules - Continued
Debt Service Funds
Combining Balance Sheet 100
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 102
Agency Funds
Combining Schedule of Changes in Assets and Liabilities 104
Summary Financial Report
Revenues and Expenditures for General Operations - Governmental Funds 105
OTHER REPORTS
Auditor’s Report on Legal Compliance
Report on Internal Control Over Financial Reporting 108
Based on an Audit of Financial Statements 109
Schedule of Findings and Responses 111
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INTRODUCTORY SECTION
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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CITY OF LAKE ELMO, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2011
Name Title Term Expires
Dean Johnston Mayor 12/31/12
Brett H. Emmons Council Member 12/31/12
Nicole Park Council Member 12/31/14
Mike Pearson Council Member 12/31/14
Anne Smith Council Member 12/31/12
Bruce Messelt City Administrator
Tom Bouthilet Finance Director/Treasurer
ELECTED
APPOINTED
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FINANCIAL SECTION
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and City Council
City of Lake Elmo, Minnesota
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City of Lake Elmo, Minnesota (the City), as of and for the year ended
December 31, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements
based on our audit. The prior year comparative information has been derived from the City’s 2010 financial statements and, in our
report dated June 7, 2011, we expressed unqualified opinions on the respective proprietary fund financial statements.
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 financial 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, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of
December 31, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective
budgetary comparison for the General fund for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
As described in the Note 9 to the basic financial statements, the City adopted the provisions of Governmental Accounting Standards
Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended
December 31, 2011. Adoption of the provision of this statement results in significant changes to the classifications of the components
of fund balances.
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis
starting on page 15 and the Schedules of Funding Progress on page 79 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the Government Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance
with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the
methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries,
the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to
express an opinion or provide any assurance.
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Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial
statements as a whole. The introductory section and combining and individual fund financial statements and schedules are presented
for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial
statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting
and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in
the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly
to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion,
the information is fairly stated in all material respects in relation to the financial statements 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 do not express
an opinion or provide any assurance on it.
June 25, 2012 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
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Management’s Discussion and Analysis
As management of the City of Lake Elmo (the City), Minnesota, we offer readers of the City’s financial statements this narrative
overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2011.
Financial Highlights
The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $21,646,391 (net assets). Of this
amount, $4,004,936 (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors.
The City’s total net assets decreased by $125,462. The difference can be attributed to both business-type and governmental
activities.
As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of
$6,913,386, an increase of $117,869 in comparison with the prior year.
At the end of the current fiscal year, the unassigned fund balance for the General fund was $1,707,711, or 58.9 percent of the
2012 General fund budgeted expenditures and transfers out. The total General fund balance as of December 31, 2011 was
$2,913,920, but $1,205,398 is nonspendable related to the inter-fund loan with the Village Project fund.
The City’s total noncurrent liabilities increased $440,305 or 3.6 percent during the current fiscal year. The key factor of this
increase was the issuance of the 2011A G.O. Improvement Bonds.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial
statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves.
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The financial statements also include notes that explain some of the information in the financial statements and provide more detailed
data. The statements are followed by a section of combining and individual fund financial statements and schedules that further
explains and supports the information in the financial statements. Figure 1 shows how the required parts of this annual report are
arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual
fund financial statements and schedules that provide details about nonmajor governmental funds, which are added together and
presented in single columns in the basic financial statements.
Figure 1
Required Components of the
City’s Annual Financial Report
Management's
Discussion and
Analysis
Basic Financial
Statements
Required
Supplementary
Information
Government-wide
Financial
Statements
Fund
Financial
Statements
Notes to the
Financial
Statements
Summary Detail
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Figure 2 summarizes the major features of the City’s financial statements, including the portion of the City government they cover and
the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the
structure and contents of each of the statements.
Figure 2
Major features of the Government-wide and Fund Financial Statements
Fund Financial Statements
Government-wide
Statements
Governmental Funds Proprietary Funds
Scope Entire City government
(except fiduciary funds) and
the City’s component units
The activities of the City that
are not proprietary or
fiduciary, such as police, fire
and parks
Activities the City operates
similar to private businesses,
such as the water and sewer
system
Required financial
statements
Statement of Net Assets
Statement of Activities
Balance Sheet
Statement of Revenues,
Expenditures, and
Changes in Fund
Balances
Statements of Net Assets
Statements of Revenues,
Expenses and Changes in
Fund Net Assets
Statements of Cash
Flows
Accounting Basis and
measurement focus
Accrual accounting and
economic resources focus
Modified accrual accounting
and current financial
resources focus
Accrual accounting and
economic resources focus
Type of asset/liability
information
All assets and liabilities, both
financial and capital, and
short-term and long-term
Only assets expected to be
used up and liabilities that
come due during the year or
soon thereafter; no capital
assets included
All assets and liabilities, both
financial and capital, and
short-term and long-term
Type of in flow/out flow
information
All revenues and expenses
during year, regardless of
when cash is received or paid
Revenues for which cash is
received during or soon after
the end of the year;
expenditures when goods or
services have been received
and payment is due during
the year or soon thereafter
All revenues and expenses
during the year, regardless of
when cash is received or paid
Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad
overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported
as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the
City is improving or deteriorating.
The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All
changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related
cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and
intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of
their costs through user fees and charges (business-type activities). The governmental activities of the City include general
government, public safety, public works, culture and recreation, and interest on long-term debt. The business-type activities of the
City include water, sewer and storm sewer utilities.
The government-wide financial statements start on page 29 of this report.
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Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other State and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:
governmental funds, proprietary funds, and fiduciary funds.
Governmental funds. The funds are used to account for essentially the same functions reported as governmental activities in the
government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a city’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the
information presented for governmental funds with similar information presented for governmental activities in the government-wide
financial statements. By doing so, readers may better understand the long-term impact by the City’s near-term financing decisions.
Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund
balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City maintains twenty-one individual governmental funds, seven of which are Debt Service funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in
fund balances for the General fund, the Debt Service fund, the Village Project fund, and the 2011 Street Improvements fund, all of
which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules
elsewhere in this report.
The City adopts an annual appropriated budget for its General fund. A budgetary comparison statement has been provided for the
General fund to demonstrate compliance with this budget.
The basic governmental fund financial statements start on page 34 of this report.
Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its
water, sewer and storm sewer utilities. Internal service funds are an accounting device used to accumulate and allocate costs internally
among the City’s various functions. The City uses internal service funds to account for the funding of equipment replacement for
radios, IT, furniture, fixtures, and other equipment. Because these services predominantly benefit governmental rather than business-
type functions, they have been included within governmental activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The
proprietary funds financial statements provide separate information for the water, sewer, and storm sewer utility funds.
The basic proprietary funds financial statements start on page 42 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are
not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s
own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statement can be found on page 52 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data
provided in the government-wide and fund financial statements. The notes to the financial statements start on page 53 of this report.
Other information. The combining statements referred to earlier in connection with nonmajor governmental funds and internal
service funds are presented following the notes to the financial statements. Combining and individual fund financial statements and
schedules start on page 82 of this report.
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Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City,
assets exceeded liabilities $21,646,391 at the close of the most recent fiscal year.
The largest portion of the City’s net assets (69.2 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and
equipment); less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide
services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other
sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the City’s net assets (12.3 percent) represents resources that are subject to external restrictions on how they
may be used. These restrictions are basically obligations for future debt service. The remaining balance of unrestricted net assets
($4,004,936) may be used to meet the City’s ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the City as
a whole, as well as for its separate governmental and business-type activities.
City of Lake Elmo’s Summary of Net Assets
Increase Increase
2011 2010 (Decrease)2011 2010 (Decrease)
Assets
Current and other assets 8,409,192$ 8,390,795$ 18,397$ 1,536,582$ 1,274,094$ 262,488$
Capital assets (net of
accumulated depreciation)13,923,816 13,651,257 272,559 11,055,674 11,385,473 (329,799)
Total assets 22,333,008 22,042,052 290,956 12,592,256 12,659,567 (67,311)
Liabilities
Noncurrent liabilities outstanding 7,911,429 7,424,188 487,241 4,665,125 4,712,061 (46,936)
Other liabilities 647,310 752,812 (105,502) 55,009 40,705 14,304
Total liabilities 8,558,739 8,177,000 381,739 4,720,134 4,752,766 (32,632)
Net assets
Invested in capital assets,
net of related debt 8,553,984 8,644,980 (90,996) 6,422,782 6,713,292 (290,510)
Restricted 2,664,689 2,771,969 (107,280) - - -
Unrestricted 2,555,596 2,448,103 107,493 1,449,340 1,193,509 255,831
Total net assets 13,774,269$ 13,865,052$ (90,783)$ 7,872,122$ 7,906,801$ (34,679)$
Governmental Activities Business-type Activities
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Governmental activities. Governmental activities decreased the City’s net assets $90,783 thereby accounting for 72.4 percent of the
total decline in the net assets of the City.
City of Lake Elmo’s Changes in Net Assets
Increase Increase
2011 2010 (Decrease)2011 2010 (Decrease)
Revenues
Program revenues
Charges for services 308,929$ 352,763$ (43,834)$ 863,798$ 796,518$ 67,280$
Operating grants and contributions 184,476 168,491 15,985 17,000 32,721 (15,721)
Capital grants and contributions 222,488 1,090,419 (867,931) 75,885 418,400 (342,515)
General revenues
Taxes 2,793,776 2,711,067 82,709 - - -
Grants and contributions not
restricted to specific programs 10,628 9,771 857 - - -
Unrestricted investment earnings 94,501 113,989 (19,488) 10,789 11,129 (340)
Miscellaneous 20,405 17,311 3,094 - - -
Total revenues 3,635,203 4,463,811 (828,608) 967,472 1,258,768 (291,296)
Expenses
General government 1,036,038 980,456 55,582 - - -
Public safety 1,107,050 1,171,158 (64,108) - - -
Public works 1,008,686 1,135,351 (126,665) - - -
Culture and recreation 247,845 239,389 8,456 - - -
Interest on long-term debt 266,730 222,404 44,326 - - -
Water - - - 845,474 898,319 (52,845)
Sewer - - - 73,797 61,513 12,284
Storm sewer - - - 142,517 151,384 (8,867)
Total expenses 3,666,349 3,748,758 (82,409) 1,061,788 1,111,216 (49,428)
Change in net assets before transfers (31,146) 715,053 (746,199) (94,316) 147,552 (241,868)
Transfers - capital assets (9,637) (7,947) (1,690) 9,637 7,947 1,690
Transfers - internal activities (50,000) (50,000) - 50,000 50,000 -
Change in net assets (90,783) 657,106 (747,889) (34,679) 205,499 (240,178)
Net assets, January 1 13,865,052 13,207,946 657,106 7,906,801 7,701,302 205,499
Net assets, December 31 13,774,269$ 13,865,052$ (90,783)$ 7,872,122$ 7,906,801$ (34,679)$
Governmental Activities Business-type Activities
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The following graph depicts various governmental activities and shows the revenue and expenses directly related to those activities.
Expenses and Program Revenues – Governmental Activities
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
General government Public safety Public works Culture and recreation Debt service
Expenses Program Revenues
Revenues by Source – Governmental Activities
Charges for
services
8.5%
Operating
grants and
contributions
5.1%
Capital grants
and
contributions
6.1%Property taxes
75.7%
Grants and
contributions
not restricted to
specific
programs
0.3%
Investment
earnings
2.6%
Other
1.7%
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Business-type activities. Business-type activities decreased the City’s net assets by $34,679, accounting for 27.6 percent of the total
decline in the City’s net assets.
Expenses and Program Revenues - Business-Type Activities
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Water Sewer Storm sewer
Expenses Program Revenues
Revenues by Source - Business-Type Activities
Operating
grants and
contributions
1.8%
Capital grants
and
contributions
7.8%
Charges for
services
89.3%
Investment
earnings
1.1%
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Financial Analysis of the Government’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and
balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned
fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances $6,913,386, an
increase of $117,869 in comparison with the prior year. Approximately 5.1 percent of this total amount, $353,957 constitutes
unassigned fund balance, which is available for spending at the City’s discretion. The remainder of fund balance ($6,559,429) is not
available for new spending because it is either 1) nonspendable ($1,206,209), 2) restricted ($4,691,748), 3) committed ($7,114), or 4)
assigned ($654,358). For further classification, refer to Note 3F on page 69 of this report.
Increase
2011 2010 (Decrease)
General 2,913,920$ 2,686,161$ 227,759$
Debt Service 3,534,742$ 3,605,250$ (70,508)$
Village Project (1,205,398)$ (1,146,241)$ (59,157)$
Fund Balances (deficits)
Major funds
December 31
Revenues exceeded expenditures in the fund by $458,264. The fund also transferred out of $230,505 leading to an increase in fund
balance of $227,759.
The Village Project fund expenditures exceeded revenues by $96,414. The decrease was due to expenditures incurred on the
Village project and interest on the advance from the General fund.
The City levied for an anticipated decrease in fund balance across all Debt Service funds of approximately $134,000. Actual fund
balance in the Debt Service funds decreased $70,508 in 2011. This variance is primarily due to nearly $85,000 received for prepaid
special assessments and net transfers out of $24,298 to close funds.
Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial
statements, but in more detail.
Unrestricted net assets of the enterprise funds at the end of the year amounted to $1,449,340. The total decrease in net assets for the
funds was $34,679. Other factors concerning the finances of this fund have already been addressed in the discussion of the City’s
business-type activities.
General Fund Budgetary Highlights
The City’s General fund budget was not amended during the year. The budget called for no change in General fund balance. Actual
net change to the General fund balance was an increase of $227,759. Actual revenues exceeded budgeted amounts and expenditures
were under budget. Revenues were over budget by $143,349 mainly due to licenses and permits which were $62,459 more than
anticipated. Expenditures were under budget by $132,915 during the year. All departments were under budget, with the exception of
general government which was over budget by $44,779. The largest positive variance was provided by public safety which was under
budget by $73,689.
