HomeMy WebLinkAbout#13 - Audit Presentation
STAFF REPORT
DATE: June 18, 2024
REGULAR
AGENDA ITEM: Presentation & Acceptance of the 2023 Annual Comprehensive Financial
Report (ACFR)
FROM: Clarissa Hadler, Finance Director
BACKGROUND:
Annually, the City engages the services of an independent outside audit firm to audit and assist with the
preparation of the financial statements. The auditors are asked to assure that the financial statements are
free from material misstatement in accordance with U.S. Generally Accepted Accounting Principles
(GAAP). The firm also performs testing and makes inquiries to help ensure that proper internal controls
are in place.
The City has retained the services of Schlenner Wenner to perform the City of Lake Elmo’s audit for 2023.
The 2023 Annual Comprehensive Financial Report (ACFR) and Management Reports will be presented to
the City Council by Mr. Ryan Schmidt – Partner, from Schlenner Wenner with the opportunity to ask
questions of both Mr. Schmidt and City Staff.
ISSUE BEFORE THE CITY COUNCIL:
1) Does the City Council have any questions regarding the 2023 ACFR?
DISCUSSION:
Mr. Ryan Schmidt will present information regarding the 2023 Audit and answer any questions the City
Council may have pertaining to the 2023 Audit and the 2023 ACFR.
The City received an unmodified audit opinion, meaning the Financial Statements are fairly stated in all
material respects. There were no findings related to Minnesota Legal Compliance. One finding related to
Internal Controls over Financial Reporting is noted in the report - Lack of Ideal Segregation of Duties.
As of December 31, 2023, the unassigned fund balance of the General Fund was $ 8,920,580 or 110% of
2024 budgeted expenditures and transfers.
FISCAL IMPACT:
Overall sound policies, fiscal management, effective operational, capital, and long-range planning are all
integral parts of City business leading up to the audit and completion of the ACFR. As such, continued
investment in financial systems will help position the City to continue to provide quality, efficient, timely
and cost-effective services to the constituents of the community.
RECOMMENDATION:
No formal action is required, but the City Council at its discretion may accept the results of the 2023 Audit
and 2023 ACFR.
MOTION:
“Motion to accept the 2023 Annual Comprehensive Financial Report.”
ATTACHMENTS:
1) 2023 Annual Comprehensive Financial Report (ACFR)
2) Schlenner Wenner Report to the Members of Governance
City of Lake Elmo,
Minnesota
Annual Comprehensive
Financial Report
For the Year Ended December 31, 2023
Prepared by:
Finance Department
CITY OF LAKE ELMO, MINNESOTA
TABLE OF CONTENTS
INTRODUCTORY SECTION:
Letter Of Transmittal ............................................................................................................................................................ 2
Certificate Of Achievement For
Excellence In Financial Reporting ................................................................................................................................ 7
City Council And Officials ................................................................................................................................................... 8
Organizational Chart ............................................................................................................................................................. 9
FINANCIAL SECTION:
INDEPENDENT AUDITOR’S REPORT ...................................................................................................................... 11
REQUIRED SUPPLEMENTARY INFORMATION:
Management’s Discussion and Analysis ..................................................................................................................... 15
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements
Statement of Net Position ..................................................................................................................................... 26
Statement of Activities ......................................................................................................................................... 27
Fund Financial Statements
Balance Sheet – Governmental Funds .................................................................................................................. 28
Reconciliation of the Balance Sheet – Governmental Funds
to the Statement of Net Position .................................................................................................................... 30
Statement of Revenues, Expenditures, and
Changes in Fund Balances – Governmental Funds ....................................................................................... 31
Reconciliation of Changes in Fund Balances of Governmental Funds
to the Statement of Activities ........................................................................................................................ 33
Statement of Net Position – Proprietary Funds .................................................................................................... 34
Statement of Revenues, Expenses, and
Changes in Net Position – Proprietary Funds ................................................................................................ 35
Statement of Cash Flows – Proprietary Funds ..................................................................................................... 36
Notes to the Basic Financial Statements ..................................................................................................................... 38
REQUIRED SUPPLEMENTARY INFORMATION:
Budgetary Comparison Schedule – General Fund ....................................................................................................... 72
Schedule of City’s Proportionate Share of the Net Pension Liability .......................................................................... 74
Schedule of City Pension Contributions ...................................................................................................................... 75
Schedule of Changes in Net Pension Liability (Asset) – Firefighters Relief Association ........................................... 76
Schedule of Changes in City’s Net OPEB Liability .................................................................................................... 77
Schedule of City OPEB Contributions ........................................................................................................................ 78
Notes to the Required Supplementary Information ..................................................................................................... 79
CITY OF LAKE ELMO, MINNESOTA
TABLE OF CONTENTS (Continued)
SUPPLEMENTARY INFORMATION:
Combining Balance Sheet – Nonmajor Governmental Funds ..................................................................................... 88
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances – Nonmajor Governmental Funds ............................................................................. 89
Combining Balance Sheet – Nonmajor Special Revenue Funds ................................................................................. 90
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances – Nonmajor Special Revenue Funds ......................................................................... 91
Combining Balance Sheet – Nonmajor Capital Project Funds .................................................................................... 92
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances – Nonmajor Capital Project Funds ............................................................................ 95
Supplemental Combining Balance Sheet – Debt Service Fund ................................................................................... 98
Supplemental Combining Schedule of Revenues, Expenditures, and
Changes in Fund Balance – Debt Service Fund ................................................................................................. 100
Schedule of Indebtedness .......................................................................................................................................... 102
STATISTICAL SECTION (UNAUDITED):
Financial Trends
Net Position by Component ....................................................................................................................................... 105
Changes in Net Position ............................................................................................................................................ 107
Fund Balances – Governmental Funds ...................................................................................................................... 111
Changes in Fund Balances – Governmental Funds ................................................................................................... 113
Revenue Capacity
Tax Capacity and Estimated Actual Value of Taxable Property ............................................................................... 115
Direct and Overlapping Property Tax Rates .............................................................................................................. 116
Principal Property Taxpayers .................................................................................................................................... 117
Property Tax Levies and Collections ......................................................................................................................... 118
Water and Sanitary Sewer Charges by Customer ...................................................................................................... 119
Debt Capacity
Ratios of Outstanding Debt by Type ......................................................................................................................... 120
Ratios of Net General Bonded Debt .......................................................................................................................... 121
Direct and Overlapping Governmental Activities Debt............................................................................................. 122
Legal Debt Margin Information ................................................................................................................................ 123
Pledged Revenue Coverage ....................................................................................................................................... 124
Demographic and Economic Information
Demographic and Economic Statistics ...................................................................................................................... 125
Principal Employers .................................................................................................................................................. 126
Operating Information
Full-Time Equivalent Employees By Function/Program .......................................................................................... 127
Operating Indicators by Function/Program ............................................................................................................... 129
Capital Asset Statistics by Function/Program ........................................................................................................... 131
OTHER REQUIRED REPORTS:
Independent Auditor’s Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ............................................................................................................................... 133
Schedule of Findings and Responses ................................................................................................................................ 135
Corrective Action Plans .................................................................................................................................................... 136
1
INTRODUCTORY
SECTION
__________________________________________________________________________
3880 Laverne Avenue North • Lake Elmo • Minnesota 55042
Phone: (651) 747-3900 • www.lakeelmo.org
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June 11, 2024
Honorable Mayor, Members of the City Council, and Citizens of the City of Lake Elmo:
Minnesota Statutes require all cities to issue an annual report on its financial position and activity prepared in accordance with
generally accepted accounting principles (GAAP), under the guidance of the Governmental Accounting Standards Board
(GASB), and audited in accordance with generally accepted auditing standards (GAAS) by a firm of licensed certified public
accountants or the Office of the State Auditor. Pursuant to that requirement, we hereby issue the comprehensive annual financial
report of the City of Lake Elmo, MN for the fiscal year ended December 31, 2023.
This report consists of management’s representation concerning the finances of the City of Lake Elmo. Consequently,
management assumes full responsibility for the completeness, accuracy and reliability of all the information presented in this
report. To provide a reasonable basis for making these representations, management has established a thorough internal control
system designed to both protect the City’s assets from loss, theft and misuse and to compile all necessary information for the
preparation of the City of Lake Elmo’s financial statements in conformity with GAAP and GASB. As a management team, we
assert that the financial statements will be free from material misstatement and that the financial report is reliable in all material
respects.
The City of Lake Elmo’s financial statements have been audited by Schlenner Wenner and Co., a firm of licensed certified
public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the
City of Lake Elmo for the fiscal year ended December 31, 2023, are free from material misstatement. The independent audit
involved examining, on an approved test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management and evaluating the overall financial
statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering
an unmodified opinion that the City of Lake Elmo’s financial statements for fiscal year ended December 31, 2023, are fairly
presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial
section of the report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial
statements in form of the Management’s Discussion and Analysis (MD&A). This letter of transmittal is included to complement
the MD&A and should be read in conjunction with it. The City of Lake Elmo’s MD&A can be found immediately following
the report of the independent auditors.
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PROFILE OF THE GOVERNMENT
The City of Lake Elmo, incorporated in 1926, is a statutory city in the State of Minnesota six miles east of St. Paul, Minnesota.
Located in Washington County, it covers 25 square miles and has an estimated 2023 population of 14,033, which represents
5,206 households.
Policy-making and legislative authority are vested in a governing council consisting of an elected Mayor and four council
members. Per Minnesota State Statute, the governing council is responsible for passing ordinances, adopting an annual budget,
appointing committees and hiring both the city’s administrator and attorney. The City Administrator is responsible for carrying
out the policies and ordinances of the governing council and overseeing the day-to-day operations of the city. The Council is
elected on a non-partisan basis. The Mayor serves a four-year term and council members serve a four-year staggered term, with
two of these positions elected every two years. The Mayor and the Council are elected at-large.
The City of Lake Elmo provides a full range of Services including fire protection, construction and maintenance of streets and
infrastructure, recreational facilities, and water, sanitary sewer and storm water utility services. The City contracts with the
Washington County Sheriff’s Department for police services.
The annual budget serves as the foundation for the City of Lake Elmo’s financial management and fiscal stewardship. City
departments and agencies of the City submit their requested budget to the City Administrator and the Finance Director in order
to compile a preliminary balanced budget for submission to the City Council. The preliminary balanced budget is presented to
the City Council in September each year so that the preliminary property tax levy can be submitted to Washington County by
the annual due date. The preliminary property tax levy may be decreased but not increased. The 2023 Adopted Budget and
final property tax levy were required to be adopted by and submitted to Washington County by December 28, 2022. Included
in the City’s annual budget process is the compilation of a Capital Improvement Plan which allows for strategic planning of
City infrastructure and equipment needs while maintaining a reasonable level of debt and a strong unassigned fund balance.
Quarterly budget to actual comparison reports are provided to the City Council to keep them apprised of the financial
performance of the City.
FACTORS AFFECTING FINANCIAL CONDITION
The information presented in the financial statements is perhaps best understood when it is considered from the broader
perspective of the specific environment within which the City of Lake Elmo operates.
LOCAL ECONOMY
Lake Elmo is home to numerous businesses that are leaders in their respective industries. New residential developments platted
since 2014 numbering approximately 3,243 dwelling units have been approved.
In 2023 and early 2024, the city saw continued interest in residential and commercial growth. Projects started in earlier years
continue, including:
• Wildflower 4th addition – 41 new single-family homes
• Royal Golf 5th Addition – 43 new single-family homes
• Hendrix Apartments and Goddard School – 190-unit apartment building and daycare
• Drake Development - Tesla, Dairy Queen and two additional commercial lots
• Amira - 146 senior rental apt building
• Lil Explorers Daycare is under construction
• DeMontreville Convent is under construction
• Carmelite Church is under construction
• The Jesuit Retreat house is under construction
• Remodel and new accessory building at Royal Park Golf Clubhouse
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New applications for building and development continue to come in. Some of which include:
• Northstar 1st Addition – 107 new single-family homes
• Royal Golf 5th Addition – 43 new single-family homes
• Easton Village 6th and 7th Addition – 27 new single-family homes
• At Home Apartments – 40 twin homes
• Royal Golf 6th Addition – 46 new single-family homes
• Bridgewater – 4 Commercial lots and a future apartment site
Further, the following commercial building projects were fully completed in 2023:
• Kokoro Volleyball - 27,540 sq. ft. athletic facility
• 11160 & 11190 Hudson Blvd
• City Center additions
The City’s highway infrastructure continues to make Lake Elmo a desirable residential location. Rapid growth is further
reflected in 2023 population estimates of 14,033 or an increase of 24% since the 2020 census.
New housing starts in 2023 numbered 168 with a total permit value of $55,067,525 and an average home value of $327,783.
There were three new commercial construction projects in 2023, and a number of remodels and expansions. All these new
developments have been built in 2023 or will be finished in 2024, which will greatly strengthen the existing tax base of the
City.
LONG TERM FINANCIAL PLANNING
Total unassigned General Fund balance as of December 31, 2023, was 110% of the next year’s general fund expenditures and
other financing uses. Although the State Auditor recommends maintaining a level of 35% - 50%, the City has consistently
exceeded that rate, showing the City’s financial strength.
In 2023, the City moved from a 5-year to a 10-year Capital Improvement Plan (“CIP”). The City’s 10-year CIP serves as the
foundation for long-term financial planning. Funding needs for capital replacements are reflected in tax levies for the street
renewal and general fund asset replacements. Funding needs for capital infrastructure in the enterprise funds are funded through
user fees in those funds.
During 2017, Moody’s Investors Service increased the City's long-term debt rating to Aa1, and reaffirmed this rating in 2022,
2023, and 2024. In their assessment of the City, Moody’s noted the following:
• Very strong financial position
• Full value per capita and resident income levels exceed the median for similarly rated peers nationally
Projections for the next five years indicate that property tax contributions, user fees, and investment income will continue to
grow based on planned development and expansion within the City.
RELEVANT FINANCIAL POLICIES
Trends of the past decade, changes in state tax law, and recent legislation indicate that the City will have a greater reliance on
property taxes as a source of financing for city operations in the future and less reliance on the intergovernmental revenues
(federal and state) and building permit fees. Changes in state tax law over the past decade have resulted in funding changes for
both schools and local governments. The elimination of the homestead and agricultural credit aids program, and large cuts in
both local government aid and the market value homestead credit programs resulted in revenue losses to the City. In addition,
as the City continues toward full development, we anticipate future decreases in building permit revenues.
5
MAJOR INITIATIVES
2023 was once again a year of robust growth for the City, due to the continuation of ongoing infrastructure upgrades, various
projects, as well as oversight of the ongoing residential and commercial development activities.
Some of the 2023 infrastructure projects included the following:
• The construction of a new City Center was approved and began in 2021, and was completed in the summer of 2023.
The new City Center consists of a combined City Hall and Public Safety Facility. This new facility brings together
City Hall staff and functions, the entire Fire Department, and a satellite office for the Washington County Sheriff’s
department. This co-location involved renovating and expanding the City-owned Brookfield Office building to
consolidate civic resources within a single structure at the historic core of the city. Additionally, the Public Works
facility will also be expanded to accommodate City growth and increased service needs.
• The Old Village Phase VII Improvements started construction in 2023. This project covers full reconstruction of the
streets, upgrading the existing water system, and installation of a new sewer system and storm water drainage system.
• Extension of municipal sewer to the Tapestry development began in 2022 and was completed in 2023.
• Municipal sewer lines were extended along the City’s western border in order to serve new development on the 180
acres the City received in a settlement with 3M in 2019. The new area will provide for business/industrial, commercial
and low-density housing options.
• The City continued work on several expedited water main projects to bring water to neighborhoods with PFAS
contamination at no cost to the city or residents due to grants from the MPCA. These projects include water main
extensions, road construction and in some cases the extension of sewer. Sewer costs of the project will be assessed
100% to the benefiting property owners. In 2023, the projects in Parkview Estates, Cardinal Ridge, Cardinal View,
Whistling Valley and Torre Pines were completed. The Stillwater Boulevard (CSAH 14) Trunk Watermain
Improvements are being constructed in 2024 using 100% 3M Settlement grant funds.
• Water Tower 3 began construction in 2022 to increase storage capacity in the southeast area of the city. Construction
was completed in 2023.
• The use of Parkland dedication fees continues to support improvements in existing and new parks. The 2023 Trail
Improvements included Stonegate Neighborhood Trail segments, Sunfish Pond trails, Hamlet on Sunfish Lake
connecting Trail, DeMontreville Wildlife connecting trail.
• As part of the City’s Street Capital Improvement Program, neighborhood street and drainage improvements were
completed in Tamarack Farms, Fields of St. Croix 1st and 2nd Additions, and Beaut Crest Estates. In 2024, street and
drainage improvements are being constructed in Carriage Station and along Jamaca Court.
• Also, as part of the City’s Street Capital Improvement Program, the 2024 Collector Roadway Improvements are being
constructed, including Hudson Boulevard, from Inwood Avenue (CSAH 13) to Julia Avenue; 15th Street from Inwood
Avenue (CSAH 13) to Oakdale/Lake Elmo city limits; and 30th Street, from Village Parkway to Lisbon Avenue.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement
for Excellence in Financial Reporting to the City of Lake Elmo for its annual comprehensive financial report for the fiscal year
ended December 31, 2022. In order to be awarded a Certificate of Achievement, a government must publish an easily readable
and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both GAAP and applicable legal
requirements. This was the 10th consecutive year that the City of Lake Elmo has achieved this prestigious award.
A Certificate of Achievement is valid for a period of one year only. We believe that our current Annual Comprehensive
Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the
GFOA to determine its eligibility for another certificate.
6
The preparation of this report would not have been possible without the efficient and dedicated services of the Finance and
Administration Department Staff. We would like to express our appreciation to all members of the organization who assisted
in contributing to the preparation of the report. Credit must also be given to the Mayor and City Council for their unfailin g
support for maintaining the highest standards of management of the City of Lake Elmo’s finances.
Respectfully submitted,
Nicole Miller
City Administrator
Clarissa Hadler
Finance Director
7
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Lake Elmo
Minnesota
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2022
Executive Director/CEO
8
CITY OF LAKE ELMO, MINNESOTA
CITY COUNCIL AND OFFICIALS
FOR THE YEAR ENDED DECEMBER 31, 2023
CITY COUNCIL Term Expires
Charles Cadenhead Mayor January 1, 2025
Katrina Beckstrom Council Member January 1, 2025
Matt Hirn Council Member January 1, 2027
Jeff Holtz Council Member January 1, 2025
Lisa McGinn Council Member November 21, 2023
APPOINTED CITY OFFICIALS
Clark Schroeder Interim City Administrator Appointed
Clarissa Hadler Finance Director Appointed
Julie Johnson City Clerk Appointed
9
ORGANIZATIONAL CHART
FOR THE YEAR ENDED DECEMBER 31, 2023
10
FINANCIAL
SECTION
11
www.schlennerwenner.cpa
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and City Council
City of Lake Elmo, Minnesota
Report on the Audit of the Financial Statements
Opinions
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, 2023, and the related notes to the financial statements, which collectively comprise the City of Lake Elmo,
Minnesota’s basic financial statements as listed in the table of contents.
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 of Lake Elmo, Minnesota, as of December 31, 2023, and the respective changes in financial position and, where
applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting
principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in
the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the
financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
12
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assuranc e
is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance
with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement
when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would
influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and
design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal
control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial
doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and
analysis, budgetary comparison information, pension schedules, and OPEB schedules listed in the table of contents be presented
to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of
the basic financial statements, is required by the Governmental 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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of
Lake Elmo, Minnesota’s basic financial statements. The accompanying combining and individual nonmajor fund financial
statements and supplemental schedules, and schedule of indebtedness, are presented for purposes of additional analysis and are
not a required part of the basic financial statements.
13
The combining and individual nonmajor fund financial statements and supplemental schedules are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic
financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the combining and individual nonmajor fund financial statements and supplemental schedules are fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
The schedule of indebtedness 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.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the
introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our
opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of
assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether
a material inconsistency exists between the other information and the basic financial statements, or the other information
otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material
misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 11, 2024 on our consideration
of the City of Lake Elmo, Minnesota’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of
Lake Elmo, Minnesota’s internal control over financial reporting and compliance.
SCHLENNER WENNER & CO.
St. Cloud, Minnesota
June 11, 2024
14
REQUIRED SUPPLEMENTARY
INFORMATION
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
15
Our discussion and analysis of the City of Lake Elmo’s financial performance provides an overview of the City’s financial
activities for the year ended December 31, 2023. Please read it in conjunction with the independent auditor’s report on page
11 and the City’s financial statements, which begin on page 26.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of the City of Lake Elmo exceeded its liabilities and deferred inflows at the close of
the most recent fiscal year by $170,695,558 (net position). The unrestricted portion of net position, the portion used
to meet the City’s ongoing obligations to citizens and creditors, is $35,000,611.
• The City’s total net position increased $19,697,043 as a result of this year’s operations.
• As of the close of the current fiscal year, the City of Lake Elmo’s governmental funds reported a combined ending
fund balance of $20,685,436 which is a decrease of $3,750,158 in comparison with the prior year. The overall
unassigned fund balance is $8,427,607.
• At the end of the current fiscal year, unrestricted fund balance for the General Fund was $8,920,580, which is 143
percent of total 2023 General Fund expenditures and 110 percent of budgeted 2024 General Fund expenditures. The
City’s Fund Balance policy is to maintain an unassigned fund balance in the General Fund of an amount that is not
less than 50 percent to 60 percent of the next year’s budgeted expenditures of the General Fund.
• In the City’s business-type activities, revenues decreased $5,022,857 (24.71 percent) and program expenses increased
$1,258,097 (19.95 percent). These changes are discussed in greater detail throughout the following pages.
• Total cost of all of the City’s governmental activities’ departments increased $1,720,576 (or 10.58 percent) in
aggregate.
• The City’s General Fund generated more revenue than budgeted of $345,081, excluding transfers in from other funds.
Expenditures were less than budgeted by $1,034,906, excluding transfers to other funds. See additional details on
page 72.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities
(on pages 26 and 27) provide information about the activities of the City as a whole and present a longer-term view of the
City’s finances. Fund financial statements start on page 28. For governmental activities, these statements tell how these services
were financed in the short term as well as what remains for future spending. Fund financial statements also report the City’s
operations in more detail than the government-wide statements by providing information about the City’s most significant
funds.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
16
USING THIS ANNUAL REPORT (Continued)
Reporting the City as a Whole
Our analysis of the City as a whole begins on page 17. One of the most important questions asked about the City’s finances is,
“Is the City as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Positio n and the
Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this
question. These statements include all assets, deferred outflows/inflows of resources, and liabilities using the accrual basis of
accounting, which is similar to the accounting used by large private-sector companies. All of the current year’s revenues and
expenses are taken into account regardless of when cash is received or paid.
These two statements report the City’s net position and changes in net position. You can think of the City’s net position (assets
plus deferred outflows, less liabilities plus deferred inflows) as one way to measure the City’s financial health, or financial
position. Over time, increases or decreases in the City’s net position are one indicator of whether its financial health is
improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the City’s
property tax base, costs associated with current and future construction projects, and the condition of the City’s roads, to assess
the overall health of the City.
In the Statement of Net Position and the Statement of Activities, we divide the City into two kinds of activities:
• Governmental Activities - Most of the City’s basic services are reported here, including the fire, public works, parks, and
planning and zoning departments, along with general administration. Property taxes, special assessments, licenses, permits
and fees, and State aids finance most of these activities.
• Business-type Activities - The City charges a fee to customers to help it cover all or most of the cost of certain services it
provides. The City’s water, sewer, and storm sewer systems are reported here.
Reporting the City’s Most Significant Funds
Our analysis of the City’s funds begins on page 19. The fund financial statements begin on page 28 and provide detailed
information about the most significant funds - not the City as a whole. Some funds are required to be established by State law
and by bond covenants. However, the City Council may establish other funds to help it control and manage money for particular
purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money. The City’s two
kinds of funds (governmental and proprietary) use different accounting approaches.
• Governmental Funds - Most of the City’s basic services are reported in governmental funds, which focus on how
money flows into and out of those funds and the balances left at year-end that are available for spending. These funds
are reported using an accounting method called modified accrual accounting, which measures cash and all other
financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term
view of the City’s general government operations and the basic services it provides. Governmental fund information
helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance
the City’s programs. We describe the relationship (or differences) between governmental activities (reported in the
Statement of Net Position and the Statement of Activities) and governmental funds in reconciliations following the
governmental fund financial statements.
• Proprietary Funds - When the City charges customers for the services it provides, these services are generally reported
in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement
of Net Position and the Statement of Activities. In fact, the City’s proprietary funds are the same as the business-type
activities we report in the government-wide statements but provide more detail and additional information, such as
cash flows, for proprietary funds.
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
17
THE CITY AS A WHOLE
The City’s combined net position increased $19,697,043 from a year ago. Our analysis below focuses on the net position
(Table 1) and changes in net position (Table 2) of the City’s governmental and business-type activities.
The net position of the City’s governmental activities increased by $11,539,230 (17.36 percent). Unrestricted net position (the
part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling
legislation, or other legal requirements) decreased by $2,206,628 compared to the prior year.
The net position of the City’s business-type activities increased by $8,157,813 (9.65 percent) from the prior year. Such increase
can be attributed primarily to the capital contributions of infrastructure assets that were received from private developers during
the year.
Table 1
Net Position
Governmental Business-Type Total
Activities Activities Government
2023 2022 2023 2022 2023 2022
Current and Other Assets 31,241,789$ 35,836,750$ 25,155,915$ 26,273,660$ 56,397,704$ 62,110,410$
Net Capital Assets 87,653,206 71,799,214 99,382,500 90,076,157 187,035,706 161,875,371
Total Assets 118,894,995 107,635,964 124,538,415 116,349,817 243,433,410 223,985,781
Deferred Outflows of Resources 1,100,857 1,375,926 116,538 181,480 1,217,395 1,557,406
Current Liabilities 5,122,759 6,459,882 2,213,887 1,980,429 7,336,646 8,440,311
Noncurrent Liabilities 34,161,649 34,230,125 29,627,608 30,027,530 63,789,257 64,257,655
Total Liabilities 39,284,408 40,690,007 31,841,495 32,007,959 71,125,903 72,697,966
Deferred Inflows of Resources 2,687,021 1,836,690 142,323 10,016 2,829,344 1,846,706
Net Position:
Net Investment in
Capital Assets 54,209,637 39,647,112 69,826,808 59,998,083 124,036,445 99,645,195
Restricted 11,658,502 12,475,169 - - 11,658,502 12,475,169
Unrestricted 12,156,284 14,362,912 22,844,327 24,515,239 35,000,611 38,878,151
Total Net Position 78,024,423$ 66,485,193$ 92,671,135$ 84,513,322$ 170,695,558$ 150,998,515$
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
18
THE CITY AS A WHOLE (Continued)
The City’s total revenues increased by $1,601,755 (4.41 percent). The total cost of all programs and services increased by
$1,720,576 (10.58 percent). Our following analysis separately considers the operations of governmental and business-type
activities.
Table 2
Changes in Net Position
Governmental Business-Type Total
Activities Activities Government
2023 2022 2023 2022 2023 2022
REVENUE
Charges for Services 2,280,874$ 2,889,869$ 4,858,305$ 5,284,821$ 7,139,179$ 8,174,690$
Operating Grants and
Contributions 1,102,707 391,306 - - 1,102,707 391,306
Capital Grants and
Contributions 9,895,930 4,783,094 9,838,374 15,257,903 19,734,304 20,040,997
Property Taxes 7,822,031 7,488,228 - - 7,822,031 7,488,228
Franchise Taxes 68,884 77,694 - - 68,884 77,694
Intergovernmental 246,056 703,388 46 2,146 246,102 705,534
Investment Earnings (Losses)1,137,908 (380,657) 604,235 (221,053) 1,742,143 (601,710)
Other 46,528 23,384 - - 46,528 23,384
Total Revenues 22,600,918 15,976,306 15,300,960 20,323,817 37,901,878 36,300,123
PROGRAM EXPENSES
General Government 1,220,552 1,055,405 - - 1,220,552 1,055,405
Public Safety 3,228,801 2,939,066 - - 3,228,801 2,939,066
Public Works 4,627,872 4,831,584 - - 4,627,872 4,831,584
Parks and Recreation 526,835 415,377 - - 526,835 415,377
Interest and Other Charges 815,944 716,093 - - 815,944 716,093
Water - - 3,982,238 3,280,875 3,982,238 3,280,875
Sewer - - 2,524,280 2,071,858 2,524,280 2,071,858
Storm Sewer - - 1,057,111 952,799 1,057,111 952,799
Total Expenses 10,420,004 9,957,525 7,563,629 6,305,532 17,983,633 16,263,057
Increase (Decrease) in Net Position
Before Transfers/Other Items 12,180,914 6,018,781 7,737,331 14,018,285 19,918,245 20,037,066
Gain (Loss) on Disposal of Assets (221,202) 69,985 - - (221,202) 69,985
Capital Asset Transfers (420,482) 3,261,225 420,482 (3,261,225) - -
Change in Net Position 11,539,230 9,349,991 8,157,813 10,757,060 19,697,043 20,107,051
Net Position - Beginning of Year 66,485,193 57,135,202 84,513,322 73,756,262 150,998,515 130,891,464
Net Position - End of Year 78,024,423$ 66,485,193$ 92,671,135$ 84,513,322$ 170,695,558$ 150,998,515$
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
19
THE CITY AS A WHOLE (Continued)
Governmental Activities
Revenue for the City’s governmental activities increased by $6,624,612 (41.47 percent). This increase in revenue is primarily
due to an increase in revenues from capital grants and contributions, resulting from significant contributions of infrastructure
from developers during 2023. Total expenses increased $462,479 (4.64 percent), primarily due to increased expenses for public
safety along with a decrease in public works costs. Such changes in expenses have been reviewed in greater detail below.
