1990 - Comp. Annual Financial Report
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CITY OF SHOREWOOD
SHOREWOOD, MINNESOTA
ANNUAL FINANCIAL REPORT
YEAR ENDED
DECEMBER 31, 1990
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MAYOR
Barb Brancel
COUNCIL
Kristi Stover
Bob Gagne
Rob DaughertY
Daniel Lewis
CITY OF
SHOREWOOD
5755 COUNTRY CLUB ROAD · SHOREWOOD, MINNESOTA 55331 . (612) 474-3236
MEMO
TO:
MAYOR, COUNCILMEMBERS, MEMBERS OF THE FINANCIAL ADVISORY
BOARD
FROM:
AL ROLEK, FINANCE DIRECTOR
DATE:
MAY 22, ~991
RE:
FINAL AUDIT REPORT FOR THE YEAR ENDED DECEMBER 31, 1990
A copy of the audit report for the year ended December 31, 1990, is
attached for your review. Gary Groen, of Abdo, Abdo & Eick, will
be at the workshop portion of the council meeting on May 28 to
present the report and answer any questions you may have regarding
the audit.
The members of the Financial Advisory Board are invited to attend
and participate in the audit workshop.
Please call me with any questions.
A Residential Community on Lake Minnetonka's South Shore _
c..
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AJIX)
CERTIFIED PuBLIC ACCOUNTANTS
AND Q)NSULTANTS
Members of the City Council
City of Shorewood
Shorewood, Minnesota
In planning and performing our audit of the general purpose
financial statements of the City of Shorewood for the year ended
December 31, 1990, we considered its internal control structure
in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and not to
provide assurance on the internal control structure. However, we
noted certain matters involving the internal control structure
and its operation that we consider to be reportable conditions
under standards established by the American Institute of
certified Public Accountants. Reportable conditions involve
matters coming to our attention relating to significant
deficiencies in the design or operation of the internal control
structure that, in our judgment, could adversely affect the
city's ability to record, process, summarize and report financial
data consistent with the assertions of management in the
financial statements.
A material weakness is a reportable condition in which the design
or operation of one or more of the internal control structure
elements does not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be material in
relation to the financial statements being audited may occur and
not be detected within a timely period by employees in the normal
course of performing their assigned functions.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control
structure that might be reportable conditions and, accordingly,
would not necessarily disclose all reportable conditions that are
also considered to be material weaknesses as defined above.
However, we noted the following reportable condition that we
believe to be material weaknesses.
Member of American Institute of Certified Public Accountants Private Companies Practice Section
1I5 EAST HICKORY STREIT, sum 301
roo BOX 1166
MANKAlO, MINNESCJrA 5IlOOz.J166
(S07) 62S-272i
FAX (507) 388-9139
104 EAST PEARL STllEET
1'0. BOX 345
OWAlONNA, MINNESCJrA 5506().{)345
(507) 451.9136
FAX (507) 45l-0794
1060 NOlITHLAND PLAZA
l800 InST &1TH STllEET
MINNEAPOLIS, MINNESCJrA 554 11
(611) 81~9090
FAX (611) 8%-3610
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Page Two
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CamAED Pueuc Ao::xluNTANTS
AND Ca&.n.TANTS
Segregation of Duties
Our study and evaluation disclosed that because of the limited
size of your office staff, your organization has limited
segregation of duties. A good internal control structure
contemplates an adequate segregation of duties so that no one
individual handles a transaction from inception to completion.
While we recognize that your organization is not large enough to
permit an adequate segregation of duties in all respects, it is
important, however, that you be aware of this condition.
Other Matters
The following are areas that came to our attention during the
audit that we feel should be reviewed:
Financial position and Results of Operations
General Fund
All general governmental functions of the City which are not
accounted for in separate funds are included in the General
Fund. Revenues and transfers for the General Fund for 1990
totaled $2,367,995, an increase of $391,034 or 19.8% over 1989.
Percent Increase
of (Decrease)
Revenue Source 1990 Total 1989 From 1989
General Property
Taxes $1 437 140 60.7% $1 118 886 $318 254
Intergovernmental
Revenue 273 780 11. 6 405 022 (131 242)
Charges for Services 9 943 .4 11 954 (2 011)
Licenses and Permits 203 828 8.6 207 129 (3 301)
Fines 124 234 5.2 105 244 18 990
Interest 91 685 3.9 80 926 10 759
Other Revenue 32 385 1.4 24 475 7 910
Transfers from
Other Funds 195 000 8.2 23 325 171 675
Total Revenue and
Transfers $2 367 995 100.0% $1 976 961 $391 034
A shift in state funding of local government eliminated the
City'S local government aid entirely. In 1989, the City
received $163,313, the loss of which was offset in 1990 by
increased property taxes.
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Page Three
AIIX)
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CamREo PuBuc Aa:rurrANTS
AND Ch&JcrANTS
Expenditures and Transfers for the General Fund for 1990
totaled $2,065,011. This is an increase of 15.1% over the 1989
General Fund Expenditures and Transfers of $1,794,684.
Percent Increase
of (Decrease)
Proqram 1990 Total 1989 From 1989
General Government $ 616 929 29.9% $ 610 659 $ 6 270
Public Safety
Police 378 149 18.3 362 066 16 083
Fire 79 749 3.9 74 565 5 184
Other 74 760 3.6 66 911 7 849
Public Works 799 543 38.7 570 981 228 562
Parks and Recreation 115 881 5.6 83 502 32 379
Operating Transfers
to Other Funds 26 000 (26 000)
Total Expenditures
and Transfers $2 065 011 100.0% $1 794 684 $270 327
Capital outlay expenditures in the public works department
accounted for much of the increase along with the recycling
program.
The fund balance at year end is reported in two components.
The first includes $210,000 which has been designated for
equipment and improvements. Most of this was funded by a
transfer from the assets remaining after bonds were defeased in
1989.
The second component is the amount designated for working
capital which increased $92,984 to $1,046,859. The working
capital is required to finance the subsequent year expenditures
until major revenues are received five or six months into the
year.
1971 and 1972 Sewer Improvement Debt Service Fund
All assets remaining, except $4,000, were transferred to a
Capital Improvements Fund. These assets may be used for any
public purpose determined by the Council.
This is, however, a one time source of revenue available to the
City and the alternatives for its use should be carefully
reviewed.
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Page Four
AfIX)
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CamAED PuIIuc AcaurrANTS
I\ND ChlsuLTANTS
CaDital proiects Funds
Both the Shorewood Oaks and Southeast projects were completed
and closed out in 1990.
Water Enterprise Fund
The cash deficit in the Water Fund was eliminated in 1990. The
cash balance at year end is $43,532. The operating income
increased $8,269 to $20,687 in 1990.
Revenues generated from user charges must be sufficient to
retire the bonds outstanding and provide a reserve for major
maintenance expenses. The Water Fund has improved the past two
years. continued review of these operations is necessary to
insure its improvement.
Depreciation is a non-cash expense included in the operating
expenses of the Water and Sewer Funds. The operations are
summarized below to report the income before depreciation.
Water Sewer
Charges for services $156 069 $447 521
Permits, connection fees, etc. 36 613 8 400
Total revenue 192 682 455 921
Operating expenses excluding
depreciation 116 289 346 015
Income before depreciation 76 393 109 906
Depreciation expense 55 706 173 906
Operating income $ 20 687 $(64 000)
Liquor EnterDrise Funds
Liquor Fund operating income increased $14,044 to $59,510 in
1990. out of these profits, $20,000 was transferred to the
General Fund.
General Fixed Assets
During 1990, the Finance Department developed records to
account for the City's general fixed assets.
The Department should be commended for their efforts on this
project.
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Page Five
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CamRm Putuc Aa:ruNrANTS
-'N[) O::..IsuLTANTS
* * * * *
This report in intended for the use of management and council.
The comments and recommendations in the report are purely
constructive in nature and should be read in this context.
Our audit would not necessarily disclose all weaknesses in the
system because it was based on selected tests of the accounting
records and related data.
If you have any questions or wish to discuss any of the items
contained in this letter, please feel free to contact us at your
convenience. We wish to thank you for the continued opportunity
to be of service and for the courtesy and cooperation extended to
us by your staff.