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Capital Asset and Debt Administration
Capital assets. The City’s investment in capital assets for its governmental and business-type activities as of December 31, 2011,
amounts to $24,979,490 (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements,
machinery and equipment, park facilities, and streets. The City’s total capital assets decreased a total of $57,240. Of that total,
governmental net capital assets increased by 2.0 percent while Business-type activities decreased this figure by 2.9 percent.
Major capital asset events during the current fiscal year included the following:
2011 street improvements of approximately $540,000.
Completion of the 2010 street improvement project. Current additions were approximately $28,000 and included in the total
additions of nearly $570,000 to governmental infrastructure.
South of 10th street improvements of approximately $123,000 were added to governmental construction in progress.
Improvements including field lights and roof repair to Lions Park.
Additional information on the City’s capital assets can be found in Note 3C starting on page 63 of this report.
City of Lake Elmo’s Capital Assets
(net of depreciation)
Increase Increase
2011 2010 (Decrease)2011 2010 (Decrease)
Land 3,453,979$ 3,439,986$ 13,993$ 36,573$ 36,573$ -$
Buildings 2,764,709 2,836,898 (72,189) - - -
Improvements other than buildings 558,332 572,840 (14,508) - - -
Machinery and equipment 938,928 1,012,929 (74,001) 146,566 166,577 (20,011)
Infrastructure 4,809,905 3,891,841 918,064 10,446,752 10,774,860 (328,108)
Construction in progress 1,397,963 1,896,763 (498,800) 425,783 407,463 18,320
Total 13,923,816$ 13,651,257$ 272,559$ 11,055,674$ 11,385,473$ (329,799)$
Governmental Activities Business-type Activities
Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $12,451,000. While all of the
City’s bonds have revenue streams, they are all backed by the full faith and credit of the City.
City of Lake Elmo’s Outstanding Debt
Increase Increase
2011 2010 (Decrease)2011 2010 (Decrease)
Other postemployment benefits payable 43,561$ 28,888$ 14,673$ 7,835$ 5,172$ 2,663$
Compensated absences payable 41,731 67,747 (26,016) 10,182 19,070 (8,888)
Unamortized premium on bonds 15,137 17,553 (2,416) 7,108 7,819 (711)
Bonds payable 7,811,000 7,310,000 501,000 4,640,000 4,680,000 (40,000)
Total 7,911,429$ 7,424,188$ 487,241$ 4,665,125$ 4,712,061$ (46,936)$
Governmental Activities Business-type Activities
The City’s total noncurrent liabilities increased $440,305 during the current fiscal year, which is a result of the issuance of $845,000
for the 2011A G.O. Improvement Bonds.
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The City bond rating was placed at “Aa2” from Moody’s for its issuance of Bonds in 2011.
Minnesota statutes limit the amount of net general obligation debt a City may issue to three percent of the market value of taxable
property within the City. Net debt is debt payable solely from ad valorem taxes. The City is currently well within their limit.
Additional information on the City’s long-term debt can be found in Note 3E starting on page 66 of this report.
Economic Factors and Next Year’s Budgets and Rates
The City’s taxable market value decreased 4.9 percent from 2010 to 2011, and 8.5 percent from 2011 to 2012.
Total property taxes levied for 2012 increased 10.8 percent over property taxes levied for 2011. This is primarily due to the
City opting out of the Washington County Library system. Due to this move, the Library levy previously reported under the
County levy has been moved to the City component.
Plans are underway for extensive development in the following three areas:
1. The I-94 Corridor where a mixed use development featuring commercial/retail business as well as residential
(2012-2017).
2. The Old Village re-development project of commercial and residential expansion (2013-2018).
3. The Highway 36 Corridor residential expansion due to the completion of the new federally funded bridge linking
Minnesota and Wisconsin (targeted completion in 2017).
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s
finances. Questions concerning any of the information provided in this report or requests for additional financial information should
be addressed to the City Finance Director, City of Lake Elmo 3800 Laverne Avenue North, Lake Elmo, Minnesota, 55042.
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INTENTIONALLY
-26-
GOVERNMENT-WIDE FINANCIAL STATEMENTS
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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INTENTIONALLY
-28-
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET ASSETS
DECEMBER 31, 2011
Governmental Business-type
Activities Activities Total
ASSETS
Cash and temporary investments 4,537,364$ 783,037$ 5,320,401$
Cash with fiscal agent 2,899,380 - 2,899,380
Receivables
Current taxes 23,020 - 23,020
Delinquent taxes 102,760 - 102,760
Accrued interest 15,371 - 15,371
Accounts 1,235 539,648 540,883
Special assessments 232,700 95,876 328,576
Due from other governments 405,410 - 405,410
Unamortized deferred charges 191,952 118,021 309,973
Capital assets
Land and construction in progress 4,851,942 462,356 5,314,298
Depreciable assets (net of accumulated depreciation)9,071,874 10,593,318 19,665,192
TOTAL ASSETS 22,333,008 12,592,256 34,925,264
LIABILITIES
Accounts payable 172,954 31,777 204,731
Accrued salaries payable 37,935 1,915 39,850
Accrued interest payable 89,536 15,808 105,344
Due to other governments 235,145 5,509 240,654
Deposits payable 75,000 - 75,000
Unearned revenue 36,740 - 36,740
Noncurrent liabilities
Due within one year 414,346 42,037 456,383
Due in more than one year 7,497,083 4,623,088 12,120,171
TOTAL LIABILITIES 8,558,739 4,720,134 13,278,873
NET ASSETS
Invested in capital assets, net of related debt 8,553,984 6,422,782 14,976,766
Restricted for
Debt service 1,963,714 - 1,963,714
Park improvements 700,975 - 700,975
Unrestricted 2,555,596 1,449,340 4,004,936
TOTAL NET ASSETS 13,774,269$ 7,872,122$ 21,646,391$
The notes to the financial statements are an integral part of this statement.
-29-
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2011
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities
General government 1,036,038$ 22,058$ -$ -$
Public safety 1,107,050 283,813 63,516 -
Public works 1,008,686 3,058 98,606 190,625
Culture and recreation 247,845 - 22,354 31,863
Interest on long-term debt 266,730 - - -
Total governmental activities 3,666,349 308,929 184,476 222,488
Business-type activities
Water 845,474 575,534 - 74,100
Sewer 73,797 53,012 - 1,785
Storm sewer 142,517 235,252 17,000 -
Total business-type activities 1,061,788 863,798 17,000 75,885
Total 4,728,137$ 1,172,727$ 201,476$ 298,373$
General revenues
Taxes
Property taxes, levied for general purposes
Property taxes, levied for debt service
Franchise taxes
Grants and contributions not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Transfers - capital assets
Transfers - internal activities
Total general revenues and transfers
Change in net assets
Net assets, January 1
Net assets, December 31
The notes to the financial statements are an integral part of this statement.
Program Revenues
-30-
Governmental Business-type
Activities Activities Total
(1,013,980)$ -$ (1,013,980)$
(759,721) - (759,721)
(716,397) - (716,397)
(193,628) - (193,628)
(266,730) - (266,730)
(2,950,456) - (2,950,456)
- (195,840) (195,840)
- (19,000) (19,000)
- 109,735 109,735
- (105,105) (105,105)
(2,950,456) (105,105) (3,055,561)
2,447,919 - 2,447,919
304,656 - 304,656
41,201 - 41,201
10,628 - 10,628
94,501 10,789 105,290
20,405 - 20,405
(9,637) 9,637 -
(50,000) 50,000 -
2,859,673 70,426 2,930,099
(90,783) (34,679) (125,462)
13,865,052 7,906,801 21,771,853
13,774,269$ 7,872,122$ 21,646,391$
Net (Expenses) Revenues and Changes in Net Assets
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INTENTIONALLY
-32-
FUND FINANCIAL STATEMENTS
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
-33-
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2011
101 300's 413 418
Debt Village 2011 Street
General Service Project Improvements
ASSETS
Cash and temporary investments 1,904,656$ 635,241$ -$ 227,993$
Cash with fiscal agent - 2,899,380 - -
Receivables
Current taxes 23,020 - - -
Delinquent taxes 102,760 - - -
Accrued interest 15,371 - - -
Accounts 1,235 - - -
Special assessments - 148,629 - -
Due from other governments 41,043 340,000 - -
Due from other funds 129,067 - - -
Advance to other funds 1,205,398 - - -
Prepaid items 811 - - -
TOTAL ASSETS 3,423,361$ 4,023,250$ -$ 227,993$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable 96,861$ -$ -$ 43,047$
Accrued salaries payable 37,935 - - -
Due to other governments 235,145 - - -
Due to other funds - - - -
Advance from other funds - - 1,205,398 -
Deposits payable - - - -
Deferred revenue 139,500 488,508 - -
TOTAL LIABILITIES 509,441 488,508 1,205,398 43,047
FUND BALANCES
Nonspendable 1,206,209 - - -
Restricted - 3,534,742 - 184,946
Committed - - - -
Assigned - - - -
Unassigned 1,707,711 - (1,205,398) -
TOTAL FUND BALANCES 2,913,920 3,534,742 (1,205,398) 184,946
TOTAL LIABILITIES AND FUND BALANCES 3,423,361$ 4,023,250$ -$ 227,993$
The notes to the financial statements are an integral part of this statement.
-34-
Other Total
Governmental Governmental
Funds Funds
1,690,440$ 4,458,330$
- 2,899,380
- 23,020
- 102,760
- 15,371
- 1,235
84,071 232,700
24,367 405,410
- 129,067
- 1,205,398
- 811
1,798,878$ 9,473,482$
26,076$ 165,984$
- 37,935
- 235,145
129,067 129,067
- 1,205,398
75,000 75,000
83,559 711,567
313,702 2,560,096
- 1,206,209
972,060 4,691,748
7,114 7,114
654,358 654,358
(148,356) 353,957
1,485,176 6,913,386
1,798,878$ 9,473,482$
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INTENTIONALLY
-36-
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
GOVERNMENTAL FUNDS
DECEMBER 31, 2011
Total fund balances - governmental funds 6,913,386$
Amounts reported for governmental activities in the statement of net assets are different because
Capital assets used in governmental activities are not financial resources and therefore
are not reported as assets in governmental funds.
Cost of capital assets 17,391,971
Less accumulated depreciation (3,712,237)
Noncurrent liabilities, including bonds payable, are not due and payable in the current period
and therefore are not reported as liabilities in the funds.
Noncurrent liabilities at year end consist of
Other postemployment benefits payable (43,561)
Compensated absences payable (41,731)
Bond principal payable (7,811,000)
Less deferred charges, net of accumulated amortization 191,952
Add bond premium, net of accumulated amortization (15,137)
Some receivables are not available soon enough to pay for the current period's expenditures,
and therefore are deferred in the funds.
Delinquent taxes receivable 102,760
Special assessments receivable 232,067
State contributions 340,000
Governmental funds do not report a liability for accrued interest until due and payable.(89,536)
Internal service funds are used by management to charge the cost of services to individual funds.
The assets and liabilities are included in the governmental statement of net assets.315,335
Total net assets - governmental activities 13,774,269$
The notes to the financial statements are an integral part of this statement.
-37-
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2011
101 300's 413 417
Debt Village 2011 Street
General Service Project Improvements
REVENUES
Taxes 2,486,117$ 304,656$ -$ -$
Licenses and permits 230,419 - - -
Intergovernmental 172,750 72,025 - -
Charges for services 14,691 - - -
Fines and forfeitures 63,819 - - -
Special assessments - 118,261 - -
Investment earnings 59,413 14,233 (1,771) (482)
Miscellaneous 35,363 - - -
TOTAL REVENUES 3,062,572 509,175 (1,771) (482)
EXPENDITURES
Current
General government 1,016,898 - - -
Public safety 996,733 - - -
Public works 447,629 - - -
Culture and recreation 143,048 - - -
Capital outlay
General government - - - -
Public safety - - - -
Public works - - 54,643 583,297
Culture and recreation - - - -
Debt service
Principal - 344,000 - -
Interest and other charges - 211,385 40,000 -
Bond issuance costs - - - 34,327
TOTAL EXPENDITURES 2,604,308 555,385 94,643 617,624
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 458,264 (46,210) (96,414) (618,106)
OTHER FINANCING SOURCES (USES)
Transfers in - 11,650 37,257 -
Bonds issued - - - 845,000
Transfers out (230,505) (35,948) - -
TOTAL OTHER FINANCING SOURCES (USES)(230,505) (24,298) 37,257 845,000
NET CHANGE IN FUND BALANCES 227,759 (70,508) (59,157) 226,894
FUND BALANCES, JANUARY 1 2,686,161 3,605,250 (1,146,241) (41,948)
FUND BALANCES, DECEMBER 31 2,913,920$ 3,534,742$ (1,205,398)$ 184,946$
The notes to the financial statements are an integral part of this statement.
-38-
Other Total
Governmental Governmental
Funds Funds
-$ 2,790,773$
- 230,419
31,863 276,638
- 14,691
- 63,819
35,275 153,536
22,673 94,066
12,854 48,217
102,665 3,672,159
- 1,016,898
- 996,733
- 447,629
25,699 168,747
9,067 9,067
20,433 20,433
316,353 954,293
45,390 45,390
- 344,000
- 251,385
- 34,327
416,942 4,288,902
(314,277) (616,743)
156,065 204,972
- 845,000
(48,907) (315,360)
107,158 734,612
(207,119) 117,869
1,692,295 6,795,517
1,485,176$ 6,913,386$
-39-
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2011
Total net change in fund balances - governmental funds 117,869$
Amounts reported for governmental activities in the statement of activities are different because
Capital outlays are reported in governmental funds as expenditures. However, in the statement of
activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense.