Table 3 presents the cost of each of the City’s programs - general government, public safety, public works, parks and recreation,
and Interest and Other Charges - as well as each program’s net cost (total cost less revenues generated by the activities). The
net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions. Activities (net of capital
outlay which is excluded from Table 3) were generally comparable to the prior year as operations remained fairly consistent
with the prior year, with the exception of:
• Public works net cost of services decreased $5,268,818, due to decreases in maintenance project costs, in conjunction
with an increase in revenues from contributed infrastructure previously discussed.
• Public safety net cost of services increased $326,777 primarily due to four firefighters transitioning to full time service,
along with an increase in contracted law enforcement expenses.
Business-type Activities
Revenues of the City’s business-type activities (see Table 2) decreased by $5,022,857 (24.71 percent) and program expenses
increased by $1,258,097 (19.95 percent). The decrease in revenues is due primarily to a decrease in MPCA grant revenues
recognized in 2023 as compared to 2022. The increase in expenses is due largely to an increase in depreciation expense being
recognized in 2023, due to various projects being finalized and placed into service. Additionally, the City incurred additional
costs related to professional service fees, water meters, and supplies.
THE CITY’S FUNDS
Governmental Funds
As the City completed the year, its governmental funds (as presented in the balance sheet on page 28) reported a combined
fund balance of $20,685,436. This is a decrease of $3,750,158 from the prior year. Operations were comparable to the prior
year, with the exception of an increase in investment earnings of $1,072,572 in 2023 as compared to unrealized investment
losses of $419,853 incurred in 2022. Additionally, the City incurred fewer expenditures related to the City Hall and Fire Station
building project as the project neared completion at the end of 2023. Financial information specific to the governmental funds
is detailed on the following page. Such information was derived from the fund financials.
Table 3
Governmental Activities
Total Cost Net Cost
of Services of Services
2023 2022 2023 2022
General Government 1,220,552$ 1,055,405$ 672,353$ 620,275$
Public Safety 3,228,801 2,939,066 962,514 635,737
Public Works 4,627,872 4,831,584 (5,551,896) (283,078)
Parks and Recreation 526,835 415,377 241,578 204,253
Economic Development - - - (24)
Interest and Other Charges 815,944 716,093 815,944 716,093
Totals 10,420,004$ 9,957,525$ (2,859,507)$ 1,893,256$
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
20
THE CITY’S FUNDS (Continued)
The fund balance of the General Fund increased by $1,380,341 compared to 2022. Details of the General Fund’s revenues and
expenditures are displayed below:
General Fund Revenues
The City received the majority of its funding in the General Fund in the form of grants and funding received from property
taxes (63.90 percent), licenses, permits, and fees (14.27 percent), charges for services (9.93 percent), and other governmental
agencies (4.80 percent). Overall, the City’s General Fund revenues were comparable to the prior year, with the exception of
property taxes that increased as planned with the 2023 levy.
Increase
2023 2022 (Decrease)
General 8,920,580$ 7,540,239$ 1,380,341$
Fund Balance December 31,
Major Funds
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
21
THE CITY’S FUNDS (Continued)
General Fund Expenditures
A significant portion of the City’s General Fund expenditures are used for public safety (48.79 percent). Remaining
expenditures are used primarily for public works (20.63 percent) and general government (19.50 percent). Expenditures are
comparable to the prior year.
The Debt Service fund balance increased as a result of an increase in property tax and assessment revenue.
The City Hall / Fire Station Bldg Project fund balance decreased due to substantial capital outlay expenditures being incurred
throughout the year for the construction of the City Hall and Fire Station project.
The 2023 Street Improvements fund balance increased due to the City receiving bond proceeds during the year in relation to
their 2023A G.O. Improvement and Utility Revenue Bond issuance.
Increase
2023 2022 (Decrease)
Fund Balance December 31,
Major Funds
Debt Service Fund 5,026,712$ 4,535,578$ 491,134$
City Hall / Fire Station Bldg Project Fund 1,448,996$ 6,720,887$ (5,271,891)$
2023 Street Improvements 287,830$ (53,095)$ 340,925$
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
22
THE CITY’S FUNDS (Continued)
General Fund Budgetary Highlights
The City’s General Fund generated more revenue than budgeted of $345,081, excluding transfers in from other funds.
Expenditures were less than those budgeted by $1,034,906, excluding transfers to other funds. Budgetary deviations were
mostly distributed across departments but resulted most significantly from street maintenance and storm sewers, building
inspections, and administration and finance costs being less than anticipated.
Proprietary Funds
As the City completed the year, its business-type activities reported a combined net position of $92,671,135. This is an increase
of $8,157,813 from the prior year. The following is a summary of the City’s major proprietary funds:
The Water Fund net position increased due to significant intergovernmental revenues received from the MPCA in relation to
various projects during the year, as well as revenues being recognized in relation to infrastructure assets conveyed to the City
by local developers.
The Sewer Fund net position increased due to the City receiving developer contributed infrastructure during the year,
$2,060,698 of which was recognized in this fund.
The Storm Sewer Fund net position increased due to the City receiving developer contributed infrastructure during the year,
$2,402,156 of which was recognized in this fund.
Increase
2023 2022 (Decrease)
Water 50,291,225$ 46,447,856$ 3,843,369$
Net Position December 31,
Major Funds
Sewer 27,604,510$ 25,298,195$ 2,306,315$
Storm Sewer 14,775,400$ 12,767,271$ 2,008,129$
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
23
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2023, the City had a net investment of $187,035,706 in a broad range of capital assets, including land, buildings,
improvements, machinery and equipment, roads, and water, sewer, and storm sewer infrastructure. This amount represents a
net increase of $25,160,335 (15.54 percent) from last year. More detailed information about the City’s capital assets is
presented in Note 2.C. to the financial statements.
Significant capital asset activity from throughout the year consisted of the following:
• Developer contributions of infrastructure exceeded $14.9 million in total.
• Costs incurred during the year for the City Hall and Fire Station project exceeded $5.7 million.
• Costs incurred for various water utility projects exceeded $4.8 million.
Debt
At year-end, the City had $62,093,296 in gross debt versus $61,209,616 last year (an increase of 1.44 percent), as shown in
Table 5. See additional information regarding these issuances in Note 2.D. to the financial statements.
Table 4
Capital Assets Net of Depreciation
Governmental
Activities Activities Totals
2023 2022 2023 2022 2023 2022
Land 3,453,979$ 3,453,979$ 3,668,869$ 3,668,869$ 7,122,848$ 7,122,848$
Construction In Progress 18,614,757 15,400,699 11,204,477 15,221,987 29,819,234 30,622,686
Buildings 2,814,305 2,904,470 - - 2,814,305 2,904,470
Other Improvements 2,092,035 1,347,725 - - 2,092,035 1,347,725
Machinery and Equipment 6,923,964 6,102,725 83,657 110,168 7,007,621 6,212,893
Infrastructure 53,754,166 42,589,616 84,425,497 71,075,133 138,179,663 113,664,749
Totals 87,653,206$ 71,799,214$ 99,382,500$ 90,076,157$ 187,035,706$ 161,875,371$
Business-Type
Table 5
Outstanding Debt at Year-End
Governmental
Activities Activities Totals
2023 2022 2023 2022 2023 2022
G.O. Improvement Bonds 29,860,000$ 28,830,000$ 28,115,000$ 28,440,000$ 57,975,000$ 57,270,000$
G.O. Equipment Certificates 555,000 655,000 - - 555,000 655,000
G.O. Tax Abatement Bonds 1,010,000 1,010,000 - - 1,010,000 1,010,000
Unamortized Bond Premium 1,321,965 1,110,679 1,082,925 1,030,720 2,404,890 2,141,399
Compensated Absences 110,115 93,109 38,291 40,108 148,406 133,217
Totals 32,857,080$ 31,698,788$ 29,236,216$ 29,510,828$ 62,093,296$ 61,209,616$
Business-Type
CITY OF LAKE ELMO, MINNESOTA
MANAGEMENT’S DISCUSSION AND ANALYSIS
DECEMBER 31, 2023
24
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
• An update to the City’s long-range financial management plan was completed in 2023 and now includes inflated
averages for capital expenses such as roads and equipment in the 5-10 year horizon. The City is projected to have
small annual increases in its tax rate over the next 10-year period while still meeting current service needs, adding a
public works position, and funding capital needs while maintaining a fund balance above the City’s policy of 50-60%
of next year’s expenses.
• Utility rate adjustments continue in accordance with the City’s long-range financial management plan. For 2024,
water and sewer rates were increased by 3% and stormwater rates had no increase.
• Market interest rates on investments trended higher in 2023 and have held relatively steady in 2024. The City is
holding various investments that were purchased prior to 2022 that have lower rates of return due to the
aforementioned increases. As a result, these investments have some unrealized losses that would only be recognized
if the City had to sell them before maturity. The City has sufficient cash and does not anticipate selling before maturity.
• The City is currently exploring sites for two new wells. These wells will need a treatment plant for PFAS which will
be funded by 3M settlement dollars. These efforts are likely to take two to three years to complete. Other major water
capital projects on the horizon include trunk main extensions and connecting existing neighborhoods vulnerable to
PFAS to municipal water service; projects which are also funded by 3M settlement funds.
• The City received a total of $1,006,489 in American Recover Plan Act (ARPA) funding in two installments in 2021
and 2022. All funds have been expended by early 2024. Projects included the extension of fiber to the public works
building and municipal sewer trunk mains to city owned land on the western edge of town.
• With its proximity to Minneapolis/St. Paul downtown area, easy access from a number of state highways, exceptional
recreational offerings and low tax rate, Lake Elmo remains an attractive area for new residents and businesses. The
City is seeing an increase in development interest for multi-family housing as well as from commercial and
business/industrial developers. There remain hundreds of acres available for development in both the downtown area
as well as along the I-94 corridor.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general
overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about
this report or need additional financial information, contact City Hall at 3880 Laverne Avenue North, Lake Elmo, Minnesota
55042.
25
BASIC FINANCIAL STATEMENTS
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET POSITION
DECEMBER 31, 2023
See accompanying notes. 26
Governmental
Activities
Business-Type
Activities Totals
ASSETS
Cash, Cash Equivalents, and Investments 25,090,109$ 18,830,867$ 43,920,976$
Property Taxes Receivable 103,590 - 103,590
Assessments Receivable 3,682,997 5,360,653 9,043,650
Accounts Receivable 857 762,788 763,645
Interest Receivable 61,968 44,060 106,028
Due from Other Governments 120,246 157,547 277,793
Leases Receivable 1,616,780 - 1,616,780
Capital Assets Not Being Depreciated 22,068,736 14,873,346 36,942,082
Capital Assets Being Depreciated (Net) 65,584,470 84,509,154 150,093,624
Net Pension Asset 565,242 - 565,242
TOTAL ASSETS 118,894,995 124,538,415 243,433,410
DEFERRED OUTFLOWS OF RESOURCES
Pensions 1,100,857 116,538 1,217,395
LIABILITIES
Accounts Payable 953,199 360,038 1,313,237
Salaries Payable 82,494 46,289 128,783
Construction Contracts Payable 696,604 357,767 1,054,371
Deposits Payable 2,380,136 - 2,380,136
Due to Other Governments 117,613 526,360 643,973
Payroll Deductions and Employer Contributions 52,653 - 52,653
Unearned Revenue 440,089 575,000 1,015,089
Accrued Interest Payable 399,971 348,433 748,404
Compensated Absences Payable:
Due Within One Year 82,586 28,718 111,304
Due After One Year 27,529 9,573 37,102
Bonds Payable:
Due Within One Year 2,705,000 2,315,000 5,020,000
Due After One Year 30,041,965 26,882,925 56,924,890
Net OPEB Liability:
Due After One Year 65,774 23,351 89,125
Net Pension Liability:
Due After One Year 1,238,795 368,041 1,606,836
TOTAL LIABILITIES 39,284,408 31,841,495 71,125,903
DEFERRED INFLOWS OF RESOURCES
Pensions 1,147,438 142,323 1,289,761
Leases 1,539,583 - 1,539,583
TOTAL DEFERRED INFLOWS OF RESOURCES 2,687,021 142,323 2,829,344
NET POSITION
Net Investment in Capital Assets 54,209,637 69,826,808 124,036,445
Restricted 11,658,502 - 11,658,502
Unrestricted 12,156,284 22,844,327 35,000,611
TOTAL NET POSITION 78,024,423$ 92,671,135$ 170,695,558$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 27
Operating Capital
Charges for Grants and Grants and Governmental Business-Type
Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities:
General Government 1,220,552$ 350,081$ 198,118$ -$ (672,353)$ -$ (672,353)$
Public Safety 3,228,801 1,587,586 678,701 - (962,514) - (962,514)
Public Works 4,627,872 60,388 223,450 9,895,930 5,551,896 - 5,551,896
Parks and Recreation 526,835 282,819 2,438 - (241,578) - (241,578)
Interest and Other Charges 815,944 - - - (815,944) - (815,944)
Total Governmental Activities 10,420,004 2,280,874 1,102,707 9,895,930 2,859,507 - 2,859,507
Business-Type Activities:
Water 3,982,238 2,804,479 - 4,848,900 - 3,671,141 3,671,141
Sewer 2,524,280 1,442,607 - 2,579,955 - 1,498,282 1,498,282
Storm Sewer 1,057,111 611,219 - 2,409,519 - 1,963,627 1,963,627
Total Business-Type Activities 7,563,629 4,858,305 - 9,838,374 - 7,133,050 7,133,050
TOTALS 17,983,633$ 7,139,179$ 1,102,707$ 19,734,304$ 2,859,507 7,133,050 9,992,557
General Revenues:
Property Taxes 7,822,031 - 7,822,031
Franchise Taxes 68,884 - 68,884
Intergovernmental 246,056 46 246,102
Investment Earnings (Losses)1,137,908 604,235 1,742,143
Gain (Loss) on Sale of Assets (221,202) - (221,202)
Miscellaneous 46,528 - 46,528
Total General Revenues 9,100,205 604,281 9,704,486
Capital Asset Transfers (420,482) 420,482 -
Total General Revenues and Transfers 8,679,723 1,024,763 9,704,486
CHANGE IN NET POSITION 11,539,230 8,157,813 19,697,043
NET POSITION - BEGINNING OF YEAR 66,485,193 84,513,322 150,998,515
NET POSITION - END OF YEAR 78,024,423$ 92,671,135$ 170,695,558$
Functions/Programs
Program Revenues Net (Expense) Revenue and Changes in Net Position
Primary Government
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET
GOVERNMENTAL FUNDS
DECEMBER 31, 2023
See accompanying notes. 28
General Fund
Debt Service
Fund
City Hall / Fire
Station Bldg
Project Fund
2023 Street
Improvements
Fund
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
ASSETS
Cash, Cash Equivalents, and Investments 12,190,097$ 5,011,444$ 2,044,541$ 395,053$ 5,448,974$ 25,090,109$
Property Taxes Receivable 103,590 - - - - 103,590
Assessments Receivable 66,113 3,596,335 - - 20,549 3,682,997
Accounts Receivable 857 - - - - 857
Interest Receivable 26,324 8,525 10,006 1,127 15,986 61,968
Due from Other Governments 120,246 - - - - 120,246
Due from Other Funds - - - - 449,894 449,894
Leases Receivable 1,616,780 - - - - 1,616,780
TOTAL ASSETS 14,124,007$ 8,616,304$ 2,054,547$ 396,180$ 5,935,403$ 31,126,441$
LIABILITIES
Accounts Payable 775,749$ -$ 16,511$ 38,351$ 122,588$ 953,199$
Salaries Payable 82,494 - - - - 82,494
Payroll Deductions and
Employer Contributions 52,653 - - - - 52,653
Construction Contracts Payable - - 589,040 69,999 37,565 696,604
Deposits Payable 2,380,136 - - - - 2,380,136
Due to Other Governments 117,613 - - - - 117,613
Due to Other Funds - - - - 449,894 449,894
Unearned Revenue 136,600 - - - 303,489 440,089
Total Liabilities 3,545,245 - 605,551 108,350 913,536 5,172,682
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue:
Property Taxes 52,486 - - - - 52,486
Special Assessments 66,113 3,589,592 - - 20,549 3,676,254
Leases 1,539,583 - - - - 1,539,583
Total Deferred Inflows of Resources 1,658,182 3,589,592 - - 20,549 5,268,323
Capital Project Funds
CITY OF LAKE ELMO, MINNESOTA
BALANCE SHEET (Continued)
GOVERNMENTAL FUNDS
DECEMBER 31, 2023
See accompanying notes. 29
General Fund
Debt Service
Fund
City Hall / Fire
Station Bldg
Project Fund
2023 Street
Improvements
Fund
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
FUND BALANCES
Restricted -$ 5,026,712$ -$ 287,830$ 3,154,339$ 8,468,881$
Committed - - - - 20,334 20,334
Assigned - - 1,448,996 - 2,319,618 3,768,614
Unassigned 8,920,580 - - - (492,973) 8,427,607
Total Fund Balances 8,920,580 5,026,712 1,448,996 287,830 5,001,318 20,685,436
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES 14,124,007$ 8,616,304$ 2,054,547$ 396,180$ 5,935,403$ 31,126,441$
Capital Project Funds
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET POSITION
DECEMBER 31, 2023
See accompanying notes. 30
Total Fund Balances - Governmental Funds 20,685,436$
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial resources
and, therefore, are not reported as assets in the governmental funds:
Capital Assets 108,951,993$
Accumulated Depreciation (21,298,787)
Capital Assets (Net) 87,653,206
Long-term liabilities are not due and payable in the current period and, therefore,
are not reported as liabilities in the governmental funds Balance Sheet:
Bond Principal Payable (31,425,000)
Bond Premium, Net of Accumulated Amortization (1,321,965)
Compensated Absences (110,115)
(32,857,080)
The net OPEB liability represents the present value of projected unfunded future
postemployment benefits other than pensions, as determined by an actuary as
of the most recent measurement date. Such liability and related balances do not
represent the impending use of current financial resources and, therefore, are
not reported in the governmental funds:
Net OPEB Liability (65,774)
The net pension asset/liability and related deferred outflows/inflows represent
the allocation of pension obligations to the City. Such balances are not reported
in the governmental funds:
Net Pension Asset 565,242
Net Pension Liability (1,238,795)
Deferred Outflows - Pensions 1,100,857
Deferred Inflows - Pensions (1,147,438)
(720,134)
Interest on long-term debt is recognized as an expenditure when due and payable
in the governmental funds. Therefore, interest is not accrued in the governmental
funds Balance Sheet, but is accrued in the Statement of Net Position:(399,971)
Other long-term assets are not available to pay for current-period expenditures
and, therefore, are reported as unavailable in the governmental funds:
Property Taxes Receivable 52,486
Special Assessments Receivable 3,676,254
3,728,740
TOTAL NET POSITION OF GOVERNMENTAL ACTIVITIES 78,024,423$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 31
General Fund
Debt Service
Fund
City Hall / Fire
Station Bldg
Project Fund
2023 Street
Improvements
Fund
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
REVENUES
Property Taxes 5,142,534$ 2,677,138$ -$ -$ -$ 7,819,672$
Franchise Taxes 68,884 - - - - 68,884
Special Assessments - 900,116 - - 8,938 909,054
Licenses, Permits, and Fees 1,148,190 - - - - 1,148,190
Intergovernmental 386,492 - 148,862 - 796,177 1,331,531
Charges for Services 798,787 - - - 282,819 1,081,606
Fines 45,402 - - - - 45,402
Investment Earnings (Losses)345,953 119,653 352,664 5,077 249,225 1,072,572
Lease Interest 65,336 - - - - 65,336
Miscellaneous 46,277 - 18,686 - 21,230 86,193
TOTAL REVENUES 8,047,855 3,696,907 520,212 5,077 1,358,389 13,628,440
EXPENDITURES
Current:
General Government 1,213,697 - - - - 1,213,697
Public Safety 3,037,244 - - - - 3,037,244
Public Works 1,284,334 - - 70,466 417 1,355,217
Parks and Recreation 409,753 - - - 739 410,492
Capital Outlay 280,584 - 5,792,103 2,192,180 3,541,629 11,806,496
Debt Service:
Principal - 2,480,000 - - - 2,480,000
Interest and Other Charges - 818,194 - 32,498 12,397 863,089
TOTAL EXPENDITURES 6,225,612 3,298,194 5,792,103 2,295,144 3,555,182 21,166,235
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 1,822,243 398,713 (5,271,891) (2,290,067) (2,196,793) (7,537,795)
Capital Project Funds
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued)
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 32
General Fund
Debt Service
Fund
City Hall / Fire
Station Bldg
Project Fund
2023 Street
Improvements
Fund
Total Nonmajor
Governmental
Funds
Total
Governmental
Funds
OTHER FINANCING SOURCES (USES)
Sale of Assets -$ -$ -$ -$ 60,600$ 60,600$
Bond Issuance - 92,421 - 2,401,498 916,081 3,410,000
Premium on Bond Issuance - - - 229,494 87,543 317,037
Transfers In - - - - 466,799 466,799
Transfers Out (441,902) - - - (24,897) (466,799)
TOTAL OTHER FINANCING
SOURCES (USES)(441,902) 92,421 - 2,630,992 1,506,126 3,787,637
NET CHANGE IN FUND BALANCES 1,380,341 491,134 (5,271,891) 340,925 (690,667) (3,750,158)
FUND BALANCES - BEGINNING 7,540,239 4,535,578 6,720,887 (53,095) 5,691,985 24,435,594
FUND BALANCES - ENDING 8,920,580$ 5,026,712$ 1,448,996$ 287,830$ 5,001,318$ 20,685,436$
Capital Project Funds
CITY OF LAKE ELMO, MINNESOTA
RECONCILIATION OF CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 33
Net Change in Fund Balances - Total Governmental Funds (3,750,158)$
Amounts reported for governmental activities in the Statement of Activities are
different due to the following:
Capital outlays are reported in the 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 Outlay Capitalized - Capital Assets 11,630,302$
Depreciation Expense (3,388,205)
Capital Assets Acquired via Donation 8,314,179
Capital Assets Transferred to Proprietary Funds (420,482)
Loss on Disposal of Assets (281,802)
15,853,992
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 position. Also, governmental
funds report the effect of premiums and discounts when debt is first issued,
whereas these amounts are deferred and amortized in the Statement of
Activities. The amounts below detail the effects of these differences in the
treatment of long-term debt and related items:
Bond Principal Repayments 2,480,000
Bond Issuance (3,410,000)
Premium on Bond Issuance (317,037)
Amortization of Bond Premium 105,751
(1,141,286)
Interest on long-term debt in the Statement of Activities differs from the amounts
reported in the governmental funds because interest is recognized as an
expenditure in the funds only when it is due. In the Statement of Activities,
however, interest expense is recognized as the interest accrues, regardless
of when it is due: (58,606)
Under the modified accrual basis of accounting, certain revenues cannot be
recognized until they are available to liquidate liabilities of the current period:
Property Taxes 2,359
Special Assessments 672,697
675,056
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 the governmental funds:
Compensated Absences (17,006)
Certain liabilities do not represent the impending use of current resources.
Therefore, the change in such liabilities and related deferrals are not
reported in the governmental funds:
Net OPEB Liability and Deferred Outflows/Inflows of Resources 5,736
Net Pension Asset/Liability and Deferred Outflows/Inflows of Resources (28,498)
(22,762)
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 11,539,230$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
DECEMBER 31, 2023
See accompanying notes. 34
Water Fund Sewer Fund
Storm Sewer
Fund Totals
ASSETS
Current Assets:
Cash and Cash Equivalents 5,792,477$ 11,621,118$ 1,417,272$ 18,830,867$
Assessments Receivable 114,234 348,951 42,479 505,664
Accounts Receivable 252,593 194,187 316,008 762,788
Interest Receivable 12,174 28,516 3,370 44,060
Due from Other Governments 157,547 - - 157,547
Total Current Assets 6,329,025 12,192,772 1,779,129 20,300,926
Noncurrent Assets:
Capital Assets Not Being Depreciated 12,717,895 2,155,451 - 14,873,346
Capital Assets Being Depreciated (Net)46,064,811 23,124,777 15,319,566 84,509,154
Assessments Receivable 387,114 4,467,073 802 4,854,989
Total Noncurrent Assets 59,169,820 29,747,301 15,320,368 104,237,489
TOTAL ASSETS 65,498,845 41,940,073 17,099,497 124,538,415
DEFERRED OUTFLOWS OF RESOURCES
Pensions 73,095 29,201 14,242 116,538
LIABILITIES
Current Liabilities:
Accounts Payable 318,353 37,964 3,721 360,038
Salaries Payable 26,838 13,060 6,391 46,289
Construction Contracts Payable 272,612 85,155 - 357,767
Due to Other Governments 475,605 50,755 - 526,360
Unearned Revenue 575,000 - - 575,000
Accrued Interest 150,391 177,270 20,772 348,433
Compensated Absences 19,530 6,426 2,762 28,718
Bonds Due Within One Year 1,150,000 950,000 215,000 2,315,000
Total Current Liabilities 2,988,329 1,320,630 248,646 4,557,605
Noncurrent Liabilities:
Compensated Absences 6,510 2,142 921 9,573
Bonds Due After One Year 11,949,402 12,909,025 2,024,498 26,882,925
Net OPEB Liability 15,330 5,303 2,718 23,351
Net Pension Liability 231,588 92,063 44,390 368,041
Total Noncurrent Liabilities 12,202,830 13,008,533 2,072,527 27,283,890
TOTAL LIABILITIES 15,191,159 14,329,163 2,321,173 31,841,495
DEFERRED INFLOWS OF RESOURCES
Pensions 89,556 35,601 17,166 142,323
NET POSITION
Net Investment in Capital Assets 45,410,692 11,336,048 13,080,068 69,826,808
Unrestricted 4,880,533 16,268,462 1,695,332 22,844,327
TOTAL NET POSITION 50,291,225$ 27,604,510$ 14,775,400$ 92,671,135$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 35
Water Fund Sewer Fund
Storm Sewer
Fund Totals
OPERATING REVENUES
Charges for Services 1,932,608$ 760,781$ 580,896$ 3,274,285$
OPERATING EXPENSES
Wages and Benefits 521,477 242,151 106,356 869,984
Materials and Supplies 368,133 23,370 9,453 400,956
Repairs and Maintenance 73,786 28,718 49,132 151,636
Professional Services 250,034 117,318 46,110 413,462
Insurance 25,923 15,790 3,728 45,441
Utilities 178,976 553,361 422 732,759
Miscellaneous 62,638 65,446 9,791 137,875
Depreciation 2,148,531 1,121,402 791,557 4,061,490
TOTAL OPERATING EXPENSES 3,629,498 2,167,556 1,016,549 6,813,603
NET OPERATING INCOME (LOSS)(1,696,890) (1,406,775) (435,653) (3,539,318)
NONOPERATING INCOME (EXPENSE)
Special Assessments 18,013 519,257 7,363 544,633
Intergovernmental 2,666,737 11 6 2,666,754
Connection Fees 866,200 648,700 - 1,514,900
Capital Contributions from Private Sources 2,164,179 2,060,698 2,402,156 6,627,033
Investment Earnings (Losses)172,199 387,540 44,496 604,235
Miscellaneous 5,671 33,126 30,323 69,120
Interest and Other Charges (352,740) (356,724) (40,562) (750,026)
TOTAL NONOPERATING
INCOME (EXPENSE)5,540,259 3,292,608 2,443,782 11,276,649
CHANGE IN NET POSITION PRIOR
TO TRANSFERS 3,843,369 1,885,833 2,008,129 7,737,331
TRANSFERS
Interfund Capital Asset Transfers - 420,482 - 420,482
CHANGE IN NET POSITION 3,843,369 2,306,315 2,008,129 8,157,813
NET POSITION - BEGINNING OF YEAR 46,447,856 25,298,195 12,767,271 84,513,322
NET POSITION - END OF YEAR 50,291,225$ 27,604,510$ 14,775,400$ 92,671,135$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 36
Water Fund Sewer Fund
Storm Sewer
Fund Totals
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash Received from Customers 1,836,037$ 697,414$ 529,068$ 3,062,519$
Cash Paid to Suppliers (859,674) (956,258) (120,221) (1,936,153)
Cash Paid to Employees (448,628) (217,144) (101,632) (767,404)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 527,735 (475,988) 307,215 358,962
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Taxes and Intergovernmental 29 11 6 46
Other Receipts from Customers 742,671 545,026 30,323 1,318,020
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING
ACTIVITIES 742,700 545,037 30,329 1,318,066
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Special Assessments 262,583 929,033 39,549 1,231,165
Intergovernmental and Other 4,413,883 - - 4,413,883
Purchases of Capital Assets (5,001,498) (1,568,407) - (6,569,905)
Payments on Bond Principal (1,200,000) (915,000) (210,000) (2,325,000)
Proceeds from Debt Issuance 529,114 1,609,114 - 2,138,228
Cash Paid for Interest and Other Charges (384,987) (373,724) (48,332) (807,043)
NET CASH PROVIDED (USED) BY
CAPITAL AND RELATED FINANCING
ACTIVITIES (1,380,905) (318,984) (218,783) (1,918,672)
CASH FLOWS FROM INVESTING
ACTIVITIES
Investment Income 164,363 368,602 42,210 575,175
Net Change in Cash and Cash Equivalents 53,893 118,667 160,971 333,531
Cash and Cash Equivalents - Beginning of Year 5,738,584 11,502,451 1,256,301 18,497,336
Cash and Cash Equivalents - End of Year 5,792,477$ 11,621,118$ 1,417,272$ 18,830,867$
CITY OF LAKE ELMO, MINNESOTA
STATEMENT OF CASH FLOWS (Continued)
PROPRIETARY FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
See accompanying notes. 37
Water Fund Sewer Fund
Storm Sewer
Fund Totals
RECONCILIATION OF NET OPERATING
INCOME (LOSS) TO NET CASH
PROVIDED (USED) BY OPERATING
ACTIVITIES
Net Operating Income (Loss)(1,696,890)$ (1,406,775)$ (435,653)$ (3,539,318)$
Adjustments to Reconcile Net Operating
Income (Loss) to Net Cash Provided
(Used) by Operating Activities:
Depreciation Expense 2,148,531 1,121,402 791,557 4,061,490
Changes in Assets, Liabilities,
and Deferrals:
Accounts Receivable (13,374) (29,096) (9,821) (52,291)
Special Assessments (83,197) (34,271) (42,007) (159,475)
Accounts Payable 99,816 (26,251) (1,585) 71,980
Due to Other Governments - (126,004) - (126,004)
Salaries Payable 17,991 9,368 5,099 32,458
Compensated Absences (227) (477) (1,113) (1,817)
Net OPEB Liability 199 (1,075) (844) (1,720)
Net Pension Liability (65,081) (32,589) (25,920) (123,590)
Deferred Outflows of
Resources - Pensions 36,455 16,719 11,768 64,942
Deferred Inflows of
Resources - Pensions 83,512 33,061 15,734 132,307
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 527,735$ (475,988)$ 307,215$ 358,962$
SCHEDULE OF NONCASH CAPITAL
AND RELATED FINANCING
ACTIVITIES
Contribution of Capital Assets from
Private Sources 2,164,179$ 2,060,698$ 2,402,156$ 6,627,033$
Contribution of Capital Assets from
Governmental Activities -$ 420,482$ -$ 420,482$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
38
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the City of Lake Elmo, Minnesota (the City) have been prepared in conformity with accounting
principles generally accepted in the United States of America (GAAP) as applied to governmental units. GAAP includes all
relevant Governmental Accounting Standards Board (GASB) pronouncements.