Sincerely,
ABDO, ABDO & EICK
Certified Public Accountant
~q.~
Gary A. Groen, CPA
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CITY OF SHOREWOOD, MINNESOTA
TABLE OF CONTENTS
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I. INTRODUCTORY SECTION
Elected and Appointed Officials
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II. FINANCIAL SECTION
Independent Auditor's Report
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General Purpose Financial Statements
Combined Balance Sheet - All Fund Types and Account Groups
combined Statement of Revenue, Expenditures and Changes
in Fund Balance - All Governmental Fund Types
Statement of Revenue, Expenditures and Changes
in Fund Balance - Budget and Actual - General Fund
Combined Statement of Revenue, Expenses and Changes in
Retained Earnings - All Proprietary Fund Types
Combined Statement of Cash Flows -
All Proprietary Fund Types
Notes to Financial Statements
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4
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6
7 - 18
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Combining and Individual Fund Statements
General Fund
Balance Sheet
Statement of Revenue, Expenditures and Changes in
Fund Balance - Budget and Actual
Debt Service Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenditures and
Changes in Fund Balance
Capital Projects Funds
Combining Balance Sheet
Combining Statement of Revenue, Expenditures
and Changes in Fund Balance
Proprietary Fund Types
Combining Balance Sheet
Combining Statement of Revenue, Expenses
and Changes in Retained Earnings
Combining Statement of Cash Flows
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20 - 24
25
26
27
28
29
30
31
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III.
OTHER REPORTS
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Independent Auditor's Report on Internal Control
structure Based Solely on a Study and Evaluation
Made as a Part of an Audit of the General Purpose
Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor's Report on Compliance Based on an
Audit of the General Purpose Financial Statements
Performed in Accordance with Government Auditing Standards
32 - 33
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Elected Officials
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Jan Haugen
Barbara Brancel
Robert Gagne Jr.
Kristi stover
Vern Watten
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Appointed Officials
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Larry Whittaker
Alan Rolek
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CITY OF SHOREWOOD, MINNESOTA
ELECTED AND APPOINTED OFFICIALS
DECEMBER 31, 1990
Term
Expires
Mayor
Council Member
Council Member
Council Member
Council Member
1992
1990
1992
1992
1990
City Administrator
Finance Director
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APIX)
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CERTIAED PuBLIC ACCOUNTANTS
AND CoNSULTANTS
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INDEPENDENT AUDITOR'S REPORT
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Honorable Mayor and City Council
City of Shorewood, Minnesota
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We have audited the accompanying general purpose financial statements of the
City of Shorewood, Minnesota, for the year ended December 31, 1990 as listed
in the table of contents. These financial statements are the responsibility
of the City of Shorewood, Minnesota's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
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We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
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In our opinion, the general purpose financial statements referred to above
present fairly, in all material respects, the financial position of the City
of Shorewood, Minnesota at December 31, 1990 and the results of its operations
and cash flows of its Proprietary Fund Types for the year then ended, in
conformity with generally accepted accounting principles.
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Our audit was made for the purpose of forming an opinion on the general
purpose financial statements taken as a whole. The combining and individual
fund financial statements listed in the table of contents are presented for
the purpose of additional analysis and are not a required part of the general
purpose financial statements of the City of Shorewood, Minnesota. The
information has been subjected to the auditing procedures applied in the audit
of the general purpose financial statements and, in our opinion, is fairly
stated in all material respects in relation to the general purpose financial
statements taken as a whole.
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!Jtt, ;JjL, ~ a
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April 11, 1991
Minneapolis, Minnesota
ABDO, ABDO & EICK
Certified Public Accountants
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Member of American Institute of Certified Public Accountants Private Companies Practice Section
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115 EAST HICKORY STREET, SUITE 302
PD. BOX 3166
MANKAlO, MINNESOTA 50002-3166
(501) 625-2721
FAX (501) 388-9139
204 EAST PEARL mEET
P.Q BOX Jl5
OWAlONNA, MINNESOL\ 5506MJl5
(501) 451-9136
FAX (501) 451-0194
1060 NOtmlLAND PLAZA
lBOO WEST BOlli STREET
MINNEAPOUS, MINNESOTA 5S411
(612) 83~9090
FAX (612) 896-3620
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CITY OF SHOREWOOD, MINNESOTA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
DECEMBER 31, 1990
CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
ALL GOVERNMENTAL FUND TYPES
YEAR ENDED DECEMBER 31, 1990
General
Debt
Service
Capital
proiects
REVENUE
General property taxes
Licenses and permits
Intergovernmental
Charges for services
Fines
Miscellaneous
Special assessments
Interest on investments
Park dedication fees
Other
$1 437 140 $
203 828
273 780
9 943
124 234
$
1 504 870 075
91 685 152 956
551
9 000
6 058
30 881
TOTAL REVENUE
2 172 995
1 023 031 15 609
EXPENDITURES
General government
Public safety
Police protection
Fire protection
Other
Public works
Parks and recreation
Debt service
Principal
Interest and service charges
616 929
378 149
79 749
74 760
799 543
115 881
67 700
260 000
175 098
TOTAL EXPENDITURES
2 065 011
435 098 67 700
EXCESS REVENUE (EXPENDITURES)
OTHER FINANCING SOURCES
Proceeds of bonds issued
Operating transfer in
Operating transfer out
107 984
587 933 (52 091)
195 000
65 000 61 000
(301 000)
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS REVENUE AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER USES
195 000
(236 000) 61 000
302 984
351 933 8 909
FUND BALANCE, JANUARY 1
953 .875
1 920 290 (28 707)
(365 386) 365 386
51 256 859 51 906 837 5345 588
FUND EQUITY TRANSFER
FUND BALANCE, DECEMBER 31
See Notes to Financial Statements
-3-
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CITY OF SHOREWOOD, MINNESOTA
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
GENERAL FUND
YEAR ENDED DECEMBER 31, 1990
Variance
Favorable
Budqet Actual (Unfavorable)
REVENUE
General property taxes $1 667 451 $1 437 140 $(230 311)
Licenses and permits 170 700 203 828 33 128
Intergovernmental 59 920 273 780 213 860
Charges for services 13 600 9 943 (3 657)
Fines 80 000 124 234 44 234
Miscellaneous
Special assessments 1 504 1 504
Interest on investments 58 000 91 685 33 685
Other 17 000 30 881 13 881
TOTAL REVENUE 2 066 671 2 172 995 106 324
EXPENDITURES
General government 653 405 616 929 36 476
Public safety
Police protection 364 150 378 149 (13 999)
Fire protection 79 551 79 749 (198)
Other 78 661 74 760 3 901
Public works 1 015 314 799 543 215 771
Parks and recreation 120 352 115 881 4471
TOTAL EXPENDITURES 2 311 433 2 065 011 246 422
EXCESS REVENUE (EXPENDITURES) (244 762) 107 984 352 746
OTHER FINANCING SOURCES
Operating transfer in 20 000 195 000 175 000
EXCESS REVENUE AND OTHER FINANCING
SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES $ (224 762) 302 984 $ 527 746
FUND BALANCE, JANUARY 1 953 875
FUND BALANCE, DECEMBER 31 $1 256 859
See Notes to Financial Statements
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CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF REVENUE, EXPENSES AND CHANGES
ALL PROPRIETARY FUND TYPES
YEAR ENDED DECEMBER 31, 1990
Sales
Less cost of sales
GROSS PROFIT
Charges for services
Permits and connection fees
GROSS PROFIT AND REVENUE
EXPENSES
Personal services
Supplies
Repairs and maintenance
Depreciation
Professional services
Contractual services
Communication
Insurance - general
Water purchases
Utilities
Other
Metropolitan Waste Control Commission
disposal charge
Rent
Advertising
TOTAL EXPENSES
OPERATING INCOME
OTHER REVENUE (EXPENSES)
Taxes
Property tax credits
Interest income
Interest expense
Other
TOTAL OTHER REVENUE (EXPENSES)
NET INCOME BEFORE TRANSFERS
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OTHER FINANCING USES
Operating transfers out
NET INCOME
ADD: CREDIT FOR DEPRECIATION ON CONTRIBUTED ASSETS
RETAINED EARNINGS, JANUARY 1
RETAINED EARNINGS, DECEMBER 31
See Notes to Financial Statements
-5-
IN RETAINED EARNINGS
$1 302 487
(1 038 403)
264 084
603 590
45 013
912 687
142 509
16 749
12 023
230 232
18 414
68 866
1 287
18 326
15 459
44 841
7 009
273 524
41 259
5 992
896 490
16 197
15 438
2 163
52 782
(7 293)
7 032
70 122
86 319
(20 000)
66 319
168 264
469 869
S 704 452
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CITY OF SHOREWOOD, MINNESOTA
COMBINED STATEMENT OF CASH FLOWS
ALL PROPRIETARY FUND TYPES
YEAR ENDED DECEMBER 31, 1990
INCREASE IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income
Other income related to operations
Adjustments to reconcile operating income to
net cash provided by operating activities
Depreciation
(Increase) decrease in assets:
Accounts and assessments receivable
Accrued interest receivable
Inventory
Prepaid expenses
Increase (decrease) in liabilities:
Accounts payable
Accrued wages
Deferred revenue
$ 16 197
17 340
230 232
2 241
(5 587)
(22 670)
(2 309)
(18 194)
(446)
1 200
218 004
(20 000)
CASH PROVIDED BY OPERATING ACTIVITIES
CASH FLOWS (FOR) NONCAPITAL FINANCING ACTIVITIES
Operating transfer to General Fund
CASH FLOWS (FOR) CAPITAL AND RELATED FINANCING
ACTIVITIES
Bond principal paid
Acquisition of property and equipment, net
Assets acquired from other funds
(10 000)
(180 053)
155 054
(34 999)
52 782
215 787
549 405
$765 192
CASH FLOWS (FOR) CAPITAL AND RELATED
FINANCING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments
INCREASE IN CASH AND CASH EQUIVALENTS
I CASH AND CASH EQUIVALENTS, JANUARY 1
CASH AND CASH EQUIVALENTS, DECEMBER 31
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II See Notes to Financial Statements
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
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Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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A. Citv Structure and Scope of the Entitv
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The City of Shorewood operates under "Optional Plan A" as defined in the
State of Minnesota Statutes. Under this Plan, the government of the City
is directed by a Council composed of an elected mayor and four elected
trustees or council members. The Council exercises legislative authority
and determines all matters of policy. The Council appoints personnel
responsible for the proper administration of all affairs relating to the
City.
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For financial reporting purposes, in conformance with section 2100 of the
Governmental Accounting and Reporting Standards of the Governmental
Accounting Standards Board, the City's financial statements and footnotes
include all Boards and Commissions over which City officials exercise
oversight responsibility.
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Oversight responsibility includes such aspects as appointment of governing
body members, budget review, approval of property tax levies, outstanding
debt secured by City full faith and credit or revenues, responsibility for
funding deficits, and others.
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The accounting policies of the City of Shorewood conform to generally
accepted accounting principles as applicable to governments. The
following is a summary of the mqre significant policies.
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B. Basis of Presentation
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The accounts of the City are organized on the basis of funds and account
groups, each of which is considered a separate accounting entity. The
operations of each fund are accounted for with a separate set of
self-balancing accounts that comprise its assets, liabilities, fund
equity, revenues and expenditures, or expenses, as appropriate.
Government resources are allocated to and accounted for in individual
funds based upon the purposes for which they are to be spent and the means
by which spending activities are controlled. The various funds are
grouped, in the financial statements in this report, into four generic
fund types and two broad fund type categories as follows:
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GOVERNMENTAL FUNDS
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General Fund - The General Fund is the general operating fund of the City
and accounts for all revenues and expenditures not required to be
accounted for in another fund.
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Debt Service Funds - The Debt Service Funds are used to account for the
accumulation of resources for, and the payment of, general long-term debt
principal, interest and related costs.
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Capital Projects Funds - Capital Projects Funds account for all resources
used for the acquisition and construction of major capital facilities.
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Note 1:
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
PROPRIETARY FUNDS
Enterprise Funds - Enterprise Funds are used to account for operations (a)
that are financed and operated in a manner similar to private business
enterprises where the intent of the governing body is that the costs
(expenses, including depreciation) of providing goods or services to the
general public on a continuing basis be financed or recovered primarily
through user charges; or (b) where the revenues earned, expenses incurred,
and/or net income is appropriate for capital maintenance, public policy,
management control, accountability, or other purposes.
Fixed Assets and Long-term Liabilities Account Groups
The Governmental Fund Types previously discussed are designed to account
for the financial flow of a particular fund; therefore, generally include
only current assets and current liabilities on their balance sheets.
Their reported fund balance is considered a measure of available spendable
resources. The City also maintains two account groups for noncurrent
assets and liabilities. These account groups are concerned only with the
measurement of financial position. They are as follows:
General Fixed Assets Group of Accounts - This separate group of
accounts contains the fixed assets used in the Governmental Fund Type
operations. They are assets of the City as a whole and not of
individual funds. Public domain general fixed assets consisting of
certain improvements other than buildings, including curbs and
gutters, streets and sidewalks and drainage systems, are not
capitalized along with other general fixed assets. No depreciation
has been provided on the assets in this account group.
All fixed assets are valued at historical or estimated historical cost.
Donated fixed assets are valued at their estimated fair value on the date
donated.
General Long-term Debt Group of Accounts - This separate group of accounts
contains the long-term liabilities of the City expected to be financed
from Governmental Funds. They are liabilities of the City as a whole and
not of individual funds. The exception to this rule is for Enterprise
Fund long-term debt which is accounted for in that fund type.
All Proprietary Funds are accounted for on a cost of services or capital
maintenance measurement focus. Therefore, all assets and liabilities,
both current and noncurrent, are included on their balance sheets. All
fixed assets are stated at historical or estimated historical cost and are
depreciated using the straight-line method over their estimated useful
lives. Depreciation on contributed assets is also charged to operations.
Their estimated useful lives are as follows:
Assets
Estimated
Useful Lives
Furniture and Equipment
Distribution and
Collection System
10 years
40 years
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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C. Basis of Accountinq
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Basis of accounting refers to when revenues and expenditures or expenses
are recognized in the accounts and reported in the financial statements.
Basis of accounting relates to the timing of the measurements made,
regardless of the measurement focus applied.
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Governmental Funds are accounted for using the modified accrual basis of
accounting. Their revenue is recognized when it becomes measurable and
available. Substantially all sources of revenue are accrued except
special assessments which are recognized when received in cash and tax
revenue which is recognized when received in cash or within sixty days
after year end.
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Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred. Exceptions to
this general rule include: (1) principal and interest on long-term debt
which are recognized when due.
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Proprietary Funds are accounted for using the accrual basis of accounting.
Their revenue is recognized when it is earned and expenses are recognized
when they are incurred.
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D. Budqets and Budqetarv Data
The City's budgeting procedures are as follows:
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The City Administrator submits to the City Council a proposed operating
budget for the fiscal year commencing the following January 1. The
operating budget includes proposed expenditures and the means of financing
them. Budgets for the General Fund are adopted on a basis consistent with
generally accepted accounting principles (GAAP). Budgeted amounts shown
in the financial statements are as originally adopted by the City Council.
Unencumbered appropriations lapse at year end.
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E. Accumulated Unpaid Vacation and Sick Pay
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Accumulated unpaid vacation has been accrued in the Enterprise Funds and
recognized as an expense when earned. In the Governmental Funds, the
liability has been recorded in the general long-term debt account group
and is recognized as an expenditure when paid. Sick leave may be
accumulated but is not payable upon termination from City employment and
therefore no liability is reported at year end.
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F. Total Memorandum Only
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Total columns on the combined financial statements are captioned
"memorandum only" to indicate that they are presented only to facilitate
analysis. Data in these columns does not present financial position,
results of operations, or changes in financial position in conformity with
generally accepted accounting principles. Neither is such data comparable
to a consolidation. Interfund eliminations have not been made in the
aggregation of this data.