Capital outlays 872,262
Depreciation expense (547,822)
Revenues in the statement of activities that do not provide current financial resources are not
reported as revenue in the funds.
Capital assets transferred to enterprise funds.(9,637)
The issuance of long-term debt provides current financial resources to governmental funds, while the
repayment of principal of long-term debt consumes the current financial resources of governmental
funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report
the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas
these amounts are deferred and amortized in the statement of activities. The amounts below are the
effects of these differences in the treatment of long-term debt and related items.
Debt issued (845,000)
Less deferral of bond issuance costs 34,327
Principal repayments 344,000
Amortization of deferred charges (17,828)
Interest on long-term debt in the statement of activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due,
and thus requires the use of current financial resources. In the statement of activities, however,
interest expense is recognized as the interest accrues, regardless of when it is due.(15,345)
Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of
accounting, certain revenues cannot be recognized until they are available to liquidate liabilities
of the current period.
Special assessments 25,064
Property taxes 3,003
State contributions (60,000)
Some expenses reported in the statement of activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
Other postemployment benefits (14,673)
Compensated absences 26,016
Internal service funds are used by management to charge certain costs to individual funds. The net
revenue of certain activities of internal service funds is reported with governmental activities in the
government-wide financial statements.(3,019)
Change in net assets - governmental activities (90,783)$
The notes to the financial statements are an integral part of this statement.
-40-
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2011
Actual Variance with
Original Final Amounts Final Budget
REVENUES
Taxes 2,489,261$ 2,489,261$ 2,486,117$ (3,144)$
Licenses and permits 167,960 167,960 230,419 62,459
Intergovernmental 132,473 132,473 172,750 40,277
Charges for services 8,400 8,400 14,691 6,291
Fines and forfeits 52,000 52,000 63,819 11,819
Investment earnings 50,000 50,000 59,413 9,413
Miscellaneous 19,129 19,129 35,363 16,234
TOTAL REVENUES 2,919,223 2,919,223 3,062,572 143,349
EXPENDITURES
Current
General government 972,119 972,119 1,016,898 (44,779)
Public safety 1,070,422 1,070,422 996,733 73,689
Public works 501,439 501,439 447,629 53,810
Culture and recreation 193,243 193,243 143,048 50,195
TOTAL EXPENDITURES 2,737,223 2,737,223 2,604,308 132,915
EXCESS OF REVENUES OVER EXPENDITURES 182,000 182,000 458,264 276,264
OTHER FINANCING USES
Transfers out (182,000) (182,000) (230,505) (48,505)
NET CHANGE IN FUND BALANCES - - 227,759 227,759
FUND BALANCES, JANUARY 1 2,686,161 2,686,161 2,686,161 -
FUND BALANCES, DECEMBER 31 2,686,161$ 2,686,161$ 2,913,920$ 227,759$
The notes to the financial statements are an integral part of this statement.
Budgeted Amounts
-41-
CITY OF LAKE ELMO, MINNESOTA
STATEMENTS OF NET ASSETS - CONTINUED ON THE FOLLOWING PAGES
PROPRIETARY FUNDS
DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
ASSETS
CURRENT ASSETS
Cash and temporary investments 752,658$ 565,407$ 27,062$ 29,226$
Receivables
Accounts 214,652 174,845 40,423 49,093
Special assessments 60,214 72,507 516 516
Due from other governments - - - -
Due from other funds - 56,226 - -
TOTAL CURRENT ASSETS 1,027,524 868,985 68,001 78,835
NONCURRENT ASSETS
Unamortized deferred charges 118,021 125,439 - -
Capital assets
Land 36,573 36,573 - -
Machinery and equipment 282,860 282,860 - -
Infrastructure 11,745,589 11,745,589 346,607 346,607
Construction in progress 387,233 373,283 - -
Less accumulated depreciation (2,159,492) (1,835,300) (177,930) (169,190)
Total capital assets (net of accumulated depreciation)10,292,763 10,603,005 168,677 177,417
TOTAL NONCURRENT ASSETS 10,410,784 10,728,444 168,677 177,417
TOTAL ASSETS 11,438,308 11,597,429 236,678 256,252
The notes to the financial statements are an integral part of this statement.
Water
602
Sewer
Business-type Activities - Enterprise Funds
601
-42-
2011 2010 2011 2010 2011 2010
3,317$ -$ 783,037$ 594,633$ 79,034$ 47,734$
284,573 249,454 539,648 473,392 - -
35,146 - 95,876 73,023 - -
- 7,607 - 7,607 - -
- - - 56,226 13,676 -
323,036 257,061 1,418,561 1,204,881 92,710 47,734
- - 118,021 125,439 - -
- - 36,573 36,573 - -
- - 282,860 282,860 592,199 560,729
595,833 595,833 12,688,029 12,688,029 - -
38,550 34,180 425,783 407,463 - 18,512
(40,149) (24,962) (2,377,571) (2,029,452) (348,117) (292,915)
594,234 605,051 11,055,674 11,385,473 244,082 286,326
594,234 605,051 11,173,695 11,510,912 244,082 286,326
917,270 862,112 12,592,256 12,715,793 336,792 334,060
Governmental Activities
Internal Service Funds
701, 702, 703
TotalsStorm Sewer
Business-type Activities - Enterprise Funds
603
-43-
CITY OF LAKE ELMO, MINNESOTA
STATEMENTS OF NET ASSETS - CONTINUED
PROPRIETARY FUNDS
DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
LIABILITIES
CURRENT LIABILITIES
Accounts payable 25,664$ 12,788$ 2,002$ 2,545$
Accrued salaries payable 1,274 1,589 288 355
Accrued interest payable 15,808 15,908 - -
Due to other funds - - - -
Due to other governments 4,973 2,176 - -
Current portion of compensated absences payable 1,355 2,282 301 459
Current portion of bonds payable 40,000 40,000 - -
TOTAL CURRENT LIABILITIES 89,074 74,743 2,591 3,359
NONCURRENT LIABILITIES
Other postemployment benefits payable 4,814 3,175 1,213 804
Compensated absences payable 5,419 9,129 1,203 1,836
Unamortized premium on bonds 7,108 7,819 - -
Bonds payable 4,600,000 4,640,000 - -
TOTAL NONCURRENT LIABILITIES 4,617,341 4,660,123 2,416 2,640
TOTAL LIABILITIES 4,706,415 4,734,866 5,007 5,999
NET ASSETS
Invested in capital assets, net of related debt 5,659,871 5,930,824 168,677 177,417
Unrestricted 1,072,022 931,739 62,994 72,836
TOTAL NET ASSETS 6,731,893$ 6,862,563$ 231,671$ 250,253$
The notes to the financial statements are an integral part of this statement.
601
Business-type Activities - Enterprise Funds
602
SewerWater
-44-
2011 2010 2011 2010 2011 2010
4,111$ 4,187$ 31,777$ 19,520$ 7,781$ 15,706$
353 639 1,915 2,583 - -
- - 15,808 15,908 - -
- 56,226 - 56,226 13,676 -
536 518 5,509 2,694 - -
381 1,073 2,037 3,814 - -
- - 40,000 40,000 - -
5,381 62,643 97,046 140,745 21,457 15,706
1,808 1,193 7,835 5,172 - -
1,523 4,291 8,145 15,256 - -
- - 7,108 7,819 - -
- - 4,600,000 4,640,000 - -
3,331 5,484 4,623,088 4,668,247 - -
8,712 68,127 4,720,134 4,808,992 21,457 15,706
594,234 605,051 6,422,782 6,713,292 244,082 286,326
314,324 188,934 1,449,340 1,193,509 71,253 32,028
908,558$ 793,985$ 7,872,122$ 7,906,801$ 315,335$ 318,354$
Governmental Activities
Internal Service Funds
701, 702, 703603
Business-type Activities - Enterprise Funds
Storm Sewer Totals
-45-
CITY OF LAKE ELMO, MINNESOTA
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
OPERATING REVENUES
Charges for services 517,814$ 506,238$ 53,012$ 48,508$
Water meter sales 9,165 11,121 - -
TOTAL OPERATING REVENUES 526,979 517,359 53,012 48,508
OPERATING EXPENSES
Personnel services 103,651 102,711 23,535 22,996
Supplies 18,940 95,164 - -
Professional services 63,441 37,991 21,935 12,032
Repair and maintenance 12,006 11,550 508 12
Insurance 6,023 9,710 - -
Utilities 119,709 117,801 19,079 17,733
Depreciation 324,192 324,818 8,740 8,740
TOTAL OPERATING EXPENSES 647,962 699,745 73,797 61,513
OPERATING INCOME (LOSS)(120,983) (182,386) (20,785) (13,005)
NONOPERATING REVENUES (EXPENSES)
Investment earnings 9,903 10,580 418 632
Rents 48,555 45,226 - -
Miscellaneous - - - -
Amortization of deferred charges (7,418) (7,418) - -
Interest expense (190,094) (191,156) - -
TOTAL NONOPERATING REVENUES (EXPENSES)(139,054) (142,768) 418 632
INCOME (LOSS) BEFORE TRANSFERS
AND CONTRIBUTIONS (260,037) (325,154) (20,367) (12,373)
TRANSFERS IN 50,000 50,000 - -
CAPITAL CONTRIBUTIONS 74,100 261,000 1,785 2,400
CAPITAL CONTRIBUTIONS FROM OTHER FUNDS 5,267 4,401 - -
CHANGE IN NET ASSETS (130,670) (9,753) (18,582) (9,973)
NET ASSETS, JANUARY 1 6,862,563 6,872,316 250,253 260,226
NET ASSETS, DECEMBER 31 6,731,893$ 6,862,563$ 231,671$ 250,253$
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
Water
601 602
Sewer
-46-
2011 2010 2011 2010 2011 2010
235,252$ 185,425$ 806,078$ 740,171$ -$ -$
- - 9,165 11,121 - -
235,252 185,425 815,243 751,292 - -
41,134 39,855 168,320 165,562 - -
891 3,257 19,831 98,421 - -
58,778 59,435 144,154 109,458 - -
26,527 33,649 39,041 45,211 8,640 2,058
- - 6,023 9,710 - -
- - 138,788 135,534 - -
15,187 15,188 348,119 348,746 55,202 56,819
142,517 151,384 864,276 912,642 63,842 58,877
92,735 34,041 (49,033) (161,350) (63,842) (58,877)
468 (83) 10,789 11,129 435 956
- - 48,555 45,226 - -
17,000 32,721 17,000 32,721 - -
- - (7,418) (7,418) - -
- - (190,094) (191,156) - -
17,468 32,638 (121,168) (109,498) 435 956
110,203 66,679 (170,201) (270,848) (63,407) (57,921)
- - 50,000 50,000 60,388 -
- 155,000 75,885 418,400 - -
4,370 3,546 9,637 7,947 - -
114,573 225,225 (34,679) 205,499 (3,019) (57,921)
793,985 568,760 7,906,801 7,701,302 318,354 376,275
908,558$ 793,985$ 7,872,122$ 7,906,801$ 315,335$ 318,354$
Internal Service Funds
Governmental Activities
701, 702, 703
Business-type Activities - Enterprise Funds
TotalsStorm Sewer
603
-47-
CITY OF LAKE ELMO, MINNESOTA
STATEMENTS OF CASH FLOWS - CONTINUED ON T HE FOLLOWING PAGES
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users 499,465$ 475,808$ 61,682$ 30,083$
Other income related to operating activities - - - -
Payments to suppliers (200,298) (290,641) (42,065) (28,848)
Payments to employees (106,964) (100,565) (23,984) (22,515)
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 192,203 84,602 (4,367) (21,280)
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Rents received 48,555 45,226
(Increase) decrease in due from other funds 56,226 23,928 - -
Increase (decrease) in due to other funds - - - -
Transfers from other funds 50,000 50,000 - -
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES 154,781 119,154 - -
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets (12,831) (33,320) - -
Connection fees received 74,100 78,000 1,785 2,400
Principal paid on long-term debt (40,000) (35,000) - -
Interest paid on long-term debt (190,905) (191,955) - -
NET CASH PROVIDED (USED) BY CAPITAL
AND RELATED FINANCING ACTIVITIES (169,636) (182,275) 1,785 2,400
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings 9,903 10,580 418 632
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 187,251 32,061 (2,164) (18,248)
CASH AND CASH EQUIVALENTS, JANUARY 1 565,407 533,346 29,226 47,474
CASH AND CASH EQUIVALENTS, DECEMBER 31 752,658$ 565,407$ 27,062$ 29,226$
The notes to the financial statements are an integral part of this statement.