The City has a mayor-council form of government that is governed by an elected mayor and four-member council. The City
provides the following services: water, sewer, and storm sewer utilities, recreation, public improvements, public safety,
planning and zoning, and general administrative services.
1.A. FINANCIAL REPORTING ENTITY
The City’s financial reporting entity is comprised of the primary governmental unit of the City of Lake Elmo, Minnesota.
In determining the financial reporting entity, the City complies with the provisions of GASB Statement No. 14, The Financial
Reporting Entity, and includes all component units of which the City appointed a voting majority of the units’ board; the City
is either able to impose its will on the unit or a financial benefit or burden relationship exists.
Blended Component Units
Blended component units are separate legal entities that meet the component unit criteria described above and whose governing
body is the same or substantially the same as the City Council or the component unit provides services entirely to the City.
These component units’ funds are blended into those of the City’s by appropriate activity type to compose the primary
government presentation. Currently, the City has the following blended component unit:
Economic Development Authority of the City of Lake Elmo
The Economic Development Authority (EDA) of Lake Elmo is an entity legally separate from the City. The EDA
provides services primarily to the City of Lake Elmo and the City Council appoints the EDA’s board members.
Therefore, the EDA has been reported as a blended component unit of the City. The EDA does not issue its own
separate financial statements.
The financial activity of the Authority is performed by the City of Lake Elmo and treated as routine City business.
Discretely Presented Component Units
Discretely presented component units are separate legal entities that meet the component unit criteria described above but do
not meet the criteria for blending. Currently, the City has no discretely presented component units.
Related Organizations
The Lake Elmo Firefighters Relief Association (the Association) is organized as a non-profit organization, legally separate
from the City, to provide pension and other benefits to its members in accordance with Minnesota Statutes. Its board of directors
is appointed by the membership of the Association and not by the City Council and the Association issues its own set of
financial statements. All funding is conducted in accordance with applicable Minnesota Statutes, whereby State aids flow to
the Association, and the Association pays benefits directly to its members. Because the Association is fiscally independent of
the City, the financial statements of the Association have not been included within the City’s reporting entity. The City’s portion
of the costs of the Association’s pension benefits is included in the general fund under public safety.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
39
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.B. BASIS OF PRESENTATION
Government-wide Financial Statements
The Statement of Net Position and Statement of Activities display information about the reporting government as a whole.
They include all funds of the reporting entity except for fiduciary funds (of which the City has none). The government-wide
statements distinguish between governmental and business-type activities. Governmental activities generally are financed
through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole
or in part by fees charged to external parties for goods and services.
Fund Financial Statements
Fund financial statements of the reporting entity are organized into funds, each of which is considered to be a separate
accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets,
deferred outflows, liabilities, deferred inflows, fund equity, revenues, and expenditures/expenses. Funds are organized into
two major categories: governmental and proprietary. An emphasis is placed on major funds within the governmental and
proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria:
• Total assets and deferred outflows, liabilities and deferred inflows, revenues, or expenditures/expenses of that
individual governmental or proprietary fund are at least 10 percent of the corresponding total for all funds of that
category or type; and
• Total assets and deferred outflows, liabilities and deferred inflows, revenues, or expenditures/expenses of that
individual governmental or proprietary fund are at least 5 percent of the corresponding total for all governmental and
proprietary funds combined.
The City reports the following major governmental funds:
The General Fund is the primary operating fund of the City and is always classified as a major fund. It is used to
account for all activities except those legally or administratively required to be accounted for in other funds.
The Debt Service Fund accounts for the accumulation of financial resources for the payment of interest and principal
on general long-term debt of the City other than debt service payments made by proprietary funds. Ad valorem taxes
and special assessments are used for the payment of principal and interest on the City’s indebtedness.
The City Hall / Fire Station Bldg Project Fund is a capital project fund used to account for financial resources related
to the construction of a new City Center/Fire Station and Public Works addition. The project was substantially
completed in 2023 and is expected to be capitalized in 2024.
The 2023 Street Improvements Fund is a capital project fund used to account for financial resources related to the
street improvement project that was initiated in 2023.
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 for revenues and costs associated with the City’s sewer system.
The Storm Sewer Fund accounts for costs associated with the City’s storm sewer system. These costs are financed by
the storm sewer surcharge.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
40
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.B. BASIS OF PRESENTATION (Continued)
The City reports the following nonmajor governmental fund types:
The Special Revenue Funds account for funds received by the City with a specific purpose.
The Capital Project Funds account for financial resources to be used for the acquisition or construction of capital
projects (other than those financed by proprietary funds).
1.C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING
Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis
of accounting refers to “when” transactions are recorded regardless of the measurement focus applied.
Measurement Focus
On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-type
activities are presented using the economic resources measurement focus as defined in the second bullet point below. In the
fund financial statements, the current financial resources measurement focus or the economic resources measurement focus is
used as appropriate:
• All governmental funds utilize a current financial resources measurement focus. Only current financial assets and
liabilities are generally included on their balance sheets. Their operating statements present sources and uses of
available financial resources during a given period. These funds use fund balance as their measure of available
financial resources at the end of the period.
• The government-wide financial statements and proprietary funds utilize an economic resources measurement focus.
The accounting objectives of this measurement focus are the determination of operating income, changes in net
position (or cost recovery), financial position, and cash flows. All assets, deferred outflows, liabilities, and deferred
inflows (whether current or noncurrent) associated with their activities are reported. Proprietary fund equity is
classified as net position.
Basis of Accounting
In the government-wide Statement of Net Position and Statement of Activities, both governmental and business-type activities
are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recorded when the liability is incurred, or economic asset used. Revenues, expenses, gains, losses,
assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.
In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this
modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing
or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days
after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general
obligation bond principal and interest which are reported when due.
All proprietary funds utilize the accrual basis of accounting.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
41
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.D. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the General Fund. The
appropriated budget is prepared by fund, function, and department. The City of Lake Elmo’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.
Appropriations in all budgeted funds lapse at the end of the fiscal year. Encumbrance accounting, under which purchase orders,
contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the
appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control
or to facilitate effective cash management.
1.E. USE OF ESTIMATES
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 the reported amounts of assets, deferred outflows,
liabilities, and deferred inflows, and disclosure of contingent assets and liabilities at the date of the financial statements.
Estimates also affect reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
1.F. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND EQUITY
Cash and Cash Equivalents
For purposes of the Statements of Net Position, “cash, cash equivalents, and investments” includes all demand, savings, and
money market savings accounts for the City, as well as certain investments discussed below. For the purpose of the proprietary
fund Statement of Cash Flows, “cash and cash equivalents” include all demand, savings, money market savings accounts, and
highly liquid investments. All investments allocated to the Proprietary Funds have original maturities of 90 days or less and
are therefore considered to be cash equivalents.
Investments
Investments are stated at their fair value as determined in accordance with the fair value hierarchy. Short-term investments are
reported at amortized cost, provided that the fair value of those investments is not significantly affected by the impairment of
the credit standing of the issuer or by other factors. Securities traded on a national or international exchange are valued at the
last reported sales price at current exchange rates. Investments that do not have an established market are reported at estimated
fair value. Certificates of deposit are stated at cost, plus accrued interest, which approximates fair market value.
Net appreciation (depreciation) in fair value of investments includes net unrealized and realized gains and losses. Purchases
and sales of securities are recorded on a trade-date basis.
See Note 2.A. for additional information related to Cash, Cash Equivalents, and Investments.
Interfund Receivables and Payables
During the course of operations, transactions occur between individual funds that may result in amounts owed between funds.
Those related to good and services type transactions are classified as “due to and from other funds.” Short-term interfund loans
are reported as “due to and from other funds.” Long-term interfund loans are reported as “advances from and to other funds.”
Interfund receivables and payables between funds within governmental activities, as well as interfund receivables and payables
between funds within business-type activities, are eliminated in the Statement of Net Position. See Note 2.E. for details of
interfund transactions, including receivables and payables at year-end.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
42
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.F. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND EQUITY
(Continued)
Prepaid Expenditures/Expenses
Prepaids, if any, represent expenditures/expenses paid during the current year to be recognized in future periods.
Receivables
In the government-wide statements, receivables consist of all revenues earned at year-end and not yet received. Allowances
for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable and not
deemed necessary at year end. Major receivable balances for the governmental activities include taxes, special assessments
and amount due from other governments. Business-type activities report utility charges and assessments as their major
receivables.
In the fund financial statements, material receivables in governmental funds include revenue accruals such as taxes,
assessments, other intergovernmental revenues, fines, and charges for services since they are usually both measurable and
available. Revenues collectible but not available are deferred in the fund financial statements in accordance with the modified
accrual basis, but are not deferred in the government-wide financial statements in accordance with the accrual basis. Interest
and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable
and available. Proprietary fund material receivables consist of all revenues earned at year-end and not yet received. Utility
accounts receivable and assessments compose the majority of proprietary fund receivables. Allowances for uncollectible
accounts receivable are based upon historical trends and the periodic aging of accounts receivable. No allowances are deemed
necessary at year end.
Leases Receivable
Lease receivables are determined based on future lease payments to be received under each corresponding lease agreement
over the lease term, discounted using the interest rate applied to the leasing arrangement. If not defined in the lease agreement,
implicit interest rates are determined based on the estimated incremental borrowing rate. Collections under the leasing
arrangements are recorded as a reduction to the corresponding lease receivable, as well as lease interest revenues.
Upon initial execution of lease, a corresponding deferred inflow of resources balance is recorded. This balance is amortized on
a straight-line basis over the term of the lease, resulting in the recognition of lease revenues.
Capital Assets
The accounting treatment over property, plant, and equipment (capital assets) depends on whether the assets are used in
governmental or proprietary fund operations and whether they are reported in the government-wide or fund financial statements.
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 $25,000 and an estimated
useful life in excess of one year.
The range of estimated useful lives by type of asset is as follows:
Buildings 10-50 years
Other Improvements 10-20 years
Machinery and Equipment 5-25 years
Infrastructure 20-40 years
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
43
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.F. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND EQUITY
(Continued)
Government-wide Statements
In the government-wide financial statements, capital outlay expenditures are accounted for as capital assets. All capital assets
are valued at historical cost or estimated historical cost if actual is unavailable, except for donated capital assets which are
recorded at their estimated acquisition value at the date of donation.
Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with
accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets’ estimated useful
lives using the straight-line method.
Fund Financial Statements
In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay
expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for
the same as in the government-wide statements.
Accounts Payable
Payables in the governmental and proprietary funds are composed almost entirely of payables to vendors.
Compensated Absences
It is the City’s policy to permit employees to accumulate earned but unused personal time off (PTO), compensatory time, and
sick pay benefits. All PTO, compensatory time, and the portion of sick pay allowable as severance pay is accrued as incurred
in the government-wide and proprietary fund financial statements. The current portion is calculated based on historical trends.
A liability for these amounts is reported in governmental funds only if they have matured, for example, as the result of an
employee’s resignation or retirement. In the event a liability is recorded in the governmental funds, General Fund resources
would typically be used to liquidate the compensated absences.
Long-Term Debt
The accounting treatment of long-term debt and other long-term debt obligations depends on whether the liabilities pertain to
governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund
financial statements.
All long-term debt to be repaid from governmental and business-type resources are reported as liabilities in the government-
wide statements. The long-term debt consists primarily of bonds payable, but also includes various other obligations.
Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are
reported as other financing sources and payment of principal and interest are reported as expenditures. The accounting for
proprietary funds is the same in the fund statements as it is in the government-wide statements.
Postemployment Benefits Other Than Pensions (OPEB)
Under the provisions of the various employee and union contracts, the City provides health insurance coverage for varying
lengths of time if certain age and minimum years of service requirements are met.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
44
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.F. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND EQUITY
(Continued)
Net Pension Asset/Liability
The net pension asset represents the Lake Elmo Firefighters Relief Association’s net pension asset as of the most recent actuarial
measurement date. The net pension liability represents the City’s allocation of its pro-rata share of the net pension liabilities
of the Statewide pension plans administered by the Public Employees Retirement Administration (PERA).
PERA
For purposes of measuring the net pension asset and liability, deferred outflows/inflows of resources, and pension expense,
information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions
to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA. For
this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments, and refunds are
recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Deferred Outflows/Inflows of Resources
In addition to assets, the Statements of Net Position report a separate section for deferred outflows of resources. This element
represents a consumption of net position that applies to future periods and, therefore, will not be recognized as an outflow of
resources (expense) until that time. The City reports deferred outflows of resources in the government-wide and proprietary
fund Statements of Net Position in relation to the activity of the pension funds in which City employees participate.
In addition to liabilities, the Statements of Net Position and Balance Sheet report a separate section for deferred inflows of
resources. This element represents an acquisition of net position or fund balance that applies to future periods and, therefore,
will not be recognized as an inflow of resources (revenue) until that time. A previously discussed, the City reports deferred
inflows of resources in both the governmental fund Balance Sheet and the government-wide Statement of Net Position in
relation to its leasing activities. The City also reports property taxes and special assessments as deferred inflows of resources
in the governmental fund financial statements, in accordance with the modified accrual basis of accounting. Accordingly, such
amounts are deferred and recognized as inflows of resources in the period that they become available. In addition, the City
reports deferred inflows of resources in the government-wide and proprietary fund Statements of Net Position in relation to the
activity of pension funds in which City employees participate.
See Notes 3 and 4 for additional information pertaining to the deferred outflows and deferred inflows recorded to account for
pension activities.
Equity Classifications
Government-wide Financial Statements
Equity is classified as net position and displayed in three components:
Net Investment in Capital Assets – Consists of capital assets including restricted capital assets, net of accumulated
depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are
attributable to the acquisition, construction, or improvement of those assets.
Restricted – The portion of net position for which use is constrained by 1) external groups such as creditors, grantors,
contributors, or laws or regulations of other governments; or 2) law through constitutional provisions or enabling
legislation.
Unrestricted – Remaining balance of net position that does not meet the definition of “restricted” or “net investment
in capital assets.”
It is the City’s policy to consider restricted net position to its depletion before unrestricted net position is applied.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
45
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.F. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS OF RESOURCES, AND EQUITY
(Continued)
Governmental Fund Financial Statements
In the fund financial statements, governmental funds report fund balances as either nonspendable, restricted, committed,
assigned, or unassigned. When the City incurs an expenditure for which it may use either restricted or unrestricted fund
balances, it uses restricted fund balances first unless unrestricted fund balances will have to be returned because they were not
used. When the City incurs an expenditure for purposes for which amounts in any unrestricted fund balance classification
could be used, it uses fund balances in the following order: Committed, assigned, unassigned.
Nonspendable – Includes amounts that cannot be spent because they are either not in spendable form, or legally or
contractually required to be maintained intact. There are no nonspendable fund balances at December 31, 2023.
Restricted – That portion of fund balance which is not available for appropriation, or which has been legally segregated
for a specific purpose.
Committed – Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action
(resolution) of the City Council, which is the highest level of decision-making authority. Committed amounts cannot be
used for any other purpose unless the City Council modifies or rescinds the commitment by resolution.
Assigned – Amounts that are constrained by the City’s intent to be used for specific purposes but are neither restricted nor
committed. The City Council has delegated the power to assign fund balances to the City Administrator and/or the Finance
Director.
Unassigned – This classification represents fund balance that has not been assigned to other funds and that has not been
restricted, committed, or assigned to specific purposes within the General Fund. The City strives to maintain a minimum
unassigned fund balance in the General Fund of an amount that is not less than 50% to 60% of the next year’s budgeted
expenditures of the General Fund.
See Note 2.F. for additional disclosures.
Proprietary Fund Financial Statements
Proprietary fund equity is classified the same as in the government-wide statements, as described on the previous page.
1.G. REVENUES, EXPENDITURES, AND EXPENSES
Property Tax
Under state law, municipalities are limited in their ability to levy a property tax. The City levies its property tax for the
subsequent year during the month of December. Washington County is the collecting agency for the levy and remits the
collections to the City. In the fund financial statements, property taxes are recorded as revenue in the period levied to the extent
they are collected within 60 days of year-end.
The City certifies its levy to the County each year in December, for collection the following year. The County creates the tax
list for all taxable property in the City and applies the applicable tax rate to the tax capacity of individual properties to arrive at
the actual tax for each property. The County also collects all special assessments, except for certain prepayments paid directly
to the City. The County collects all taxes and assessments, except as noted above. The County mails copies of all real estate
and personal property tax statements. Each year, property owners are required to pay one half of their real estate taxes by May
15 and the balance by October 15. Penalties and interest are assessed to property owners who do not pay their property taxes
and special assessments by the due dates.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
46
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.G. REVENUES, EXPENDITURES, AND EXPENSES (Continued)
Delinquent taxes receivable include the past six years’ uncollected taxes. Delinquent taxes have been offset by deferred inflows
of resources for taxes not received within 60 days after year end in the fund financial statements.
Special Assessments
Special assessments are levied against benefited properties for the cost or a portion of the cost of special assessment
improvement projects in accordance with State Statutes. These assessments are collectible by the City over a term of years
usually consistent with the term of the related bond issue. Collection of annual installments (including interest) is handled by
the County Auditor in the same manner as property taxes. Property owners are allowed to (and often do) prepay future
installments without interest or prepayment penalties.
Once a special assessment roll is adopted, the amount attributed to each parcel is a lien upon that property until full payment is
made or the amount is determined to be excessive by the City Council or court action. If special assessments are allowed to go
delinquent, the property is subject to tax forfeit sale and the first proceeds of that sale (after costs, penalties, and expenses of
sale) are remitted to the City in payment of delinquent special assessments. Generally, the City will collect the full amount of
its special assessments not adjusted by City Council or court action. Pursuant to State Statutes, a property shall be subject to a
tax forfeit sale after three years unless it is homesteaded, agricultural or seasonal recreational land in which event the property
is subject to such sale after five years.
Within the government-wide financial statements, the City recognizes special assessment revenue in the period that the
assessment roll was adopted by the City Council. Uncollectible special assessments are not material and have not been reported.
Within the fund financial statements, the revenue from special assessments is recognized by the City when it becomes
measurable and available to finance expenditures of the current fiscal period. In practice, current and delinquent special
assessments received by the City are recognized as revenue for the current year. Special assessments are collected by the County
and remitted by December 31 (remitted to the City the following January) and are also recognized as revenue for the current
year. All remaining delinquent, deferred, and special deferred assessments receivable in governmental funds are completely
offset by deferred inflows of resources.
Operating Revenues and Expenses
Operating revenues and expenses for proprietary funds are those that result from providing services and producing and
delivering goods and/or services. It also includes all revenue and expenses not related to capital and noncapital financing or
investing activities.
Expenditures/Expenses
In the government-wide financial statements, expenses are classified by function for both governmental and business-type
activities.
In the fund financial statements, expenditures are classified as follows:
Governmental Funds - By Character Current (further classified by Function)
Capital Outlay
Debt Service
Proprietary Fund - By Operating and Nonoperating
In the fund financial statements, governmental funds report expenditures of financial resources. Proprietary funds report
expenses relating to use of economic resources.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
47
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.G. REVENUES, EXPENDITURES, AND EXPENSES (Continued)
Interfund Transfers
Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purpose
of the Statement of Activities, all interfund transfers between individual governmental funds, as well as all interfund transfers
between individual proprietary funds, have been eliminated. See additional information at Note 2.E.
1.F. RECLASSIFICATIONS
Certain amounts from 2022 have been reclassified to conform to the 2023 presentation in the Management’s Discussion and
Analysis section.
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS
The following notes present detail information to support the amounts reported in the basic financial statements for its various
assets, liabilities, deferred outflows/inflows of resources, equity, revenues, and expenditures/expenses.
2.A. CASH, CASH EQUIVALENTS, AND INVESTMENTS
Deposits
In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City
Council. 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 (100% if collateral pledged
is irrevocable standby letters of credit issued by the Federal Home Loan Bank). The City complies with such laws.
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;
• A general obligation of a state or local government, with taxing powers, rated “A” or better;
• A revenue obligation of a state or local government, with taxing powers, rated “AA” or better;
• Unrated general obligation securities of a local government, with taxing powers, pledged as collateral against funds
deposited by that same local government entity;
• Irrevocable standby letter of credit issued by a Federal Home Loan Bank accompanied by written evidence that the
Federal Home Loan Bank’s public debt is rated “AA” or better by Moody’s or Standard and Poor’s; or
• Time deposits insured by any federal agency.
Minnesota Statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve Ba nk,
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 December 31, 2023, the City’s deposits, including certificates of deposit, were not exposed to custodial credit risk. The
City’s deposits were sufficiently covered by federal depository insurance and collateral held by the City’s agent in the City’s
name.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
48
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.A. CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued)
Investments
The City may also invest idle funds as authorized by Minnesota Statutes as follows: direct obligations guaranteed by the United
States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that
received the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of
the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated
“AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of
United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States
corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating
agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank,
domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest
categories; repurchase or reverse purchase 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 $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York,
or certain Minnesota securities broker-dealers. The City does not have any investment policies that would further limit
investment choices.
The City categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally
accepted in the United State of America. The hierarchy is based on the valuation inputs used to measure the fair value of the
asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable
inputs; Level 3 inputs are significant unobservable inputs.
Investment balances at December 31, 2023 are as follows:
The investments of the City are subject to the following risks:
• Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings are
provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota Statutes
limit the City’s investments. The City’s policy to minimize credit risk includes limiting investing funds to those
allowable under Minnesota Statute 118A, annually appointing all financial institutions where investments are held,
and diversifying the investment portfolio. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization.
S & P's
Credit Fair Value Fair Less
Investment Type Rating Level Value Than 1 1 - 5 6 - 10
Money Market Funds N/A N/A 1,068,433$ 1,068,433$ -$ -$
U.S. Government Bonds AA+ Level 2 8,167,665 4,449,294 3,718,371 -
Municipal Bonds A to AAA Level 2 3,482,216 443,620 2,470,534 568,062
Brokered Certificates of Deposit NR Level 2 3,819,039 2,569,814 1,249,225 -
Totals 16,537,353$ 8,531,161$ 7,438,130$ 568,062$
Investment Maturities (in Years)
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
49
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.A. CASH, CASH EQUIVALENTS, AND INVESTMENTS (Continued)
• Custodial credit risk is the risk that in the event of a 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. The
City’s investment policy requires its brokers to be licensed with the appropriate federal and state agencies. A minimum
capital requirement of $10,000,000 and at least five years of operation is mandatory. Investments in securities are held
by the City’s broker-dealers. The securities at each broker-dealer are insured $500,000 through SIPC. Each broker-
dealer has provided additional protection by providing additional insurance. This insurance is subject to aggregate
limits applied to all of the broker-dealer’s accounts.
• Concentration of Credit Risk is the risk associated with the magnitude of the City’s investments (considered five
percent or more) in the investments of a single issuer, excluding U.S. guaranteed investments (such as treasuries),
investment pools, and mutual funds. The City’s investment policy allows no more than 5 percent of the overall
portfolio to be invested in a single issuer, except for the securities of the U.S. Government, or a maximum of 25
percent with any individual counter party in an external investment pool. At December 31, 2023, the City did not have
a significant concentration of credit risk.
• Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The
City’s investment policy states that extended maturities may be utilized to take advantage of higher yields; however
no more than 25 percent of total investments should extend beyond five years and in no circumstance should any
extend beyond ten years. The City’s investment portfolio is structured so that securities mature to meet cash
requirements for ongoing operations.
Deposits and Investments Summary
A reconciliation of cash and investments as shown on the Statements of Net Position for the City follows:
2.B. LEASE RECEIVABLES
The City has executed various arrangements under which the City leases property to external parties. A summary of the
pertinent terms for these leasing arrangements, as well as the corresponding lease receivables, is presented below:
Carrying Amount of Deposits 27,383,623$
Investments 16,537,353
Total 43,920,976$
Government-wide
Cash, Cash Equivalents, and Investments 43,920,976$
Governmental Activities
Original Total Annual Interest Maturity Remaining
Description Amount Lease Payment Rate(s)Date Amount
Wireless Site Lease 58,510$ $20,441 3.25%12/31/2024 20,140$
Wireless Site Lease 548,874 $2,500 - $55,902 5.50%11/30/2047 548,855
Wireless Site Lease 696,030 $27,987 - $55,425 3.25%6/30/2043 664,780
Land Lease 400,078 $21,012 - $31,847 3.25%12/31/2043 383,005
Total Governmental Activities Lease Receivables 1,616,780$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
50
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.B. LEASE RECEIVABLES (Continued)
During the year ended December 31, 2023, the City recognized revenues from leasing activities under the arrangements above
within governmental activities in the amount of $157,353.
2.C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2023 is as follows:
Balance at Balance at
01/01/23 Additions Disposals Transfers 12/31/23
Governmental Activities
Capital Assets not Being
Depreciated
Land 3,453,979$ -$ -$ -$ 3,453,979$
Construction In Progress 15,400,699 11,011,594 (281,802) (7,515,734) 18,614,757
Total Capital Assets not Being
Depreciated 18,854,678 11,011,594 (281,802) (7,515,734) 22,068,736
Capital Assets Being Depreciated
Buildings 4,330,670 - - - 4,330,670
Other Improvements 2,780,348 - - 841,131 3,621,479
Machinery and Equipment 9,202,576 618,707 (44,167) 726,787 10,503,903
Infrastructure 54,585,691 8,314,180 - 5,527,334 68,427,205
Total Capital Assets Being
Depreciated 70,899,285 8,932,887 (44,167) 7,095,252 86,883,257
Less: Accumulated Depreciation
Buildings (1,426,200) (90,165) - - (1,516,365)
Other Improvements (1,432,624) (96,820) - - (1,529,444)
Machinery and Equipment (3,099,851) (524,255) 44,167 - (3,579,939)
Infrastructure (11,996,074) (2,676,965) - - (14,673,039)
Total Accumulated Depreciation (17,954,749) (3,388,205) 44,167 - (21,298,787)
Total Capital Assets Being
Depreciated, Net 52,944,536 5,544,682 - 7,095,252 65,584,470
Capital Assets, Net 71,799,214$ 16,556,276$ (281,802)$ (420,482)$ 87,653,206$
Depreciation is charged to governmental activities as follows:
General Government 11,911$
Public Safety 168,454
Public Works 3,091,536
Parks and Recreation 116,304
Total Depreciation Expense 3,388,205$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
51
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.C. CAPITAL ASSETS (Continued)
2.D. NONCURRENT LIABILITIES
The reporting entity’s long-term debt is segregated between the amounts to be repaid from governmental activities and amounts
to be repaid from business-type activities.
