CITY OF LITCHFIELD, MINNESOTA AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2010

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1 AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED DECEMBER 31, 2010 Conway, Deuth & Schmiesing, PLLP Certified Public Accountants Litchfield, Minnesota

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3 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE ELECTED AND APPOINTED OFFICIALS 1 INDEPENDENT AUDITOR'S REPORT 2-3 REQUIRED SUPPLEMENTARY INFORMATION Management Discussion and Analysis 4-10 BASIC FINANCIAL STATEMENTS Statement of Net Assets 11 Statement of Activities 12 Balance Sheet - Governmental Funds 13 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 14 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 15 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 17 Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Net Assets - Proprietary Funds 20 Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets 23 Statement of Changes in Fiduciary Net Assets 23 Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress - Other Postemployment Benefits Plan 52

4 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE SUPPLEMENTARY INFORMATION COMBINING STATEMENTS OF NONMAJOR FUNDS Combining Balance Sheet - Nonmajor Governmental Funds 53 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 54 Combining Balance Sheet - Special Revenue Nonmajor Funds Combining Balance Sheet - Debt Service Nonmajor Funds 58 Combining Balance Sheet - Capital Projects Nonmajor Funds 59 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Special Revenue Nonmajor Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Nonmajor Funds 63 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Capital Projects Nonmajor Funds 64 INDIVIDUAL FUND STATEMENTS Balance Sheet - General Fund 65 Statements of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 66 Statements of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Detail - General Fund Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Hazardous Building Special Revenue Fund 73 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Trail Project Special Revenue Fund 74 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Golf Course Special Revenue Fund 75 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Economic Development Special Revenue Fund 76 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Small Cities Rehabilitation Special Revenue Fund 77

5 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Airport Special Revenue Fund 78 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Dial-A-Ride Special Revenue Fund 79 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Civic Arena Special Revenue Fund 80 Balance Sheet - Infrastructure TIF Special Revenue Funds 81 Statement of Revenues, Expenditures and Changes in Fund Balances - Infrastructure TIF Special Revenue Funds 82 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Infrastructure Street Special Revenue Fund 83 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Cemetery Special Revenue Fund 84 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Permanent Improvement Revolving Special Revenue Fund 85 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Industrial Park Special Revenue Fund 86 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Community Reinvestment Special Revenue Fund 87 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Reserve for JobZ Special Revenue Fund 88 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Highway 12 Beautification Special Revenue Fund 89 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Lake Ripley Improvement Special Revenue Fund 90 Liquor Enterprise Fund Statement of Net Assets 91 Statement of Revenues, Expenses and Changes in Net Assets 92 Sewer Enterprise Fund Statement of Net Assets 93 Statement of Revenues, Expenses and Changes in Net Assets 94

6 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE Electric Enterprise Fund Statement of Net Assets 95 Statement of Revenues, Expenses and Changes in Net Assets 96 Water Enterprise Fund Statement of Net Assets 97 Statement of Revenues, Expenses and Changes in Net Assets 98 Internal Service Funds Statement of Net Assets 99 Statement of Revenues, Expenses and Changes in Net Assets 100 Capital Improvement Revolving Internal Service Fund Statement of Net Assets 101 Statement of Revenues, Expenses and Changes in Net Assets 102 Operating Revolving Internal Service Fund Statement of Net Assets 103 Statement of Revenues, Expenses and Changes in Net Assets 104 Fiduciary Funds Statement of Net Assets 105 Statement of Revenues, Expenditures and Changes in Net Assets 106 FINANCIAL SCHEDULES Tax Increment Financing Districts Schedule of Sources and Uses of Public Funds Seventh Street - Donnelly Avenue Projects Tax Increment Financing District No Schedule of Sources and Uses of Public Funds Pleasantview Estates Outfall Tax Increment Financing District No

7 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE Schedule of Sources and Uses of Public Funds Longfellow Square Tax Increment Financing District No Schedule of Sources and Uses of Public Funds Housing Tax Increment Financing District No Schedule of Sources and Uses of Public Funds Northstar I Tax Increment Financing District No Schedule of Sources and Uses of Public Funds Towmaster Tax Increment Financing District No G.O. Bonds, Series 2007A 113 G.O. Improvement Bonds, Series 2004A 114 G.O. Improvement Bonds, Series 2006A 115 G.O. Refunding Improvement Bonds, Series 2009B 116 G.O. Housing Development Bonds, Series 1996A 117 Public Project Lease Revenue Bonds, Series 2005A 118 Public Project Lease Revenue Bonds, Series 2007B 119 G.O. Revenue Loans Payable of G.O. Revenue Loans Payable of G.O. Revenue Note - Wastewater Infrastructure Funding 122 G.O. Wastewater Facility Revenue Refunding Bonds, Series 2002A 123 Electric Utility Revenue Bonds, Series 2008A 124 Electric Revenue Bonds, Series 2009C 125 Assessment Payable 126 Certificates of Indebtedness Certificates of Indebtedness Certificates of Indebtedness