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Note 2:
COMPLIANCE AND ACCOUNTABILITY
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The following fund had a retained earnings deficit at year end:
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Enterprise Fund
Water Fund
$203 075
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
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Note 3: DETAIL ON ACCOUNTS
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A. Cash and Temporary Investments
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Cash balances from all funds are pooled and invested, to the extent
available, in certificates of deposit and other authorized investments.
Investments are carried at cost which approximates market value. Earnings
from such investments are allocated on the basis of applicable
participation by each of the funds.
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In accordance with Minnesota Statutes, the City maintains deposits at
those 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% of the
deposits not covered by insurance or bonds (140% in the case of mortgage
notes pledged). Authorized collateral includes the legal investments
described below, as well as certain first mortgage notes, and certain
other State or local government obligations. Minnesota Statutes require
that securities pledged as collateral be held in safekeeping by the City
treasurer or in a financial institution other than that furnishing the
collateral. At December 31, 1990, the City did have sufficient collateral
to secure its deposits.
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Cash and investment balances are summarized as follows:
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Bank
Balances
Carrying
Amount
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Cash and certificates of deposit
insured or collateralized by securities
held by the City or its agent in the
City's name
$3 243 079
$3 125 404
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The City also invests idle funds as authorized by Minnesota Statutes, as
follows:
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a. Direct obligation or obligations guaranteed by the United States
or its agencies.
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b. Shares of investment companies registered under the Federal
Investment Company Act of 1940 and whose only investments are in
securities described in (a) above.
c. Bankers acceptances of United states Banks eligible for purchase
by the Federal Reserve System.
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d. Commercial paper issued by United States corporations or their
Canadian subsidiaries, of the highest quality, and maturing in 270
days of less.
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e. Repurchase or reverse repurchase agreements 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-dealer.
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
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Note 3: DETAIL ON ACCOUNTS - CONTINUED
Balances at December 31, 1990:
Securities Credit Risk Cateqorv Carrying
T~e 1 2 3 Amount
U.S. Government $913 328 $ $ $ 913 328
Commercial Paper 200 498 200 498
Total $913 328 $ $200 498 $1 113 826
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The City's investments are categorized above to give an indication of the
level of risk assumed at year end. Category 1 includes investments that are
incurred or registered or for which the securities are held by the City or its
agent in the City's name. Category 2 includes uninsured and unregistered
investments for which the securities are held by the broker's or dealer's
trust department or agent in the City's name. Category 3 includes uninsured
and unregistered investments for which the securities are held by the broker
or dealer, or by its trust department or agent but not in the City's name.
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B. Propertv Taxes
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The City Council annually adopts a tax levy and certifies it to the County
for collection. The County is responsible for collecting all property
taxes for the City. These taxes attach an enforceable lien on taxable
property within the City on January 1 and are payable by the property
owners in May and October each year. The taxes are collected by the
County Treasurer and tax settlements are made to the City three or four
times each year.
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Taxes payable on homestead property, as defined by State statutes, are
partially reduced by a homestead and agriculture credit aid. These
credits are paid to the City by the State of Minnesota in lieu of taxes
levied against homestead property. The State remits this credit in two
equal installments in July and December each year.
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Allowances are provided for the amount of delinquent taxes receivable,
which are not remitted to the City within sixty days after the year end.
This allowance is reported as deferred revenue.
C. Contract Receivable
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The balance, together with 10% interest, is receivable in monthly
installments of $833 through April 1, 1993, at which time the balance of
$91,898 is due. The receivable is offset by deferred revenue and the
payments are recognized as revenue when received.
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D. Special Assessments Receivable
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Special assessments are recognized as a receivable and deferred revenue
when the assessments are certified to the County for collection. Special
assessments are recognized as revenue when received in cash.
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
Note 3: DETAIL ON ACCOUNTS - CONTINUED
E. Inventorv
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The inventories of the Proprietary Funds are stated at the lower of cost
or market on the first-in, first-out basis.
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F. Property. Plant and Eauipment
A summary of Proprietary Fund Type property, plant and equipment at
December 31, 1990 follows:
Liauor Funds
Water Sewer Store I Store II Total
Fixtures and
equipment $ 23 803 $ 36 286 $ 24 917 $ 8 736 $ 93 742
Collection and
distribution systems 2 183 501 6 917 848 9 101 349
Total 2 207 304 6 954 134 24 917 8 736 9 195 091
Less accumulated
depreciation (406 096) (3 031 865) (24 917) (6 954) (3 469 832)
Net $1 801 208 $3 922 269 $ $ 1 782 $5 725 259
A summary of general fixed assets and changes are as follows:
Balance
Beginning
of Year
(Unauditedl Additions Deletions Adiustments
Balance
End
of Year
(Auditedl
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Land and
buildings $1 095 190 $218 604 $ $ 81 719 $1 395 513
Furniture and
equipment 845 210 100 117 tl3 763) tl39 798) 791 766
Total $1 940 400 $318 721 $ (13 763) $(58 079) $2 187 279
G. Lonq-term Debt
The following is a summary of bond transactions of the City for the year
ended December 31, 1990:
General
Lonq-term Revenue Total
Bonds payable, beginning
of year $2 905 000 $ 85 000 $2 990 000
Bonds retired (260 000) tlO 000) (270 000)
Bonds payable, end of year $2 645 000 $ 75 000 $2 720 000
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
DETAIL ON ACCOUNTS - CONTINUED
Bonds payable at December 31, 1990 are comprised of the following types of
issues:
General Long-term Debt
$875,000 General Obligation Improvement Refunding
Bonds dated April 1, 1987 are payable in annual
principal installments of $60,000 to $65,000
through February 1, 2001 together with interest
at 4.9 to 6.6%.
$1,095,000 General obligation Improvement Bonds
of 1989 dated October 1, 1989 are payable in
annual principal installments of $55,000 to $85,000
through February 1, 2003 together with interest
at 6.0 to 6.5%.
$1,250,000 General obligation Improvement Bonds
dated January 1, 1974 are payable in annual
principal installments of $30,000 to $70,000
through January 1, 1994 together with interest
at 5.6 to 5.7%.
$985,000 General Obligation Improvement Bonds
dated August 1, 1986 are due in annual principal
installments of $65,000 to $70,000 through
February 1, 2002 together with interest at
6.25 to 7.9%.
Total General Long-term Debt
Revenue Bonds
$140,000 General Obligation Water Revenue Bonds of
1980 dated September 1, 1980 are payable in annual
principal installments of $10,000 to $15,000 through
September 1, 1996 together with interest at 8.25
to 8.5%
$ 680 000
1 040 000
130 000
795 000
$2 645 000
$
75 000
The annual requirements to amortize all debt outstanding as of December
31, 1990, including interest payments totalling $1,116,418 are as follows:
Year Ending General
December 31 Lona-term Revenue Total
1991 $ 456 050 $ 16 325 $ 472 375
1992 439 320 15 500 454 820
1993 383 280 14 675 397 955
1994 363 151 18 825 381 976
1995 309 028 17 550 326 578
Thereafter 1 786 439 16 275 1 802 714
Total $3 737 268 $ 99 150 $3 836 418
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Note 3:
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
DETAIL ON ACCOUNTS - CONTINUED
The amount available for debt service, in the Debt Service Funds, is
$1,902,837. Additional amounts to be provided will be derived from future
tax levies and special assessments.
On April 29, 1987 the City issued general obligation refunding bonds in
the amount of $875,000 to advance refund $1,250,000 outstanding 1984
general obligation bonds. The proceeds of the refunding issue plus
additional cash from the debt service have been placed in an irrevocable
escrow account and have been invested in U.S. Government obligations. The
maturities of these investments coincide with the principal and interest
payment dates of the refunded bonds and have been certified to be
sufficient to pay all principal and interest on the refunded bonds when
due, as required by applicable laws. Accordingly, the original refunded
bonds have been removed and the new advance refunding bonds are reported
on the financial statements. The City remains contingently liable in the
remote possibility that the escrow account is insufficient to pay the
refunded bonds.
