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HomeMy WebLinkAbout2017.07.17 City of Hugo Financial Summary December 31, 2016 1 AUDIT Audit Opinion Provides reasonable, but not absolute, assurance that financials are free of material misstatement Audit procedures include: outside confirmation of certain balances and transactions, sample tests of documentary evidence, inquiries of employees and management, analytical procedures applied to balances and certain other testing procedures Unmodified opinion – Financial Statements fairly stated in all material respects Minnesota Legal Compliance Seven areas required to be tested by the State of Minnesota: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions and tax increment financing. The items required to be tested for each area are listed in the Office of the State Auditor’s Minnesota Legal Compliance Guide for Cities Testing covered all of the listed areas and consisted of inquiries, sighting of documents and testing on a sample basis No exceptions noted during 2016 audit 2 2 FUND TYPES Governmental General Fund Special Revenue Funds Debt Service Funds Capital Project Funds Enterprise Water Sewer 3 3 GOVERNMENTAL FUNDS 4 REVENUES 4 GOVERNMENTAL FUND REVENUES 5 5 GOVERNMENTAL FUNDS 6 EXPENDITURES 6 GENERAL GOVERNMENT EXPENDITURES Includes mayor and council, admin., elections, clerk/treasurer, finance director, assessing, accounting services, planning and zoning, engineering, legal fees, and general government building Represents 23% of governmental expenditures (excluding capital projects and debt service) in 2016 Totaled $1,014,614 in 2016, an increase of $34,826 (4%) from 2015 7 7 PUBLIC SAFETY EXPENDITURES Includes police, fire protection, protective inspection, and animal control Public Safety represented about 36% of total governmental expenditures (excluding capital projects and debt service) in 2016 Totaled $1,549,208 in 2016, a decrease of $21,976 (1%) from 2015 Decrease in public safety expenditures in 2016 is due primarily to a decrease in police contracted services 8 8 HIGHWAYS AND STREETS EXPENDITURES Includes administration and engineering, streets, and street lighting Primarily supplies and street materials Totaled $1,182,129 in 2016 and $1,204,844 in 2015 – a decrease of 2% 9 9 COMMUNITY DEVELOPMENT EXPENDITURES Includes personal services, other services and charges, and capital outlay Totaled $76,355 in 2016, an increase of $32,857 (76%) from 2015 Increase in 2016 was due primarily to the hiring of an community development assistant 10 10 GOVERNMENTAL FUND EXPENDITURES 11 11 GENERAL FUND RESERVES 12 12 GENERAL FUND - RESERVES Unassigned General Fund balance as a % of General Fund expenditures 2016 60% 2015 57% 2014 56% 2013 54% 2012 54% State Auditor recommendation is 35 to 50% in unreserved fund balance 13 13 PURPOSES AND BENEFITS OF RESERVES Cash flow timing differences Intergovernmental revenue cutbacks Capital outlay replacement Emergency or unanticipated expenditures Special City Council projects Unfunded mandates Favorable bond rating Higher investment earnings Provides resources for minor projects or feasibility reports Avoids temporary overdrafts prior to major receipts Allows time to study effects of revenue cuts Avoids overburdening of annual budgets for certain capital outlay Provides the City greater number of options to deal with unexpected events 14 Purpose of Reserves Benefits of Reserves 14 DEBT SERVICE 15 15 5-YEAR DEBT SERVICE REQUIREMENTS All bond payments are being paid on a timely basis Includes principal and interest Made up entirely of general obligation debt 16 16 CAPITAL PROJECTS 17 17 CAPITAL PROJECTS FUNDS - EXPENDITURES Major capital projects in 2016 were: Purchase of playground equipment for McCollar Park Completion of the 147th Street and Oneka Lake Blvd. street improvement project Purchase of a Freightliner street sweeper Purchase of a Mack plow truck Purchase of a Cat road grader Major capital projects in 2015 were: Purchase of a Mack plow truck Purchase of a new dump truck and a reconditioned water truck Completion of the Rosemary Way street improvement project Rice Lake Meadows street improvement project 18 18 Capital outlay expenditures from capital project funds ONLY ENTERPRISE FUNDS 19 OPERATIONAL TRENDS 19 WATER AND SEWER FUND 20 20 WATER AND SEWER FUND (CONTINUED) Water and sewer service supported by ratepayers Increased usage for population and commercial industrial growth have created increases in operating revenues, operating expenses and other income Higher than normal revenues in 2012 due to a one-time refund to the City for previous expenditures, as well as higher future infrastructure charges Other income includes future infrastructure charges, developer fees, special assessments, investment earnings and other miscellaneous income and expenses Fund balance growing each year due to net income (positive income each year even after subtracting depreciation) 21 21 SUMMARY Unmodified audit opinion and no Minnesota Legal Compliance exceptions CAFR has been posted on the City’s website by the Finance Department CAFR is available for public inspection by contacting the City’s Finance Department A summary of the financial information has been published in the City’s official newspaper 22 22