8 YEAR ENDED DECEMBER 31, 2010 TABLE OF CONTENTS PAGE Computation of Legal Debt Margin 130 Schedule of Expenditures of Federal Awards 131 Notes to Schedule of Expenditures of Federal Awards 132 COMPLIANCE SECTION Independent Auditor's Report on Minnesota Legal Compliance 133 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 Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A Schedule of Findings and Questioned Costs

9 ELECTED AND APPOINTED OFFICIALS DECEMBER 31, 2010 Term Expires Mayor Vernon Madson 12/31/2010 Council Member At Large Ron Dingmann 12/31/2012 Council Member - 1st Ward Barbara Altringer 12/31/2014 Council Member - 2nd Ward Connie Lies 12/31/2012 Council Member - 3rd Ward Steve Black 12/31/2010 Council Member - 4th Ward Vern Loch, Jr. 12/31/2012 Council Member - 5th Ward Gary Walz 12/31/2014 City Administrator Bruce Miller Appointed Assistant City Administrator Joyce Spreiter Appointed 1

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11 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Litchfield Litchfield, Minnesota 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 Litchfield, Minnesota, as of and for the year ended December 31, 2010, which collectively comprise the City s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. The prior year partial comparative information has been derived from the City's 2009 financial statements and, in our report dated June 21, 2010, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information. 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. 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 opinions. 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 Litchfield, Minnesota, as of December 31, 2010, and the respective changes in financial position, and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1. J. to the financial statements, the City adopted the provisions of GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, in

12 City of Litchfield, Minnesota Page 2 In accordance with Government Auditing Standards, we have also issued our report dated June 20, 2011, on our consideration of the City'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 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information, 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The Elected and Appointed Officials section and Supplementary Information as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The Supplementary Information as listed in the table of contents and the Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole. The Elected and Appointed Officials section 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. CONWAY, DEUTH & SCHMIESING, PLLP Certified Public Accountants Litchfield, Minnesota June 20,

13 REQUIRED SUPPLEMENTARY INFORMATION

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15 - - The City s total net assets increased by $2,583,454. CITY OF LITCHFIELD, MINNESOTA MANAGEMENT DISCUSSION AND ANALYSIS This section of the basic financial statements of the City of Litchfield (the City) presents a discussion and analysis of the City s financial performance during the fiscal year ended December 31, Please read it in conjunction with the City s basic financial statements following this section. Financial Highlights The assets of the City exceeded liabilities by $45.6 million. Of this amount, $13.7 million may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designations and fiscal policies. - - The City s Governmental Funds reported combined ending fund balances of $2.4 million. Of this total amount, approximately 34% is available for spending at the City s discretion. At the end of the current fiscal year, unreserved fund balance for the General Fund was $1.3 million, or 36% of total general fund expenditures of $3.6 million. Using This Annual Report This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities 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 are presented after the Statement of Activities. Fund financial statements also report the City s operations in more detail than the government-wide statements by providing information about the City s funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of organizations outside the government. The notes to the basic financial statements provide information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. This annual report also contains other supplementary information in addition to the basic financial statements. The City as a Whole: Statement of Net Assets and Statement of Activities Our analysis of the City of Litchfield begins with the Statement of Net Assets and the Statement of Activities. 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 Assets and the Statement of Activities both report information about the City as a whole and about its activities in a way that helps answer this question. With the exception of Fiduciary Funds, which have been excluded because they do not represent the City's financial resources, the Statement of Net Assets includes all assets and liabilities using the accrual basis of accounting. In the Statement of Activities, 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 assets and changes in them. You can think of the City s net assets the difference between assets and liabilities as one way to measure the City s financial health. Over time, increases or decreases in the City's net assets are one indicator of whether the City's financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, to assess the overall health of the City of Litchfield. In the Statement of Net Assets and the Statement of Activities, we divide the City into two kinds of activities: 4