602
SewerWater
Business-type Activities - Enterprise Funds
601
-48-
2011 2010 2011 2010 2011 2010
164,987$ 132,939$ 726,134$ 638,830$ -$ -$
24,607 25,114 24,607 25,114 - -
(86,254) (94,821) (328,617) (414,310) (859) (2,058)
(44,265) (39,221) (175,213) (162,301) - -
59,075 24,011 246,911 87,333 (859) (2,058)
- - 48,555 45,226 - -
- - 56,226 23,928 (13,676) -
(56,226) (23,928) (56,226) (23,928) 13,676 -
- - 50,000 50,000 60,388 -
(56,226) (23,928) 98,555 95,226 60,388 -
- - (12,831) (33,320) (28,664) (11,164)
- - 75,885 80,400 - -
- - (40,000) (35,000) - -
- - (190,905) (191,955) - -
- - (167,851) (179,875) (28,664) (11,164)
468 (83) 10,789 11,129 435 956
3,317 - 188,404 13,813 31,300 (12,266)
- - 594,633 580,820 47,734 60,000
3,317$ -$ 783,037$ 594,633$ 79,034$ 47,734$
Governmental Activities
701, 702, 703
Internal Service Funds
603
Storm Sewer
Business-type Activities - Enterprise Funds
Totals
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CITY OF LAKE ELMO, MINNESOTA
STATEMENTS OF CASH FLOWS - CONTINUED
PROPRIETARY FUNDS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES
Operating income (loss)(120,983)$ (182,386)$ (20,785)$ (13,005)$
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities
Depreciation 324,192 324,818 8,740 8,740
Other income related to operations - - - -
(Increase) decrease in assets
Accounts receivable (39,807) (68,946) 8,670 (18,425)
Special assessments 12,293 27,395 - -
Due from other governments - - - -
Increase (decrease) in liabilities
Accounts payable 17,024 (2,183) (543) 929
Accrued salaries payable (315) 297 (67) 81
Due to other governments 2,797 (16,242) - -
Other postemployment benefits payable 1,639 1,596 409 405
Compensated absences payable (4,637) 253 (791) (5)
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 192,203$ 84,602$ (4,367)$ (21,280)$
SCHEDULE OF NONCASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Capital contributions 5,267$ 187,401$ -$ -$
Capital assets purchased on account -$ 4,148$ -$ -$
Amortization of deferred charges 7,418$ 7,418$ -$ -$
Amortization of bond premium 711$ 711$ -$ -$
The notes to the financial statements are an integral part of this statement.
Business-type Activities - Enterprise Funds
Water
601
Sewer
602
-50-
2011 2010 2011 2010 2011 2010
92,735$ 34,041$ (49,033)$ (161,350)$ (63,842)$ (58,877)$
15,187 15,188 348,119 348,746 55,202 56,819
17,000 32,721 17,000 32,721 - -
(35,119) (52,486) (66,256) (139,857) - -
(35,146) - (22,853) 27,395 - -
7,607 (7,607) 7,607 (7,607) - -
(76) 1,502 16,405 248 7,781 -
(286) 143 (668) 521 - -
18 18 2,815 (16,224) - -
615 600 2,663 2,601 - -
(3,460) (109) (8,888) 139 - -
59,075$ 24,011$ 246,911$ 87,333$ (859)$ (2,058)$
4,370$ 158,546$ 9,637$ 345,947$ -$ -$
-$ -$ -$ 4,148$ -$ 15,706$
-$ -$ 7,418$ 7,418$ -$ -$
-$ -$ 711$ 711$ -$ -$
Business-type Activities - Enterprise Funds
TotalStorm Sewer
603
Governmental Activities
701, 702, 703
Internal Service Funds
-51-
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
DECEMBER 31, 2011
ASSETS
Cash and temporary investments 335,255$
Accounts receivable 128
TOTAL ASSETS 335,383$
LIABILITIES
Accounts payable 5,000$
Deposits payable 330,383
TOTAL LIABILITIES 335,383$
The notes to the financial statements are an integral part of this statement.
Agency Funds
-52-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting entity
The City of Lake Elmo (the City), Minnesota, operates under “Optional Plan A” as defined in the State of Minnesota
statutes. The City is governed by an elected Mayor and a four-member Council. The Council exercises legislative
authority and determines all matters of policy. The Council appoints personnel responsible for the proper administration
of all affairs relating to the City. The City has considered all potential units for which it is financially accountable, and
other organizations for which the nature and significance of their relationship with the City are such that exclusion would
cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board
(GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a
voting majority of an organization’s governing body, and (1) the ability of the primary government to impose its will on
that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial
burdens on the primary government. The City has no component units.
B. Government-wide and fund financial statements
The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report
information on all of the nonfiduciary activities of the primary government. 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 or segment are offset
by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. 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 segment and 2) grants and contributions that are restricted to meeting the
operational or capital requirements of a particular function or segment. Taxes and other items not properly included
among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental and proprietary funds and fiduciary funds, even though the
latter are excluded from the government-wide financial statements. Major individual governmental funds and major
individual enterprise 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, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded
when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenues in the year for which they are levied. 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. For this purpose, the City considers revenues to be available if they are collected
within 60 days 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, as well as expenditures related to compensated absences
and claims and judgments, are recorded only when payment is due.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Property taxes, franchise taxes, license 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. Only the portion of special
assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available only when cash is received by the
City.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is
recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the
year in which the resources are measurable and become available.
Non-exchange transactions, in which the City receives value without directly giving equal value in return, include
property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the
year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange
transactions must also be available before it can be recognized.
Deferred revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as deferred revenue. On the modified
accrual basis, receivables that will not be collected within the available period have also been reported as deferred
revenue in the fund financial statements.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
The City reports the following major governmental funds:
The General fund is the government’s primary operating fund. It accounts for all financial resources of the City,
except those required to be accounted for in another fund.
The Debt Service fund accounts for the resources accumulated and payments made for principal and interest on
long-term general obligation debt of governmental funds.
The Village Project fund accounts for engineering, planning and financing of the village area developments and
redevelopments.
The 2011 Street Improvements fund accounts for the accumulation of resources and costs associated with the
2011 Street Improvement project.
The City reports the following major proprietary funds:
The Water fund accounts for the activities of the City’s water distribution operations.
The Sewer fund accounts costs associated with the City’s sewer system.
The Storm Sewer fund accounts costs associated with the City’s storm sewer system, which are financed by the
storm sewer surcharge.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Additionally, the City reports the following fund types:
Internal Service funds are used to account for the replacement of radios, Information Technology (IT), and
Furniture, Fixture, and Equipment (FFE) expenses of the governmental activities. Internal service funds operate in a
manner similar to enterprise funds; however, they accumulate funding primarily from other departments within the
City on a cost reimbursement basis.
Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others.
The Agency funds are custodial in nature and do not present results of operations or have a measurement focus.
Agency funds are accounted for using the modified accrual basis of accounting. These funds are used to account for
assets that the City holds for others in an agency capacity.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed
in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict
with or contradict guidance of GASB. Governments also have the option of following subsequent private-sector
guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not
to follow subsequent private-sector guidance.
As a general rule the effect of interfund activity has been eliminated from government-wide financial statements.
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. Likewise, general
revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges to
customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
D. Assets, liabilities, and net assets or equity
Deposits and investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments
with original maturities of three months or less from the date of acquisition.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of
the funds.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
The City may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received
the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have
a final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations
rated “AA” or better.
4. General obligations of the Minnesota Housing Finance Agency rated “A” or better.
5. Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System.
6. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less.
7. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a “depository” by the government entity, 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, or certain Minnesota securities broker-dealers.
8. Guaranteed investment contracts (GIC’s) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
Investments for the City are reported at fair value. The broker money market investment pool operates in accordance
with appropriate State laws and regulations. The reported value of the pool is the same as the fair value of the pool share.
Property taxes
The Council annually adopts a tax levy in December and certifies it to the County for collection the following year. The
County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on taxable
property within the City on January 1 and are payable by the property owners in two installments. The taxes are collected
by the County Treasurer and tax settlements are made to the City during January, July and December each year.
Taxes payable on homestead property, as defined by Minnesota statutes, were partially reduced by a market value credit
aid. The credit is paid to the City by the State in lieu of taxes levied against the homestead property. The State remits this
credit in two equal installments in October and December each year.
Delinquent taxes receivable include the past six years’ uncollected taxes. Delinquent taxes have been offset by a deferred
revenue liability for taxes not received within 60 days after year end in the fund financial statements.
Accounts receivable
Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund
receivables are also included for services provided in 2011. The City annually certifies delinquent water, sewer, and
storm sewer accounts to the County for collection in the following year. Therefore, there has been no allowance for
doubtful accounts established.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Special assessments
Special assessments represent the financing for public improvements paid for by benefiting property owners. These
assessments are recorded as receivables upon certification to the County. Special assessments are recognized as revenue
when they are annually certified to the County or received in cash or within 60 days after year end. All governmental
special assessments receivable are offset by a deferred revenue liability in the fund financial statements.
Interfund receivables and payables
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal
year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from
other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported
as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as “internal balances.”
Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in the
General fund to indicate that they are not available for appropriation and are not expendable available financial
resources.
Prepaid items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in
both government-wide and fund financial statements.
Capital assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and
similar items) are reported in the applicable governmental or business-type activities columns in the government-wide
financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000
(amount not rounded) and an estimated useful life in excess of three years. Donated capital assets are recorded at
estimated fair market value at the date of donation.
In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the
City chose to include all such items regardless of their acquisition date or amount. The City was able to estimate the
historical cost for the initial reporting of these assets through backtrending (i.e., estimating the current replacement cost
of the infrastructure to be capitalized and using an appropriate price-level index to deflate the cost to the acquisition
year). As the City constructs or acquires additional capital assets each period, including infrastructure assets, they are
capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs which are
essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency of the item or extend
its useful life beyond the original estimate.
Interest incurred during the construction phase of capital assets of business-type activities is included as part of the
capitalized value of the assets constructed.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives:
Useful Lives
Assets in Years
Buildings and improvements 10 - 40
Improvements other than buildings 15 - 30
Machinery and equipment 3 - 15
Infrastructure 20 - 60
Compensated absences
It is the City’s policy to permit employees to accumulate a limited amount of earned but unused personal time off. An
employee leaving the service of the City in good standing will be compensated 100 percent for personal time off accrued,
not to exceed 240 hours, to the day of separation provided the said employee has served at least twelve consecutive
months prior to separation and has given the City at least two weeks’ notice prior to the effective date of such separation.
In governmental fund types, the cost of these benefits is recognized when payments are made to the employees. The
General fund normally liquidates liabilities for governmental compensated absences, while the enterprise funds normally
liquidate liabilities for business-type compensated absences.
Postemployment benefits other than pensions
Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue
coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must be
receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group
plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent
coverage immediately before retirement. All premiums are funded on a pay-as-you-go basis. The liability was
determined using the alternative measurement method, in accordance with GASB Statement 45, at January 1, 2009.
Long-term obligations
In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt
and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type
activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are
deferred and amortized over the life of the bonds using the straight-line method.
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.
-58-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Fund balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which
the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These
classifications are defined as follows:
Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items.
Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or
constraints imposed by state statutory provisions.
Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of
the City Council (the Council), which is the City’s highest level of decision-making authority. Committed amounts
cannot be used for any other purpose unless the Council modifies or rescinds the commitment by resolution.
Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than
the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable
and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established
by the Council itself or by an official to which the governing body delegates the authority. The Council has adopted
a fund balance policy which delegates the authority to assign amounts for specific purposes to the City
Administrator or his/her designee.
Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.
The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available.
Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund
balance when expenditures are made.
The City has formally adopted a fund balance policy for the General fund. The City’s policy is to maintain a minimum
unassigned fund balance of 50 percent of the following year’s budgeted expenditures for cash-flow timing needs.
Net assets
In the government-wide and proprietary fund financial statements, net assets represent the difference between assets and
liabilities. Net assets are displayed in three components:
a. Invested in capital assets, net of related debt - Consists of capital assets, net of accumulated depreciation
reduced by any outstanding debt attributable to acquire capital assets.
b. Restricted net assets - Consist of net assets restricted when there are limitations imposed on their use through
external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net assets - All other net assets that do not meet the definition of “restricted” or “invested in capital
assets, net of related debt”.
Comparative data/reclassifications
Comparative total data for the prior year have been presented only for the individual enterprise funds in the fund
financial statements in order to provide an understanding of the changes in the financial position and operations of these
funds. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with the current
year’s presentation.
-59-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgetary information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. All annual appropriations lapse at fiscal year-end. The City does not use encumbrance
accounting.
In August of each year, all departments of the City submit requests for appropriations to the City Administrator so that a
budget may be prepared. Before September 15th, the proposed budget is presented to the Council for review. The Council
adopts a preliminary maximum budget. Truth-in-taxation notices are mailed out to residents by Washington County. The
Council holds public hearings and adopts a budget and tax levy in December.
The appropriated budget is prepared by fund, function and department. The City’s department heads may make transfers
of appropriations within a department. Transfers of appropriations between departments require the approval of the
Council. The legal level of budgetary control (i.e., the level at which expenditures may not legally exceed
appropriations) is the department level. Budgeted amounts are as originally adopted, or as amended by the Council. No
budget amendments were made during 2011.
B. Deficit fund equity
The following funds had deficits at December 31, 2011:
Amount
Major
Village Project 1,205,398$
Nonmajor
Library 7,483
Manning Avenue / Highway 36 6,794
2012 Street Improvements 10,650
South of 10th Street 123,429
Fund
The City plans to eliminate the deficits through future taxes, charges for services, transfers and other revenue collections.
Note 3: DETAILED NOTES ON ALL FUNDS
A. Deposits and investments
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City’s deposits and
investments may not be returned or the City will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at
those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market value of
collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.
-60-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Authorized collateral in lieu of a corporate surety bond includes:
United States government Treasury bills, Treasury notes, Treasury bonds;
Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
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;
General obligation securities of a local government with taxing powers may be pledged as collateral against
funds deposited by that same local government entity;
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
Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the City.
At year end, the City’s carrying amount of deposits was $1,609,367 and the bank balance was $1,644,625. Of the bank
balance, $500,000 was covered by federal depository insurance. The remaining balance was covered by collateral held in
the City’s name.
Investments
The investments of the City are subject to the following risks:
Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
Ratings are provided by various credit rating agencies and where applicable, indicate associated credit risk.
Minnesota statutes limit the City’s investments to the list on page 56 of the notes.
Custodial Credit Risk is the risk that, in the event of the failure of the counterparty to a transaction, a
government will not be able to recover the value of investment or collateral securities that are in the possession
of an outside party.