During 1989, the City defeased the balances remaining to be paid on the
following bond issues:
$415,000 G.O. Sewer Improvement Bonds
dated December 1, 1971
$2,300,000 G.O. Sewer Improvement Bonds
dated June 1, 1972
$1,600,000 G.O. Sewer Improvement Bonds
dated November 1, 1972
$80,000 G.O. Water Improvement Bonds
dated July 1, 1973
The City provided the cash from the debt service funds which was placed in
an irrevocable escrow agreement and invested in U.S. Government
Securities. The maturities of these investments coincide with the
principal and interest payment dates of the defeased bond issues.
Accordingly, the defeased bond issues are not reported as a liability of
the City. The City does, however, remain contingently liable in the
remote possibility that the escrow account is insufficient to pay the
defeased bonds.
H. Fund Equitv
Fund equity balances are classified as follows to reflect the limitations
and restrictions of the respective funds:
Proprietary Funds Contributed Capital - This balance represents the cost
of property contributed to the Proprietary Funds by other City funds.
Changes occurring in this account during the year were as follows:
Water Fund Sewer Fund Total
Balance, beginning of year $1 955 721 $4 119 788 $6 075 509
Additions 74 695 80 360 155 055
Depreciation on
contributed assets (5 617) (162 647) (168 264)
Balance, end of year 52 024 799 54 037 501 56 062 300
Investment in General Fixed Assets represents the City's equity in its
general fixed assets.
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
Note 3:
DETAIL ON ACCOUNTS - CONTINUED
Reserved fund balance represents amounts restricted by provisions of the
various bonds which have been issued.
Unreserved and designated fund balance in the General Fund represents the
amount necessary to provide working capital until the fund's major
revenues are received in the following year and amounts set aside for
equipment and improvements.
Unreserved and undesignated fund balance represents resources available to
meet future years' expenditures.
Note 4: SEGMENT INFORMATION FOR PROPRIETARY FUNDS
The City provides services which are accounted for in the Enterprise Funds.
The segment information for these Enterprise Funds for the year ended December
31, 1990, is as follows:
Liquor Funds
Water Sewer Store I Store II Total
Gross profit and
operating revenue $ 192 682 $ 455 921 $113 340 $150 744 $ 912 687
Depreciation expense 55 706 173 906 620 230 232
Operating income (loss) 20 687 (64 000) 27 481 32 029 16 197
Operating transfer out 6 667 13 333 20 000
Net income (loss) after
transfers 36 292 (26 574) 28 854 27 747 66 319
Contributed capital 2 024 799 4 037 501 6 062 300
Net working capital 84 412 704 752 132 044 184 181 1 105 389
Total equity 1 821 724 4 627 021 132 044 185 963 6 766 752
Note 5: STATUTORY DEBT LIMIT
In accordance with Minnesota Statutes, the City may not incur or be subject to
net debt in excess of two percent of its market value. Net debt is payable
solely from ad valorem taxes and, therefore, excludes debt financed partially
or entirely by special assessments, enterprise fund revenues or tax
increments.
Note 6: DEFINED BENEFIT PENSION PLAN - STATEWIDE
A. Plan Description
All full-time and certain part-time employees of the City of Shorewood are
covered by defined benefit pension plans administered by the Public
Employees Retirement Association of Minnesota (PERA). PERA administers
the Public Employees Retirement Fund (PERF) which is a cost-sharing
multiple-employer retirement plan. PERF members belong to either the
Coordinated Plan or the Basic Plan. Coordinated members are covered by
Social Security and Basic members are not. All new members must
participate in the Coordinated Plan. The payroll for employees covered by
PERF for the year ended December 31, 1990, was $517,700; the City's total
payroll was $602,258.
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED
PERA provides retirement benefits as well as disability benefits to
members, and benefits to survivors upon death of eligible members.
Benefits are established by State Statute, and vest after three years of
credited service. The defined retirement benefits are based on a member's
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 Coordinated and Basic members. The retiring member
receives the higher of step-rate benefit accrual formula (Method 1) or a
level accrual formula (Method 2). Under Method 1, the annuity accrual
rate for a Basic member is 2 percent of average salary for each of the
first 10 years of service and 2.5 percent for each remaining year. For a
Coordinated member, the annuity accrual rate is 1 percent of average
salary for each of the first 10 years and 1.5 percent for each remaining
year. Using Method 2, the annuity accrual rate is 2.5 percent of average
salary for Basic members and 1.5 percent for Coordinated members. For
PERF members whose annuity is calculated using Method 1, a full annuity is
available when age plus years of service equal 90.
There are different types of annuities available to members upon
retirement. A normal annuity is a lifetime annuity that ceases upon the
death of the retiree. No survivor annuity is payable. There are also
various types of joint and survivor annuity options available which will
reduce the monthly normal annuity amount, because the annuity is payable
over joint lives. Members may also leave their contributions in the fund
upon termination of public service, in order to qualify for a deferred
annuity at retirement age. Refunds of contributions are available at any
time to members who leave public service, but before retirement benefits
begin.
B. Contributions Required and Contributions Made
Minnesota statutes Chapter 353 sets the rates for employer and employee
contributions. The City makes annual contributions to the pension plans
equal to the amount required by state statutes. According to Minnesota
Statutes Chapter 356.215, Subd. 4(g), the date of full funding required
for the PERF is the year 2020. As part of the annual actuarial valuation,
PERA's actuary determines the sufficiency of statutory contribution rates
towards meeting the required full funding deadline. The actuary compares
the actual contribution rate to a "required" contribution rate. Current
combined statutory contribution rates and actuarially required
contribution rates for the plans are as follows:
Statutory Rates
Employees Employer
Required
Rates
PERF (Basic and
Coordinated Plans)
4.47%
4.82%
8.83%
Total contributions made by the City during fiscal year 1990 were:
Amounts
Employees Emplover
Percentage of
Covered Payroll
Employees Employer
PERF
$ 20 708
4.38%
$ 22 675
4.00%
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED
The City's contribution for the year ended June 30, 1990 to the PERF
represented .024 percent of total contributions required of all
participating entities.
C. Fundina Status and proaress
Pension Benefit Obliaation
The "pension benefit obligation" is a standardized disclosure measure of
the present value of pension benefits, adjusted for the effects of
projected salary increases and step-rate benefits, estimated to be payable
in the future as a result of employee service to date. The measure, which
is the actuarial present value of credited projected benefits, is intended
to help users assess PERA's funding status on a going-concern basis,
assess progress made in accumulating sufficient assets to pay benefits
when due, and make comparisons among Public Employees Retirement Systems
and among employers. PERA does not make separate measurements of assets
and pension benefit obligations for individual employers.
The pension benefit obligation as of June 30, 1990, is shown below:
(In Thousands)
PERF
Total pension benefit obligation
$4 089 960
Net assets available for benefits,
at cost (Market Values for
PERF = $3,547,243)
3 250 157
S 839 803
Unfunded pension benefit obligation
The measurement of the pension benefit obligation is based on an actuarial
valuation as of June 30, 1990. Net assets available to pay pension
benefits were valued as of June 30, 1990.
Chanaes in Actuarial Methods and Benefit Provisions
For the fiscal year 1990 actuarial valuation, the PERA Board of Trustees
approved the use of new withdrawal rates. The change was made to reduce,
if not eliminate, the series of large, annually recurring actuarial losses
~n the last few years due to lower than expected terminations.
With the adoption of new withdrawal rates, the pension benefit obligation
increased $59,942,000 in the PERF.
D. Ten-Year Historical Trend Information
Ten-year historical trend information is presented in PERA's Comprehensive
Annual Financial Report for the year ended June 30, 1990. This
information is useful in assessing the pension plan's accumulation of
sufficient assets to pay pension benefits as they become due.
E.
Related Party Investments
As of June 30, 1990, and for the fiscal year then ended, PERA held no
securities issued by the City or other related parties.
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CITY OF SHOREWOOD, MINNESOTA
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1990
CONTINGENCY
The City has incurred substantial expenditures related to a Tax Increment
Project out of the General Fund. The developer provided an escrow account to
pay the City's costs if the project was completed. At year end, the City has
reimbursed the General Fund $46,545 for the costs incurred to date out of this
escrow even though the project has not started as of this date. In the event
the City fails to perform as outlined in its agreement with the developer, it
must reimburse the developer for this amount.