Debt Detail
General Obligation Bonds and Certificates
The City of Lake Elmo issues general obligation bonds and certificates to finance the acquisition and construction of major
capital facilities and infrastructure throughout the City. General obligation bonds and certificates have been issued for both
activities pertaining to governmental and business-type operations. All bonds are direct obligations of the City and pledge the
full faith and credit of the City.
Balance at Balance at
01/01/23 Additions Disposals Transfers 12/31/23
Business-Type Activities
Capital Assets not Being
Depreciated
Land 3,668,869$ -$ -$ -$ 3,668,869$
Construction In Progress 15,221,987 6,218,737 - (10,236,247) 11,204,477
Total Capital Assets not Being
Depreciated 18,890,856 6,218,737 - (10,236,247) 14,873,346
Capital Assets Being Depreciated
Machinery and Equipment 413,699 - - - 413,699
Infrastructure 89,134,681 6,728,614 - 10,656,729 106,520,024
Total Capital Assets Being
Depreciated 89,548,380 6,728,614 - 10,656,729 106,933,723
Less: Accumulated Depreciation
Machinery and Equipment (303,531) (26,511) - - (330,042)
Infrastructure (18,059,548) (4,034,979) - - (22,094,527)
Total Accumulated Depreciation (18,363,079) (4,061,490) - - (22,424,569)
Total Capital Assets Being
Depreciated, Net 71,185,301 2,667,124 - 10,656,729 84,509,154
Capital Assets, Net 90,076,157$ 8,885,861$ -$ 420,482$ 99,382,500$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
52
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.D. NONCURRENT LIABILITIES (Continued)
As of December 31, 2023, the long-term debt of the financial reporting entity, excluding compensated absences payable and
the net pension and OPEB liabilities, consists of the following:
Original Interest Final Maturity Balance
Issue Amount Rates Date Outstanding
Governmental Activities
General Obligation Improvement Bonds:
GO Refunding Bonds, Series 2010B 1,970,000$ 1.00 - 3.20%2025 375,000$
GO Improvement Bonds, Series 2014A 2,850,000 2.00 - 3.50%2030 1,160,000
GO Improvement Bonds, Series 2015A 1,620,000 2.00 - 3.00%2026 480,000
GO Improvement Bonds, Series 2016A 2,690,000 2.00 - 2.00%2027 1,135,000
GO Improvement Bonds, Series 2017A 4,565,000 2.50 - 2.50%2028 2,405,000
GO Improvement Bonds, Series 2019A 2,860,000 2.00 - 3.00%2035 2,080,000
GO Improvement Bonds, Series 2021A 15,675,000 1.75 - 3.00%2042 14,920,000
GO Improvement Bonds, Series 2022A 3,895,000 3.00 - 5.00%2038 3,895,000
GO Improvement Bonds, Series 2023A 3,410,000 4.00 - 5.00%2034 3,410,000
Total General Obligation Improvement Bonds 29,860,000
General Obligation Equipment Certificates:
GO Equipment Certificates, Series 2018A 940,000 2.70 - 2.70%2028 555,000
General Obligation Tax Abatement Bonds:
GO Tax Abatement Bonds, Series 2022A 1,010,000 3.00 - 5.00%2033 1,010,000
Total Governmental Activities Debt 31,425,000$
Business-Type Activities
General Obligation Revenue Bonds:
GO Refunding Bonds, Series 2012A 4,035,000$ 2.00 - 2.50%2030 2,230,000$
GO Improvement Bonds, Series 2014A 3,385,000 2.00 - 3.50%2030 1,720,000
GO Improvement Bonds, Series 2015A 1,195,000 2.00 - 3.00%2031 690,000
GO Improvement Bonds, Series 2016A 6,855,000 2.00 - 2.00%2032 4,355,000
GO Improvement Bonds, Series 2017A 4,480,000 2.50 - 3.00%2033 3,165,000
GO Improvement Bonds, Series 2019A 1,195,000 2.00 - 3.00%2035 1,000,000
GO Improvement Bonds, Series 2021A 6,310,000 1.75 - 3.00%2037 5,880,000
GO Improvement Bonds, Series 2022A 7,590,000 3.00 - 5.00%2037 7,075,000
GO Improvement Bonds, Series 2023A 2,000,000 4.00 - 5.00%2038 2,000,000
Total Business-Type Activities Debt 28,115,000$
Description
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
53
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.D. NONCURRENT LIABILITIES (Continued)
Changes in Noncurrent Liabilities
The following is a summary of changes in noncurrent liabilities, excluding the net pension and OPEB liabilities, for the year
ended December 31, 2023:
Governmental activity debt is typically funded through the Debt Service Fund. Business-Type activity debt is typically funded
through the Water Fund, Sewer Fund, and Storm Sewer Fund. Compensated absences are funded through the funds to which
the respective employees’ wages are allocated.
Amounts Due
Balance Balance Within
Type of Debt 01/01/23 Additions Deductions 12/31/23 One Year
Governmental Activities
G.O. Improvement Bonds 28,830,000$ 3,410,000$ (2,380,000)$ 29,860,000$ 2,520,000$
G.O. Equipment Certificates 655,000 - (100,000) 555,000 105,000
G.O. Tax Abatement Bonds 1,010,000 - - 1,010,000 80,000
Unamortized Bond Premium 1,110,679 317,037 (105,751) 1,321,965 -
Compensated Absences 93,109 17,006 - 110,115 82,586
Total 31,698,788$ 3,744,043$ (2,585,751)$ 32,857,080$ 2,787,586$
Business-Type Activities
G.O. Revenue Bonds 28,440,000$ 2,000,000$ (2,325,000)$ 28,115,000$ 2,315,000$
Unamortized Bond Premium 1,030,720 138,228 (86,023) 1,082,925 -
Compensated Absences 40,108 - (1,817) 38,291 28,718
Total 29,510,828$ 2,138,228$ (2,412,840)$ 29,236,216$ 2,343,718$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
54
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.D. NONCURRENT LIABILITIES (Continued)
Annual Debt Service Requirements
At December 31, 2023, the estimated annual debt service requirements to maturity, including principal and interest and
excluding compensated absences payable and net pension and OPEB liabilities, are as follows:
Interest expense totals $1,650,918 in the Statement of Activities (included in Debt Service, Water, Sewer, and Storm Sewer
lines). Interest expenditures total $788,295 for the Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds (included in the line Interest and Other Charges) and $804,017 in the Statement of Revenues, Expenses,
and Changes in Net Position – Proprietary Funds (included in the line Interest and Other Charges).
Years Ending
December 31, Principal Interest Total Principal Interest Total
2024 2,520,000$ 840,309$ 3,360,309$ 105,000$ 13,568$ 118,568$
2025 2,770,000 748,837 3,518,837 110,000 10,665 120,665
2026 2,655,000 663,554 3,318,554 110,000 7,695 117,695
2027 2,570,000 580,626 3,150,626 115,000 4,656 119,656
2028 2,330,000 500,179 2,830,179 115,000 1,551 116,551
2029-2033 8,510,000 1,569,357 10,079,357 - - -
2034-2038 6,080,000 568,813 6,648,813 - - -
2039-2042 2,425,000 103,917 2,528,917 - - -
Totals 29,860,000$ 5,575,592$ 35,435,592$ 555,000$ 38,135$ 593,135$
Governmental Activities
G.O. Improvement Bonds G.O. Equipment Certificates
Years Ending
December 31, Principal Interest Total Principal Interest Total
2024 80,000$ 43,700$ 123,700$ 2,315,000$ 815,121$ 3,130,121$
2025 85,000 39,575 124,575 2,355,000 738,521 3,093,521
2026 90,000 35,200 125,200 2,410,000 666,583 3,076,583
2027 95,000 30,575 125,575 2,480,000 592,238 3,072,238
2028 95,000 25,825 120,825 2,565,000 514,600 3,079,600
2029-2033 565,000 53,925 618,925 11,170,000 1,430,706 12,600,706
2034-2038 - - - 4,820,000 299,074 5,119,074
Totals 1,010,000$ 228,800$ 1,238,800$ 28,115,000$ 5,056,843$ 33,171,843$
G.O. Tax Abatement Bonds G.O. Revenue Bonds
Business-Type ActivitiesGovernmental Activities
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
55
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.E. INTERFUND TRANSACTIONS AND BALANCES
Operating transfers consist of the following for the year ended December 31, 2023:
Transfers are used to (a) move revenues from the fund that statute or budget requires to collect them to the fund that statute or
budget requires to expend them and to (b) use unrestricted revenues collected in the General Fund to finance various programs
accounted for in other funds in accordance with budgetary authorizations.
Interfund balances at year-end are as follows:
Interfund balances are to be repaid as cash flows become available.
Nonmajor
Transfers Capital Project
Out Funds Total
General 441,902$ 441,902$ 441,902$
Infrastructure Reserve Fund 24,897 24,897 24,897
466,799$ 466,799$ 466,799$
Major Funds
Transfers In
Nonmajor Funds
Due To Fund Due From Fund Amount Reason
Infrastructure Reserve Fund Old Village Phases 5 & 6 Fund 252,849$ Eliminate negative cash
Infrastructure Reserve Fund CSAH 13 Phase 2 Fund 48,389 Eliminate negative cash
Infrastructure Reserve Fund CSAH 15 Manning Avenue Phase 3 Fund 3,525 Eliminate negative cash
Infrastructure Reserve Fund CSAH 15 Manning Avenue & 30th Street Fund 14,512 Eliminate negative cash
Infrastructure Reserve Fund TH36 Lake Elmo Avenue Improvements Fund 5,499 Eliminate negative cash
Infrastructure Reserve Fund CASH 15 (Manning Ave) Phase 3 Fund 1,482 Eliminate negative cash
Infrastructure Reserve Fund 2024 Street & Utility Improvement Fund 31,336 Eliminate negative cash
Infrastructure Reserve Fund Hudson Blvd Imp-Seg A-InwdHdrx Fund 48,215 Eliminate negative cash
Infrastructure Reserve Fund 15th Street N Improvement Fund 21,684 Eliminate negative cash
Infrastructure Reserve Fund 30th St N Gap Segmt Improvement Fund 22,403 Eliminate negative cash
Total Short-Term Interfund Balance 449,894
Government Fund Elimination (449,894)
Government-wide Internal Balances -$
Short-Term Balances
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
56
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.F. FUND EQUITY
At December 31, 2023, governmental fund equity consists of the following:
Restricted Committed Assigned Unassigned
General Fund
Unassigned -$ -$ -$ 8,920,580$
Debt Service Fund
Restricted for Debt Service 5,026,712$ -$ -$ -$
City Hall/Fire Station Bldg Project Fund
Assigned for City Hall/Fire Station Project -$ -$ 1,448,996$ -$
2023 Street Improvements Fund
Restricted for 2023 Street Improvements 287,830$ -$ -$ -$
Nonmajor Governmental Funds
Restricted for Capital Projects 730,006$ -$ -$ -$
Restricted for Park Improvements 1,424,333 - - -
Restricted for the Development of Ball Parks 1,000,000 - - -
Committed for Lions Park - 20,334 - -
Assigned for Economic Development Authority - - 12,355 -
Assigned for ARPA Purchases - - 10,589 -
Assigned for Vehicle Acquisition - - 1,502,126 -
Assigned for Infrastructure Reserve - - 636,610 -
Assigned for City Facilities - - 98,874 -
Assigned for Manning and Hudson Future Stoplight - - 17,195 -
Assigned for Railroad Crossing Improvements - - 39,297 -
Assigned for Manning and Highway 36 Interchange - - 2,572 -
Unassigned - - - (492,973)
Total Nonmajor Governmental Funds Balance 3,154,339$ 20,334$ 2,319,618$ (492,973)$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
57
NOTE 2 DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
2.F. FUND EQUITY (Continued)
Deficit fund balances in individual funds at December 31, 2023 consist of the following:
Fund deficits are expected to be recovered through future assessments, tax levies, tax increment, or transfers.
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE
Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the Public
Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA’s defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan
All full time and certain part-time employees of the City of Lake Elmo are covered by the General Employees Plan. General
Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are covered by Social Security.
Public Employees Police and Fire Plan
The Police and Fire Plan, originally established for police officers and firefighters not covered by a local relief association,
now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the Police and Fire Plan also covers
police officers and firefighters belonging to local relief associations that elected to merge with and transfer assets and
administration to PERA.
Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by State Statute and can only be
modified by the State Legislature. 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.
Fund
Deficit
CSAH 13 Phase 2 Fund (48,389)$
Old Village Phases 5 & 6 (257,973)$
CSAH 15 Manning Avenue Phase 3 Fund (3,525)$
CSAH 15 Manning Avenue & 30th Street Fund (14,512)$
TH36 Lake Elmo Avenue Improvements Fund (5,849)$
CASH 15 (Manning Ave) Phase 3 Fund (1,552)$
2024 Street & Utility Improvement Fund (56,882)$
Hudson Blvd Imp-Seg A-InwdHdrx Fund (53,827)$
15th Street N Improvement Fund (25,032)$
30th St N Gap Segmt Improvement Fund (25,432)$
Nonmajor Governmental Funds
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
58
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
General Employees Plan Benefits
General Employees Plan 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. Two methods are used to compute benefits for PERA's Coordinated
Plan members. Members hired prior to July 1, 1989 receive the higher of Method 1 or Method 2 formulas. Only Method 2 is
used for members hired after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.20 percent for
each of the first 10 years of service and 1.70 percent for each additional year. Under Method 2, the accrual rate for Coordinated
members is 1.70 percent for all years of service. For members hired prior to July 1, 1989, a full annuity is available when age
plus years of service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement
age is the age for unreduced Social Security benefits capped at 66.
Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of the
cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a maximum of
1.50 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the
effective date of the increase will receive the full increase. Recipients receiving the annuity or benefit for at least one month
but less than a full year as of the June 30 before the effective date of the increase will receive a reduced prorated increas e. In
2023, legislation repealed the statute delaying increases for members retiring before full retirement age.
Police and Fire Plan Benefits
Benefits for Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from
50 percent after five years up to 100 percent after ten years of credited service. Benefits for Police and Fire Plan members first
hired after June 30, 2014, vest on a prorated basis from 50 percent after ten years up to 100 percent after twenty years of
credited service. The annuity accrual rate is 3 percent of average salary for each year of service. For Police and Fire Plan
members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90.
Benefit increases are provided to benefit recipients each January. The postretirement increase is fixed at 1 percent. Recipients
that have been receiving the annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase
will receive the full increase. Recipients receiving the annuity or benefit for at least 25 months but less than 36 months as of
the June 30 before the effective date of the increase will receive a reduced prorated increase.
In 2023, the legislature allocated funding for a one-time lump-sum payment to General Employee and Police and Fire Plan
benefit recipients. Eligibility criteria and the payment amount is specified in statute. The one-time payment is non-compounding
towards future benefits.
Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be modified
by the State Legislature.
General Employees Fund Contributions
Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2023 and the
City was required to contribute 7.50 percent for Coordinated Plan members. The City’s contributions to the General Employees
Fund for the year ended December 31, 2023 were $135,093. The City’s contributions were equal to the required contributions
as set by State Statute.
Police and Fire Fund Contributions
Police and Fire Plan members were required to contribute 11.80 percent of their annual covered salary in the fiscal year 2023
and the City was required to contribute 17.70 percent for the Police and Fire Plan members. The City’s contributions to the
Police and Fire Fund for the year ended December 31, 2023 were $72,744. The City’s contributions were equal to the required
contributions as set by State Statute.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
59
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
Pension Costs
General Employees Fund Pension Costs
At December 31, 2023, the City reported a liability of $1,185,480 for its proportionate share of the General Employees Fund’s
net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s contribution of $16
million. The State of Minnesota is considered a non-employer contributing entity and the State’s contribution meets the
definition of a special funding situation. The State of Minnesota’s proportionate share of the net pension liability associated
with the City totaled $32,703.
The net pension liability was measured as of June 30, 2023, and the total pension liability used to calculate the net pension
liability was determined by an actuarial valuation as of that date. The City's proportionate of the net pension liability was based
on the City's contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2022
through June 30, 2023, relative to the total employer contributions received from all of PERA's participating employers. The
City’s proportionate share was 0.0212 percent at the end of the measurement period and 0.0232 percent for the beginning of
the period.
City’s proportionate share of the net pension liability: $1,185,480
State of Minnesota’s proportionate share of the net pension
liability associated with the City 32,703
Total $1,218,183
For the year ended December 31, 2023, the City recognized pension expense of negative $8,377 for its proportionate share of
the General Employees Plan’s pension expense. In addition, the City recognized an additional $147 as pension expense (and
grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the General Employees
Fund.
At December 31, 2023, the City reported its proportionate share of the General Employees Plan’s deferred outflows of resources
and deferred inflows of resources related to pensions from the following sources:
The $70,700 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024.
Deferred Outflows of Deferred Inflows of
Resources Resources
Differences between expected
and actual economic experience 39,814$ 7,781$
Changes in actuarial assumptions 183,941 324,930
Difference between projected
and actual investment earnings 17,369 -
Changes in proportionate share 64,057 125,720
Contributions paid to PERA subsequent
to the measurement date 70,700 -
Total Deferred Outflows/Inflows 375,881$ 458,431$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
60
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Police and Fire Fund Pension Costs
At December 31, 2023, the City reported a liability of $421,356 for its proportionate share of the Police and Fire Fund’s net
pension liability. The net pension liability was measured as of June 30, 2023, and the total pension liability used to calculate
the net pension liability was determined by an actuarial valuation as of that date. The City’s proportionate share of the net
pension liability was based on the City’s contributions received by PERA during the measurement period for employer payroll
paid dates from July 1, 2022 through June 30, 2023, relative to the total employer contributions received from all of PERA’s
participating employers. The City’s proportionate share was 0.0244 percent at the end of the measurement period and 0.0256
percent for the beginning of the period.
The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year ended June 30, 2023. The
contribution consisted of $9 million in direct State aid that does meet the definition of a special funding situation and $9 million
in supplemental State aid that does not meet the definition of a special funding situation. The $9 million direct State was paid
on October 1, 2022. Thereafter, by October 1 of each year, the State will pay $9 million to the Police and Fire Fund until full
funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental State aid will continue until the fund
is 90 percent funded, or until the State Patrol Plan (administered by the Minnesota State Retirement System) is 90 percent
funded, whichever occurs later. The State of Minnesota’s proportionate share of the net pension liability associated with the
City totaled $16,984.
City’s proportionate share of the net pension liability: $421,356
State of Minnesota’s proportionate share of the net pension
liability associated with the City 16,984
Total $438,340
The State of Minnesota is included as a non-employer contributing entity in the Police and Fire Retirement Plan Schedule of
Employer Allocations and Schedule of Pension Amounts by Employer, Current Reporting Period Only (pension allocation
schedules) for the $9 million in direct State aid. Police and Fire Plan employers need to recognize their proportionate share of
the State of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation accounting and
financial reporting requirements. For the year ended December 31, 2023, the City recognized pension expense of negative
$19,749 for its proportionate share of the Police and Fire Plan’s pension expense. The City recognized negative $1,023 as
grant revenue and pension expense for its proportionate share of the State of Minnesota’s pension expense for the contribution
of $9 million to the Police and Fire Fund.
The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire Pension Plan pension
allocation schedules for the $9 million in supplemental State aid. The City recognized $2,199 for the year ended December
31, 2023 as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of Minnesota’s
on-behalf contributions to the Police and Fire Fund.
Year ended
December 31, Pension Expense
2024 30,096$
2025 (160,031)$
2026 2,403$
2027 (25,716)$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
61
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
At December 31, 2023, the City reported its proportionate share of the Police and Fire Plan’s deferred outflows of resources
and deferred inflows of resources related to pensions from the following sources:
The $44,846 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the
measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2024. Other
amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as
follows:
Total Pension Expense
The total pension expense for all plans recognized by the City for the year ended December 31, 2023, including amortization
of deferred balances, was $164,798.
Long-Term Expected Return on Investment
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on a
regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of expected
future rates of return are developed for each major asset class. These ranges are combined to produce an expected long-term
rate of return by weighting the expected future rates of return by the target asset allocation percentages. The target allocation
and best estimates of geometric real rates of return for each major asset class are summarized in the following table:
Asset Class
Target Allocation
Long-Term Expected Real
Rate of Return
Domestic Equity 33.50% 5.10%
International Equity 16.50% 5.30%
Fixed Income 25.00% 0.75%
Private Markets 25.00% 5.90%
Total 100%
Deferred Outflows of Deferred Inflows of
Resources Resources
Differences between expected
and actual economic experience 111,602$ -$
Changes in actuarial assumptions 451,054 591,512
Difference between projected
and actual investment earnings 49,067 -
Changes in proportionate share 51,977 54,486
Contributions paid to PERA subsequent
to the measurement date 44,846 -
Total Deferred Outflows/Inflows 708,546$ 645,998$
Year ended
December 31, Pension Expense
2024 36,860$
2025 22,441$
2026 92,446$
2027 (20,801)$
2028 (113,244)$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
62
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
Actuarial Methods and Assumptions
The total pension liability in the June 30, 2023, actuarial valuation was determined using an individual entry-age normal
actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability
is 7.00 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national
investment consulting firms. The review provided a range of investment return rates deemed to be reasonable by the actuary.
An investment return of 7.00 percent was deemed to be within that range of reasonableness for financial reporting purposes.
Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and Fire Plan. Benefit
increases after retirement are assumed to be 1.25 percent for the General Employees Plan and 1.00 percent for the Police and
Fire Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of
service to 3.00 percent after 27 years of service. In the Police and Fire Plan, salary growth assumptions range from 11.75
percent after one year of service to 3.00 percent after 24 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. Mortality rates
for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee Mortality tables. The tables are adjusted slightly
to fit PERA’s experience.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent four-year experience
study for the General Employees Plan was completed in 2022. The assumption changes were adopted by the Board and became
effective with the July 1, 2023 actuarial valuation. The most recent four-year experience studies for the Police and Fire Plan
were completed in 2020 and were adopted by the Board and became effective with the July 1, 2021 actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2023:
General Employees Fund
Changes in Actuarial Assumptions:
• The investment return assumption and single discount rate were changed from 6.50 percent to 7.00 percent.
Changes in Plan Provisions
• An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1,
2023.
• The vesting period of those hired after June 30, 2010 was changed from five years of allowable service to three years
of allowable service.
• The benefit increase delay for early retirements on or after January 1, 2024 was eliminated.
• A one-time, non-compounding benefit increase of 2.50 percent minus the actual 2024 adjustment will be payable in a
lump sum for calendar year 2024 by March 31, 2024.
Police and Fire Fund
Changes in Actuarial Assumptions:
• The investment return assumption was changed from 6.50 percent to 7.00 percent.
• The single discount rate changed from 5.40 percent to 7.0 percent.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
63
NOTE 3 DEFINED BENEFIT PENSION PLANS – STATEWIDE (Continued)
Changes in Plan Provisions:
• Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023.
• Vesting requirement for new hires after June 30, 2014 was changed from a graded 20-year vesting schedule to a graded
10-year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100 percent after 10
years.
• A one-time, non-compounding benefit increase of 3.00 percent will be payable in a lump sum for calendar year 2024
by March 31, 2024.
• Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a
psychological condition relating to the member’s occupation.
• The total and permanent duty disability benefit was increased, effective July 1, 2023.
Discount Rate
The discount rate used to measure the total pension liability in 2023 was 7.00 percent. The projection of cash flows used to
determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota
Statutes. Based on these assumptions, the fiduciary net position of the General Employees and Police and Fire Plans were
projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term
expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the
total pension liability.
Pension Liability Sensitivity
The following table presents the City's proportionate share of the net pension liability for all plans it participates in, calculated
using the discount rate disclosed in the preceding paragraph, as well as what the City's proportionate share of the net pension
liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the
current discount rate:
Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in a separately issued PERA financial report
that includes financial statements and required supplementary information. That report may be obtained on the Internet at
www.mnpera.org.
NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION
Plan Description
Firefighters of the City of Lake Elmo are members of the Lake Elmo Firefighters Relief Association. The Association is the
administrator of the single-employer defined benefit pension plan available to firefighters. The plan is administered pursuant
to Minnesota Statutes Chapter 69, Chapter 424A, and the Association’s by-laws. As of the most recent valuation date,
membership includes 19 active participants and 11 inactive members who are entitled to future benefits. The plan issues a
stand-alone financial statement.
6.00% $ 2,097,210 6.00%836,021$
7.00%1,185,480$ 7.00%421,356$
8.00%435,548$ 8.00%80,446$ 1% Increase in Discount Rate
Current Discount Rate
1% Decrease in Discount Rate
Sensitivity Analysis
Net Pension Liability at Different Discount Rates
General Employees Fund Police and Fire Fund
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
64
NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION (Continued)
Benefits Provided
Each member who is at least 50 years of age, has retired from the Lake Elmo Fire Department, has served at least 20 years of
active service with such department before retirement shall be entitled to a lump sum service pension in the amount of $5,850
for each year of active Fire Department service. Members electing retirement with at least 10 years of service will be eligible
for at least 60 percent of this benefit, increasing by 4 percent for each additional year of service up to 20 years.
If a member of the Association shall become permanently or totally disabled, the Association shall pay the sum $5,850 for each
year the member was an active member of the City of Lake Elmo Fire Department. A death benefit is also available, which is
payable to a survivor.
Minnesota Statutes Section 424A.10 provides for the payment of a supplemental benefit equal to 10% of a regular lump sum
distribution up to a maximum of $1,000. The supplemental benefit is in lieu of state income tax exclusion for lump sum
distributions and will no longer be available if State tax law is modified to exclude lump sum distributions from State income
tax. The Association qualifies for these benefits.
Contributions
Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis. The minimum support
rates from the municipality and from state aid are determined as the amount required to meet the normal cost plus amortizing
any existing prior service costs over a 10-year period. The significant actuarial assumptions used to compute the municipal
support are specified in Minnesota Statutes. The association is comprised of volunteers; therefore, there are no payroll
expenditures (i.e. there are no covered payroll percentage calculations).
The plan is funded in part by fire state aid and, if necessary, City contributions. The State of Minnesota distributed to the City
$117,613 in fire state aid, which the City remitted to the Relief Association during the year ended December 31, 2023. Required
employer contributions are calculated annually based on statutory provisions. The City did not have a statutorily-required
contribution to the plan for the year ended December 31, 2023.
Pension Costs
At December 31, 2023, the City of Lake Elmo reported a net pension asset of $565,242 for the Firefighters Relief Association’s
plan. The net pension asset was measured as of December 31, 2022, as determined by an actuarial valuation as of January 1,
2023.
For the year ended December 31, 2023, the City recognized pension expense of negative $79,352 for the Association. The
City also recognized $101,778, as pension expense (and grant revenue) for State of Minnesota’s contributions to the Association
during the measurement period.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
65
NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION (Continued)
The following table presents the changes in net pension asset during the measurement period.
At December 31, 2023, the City of Lake Elmo reported deferred outflows of resources and deferred inflows of resources related
to the pension from the following sources:
Amounts reported as deferred outflows and inflows of resources related to the pension will be recognized in pension expense
as follows:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
Beginning Balance 12/31/21 864,850$ 1,462,205$ (597,355)$
Service Cost 47,844 - 47,844
Interest on Pension Liability 45,031 - 45,031
Assumption Changes (15,405) - (15,405)
Projected Investment Earnings - 76,145 (76,145)
Contributions (State)- 101,778 (101,778)
Asset (Gain)/Loss (124,184) (241,246) 117,062
Benefit Payouts (109,933) (109,933) -
Administrative Fee - (15,504) 15,504
Net Changes (156,647) (188,760) 32,113
Balance End of Year 12/31/22 708,203$ 1,273,445$ (565,242)$
Deferred Outflows of Deferred Inflows of
Resources Resources
Differences between expected
and actual economic experience -$ 171,852$
Changes in actuarial assumptions 7,387 13,480
Difference between projected
and actual investment earnings 125,581 -
Total Deferred Outflows/Inflows 132,968$ 185,332$
Year ended
December 31, Pension Expense
2024 (19,998)$
2025 (4,669)$
2026 7,233$
2027 20,132$
2028 (20,164)$
2029-2030 (34,898)$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
66
NOTE 4 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION (Continued)
Actuarial Assumptions
The total pension asset measured at December 31, 2022 was determined using the entry age normal actuarial cost method and
the following actuarial assumptions:
Assumptions Rates
Investment Rate of Return (Discount) 5.75%
Expected Long-Term Rate of Return 5.75%
Salary Increases
Interest on Deferred Amounts
2.50%
0.00%
The following changes in actuarial assumptions and plan provisions occurred in 2023:
Changes in Plan Provisions:
• There were no changes to plan provisions since the prior valuation.