Concentration of Credit Risk is the risk of loss attributed to the magnitude of a government’s investment in a
single issuer. The City places no limit on the amount that may be invested in any one issuer. As of
December 31, 2011 the City had invested 5 percent or more of its total investment portfolio in the following
issuer: Fox Valley Park District of Illinois – 6.8 percent.
Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair value of an investment.
The City does not currently have a formal investment policy that addresses the above mentioned risks.
-61-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
At year end, the City’s investment balances were as follows:
Fair Value
Credit Segmented and
Quality/Time Carrying
Ratings (1)Distribution (2)Amount
Pooled investments
Brokered money markets N/A Less than 6 months 973,925$
Non-pooled investments
Brokered certificates of deposit N/A Less than 6 months 586,575
Brokered certificates of deposit N/A 6 months to 1 year 502,484
Brokered certificates of deposit N/A 1 to 3 years 595,391
U.S. Treasuries AAA Less than 6 months 18,105
U.S. Treasuries AAA 6 months to 1 year 18,124
U.S. Treasuries AAA 1 to 3 years 2,863,151
Municipal bonds AA2 1 to 3 years 805,776
U.S. Government Agencies AAA More than 3 years 581,888
Total investments 6,945,419$
Type of Investment
(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable or available.
A reconciliation of cash and temporary investments as shown on the Statement of Net Assets for the City follows:
Carrying amount of deposits 1,609,367$
Investments 6,945,419
Petty cash 250
Total 8,555,036$
Government-wide
Cash and temporary investments 5,320,401$
Cash with fiscal agent 2,899,380
Fiduciary
Cash and temporary investments 335,255
Total 8,555,036$
B. Deferred revenue
Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be
available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection
with resources that have been received, but not yet earned.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
At the end of the current fiscal year, the various components of deferred and unearned revenue reported in the
governmental funds were as follows:
Unavailable Unearned
General
Delinquent taxes receivable 102,760$ -$
Unspent grant proceeds - 36,740
Debt Service
Special assessments receivable 148,508 -
Due from other governments - state contributions 340,000 -
Nonmajor governmental
Special assessments receivable 83,559 -
Total 674,827$ 36,740$
Fund
C. Capital assets
Capital asset activity for the City for the year ended December 31, 2011 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land 3,439,986$ 13,993$ -$ 3,453,979$
Construction in progress 1,896,763 790,875 (1,289,675) 1,397,963
Total capital assets
not being depreciated 5,336,749 804,868 (1,289,675) 4,851,942
Capital assets being depreciated
Buildings 3,388,076 5,270 - 3,393,346
Improvements other than buildings 1,151,029 48,512 - 1,199,541
Machinery and equipment 2,616,535 48,404 - 2,664,939
Infrastructure 4,616,198 1,258,204 - 5,874,402
Total capital assets being depreciated 11,771,838 1,360,390 - 13,132,228
Less accumulated depreciation for
Buildings (551,178) (77,459) - (628,637)
Improvements other than buildings (578,189) (63,020) - (641,209)
Machinery and equipment (1,603,606) (122,405) - (1,726,011)
Infrastructure (724,357) (340,140) - (1,064,497)
Total accumulated depreciation (3,457,330) (603,024) - (4,060,354)
Total capital assets
being depreciated, net 8,314,508 757,366 - 9,071,874
Governmental activities
capital assets, net 13,651,257$ 1,562,234$ (1,289,675)$ 13,923,816$
-63-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
Beginning Ending
Balance Increases Decreases Balance
Business-type activities
Capital assets not being depreciated
Land 36,573$ -$ -$ 36,573$
Construction in progress 407,463 18,320 - 425,783
Total capital assets
not being depreciated 444,036 18,320 - 462,356
Capital assets being depreciated
Machinery and equipment 282,860 - - 282,860
Infrastructure 12,688,029 - - 12,688,029
Total capital assets being depreciated 12,970,889 - - 12,970,889
Less accumulated depreciation for
Machinery and equipment (116,283) (20,011) - (136,294)
Infrastructure (1,913,169) (328,108) - (2,241,277)
Total accumulated depreciation (2,029,452) (348,119) - (2,377,571)
Total capital assets
being depreciated, net 10,941,437 (348,119) - 10,593,318
Business-type activities
capital assets, net 11,385,473$ (329,799)$ -$ 11,055,674$
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities
General government 32,441$
Public safety 107,669
Public works 396,724
Culture and recreation 66,190
Total depreciation expense - governmental activities 603,024$
Business-type activities
Water 324,192$
Sewer 8,740
Storm sewer 15,187
Total depreciation expense - business-type activities 348,119$
-64-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
D. Interfund receivables, payables and transfers
At December 31, 2011, the balance of the interfund loans from the General fund to the nonmajor governmental funds
was $129,067. These were done to fund deficit cash balances.
The City established an interfund loan from the General fund to the Village Project fund. At December 31, 2011, the
outstanding balance was $1,205,398. The loan carries an interest rate of 4 percent.
Interfund transfers
Nonmajor
Village Governmental
Debt Service Project Funds
Transfers out
General -$ -$ 120,117$
Debt Service - - 35,948
Nonmajor Governmental 11,650 37,257 -
Total 11,650$ 37,257$ 156,065$
Internal
Service Water
Funds Enterprise Total
Transfers out
General 60,388$ 50,000$ 230,505$
Debt Service - - 35,948
Nonmajor Governmental - - 48,907
Total 60,388$ 50,000$ 315,360$
Fund
Fund
Transfers in
During the year ended December 31, 2011, the City made the following transfers:
The following transfers were made to close funds: the General transferred $9,117 to close the nonmajor
governmental Development fund, the nonmajor governmental 2010 Street Improvements fund was closed with
a $11,650 transfer to the Debt Service fund, and the 2002 G.O. Improvement Bond Debt Service fund was
closed with a transfer of $35,948 to the nonmajor governmental Infrastructure Reserve fund.
The General fund made the following budgeted transfers: $111,000 to other governmental funds primarily for
future capital purchases and projects, $18,000 to the Internal Service funds for future capital purchases, and
$50,000 to the Water Enterprise fund to aid in offsetting a projected deficit cash balance.
The General fund made a $42,388 transfer to the Internal Service fund for the purchase of fire equipment.
Nonmajor governmental funds transferred $37,257 to the Village Project fund its portion of prior year
engineering costs.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
E. Long-term debt
General obligation (G.O.) bonds
The City issues G.O. bonds to provide funds for the acquisition and construction of major capital facilities. G.O. bonds
have been issued for both general government and proprietary activities. These bonds are reported in the proprietary
funds if they are expected to be repaid from proprietary fund revenues. Additionally, G.O. bonds have been issued to
refund G.O. improvement bonds and G.O. revenue bonds.
G.O. bonds are direct obligations and pledge the full faith and credit of the City.
G.O. improvement bonds
The following bonds have been issued to finance various improvements and will be repaid with special assessment
collections and ad valorem tax levies. All special assessment debt is backed by the full faith and credit of the City. Each
year the combined assessment and tax levy equals 105 percent of the amount required for debt service. The excess of
5 percent is to cover any delinquencies in tax or assessment payments.
Authorized Issue Maturity Balance at
and Issued Date Date Year End
G.O. CIP Bonds,
Series 2004A 4,090,000$ 3.10 - 3.45 %11/01/04 02/01/13 3,205,000$
G.O. Refunding Bonds,
Series 2009A 535,000 2.50 - 3.85 05/01/09 12/01/16 340,000
G.O. Improvement Bonds,
Series 2009B 575,000 2.00 - 3.05 10/01/09 01/15/20 545,000
G.O. Improvement Bonds,
Series 2010A 710,000 0.75 - 2.80 11/15/10 02/01/21 710,000
G.O. CIP Crossover Refunding
Bonds, Series 2010B 1,970,000 1.00 - 3.20 11/15/10 02/01/25 1,970,000
G.O. Improvement Bonds,
Series 2011A 845,000 .50 - 2.30 10/01/11 02/01/22 845,000
Total G.O. improvement bonds 7,615,000$
Interest
RateDescription
The annual debt service to maturity for G.O. improvement bonds are as follows:
Year Ending
December 31,Principal Interest Total
2012 360,000$ 219,413$ 579,413$
2013 3,300,000 153,411 3,453,411
2014 415,000 86,735 501,735
2015 430,000 80,100 510,100
2016 435,000 72,216 507,216
2017-2021 1,855,000 234,581 2,089,581
2022-2025 820,000 47,378 867,378
Total 7,615,000$ 893,834$ 8,508,834$
Governmental Activities
-66-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
G.O. equipment certificates of indebtedness
G.O. equipment certificates of indebtedness are direct obligations and pledge the full faith and credit of the City. The
bonds have been issued to finance capital acquisitions. They will be repaid with ad valorem tax levies. G.O. equipment
certificates of indebtedness currently outstanding are as follows:
Authorized Issue Maturity Balance at
and Issued Date Date Year End
G.O. Equipment Certificates
of Indebtedness,
Series 2006A 443,000$ 3.65-4.00 %03/08/06 12/01/15 196,000$
Interest
RateDescription
The annual debt service to maturity for G.O. equipment certificates of indebtedness are as follows:
Year Ending
December 31,Principal Interest Total
2012 46,000$ 7,840$ 53,840$
2013 48,000 6,000 54,000
2014 50,000 4,080 54,080
2015 52,000 2,080 54,080
Total 196,000$ 20,000$ 216,000$
Governmental Activities
G.O. revenue bonds
The following bonds were issued to finance capital improvements in the Water enterprise fund. They will be repaid from
future net revenues pledged from the Water fund and are backed by the taxing power of the City. Annual principal and
interest payments on the bonds are expected to require nearly 45 percent of net revenues from the Water fund. For 2011,
principal and interest paid and total customer net revenues for the Water fund were $230,905 and $517,814, respectively.
Authorized Issue Maturity Balance at
and Issued Date Date Year End
G.O. Revenue Bonds
G.O. Water Revenue
Bonds - 2005A 4,600,000$ 3.50 - 4.30 %08/10/05 12/01/30 4,200,000$
G.O. Refunding Bonds,
Series 2009A 515,000 3.00 - 3.85 05/01/09 12/01/21 440,000
Total G.O. revenue bonds 4,640,000$
Rate
Interest
Description
-67-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
The annual debt service to maturity for G.O. revenue bonds are as follows:
Year Ending
December 31,Principal Interest Total
2012 40,000$ 189,705$ 229,705$
2013 165,000 188,705 353,705
2014 190,000 183,130 373,130
2015 190,000 176,530 366,530
2016 190,000 169,580 359,580
2017-2021 1,090,000 731,464 1,821,464
2022-2026 1,400,000 484,725 1,884,725
2027-2030 1,375,000 151,787 1,526,787
Total 4,640,000$ 2,275,626$ 6,915,626$
Business-type Activities
Changes in long-term liabilities
Long-term liability activity for the year ended December 31, 2011 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
Bonds payable
G.O. improvement bonds 7,070,000$ 845,000$ (300,000)$ 7,615,000$ 360,000$
G.O. equipment certificates
of indebtedness 240,000 - (44,000) 196,000 46,000
Total bonds payable 7,310,000 845,000 (344,000) 7,811,000 406,000
Unamortized premium on bonds 17,553 - (2,416) 15,137 -
Other postemployment
benefits payable 28,888 14,673 - 43,561 -
Compensated absences
payable 67,747 38,980 (64,996) 41,731 8,346
Governmental activity
long-term liabilities 7,424,188$ 898,653$ (411,412)$ 7,911,429$ 414,346$
Business-type activities
Bonds payable
G.O. revenue bonds 4,680,000$ -$ (40,000)$ 4,640,000$ 40,000$
Unamortized premium on bonds 7,819 - (711) 7,108 -
Other postemployment
benefits payable 5,172 2,663 - 7,835 -
Compensated absences
payable 19,070 9,511 (18,399) 10,182 2,037
Business-type
long-term liabilities 4,712,061$ 12,174$ (59,110)$ 4,665,125$ 42,037$
-68-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED
F. Components of fund balance
At December 31, 2011, portions of the City’s fund balance are not available for appropriation due to not being in
spendable form (Nonspendable), legal restrictions (Restricted), City Council action (Committed), policy and/or intent
(Assigned). The following is a summary of the components of fund balance:
2011 Other
Debt Street Governmental
General Service Improvement Funds Total
Nonspendable for
Prepaid items $ 811 $ - $ - $ - $ 811
Advance to other funds 1,205,398 - - - 1,205,398
Total nonspendable $ 1,206,209 $ - $ - $ - $ 1,206,209
Restricted for
Debt service $ - $ 3,534,742 $ - $ - $ 3,534,742
Street improvement - - 184,946 - 184,946
Park improvements - - - 700,975 700,975
City facilities - - - 271,085 271,085
Total restricted $ - $ 3,534,742 $ 184,946 $ 972,060 $ 4,691,748
Committed to
Fall festival $ - $ - $ - $ 7,114 $ 7,114
Assigned to
Park improvements $ - $ - $ - $ 251,666 $ 251,666
Infrastructure reserve - - - 49,259 49,259
Vehicle acquisition - 353,433 353,433
Total assigned $ - $ - $ - $ 654,358 $ 654,358
Note 4: DEFINED PENSION PLANS - STATEWIDE
A. Plan description
All full-time and certain part-time employees of the City are covered by defined benefit plans administered by the Public
Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund
(GERF), which is a cost-sharing, multiple-employer retirement plan. This plan is established and administered in
accordance with Minnesota statutes, chapters 353 and 356.
GERF 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 Minnesota 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.