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CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
BALANCE SHEET
DECEMBER 31, 1990 AND 1989
ASSETS
Cash and investments
Cash on hand
Receivables
Taxes
Accounts
Accrued interest
Contract
Special assessments
Delinquent
Deferred
1990 1989
$1 291 812 $ 913 409
100 100
106 222 83 024
47 014 82 871
39 702 26 787
93 640 94 199
762
5 822
Sl 585 074 Sl 200 390
TOTAL ASSETS
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts and contracts payable
Salaries payable
Refundable deposits payable
Deferred revenue
$ 53 478 $ 34 987
23 198 20 280
83 777 28 180
167 762 163 068
328 215 246 515
TOTAL LIABILITIES
FUND BALANCE
Unreserved
Designated for working capital 1 046 859
Designated for equipment and improvements 210 000
953 875
TOTAL FUND BALANCE 1 256 859
953 875
TOTAL LIABILITIES AND FUND BALANCE Sl 585 074
Sl 200 390
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I CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE , EXPENDITURES AND CHANGES IN FUND BALANCE
I BUDGET AND ACTUAL
YEAR ENDED DECEMBER 31, 1990
(With comparative amounts for the year ended December 31, 1989)
I 1990
Variance
Favorable 1989
Budaet Actual (Unfavorable) Actual
I REVENUE
General property taxes
General property taxes $1 667 451 $1 372 745 $(294 706) $1 039 125
Fiscal disparities 61 277 61 277 63 547
I Forfeit tax sales 1 486 1 486 3 511
Penalties and interest 1 632 1 632 12 703
Total 1 667 451 1 437 140 (230 311) 1 118 886
I Licenses and permits
Business 8 700 8 806 106 8 600
Nonbusiness 162 000 195 022 33 022 198 529
I Total 170 700 203 828 33 128 207 129
Intergovernmental
I State
Local government aid 163 313
Property tax credits 209 928 209 928 171 665
Other 13 875 13 875 24 176
I County
Road 31 920 (31 920) 27 666
Recycling 28 000 49 977 21 977 18 202
I Total 59 920 273 780 213 860 405 022
Charges for services
General government 10 000 2 745 (7 255) 8 823
I Refuse 3 600 6 089 2 489 3 131
Parks and recreation 1 109 1 109
Total 13 600 9 943 (3 657) 11 954
I Fines 80 000 124 234 44 234 105 244
Other revenue
I Interest on investments 58 000 91 685 33 685 80 926
Special assessment 1 504 1 504 4 665
Other 17 000 30 881 13 881 19 810
I Total 75 000 124 070 49 070 105 401
TOTAL REVENUE 2 066 671 2 172 995 106 324 1 953 636
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I CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
I BUDGET AND ACTUAL- CONTINUED
YEAR ENDED DECEMBER 31, 1990
(With comparative amounts for the year ended December 31, 1989)
I 1990
Variance
Favorable 1989
I Budaet Actual (Unfavorable) Actual
EXPENDITURES
General government
I Mayor and Council
Personal services $ 9 696 $ 10 168 $ (472) $ 9 754
Supplies 300 368 (68) 315
Other services and charges 44 798 33 959 10 839 30 601
I Capital outlay 3 850 3 850
Contingency 50 000 50 000
Total 108 644 44 495 64 149 40 670
I Administrator
Personal services 57 952 56 083 1 869 45 797
Supplies 250 426 (176) 116
I Other services and charges 4 830 5 267 (437) 16 076
Capital outlay 1 500 1 470 30 712
Total 64 532 63 246 1 286 62 701
I Finance
Personal services 59 901 59 986 (85) 53 066
Supplies 1 700 1 949 (249) 1 532
I other services and charges 10 000 10 279 (279) 11 305
Capital outlay 500 500 440
Total 72 101 72 214 ( 113) 66 343
I Professional services
Supplies 500 667 (167) 451
Other services and charges 108 680 146 629 (37 949) 146 617
I Total 109 180 147 296 (38 116) 147 068
Planning and zoning
I Personal services 52 868 57 926 (5 058) 57 550
Supplies 350 565 (215) 278
Other services and charges 3 885 1 853 2 032 1 401
Capital outlay 1 200 1 150 50 127
I Total 58 303 61 494 (3 191) 59 356
Municipal building
I Supplies 3 500 2 287 1 213 2 457
Other services and charges 87 823 84 394 3 429 129 311
Capital outlay 55 200 48 770 6 430 20 914
I Total 146 523 135 451 11 072 152 682
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I CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
I BUDGET AND ACTUAL- CONTINUED
YEAR ENDED DECEMBER 31, 1990
(With comparative amounts for the year ended December 31, 1989)
I 1990
Variance
Favorable 1989
I Budaet Actual (Unfavorable) Actual
EXPENDITURES - CONTINUED
General government
I Other general government
services
Personal services $ 74 632 $ 72 627 $ 2 005 $ 65 033
Supplies 9 340 11 820 (2 480) 8 364
I Other services and charges 10 150 8 286 1 864 6 827
Capital outlay 1 615
Total 94 122 92 733 1 389 81 839
I Total general government 653 405 616 929 36 476 610 659
Public safety
I Police protection
Other services and charges 354 150 354 150 350 292
Miscellaneous 10 000 23 999 (13 999) 11 774
I Total 364 150 378 149 (13 999) 362 066
Fire protection
Other services and charges 79 551 79 749 ll98 ) 74 565
I Protective inspection
Personal services 54 371 47 152 7 219 44 913
Supplies 300 530 (230) 370
I other services and charges 23 740 26 906 (3 166) 20 466
Capital outlay 250 172 78 1 162
Total 78 661 74 760 3 901 66 911
I Total public safety 522 362 532 658 llO 296) 503 542
Public works
I General maintenance
Personal services 94 228 94 847 (619) 94 533
Supplies 7 500 3 930 3 570 4 488
Other services and charges 30 450 27 322 3 128 22 516
I Capital outlay 265 500 187 967 77 533 106 104
Total 397 678 314 066 83 612 227 641
I Garage
Supplies 150 282 (132 ) 242
Other services and charges 13 500 9 316 4 184 12 320
Capital outlay 804
I Total 13 650 9 598 4 052 13 366
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I CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
I BUDGET AND ACTUAL- CONTINUED
YEAR ENDED DECEMBER 31, 1990
(With comparative amounts for the year ended December 31, 1989)
I 1990
Variance
Favorable 1989
I Budoet Actual (Unfavorable) Actual
EXPENDITURES - CONTINUED
Public works
I Streets and roadways
Personal services $ 75 314 $ 75 048 $ 266 $ 55 060
Supplies 60 000 60 155 (155) 36 560
Other services and charges 1 600 1 209 391 11 778
I Capital outlay 300 000 198 961 101 039 151 387
Total 436 914 335 373 101 541 254 785
I Snow and ice removal
Personal services 21 145 9 465 11 680 14 949
Supplies 12 000 9 415 2 585 11 631
I Total 33 145 18 880 14 265 26 580
Traffic control
Supplies 5 000 4 020 980 2 263
I Other services and charges 26 200 25 893 307 22 599
Total 31 200 29 913 1 287 24 862
I Sanitation and waste removal
Personal services 6 466 7 258 (792) 4 637
Other services and charges 74 100 66 028 8 072 12 899
I Total 80 566 73 286 7 280 17 536
Tree maintenance
Personal services 11 961 11 716 245 5 621
I Other services and charges 10 200 6 711 3 489 590
Total 22 161 18 427 3 734 6 211
I Total public works 1 015 314 799 543 215 771 570 981
Parks and recreation
Personal services 67 252 68 812 (1 560) 55 960
I Supplies 16 000 14 831 1 169 6 000
Other services and charges 37 100 32 238 4 862 21 542
Total parks and
I recreation 120 352 115 881 4 471 83 502
Total expenditures 2 311 433 2 065 011 246 422 1 768 684
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CITY OF SHOREWOOD, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - CONTINUED
YEAR ENDED DECEMBER 31, 1990
(With comparative amounts for the year ended December 31, 1989)
EXCESS REVENUE (EXPENDITURES)
1990
Variance
Favorable 1989
Budoet Actual (Unfavorable) Actual
S (244 762) S 107 984 S 352 746 S 184 952
OTHER FINANCING SOURCES (USES)
Operating transfer in
Operating transfer out
20 000
195 000
175 000
23 325
(26 000)
TOTAL OTHER FINANCING
SOURCES (USES)
EXCESS REVENUE AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES
20 000
195 000
175 000
(2 675)
S 527 746
182 277
FUND BALANCE, JANUARY 1
771 598
FUND BALANCE, DECEMBER 31
$1 256 859
$ 953 875
-24-
CITY OF SHOREWOOD, MINNESOTA
DEBT SERVICE FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 1990
(With comparative totals as of December 31, 1989)
1984 1971 and
Improvement 1972
(1987 Sewer
Refundina\ Shorewood Oaks Improvement
ASSETS
Cash and investments $587 381 $ 634 135 $ 4 000
Accrued interest receivable 13 305 14 365
Taxes receivable
Special assessments receivable
Delinquent 1 311
Deferred 88 125 629 416
TOTAL ASSETS 5688 811 51 279 227 5 4 000
LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts payable $ 50 $ 53 $
Deferred revenue 88 125 629 416
TOTAL LIABILITIES 88 175 629 469
FUND BALANCE
Reserved for debt service 600 636 649 758
Unreserved - undesignated 4 000
TOTAL FUND BALANCE 600 636 649 758 4 000
TOTAL LIABILITIES AND
FUND BALANCE 5688 811 51 279 227 5 4 000
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I Southeast
1974 Water
Sewer (1986 Total
Improvement Improvement) 1990 1989
