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FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
<br />As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related
<br />legal requirements.
<br />Governmental Funds — The focus of the City's governmental funds is to provide information on near -term
<br />inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's
<br />financing requirements. In particular, assigned and unassigned fund balance may serve as a useful measure
<br />of a government's net resources available for spending at the end of the fiscal year.
<br />As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
<br />balances of $17,658,413, a decrease of $859,045 in comparison with the prior year. Approximately
<br />12.8 percent of this total amount, $2,254,010, is restricted for economic development, tax increment,
<br />communications, public safety, parks and recreation, conservation, and debt service. Approximately
<br />55.9 percent, or $9,876,213, is assigned for future expenditures, and 31.3 percent, or $5,528,190, is
<br />unassigned. Assigned and unassigned fund balances are available for spending at the government's
<br />discretion.
<br />The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned
<br />fund balance was $5,528,190. Due to the pattern of receipt of taxes and intergovernmental revenues
<br />mandated by the state, Minnesota cities do not receive any significant revenues in their General Fund until
<br />July of each year. The City's policy is to end the year with a fund balance equal to 35.0 percent to
<br />50.0 percent of the subsequent year's budgeted revenues and transfers, or a minimum of five months
<br />expenditures and transfers. Unassigned fund balance represents 60.7 percent of the 2024 budgeted General
<br />Fund revenue and transfers from other funds.
<br />Fund balance for the City's General Fund decreased by $1,601,278 during the current fiscal year. The City
<br />had budgeted for a net decrease in fund balance of $2,821,240. The City budgeted and made significant
<br />transfers to other funds, primarily for capital purposes in the current year. The favorable results are due to
<br />conservative projections for intergovernmental revenues, investment earnings, and miscellaneous sources.
<br />The Economic Development Authority Special Revenue Fund reported an increase in fund balance of
<br />$29,900, compared to the final budget that anticipated a reduction in fund balance of $11,698. The increase
<br />in the current year was largely due to less expenditures than anticipated in the final budget for housing
<br />programs and business subsidies.
<br />The Community Center Special Revenue Fund reported a slight decrease in fund balance of $9,754, which
<br />compares to a decrease of $77,300 anticipated in the budget. Actual results were better than anticipated,
<br />largely due to increased program participation increasing revenues more than the additional expenditures
<br />to provide the level of programming.
<br />The Tax Increment Financing District No. 5 Special Revenue Fund reported a decrease in fund balance of
<br />$842,759, compared to the $33,197 increase anticipated in the final budget. The decrease in fund balance
<br />and variance to budget was a combination of the City receiving less tax increment financing in the current
<br />year and an increase in community incentive payments reported.
<br />The Vehicle and Equipment Fund (Capital Projects), the Special Projects Fund (Capital Projects), and the
<br />Street Improvement Fund (Capital Projects) reported increases in fund balance of $207,049, $1,362,995,
<br />and $252,403, respectively. Each of these capital projects funds received transfers in the current year
<br />(largely from the General Fund) to finance current and future projects.
<br />Proprietary Funds — The City's proprietary funds provide the same type of information found in the
<br />government -wide financial statements, but in more detail.
<br />The three major utility funds (Water, Sewer, and Storm Water) saw favorable results for changes in total
<br />net position: the Water Fund increased by $65,625; the Sewer Fund increased by $234,442; and the Storm
<br />Water Fund increased by $152,100. Rate increases helped produce net income for all three funds. All
<br />three funds recognized higher investment returns as a result of marking investments to fair value.
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