-69-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 4: DEFINED PENSION PLANS - STATEWIDE - CONTINUED
Two methods are used to compute benefits for PERA’s Coordinated and Basic Plan members. The retiring member
receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under
Method 1, the annuity accrual rate for a Basic Plan member is 2.20 percent of average salary for each of the first 10 years
of service and 2.70 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is
1.20 percent of average salary for each of the first 10 years and 1.70 percent for each remaining year. Under Method 2,
the annuity accrual rate is 2.70 percent of average salary for Basic Plan members and 1.70 percent for Coordinated Plan
members for each year of service. For all GERF members hired prior to July 1, 1989 whose annuity is calculated using
Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 65 for Basic and
Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security
benefits capped at 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also
available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life annuity is a lifetime annuity
that ceases upon the death of the retiree -- no survivor annuity is payable. There are also various types of joint and
survivor annuity options available which will be payable over joint lives. Members may also leave their contributions in
the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of
contributions are available at any time to members who leave public service, but before retirement benefits begin.
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 GERF. That report may be obtained on the Internet at www.mnpera.org, 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 City makes annual contributions to the pension plans equal to the amount
required by Minnesota statutes. GERF Basic Plan members and Coordinated Plan members were required to contribute
9.10 percent and 6.25 percent, respectively, of their annual covered salary in 2011. In 2011, the City was required to
contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan GERF members and
7.25 percent for Coordinated Plan GERF members. The City’s contributions to the GERF for the years ending
December 31, 2011, 2010 and 2009 were $56,576, $52,277, and $56,136, respectively. The City’s contributions were
equal to the contractually required contributions for each year as set by Minnesota statute.
Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
A. Plan description
The City administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides
healthcare insurance for eligible retirees and their spouses through the City’s group health insurance plan until Medicare
age, which covers both active and retired members. There are 10 active participants. Benefit provisions are established
by the Council. The Retiree Health Plan does not issue a publicly available financial report.
B. Funding policy
The City has historically funded these liabilities on a pay-as-you-go basis. Contribution requirements are negotiated
between the City and union representatives on a per contract basis. At the present time, no retiree benefits are provided
except the allowance to continue health insurance that is mandated by Minnesota Law. The City does not contribute any
of the cost of current-year premiums for eligible retired plan members or their spouses. For fiscal year 2011, the City did
not contribute anything to the plan. Plan members receiving benefits contribute 100 percent of their premium costs.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - CONTINUED
C. Annual other postemployment benefit cost and net other postemployment benefit obligation
The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required
contribution of the employer (ARC). The City has elected to calculate the ARC and related information using the
alternative measurement method permitted by GASB Statement No. 45 for employers in plans with fewer than one
hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to
exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount
actually contributed to the plan, and changes in the City’s net OPEB obligation:
Annual required contribution 16,929$
Interest on net OPEB obligation 1,703
Adjustment to annual required contribution (1,296)
Annual OPEB cost (expense)17,336
Contributions made -
Increase in net OPEB obligation 17,336
Net OPEB obligation, January 1 34,060
Net OPEB obligation, December 31 51,396$
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation
for fiscal years ended 2011, 2010, and 2009 are as follows:
Year Annual Net OPEB
Ending OPEB Cost Obligation
12/31/11 17,336$ - %51,396$
12/31/10 17,131 - 34,060
12/31/09 16,929 - 16,929
Trend Information
Percentage
Annual OPEB
Contributed
D. Funded status and funding progress
As of January 1, 2009, the actuarial accrued liability for benefits was $112,761, all of which was unfunded. The covered
payroll (annual payroll of active employees covered by the plan) was $892,528, and the ratio of the unfunded actuarial
accrued liability to the covered payroll was 12.6 percent.
The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and
the annual required contributions of the employer are subject to continual revision as actual results are compared with
past expectations and new estimates are made about the future. The schedule of funding progress, presented as required
supplementary information following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities
for benefits.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - CONTINUED
E. Methods and assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and plan members) and include the types of benefits provided at the time of each valuation and the historical
pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
The following simplifying assumptions were made:
Retirement age for active employees - Based on the historical average retirement age for the covered group, active
plan members were assumed to retire at age 63, or at the first subsequent year in which the member would qualify
for benefits. In addition, spouses of retired employees were assumed to continue on the plan for the lesser of
eighteen months after the retired employee reaches Medicare age of until the spouse reaches Medicare age.
Marital status - Marital status of members at the calculation date was assumed to continue throughout retirement.
Mortality - Life expectancies were based on mortality tables from the National Center for Health Statistics. The
2004 United States Life Tables for Males and for Females were used.
Turnover - Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for
assigning active members a probability of remaining employed until the assumed retirement age and for developing
an expected future working lifetime assumption for purposes of allocating to periods the present value of total
benefits to be paid.
Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums was based on
projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 2.0 percent
initially, rose to an ultimate rate of 6.0 percent after six years, was used.
Health insurance premiums - 2008 and 2009 health insurance premiums for retirees were used as the basis for
calculation of the present value of total benefits to be paid.
Inflation rate - The expected long-term inflation assumption of 4.09 percent was based on projected changes in the
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in The 2008 Annual Report of the
Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds for an
intermediate growth scenario.
Payroll growth rate - The expected long-term payroll growth rate was assumed to equal the rate of inflation.
Based on the historical and expected returns of the City’s short-term investment portfolio, a discount rate of 5.0 percent
was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial
accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining
amortization period at December 31, 2011, was thirty years.
-72-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 6: LAKE ELMO VOLUNTEER FIREFIGHTER’S RELIEF ASSOCIATION
A. Plan description
All members of the Lake Elmo Fire Department (Department) are covered by a defined benefit plan administered by the
Lake Elmo Firemen’s Relief Association (Association). The plan is a single employer retirement plan and is established
and administered in accordance with Minnesota statute, chapter 69.
The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the
Department’s membership. Funding for the Association is derived from an insurance premium tax in accordance with the
Volunteer Firefighter’s Relief Association Financing Guidelines Act of 1971 (chapter 261 as amended by chapter 509 of
Minnesota statutes 1980). Funds are also derived from investment income.
The Association issues a publicly available financial report that includes financial statements and required supplementary
information. The report may be obtained by writing to Lake Elmo Firefighter’s Relief Association, 3800 Laverne
Avenue North, Lake Elmo, Minnesota 55042.
B. Funding policy
The financial requirements of the Special fund are determined in accordance with Minnesota statutes, section 69.772,
which requires the payment of pension benefits in a lump sum or optionally in annual installments. The benefits are
payable after age 50, 20 years of service, and 10 years of Association membership or upon death. The City’s annual
pension cost for the current year and related information for the plan is as follows:
Annual pension cost 47,867$
Contributions made
City 7,175
State aid 40,692
Actuarial valuation date 12/31/11
Actuarial cost method Entry age normal
Amortization method Level dollar closed
Remaining amortization period
Normal cost 20 years
Prior service cost 10 years
Asset valuation method Fair value
Actuarial assumptions
Investment rate of return 5%
Projected salary increases N/A
Inflation rate N/A
Cost of living adjustments None
Annual
Year Pension Net Pension
Ending Cost (APC)Obligation
12/31/11 47,867$ 100.0 %-$
12/31/10 55,081 100.0 -
12/31/09 36,217 100.0 -
Contributed
of APC
Percentage
Three Year Trend Information
-73-
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 7: DEFERRED COMPENSATION PLANS - STATEWIDE
Plan description
Under Minnesota statute 353.028, subdivision 2, City managers or administrators may elect to be excluded from membership
in PERA. They must choose exclusion within six months of the day they begin employment. The law also provides for
refunds of contributions made before the election. If they elect exclusion, they and their cities may agree that the cities will
defer and contribute additional compensation on behalf of the employees to a deferred compensation program. The program
must meet federal income tax laws. The City contribution cannot exceed the amount it would have made under the PERA
contribution.
The City Administrator is covered by deferred compensation plan 457(b) administered by ICMA-RC. The City contributed
$6,230, $6,759 and $1,428 for the years ended December 31, 2011, 2010, and 2009, respectively.
In general, any amount of compensation deferred, and any income attributable to the amounts so deferred, shall be includible
in gross income only for the taxable year in which such compensation or other income is paid to the participant or other
beneficiary.
Under federal requirements, a plan meets distribution requirements if under the plan amounts will not be made available to
participants or beneficiaries earlier than (i) the calendar year in which the participant attains age 70 ½, (ii) when the
participant has a severance from employment with the employer, or (iii) when the participant is faced with an unforeseeable
emergency (determined in the manner prescribed by the Secretary in regulations).
ICMA-RC issues a publicly available financial report that includes financial statements and required supplementary
information for the 457(b) plan. That report may be obtained by writing to ICMA-RC Headquarters, 777 North Capitol
Street, NE Washington, DC 20002 or by calling 202-962-4600.
Note 8: OTHER INFORMATION
A. Legal debt margin
In accordance with Minnesota statutes, the City may not incur or be subject to net debt in excess of three percent of the
market value of taxable property within the City. Net debt is payable solely from ad valorem taxes and therefore,
excludes debt financed partially or entirely by special assessments, enterprise fund revenues or tax increments. The
market value of taxable property totaled $1,142,936,500 for an allowable margin of $34,288,095. As of
December 31, 2011, the City has $196,000 of debt subject to this limit.
B. Risk management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance
through participation in the League of Minnesota Cities Insurance Trust (LMCIT), which is a risk sharing pool with
approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City’s coverage
in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City’s
management is not aware of any incurred but not reported claims.
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CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2011
Note 9: ACCOUNTING CHANGE
GASB Statement 54 “Fund Balance Reporting and Governmental Fund Type Definitions” enhances the usefulness of fund
balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying
the existing governmental fund type definitions. The City implemented this standard for fiscal year end December 31, 2011.
Changes to governmental fund type fund balance reporting is reflected in the financial statements and schedules and related
disclosures are included in Note 1 and Note 3.
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INTENTIONALLY
-76-
REQUIRED SUPPLEMENTARY
INFORMATION
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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THIS PAGE IS LEFT BLANK
INTENTIONALLY
-78-
CITY OF LAKE ELMO, MINNESOTA
REQUIRED SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 2011
Schedule of Funding Progress for the Postemployment Benefit Plan
Unfunded
Actuarial
Actuarial Actuarial Actuarial Accrued
Valuation Value of Accrued Liability Covered
Date Assets Liability (UAAL)Payroll
01/01/09 -$ 112,761$ 112,761$ - %892,528$ 12.6 %
Funded
Ratio Payroll
of Covered
Percentage
UAAL as a
Schedule of Funding Progress for the Lake Elmo Volunteer Firefighter’s Relief Association Pension Plan
Assets in
Excess of Pension
Actuarial Actuarial Actuarial (Unfunded)Benefit
Valuation Value of Accrued Accrued Per Year
Date Assets Liability Liability of Service
12/31/11 *****
12/31/10 846,373$ 715,984$ 130,389$ 118.2 %3,100$
12/31/09 920,405 857,341 63,064 107.4 3,100
Funded
Rate
* Information unavailable at the time of publication.