I $ 65 756 $559 899 $1 851 171 $1 853 219
1 491 14 758 43 919 38 590
213 213
I 18 920 20 231 93 290
71 829 228 741 1 018 111 1 825 939
I $158 209 $803 398 52 933 645 $3 811 038
I $ 6 $ 55 $ 164 $
80 362 228 741 1 026 644 1 890 748
I 80 368 228 796 1 026 808 1 890 748
77 841 574 602 1 902 837 1 510 303
I 4 000 409 987
77 841 574 602 1 906 837 1 920 290
I 5158 209 $803 398 52 933 645 53 811 038
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-25-
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CITY OF SHOREWOOD, MINNESOTA
DEBT SERVICE FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
YEAR ENDED DECEMBER 31, 1990
(With comparative totals for the year ended December 31, 1989)
1984
Improvement
(1987
Refundinq)
1971 and
1972
Sewer
Shorewood Oaks Improvement
REVENUE
Special assessments
Interest on investments
$ 19 718
42 108
$471 283
31 992
$201 476
31 343
TOTAL REVENUE
61 826
232 819
503 275
EXPENDITURES
Principal
Interest and service charges
65 000
42 079
55 000
56 527
4 094
TOTAL EXPENDITURES
107 079
4 094
111 527
EXCESS REVENUE (EXPENDITURES)
(45 253)
391 748
228 725
OTHER FINANCING SOURCES (USES)
Proceeds of bonds issued
Transfers (to) from other funds
(301 000)
(301 000)
TOTAL FINANCING SOURCES (USES)
EXCESS REVENUE AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
(45 253)
645 889
391 748
(72 275)
FUND BALANCE, JANUARY 1
198 252
409 987
FUND EQUITY TRANSFER
59 758
(333 712)
$ 4 000
FUND BALANCE, DECEMBER 31
$600 636
$649 758
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CITY OF SHOREWOOD, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
DECEMBER 31, 1990
(With comparative totals as of December 31, 1989)
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TOTAL ASSETS
Capital Park
Improvement Capital
Fund Improvement
$313 889 $ 17 166
7 202 393
34 849
224 296
$580 236 $ 17 559
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ASSETS
Cash and investments
Accrued interest receivable
Special assessments receivable
Delinquent
Deferred
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TOTAL LIABILITIES
246 524
5 683
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LIABILITIES AND FUND BALANCE
LIABILITIES
Accounts and contracts payable
Deferred revenue
$ 27
246 497
$ 5 683
FUND BALANCE
Unreserved
333 712
11 876
TOTAL LIABILITIES AND FUND BALANCE
$580 236
$ 17 559
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CITY OF SHOREWOOD, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
YEAR ENDED DECEMBER 31, 1990
(With comparative totals for the year ended December 31, 1989)
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I
Capital
Improvement
Fund
Park
Capital
Improvement
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REVENUE
Charges for services
Donations
Interest on investments
Park dedication fees
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TOTAL REVENUE
EXPENDITURES
Professional services
Construction costs
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TOTAL EXPENDITURES
EXCESS REVENUE (EXPENDITURES)
OTHER FINANCING SOURCES
Operating transfer in
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EXCESS REVENUE AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
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FUND BALANCE, JANUARY 1
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FUND EQUITY TRANSFER
FUND BALANCE, DECEMBER 31
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CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING BALANCE SHEET
DECEMBER 31, 1990
(With comparative totals as of December 31, 1989)
Water
Fund
ASSETS
CURRENT ASSETS
Cash and investments
Cash on hand
Receivables
Taxes
Accounts
Accrued interest
Special assessment
Delinquent
Deferred
Inventories, at cost
Prepaid expenses
Sewer
Fund
$ 43 532 $ 533 726
688
33 263
1 187
2 128
15 998
3 638
100 434
TOTAL CURRENT ASSETS
PROPERTY AND EQUIPMENT, AT COST
LESS ACCUMULATED DEPRECIATION
126 368
12 363
13 520
28 682
2 852
717 511
2 207 304 6 954 134
(406 096) (3 031 865)
TOTAL PROPERTY AND EQUIPMENT
1 801 208
OTHER ASSETS
Bond discount, net of amortization
1 104
$1 902 746 $4 639 780
TOTAL ASSETS
LIABILITIES AND FUND EQUITY
CURRENT LIABILITIES
Accounts and contracts payable
Accrued salaries payable
Deferred revenue
Current portion of long-term debt
$
5 453 $
113
456
10 000
16 022
TOTAL CURRENT LIABILITIES
LONG-TERM LIABILITIES
Bonds payable less current portion above
65 000
81 022 12 759
TOTAL LIABILITIES
FUND EQUITY
Contributed capital
Retained earnings - unreserved
3 922 269
11 662
353
744
12 759
2 024 799 4 037 501
(203 075) 589 520
1 821 724 4 627 021
TOTAL FUND EQUITY
TOTAL LIABILITIES AND FUND EQUITY
$1 902 746 $4 639 780
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I
I Liquor Fund Total
store I store II 1990 1989
I $102 453 $ 85 481 $ 765 192 $ 549 405
600 600 1 200 1 200
688
I 159 631 161 946
2 326 1 933 17 809 12 222
15 648 12 436
I 44 680 48 505
43 507 117 060 160 567 137 897
4 214 6 183 16 887 14 578
I 153 100 211 257 1 182 302 938 189
24 917 8 736 9 195 091 9 015 038
(24 917) (6 954) (3 469 832) (3 239 785)
I 1 782 5 725 259 5 775 253
I 1 104 1 289
S153 100 S213 039 S6 908 665 $6 714 731
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$ 18 439 $ 24 296 $ 59 850 $ 78 044
I 2 617 2 780 5 863 6 309
1 200
10 000 10 000
I 21 056 27 076 76 913 94 353
65 000 75 000
I 21 056 27 076 141 913 169 353
I 6 062 300 6 075 509
132 044 185 963 704 452 469 869
132 044 185 963 6 766 752 6 545 378
I S153 100 S213 039 S6 908 665 S6 714 731
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CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1990
(With comparative totals for the year ended December 31, 1989)
156 069 447 521
36 613 8 400
192 682 455 921
9 819 11 179
10 123 1 768
8 664 3 359
55 706 173 906
5 099 9 655
32 894 34 529
1 214 73
4 561 2 904
15 459
27 654 5 132
802 3 892
273 524
Water
Fund
Sales
Less cost of sales
$
GROSS PROFIT
Charges for services
Permits, connection fees and meters
GROSS PROFIT AND REVENUE
EXPENSES
Personal services
Supplies
Repairs and maintenance
Depreciation
Professional services
Contracted services
Communication
Insurance - general
Water purchases
Utilities
Other
Metropolitan Waste Control
Commission disposal charges
Rent
Advertising
TOTAL EXPENSES
171 995
20 687
15 438
2 163
1 697
3 600
17 293)
15 605
36 292
OPERATING INCOME (LOSS)
OTHER REVENUE (EXPENSES)
Taxes
Property tax credits
Interest income
Other income (expenses)
Interest expense
TOTAL OTHER REVENUE (EXPENSES)
NET INCOME (LOSS) BEFORE TRANSFERS
OTHER FINANCING USES
Operating transfers out
NET INCOME (LOSS)
Sewer
Fund
$
519 921
(64 000)
37 426
37 426
(26 574)
36 292 (26 574)
5 617 162 647
ADD: CREDIT FOR DEPRECIATION ON CONTRIBUTED ASSETS
RETAINED EARNINGS, JANUARY 1
(244 984) 453 447
$(203 075) $589 520
RETAINED EARNINGS, DECEMBER 31
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CITY OF SHOREWOOD, MINNESOTA
PROPRIETARY FUND TYPES
COMBINING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1990
(With comparative totals for the year ended December 31, 1989)
Water
Fund
INCREASE IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Operating income (loss)
Other inoome related to operations
Adjustments to reconcile operating income
to net cash provided by operating activities
Depreciation and amortization
(Increase) decrease in assets -
Accounts and assessments receivable
Accrued interest receivable
Inventory
Prepaid expenses
Increase (decrease) in liabilities -
Accounts payable
Accrued wages
Interest payable
Deferred revenue
$ 20 687
13 908
55 706
6 942
(1 187)
195
2 350
(108)
456
CASH PROVIDED BY OPERATING ACTIVITIES
98 949
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Operating transfer to General Fund
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Bond principal paid
Acquisition of property and equipment, net
Assets acquired from other funds
(10 000)
(85 194)
74 695
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
(20 499)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments
1 697
INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, JANUARY 1
80 147
(36 615)
$ 43 532
CASH AND CASH EQUIVALENTS, DECEMBER 31
-31-
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Sewer
Fund
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$(64 000)
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173 906
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(4 701)
(3 615)
(518)
(8 887)
82
744
93 011
(94 859)
80 359
(14 500)
37 426
115 937
417 789
$533 726
