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STUART J. BONNIWELL Certified Public Accountant 7101 York Avenue South- Suite 50 go Office: (612)921-3325 Minneapolis,MN 55435 Fax: (612)921-3331 The CPA.Neva+UvWerasUmata The Value:' April 17, 1998 Honorable Mayor and Members of the City Council City of St. Anthony, Minnesota I have audited the general purpose financial statements of the City of St. Anthony, Minnesota as of and for the year ended December 31 , 1997, and have issued my report thereon dated April 17, 1998. The purpose of this letter is to communicate certain observations noted during the audit of the general purpose financial statements of the City of St. Anthony for the year ended December 31 , 1997. These comments are presented for your consideration and are intended to enhance the performance of City management in fulfilling its duties and responsibilities. This report is intended solely for the information and use of the City Council, management and others within the organization. Recommendations are intended to improve or strenghthen financial management and administration. Financial Summary The financial condition of the City continues to be strong. The City improved its overall financial stability for the year ended December 31 , 1997. Following is a brief summary of significant activities noted during the year. General Fund - Revenues of approximately. $3,273,000 exceeded expenditures (before operating transfers) by $284,185 in the General Fund. This excess allowed Council to authorize the following year end transfers: $17,857 for cable reserves from excess franchise fees, $40,505 for capital equipment from police contracts, $36,000 for removal of underground storage tanks, and $164,598 for park improvements and renovations. These transfers reduced the unreserved fund balance of the General Fund to $703,,532 as of December 31 , 1997, which has been designated by Council. A major portion of this fund balance has been designated as follows; $490,532 for working capital pur= poses, $100.,000 for self-insurance reserves, and $65,000 for potential legal claims. The reserve for working capital represents approximately 15.67% of budgeted expendi- tures for 1998 (compared to 16.00% for the previous year). As previously stated., working capital reserves provide for financing of current operations until tax settlements and state aids are received. This reserve also serves as a safeguard against potential revenue shortages or unexpected expenditures which may occur throughout the year. The self-insurance reserve was decreased slightly as a result of continuing favorable insurance experience. It is anticipated that the reserve for legal claims is sufficient and these claims will be resolved in 1998.