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INTENTIONALLY
-80-
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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CITY OF LAKE ELMO, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2011
Total
Nonmajor
Special Capital Governmental
Revenue Projects Funds
ASSETS
Cash and temporary investments 7,254$ 1,683,186$ 1,690,440$
Receivables
Special assessments
Current - 513 513
Delinquent - 1,006 1,006
Deferred - 48,376 48,376
Special deferred - 34,176 34,176
Due from other governments - 24,367 24,367
TOTAL ASSETS 7,254$ 1,791,624$ 1,798,878$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable 1,985$ 24,091$ 26,076$
Due to other funds 5,638 123,429 129,067
Deposits payable - 75,000 75,000
Deferred revenue - 83,559 83,559
TOTAL LIABILITIES 7,623 306,079 313,702
FUND BALANCES
Restricted - 972,060 972,060
Committed 7,114 - 7,114
Assigned - 654,358 654,358
Unassigned (7,483) (140,873) (148,356)
TOTAL FUND BALANCES (369) 1,485,545 1,485,176
TOTAL LIABILITIES AND FUND BALANCES 7,254$ 1,791,624$ 1,798,878$
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CITY OF LAKE ELMO, MINNESOTA
NONMAJOR GOVERNMENTAL FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2011
Total
Nonmajor
Special Capital Governmental
Revenue Projects Funds
REVENUES
Intergovernmental -$ 31,863$ 31,863$
Special assessments - 35,275 35,275
Investment earnings 226 22,447 22,673
Miscellaneous 8,854 4,000 12,854
TOTAL REVENUES 9,080 93,585 102,665
EXPENDITURES
Current
Culture and recreation 25,699 - 25,699
Capital outlay
General government - 9,067 9,067
Public safety - 20,433 20,433
Public works 25,191 291,162 316,353
Culture and recreation - 45,390 45,390
TOTAL EXPENDITURES 50,890 366,052 416,942
DEFICIENCY OF REVENUES
UNDER EXPENDITURES (41,810) (272,467) (314,277)
OTHER FINANCING SOURCES (USES)
Transfers in 14,117 141,948 156,065
Transfers out - (48,907) (48,907)
TOTAL OTHER FINANCING SOURCES (USES)14,117 93,041 107,158
NET CHANGE IN FUND BALANCES (27,693) (179,426) (207,119)
FUND BALANCES, JANUARY 1 27,324 1,664,971 1,692,295
FUND BALANCES, DECEMBER 31 (369)$ 1,485,545$ 1,485,176$
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CITY OF LAKE ELMO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2011
203 204 206
Fall
Development Festival Library Total
ASSETS
Cash and temporary investments -$ 7,254$ -$ 7,254$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable -$ 140$ 1,845$ 1,985$
Due to other funds - - 5,638 5,638
TOTAL LIABILITIES - 140 7,483 7,623
FUND BALANCES
Committed - 7,114 - 7,114
Unassigned - - (7,483) (7,483)
TOTAL FUND BALANCES - 7,114 (7,483) (369)
TOTAL LIABILITIES AND FUND BALANCES -$ 7,254$ -$ 7,254$
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CITY OF LAKE ELMO, MINNESOTA
NONMAJOR SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2011
203 204 206
Fall
Development Festival Library Total
REVENUES
Investment earnings 101$ 131$ (6)$ 226$
Miscellaneous
Donations - 8,854 - 8,854
TOTAL REVENUES 101 8,985 (6) 9,080
EXPENDITURES
Current
Culture and recreation - 18,222 7,477 25,699
Capital outlay
Public works 25,191 - - 25,191
TOTAL EXPENDITURES 25,191 18,222 7,477 50,890
DEFICIENCY OF REVENUES
UNDER EXPENDITURES (25,090) (9,237) (7,483) (41,810)
OTHER FINANCING SOURCES
Transfers in 9,117 5,000 - 14,117
NET CHANGE IN FUND BALANCES (15,973) (4,237) (7,483) (27,693)
FUND BALANCES, JANUARY 1 15,973 11,351 - 27,324
FUND BALANCES, DECEMBER 31 -$ 7,114$ (7,483)$ (369)$
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CITY OF LAKE ELMO, MINNESOTA
NONMAJOR CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2011
404 409 410 411
Park Infrastructure Vehicle City
Dedication Reserve Acquisition Facilities
ASSETS
Cash and temporary investments 953,780$ 36,682$ 353,433$ 271,085$
Receivables
Special assessments
Current - 513 - -
Delinquent - 1,006 - -
Deferred - 48,376 - -
Special deferred - 34,176 - -
Due from other governments - 24,367 - -
TOTAL ASSETS 953,780$ 145,120$ 353,433$ 271,085$
LIABILITIES AND FUND BALANCES
LIABILITIES
Accounts payable 1,139$ 12,302$ -$ -$
Due to other funds - - - -
Deposits payable - - - -
Deferred revenue - 83,559 - -
TOTAL LIABILITIES 1,139 95,861 - -
FUND BALANCES
Restricted 700,975 - - 271,085
Assigned 251,666 49,259 353,433 -
Unassigned - - - -
TOTAL FUND BALANCES 952,641 49,259 353,433 271,085
TOTAL LIABILITIES AND FUND BALANCES 953,780$ 145,120$ 353,433$ 271,085$
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414 417 419 420
Manning
Avenue/2010 Street 2012 Street South of
Highway 36 Improvements Improvements 10th Street Total
68,206$ -$ -$ -$ 1,683,186$
- - - - 513
- - - - 1,006
- - - - 48,376
- - - - 34,176
- - - - 24,367
68,206$ -$ -$ -$ 1,791,624$
-$ -$ 10,650$ -$ 24,091$
- - - 123,429 123,429
75,000 - - - 75,000
- - - - 83,559
75,000 - 10,650 123,429 306,079
- - - - 972,060
- - - - 654,358
(6,794) - (10,650) (123,429) (140,873)
(6,794) - (10,650) (123,429) 1,485,545
68,206$ -$ -$ -$ 1,791,624$
-87-
CITY OF LAKE ELMO, MINNESOTA
NONMAJOR CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2011
404 409 410 411
Park Infrastructure Vehicle City
Dedication Reserve Acquisition Facilities
REVENUES
Intergovernmental 31,863$ -$ -$ -$
Special assessments - 35,275 - -
Investment earnings 12,823 546 4,854 3,651
Miscellaneous
Other 4,000 - - -
TOTAL REVENUES 48,686 35,821 4,854 3,651
EXPENDITURES
Capital outlay
General government - - - 9,067
Public safety - - 20,433 -
Public works - 166,655 - -
Culture and recreation 45,390 - - -
TOTAL EXPENDITURES 45,390 166,655 20,433 9,067
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 3,296 (130,834) (15,579) (5,416)
OTHER FINANCING SOURCES (USES)
Transfers in - 135,948 6,000 -
Transfers out - - - -
TOTAL OTHER FINANCING SOURCES (USES)- 135,948 6,000 -
NET CHANGE IN FUND BALANCES 3,296 5,114 (9,579) (5,416)
FUND BALANCES, JANUARY 1 949,345 44,145 363,012 276,501
FUND BALANCES, DECEMBER 31 952,641$ 49,259$ 353,433$ 271,085$
-88-
414 417 419 420
Manning
Avenue/2010 Street 2012 Street South of
Highway 36 Improvements Improvements 10th Street Total
-$ -$ -$ -$ 31,863$
- - - - 35,275
907 438 - (772) 22,447
- - - - 4,000
907 438 - (772) 93,585
- - - - 9,067
- - - - 20,433
- 28,457 10,650 85,400 291,162
- - - - 45,390
- 28,457 10,650 85,400 366,052
907 (28,019) (10,650) (86,172) (272,467)
- - - - 141,948
- (11,650) - (37,257) (48,907)
- (11,650) - (37,257) 93,041
907 (39,669) (10,650) (123,429) (179,426)
(7,701) 39,669 - - 1,664,971
(6,794)$ -$ (10,650)$ (123,429)$ 1,485,545$
-89-
CITY OF LAKE ELMO, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF NET ASSETS
DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
ASSETS
CURRENT ASSETS
Cash and temporary investments 12,972$ 20,334$ 23,674$ 18,253$
Due from other funds 13,676 - - -
TOTAL CURRENT ASSETS 26,648 20,334 23,674 18,253
NONCURRENT ASSETS
Capital assets
Machinery and equipment 99,851 99,851 129,195 129,195
Construction in progress - - - -
Less accumulated depreciation (36,751) (28,430) (85,455) (68,809)
Total capital assets (net of accumulated depreciation)63,100 71,421 43,740 60,386
TOTAL ASSETS 89,748 91,755 67,414 78,639
LIABILITIES
CURRENT LIABILITIES
Accounts payable - - - -
Due to other funds - - - -
TOTAL LIABILITIES - - - -
NET ASSETS
Invested in capital assets 63,100 71,421 43,740 60,386
Unrestricted 26,648 20,334 23,674 18,253
TOTAL NET ASSETS 89,748$ 91,755$ 67,414$ 78,639$
Governmental Activities - Internal Service Funds
Radio Replacement
701 702
IT Replacement
-90-
2011 2010 2011 2010
42,388$ 9,147$ 79,034$ 47,734$
- - 13,676 -
42,388 9,147 92,710 47,734
363,153 331,683 592,199 560,729
- 18,512 - 18,512
(225,911) (195,676) (348,117) (292,915)
137,242 154,519 244,082 286,326
179,630 163,666 336,792 334,060
7,781 15,706 7,781 15,706
13,676 - 13,676 -
21,457 15,706 21,457 15,706
137,242 154,519 244,082 286,326
20,931 (6,559) 71,253 32,028
158,173$ 147,960$ 315,335$ 318,354$
Totals
Governmental Activities - Internal Service Funds
703
FFE Replacement
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CITY OF LAKE ELMO, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
OPERATING EXPENSES
Repair and maintenance -$ -$ 859$ 2,058$
Depreciation 8,321 8,321 16,646 18,737
TOTAL OPERATING EXPENSES 8,321 8,321 17,505 20,795
NONOPERATING REVENUES
Investment earnings 314 334 280 311
LOSS BEFORE TRANSFERS (8,007) (7,987) (17,225) (20,484)
TRANSFERS IN 6,000 - 6,000 -
CHANGE IN NET ASSETS (2,007) (7,987) (11,225) (20,484)
NET ASSETS, JANUARY 1 91,755 99,742 78,639 99,123
NET ASSETS, DECEMBER 31 89,748$ 91,755$ 67,414$ 78,639$
Governmental Activities - Internal Service Funds
701 702
Radio Replacement IT Replacement
-92-
2011 2010 2011 2010
7,781$ -$ 8,640$ 2,058$
30,235 29,761 55,202 56,819
38,016 29,761 63,842 58,877
(159) 311 435 956
(38,175) (29,450) (63,407) (57,921)
48,388 - 60,388 -
10,213 (29,450) (3,019) (57,921)
147,960 177,410 318,354 376,275
158,173$ 147,960$ 315,335$ 318,354$
Governmental Activities - Internal Service Funds
Totals
703
FFE Replacement
-93-
CITY OF LAKE ELMO, MINNESOTA
INTERNAL SERVICE FUNDS
COMBINING STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010 2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers -$ -$ (859)$ (2,058)$
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
(Increase) decrease in due from other funds (13,676) - - -
Increase (decrease) in due to other funds - - - -
Transfers from other funds 6,000 - 6,000 -
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACTIVITIES (7,676) - 6,000 -
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Acquisition of capital assets - - - -
CASH FLOWS FROM INVESTING ACTIVITIES
Investment earnings 314 334 280 311
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (7,362) 334 5,421 (1,747)
CASH AND CASH EQUIVALENTS, JANUARY 1 20,334 20,000$ 18,253 20,000$
CASH AND CASH EQUIVALENTS, DECEMBER 31 12,972$ 20,334$ 23,674$ 18,253$
RECONCILIATION OF OPERATING LOSS TO
NET CASH USED BY OPERATING ACTIVITIES
Operating loss (8,321)$ (8,321)$ (17,505)$ (20,795)$
Adjustments to reconcile operating loss to
net cash used by operating activities
Depreciation 8,321 8,321 16,646 18,737
Increase (decrease) in liabilities
Accounts payable - - - -
NET CASH USED BY
OPERATING ACTIVITIES -$ -$ (859)$ (2,058)$
SCHEDULE OF NONCASH CAPITAL AND
RELATED FINANCING ACTIVITIES
Capital assets purchased on account -$ -$ -$ -$
Governmental Activities - Internal Service Funds
701 702
Radio Replacement IT Replacement
-94-
2011 2010 2011 2010
-$ -$ (859)$ (2,058)$
- - (13,676) -
13,676 - 13,676 -
48,388 - 60,388 -
62,064 - 60,388 -
(28,664) (11,164) (28,664) (11,164)
(159) 311 435 956
33,241 (10,853) 31,300 (12,266)
9,147 20,000$ 47,734 60,000
42,388$ 9,147$ 79,034$ 47,734$
(38,016)$ (29,761)$ (63,842)$ (58,877)$
30,235 29,761 55,202 56,819
7,781 - 7,781 -
-$ -$ (859)$ (2,058)$
-$ 15,706$ -$ 15,706$
Totals
Governmental Activities - Internal Service Funds
703
FFE Replacement
-95-
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES
FOR THE YEAR ENDED DECEMBER 31, 2011
(With comparative totals for the year ended December 31, 2010)
2010
Actual Variance With Actual
Original Final Amounts Final Budget Amounts
REVENUES
Taxes
Property 2,452,261$ 2,452,261$ 2,444,916$ (7,345)$ 2,371,784$
Franchise 37,000 37,000 41,201 4,201 37,725
Total 2,489,261 2,489,261 2,486,117 (3,144) 2,409,509
Licenses and permits
Business 10,360 10,360 13,145 2,785 15,030
Nonbusiness 157,600 157,600 217,274 59,674 246,420
Total 167,960 167,960 230,419 62,459 261,450
Intergovernmental
State
Property tax credits 6,224 6,224 7,879 1,655 7,022
MSA - maintenance 68,500 68,500 83,018 14,518 77,347
Fire state aid 40,000 40,000 40,692 692 36,153
Other 2,749 2,749 25,573 22,824 19,183
County/Local 15,000 15,000 15,588 588 15,588
Total 132,473 132,473 172,750 40,277 155,293
Charges for services 8,400 8,400 14,691 6,291 11,616
Fines and forfeits 52,000 52,000 63,819 11,819 68,897
Investment earnings 50,000 50,000 59,413 9,413 59,711
Miscellaneous 19,129 19,129 35,363 16,234 25,333
TOTAL REVENUES 2,919,223 2,919,223 3,062,572 143,349 2,991,809
2011
Budgeted Amounts
-96-
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2011
(With comparative totals for the year ended December 31, 2010)
2010
Actual Variance With Actual
Original Final Amounts Final Budget Amounts
EXPENDITURES
Current
General government
Mayor and Council
Personnel services 17,692$ 17,692$ 17,692$ -$ 17,692$
Other services and charges 16,300 16,300 18,726 (2,426) 17,202
Total 33,992 33,992 36,418 (2,426) 34,894
Election
Personnel services - - - - 7,836
Supplies - - - - 56
Other services and charges 1,350 1,350 3,380 (2,030) 1,857
Total 1,350 1,350 3,380 (2,030) 9,749
Administration
Personnel services 339,609 339,609 354,807 (15,198) 321,808
Supplies 9,000 9,000 7,093 1,907 4,780
Other services and charges 68,750 68,750 61,216 7,534 54,250
Total 417,359 417,359 423,116 (5,757) 380,838
Communications
Personnel services 13,363 13,363 6,703 6,660 7,463
Other services and charges 44,900 44,900 39,561 5,339 44,214
Total 58,263 58,263 46,264 11,999 51,677
Building
Supplies 1,550 1,550 689 861 943
Other services and charges 37,925 37,925 34,965 2,960 34,841
Total 39,475 39,475 35,654 3,821 35,784
Professional services
Assessor 45,500 45,500 46,384 (884) 43,587
Accounting and auditing 59,500 59,500 77,972 (18,472) 75,371
Legal 60,000 60,000 95,081 (35,081) 55,739
Engineering 70,000 70,000 67,639 2,361 57,927
Total 235,000 235,000 287,076 (52,076) 232,624
Budgeted Amounts
2011
-97-
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2011
(With comparative totals for the year ended December 31, 2010)
2010
Actual Variance With Actual
Original Final Amounts Final Budget Amounts
Budgeted Amounts
2011
EXPENDITURES - CONTINUED
Current - continued
General government - continued
Planning and zoning
Personnel services 147,180$ 147,180$ 144,423$ 2,757$ 135,704$
Supplies 1,000 1,000 679 321 401
Other services and charges 38,500 38,500 39,888 (1,388) 39,919
Total 186,680 186,680 184,990 1,690 176,024
Total general government 972,119 972,119 1,016,898 (44,779) 921,590
Public safety
Police
Contracted services 483,765 483,765 452,262 31,503 481,243
Fire protection
Personnel services 215,179 215,179 180,907 34,272 180,125
2% fire aid 40,000 40,000 40,692 (692) 36,153
Supplies 25,200 25,200 24,108 1,092 22,879
Other services and charges 142,500 142,500 149,692 (7,192) 165,689
Total 422,879 422,879 395,399 27,480 404,846
Building inspector
Personnel services 81,953 81,953 79,419 2,534 78,525
Supplies 4,350 4,350 717 3,633 -
Other services and charges 11,125 11,125 14,944 (3,819) 33,219
Total 97,428 97,428 95,080 2,348 111,744
Animal control
Supplies 150 150 - 150 -
Other services and charges 12,700 12,700 2,302 10,398 10,996
Total 12,850 12,850 2,302 10,548 10,996
Criminal legal 51,000 51,000 46,440 4,560 48,549
Emergency communications
Other services and charges 2,500 2,500 5,250 (2,750) 6,798
Total public safety 1,070,422 1,070,422 996,733 73,689 1,064,176
-98-
CITY OF LAKE ELMO, MINNESOTA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 2011
(With comparative totals for the year ended December 31, 2010)
2010
Actual Variance With Actual
Original Final Amounts Final Budget Amounts
Budgeted Amounts
2011
EXPENDITURES - CONTINUED
Current - continued
Public works
General
Personnel services 211,669$ 211,669$ 186,458$ 25,211$ 184,356$
Supplies 134,500 134,500 120,227 14,273 142,304
Other services and charges 120,770 120,770 100,578 20,192 107,563
Total 466,939 466,939 407,263 59,676 434,223
Trees 10,500 10,500 10,358 142 15,665
Street lighting 24,000 24,000 30,008 (6,008) 23,405
Total public works 501,439 501,439 447,629 53,810 473,293
Culture and recreation
Parks
Personnel services 148,679 148,679 117,269 31,410 118,478
Supplies 12,550 12,550 5,056 7,494 5,931
Other services and charges 32,014 32,014 20,723 11,291 31,140
Total culture and recreation 193,243 193,243 143,048 50,195 155,549
TOTAL EXPENDITURES 2,737,223 2,737,223 2,604,308 132,915 2,614,608
EXCESS OF REVENUES
OVER EXPENDITURES 182,000 182,000 458,264 276,264 377,201
OTHER FINANCING USES
Transfers out (182,000) (182,000) (230,505) (48,505) (126,850)
NET CHANGE IN FUND BALANCES - - 227,759 227,759 250,351
FUND BALANCES, JANUARY 1 2,686,161 2,686,161 2,686,161 - 2,435,810
FUND BALANCES, DECEMBER 31 2,686,161$ 2,686,161$ 2,913,920$ 227,759$ 2,686,161$
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CITY OF LAKE ELMO, MINNESOTA