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I Liquor Total
Fund 1990 1989
I $ 59 510 $ 16 197 $ (22 024)
3 432 17 340 12 162
I 620 230 232 225 291
2 241 (55 151)
I (785 ) (5 587) (4 948)
(22 670) (22 670) 17 439
(1 986) (2 309) (438)
I (11 657) (18 194) 16 542
(420) (446) 2 480
(931)
1 200
I 26 044 218 004 190 422
I (20 000) (20 000) (23 325)
I (10 000) (10 000)
(180 053) (3 991 221)
155 054 3 958 437
I (34 999) 142 784)
I 13 659 52 782 42 208
19 703 215 787 166 521
I 168 231 549 405 382 884
$187 934 $765 192 $ 549 405
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APlX)
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I
CoomED PuIluc AaxluNrANTS
AND CoNsulTANTS
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INDEPENDENT AUDITOR'S REPORT ON
INTERNAL CONTROL STRUCTURE BASED SOLELY ON A
STUDY AND EVALUATION MADE AS A PART OF AN AUDIT
OF THE GENERAL PURPOSE FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS
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I
Honorable Mayor and City Council
City of Shorewood, Minnesota
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I
We have audited the general purpose financial statements of the City of
Shorewood, Minnesota, as of and for the year ended December 31, 1990, and have
issued our report thereon dated April 11, 1991.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement.
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I
In planning and performing our audit of the general purpose financial
statements of the City of Shorewood, Minnesota for the year ended December 31,
1990, we considered its internal control structure in order to determine our
auditing procedures for the purpose of expressing our opinion on the general
purpose financial statements and not to provide assurance on the internal
control structure.
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I
The management of the City of Shorewood, Minnesota is responsible for
establishing and maintaining an internal control structure. In fulfilling
this responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control structure
policies and procedures. The objectives of an internal control structure are
to provide management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of general purpose financial
statements in accordance with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may nevertheless occur and not be detected. Also, projection
of any evaluation of the structure to future periods is subject to the risk
that procedures may become inadequate because of changes in conditions or that
the effectiveness of the design and operation of policies and procedures may
deteriorate.
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For the purpose of this report, we have classified the significant internal
control structure policies and procedures in the following categories:
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o Cash receipts
o Cash disbursements
o Payroll
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Page Two
AIIX)
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CElITIRED PuBUC AcoJumANTS
AND OJNSUlTANTS
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For all of the internal control structure categories listed above, we obtained
an understanding of the design of relevant policies and procedures and whether
they have been placed in operation, and we assessed control risk.
I
We noted certain matters involving the internal control structure and its
operation that we consider to be reportable conditions under standards
established by the American Institute of Certified Public Accountants.
Reportable conditions involve matters coming to our attention relating to
significant deficiencies in the design or operation of the internal control
structure that, in our judgment, could adversely affect the entity's ability
to record, process, summarize and report financial data consistent with the
assertions of management in the general purpose financial statements.
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Our study and evaluation disclosed that because of the limited size of your
office staff, your organization has limited segregation of duties. A good
system of internal control structure contemplates an adequate segregation of
duties so that no one individual handles a transaction from inception to
completion. While we recognize that your organization is not large enough to
permit an adequate segregation of duties in all respects, it is important,
however, that you be aware of this reportable condition. The City's course of
action to compensate for this condition is active Mayor and Council
participation in the City's affairs.
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A material weakness is a reportable condition in which the design or operation
of the specific internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the general purpose financial statements
being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
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Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be
reportable conditions and, accordingly, would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses as
defined above. We believe that the reportable condition described above is a
material weakness.
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We also noted other matters involving the internal control structure and its
operation and we have reported to the management of the City of Shorewood in a
separate letter dated April 11, 1991.
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This report is intended for the information of management and the State
Auditor's office. This restriction is not intended to limit the distribution
of this report, which is a matter of public record.
I
ftU., aLL t. U
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April 11, 1991
Minneapolis, Minnesota
ABDO, ABDO & EICK
Certified Public Accountants
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APIX)
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CamAED PuBuc Aa:nuNrANTS
AND O:lNSULTANTS
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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
BASED ON AN AUDIT OF THE GENERAL PURPOSE
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
I
Honorable Mayor and City Council
City of Shorewood, Minnesota
I
We have audited the general purpose financial statements of the City of
Shorewood, Minnesota for the year ended December 31, 1990, and have issued our
report thereon dated April 11, 1991.
I
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards issued by the Comptroller General
of the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement.
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Our audit was also conducted in accordance with the provisions of the Legal
Compliance Audit Guide promulgated by the Legal Compliance Task Force pursuant
to Minnesota Statutes. The Legal Compliance Audit Guide covers five main
categories of compliance to be tested: contracting and bidding, deposits and
investments, conflicts of interest, public indebtedness, and claims and
disbursements. Our study included all of the listed categories.
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Compliance with laws, regulations, contracts and grants applicable to the City
of Shorewood is the responsibility of the City's management. As part of
obtaining reasonable assurance about whether the general purpose financial
statements are free of material misstatement, we performed tests of the City's
compliance with certain provisions of laws, regulations, contracts, and
grants. However, our objective was not to provide an opinion on overall
compliance with such provisions.
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The results of our tests indicate that, with respect to the items tested, the
City of Shorewood complied, in all material respects, with the provisions
referred to in the preceding paragraph. With respect to items not tested,
nothing came to our attention that caused us to believe that the City had not
complied, in all material respects, with those provisions.
I
This report is intended for the information of management and the State
Auditor's Office. This restriction is not intended to limit the distribution
of this report, which is a matter of public record.
I
c~
flU J au,
I
April 11, 1991
Minneapolis, Minnesota
ABDO, ABDO & EICK
Certified Public Accountants
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