16 MANAGEMENT DISCUSSION AND ANALYSIS Governmental Activities - Most of the City's basic services are reported here, including the police, public works, and parks department, and general administration. Property taxes, and state and federal grants 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 liquor, sewer, electric, and water funds are reported here. The City's Most Significant Funds: Fund Financial Statements Our analysis of the City of Litchfield, Minnesota s major funds begins with the fund financial statements. These statements 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 establishes 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 three kinds of funds - governmental, proprietary, and fiduciary - use different accounting approaches. Governmental Funds - Most of the City s basic services are reported in governmental funds. Governmental funds 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 the reader of the statements 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 Assets and the Statement of Activities) and governmental funds in a reconciliation after the fund financial statements. The governmental fund financial statements can be found on pages of this report. Proprietary Funds - When the City of Litchfield charges customers for the services it provides whether to outside customers or to other units of the City 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 Assets and the Statement of Activities. In fact, the City s enterprise funds are the same as the business-type activities we report in the governmentwide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The proprietary fund financial statements can be found on pages of this report. Fiduciary Funds - The City of Litchfield is the trustee, or fiduciary, for resources collected to provide equipment, books and library supplies as determined by the library board. The resources held in a fiduciary capacity are reported in separate Statements of Fiduciary Net Assets. We exclude these activities from the City's other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The fiduciary fund financial statements can be found on page 23 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the governmentwide and fund financial statements. The notes to the financial statements can be found on pages of this report. 5

17 MANAGEMENT DISCUSSION AND ANALYSIS Supplementary Information The combining statements in connection with nonmajor governmental funds are presented immediately following the notes to the financial statements. Combining statements and individual fund information can be found on pages of this report. Statement of Net Assets The City of Litchfield's net assets were $45,569,107 on December 31, 2010 (see details in Table 1). This was an increase of $2,583,454 or 6% from $42,985,653 at December 31, Table 1 Condensed Statement of Net Assets Governmental Activities Business-Type Activities Current and Other Assets $ 5,808,373 $ 6,094,048 $ 14,791,464 $ 15,111,878 Capital Assets 19,592,305 19,100,920 51,207,120 44,367,397 Total Assets $ 25,400,678 $ 25,194,968 $ 65,998,584 $ 59,479,275 Current and Other Liabilities $ 297,716 $ 276,281 $ 2,111,656 $ 2,312,757 Long-Term Liabilities 6,956,012 7,685,261 36,464,771 31,414,291 Total Liabilities 7,253,728 7,961,542 38,576,427 33,727,048 Net Assets Invested in Capital Assets, Net of Related Debt 12,742,305 11,415,659 16,689,543 14,869,901 Restricted 1,144,321 1,303,434 1,276,625 1,252,330 Unrestricted 4,260,324 4,514,333 9,455,989 9,629,996 Total Net Assets 18,146,950 17,233,426 27,422,157 25,752,227 Total Liabilities and Net Assets $ 25,400,678 $ 25,194,968 $ 65,998,584 $ 59,479,275 Governmental Activities Net assets of the City's governmental activities increased by $913,524, or 5.3%. The most significant change occurred in the capital net asset categories. Investment in capital assets (net of related debt) increased by $1,326,646 mostly due to capital equipment purchases, storm sewer improvements, and street overlay improvements. Business-Type Activities The net assets of our business-type activities increased by $1,669,930, or 6.5%. The increase was due to the following funds change in net assets: Liquor Fund $86,528, Sewer Fund $723,318, Electric Fund $862,056, and Water Fund $(1,972). Most of the change in the Sewer and Electric Funds resulted from operating expenditures being well below budgeted amounts. 6

18 MANAGEMENT DISCUSSION AND ANALYSIS The following table indicates the changes in net assets for the City's governmental and business-type activities: Table 2 Condensed Statement of Activities Governmental Activities Business-Type Activities Revenues Program Revenues Fees, Fines, and Charges for Services $ 1,059,521 $ 1,065,392 $ 15,060,644 $ 14,093,928 Operating Grants and Contributions 117, ,273 Capital Grants and Contributions 526, ,735 1,771,512 General Revenues Taxes 2,256,663 2,190,087 Grants and Contributions 1,681,821 1,968,706 Interest Income 10,348 40,557 21,061 98,705 Other 73,791 72,750 50,009 38,926 Total Revenues 5,725,907 5,944,500 15,131,714 16,003,071 Expenses General Government 1,069,868 1,216,085 Public Safety 1,587,862 1,611,410 Public Works 1,062,197 1,196,569 Airport 126,925 90,663 Culture and Recreation 992,775 1,097,285 Economic Development 301, ,439 Interest on Long-Term Debt 329, ,369 Liquor Store 1,785,903 1,769,155 Sewer Utility 2,068,969 2,277,682 Electric Utility 8,083,036 7,122,529 Water Utility 865, ,651 Total Expenses 5,470,481 5,975,820 12,803,686 12,101,017 Change in Net Assets before Transfers 255,426 (31,320) 2,328,028 3,902,054 Transfers 658, ,530 (658,098) (538,530) Change in Net Assets 913, ,210 1,669,930 3,363,524 Net Assets, Beginning of Year 17,233,426 16,726,216 25,752,227 22,388,703 Net Assets, End of Year $ 18,146,950 $ 17,233,426 $ 27,422,157 $ 25,752,227 7