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 2011
312 313 314 315
2006 G.O.
2002 G.O.Equipment 2009A G.O.
Improvement 2004 G.O.Certificates of Refunding
Bond CIP Bond Indebtedness Bond
ASSETS
Cash and temporary investments -$ 309,804$ 17,797$ -$
Cash with fiscal agent - 2,899,380 - -
Receivables
Special assessments
Delinquent - - - -
Deferred - - - -
Due from other governments - - 340,000
TOTAL ASSETS -$ 3,209,184$ 17,797$ 340,000$
LIABILITIES AND FUND BALANCES
LIABILITIES
Deferred revenue -$ -$ -$ 340,000$
FUND BALANCES
Restricted - 3,209,184 17,797 -
TOTAL LIABILITIES AND FUND BALANCES -$ 3,209,184$ 17,797$ 340,000$
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316 317 319
2009B G.O.2010A G.O.2011A G.O.
Improvement Improvement Improvement
Bond Bond Bond Total
164,600$ 142,162$ 878$ 635,241$
- - - 2,899,380
121 - - 121
62,008 86,500 - 148,508
340,000
226,729$ 228,662$ 878$ 4,023,250$
62,008$ 86,500$ -$ 488,508$
164,721 142,162 878 3,534,742
226,729$ 228,662$ 878$ 4,023,250$
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CITY OF LAKE ELMO, MINNESOTA
DEBT SERVICE FUNDS
COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED DECEMBER 31, 2011
312 313 314 315
2006 G.O.
2002 G.O.Equipment 2009A G.O.
Improvement 2004 G.O.Certificates of Refunding
Bond CIP Bond Indebtedness Bond
REVENUES
Property taxes -$ 140,000$ 56,118$ -$
Intergovernmental
MSA contributions - - - 72,025
Special assessments 22,024 - - -
Investment earnings 821 10,242 278 -
TOTAL REVENUES 22,845 150,242 56,396 72,025
EXPENDITURES
Debt service
Principal 40,000 170,000 44,000 60,000
Interest and other charges 1,840 165,045 9,446 12,025
TOTAL EXPENDITURES 41,840 335,045 53,446 72,025
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES (18,995) (184,803) 2,950 -
OTHER FINANCING SOURCES (USES)
Transfers in - - - -
Transfers out (35,948) - - -
TOTAL OTHER FINANCING SOURCES (USES)(35,948) - - -
NET CHANGE IN FUND BALANCES (54,943) (184,803) 2,950 -
FUND BALANCES, JANUARY 1 54,943 3,393,987 14,847 -
FUND BALANCES, DECEMBER 31 -$ 3,209,184$ 17,797$ -$
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316 317 319
2009B G.O.2010A G.O.2011A G.O.
Improvement Improvement Improvement
Bond Bond Bond Total
50,544$ 57,994$ -$ 304,656$
- - - 72,025
14,837 81,400 - 118,261
1,630 384 878 14,233
67,011 139,778 878 509,175
30,000 - - 344,000
13,763 9,266 - 211,385
43,763 9,266 - 555,385
23,248 130,512 878 (46,210)
- 11,650 - 11,650
- - - (35,948)
- 11,650 - (24,298)
23,248 142,162 878 (70,508)
141,473 - - 3,605,250
164,721$ 142,162$ 878$ 3,534,742$
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CITY OF LAKE ELMO, MINNESOTA
AGENCY FUND
COMBINING SCHEDULE OF CHANGES IN ASSETS AND LIABILITIES
FOR THE YEAR ENDED DECEMBER 31, 2011
Balance Balance
January 1 Additions Deductions December 31
Escrow
ASSETS
Cash and temporary investments 315,522$ 112,950$ (93,089)$ 335,383$
LIABILITIES
Accounts payable 13,750$ 5,000$ (13,750)$ 5,000$
Deposits payable 301,772 107,950 (79,339) 330,383
TOTAL LIABILITIES 315,522$ 112,950$ (93,089)$ 335,383$
Yellow Ribbon
ASSETS
Cash and temporary investments (deficits)(128)$ -$ -$ (128)$
Accounts receivable 128 - - 128
TOTAL ASSETS -$ -$ -$ -$
TOTAL AGENCY FUNDS
ASSETS
Cash and temporary investments 315,394$ 112,950$ (93,089)$ 335,255$
Accounts receivable 128 - - 128
TOTAL ASSETS 315,522$ 112,950$ (93,089)$ 335,383$
LIABILITIES
Accounts payable 13,750$ 5,000$ (13,750)$ 5,000$
Deposits payable 301,772 107,950 (79,339) 330,383
TOTAL LIABILITIES 315,522$ 112,950$ (93,089)$ 335,383$
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CITY OF LAKE ELMO, MINNESOTA
SUMMARY FINANCIAL REPORT
REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS
GOVERNMENTAL FUNDS
YEARS ENDED DECEMBER 31, 2011 AND 2010
2011 2010
REVENUES
Taxes 2,790,773$ 2,737,225$ 1.96 %
Licenses and permits 230,419 261,450 (11.87)
Intergovernmental 276,638 239,244 15.63
Charges for services 14,691 22,416 (34.46)
Fines and forfeits 63,819 68,897 (7.37)
Special assessments 153,536 134,257 14.36
Investment earnings 94,066 113,033 (16.78)
Miscellaneous 48,217 84,860 (43.18)
TOTAL REVENUES 3,672,159$ 3,661,382$ 0.29 %
Per Capita 455$ 440$ 3.49 %
EXPENDITURES
Current
General government 1,016,898$ 921,590$ 10.34 %
Public safety 996,733 1,064,176 (6.34)
Public works 447,629 473,293 (5.42)
Culture and recreation 168,747 168,971 (0.13)
Capital outlay
General government 9,067 50,178 (81.93)
Public safety 20,433 41,217 (50.43)
Public works 954,293 1,035,628 (7.85)
Culture and recreation 45,390 76,286 (40.50)
Debt service
Principal 344,000 313,000 9.90
Interest and other charges 251,385 216,820 15.94
Bond issuance costs 34,327 74,580 (53.97)
TOTAL EXPENDITURES 4,288,902$ 4,435,739$ (3.31) %
Per Capita 532$ 533$ (0.23) %
Total Long-term Indebtedness 7,811,000$ 7,310,000$ 6.85 %
Per Capita 968 878 10.26
General Fund Balance - December 31 2,913,920$ 2,686,161$ 8.48 %
Per Capita 361 323 11.94
The purpose of this report is to provide a summary of financial information concerning the City of Lake Elmo to interested
citizens. The complete financial statements may be examined at City Hall, 3800 Laverne Avenue North, Lake Elmo,
Minnesota, 55042. Questions about this report should be directed to the City Finance Director at (651) 777-5510.
Percent
Increase
(Decrease)
Total
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OTHER REPORTS
CITY OF LAKE ELMO
LAKE ELMO, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2011
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AUDITOR’S REPORT ON LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Lake Elmo, Minnesota
We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information of the City of Lake Elmo, Minnesota (the City), as of and for the year ended
December 31, 2011, which collectively comprise the basic financial statements as listed in the table of contents, and have issued our
report thereon dated June 25, 2012.
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 Political Subdivisions, promulgated by the Minnesota Office of the State Auditor
pursuant to Minnesota statute 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 Political Subdivisions covers seven categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous
provisions, and Tax Increment Financing. Our study included all of the listed categories except that we did not test for compliance in
Tax Increment Financing because the City has not established a Tax Increment Financing district.
The results of our tests indicate that for the items tested, the City complied with the material terms and conditions of applicable legal
provisions.
This report is intended solely for the information and use of the Council, management, and the Minnesota Office of the State Auditor
and is not intended to be and should not be used by anyone other than these specified parties.
June 25, 2012 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AUDIT OF FINANCIAL STATEMENTS
Honorable Mayor and City Council
City of Lake Elmo, Minnesota
In planning and performing our audit of the financial statements of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Lake Elmo, Minnesota (the City), as of and for the year ended
December 31, 2011, in accordance with auditing standards generally accepted in the United States of America, we considered the
City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control
over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial
reporting.
Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and
was not designed to identify all deficiencies in internal control over financial reporting that might be significant deficiencies or
material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses
have been identified. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that
we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the
normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material
weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the City’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the
deficiency presented as finding 2011-1 in the Schedule of Findings and Responses to be a material weakness in internal control over
financial reporting.
We noted certain matters that we have reported to management of the City in a separate letter dated June 25, 2012.
The City’s response to the finding identified in our audit is described in the accompanying Schedule of Findings and Responses. We
did not audit the City’s response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the Council, management, and the Minnesota Office of the State Auditor
and is not intended to be and should not be used by anyone other than these specified parties.
June 25, 2012 ABDO, EICK & MEYERS, LLP
Minneapolis, Minnesota Certified Public Accountants
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CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF FINDINGS AND RESPONSES
FOR THE YEAR ENDED DECEMBER 31, 2011
2011-1 Material audit adjustments
Condition: During our audit, adjustments were needed to correct the year-end trial balance, which include:
Receipts collected from utility bills were miscoded in the accounting software to Water and
should have identified for Storm Sewer.
The General fund received a contribution from Washington County for any and all future
costs to provide snow and ice removal services and other maintenance for Demontreville
Trail/County Road 13B until 11/01/2013.
Criteria: The financial statements are the responsibility of the City’s management. Additionally, funds are
segregated for the purpose of carrying on specific activities or objectives under special regulations,
restrictions or limitations.
Cause: The City has not prepared a year-end trial balance reflecting all necessary accounting entries.
Specifically,
Receipts are tracked on an excel spreadsheet as collected and then entered into the
accounting system monthly. It appears that certain receipts collected from Storm Sewer
charges were not properly classified. Also, there is no formal reconciliation done by the
City to ensure that what has been billed is properly recorded as revenue in the appropriate
fund in the accounting system.
Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing
requirements, which specify the year when the resources are required to be used or the year
when use is first permitted, and expenditure requirements, in which the resources are
provided to the City on a reimbursement basis. The donation has not met these
requirements and needed to be adjusted to deferred revenue.
Effect: This indicates that it would be likely that a misstatement may occur and not be detected by the City’s
system of internal control. The audit firm cannot serve as a compensating control over this
deficiency.
Recommendation: We recommend that management review and approve each adjustment, obtain an understanding of
why each was necessary and modify current procedures to ensure that future corrections are
minimized. Further, we recommend reconciliation be completed, quarterly at a minimum, that
identifies any discrepancy between utility billings charged and collected from the billing software to
the revenue recorded in the accounting system.
Management response:
The management team will review each journal entry in an effort to better understand the reason the modification was
necessary in an effort to limit future corrections. Although these adjustments were minor compared to total utility
collections and total fund balance, management agrees that additional reconciling needs to be done throughout the year
to allow for timely corrections.
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