Changes in Actuarial Assumptions:
• The discount rate changed from 5.25 percent to 5.75 percent.
Pension Liability Sensitivity
The following presents the City’s net pension asset for the Firefighters Relief Association’s plan, calculated using the discount
rate disclosed in the preceding paragraph, as well as what the City’s net pension asset would be if it were calculated using a
discount rate one percent lower or one percent higher than the current discount rate:
Plan Investments
Asset Allocation
The long-term expected rate of return on pension plan investments is 5.75 percent. The target allocation and best estimates of
geometric real rates of return for each major asset class of the Association’s pension fund investments are summarized in the
following table:
Long-Term Expected
Asset Class Target Allocation Real Rate of Return
Cash 12.00% 2.00%
Fixed Income 28.00% 3.10%
Equities 60.00% 7.90%
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in a separately issued financial report that
includes financial statements and required supplementary information. That report may be obtained by contacting the City Hall
at 3880 Laverne Avenue North, Lake Elmo, Minnesota 55042.
1% Decrease in 1% Increase in
Discount Rate (4.75%)Discount Rate (5.75%)Discount Rate (6.75%)
Net Pension Asset 533,647$ 565,242$ 593,879$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
67
NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Plan Description
The City administers a single-employer defined benefit plan (the Plan) that provides health insurance to eligible employees and
their spouses through the City’s health insurance plan. As of the most recent actuarial valuation date, there are 23 active
employees electing coverage and no retirees electing coverage. Benefit and eligibility provisions are established through
negotiations between the City and the City’s employees. The Plan does not issue a publicly available financial report.
Benefits Provided
At retirement, employees of the City receiving a retirement or disability benefit, or eligible to receive a benefit, from a
Minnesota public pension plan may continue to participate in the City’s group insurance plan. Vesting requirements of three
years if hired before July 1, 2010 or five years if hired on or after July 1, 2010 generally apply.
The City is legally required to include any retirees for who it provides health insurance coverage in the same insurance pool as
its active employees until the retiree reaches Medicare eligibility, regardless of whether the premiums are paid by the City or
the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate
subsidy.” This benefit arises from the assumption that the retiree is receiving a more favorable premium rate than they would
otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger
and statistically healthier active employees.
Contributions
The City has historically funded these liabilities on a pay-as-you-go basis, in the amounts contractually required to satisfy the
benefit terms discussed above. For the year ended December 31, 2023, the City did not make any direct contributions to the
plan.
Net OPEB Liabilities, OPEB Expense, and Deferred Outflows/Inflows of Resources
At December 31, 2023, the City reported a net OPEB liability of $89,125 for the City’s plan. The net OPEB liability was
measured as of December 31, 2022, based on an actuarial valuation as of December 31, 2021.
For the year ended December 31, 2023, the City recognized OPEB expense of negative $7,456.
In accordance with the Alternative Measurement Method, gains and losses due to experience and assumption changes are
recognized immediately. In addition, there were no contributions between the measurement date and reporting date because
the City has no retirees and no active employees who were expected to retire during 2023. Therefore, there are no deferred
outflows or inflows of resources related to OPEB as of December 31, 2023.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
68
NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)
Changes in the Net OPEB Liability
The following table summarizes changes in the net OPEB liability for the year ended December 31, 2023:
Actuarial Assumptions
The following is a summary of pertinent actuarial assumptions and methods utilized, applied to all periods included in the
measurement, unless otherwise specified:
Key Methods and Assumptions Used in Valuation of Total OPEB Liability
Actuarial Information:
Valuation Date December 31, 2021
Measurement Date December 31, 2022
Actuarial Cost Method Entry Age Normal level percentage of pay
Actuarial Assets None
Actuarial Assumptions:
Discount Rate 4.05%
Inflation 2.50%
Bond Yield 2.50%
Medical Trend Rate 6.80% for 2022, gradually decreasing to an ultimate rate of
3.90% by 2075 and later years
Dental Trend Rate None
Mortality rates were based on the Pub-2010 General mortality tables with projected mortality improvements based on scale
MP-2021, and other adjustments.
Changes in Plan Provisions:
• There were no changes in plan provisions since the prior valuation.
Changes in Actuarial Assumptions:
• The discount rate was changed from 1.84 percent to 4.05 percent based on updated 20-year municipal bonds rates.
Changes in Total OPEB Liability (TOL)
Balance at January 1st 96,581$
Service Cost 14,941
Interest Cost 1,987
Changes in Assumptions (17,298)
Benefit Payments (7,086)
Balance at December 31st 89,125$
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
69
NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued)
Net OPEB Liability Sensitivity
The following presents the net OPEB liability, calculated using the discount rate disclosed in the preceding section, as well as
what the City’s net OPEB liability would be if it were calculated using a discount rate one percentage point lower or one
percentage point higher than the current discount rate:
Sensitivity of Net OPEB Liability at Current Single Discount Rate
Rates Amounts
1% Increase in Discount Rate 5.05% $85,450
Current Discount Rate 4.05% $89,125
1% Decrease in Discount Rate 3.05% $96,508
The following presents the net OPEB liability, calculated using the healthcare cost trend rates disclosed in the preceding section,
as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are one
percentage point lower or one percentage point higher than the current healthcare cost trend rates:
Sensitivity of Net OPEB Liability at Current Healthcare Cost Trend Rate
Amounts
1% Increase in Healthcare Trend Rates $101,252
Current Healthcare Trend Rates $89,125
1% Decrease in Healthcare Trend Rates $79,153
NOTE 6 OTHER NOTES
6.A. RISK MANAGEMENT
Claims and Judgements
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. To manage these risks, the City purchases commercial insurance. The City retains
risk for the deductible portions of the insurance. The amounts of these deductibles are considered immaterial to the financial
statements. There were no significant reductions in insurance from the previous year settlements in excess of insurance for any
of the past two 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. The City’s management is not aware
of any incurred but not reported claims.
6.B. OTHER EMPLOYEE BENEFITS
The City provides eligible employees future retirement benefits through participation in the Minnesota Deferred Compensation
Plan (MNDCP), which is a Section 457 plan administered by the Minnesota State Retirement System. Eligible employees of
the City may begin participating in the MNDCP commencing on the date of their employment by electing to have a portion of
their pay contributed to the Plan. Certain employees are eligible to receive a City match of employee contributions up to the
qualifying amounts set forth in their employment contracts, and there are no vesting requirements related to such contributions.
The City’s contributions to the plan total $3,509 for the year ended December 31, 2023.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE BASIC FINANCIAL STATEMENTS
DECEMBER 31, 2023
70
NOTE 6 OTHER NOTES (Continued)
6.C. COMMITMENTS
During the year, the City entered into various contracts for construction services. At December 31, 2023, remaining
commitments related to these projects total $1,099,565.
6.D. CONTINGENCIES
The City has received notice from the Minnesota Department of Natural Resources (DNR) indicating that the volume of water
being drawn from City wells has exceeded the amount appropriated to the City under the corresponding permit. The City is
currently pursuing options for obtaining an increase to this appropriation but may be subject to fines imposed by the DNR. At
this time, the range of such fines cannot be reasonably determined.
6.E. SUBSEQUENT EVENTS
Subsequent to year end but prior to the issuance of these financial statements, the City accepted bids for various construction
projects, engineering services, and equipment in the amount of $3,217,586.
Additionally, the City expects to issue G.O. Improvement Bonds in the amount of $5,230,000 to finance these projects.
71
REQUIRED SUPPLEMENTARY
INFORMATION
CITY OF LAKE ELMO, MINNESOTA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2023
72
Budget Actual Variance with
Amounts - Amounts Budget
Original and Budgetary Over
Final Basis (Under)
REVENUES
Taxes
Property Taxes 5,103,517$ 5,142,477$ 38,960$
Franchise Taxes 70,000 68,884 (1,116)
Gravel Tax - 57 57
Total Taxes 5,173,517 5,211,418 37,901
Licenses and Permits 1,256,495 1,148,190 (108,305)
Intergovernmental Revenue
State Revenue
Market Value Credit - 4,588 4,588
Police and Fire Aid 80,000 117,613 37,613
Other State Grants and Aids 182,100 225,035 42,935
County Revenue
Other County Grants and Aids 14,000 39,256 25,256
Total Intergovernmental Revenue 276,100 386,492 110,392
Charges for Services
General Government 255,662 327,360 71,698
Other Public Safety 650,000 470,911 (179,089)
Streets and Highways 1,500 516 (984)
Total Charges for Services 907,162 798,787 (108,375)
Fines and Forfeitures 30,000 45,402 15,402
Miscellaneous Revenue
Investment Earnings (Losses)35,000 345,953 310,953
Lease Interest - 65,336 65,336
Refunds and Reimbursements 5,000 (2,858) (7,858)
Contributions and Donations 11,000 12,759 1,759
Other Miscellaneous 8,500 36,376 27,876
Total Miscellaneous Revenue 59,500 457,566 398,066
TOTAL REVENUES 7,702,774 8,047,855 345,081
CITY OF LAKE ELMO, MINNESOTA
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND (Continued)
FOR THE YEAR ENDED DECEMBER 31, 2023
73
Budget Actual Variance with
Amounts - Amounts Budget
Original and Budgetary Over
Final Basis (Under)
EXPENDITURES
General Government
Mayor and Council 59,960$ 56,842$ (3,118)$
Administration and Finance 886,439 720,606 (165,833)
Other General Government 590,592 436,249 (154,343)
Total General Government 1,536,991 1,213,697 (323,294)
Public Safety
Police
Current 1,049,784 1,050,555 771
Fire
Current 1,348,769 1,233,415 (115,354)
Capital Outlay 205,000 205,268 268
Building Inspections
Current 917,351 690,772 (226,579)
Other Public Safety
Current 67,500 62,502 (4,998)
Total Public Safety 3,588,404 3,242,512 (345,892)
Public Works
Street Maintenance and Storm Sewers 1,556,382 1,124,231 (432,151)
Snow and Ice Removal 62,000 67,773 5,773
Street Engineering 14,000 26,526 12,526
Street Lighting 49,000 65,804 16,804
Capital Outlay - Other 25,000 75,316 50,316
Total Public Works 1,706,382 1,359,650 (346,732)
Culture and Recreation
Parks and Recreation
Current 428,741 409,753 (18,988)
TOTAL EXPENDITURES 7,260,518 6,225,612 (1,034,906)
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 442,256 1,822,243 1,379,987
OTHER FINANCING SOURCES (USES)
To Other Funds (425,000) (441,902) (16,902)
NET CHANGE IN FUND BALANCE 17,256$ 1,380,341 1,363,085$
FUND BALANCE - BEGINNING 7,540,239
FUND BALANCE - ENDING 8,920,580$
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF CITY’S PROPORTIONATE
SHARE OF THE NET PENSION LIABILITY
LAST TEN YEARS (Presented Prospectively)
74
City's
Proportionate
Share of the Net City's
Pension Liability Proportionate Plan
City's State's and the State's Share of the Net Fiduciary Net
Proportionate Proportionate Proportionate Pension Liability Position as a
For the City's Share of the Share of the Net Share of the Net (Asset) as a Percentage
Measurement Proportion of the Net Pension Pension Liability Pension Liability City's Percentage of of the Total
Year Ended Net Pension Liability Associated with Associated with Covered its Covered Pension
June 30,Liability (Asset)(Asset) (a)the City (b)the City (a+b)Payroll (c)Payroll ((a+b)/c)Liability
General Employees Retirement Pension Plan
2023 0.0212%1,185,480$ 32,703$ 1,218,183$ 1,728,760$ 70.5%83.1%
2022 0.0232%1,837,447$ 53,688$ 1,891,135$ 1,776,733$ 106.4%76.7%
2021 0.0202%862,631$ 26,322$ 888,953$ 1,456,866$ 61.0%87.0%
2020 0.0207%1,241,060$ 38,201$ 1,279,261$ 1,476,621$ 86.6%79.1%
2019 0.0193%1,067,054$ 33,165$ 1,100,219$ 1,364,625$ 80.6%80.2%
2018 0.0191%1,059,590$ 34,710$ 1,094,300$ 1,283,088$ 85.3%79.5%
2017 0.0189%1,206,564$ 15,173$ 1,221,737$ 1,209,466$ 101.0%75.9%
2016 0.0159%1,291,001$ 16,853$ 1,307,854$ 1,041,540$ 125.6%68.9%
2015 0.0169%875,846$ -$ 875,846$ 975,250$ 89.8%78.2%
2014 0.0191%897,222$ -$ 897,222$ 979,703$ 91.6%78.2%
Public Employees Police and Fire Pension Plan
2023 0.0244%421,356$ 16,984$ 438,340$ 301,836$ 145.2%86.5%
2022 0.0256%1,114,011$ 48,633$ 1,162,644$ 292,842$ 397.0%70.5%
2021 0.0165%127,363$ 5,712$ 133,075$ 194,379$ 68.5%93.7%
2020 0.0171%225,396$ 5,309$ 230,705$ 194,511$ 118.6%87.2%
2019 0.0193%205,468$ 2,605$ 208,073$ 203,030$ 102.5%89.3%
2018 0.0163%173,741$ 1,467$ 175,208$ 172,287$ 101.7%88.8%
2017 0.0100%135,012$ -$ 135,012$ 105,846$ 127.6%85.4%
2016 0.0090%361,186$ -$ 361,186$ 87,111$ 414.6%63.9%
2015 0.0090%102,261$ -$ 102,261$ 86,600$ 118.1%86.6%
2014 0.0090%97,204$ -$ 97,204$ 84,098$ 115.6%87.1%
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF CITY PENSION CONTRIBUTIONS
LAST TEN YEARS (Presented Prospectively)
75
Contributions in
Relation to the Contributions as
For the Fiscal Statutorily Statutorily Contribution City's a Percentage of
Year Ended Required Required Deficiency Covered Covered
December 31,Contribution Contribution (Excess)Payroll Payroll
General Employees Retirement Pension Plan
2023 135,093$ 135,093$ -$ 1,801,240$ 7.5%
2022 132,383$ 132,383$ -$ 1,765,107$ 7.5%
2021 120,362$ 120,362$ -$ 1,609,407$ 7.5%
2020 109,289$ 109,289$ -$ 1,457,195$ 7.5%
2019 108,779$ 108,779$ -$ 1,450,387$ 7.5%
2018 96,960$ 96,960$ -$ 1,294,100$ 7.5%
2017 95,794$ 95,794$ -$ 1,276,944$ 7.5%
2016 85,649$ 85,649$ -$ 1,141,987$ 7.5%
2015 70,582$ 70,582$ -$ 941,092$ 7.5%
2014 73,182$ 73,182$ -$ 1,009,407$ 7.2%
Public Employees Police and Fire Pension Plan
2023 72,744$ 72,744$ -$ 410,983$ 17.7%
2022 49,674$ 49,674$ -$ 280,644$ 17.7%
2021 47,658$ 47,658$ -$ 269,254$ 17.7%
2020 27,492$ 27,492$ -$ 155,365$ 17.7%
2019 39,225$ 39,225$ -$ 231,416$ 16.9%
2018 30,990$ 30,990$ -$ 191,350$ 16.2%
2017 20,327$ 20,327$ -$ 125,475$ 16.2%
2016 13,967$ 13,967$ -$ 86,216$ 16.2%
2015 14,257$ 14,257$ -$ 88,005$ 16.2%
2014 13,035$ 13,035$ -$ 85,195$ 15.3%
Volunteer Fire Relief Association
2023 -$ -$ -$ N/A N/A
2022 -$ -$ -$ N/A N/A
2021 -$ 76,608$ (76,608)$ N/A N/A
2020 -$ 69,975$ (69,975)$ N/A N/A
2019 -$ 65,533$ (65,533)$ N/A N/A
2018 -$ 61,147$ (61,147)$ N/A N/A
2017 -$ 59,136$ (59,136)$ N/A N/A
2016 -$ 61,166$ (61,166)$ N/A N/A
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF CHANGES IN NET PENSION LIABILITY (ASSET)
FIREFIGHTERS RELEIF ASSOCIATION
LAST TEN YEARS (Presented Prospectively)
76
2022 2021 2020 2019 2018 2017 2016 2015
Changes in Total Pension Liability (TPL)
Balance at January 1st 864,850$ 775,033$ 724,844$ 898,899$ 681,802$ 618,531$ 588,689$ 714,621$
Service Cost 47,844 46,677 38,225 37,293 28,420 27,727 27,579 28,520
Interest on the TPL 45,031 43,140 39,743 42,177 36,119 35,544 36,976 37,130
Assumption Changes (15,405) - - - 8,730 - 11,690 -
Plan Changes - - - - 325,127 - - -
Actuarial Experience (Gains)/Losses (124,184) - (27,779) - (80,312) - (46,403) -
Benefit Payments (109,933) - - (253,525) (100,987) - - (191,582)
Balance at December 31st 708,203$ 864,850$ 775,033$ 724,844$ 898,899$ 681,802$ 618,531$ 588,689$
Plan Fiduciary Net Position (PFNP)
Balance at January 1st 1,462,205$ 1,280,455$ 1,097,917$ 1,169,306$ 1,279,379$ 1,075,446$ 963,628$ 1,155,598$
Fire State Aid 101,778 80,470 76,608 69,975 65,533 61,147 59,136 61,166
Projected Investment Income 76,145 68,948 118,822 127,902 (61,227) 156,879 70,101 (48,240)
Gain or Loss (241,246) 47,138 - - - - - -
Total Additions (63,323) 196,556 195,430 197,877 4,306 218,026 129,237 12,926
Benefit Payments (109,933) - - (253,525) (100,987) - - (191,582)
Administrative Expenses (15,504) (14,806) (12,892) (15,741) (13,392) (14,093) (17,419) (13,314)
Total Reductions (125,437) (14,806) (12,892) (269,266) (114,379) (14,093) (17,419) (204,896)
Balance at December 31st 1,273,445$ 1,462,205$ 1,280,455$ 1,097,917$ 1,169,306$ 1,279,379$ 1,075,446$ 963,628$
Net Pension Liability (Asset) - December 31st (565,242)$ (597,355)$ (505,422)$ (373,073)$ (270,407)$ (597,577)$ (456,915)$ (374,939)$
Plan Fiduciary Net Position as a Percentage of
Total Pension Liability (Asset)179.8%169.1%165.2%151.5%130.1%187.6%173.9%163.7%
Note:The schedule is provided prospectively with the City’s fiscal year ended December 31,2016 (December 31,2015 measurement date)and is intended to show a ten year trend.
Additional years will be reported as they become available.
Measurement Year Ended December 31,
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF CHANGES IN CITY’S NET OPEB LIABILITY
LAST TEN YEARS (Presented Prospectively)
77
2022 2021 2020 2019 2018 2017
Changes in Total OPEB Liability (TOL)
Balance at January 1st 96,581$ 99,789$ 79,303$ 73,788$ 63,930$ 51,220$
Service Cost 14,941 15,989 13,859 9,793 9,525 8,200
Interest on the TPL 1,987 2,300 2,541 3,101 2,431 2,264
Assumption Changes (17,298) (4,833) 5,583 6,912 (2,098) 2,246
Differences Between Expected and
Actual Experience - (15,088) - (14,291) - -
Benefit Payments (7,086) (1,576) (1,497) - - -
Balance at December 31st 89,125$ 96,581$ 99,789$ 79,303$ 73,788$ 63,930$
Covered Payroll for Active Members 1,996,038$ 1,743,100$ 1,455,967$ 1,831,326$ 1,605,997$ 1,483,782$
Net OPEB Liability / Covered Payroll 4.5%5.5%6.9%4.3%4.6%4.3%
Note:The schedule is provided prospectively beginning with the City’s fiscal year ended December 31,2018 (December 31,2017 measurement date)and is intended
to show a ten year trend. Additional years will be reported as they become available.
Measurement Year Ended December 31,
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF CITY OPEB CONTRIBUTIONS
LAST TEN YEARS (Presented Prospectively)
78
Contributions in
Relation to the Contributions as
For the Contractually Contractually Contribution City's a Percentage of
Year Ended Required Required Deficiency Covered Covered
December 31,Contribution Contribution (Excess)Payroll Payroll
Other Post-Employment Benefits
2023 -$ -$ -$ 2,115,800$ 0.0%
2022 -$ -$ -$ 1,786,678$ 0.0%
2021 -$ -$ -$ 1,743,100$ 0.0%
2020 -$ -$ -$ 1,455,967$ 0.0%
2019 -$ -$ -$ 1,831,326$ 0.0%
2018 -$ -$ -$ 1,605,997$ 0.0%
2017 -$ -$ -$ 1,483,782$ 0.0%
Note:The schedule is provided prospectively beginning with the City’s fiscal year ended December 31,2017 and is
intended to show a ten year trend. Additional years will be reported as they become available.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
79
NOTE 1 PUBLIC EMPLOYEES RETIREMENT PLAN – GENERAL EMPLOYEES FUND
2023 Changes
Changes in Actuarial Assumptions
• The investment return assumption and single discount rate were changed from 6.50 percent to 7.00 percent.
Changes in Plan Provisions
• An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1,
2023.
• The vesting period of those hired after June 30, 2010 was changed from five years of allowable service to three years
of allowable service.
• The benefit increase delay for early retirements on or after January 1, 2024 was eliminated.
• A one-time, non-compounding benefit increase of 2.50 percent minus the actual 2024 adjustment will be payable in a
lump sum for calendar year 2024 by March 31, 2024.
2022 Changes
Changes in Actuarial Assumptions
• The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2021 Changes
Changes in Actuarial Assumptions
• The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting
purposes.
• The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2020 Changes
Changes in Actuarial Assumptions
• The price inflation assumption was decreased from 2.50 percent to 2.25 percent.
• The payroll growth assumption was decreased from 3.25 percent to 3.00 percent.
• Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect
is assumed rates that average 0.25 percent less than previous rates.
• Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result
in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.
• Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates
are based on service and are generally lower than the previous rates for years 2-5 and slightly higher thereafter.
• Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results
in fewer predicted disability retirements for males and females.
• The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010
General Mortality table, with adjustments. The base mortality table for disabled annuitants was changed from the RP-
2014 disabled annuitant mortality table to the PUB-2010 General/Teacher disabled annuitant mortality table, with
adjustments.
• The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019.
• The assumed spouse age difference was changed from two years older for females to one year older.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
80
NOTE 1 PUBLIC EMPLOYEES RETIREMENT PLAN – GENERAL EMPLOYEES FUND (Continued)
• The assumed number of married male new retirees electing the 100 percent Joint & Survivor option changed from
35.00 percent to 45.00 percent. The assumed number of married female new retirees electing the 100 percent Joint &
Survivor option changed from 15.00 percent to 30.00 percent. The corresponding number of married new retirees
electing the Life annuity option was adjusted accordingly.
Changes in Plan Provisions
• Augmentation for current privatized members was reduced to 2.00 percent for the period July 1, 2020 through
December 31, 2023 and 0.00 percent after. Augmentation was eliminated for privatizations occurring after June 30,
2020.
2019 Changes
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions
• The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million
per year. The State’s special funding contribution was changed prospectively, requiring $16.0 million due per year
through 2031.
2018 Changes
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2015 to MP-2017.
• The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50 percent per year
thereafter to 1.25 percent per year.
Changes in Plan Provisions
• The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019,
resulting in actuarial equivalence after June 30, 2024.
• Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018.
• Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already
accrued for deferred members will still apply.
• Contribution stabilizer provisions were repealed.
• Postretirement benefit increases were changed from 1.00 percent per year with a provision to increase to 2.50 percent
upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not
less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019.
• For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal
retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors.
• Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
2017 Changes
Changes in Actuarial Assumptions
• The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent
for vested and non-vested deferred members. The revised CSA load are now 0.00 percent for active member liability,
15.00 percent for vested deferred member liability, and 3.00 percent for non-vested deferred member liability.
• The assumed postretirement benefit increase rate was changed from 1.00 percent per year for all years to 1.00 percent
per year through 2044 and 2.50 percent per year thereafter.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
81
NOTE 1 PUBLIC EMPLOYEES RETIREMENT PLAN – GENERAL EMPLOYEES FUND (Continued)
Changes in Plan Provisions
• The State’s contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and
$6,000,000 thereafter.
• The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from
$21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State’s contribution changed from $16,000,000 to
$6,000,000 in calendar years 2019 to 2031.
2016 Changes
Changes in Actuarial Assumptions
• The assumed postretirement benefit increase rate was changed from 1.00 percent per year through 2035 and 2.50
percent per year thereafter to 1.00 percent per year for all years.
• The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed
from 7.90 percent to 7.50 percent.
• Other assumptions were changed pursuant to the experience study June 30, 2015. The assumed future salary increases,
payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for
inflation.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2015 Changes
Changes in Actuarial Assumptions
• The assumed postretirement benefit increase rate was changed from 1.00 percent per year through 2030 and 2.50
percent per year thereafter to 1.00 percent per year through 2035 and 2.50 percent per year thereafter.
Changes in Plan Provisions
• On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund,
which increased the total pension liability by $1.1 billion and increase the fiduciary plan net position by $892 million.
Upon consolidation, state and employer contributions were revised; the State’s contribution of $6.0 million, which
meets the special funding situation definition, was due September 2015.
NOTE 2 PUBLIC EMPLOYEES RETIREMENT PLAN – POLICE AND FIRE FUND
2023 Changes
Changes in Actuarial Assumptions
• The investment return assumption was changed from 6.50 percent to 7.00 percent.
• The single discount rate changed from 5.40 percent to 7.0 percent.
Changes in Plan Provisions
• Additional one-time direct state aid contribution of 19.4 million will be contributed to the Plan on October 1, 2023.
• Vesting requirement for new hires after June 30, 2014 was changed from a graded 20-year vesting schedule to a graded
10-year vesting schedule, with 50 percent vesting after five years, increasing incrementally to 100 percent after 10
years.
• A one-time, non-compounding benefit increase of 3.00 percent will be payable in a lump sum for calendar year 2024
by March 31, 2024.
• Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability benefit for a
psychological condition relating to the member’s occupation.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
82
NOTE 2 PUBLIC EMPLOYEES RETIREMENT PLAN – POLICE AND FIRE FUND (Continued)
• The total and permanent duty disability benefit was increased, effective July 1, 2023.
2022 Changes
Changes in Actuarial Assumptions
• The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
• The single discount rate changed from 6.50 percent to 5.40 percent.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2021 Changes
Changes in Actuarial Assumptions
• The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting
purposes.
• The inflation assumption was changed from 2.50 percent to 2.25 percent.
• The payroll growth assumption was changed from 3.25 percent to 3.00 percent.
• The base mortality table for healthy annuitants and employees was changed from the RP-2014 table to the Pub-2010
Public Safety Mortality table. The mortality improvement scale was changed from MP-2019 to MN-2020.
• The base mortality table for disabled annuitants was changed from the RP-2014 healthy annuitant mortality table (with
future mortality improvement according to Scale MP-2019) to the Pub-2010 Public Safety disabled annuitant mortality
table (with future mortality improvement according to Scale MP-2020).
• Assumed rates of salary increase were modified as recommended in the July 14, 2020 experience study. The overall
impact is a decrease in gross salary increase rates.
• Assumed rates of retirement were changed as recommended in the July 14, 2020 experience study. The changes result
in slightly more unreduced retirements and fewer assumed early retirements.
• Assumed rates of withdrawal were changed from select and ultimate rates to service-based rates. The changes result
in more assumed terminations.
• Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49. Overall, proposed rates
result in more projected disabilities.
• Assumed percent married for active female members was changed from 60.00 percent to 70.00 percent. Minor changes
to form of payment assumptions were applied.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2020 Changes
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2018 to MP-2019.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2019 Changes
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2017 to MP-2018.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
83
NOTE 2 PUBLIC EMPLOYEES RETIREMENT PLAN – POLICE AND FIRE FUND (Continued)
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2018 Changes
Changes in Actuarial Assumptions
• The mortality projection scale was changed from MP-2016 to MP-2017.
Changes in Plan Provisions
• Postretirement benefit increases were changed to 1.00 percent for all years, with no trigger.
• An end date of July 1, 2048 was added to the existing $9.0 million state contribution.
• New annual State aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million thereafter until the plan
reaches 100 percent funding, or July 1, 2048, if earlier.
• Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective January 1, 2019 and 11.80
percent of pay, effective January 1, 2020.
• Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective January 1, 2019 and 17.70
percent of pay, effective January 1, 2020.
• Interest credited on member contributions decreased from 4.00 percent to 3.00 percent, beginning July 1, 2018.
• Deferred augmentation was changed to 0.00 percent, effective January 1, 2019. Augmentation that has already
accrued for deferred members will still apply.
• Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
2017 Changes
Changes in Actuarial Assumptions
• Assumed salary increases were changed as recommended in the June 30, 2016 experience study. The net effect is
proposed rates that average 0.34 percent lower than the previous rates.
• Assumed rates of retirement were changed, resulting in fewer retirements.