19 MANAGEMENT DISCUSSION AND ANALYSIS Governmental Activities Revenues - The following chart visually illustrates the City's revenue by source for its governmental activities and business-type activities: Revenue by Source - Governmental Activities Grants and Contributions 29.37% Other 1.29% Interest Income 0.18% Taxes 39.41% Fees, Fines, and Charges for Services 18.51% Capital Grants and Contributions 9.19% Operating Grants and Contributions 2.05% Revenue by Source - Business-Type Activities Interest Income 0.14% Other 0.33% Fees, Fines, and Charges for Services 99.53% Financial Analysis of the City's Funds General Fund - The change in the City's General Fund Balance after transfers was $3,263 for The historical practice of the City is to transfer excess revenues over expenditures not required for current cash flow purposes to dedicated funds for future capital improvements. The 2010 net excess transferred was $68,850. 8

20 MANAGEMENT DISCUSSION AND ANALYSIS Special Revenue Funds - The change in the City's special revenue fund balances was $25,809 for This increase was a result of various increases and decreases in several Special Revenue Funds. The Golf Course Fund balance increased by $32,733 due to reducing expenditures related to salaries and benefits. The Economic Development Fund balance decreased by $(27,962) due the City's annual contribution towards the renovation of the auditorium at the 1930 Middle School Building. The Airport Fund balance decreased by $(26,014) due to expenditures related to the airport layout plan. The Dial-A-Ride Fund balance increased by $44,907 due to a transfer from the General Fund. The Infrastructure Street Fund balance increased by $75,528 due to a transfer from the T.I.F. and Community Reinvestment Funds to cover a portion of the costs of 2010 street overlay improvements. The Community Reinvestment Fund balance decreased by $(77,053) due to professional fees related to a community pool and downtown survey along with a transfer to the Infrastructure Street Fund. Debt Service Funds - The debt service fund balances decreased by $156,958 due to making scheduled debt principal and interest payments. Capital Projects Fund - The capital projects fund balances decreased by $138,713. The major capital project improvements were for the Airport, Marshall/1st Street, and Minnesota Rubber Expansion projects. General Fund Budgetary Highlights Over the course of the year, the City of Litchfield City Council did not revise the budget. The General Fund budget included sufficient revenues to cover expenditures predicting a small increase in the change in fund balance. Increased transfers out resulted in a decrease in fund balance rather than the zero increase. Capital Assets At the end of 2010, the City of Litchfield had $102 million invested in a broad range of capital assets. Refer to Note 8 of the Notes to the Financial Statements for a schedule showing the City's capital asset activity. The City of Litchfield's fiscal year 2011 capital budget includes beginning construction on the Marshall Avenue Project and Fire/Rescue Building and the completion of the Wastewater Treatment Improvement and Electric Improvement projects. The City Council is working on an updated capital improvement plan. Long-Term Debt At year-end, the City of Litchfield had $43 million in bonds and notes outstanding. Refer to Note 11 of the Notes to the Financial Statements for a schedule showing the City's long-term debt activity. The City of Litchfield was assigned an ""A+" general obligation bond rating from Standard & Poor's. Economic Factors and Next Year's Budget The City of Litchfield's appointed officials considered many factors when setting the fiscal year 2011 budget, rates, and fees that will be charged for the business-type activities. The major factor accounted for when adopting the General Fund budget was to hold all line items as much as possible to the 2010 final budget. Because of past state funding problems, the City has subsequently taken measures to reduce any adverse impact that this might have on the City's 2011 and future years' budget by making appropriate permanent budget cuts. 9