• The Combined Service Annuity (CSA) load was 30.00 percent for vested and non-vested, deferred members. The
CSA has been changed to 33.00 percent for vested members and 2.00 percent for non-vested members.
• The base mortality table for healthy annuitants was changed from the RP-2000 fully generational table to the RP-2014
fully generational table (with a base year of 2006), with male rates adjusted by a factor of 0.96. The mortality
improvement scale was changed from Scale AA to Scale MP-2016. The base mortality table for disabled annuitants
was changed from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees.
• Assumed termination rates were decreased to 3.00 percent for the first three years of service. Rates beyond the select
period of three years were adjusted, resulting in more expected terminations overall.
• Assumed percentage of married female members was decreased from 65.00 percent to 60.00 percent.
• Assumed age difference was changed from separate assumptions for male members (wives assumed to be three years
younger) and female members (husbands assumed to be four years older) to the assumption that males are two years
older than females.
• The assumed percentage of female members electing joint and survivor annuities was increased.
• The assumed postretirement benefit increase rate was changed from 1.00 percent for all years to 1.00 percent per year
through 2064 and 2.50 percent thereafter.
• The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
84
NOTE 2 PUBLIC EMPLOYEES RETIREMENT PLAN – POLICE AND FIRE FUND (Continued)
2016 Changes
Changes in Actuarial Assumptions
• The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2037 and 2.50
percent thereafter to 1.00 percent per year for all future years.
• The assumed investment return was changed from 7.90 percent to 7.50 percent.
• The single discount rate changed from 7.90 percent to 5.60 percent.
• The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for
payroll growth and 2.50 percent for inflation.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2015 Changes
Changes in Actuarial Assumptions
• The assumed postretirement benefit increase rate was changed from 1.00 percent per year through 2030 and 2.50
percent per year thereafter to 1.00 percent per year through 2037 and 2.50 percent per year thereafter.
Changes in Plan Provisions
• The post-retirement benefit increase to be paid after attainment of the 90 percent funding threshold was changed, from
inflation up to 2.50 percent, to a fixed rate of 2.50 percent.
NOTE 3 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION
2022 Changes
Changes in Actuarial Assumptions
• The discount rate changed from 5.25 percent to 5.75 percent.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2021 Changes
Changes in Actuarial Assumptions
• There have been no changes in actuarial assumptions since the previous valuation.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2020 Changes
Changes in Actuarial Assumptions
• There have been no changes in actuarial assumptions since the previous valuation.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
85
NOTE 3 DEFINED BENEFIT PENSION PLAN – FIREFIGHTERS RELIEF ASSOCIATION (Continued)
2019 Changes
Changes in Actuarial Assumptions
• There have been no changes in actuarial assumptions since the previous valuation.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2018 Changes
Changes in Actuarial Assumptions
• There have been no changes in actuarial assumptions since the previous valuation.
Changes in Plan Provisions
• The benefit level increased from $3,400 to $5,850 for each year of service.
NOTE 4 OTHER POSTEMPLOYMENT BENEFIT PLAN
2023 Changes
Changes in Actuarial Assumptions
• The discount rate was changed from 1.84 percent to 4.05 percent based on updated 20-year municipal bonds rates.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2022 Changes
Changes in Actuarial Assumptions
• The discount rate was changed from 2.00 percent to 1.84 percent based on updated 20-year municipal bonds rates.
• Healthcare trend rates were reset to reflect updated cost increase expectations.
• Medical per capita claims costs were updated to reflect recent experience.
• Withdrawal, mortality, and salary increase rates were updated from the rates used in the 7/1/2019 PERA General
Employees Plan valuation to the rates used in the 7/1/2022 valuation.
Changes in Plan Provisions
• Retiree premiums were updated to current levels.
2021 Changes
Changes in Actuarial Assumptions
• The discount rate was changed from 2.75 percent to 2.00 percent.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
CITY OF LAKE ELMO, MINNESOTA
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2023
86
NOTE 4 OTHER POSTEMPLOYMENT BENEFIT PLAN (Continued)
2020 Changes
Changes in Actuarial Assumptions
• The discount rate was changed from 3.71 percent to 2.75 percent based on updated 20-year municipal bond rates.
• Healthcare trend rates were reset to reflect updated cost increase expectations, including the repeal of the Affordable
Care Act’s Excise Tax on high-cost health insurance plans. In addition, the medical trend rate adjustments to reflect
the projected effect of the Affordable Care Act’s Excise Tax on high-cost health insurance plans was removed because
the tax was repealed.
• Medical per capita claims costs were updated to reflect recent experience.
• Salary increase rates were updated from the rates used in the July 1, 2017 PERA General Employees Plan valuation
to the rates used in the July 1, 2019 valuation.
• Mortality rates were updated from the RP-2014 tables to the rates used in the July 1, 2019 PERA General Employees
Plan actuarial valuation.
• The inflation assumption was changed from 2.75 percent to 2.50 percent based on an updated historical analysis of
inflation rates and forward-looking market expectations.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
2019 Changes
Changes in Actuarial Assumptions
• The discount rate was changed from 3.31 percent to 3.71 percent.
Changes in Plan Provisions
• There have been no changes in plan provisions since the previous valuation.
87
SUPPLEMENTARY INFORMATION
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR GOVERMENTAL FUNDS
DECEMBER 31, 2023
88
Total Nonmajor
Special Revenue
Funds
Total Nonmajor
Capital Project
Funds
Total Nonmajor
Governmental
Funds
ASSETS
Cash, Cash Equivalents, and Investments 96,048$ 5,352,926$ 5,448,974$
Assessments Receivable - 20,549 20,549
Interest Receivable 719 15,267 15,986
Due from Other Funds - 449,894 449,894
TOTAL ASSETS 96,767$ 5,838,636$ 5,935,403$
LIABILITIES
Accounts Payable -$ 122,588$ 122,588$
Construction Contracts Payable - 37,565 37,565
Due to Other Funds - 449,894 449,894
Unearned Revenue 53,489 250,000 303,489
Total Liabilities 53,489 860,047 913,536
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue:
Special Assessments - 20,549 20,549
FUND BALANCES
Restricted - 3,154,339 3,154,339
Committed 20,334 - 20,334
Assigned 22,944 2,296,674 2,319,618
Unassigned - (492,973) (492,973)
Total Fund Balances 43,278 4,958,040 5,001,318
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES 96,767$ 5,838,636$ 5,935,403$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERMENTAL FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
89
Total Nonmajor
Special Revenue
Funds
Total Nonmajor
Capital Project
Funds
Total Nonmajor
Governmental
Funds
REVENUES
Special Assessments -$ 8,938$ 8,938$
Intergovernmental 242,390 553,787 796,177
Charges for Services 5,700 277,119 282,819
Investment Earnings (Losses)15,120 234,105 249,225
Miscellaneous - 21,230 21,230
TOTAL REVENUES 263,210 1,095,179 1,358,389
EXPENDITURES
Current:
Public Works - 417 417
Parks and Recreation - 739 739
Capital Outlay 242,390 3,299,239 3,541,629
Debt Service:
Interest and Other Charges - 12,397 12,397
TOTAL EXPENDITURES 242,390 3,312,792 3,555,182
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 20,820 (2,217,613) (2,196,793)
OTHER FINANCING SOURCES (USES)
Sale of Assets - 60,600 60,600
Bond Issuance - 916,081 916,081
Premium on Bond Issuance - 87,543 87,543
Transfers In - 466,799 466,799
Transfers Out - (24,897) (24,897)
TOTAL OTHER FINANCING
SOURCES (USES)- 1,506,126 1,506,126
NET CHANGE IN FUND BALANCES 20,820 (711,487) (690,667)
FUND BALANCES - BEGINNING 22,458 5,669,527 5,691,985
FUND BALANCES - ENDING 43,278$ 4,958,040$ 5,001,318$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR SPECIAL REVENUE FUNDS
DECEMBER 31, 2023
90
Lions Park Sign
Program Fund
Economic
Development
Authority Fund ARPA Fund
Total Nonmajor
Special Revenue
Funds
ASSETS
Cash, Cash Equivalents, and Investments 20,286$ 12,324$ 63,438$ 96,048$
Interest Receivable 48 31 640 719
TOTAL ASSETS 20,334$ 12,355$ 64,078$ 96,767$
LIABILITIES
Unearned Revenue -$ -$ 53,489$ 53,489$
FUND BALANCES
Committed 20,334 - - 20,334
Assigned - 12,355 10,589 22,944
Total Fund Balances 20,334 12,355 10,589 43,278
TOTAL LIABILITIES
AND FUND BALANCES 20,334$ 12,355$ 64,078$ 96,767$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES,
EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR SPECIAL REVENUE FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
91
Lions Park Sign
Program Fund
Economic
Development
Authority Fund ARPA Fund
Total Nonmajor
Special Revenue
Funds
REVENUES
Intergovernmental -$ -$ 242,390$ 242,390$
Charges for Services 5,700 - - 5,700
Investment Earnings (Losses)514 412 14,194 15,120
TOTAL REVENUES 6,214 412 256,584 263,210
EXPENDITURES
Capital Outlay - - 242,390 242,390
NET CHANGE IN FUND BALANCES 6,214 412 14,194 20,820
FUND BALANCES - BEGINNING 14,120 11,943 (3,605) 22,458
FUND BALANCES - ENDING 20,334$ 12,355$ 10,589$ 43,278$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET
NONMAJOR CAPITAL PROJECT FUNDS
DECEMBER 31, 2023
92
Park Dedication
Fund
Vehicle
Acquisition Fund
Heritage Farms
Street & Utility
Improvements
Fund
Infrastructure
Reserve Fund
City Facilities
Fund
Manning &
Hudson Future
Stoplight Fund
CSAH 13 Phase
2 Fund
ASSETS
Cash, Cash Equivalents,
and Investments 2,474,283$ 1,499,404$ 232,757$ 185,083$ 98,628$ 266,529$ -$
Assessments Receivable - - - 20,549 - - -
Interest Receivable 7,551 2,722 585 1,633 246 666 -
Due from Other Funds - - - 449,894 - - -
TOTAL ASSETS 2,481,834$ 1,502,126$ 233,342$ 657,159$ 98,874$ 267,195$ -$
LIABILITIES
Accounts Payable 57,501$ -$ -$ -$ -$ -$ -$
Construction Contracts Payable - - - - - - -
Due to Other Funds - - - - - - 48,389
Unearned Revenue - - - - - 250,000 -
Total Liabilities 57,501 - - - - 250,000 48,389
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue:
Special Assessments - - - 20,549 - - -
FUND BALANCES
Restricted 2,424,333 - 233,342 - - - -
Assigned - 1,502,126 - 636,610 98,874 17,195 -
Unassigned - - - - - - (48,389)
Total Fund Balance 2,424,333 1,502,126 233,342 636,610 98,874 17,195 (48,389)
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES 2,481,834$ 1,502,126$ 233,342$ 657,159$ 98,874$ 267,195$ -$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET (Continued)
NONMAJOR CAPITAL PROJECT FUNDS
DECEMBER 31, 2023
93
Railroad
Crossing
Improvements
Fund
Old Village
Phases 5 & 6
Fund
CSAH 15
Manning Avenue
Phase 3 Fund
Manning &
Highway 36
Interchange Fund
Tamarack Farm
Estates Street
Improvements
Fund
CSAH 15
Manning Avenue
& 30th Street
Fund
TH36 Lake
Elmo Avenue
Improvements
Fund
ASSETS
Cash, Cash Equivalents,
and Investments 53,220$ -$ -$ 2,566$ 123,333$ -$ -$
Assessments Receivable - - - - - - -
Interest Receivable 147 - - 6 308 - -
Due from Other Funds - - - - - - -
TOTAL ASSETS 53,367$ -$ -$ 2,572$ 123,641$ -$ -$
LIABILITIES
Accounts Payable 14,070$ 5,124$ -$ -$ 200$ -$ 350$
Construction Contracts Payable - - - - - - -
Due to Other Funds - 252,849 3,525 - - 14,512 5,499
Unearned Revenue - - - - - - -
Total Liabilities 14,070 257,973 3,525 - 200 14,512 5,849
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue:
Special Assessments - - - - - - -
FUND BALANCES
Restricted - - - - 123,441 - -
Assigned 39,297 - - 2,572 - - -
Unassigned - (257,973) (3,525) - - (14,512) (5,849)
Total Fund Balance 39,297 (257,973) (3,525) 2,572 123,441 (14,512) (5,849)
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES 53,367$ -$ -$ 2,572$ 123,641$ -$ -$
CITY OF LAKE ELMO, MINNESOTA
COMBINING BALANCE SHEET (Continued)
NONMAJOR CAPITAL PROJECT FUNDS
DECEMBER 31, 2023
94
2022 Street
Improvements
Fund
Old Village
Phase 7 Fund
CSAH 15
(Manning Ave)
Phase 3 Fund
2024 Street &
Utility
Improvement
Fund
Hudson Blvd
Imp-Seg A-
InwdHdrx Fund
15th Street N
Improvement
Fund
30th St N Gap
Segmt
Improvement
Fund
Total Nonmajor
Capital Project
Funds
ASSETS
Cash, Cash Equivalents,
and Investments 353,727$ 63,396$ -$ -$ -$ -$ -$ 5,352,926$
Assessments Receivable - - - - - - - 20,549
Interest Receivable 902 501 - - - - - 15,267
Due from Other Funds - - - - - - - 449,894
TOTAL ASSETS 354,629$ 63,897$ -$ -$ -$ -$ -$ 5,838,636$
LIABILITIES
Accounts Payable 288$ 7,450$ 70$ 25,546$ 5,612$ 3,348$ 3,029$ 122,588$
Construction Contracts Payable - 37,565 - - - - - 37,565
Due to Other Funds - - 1,482 31,336 48,215 21,684 22,403 449,894
Unearned Revenue - - - - - - - 250,000
Total Liabilities 288 45,015 1,552 56,882 53,827 25,032 25,432 860,047
DEFERRED INFLOWS OF
RESOURCES
Unavailable Revenue:
Special Assessments - - - - - - - 20,549
FUND BALANCES
Restricted 354,341 18,882 - - - - - 3,154,339
Assigned - - - - - - - 2,296,674
Unassigned - - (1,552) (56,882) (53,827) (25,032) (25,432) (492,973)
Total Fund Balance 354,341 18,882 (1,552) (56,882) (53,827) (25,032) (25,432) 4,958,040
TOTAL LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES 354,629$ 63,897$ -$ -$ -$ -$ -$ 5,838,636$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR CAPITAL PROJECT FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
95
Park Dedication
Fund
Vehicle
Acquisition Fund
Heritage Farms
Street & Utility
Improvements
Fund
Infrastructure
Reserve Fund
City Facilities
Fund
Manning &
Hudson Future
Stoplight Fund
CSAH 13 Phase
2 Fund
REVENUES
Special Assessments -$ -$ -$ 8,938$ -$ -$ -$
Intergovernmental - 553,787 - - - - -
Charges for Services 277,119 - - - - - -
Investment Earnings (Losses)111,431 47,614 6,592 21,170 3,477 9,398 2,273
Miscellaneous - - - - - - -
TOTAL REVENUES 388,550 601,401 6,592 30,108 3,477 9,398 2,273
EXPENDITURES
Current:
Public Works - - - - - - -
Parks and Recreation 739 - - - - - -
Capital Outlay 1,041,913 846,545 3,156 - - - (1,055)
Debt Service:
Interest and Other Charges - - - - - - -
TOTAL EXPENDITURES 1,042,652 846,545 3,156 - - - (1,055)
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (654,102) (245,144) 3,436 30,108 3,477 9,398 3,328
OTHER FINANCING
SOURCES (USES)
Sale of Assets - 60,600 - - - - -
Bond Issuance - - - - - - -
Premium on Bond Issuance - - - - - - -
Transfers In - 425,000 - - - - -
Transfers Out - - - (24,897) - - -
TOTAL OTHER FINANCING
SOURCES (USES)- 485,600 - (24,897) - - -
NET CHANGE IN FUND BALANCES (654,102) 240,456 3,436 5,211 3,477 9,398 3,328
FUND BALANCES- BEGINNING 3,078,435 1,261,670 229,906 631,399 95,397 7,797 (51,717)
FUND BALANCES - ENDING 2,424,333$ 1,502,126$ 233,342$ 636,610$ 98,874$ 17,195$ (48,389)$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued)
NONMAJOR CAPITAL PROJECT FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
96
Railroad
Crossing
Improvements
Fund
Old Village
Phases 5 & 6
Fund
CSAH 15
Manning Avenue
Phase 3 Fund
Manning &
Highway 36
Interchange Fund
Tamarack Farm
Estates Street
Improvements
Fund
CSAH 15
Manning Avenue
& 30th Street
Fund
TH36 Lake
Elmo Avenue
Improvements
Fund
REVENUES
Special Assessments -$ -$ -$ -$ -$ -$ -$
Intergovernmental - - - - - - -
Charges for Services - - - - - - -
Investment Earnings (Losses)2,444 2,616 - 1,906 4,403 6,444 -
Miscellaneous 21,230 - - - - - -
TOTAL REVENUES 23,674 2,616 - 1,906 4,403 6,444 -
EXPENDITURES
Current:
Public Works - - - - - - -
Parks and Recreation - - - - - - -
Capital Outlay 53,887 252,176 - - 439 613 3,139
Debt Service:
Interest and Other Charges - - - - - - -
TOTAL EXPENDITURES 53,887 252,176 - - 439 613 3,139
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (30,213) (249,560) - 1,906 3,964 5,831 (3,139)
OTHER FINANCING
SOURCES (USES)
Sale of Assets - - - - - - -
Bond Issuance - - - - - - -
Premium on Bond Issuance - - - - - - -
Transfers In 41,799 - - - - - -
Transfers Out - - - - - - -
TOTAL OTHER FINANCING
SOURCES (USES)41,799 - - - - - -
NET CHANGE IN FUND BALANCES 11,586 (249,560) - 1,906 3,964 5,831 (3,139)
FUND BALANCES- BEGINNING 27,711 (8,413) (3,525) 666 119,477 (20,343) (2,710)
FUND BALANCES - ENDING 39,297$ (257,973)$ (3,525)$ 2,572$ 123,441$ (14,512)$ (5,849)$
CITY OF LAKE ELMO, MINNESOTA
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (Continued)
NONMAJOR CAPITAL PROJECT FUNDS
FOR THE YEAR ENDED DECEMBER 31, 2023
97
2022 Street
Improvements
Fund
Old Village
Phase 7 Fund
CSAH 15
(Manning Ave)
Phase 3 Fund
2024 Street &
Utility
Improvement
Fund
Hudson Blvd
Imp-Seg A-
InwdHdrx Fund
15th Street N
Improvement
Fund
30th St N Gap
Segmt
Improvement
Fund
Total Nonmajor
Capital Project
Funds
REVENUES
Special Assessments -$ -$ -$ -$ -$ -$ -$ 8,938$
Intergovernmental - - - - - - - 553,787
Charges for Services - - - - - - - 277,119
Investment Earnings (Losses)12,078 2,259 - - - - - 234,105
Miscellaneous - - - - - - - 21,230
TOTAL REVENUES 12,078 2,259 - - - - - 1,095,179
EXPENDITURES
Current:
Public Works - 179 - 238 - - - 417
Parks and Recreation - - - - - - - 739
Capital Outlay 16,234 919,705 1,552 56,644 53,827 25,032 25,432 3,299,239
Debt Service:
Interest and Other Charges - 12,397 - - - - - 12,397
TOTAL EXPENDITURES 16,234 932,281 1,552 56,882 53,827 25,032 25,432 3,312,792
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
EXPENDITURES (4,156) (930,022) (1,552) (56,882) (53,827) (25,032) (25,432) (2,217,613)
OTHER FINANCING
SOURCES (USES)
Sale of Assets - - - - - - - 60,600
Bond Issuance - 916,081 - - - - - 916,081
Premium on Bond Issuance - 87,543 - - - - - 87,543
Transfers In - - - - - - - 466,799
Transfers Out - - - - - - - (24,897)
TOTAL OTHER FINANCING
SOURCES (USES)- 1,003,624 - - - - - 1,506,126
NET CHANGE IN FUND BALANCES (4,156) 73,602 (1,552) (56,882) (53,827) (25,032) (25,432) (711,487)
FUND BALANCES- BEGINNING 358,497 (54,720) - - - - - 5,669,527
FUND BALANCES - ENDING 354,341$ 18,882$ (1,552)$ (56,882)$ (53,827)$ (25,032)$ (25,432)$ 4,958,040$
CITY OF LAKE ELMO, MINNESOTA
SUPPLEMENTAL COMBINING BALANCE SHEET
DEBT SERVICE FUND
DECEMBER 31, 2023
98
2010B GO CIP
Bonds Fund
2012B GO
Improvement
Bonds Fund
2014A GO
Improvement
Bonds Fund
2015A GO
Improvement
Bonds Fund
2016A GO
Improvement
Bonds Fund
2017A GO
Improvement
Bonds Fund
ASSETS
Cash, Cash Equivalents, and Investments 216,937$ (23,678)$ 973,597$ 5,781$ 673,764$ 70,867$
Assessments Receivable - 1,831 82,273 237,703 432,646 368,683
Interest Receivable 291 - 2,136 - 1,328 -
TOTAL ASSETS 217,228$ (21,847)$ 1,058,006$ 243,484$ 1,107,738$ 439,550$
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue:
Special Assessments -$ 1,333$ 81,913$ 237,703$ 432,268$ 366,313$
FUND BALANCES
Restricted 217,228 (23,180) 976,093 5,781 675,470 73,237
TOTAL DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES 217,228$ (21,847)$ 1,058,006$ 243,484$ 1,107,738$ 439,550$
CITY OF LAKE ELMO, MINNESOTA
SUPPLEMENTAL COMBINING BALANCE SHEET (Continued)
DEBT SERVICE FUND
DECEMBER 31, 2023
99
ASSETS
Cash, Cash Equivalents, and Investments
Assessments Receivable
Interest Receivable
TOTAL ASSETS
DEFERRED INFLOWS OF RESOURCES
Unavailable Revenue:
Special Assessments
FUND BALANCES
Restricted
TOTAL DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
2019
Improvement
Bonds Fund
2018A GO
Equipment Cert.
Bonds Fund
2021A GO
Improvement
Bonds Fund
2022A GO
Improvement
Bonds Fund
2023A GO
Improvement
Bonds Fund
Total Debt
Service Fund
765,500$ 36,738$ 1,632,366$ 335,618$ 323,954$ 5,011,444$
227,014 - 1,159,735 296,200 790,250 3,596,335
1,510 - 2,722 284 254 8,525
994,024$ 36,738$ 2,794,823$ 632,102$ 1,114,458$ 8,616,304$
226,067$ -$ 1,157,545$ 296,200$ 790,250$ 3,589,592$
767,957 36,738 1,637,278 335,902 324,208 5,026,712
994,024$ 36,738$ 2,794,823$ 632,102$ 1,114,458$ 8,616,304$
CITY OF LAKE ELMO, MINNESOTA
SUPPLEMENTAL COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
DEBT SERVICE FUND
FOR THE YEAR ENDED DECEMBER 31, 2023
100
2010B GO CIP
Bonds Fund
2012B GO
Improvement
Bonds Fund
2014A GO
Improvement
Bonds Fund
2015A GO
Improvement
Bonds Fund
2016A GO
Improvement
Bonds Fund
2017A GO
Improvement
Bonds Fund
REVENUES
Property Taxes 206,656$ -$ 200,091$ -$ 193,409$ 342,660$
Special Assessments - 16,693 39,212 57,869 73,055 61,531
Investment Earnings (Losses)4,274 435 31,164 2,250 19,818 602
TOTAL REVENUES 210,930 17,128 270,467 60,119 286,282 404,793
EXPENDITURES
Debt Service:
Principal 180,000 95,000 225,000 170,000 275,000 455,000
Interest and Other Charges 15,011 1,398 38,965 14,020 25,450 65,813
TOTAL EXPENDITURES 195,011 96,398 263,965 184,020 300,450 520,813
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES 15,919 (79,270) 6,502 (123,901) (14,168) (116,020)
OTHER FINANCING SOURCES (USES)
Bond Issuance - - - - - -
NET CHANGE IN FUND BALANCES 15,919 (79,270) 6,502 (123,901) (14,168) (116,020)
FUND BALANCES - BEGINNING 201,309 56,090 969,591 129,682 689,638 189,257
FUND BALANCES - ENDING 217,228$ (23,180)$ 976,093$ 5,781$ 675,470$ 73,237$
CITY OF LAKE ELMO, MINNESOTA
SUPPLEMENTAL COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE (Continued)
DEBT SERVICE FUND
FOR THE YEAR ENDED DECEMBER 31, 2023
101
REVENUES
Property Taxes
Special Assessments
Investment Earnings (Losses)
TOTAL REVENUES
EXPENDITURES
Debt Service:
Principal
Interest and Other Charges
TOTAL EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Bond Issuance
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING
FUND BALANCES - ENDING
2019
Improvement
Bonds Fund
2018A GO
Equipment Cert.
Bonds Fund
2021A GO
Improvement
Bonds Fund
2022A GO
Improvement
Bonds Fund
2023A GO
Improvement
Bonds Fund
Total Debt
Service Fund
297,138$ 123,569$ 1,025,930$ 287,685$ -$ 2,677,138$
39,858 - 167,399 187,049 257,450 900,116
21,812 - 36,315 1,838 1,145 119,653
358,808 123,569 1,229,644 476,572 258,595 3,696,907
275,000 100,000 705,000 - - 2,480,000
61,676 16,335 357,669 195,049 26,808 818,194
336,676 116,335 1,062,669 195,049 26,808 3,298,194
22,132 7,234 166,975 281,523 231,787 398,713
- - - - 92,421 92,421
22,132 7,234 166,975 281,523 324,208 491,134
745,825 29,504 1,470,303 54,379 - 4,535,578
767,957$ 36,738$ 1,637,278$ 335,902$ 324,208$ 5,026,712$
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF INDEBTEDNESS
FOR THE YEAR ENDED DECEMBER 31, 2023
(UNAUDITED)
102
Initial Outstanding Outstanding Principal
Issue Interest Maturity Authorized Balance Balance Due Within
Dates Rates Dates Issue 01/01/23 Issued Paid 12/31/23 One Year
GOVERNMENTAL INDEBTEDNESS
General Obligation Improvement Bonds
2010B G.O. Refunding Bonds 11/30/2010 1.00 - 3.20%2/1/2025 1,970,000$ 555,000$ -$ 180,000$ 375,000$ 185,000$
2012B G.O. Improvement Bonds 8/16/2012 0.50 - 1.90%2/1/2023 865,000 95,000 - 95,000 - -
2014A G.O. Improvement Bonds 7/15/2014 2.00 - 3.50%1/15/2030 2,850,000 1,385,000 - 225,000 1,160,000 230,000
2015A G.O. Improvement Bonds 8/13/2015 2.00 - 3.00%1/15/2026 1,620,000 650,000 - 170,000 480,000 155,000
2016A G.O. Improvement Bonds 6/8/2016 2.00%1/15/2027 2,690,000 1,410,000 - 275,000 1,135,000 280,000
2017A G.O. Improvement Bonds 6/8/2017 2.50%1/15/2028 4,565,000 2,860,000 - 455,000 2,405,000 465,000
2019A G.O. Improvement Bonds 10/24/2019 2.00 - 3.00%2/1/2035 2,860,000 2,355,000 - 275,000 2,080,000 285,000
2021A G.O. Improvement Bonds 12/7/2021 1.75 - 3.00%2/1/2042 15,675,000 15,625,000 - 705,000 14,920,000 725,000
2022A G.O. Improvement Bonds 8/16/2022 3.00 - 5.00%2/1/2038 3,895,000 3,895,000 - - 3,895,000 195,000
2023A G.O. Improvement Bonds 7/6/2023 4.00 - 5.00%2/1/2034 3,410,000 - 3,410,000 - 3,410,000 -
40,400,000 28,830,000 3,410,000 2,380,000 29,860,000 2,520,000
General Obligation Equipment Certificates
2018A G.O. Equipment Certificates 10/16/2018 2.70%2/1/2028 940,000 655,000 - 100,000 555,000 105,000
General Obligation Tax Abatement Bonds
2022A G.O. Tax Abatement Bonds 8/16/2022 3.00 - 5.00%2/1/2033 1,010,000 1,010,000 - - 1,010,000 80,000
TOTAL GOVERNMENTAL DEBTS 42,350,000 30,495,000 3,410,000 2,480,000 31,425,000 2,705,000
BUSINESS-TYPE INDEBTEDNESS
General Obligation Revenue Bonds
2012A G.O. Water Crossover Refunding Bonds 8/16/2012 2.00 - 2.50%12/1/2030 4,035,000 2,530,000 - 300,000 2,230,000 290,000
2014A G.O. Improvement Bonds 7/15/2014 2.00 - 3.50%1/15/2030 3,385,000 1,940,000 - 220,000 1,720,000 225,000
2015A G.O. Improvement Bonds 8/13/2015 2.00 - 3.00%1/15/2031 1,195,000 770,000 - 80,000 690,000 80,000
2016A G.O. Improvement Bonds 6/8/2016 2.00%1/15/2032 6,855,000 4,790,000 - 435,000 4,355,000 445,000
2017A G.O. Improvement Bonds 6/8/2017 2.50 - 3.00%1/15/2033 4,480,000 3,440,000 - 275,000 3,165,000 285,000
2019A G.O. Improvement Bonds 10/24/2019 2.00 - 3.00%2/1/2035 1,195,000 1,070,000 - 70,000 1,000,000 75,000
2021A G.O. Improvement Bonds 12/7/2021 1.75 - 3.00%2/1/2037 6,310,000 6,310,000 - 430,000 5,880,000 415,000
2022A G.O. Improvement Bonds 8/16/2022 3.00 - 5.00%2/1/2037 7,590,000 7,590,000 - 515,000 7,075,000 375,000
2023A G.O. Improvement Bonds 7/6/2023 4.00 - 5.00%2/1/2034 2,000,000 - 2,000,000 - 2,000,000 125,000
TOTAL BUSINESS-TYPE DEBTS 37,045,000 28,440,000 2,000,000 2,325,000 28,115,000 2,315,000
TOTAL INDEBTEDNESS 79,395,000$ 58,935,000$ 5,410,000$ 4,805,000$ 59,540,000$ 5,020,000$
103
STATISTICAL SECTION
(UNAUDITED)
CITY OF LAKE ELMO, MINNESOTA
STATISTICAL SECTION
(UNAUDITED)
104
This part of the City of Lake Elmo, Minnesota's Annual Comprehensive Financial Report presents detailed information as a
context for understanding what the information in the financial statements, note disclosures and required supplementary
information says about the City's overall financial health.
Contents Pages
Financial Trends 105-114
These tables contain trend information to help the reader understand how the City's financial
performance and well-being have changed over time.
Revenue Capacity 115-119
These tables contain information to help the reader assess the City's most significant local
revenue source, property taxes, as well as water and sanitary sewer rates and gallons sold.
Debt Capacity 120-124
These tables present information to help the reader assess the affordability of the City's
current levels of outstanding debt and the City's ability to issue additional debt in the future.
Demographic and Economic Information 125-126
These tables offer demographic and economic indicators to help the reader understand the
environment within which the City's financial activities take place.
Operating Information 127-131
These tables contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the City provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive
financial reports for the relevant year.
CITY OF LAKE ELMO, MINNESOTA
NET POSITION BY COMPONENT
LAST TEN YEARS
105
GASB 68 was implemented in 2015. Net position was restated for 2014 to reflect the reporting of net pension liability
and pension related deferred outflows of resources. Net position for years prior to 2014 was not restated.
GASB 75 was implemented in 2018. Net position was restated for 2017 to reflect the reporting of the OPEB liability
and OPEB related deferred inflows of resources. Net position for years prior to 2017 was not restated.
GASB 87 was implemented in 2022. Net position for years prior to 2022 was not restated.
2023 2022 2021 2020 2019
Governmental Activities:
Net Investment in Capital Assets 54,209,637$ 39,647,112$ 34,784,806$ 29,694,288$ 24,771,065$
Restricted 11,658,502 12,475,169 10,249,092 8,171,161 8,596,759
Unrestricted 12,156,284 14,362,912 12,101,304 5,284,397 4,231,363
Total Governmental Activities Net Position 78,024,423$ 66,485,193$ 57,135,202$ 43,149,846$ 37,599,187$
Business-Type Activities:
Net Investment in Capital Assets 69,826,808$ 59,998,083$ 53,867,479$ 44,371,375$ 33,052,649$
Restricted - - - - -
Unrestricted 22,844,327 24,515,239 19,888,783 18,578,807 16,528,968
Total Business-Type Activities Net Position 92,671,135$ 84,513,322$ 73,756,262$ 62,950,182$ 49,581,617$
Primary Government:
Net Investment in Capital Assets 124,036,445$ 99,645,195$ 88,652,285$ 74,065,663$ 57,823,714$
Restricted 11,658,502 12,475,169 10,249,092 8,171,161 8,596,759
Unrestricted 35,000,611 38,878,151 31,990,087 23,863,204 20,760,331
Total Primary Government Net Position 170,695,558$ 150,998,515$ 130,891,464$ 106,100,028$ 87,180,804$
CITY OF LAKE ELMO, MINNESOTA
NET POSITION BY COMPONENT (Continued)
LAST TEN YEARS
106
2018 2017 2016 2015 2014
Governmental Activities:
Net Investment in Capital Assets 15,396,520$ 8,883,320$ 9,032,535$ 8,723,329$ 7,957,840$
Restricted 10,121,648 5,057,169 4,704,133 3,446,142 1,106,200
Unrestricted 1,086,636 4,818,383 4,136,292 3,942,646 5,405,920
Total Governmental Activities Net Position 26,604,804$ 18,758,872$ 17,872,960$ 16,112,117$ 14,469,960$
Business-Type Activities:
Net Investment in Capital Assets 18,382,934$ 12,180,378$ 12,506,474$ 10,170,351$ 10,567,418$
Restricted - 2,695,734 1,473,164 1,876,119 2,387,312
Unrestricted 13,842,382 9,151,417 6,400,375 3,577,285 1,100,422
Total Business-Type Activities Net Position 32,225,316$ 24,027,529$ 20,380,013$ 15,623,755$ 14,055,152$
Primary Government:
Net Investment in Capital Assets 33,779,454$ 21,063,698$ 21,539,009$ 18,893,680$ 18,525,258$
Restricted 10,121,648 7,752,903 6,177,297 5,322,261 3,493,512
Unrestricted 14,929,018 13,969,800 10,536,667 7,519,931 6,506,342
Total Primary Government Net Position 58,830,120$ 42,786,401$ 38,252,973$ 31,735,872$ 28,525,112$
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION
LAST TEN YEARS
107
2023 2022 2021 2020 2019
Expenses
Governmental Activities:
General Government 1,220,552$ 1,055,405$ 1,052,188$ 1,008,916$ 1,181,219$
Public Safety 3,228,801 2,939,066 3,091,321 2,681,784 2,058,419
Public Works 4,627,872 4,831,584 3,735,767 4,012,661 3,728,247
Parks and Recreation 526,835 415,377 391,240 428,083 361,730
Economic Development Authority - - 53,264 46,371 71,609
Debt Service 815,944 716,093 353,256 363,988 395,106
Total Governmental
Activities Expenses 10,420,004 9,957,525 8,677,036 8,541,803 7,796,330
Business-Type Activities:
Water 3,982,238 3,280,875 2,665,708 2,383,252 1,940,148
Sewer 2,524,280 2,071,858 1,563,008 1,481,586 1,082,997
Storm Sewer 1,057,111 952,799 830,044 753,177 469,765
Total Business-Type
Activities Expenses 7,563,629 6,305,532 5,058,760 4,618,015 3,492,910
Total Primary Government
Expenses 17,983,633$ 16,263,057$ 13,735,796$ 13,159,818$ 11,289,240$
Program Revenues
Governmental Activities:
Charges for Services:
General Government 350,081$ 409,126$ 485,785$ 421,792$ 553,870$
Public Safety 1,587,586 2,215,965 2,199,655 2,146,319 1,574,359
Public Works 60,388 58,414 104,817 243,060 126,721
Parks and Recreation 282,819 206,340 25 2,812 1,430
Economic Development Authority - 24 57,539 87,778 99,690
Operating Grants and Contributions 1,102,707 391,306 279,690 1,039,823 795,483
Capital Grants and Contributions 9,895,930 4,783,094 8,981,866 4,823,628 11,076,353
Total Governmental Activities
Program Revenues 13,279,511 8,064,269 12,109,377 8,765,212 14,227,906
Business-Type Activities:
Charges for services:
Water 2,804,479 3,241,839 1,711,596 1,239,404 962,003
Sewer 1,442,607 1,499,393 549,567 432,583 306,041
Storm Sewer 611,219 543,589 512,624 369,689 380,645
Operating Grants and Contributions - - 35,635 21,893 122,350
Capital Grants and Contributions 9,838,374 15,257,903 18,326,363 15,636,661 14,114,787
Total Business-Type Activities 14,696,679 20,542,724 21,135,785 17,700,230 15,885,826
Total Primary Government
Program Revenues 27,976,190$ 28,606,993$ 33,245,162$ 26,465,442$ 30,113,732$
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION (Continued)
LAST TEN YEARS
108
2018 2017 2016 2015 2014
Expenses
Governmental Activities:
General Government 1,266,269$ 1,503,251$ 1,358,370$ 1,134,132$ 1,072,888$
Public Safety 2,161,082 1,528,253 1,308,360 1,344,282 1,530,609
Public Works 2,192,092 2,800,044 1,698,566 1,377,969 1,032,426
Parks and Recreation 524,445 1,299,551 660,947 639,006 448,361
Economic Development Authority 47,702 - - - -
Debt Service 352,376 225,910 178,266 215,611 165,028
Total Governmental
Activities Expenses 6,543,966 7,357,009 5,204,509 4,711,000 4,249,312
Business-Type Activities:
Water 2,068,178 2,022,446 1,409,832 1,363,043 1,069,511
Sewer 846,032 1,030,058 380,650 250,866 353,438
Storm Sewer 315,967 213,514 150,302 103,536 149,887
Total Business-Type
Activities Expenses 3,230,177 3,266,018 1,940,784 1,717,445 1,572,836
Total Primary Government
Expenses 9,774,143$ 10,623,027$ 7,145,293$ 6,428,445$ 5,822,148$
Program Revenues
Governmental Activities:
Charges for Services:
General Government 379,378$ 206,856$ 51,009$ 42,706$ 45,161$
Public Safety 1,938,163 2,101,890 1,752,522 866,708 496,916
Public Works - - - 3,615 -
Parks and Recreation - - - 26,214 10,753
Economic Development Authority 78,573 - - - -
Operating Grants and Contributions 248,915 229,960 235,214 249,094 204,462
Capital Grants and Contributions 4,970,565 2,290,265 1,452,469 2,038,940 557,601
Total Governmental Activities
Program Revenues 7,615,594 4,828,971 3,491,214 3,227,277 1,314,893
Business-Type Activities:
Charges for services:
Water 951,985 2,628,848 1,801,228 1,850,240 1,291,091
Sewer 252,614 2,435,749 1,315,948 1,523,067 741,054
Storm Sewer 322,700 289,375 213,233 229,252 214,915
Operating Grants and Contributions - - - - -
Capital Grants and Contributions 7,466,627 1,489,922 3,464,567 - 1,159,222
Total Business-Type Activities 8,993,926 6,843,894 6,794,976 3,602,559 3,406,282
Total Primary Government
Program Revenues 16,609,520$ 11,672,865$ 10,286,190$ 6,829,836$ 4,721,175$
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION (Continued)
LAST TEN YEARS
109
2023 2022 2021 2020 2019
Net (Expense) Revenue:
Governmental Activities 2,859,507$ (1,893,256)$ 3,432,341$ 223,409$ 6,431,576$
Business-Type Activities 7,133,050 14,237,192 16,077,025 13,082,215 12,392,916
Total Primary Government, net 9,992,557 12,343,936 19,509,366 13,305,624 18,824,492
General Revenues and Other
Changes in Net Position:
Governmental Activities:
General Property Taxes 7,890,915 7,565,922 5,294,950 4,960,342 4,181,914
Unrestricted Grants
and Contributions 246,056 703,388 4,639 4,337 4,956
Unrestricted Investment
Earnings (Losses)1,137,908 (380,657) (13,874) 348,766 331,010
Miscellaneous 46,528 23,384 - - -
Gain (Loss) on Disposal of
Capital Assets (221,202) 69,985 17,300 13,805 44,927
Transfers (420,482) 3,261,225 5,250,000 - -
Total Governmental Activities 8,679,723 11,243,247 10,553,015 5,327,250 4,562,807
Business-Type Activities:
Unrestricted Grants
and Contributions 46 2,146 - - -
Unrestricted Investment
Earnings (Losses)604,235 (221,053) (20,945) 286,350 411,206
Extraordinary Item - - - - 4,552,179
Transfers 420,482 (3,261,225) (5,250,000) - -
Total Business-Type Activities 1,024,763 (3,480,132) (5,270,945) 286,350 4,963,385
Total Primary Government 9,704,486$ 7,763,115$ 5,282,070$ 5,613,600$ 9,526,192$
Change in Net Position:
Governmental Activities 11,539,230$ 9,349,991$ 13,985,356$ 5,550,659$ 10,994,383$
Business-Type Activities 8,157,813 10,757,060 10,806,080 13,368,565 17,356,301
Total Primary Government
Change in Net Position 19,697,043$ 20,107,051$ 24,791,436$ 18,919,224$ 28,350,684$
GASB 68 was implemented in 2015. Pension expense for years prior to 2015 was not restated.
GASB 75 was implemented in 2018. OPEB expense for years prior to 2018 was not restated.
GASB 87 was implemented in 2022. Lease revenue for years prior to 2022 was not restated.
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN NET POSITION (Continued)
LAST TEN YEARS
110
2018 2017 2016 2015 2014
Net (Expense) Revenue:
Governmental Activities 1,071,628$ (2,528,038)$ (1,713,295)$ (1,483,723)$ (2,934,419)$
Business-Type Activities 5,763,749 3,577,876 4,854,192 1,885,114 1,833,446
Total Primary Government, net 6,835,377 1,049,838 3,140,897 401,391 (1,100,973)
General Revenues and Other
Changes in Net Position:
Governmental Activities:
General Property Taxes 3,610,106 3,040,413 3,226,739 3,204,119 3,200,291
Unrestricted Grants
and Contributions 6,868 2,749 8,584 2,749 2,749
Unrestricted Investment
Earnings (Losses)115,583 48,987 43,228 46,589 87,586
Miscellaneous - 158,350 52,479 73,738 125,400
Gain (Loss) on Disposal of
Capital Assets 8,991 - - - -
Transfers 840 - 143,105 220,842 (887,312)
Total Governmental Activities 3,742,388 3,250,499 3,474,135 3,548,037 2,528,714
Business-Type Activities:
Unrestricted Grants
and Contributions 956 - 748 - -
Unrestricted Investment
Earnings (Losses)96,425 46,757 44,423 39,757 19,337
Extraordinary Item - - - - -
Transfers (840) - (143,105) (220,842) 887,312
Total Business-Type Activities 96,541 46,757 (97,934) (181,085) 906,649
Total Primary Government 3,838,929$ 3,297,256$ 3,376,201$ 3,366,952$ 3,435,363$
Change in Net Position:
Governmental Activities 4,814,016$ 722,461$ 1,760,840$ 2,064,314$ (405,705)$
Business-Type Activities 5,860,290 3,624,633 4,756,258 1,704,029 2,740,095
Total Primary Government
Change in Net Position 10,674,306$ 4,347,094$ 6,517,098$ 3,768,343$ 2,334,390$
CITY OF LAKE ELMO, MINNESOTA
FUND BALANCES – GOVERNMENTAL FUNDS
LAST TEN YEARS
111
2023 2022 2021 2020 2019
General Fund:
Nonspendable -$ -$ -$ 21,206$ 28,162$
Committed - - - - -
Unassigned 8,920,580 7,540,239 5,618,812 5,212,435 4,286,022
Total General Fund 8,920,580 7,540,239 5,618,812 5,233,641 4,314,184
All Other Governmental Funds:
Nonspendable - - - - -
Restricted 8,468,881 9,933,623 17,458,949 5,814,832 5,973,451
Committed 20,334 14,120 7,673 7,314 24,070
Assigned 3,768,614 7,145,740 7,571,501 2,653,880 1,746,202
Unassigned (492,973) (198,128) (246,004) (1,525,916) (757,968)
Total all Other Governmental Funds 11,764,856 16,895,355 24,792,119 6,950,110 6,985,755
Total Governmental Funds 20,685,436$ 24,435,594$ 30,410,931$ 12,183,751$ 11,299,939$
CITY OF LAKE ELMO, MINNESOTA
FUND BALANCES – GOVERNMENTAL FUNDS (Continued)
LAST TEN YEARS
112
2018 2017 2016 2015 2014
General Fund:
Nonspendable 18,951$ 410,193$ 409,222$ 432,306$ 638,963$
Committed - 200,000 200,000 - -
Unassigned 4,756,695 3,499,133 3,279,815 2,754,976 2,542,038
Total General Fund 4,775,646 4,109,326 3,889,037 3,187,282 3,181,001
All Other Governmental Funds:
Nonspendable 395 675,000 - 3,908 -
Restricted 6,133,168 2,849,956 3,248,230 2,477,730 717,781
Committed 11,003 - - - -
Assigned 1,198,909 1,307,216 1,504,656 1,768,742 2,943,525
Unassigned (3,043,623) (681,681) (418,169) (431,755) (693,904)
Total all Other Governmental Funds 4,299,852 4,150,491 4,334,717 3,818,625 2,967,402
Total Governmental Funds 9,075,498$ 8,259,817$ 8,223,754$ 7,005,907$ 6,148,403$
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
LAST TEN YEARS
113
2023 2022 2021 2020 2019
Revenues:
General Property Taxes 7,888,556$ 7,562,013$ 5,303,553$ 4,947,133$ 4,182,327$
Licenses and Permits 1,148,190 1,646,539 1,485,658 1,425,695 1,055,038
Intergovernmental 1,331,531 1,121,633 722,128 1,023,193 2,819,961
Charges for Services 1,081,606 1,170,762 1,151,914 1,273,241 1,079,342
Fines and Forfeits 45,402 34,711 45,749 33,584 36,696
Special Assessments 909,054 570,486 862,766 474,099 649,487
Park Dedication Fees - - 1,845,371 714,558 123,500
Investment Earnings (Losses)1,072,572 (419,853) (13,874) 348,766 331,010
Lease Interest 65,336 39,196 - - -
Miscellaneous 86,193 150,426 177,000 183,711 201,494
Total Revenues 13,628,440 11,875,913 11,580,265 10,423,980 10,478,855
Expenditures:
Current:
General Government 1,213,697 1,017,210 1,056,983 1,005,254 1,136,908
Public Safety 3,037,244 2,701,216 3,003,677 2,641,770 1,948,269
Public Works 1,355,217 1,763,030 1,488,448 1,493,370 1,875,606
Parks And Recreation 410,492 282,789 258,690 310,066 265,260
Economic Development Authority - - 53,264 46,371 71,609
Debt service:
Principal 2,480,000 1,870,000 3,641,000 1,790,000 1,615,000
Interest and Fiscal Charges 863,089 611,636 425,797 420,299 454,814
Capital Outlay 11,806,496 14,912,731 4,915,641 1,846,843 4,354,643
Total Expenditures 21,166,235 23,158,612 14,843,500 9,553,973 11,722,109
Excess (Deficiency) of Revenues
Over Expenditures (7,537,795) (11,282,699) (3,263,235) 870,007 (1,243,254)
Other Financing Sources (Uses):
Issuance of Debt 3,410,000 4,905,000 6,126,989 - 2,860,000
Premium on Issuance of Debt 317,037 326,200 (876,989) - 168,168
(Discount) on Issuance of Debt - - 15,675,000 - -
Proceeds from Sale of Capital Assets 60,600 76,162 548,115 13,805 44,927
Transfers In 466,799 252,074 - 1,900,244 1,181,173
Transfers Out (466,799) (252,074) 17,300 (1,900,244) (786,573)
Total Other Financing
Sources (Uses)3,787,637 5,307,362 21,490,415 13,805 3,467,695
Net Change in Fund Balance (3,750,158)$ (5,975,337)$ 18,227,180$ 883,812$ 2,224,441$
Debt Service as a Percentage of
Noncapital Expenditures 35.1%28.3%40.9%26.8%26.1%
Debt Service as a Percentage of
Total Expenditures 15.8%10.7%27.4%23.1%17.7%
CITY OF LAKE ELMO, MINNESOTA
CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS (Continued)
LAST TEN YEARS
114
2018 2017 2016 2015 2014
Revenues:
General Property Taxes 3,610,508$ 3,042,074$ 3,231,674$ 3,222,216$ 3,203,111$
Licenses and Permits 1,317,648 2,046,462 1,713,918 828,494 451,953
Intergovernmental 247,178 1,023,864 282,874 296,902 413,968
Charges for Services 899,808 137,920 38,608 35,796 30,192
Fines and Forfeits 49,203 41,418 49,505 48,739 48,647
Special Assessments 1,398,155 455,493 897,323 1,316,239 115,424
Park Dedication Fees 502,802 265,783 171,708 138,158 274,257
Investment Earnings (Losses)115,583 48,987 43,228 46,415 87,467
Lease Interest - - - - -
Miscellaneous 129,455 265,133 77,491 99,055 165,319
Total Revenues 8,270,340 7,327,134 6,506,329 6,032,014 4,790,338
Expenditures:
Current:
General Government 1,208,145 1,502,904 1,358,306 1,094,723 1,046,906
Public Safety 1,644,159 1,470,726 1,262,040 1,203,765 1,198,546
Public Works 1,227,521 1,185,828 893,644 686,401 585,071
Parks And Recreation 241,761 603,292 500,689 457,749 368,276
Economic Development Authority 47,702 - - - -
Debt service:
Principal 1,175,000 910,000 826,219 667,342 585,000
Interest and Fiscal Charges 230,822 463,570 242,392 226,611 157,649
Capital Outlay 4,552,089 5,860,917 3,126,782 2,729,512 2,881,437
Total Expenditures 10,327,199 11,997,237 8,210,072 7,066,103 6,822,885
Excess (Deficiency) of Revenues
Over Expenditures (2,056,859) (4,670,103) (1,703,743) (1,034,089) (2,032,547)
Other Financing Sources (Uses):
Issuance of Debt 1,866,000 4,565,000 2,690,000 1,620,000 2,850,000
Premium on Issuance of Debt - 166,068 102,877 32,137 31,520
(Discount) on Issuance of Debt - (26,302) (14,392) (11,386) -
Proceeds from Sale of Capital Assets 8,991 1,400 - 30,000 -
Transfers In 56,209 - 143,105 220,842 10,501
Transfers Out (173,190) - - - -
Total Other Financing
Sources (Uses)1,758,010 4,706,166 2,921,590 1,891,593 2,892,021
Net Change in Fund Balance (298,849)$ 36,063$ 1,217,847$ 857,504$ 859,474$
Debt Service as a Percentage of
Noncapital Expenditures 24.2%22.4%21.0%20.6%18.8%
Debt Service as a Percentage of
Total Expenditures 13.6%11.4%13.0%12.7%10.9%
CITY OF LAKE ELMO, MINNESOTA
TAX CAPACITY AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN YEARS
115
Total % of Tax
Taxable Total Adjusted City Capacity to
Payable Market Real Personal Tax Tax Urban Tax Total Estimated
Year Value Property Property Capacity Capacity (1)Rate Market Value
2014 1,046,031,000$ 11,504,611$ 238,764$ 11,743,375$ 11,393,889$ 27.761 1.12%
2015 1,184,578,800 12,938,515 243,104 13,181,619 13,072,105 23.798 1.11%
2016 1,224,463,300 13,386,725 266,218 13,652,943 13,441,204 23.121 1.12%
2017 1,316,618,700 14,520,320 292,938 14,813,258 14,631,062 20.018 1.13%
2018 1,452,554,500 16,054,044 326,744 16,380,788 15,359,350 22.442 1.13%
2019 1,648,277,500 18,184,317 345,172 18,529,489 18,249,623 22.927 1.12%
2020 1,901,067,300 20,907,484 345,800 21,253,284 20,021,726 23.476 1.12%
2021 2,009,618,900 21,975,125 374,464 22,349,589 21,116,953 23.638 1.11%
2022 2,231,230,900 24,469,045 287,646 24,756,691 23,487,099 30.546 1.11%
2023 2,862,780,200 31,639,649 309,460 31,949,109 30,606,781 24.064 1.12%
(1) Tax Capacity adjusted for captured tax increment, fiscal disparities, and transmission lines.
Tax Capacity
Valuations are determined as of January 1 of year preceding tax collection year.The County determines a property's tax capacity by
multiplying a property's estimated market value times the property's class rate which is determined by its use.The total City tax levy
divided by the total City tax capacity determines a percentage,the City tax rate,that is applied to each parcel's tax capacity to determine
the tax amount.
CITY OF LAKE ELMO, MINNESOTA
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN YEARS
116
Operating Debt Total Special
Fiscal Tax Service Tax Washington Taxing
Year Rate Tax Rate Rate County Districts
2014 23.472 4.289 27.761 23.150 -39.770 30.243 0.761 -5.066 4.641 86.556 107.481
2015 20.121 3.677 23.798 21.120 -35.860 27.691 0.692 -4.769 4.183 77.484 96.301
2016 18.184 4.937 23.121 19.849 -35.569 27.860 0.075 -5.111 4.568 75.473 96.229
2017 14.083 5.934 20.017 20.390 -34.093 27.852 0.839 -5.275 4.345 73.443 91.582
2018 16.107 (1)6.335 22.442 19.349 -32.161 29.709 0.819 -5.021 3.072 75.391 92.405
2019 16.258 (1)6.670 22.927 18.442 -31.894 29.305 0.808 -5.263 3.994 75.476 93.383
2020 16.777 (1)6.700 23.477 15.321 -29.926 28.610 0.766 -4.850 3.738 71.911 90.600
2021 17.178 (1)6.460 23.638 17.277 -29.554 27.244 0.742 -4.835 3.593 72.494 88.864
2022 20.505 (1)10.041 30.546 19.502 -32.173 27.526 0.718 -4.437 3.483 81.775 97.476
2023 15.803 8.261 24.064 17.143 -29.825 23.620 0.654 -3.867 2.974 68.456 83.462
Source: Washington County Taxation Division
The City's direct property tax rate is determined by dividing the amount of tax levied by the City Council by the City's total tax capacity.
Overlapping rates are those of local and county governments that apply to property owners within the City of Lake Elmo. Not all
overlapping rates apply to all City of Lake Elmo property owners. Although the property tax rates apply to all city property owners,
some city properties lie within the geographical boundaries of different school and watershed districts.