21 MANAGEMENT DISCUSSION AND ANALYSIS Contacting the City's Financial Management This financial report is designed to provide our residents, customers, and creditors with a general overview of the City of Litchfield's finances and to show the City's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the City of Litchfield, 126 Marshall Avenue North, Litchfield, Minnesota 55355, (320) , or ctylitch@hutchtel.net. 10

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23 BASIC FINANCIAL STATEMENTS

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25 STATEMENT OF NET ASSETS DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2009 Governmental Business-Type Totals Activities Activities ASSETS Cash and Investments $ 4,279,486 $ 10,079,801 $ 14,359,287 $ 14,840,503 Cash with Fiscal Agent 326, , ,625 1,049,217 Restricted Cash and Investments 1,276,625 1,276,625 1,252,330 Receivables (Net) 665,837 1,418,780 2,084,617 2,001,520 Due from Other Governmental Units 187, , , ,280 Inventories 11, , , ,895 Prepaid Expenses 52,159 43,259 95,418 89,561 Deferred Charges 168, , , ,587 Net OPEB Asset 116, , , ,033 Capital Assets Non-Depreciable 2,253,548 26,494,411 28,747,959 21,355,062 Depreciable, Net 17,338,757 24,712,709 42,051,466 42,113,255 Total Assets $ 25,400,678 $ 65,998,584 $ 91,399,262 $ 84,674,243 LIABILITIES AND NET ASSETS Liabilities Accounts and Contracts Payable $ 109,207 $ 1,601,291 $ 1,710,498 $ 1,818,219 Accrued Salaries 73,076 49, , ,218 Accrued Interest Payable 105, , , ,229 Deposits Payable 34,343 34,343 28,004 Due to Other Governmental Units 9,594 19,784 29,378 70,368 Noncurrent Liabilities Due within One Year 570,000 1,768,102 2,338,102 2,141,207 Due in more than One Year 6,386,012 34,696,669 41,082,681 36,958,345 Total Liabilities 7,253,728 38,576,427 45,830,155 41,688,590 Net Assets Invested in Capital Assets, Net of Related Debt 12,742,305 16,689,543 29,431,848 26,285,560 Restricted for Debt Service 1,144,321 1,276,625 2,420,946 2,555,764 Unrestricted 4,260,324 9,455,989 13,716,313 14,144,329 Total Net Assets 18,146,950 27,422,157 45,569,107 42,985,653 Total Liabilities and Net Assets $ 25,400,678 $ 65,998,584 $ 91,399,262 $ 84,674,243 See accompanying Notes to the Financial Statements 11

26 STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Net (Expense) Revenue and Program Revenues Changes in Net Assets Fees, Fines, and Operating Capital Charges for Grants and Grants and Governmental Business-Type Totals Expenses Services Contributions Contributions Activities Activities GOVERNMENTAL ACTIVITIES General Government $ 1,069,868 $ 194,866 $ $ 50 $ (874,952) $ $ (874,952) $ (1,020,895) Public Safety 1,587, , ,279 54,606 (1,304,543) (1,304,543) (1,340,699) Public Works 1,062,197 1, ,395 (648,055) (648,055) (922,714) Airport 126,925 25,064 15,304 38,254 (48,303) (48,303) 114,420 Culture and Recreation 992, ,152 5,875 (539,748) (539,748) (647,236) Economic Development 301,350 24,125 15,000 (262,225) (262,225) (234,030) Interest on Long-Term Debt 329, ,133 (89,371) (89,371) (252,266) Total Governmental Activities 5,470,481 1,059, , ,180 (3,767,197) 0 (3,767,197) (4,303,420) BUSINESS-TYPE ACTIVITIES Liquor 1,785,903 1,929, , , ,792 Sewer 2,068,969 2,739, , ,629 1,997,348 Electric 8,083,036 9,498,669 1,415,633 1,415,633 1,759,706 Water 865, ,161 27,383 27,383 (111,423) Total Business-Type Activities 12,803,686 15,060, ,256,958 2,256,958 3,764,423 Total $ 18,274,167 $ 16,120,165 $ 117,583 $ 526,180 (3,767,197) 2,256,958 (1,510,239) (538,997) GENERAL REVENUES: Taxes Property Taxes, Levied for General Purposes 1,739,193 1,739,193 1,719,613 Property Taxes, Levied for Debt Service 517, , ,474 Grants and Contributions not Restricted to Specific Programs 1,681,821 1,681,821 1,968,706 Interest Income 10,348 21,061 31, ,262 Other 73,791 50, , ,676 TRANSFERS 658,098 (658,098) Total General Revenues and Transfers 4,680,721 (587,028) 4,093,693 4,409,731 Change in Net Assets 913,524 1,669,930 2,583,454 3,870,734 NET ASSETS, BEGINNING OF YEAR 17,233,426 25,752,227 42,985,653 39,114,919 NET ASSETS, END OF YEAR $ 18,146,950 $ 27,422,157 $ 45,569,107 $ 42,985,653 See accompanying Notes to the Financial Statements 12