(1) Excludes Library Levy component effective 1/1/2018 due to going back to Washington County
Range of Total
Direct and Overlapping
Tax Rates
City Direct Rate
Range of Tax
Rates for ISD's
622, 832 & 834
Range of Tax
Rates for
Watershed Districts
Overlapping Rates
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
117
Percentage Percentage
of Total of Total
Taxable City Tax Taxable City Tax
Tax Capacity Tax Capacity
Taxpayer Capacity Rank Value Capacity Rank Value
Continental 483 Fund Llc 336,784$ 1 1.05%-$ -
Dakota Upreit Lp 279,546 2 0.87%- -
Bremer Financial Services Inc 257,388 3 0.81%197,474 3 1.68%
Drp Mn 2 Llc 213,398 4 0.67%- -
Boulder Ponds Senior Living Llc 205,021 5 0.64%- -
Mill High Pointe Llc 199,384 6 0.62%- -
Xcel Energy 192,270 7 0.60%208,806 2 1.78%
Arbor Glen Senior Living Llc 174,051 8 0.54%- -
Eagle Point Medical Building Llc 172,324 9 0.54%- -
Lake Elmo Independent Living Llc 165,724 10 0.52%- -
IRET Properties - - 205,342 1 1.75%
MHC Cimarron LLC - - 134,090 4 1.14%
HOA Hotels LLC - - 108,150 5 0.92%
Tartan Park LLC - - 100,647 6 0.86%
Danate Proper Inv I LLC - - 76,762 7 0.65%
Eagle Point II LLC - - 71,064 8 0.61%
Davis Estates LTD - - 64,912 9 0.55%
United Properties Inv LLC - - 62,460 10 0.53%
Total 2,195,890$ 6.87%1,229,707$ 10.47%
Source: Washington County Taxation Division
2023 2014
CITY OF LAKE ELMO, MINNESOTA
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN YEARS
118
Taxes Levied Net Tax Levy Collections in Outstanding Delinquent Taxes
Fiscal for the for the Percentage Subsequent Percentage Delinquent as a Percentage of
Year Fiscal Year Fiscal Year (1)Amount of Net Levy Years Amount of Net Levy Taxes Total Net Tax Levy
2014 3,163,359$ 3,160,285$ 3,128,695$ 99.00%31,590$ 3,160,285$ 100.00%-$ 0.00%
2015 3,113,017 3,133,137 3,112,989 99.36%19,874 3,132,863 99.99%274 0.01%
2016 3,112,204 3,112,204 3,068,116 98.58%42,044 3,110,160 99.93%2,044 0.07%
2017 2,950,426 2,950,426 2,935,173 99.48%12,485 2,947,658 99.91%2,768 0.09%
2018 3,596,601 3,592,491 3,574,859 99.51%13,239 3,588,098 99.88%4,393 0.12%
2019 4,179,840 4,175,590 4,149,059 99.36%19,244 4,168,303 99.83%7,287 0.17%
2020 4,949,823 4,945,184 4,864,708 98.37%43,075 4,907,782 99.24%37,402 0.76%
2021 5,263,268 5,258,656 5,205,793 98.99%50,910 5,256,703 99.96%1,953 0.04%
2022 7,468,748 7,463,868 7,372,100 98.77%61,909 7,434,009 99.60%29,860 0.40%
2023 7,798,403 7,793,724 7,738,743 99.29%47,873 7,786,616 99.91%7,108 0.09%
(1) Tax Levy adjusted for powerline and market value credits and AG program credits prior to 2016
Fiscal Year of the Levy
Collected within the
Total Collections to Date
CITY OF LAKE ELMO, MINNESOTA
WATER AND SANITARY SEWER CHARGES BY CUSTOMER
LAST TEN YEARS
119
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Water (in millions of gallons):
Residential 399.645 351.923 323.632 203.453 173.925 96.882 93.513 98.044 84.007 98.573
Commercial service 36.773 46.427 50.822 157.170 87.935 22.189 16.603 29.379 21.653 12.156
Total gallons 436.418 398.350 374.454 360.623 261.860 119.071 110.116 127.423 105.660 110.729
Total direct rate per 1,000 gallons:
Residential (2)2.18 2.16 2.14 2.12 2.12 2.06 2.00 2.14 2.14 2.14
Commercial service (2)3.39 3.36 3.33 3.30 3.30 3.20 3.11 3.11 3.11 3.11
Sanitary Sewer (in millions of gallons):
Residential (1)105.255 96.361 75.550 46.170 41.003 32.409 38.340 6.812 3.794 -
Commercial service 22.900 20.432 16.021 11.779 12.943 12.267 6.807 9.125 8.179 6.532
Total gallons 128.155 116.793 91.571 57.949 53.946 44.676 45.147 15.937 11.973 6.532
Total direct rate per 1,000 gallons 4.80 4.75 4.70 4.65 4.60 4.55 4.50 4.50 4.50 4.50
(1) City did not have any residential sanitary sewer customers in 2014 and prior
(2) City uses tiers, rate represents first tier, up to 15,000 gallons rate
CITY OF LAKE ELMO, MINNESOTA
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN YEARS
120
Business-Type
Activities
G.O.G.O.G.O. Capital Other Total G.O. Utility Percentage
Fiscal Improvement Equipment Improvement Notes and Governmental Revenue Total Primary of Personal Per
Year Bonds Certificates Plan Bonds Bonds Activities Bonds Government Income Capita
2014 6,919,568$ 52,000$ 1,808,024$ -$ 8,779,592$ 15,530,642$ 24,310,234$ 6.8%3,013
2015 8,095,288 - 1,687,803 21,219 9,804,310 12,622,484 22,426,794 6.0%2,779
2016 10,210,038 - 1,537,530 - 11,747,568 18,990,395 30,737,963 8.2%3,809
2017 14,151,671 - 1,382,249 - 15,533,920 22,866,787 38,400,707 8.8%3,990
2018 13,185,126 940,000 1,226,928 926,000 16,278,054 21,680,126 37,958,180 7.6%3,608
2019 14,697,425 940,000 1,065,000 926,000 17,628,425 21,520,145 39,148,570 6.5%3,525
2020 13,159,432 850,000 900,000 881,000 15,790,432 20,105,366 35,895,798 5.5%3,232
2021 26,839,553 755,000 730,000 - 28,324,553 22,841,659 51,166,212 6.0%4,043
2022 29,385,678 655,000 555,000 1,010,000 31,605,678 29,470,720 61,076,398 5.9%4,519
2023 30,806,965 555,000 375,000 1,010,000 32,746,965 29,197,925 61,944,890 6.0%4,584
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See the Demographic and Economic Statistics schedule for personal income and population data.
Governmental Activities
CITY OF LAKE ELMO, MINNESOTA
RATIOS OF NET GENERAL BONDED DEBT
LAST TEN YEARS
121
Percentage
G.O.G.O.G.O. Capital Other G.O. Utility Less: Amounts Net General of Actual
Fiscal Improvement Equipment Improvement Notes and Revenue Available in Debt Bonded Debt Taxable Value Per
Year Bonds Certificates Plan Bonds Bonds Bonds Total*Service Funds Outstanding of Property Capita (Net)
2014 6,919,568$ 52,000$ 1,808,024$ -$ 15,530,642$ 24,310,234$ (691,700)$ 23,618,534$ 2.26%2,927
2015 8,095,288 - 1,687,803 21,219 12,622,484 22,426,794 (2,477,730) 19,949,064 1.68%2,472
2016 10,210,038 - 1,537,530 - 18,990,395 30,737,963 (3,215,590) 27,522,373 2.25%3,411
2017 14,151,671 - 1,382,249 - 22,866,787 38,400,707 (3,524,956) 34,875,751 2.65%3,623
2018 13,185,126 940,000 1,226,928 926,000 21,680,126 37,958,180 (4,461,692) 33,496,488 2.31%3,184
2019 14,697,425 940,000 1,065,000 926,000 21,520,145 39,148,570 (4,716,520) 34,432,050 2.09%3,101
2020 13,159,432 850,000 900,000 881,000 20,105,366 35,895,798 (4,530,993) 31,364,805 1.65%2,824
2021 26,839,553 755,000 730,000 - 22,841,659 51,166,212 (3,893,266) 47,272,946 2.35%3,736
2022 29,385,678 655,000 555,000 1,010,000 29,470,720 61,076,398 (4,535,578) 56,540,820 2.53%4,184
2023 30,806,965 555,000 375,000 1,010,000 29,197,925 61,944,890 (5,026,712) 56,918,178 1.99%4,212
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 5 for taxable market value
See Table 15 for population data
* Net of crossover debt
General Bonded Debt Outstanding
CITY OF LAKE ELMO, MINNESOTA
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF DECEMBER 31, 2023
122
Estimated
Estimated Share of
Debt Percentage Overlapping
Outstanding Applicable*Debt
Overlapping Debt:
Independent School District # 622 427,615,000$ (1)11.3%48,246,736$
Independent School District # 832 45,045,000 (1)2.3%1,023,702
Independent School District # 834 74,620,000 (1)15.0%11,204,552
Washington County 98,060,000 (1)6.0%5,910,269
Metropolitan Council 1,694,829,000 (1)0.1%1,170,806
Total Overlapping Debt 67,556,065
City Direct Debt 32,746,965$ 100%32,746,965
Total Direct and Overlapping Debt 100,303,030$
Sources: Taxable value data used to estimate applicable percentages provided by Washington County.
Debt outstanding data provided by each governmental unit.
*For debt repaid with property taxes,the percentage of overlapping debt applicable is estimated using taxable assessed
property values.Applicable percentages were estimated by determining the portion of another governmental unit's taxable
assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value.
Overlapping governments are those that coincide,at least in part,with the geographic boundaries of the City.This schedule
estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses
of the City.This process recognizes that,when considering the City's ability to issue and repay long-term debt,the entire
debt burden borne by the residents and businesses should be taken into account.However,this does not imply that every
taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government.
CITY OF LAKE ELMO, MINNESOTA
LEGAL DEBT MARGIN INFORMATION
LAST TEN YEARS
123
Pay 2023 Market Value 2,862,780,200$
Applicable Percentage 3%
Debt Limit 85,883,406
Debt Applicable to Limit:
Series 2010B Refunding 375,000
Series2017A Equipment Portion 125,000
Series 2018A Equipment Cert. 555,000
Series 2019A Equipment Portion 490,000
Series 2021A 2018A Refunding 710,000
Series 2021A City Hall 9,895,000
Total Debt Applicable to Debt Limit 12,150,000
Legal Debt Margin 73,733,406$
Net Debt
Net Debt Legal Amount of Debt Applicable
Fiscal Debt Applicable to Debt Applicable to to Limit
Year Population Limit Limit Margin Debt Limit Per Capita
2014 8,069 35,537,364$ 1,757,421$ 33,779,943$ 4.95%218$
2015 8,069 36,733,899 1,572,289 35,161,610 4.28%195
2016 8,069 38,035,233 2,102,343 35,932,890 5.53%261
2017 9,625 38,556,774 1,846,657 36,710,117 4.79%192
2018 10,521 43,576,635 2,018,280 41,558,355 4.63%192
2019 11,105 49,448,325 1,839,548 47,608,777 3.72%166
2020 11,105 57,032,019 850,000 56,182,019 1.49%77
2021 12,655 60,288,567 1,485,000 58,803,567 2.46%117
2022 12,655 66,936,927 12,990,000 53,946,927 19.41%1,026
2023 13,514 85,883,406 12,150,000 73,733,406 14.15%899
Legal Debt Margin Calculation for Fiscal Years 2014 Through 2023
Legal Debt Margin Calculation for Fiscal Year 2023
CITY OF LAKE ELMO, MINNESOTA
PLEDGED REVENUE COVERAGE
LAST TEN YEARS
124
Net
Payable Gross Operating Available
Year Revenue (1)Expenses (2)Revenue Principal Interest Coverage
G.O. Utility Revenue Bonds
Debt Service (3)
2014 2,266,397$ 678,394$ 1,588,003$ 365,000$ 424,080$ 201%
2015 3,642,316 627,977 3,014,339 4,165,000 456,782 65%
2016 3,407,097 757,862 2,649,235 615,000 380,969 266%
2017 6,651,513 1,505,420 5,146,093 705,000 513,768 422%
2018 5,767,128 1,279,347 4,487,781 625,000 312,660 479%
2019 4,190,240 1,175,282 3,014,958 1,360,000 509,863 161%
2020 6,243,582 1,553,371 4,690,211 1,380,000 504,661 249%
2021 9,147,164 1,680,527 7,466,637 3,825,000 514,210 172%
2022 6,911,305 2,086,151 4,825,154 1,345,000 468,989 266%
2023 5,938,053 2,752,113 3,185,940 2,325,000 775,011 103%
(1) Gross revenue includes investment earnings, infrastructure charges and special assessments.
(2) Operating expenses do not include interest, depreciation, or amortization expense.
(3) Details regarding the City's outstanding debt can be found in the notes to the financial statements.
CITY OF LAKE ELMO, MINNESOTA
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN YEARS
125
Personal Per
Income (4)Capita State City
Fiscal (thousands Personal Unemployment Unemployment
Year Population (1)of dollars)Income (2)Rate (3)Rate (3)
2014 8,069 357,723$ 44,333$ 3.8%3.7%
2015 8,069 371,602 46,053 3.2%2.9%
2016 8,069 374,345 46,393 3.8%3.3%
2017 9,625 438,563 45,565 3.3%3.3%
2018 10,521 497,896 47,324 2.8%2.7%
2019 11,105 601,991 54,209 3.5%2.8%
2020 11,105 652,352 58,744 4.9%4.0%
2021 12,655 851,277 67,268 2.6%2.2%
2022 13,514 1,036,970 76,733 3.4%2.9%
2023 13,514 1,038,064 76,814 1.9%1.7%
Sources:
(1) Metropolitan Council; 2022 most recent
(2) United States Census Bureau
(3) Estimate based on County unemployment rate provided by Minnesota Department of
Employment and Economic Development
(4) The estimated personal income for the City of Lake Elmo is calculated by taking the per capita
income and multiplying it by the City's population.
CITY OF LAKE ELMO, MINNESOTA
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
126
Percentage of Percentage of
Total City Total City
Employer Employees Rank Employment(1)Employees Rank Employment(1)
3M Company (Maplewood)10,000 1 43.1%9,100 1 48.7%
Andersen Corp (Bayport)5,000 2 21.5%1,875 2 9.5%
ISD No. 622 ( North St. Paul-Maplewood-Oakdale)1,830 3 7.9% -
Woodwinds Health (Woodbury)1,500 4 6.5%1,085 4 5.5%
Washington County (Stillwater)1,386 5 6.0%1,142 3 5.8%
ISD 834 (Stillwater)1,162 6 5.0%1,046 5 5.3%
HealthEast Care/St. John's Hospital (Maplewood)973 7 4.2% -
Presbyterian Homes/Boutwells (Oak Park Heights)500 8 2.2% -
Ecowater Systems, Inc. (Woodbury)440 9 1.9%440 7 2.3%
Bremer Bank Operations Ctr (Lake Elmo)425 10 1.8%415 8 2.1%
MN Correctional Facility ( Oak Park Hts) - - - 730 6 3.7%
Imation Corp (Oakdale) - - - 360 9 1.9%
SunAmerica Financial Group (Woodbury) - - - 310 10 1.6%
(1)City staff estimate
2023 2014
CITY OF LAKE ELMO, MINNESOTA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION/PROGRAM
LAST TEN YEARS
127
Source: City’s Adopted Budgets
2023 2022 2021 2020 2019
General Government:
Administration 1.93 1.93 1.93 1.98 2.70
Finance 1.66 0.82 0.82 0.72 1.05
Planning and Zoning 4.35 2.75 1.95 1.95 2.10
Total General Government 7.94 5.50 4.70 4.65 5.85
Public Safety:
Fire 7.82 2.32 1.42 1.42 3.80
Building Inspections 6.78 5.21 4.91 4.91 4.20
Total Public Safety 14.60 7.53 6.33 6.33 8.00
Public Works:
EngineeringStreets and Roadways 5.17 5.64 6.47 4.80 4.80
Parks and Recreation:
Parks 1.46 1.18 1.01 2.25 2.20
Communications 0.42 0.42 0.42 0.42 0.50
Total Governmental Activities 29.58 20.27 18.93 18.45 21.35
Business-type Activities:
Water Utility 4.49 3.76 2.98 2.75 2.50
Sewer Utility 1.92 1.59 1.05 1.40 1.15
Storm Sewer Utility 1.01 0.89 0.54 0.90 0.80
Total Business-Type Activities 7.42 6.23 4.57 5.05 4.45
Total 37.00 26.50 23.50 23.50 25.80
Full-Time-Equivalent Employees as of December 31,
CITY OF LAKE ELMO, MINNESOTA
FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION/PROGRAM (Continued)
LAST TEN YEARS
128
2018 2017 2016 2015 2014
General Government:
Administration 2.70 2.45 2.45 3.20 3.55
Finance 1.05 1.20 1.20 0.80 1.25
Planning and Zoning 2.10 2.21 2.21 2.75 2.70
Total General Government 5.85 5.86 5.86 6.75 7.50
Public Safety:
Fire 3.80 3.80 3.80 1.50 1.55
Building Inspections 4.20 4.21 4.21 3.15 1.55
Total Public Safety 8.00 8.01 8.01 4.65 3.10
Public Works:
EngineeringStreets and Roadways 4.80 4.55 4.55 3.90 3.20
Parks and Recreation:
Parks 2.20 3.00 3.00 1.85 3.30
Communications 0.50 - - 0.70 0.35
Total Governmental Activities 21.35 21.42 21.42 17.85 17.45
Business-type Activities:
Water Utility 2.50 2.00 2.00 2.45 2.60
Sewer Utility 1.15 1.66 1.66 1.30 0.70
Storm Sewer Utility 0.80 0.80 - - -
Total Business-Type Activities 4.45 4.46 3.66 3.75 3.30
Total 25.80 25.88 25.08 21.60 20.75
Full-Time-Equivalent Employees as of December 31,
CITY OF LAKE ELMO, MINNESOTA
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN YEARS
129
2023 2022 2021 2020 2019
Planning and Zoning:
Conditional use permits 2 7 1 1 5
Interim use permits 2 - - - -
Minor subdivisions 2 - 2 - 1
Plats / planned unit developments 10 5 7 5 8
Rezonings 8 2 8 1 4
Site plans - - - 3 -
Variances 5 10 6 5 5
Other (new in 2023)9
Fire:
Total emergency responses 1047 790 568 546 541
EMS responses 652 493 355 317 383
Fire responses 395 297 213 229 158
Building Inspections:
Residential permit valuations (thousands of dollars)55,067$ 69,557$ 100,189$ 98,294$ 76,378$
Commercial permit valuations (thousands of dollars)14,577$ 25,189$ 12,548$ 11,761$ 3,146$
New residential units (1)195 200 297 309 44
New commercial units 3 6 5 11 2
Water Utility:
Number of customers 3466 3,196 2,863 2,522 2,423
Average quarterly consumption (2)108 100 89 76 69
(millions of gallons)
Sanitary Sewer Utility:
Number of customers 2504 2,206 1,937 1,612 1,436
Average quarterly flow (3)32 29 19 18 16
(millions of gallons)
Sources: Various City Department's annual financial report statistics
(1) Excludes fire/demolition rebuilds
(2) Residential and Commercial
(3) Billed and measured based on water usage; new developer homes built in 2015 but not yet sold/occupied so no impact to flows
CITY OF LAKE ELMO, MINNESOTA
OPERATING INDICATORS BY FUNCTION/PROGRAM (Continued)
LAST TEN YEARS
130
2018 2017 2016 2015 2014
Planning and Zoning:
Conditional use permits 6 5 3 2 4
Interim use permits - 2 2 1 1
Minor subdivisions 1 1 2 2 -
Plats / planned unit developments 13 10 11 9 17
Rezonings 4 5 3 2 11
Site plans - 1 1 - -
Variances 6 6 4 2 2
Other (new in 2023)
Fire:
Total emergency responses 461 456 430 429 358
EMS responses 317 313 268 274 237
Fire responses 144 143 162 32 21
Building Inspections:
Residential permit valuations (thousands of dollars)113,913$ 86,710$ 119,301$ 50,401$ 23,032$
Commercial permit valuations (thousands of dollars)3,217$ 1,185$ 2,003$ 1,952$ 7,309$
New residential units (1)245 299 240 140 41
New commercial units - 1 1 1 3
Water Utility:
Number of customers 2,317 1,727 1,538 1,234 1,073
Average quarterly consumption (2)56 28 18 18 19
(millions of gallons)
Sanitary Sewer Utility:
Number of customers 1,253 712 321 96 45
Average quarterly flow (3)11 12 14 74 77
(millions of gallons)
CITY OF LAKE ELMO, MINNESOTA
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN YEARS
131
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Fire:
Stations 1 2 2 2 2 2 2 2 2 2
Public Works:
Bituminous streets (miles)97 97 94.80 92 112 112 103 103 65 65
Gravel streets (miles)0.5 0.5 0.5 0.5 0.5 1 2 2 2 2
Storm sewer (miles)56.8 52.5 50 48 33 33 30 30 25 25
Parks & Recreation:
Acres of parkland 526 517 517 427 427 427 420 420 420 420
Number of parks 25 24 24 24 24 24 17 17 17 17
Water Utility:
Water towers 3 3 3 3 3 3 3 3 3 3
Miles of watermain 89.6 81.6 75 73 58 58 50 50 43 40
Number of fire hydrants 902 812 735 707 559 559 415 415 378 351
Sanitary Sewer Utility:
Miles of sanitary sewer 40.1 36.1 33 32 29 29 8 8 4 3
Lift Stations 8 8 6 7 5 5 4 4 4 4
132
OTHER REQUIRED REPORTS
133
www.schlennerwenner.cpa
INDEPENDENT AUDITOR’S REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE
AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Honorable Mayor and City Council
City of Lake Elmo, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the
United States, 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, 2023, and the related notes to the financial statements, which collectively comprise the City of Lake Elmo’s basic financial
statements and have issued our report thereon dated June 11, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of Lake Elmo's internal control over
financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances 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. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
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 entity’s financial statements will not be prevented, or detected and corrected, on a timely
basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not
designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and
therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during
our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified
certain deficiencies in internal control, described in the accompanying Schedule of Findings and Responses as item 2023-001
that we consider to be a significant deficiency.
134
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement,
we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
Minnesota Legal Compliance
In connection with our audit, nothing came to our attention that caused us to believe that the City of Lake Elmo failed to comply
with the provisions of the contracting - bid laws, depositories of public funds and investments, conflicts of interest, public
indebtedness, claims and disbursements, and miscellaneous provisions sections of the Minnesota Legal Compliance Audit
Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65, insofar as they relate to accounting matters.
However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we
performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the
above referenced provisions, insofar as they relate to accounting matters.
City of Lake Elmo’s Response to Findings
Government Auditing Standards require the auditor to perform limited procedures on the City of Lake Elmo’s response to the
findings identified in our audit and described in the accompanying Schedule of Findings and Responses and Corrective Action
Plans. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statements
and, accordingly, we express no opinion on the response.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of
that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is
an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal
control and compliance. Accordingly, this communication is not suitable for any other purpose.
SCHLENNER WENNER & CO.
St. Cloud, Minnesota
June 11, 2024
CITY OF LAKE ELMO, MINNESOTA
SCHEDULE OF FINDINGS AND RESPONSES
FOR THE YEAR ENDED DECEMBER 31, 2023
135
FINANCIAL STATEMENT FINDINGS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Finding 2023-001 Limited Segregation of Duties
Condition: Throughout the year, the same employee was often responsible for preparing and reviewing bank
reconciliations, as well as recording and approving adjusting journal entries. Additionally, the
individual primarily responsible for completing bank reconciliations was also an authorized signer
for the City’s checking account.
Criteria: The City should adopt an internal control structure that properly segregates the various functions of
each accounting cycle. This means no single person should be in a position to both initiate and
approved a transaction, as well as have access to the related physical assets involved with the
transaction. In other words, an employee should not be in a position to both commit an irregularity
and cover it up.
Cause: Limited number of staff members in the finance department, as well as temporary vacancies in the
Finance Director and City Administrator roles.
Effect: The lack of ideal segregation of duties could expose the City to heightened risk that errors or fraud
could occur and not be detected in a timely manner.
Recommendation: We recommend the City review and evaluate current procedures for the purpose of implementing
additional oversight and segregation of duties to the extent that is determined to be feasible.
Views of Responsible
Officials And Planned
Corrective Actions: Management agrees with the recommendation. See corresponding Corrective Action Plan.
CITY OF LAKE ELMO, MINNESOTA
CORRECTIVE ACTION PLANS
FOR THE YEAR ENDED DECEMBER 31, 2023
136
FINANCIAL STATEMENT FINDINGS IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Finding 2023-001 Limited Segregation of Duties
1.Explanation of Disagreement with Audit Finding
There is no disagreement with the audit finding.
2.Actions Planned in Response to Finding
The City will review and evaluate current processes, procedures, and employee roles within the Finance Department.
To the extent possible, the City will implement additional controls to mitigate the lack of segregation of duties.
3.Official Responsible
Nicole Miller, City Administrator, is the official responsible for ensuring corrective action.
4.Planned Completion Date
December 31, 2024.
5.Plan to Monitor Completion
The City Council will be monitoring this Corrective Action Plan.
City of Lake Elmo,
Minnesota
Report to the Members of
Governance
June 11, 2024
CITY OF LAKE ELMO, MINNESOTA
TABLE OF CONTENTS
Introductory Letter...................................................................................................................................................... 1
Required Communications ......................................................................................................................................... 2
Exhibit A – Representation Letter
An Independently Owned Member, RSM US Alliance
1
www.schlennerwenner.cpa
Members of Governance
City of Lake Elmo, Minnesota
We are pleased to present this report related to our audit of the basic financial statements of the City of Lake Elmo (the
City) as of and for the year ended December 31, 2023. This report summarizes certain matters required by professional
standards to be communicated to you in your oversight responsibility for the City’s financial reporting process.
This report is intended solely for the information and use of the members of governance and management and is not
intended to be, and should not be, used by anyone other than these specified parties. It will be our pleasure to respond
to any questions you have regarding this report. We appreciate the opportunity to continue to be of service to the City.
SCHLENNER WENNER & CO.
St. Cloud, Minnesota
June 11, 2024
CITY OF LAKE ELMO, MINNESOTA
REQUIRED COMMUNICATIONS
2
Auditing standards generally accepted in the United States of America (AU-C 260, The Auditor’s Communication
With Those Charged With Governance) require the auditor to promote effective two-way communication between the
auditor and those charged with governance. Consistent with this requirement, the following summarizes our
responsibilities regarding the financial statement audit as well as observations arising from our audit that are
significant and relevant to your responsibility to oversee the financial and related compliance reporting process.
Our Responsibilities With Regard to the Financial Statement and Compliance Audit
Our responsibilities under auditing standards generally accepted in the United States of America and Government
Auditing Standards issued by the Comptroller General of the United States have been described to you in our
engagement letter dated December 8, 2022. Our audit of the basic financial statements does not relieve management or
those charged with governance of their responsibilities, which are also described in that letter.
Overview of the Planned Scope and Timing of the Financial Statement Audit
We have issued a separate communication dated April 10, 2024 regarding the planned scope and timing of our audit
and identified significant risks.
Accounting Policies and Practices
Preferability of Accounting Policies and Practices
Under accounting principles generally accepted in the United States of America, in certain circumstances,
management may select among alternative accounting practices. In our view, in such circumstances, management has
selected the preferable accounting practice.
Adoption of, or Change in, Accounting Policies
Management has the ultimate responsibility for the appropriateness of the accounting policies used by the City. The
City did not adopt any significant new accounting policies, nor have there been any changes in existing significant
accounting policies during the current period.
Significant Accounting Policies
We did not identify any significant accounting policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus.
Significant Unusual Transactions
We did not identify any significant unusual transactions.
Management’s Judgments and Accounting Estimates
Accounting estimates are an integral part of the preparation of financial statements and are based upon management's
current judgment. The process used by management encompasses their knowledge and experience about past and
current events and certain assumptions about future events. You may wish to monitor throughout the year the process
used to determine and record these accounting estimates. The only estimates we have deemed significant to the
financial statements are estimates associated with the following balances reported at year-end:
• Net OPEB liability and related deferred outflows/inflows of resources
• Net pension asset/liability and related deferred outflows/inflows of resources
CITY OF LAKE ELMO, MINNESOTA
REQUIRED COMMUNICATIONS
3
Audit Adjustments and Uncorrected Misstatements
Audit adjustments, other than those that are clearly trivial, proposed by us and recorded by the City are shown
following the attached representation letter at Exhibit A.
Uncorrected misstatements are summarized within the attached representation letter at Exhibit A. Uncorrected
misstatements or matters underlying these uncorrected misstatements could potentially cause future-period financial
statements to be materially misstated, even if we have concluded that the uncorrected misstatements are immaterial to
the financial statements under audit.
Other Information Included in Annual Reports
Our responsibility for other information included in annual reports is to read the information and consider whether its
content or the manner of its presentation is materially inconsistent with the financial information covered by our
auditor’s report, whether it contains a material misstatement of fact or whether the other information is otherwise
misleading. We read the City’s introductory and statistical sections included in the annual report. We did not identify
material inconsistencies with the audited financial statements.
Observations About the Audit Process
Disagreements with Management
We encountered no disagreements with management over the application of significant accounting principles, the
basis for management’s judgments on any significant matters, the scope of the audit, or significant disclosures to be
included in the basic financial statements.
Consultations with Other Accountants
We are not aware of any consultations management had with other accountants about accounting or auditing matters.
Significant Issues Discussed with Management
No significant issues arising from the audit were discussed or were the subject of correspondence with management.
Significant Difficulties Encountered in Performing the Audit
We did not encounter any significant difficulties in dealing with management during the audit.
Difficult or Contentious Matters That Required Consultation
We did not encounter any significant and difficult or contentious matters that required consultation outside the
engagement team.
Shared Responsibilities for Independence
Independence is a joint responsibility and is managed most effectively when management, audit committees (or their
equivalents), and audit firms work together in considering compliance with American Institute of Certified Public
Accountants (AICPA) and Government Accountability Office (GAO) independence rules. For Schlenner Wenner &
Co. to fulfill its professional responsibility to maintain and monitor independence, management, the audit committee
(when applicable), and Schlenner Wenner & Co. each play an important role.
Our Responsibilities
• AICPA and GAO rules require independence both of mind and in appearance when providing audit and other
attestation services. Schlenner Wenner & Co. is to ensure that the AICPA and GAO’s General Requirements
for performing non-attest services are adhered to and included in all letters of engagement.
• Maintain a system of quality control over compliance with independence rules and firm policies.
CITY OF LAKE ELMO, MINNESOTA
REQUIRED COMMUNICATIONS
4
The City’s Responsibilities
• Timely inform Schlenner Wenner & Co., before the effective date of transactions or other changes, of the
following:
o New affiliates, members of governance, or person in financial reporting and compliance oversight
roles.
o Changes in the reporting entity impacting affiliates such as related entities, investments, joint
ventures, component units, and jointly governed organizations.
• Provide necessary affiliate information such as new or updated structure charts, as well as financial
information required to perform materiality calculations needed for making affiliate determinations.
• Understand and conclude on the permissibility, prior to the City and its affiliates, members of governance, or
persons in a decision-making capacity, engaging in business relationships with Schlenner Wenner & Co.
• Not entering into arrangements of non-audit services resulting in Schlenner Wenner & Co. being involved in
making management decisions on behalf of the City.
• Not entering into relationships resulting in Schlenner Wenner & Co., Schlenner Wenner & Co. covered
persons or their close family members, temporarily or permanently acting as a member of governance or
person in an accounting, financial reporting or compliance oversight role at the City.
Internal Control and Compliance Matters
We have separately communicated any significant deficiencies and material weaknesses in internal control and
compliance findings over financial reporting identified during our audit of the basic financial statements, as required
by Government Auditing Standards. This communication is included within the compliance section of the City’s
financial report for the year ended December 31, 2023.
Significant Written Communications Between Management and Our Firm
Copies of significant written communications between our firm and the management of the City of Lake Elmo,
including the representation letter provided to us by management, are attached as Exhibit A.
EXHIBIT A
REPRESENTATION LETTER