27 BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31, 2009 Other Governmental Total Governmental Funds General Funds ASSETS Cash and Investments $ 1,304,915 $ 1,868,204 $ 3,173,119 $ 3,333,313 Cash with Fiscal Agent 326, , ,527 Receivables Accounts 34,946 16,753 51,699 45,025 Contracts 48,000 48,000 52,000 Taxes 79,585 27, ,065 82,405 Notes 20,589 20,589 20,589 Special Assessments 1, , , ,560 Due from Other Governmental Units 23, , , ,824 Inventories 11,892 11,892 16,129 Prepaid Expenses 35,509 16,650 52,159 50,877 Advance to Other Funds 28, , , ,862 Deferred Charges 47,279 47,279 51,192 Total Assets $ 1,508,189 $ 3,465,995 $ 4,974,184 $ 5,124,303 LIABILITIES AND FUND BALANCE Liabilities Accounts and Contracts Payable $ 48,153 $ 54,839 $ 102,992 $ 51,079 Cash Drawn in Excess of Funds 842, , ,745 Accrued Salaries 66,989 6,087 73,076 85,582 Due to Other Governmental Units 8, ,594 17,187 Advance from Other Funds 951, , ,354 Deferred Revenue 81, , , ,554 Total Liabilities 205,033 2,340,948 2,545,981 2,429,501 Fund Balance Reserved 28,118 1,572,330 1,600,448 1,768,071 Unreserved, Designated 10,499 Unreserved, Undesignated in General Fund 1,275,038 1,275,038 1,260,700 Special Revenue Funds 135, ,894 99,996 Capital Projects Funds (583,177) (583,177) (444,464) Total Fund Balance 1,303,156 1,125,047 2,428,203 2,694,802 Total Liabilities and Fund Balance $ 1,508,189 $ 3,465,995 $ 4,974,184 $ 5,124,303 See accompanying Notes to the Financial Statements 13

28 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS AS OF DECEMBER 31, Total Fund Balances - Governmental Funds $ 2,428,203 $ 2,694,802 Amounts reported for governmental activities in the statement of net assets are different because Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in the governmental funds. Governmental Capital Assets 24,773,609 24,028,797 Accumulated Depreciation (7,919,888) (7,298,552) Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Taxes 107,065 82,405 Notes 20,589 20,589 Special Assessments 438, ,560 Internal service funds are used by management to charge the costs of equipment to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 3,864,708 3,372,763 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. Net OPEB Asset 116,615 84,682 Bonds and Notes Payable (5,575,001) (6,150,499) Compensated Absences (106,012) (104,762) Accrued Interest Payable (105,839) (117,547) Deferred Charges 104, ,188 Total Net Assets - Governmental Activities $ 18,146,950 $ 17,233,426 See accompanying Notes to the Financial Statements 14

29 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Other Governmental Total Governmental Funds General Funds REVENUES Taxes $ 1,508,863 $ 599,431 $ 2,108,294 $ 2,069,158 Special Assessments 104, , ,151 Licenses and Permits 103, ,245 98,540 Intergovernmental 1,766, ,341 2,270,042 2,546,556 Charges for Services 198, , , ,804 Fines and Forfeits 26,240 26,240 26,586 Interest Income 2,160 3,975 6,135 27,880 Miscellaneous 39,162 80, , ,705 Total Revenues 3,645,091 1,939,568 5,584,659 5,839,380 EXPENDITURES General Government 615, , , ,468 Public Safety 1,606,533 10,684 1,617,217 1,653,405 Public Works 769, ,563 1,338,073 1,130,818 Airport 82,906 82, ,244 Culture and Recreation 433, , ,715 1,022,551 Economic Development 301, , ,443 Debt Service 854, , ,706 Miscellaneous 147, ,699 94,168 Total Expenditures 3,572,978 2,368,228 5,941,206 6,567,803 Excess (Deficiency) of Revenues Over (Under) Expenditures 72,113 (428,660) (356,547) (728,423) OTHER FINANCING SOURCES (USES) Sale or Compensation for Property 13,556 Debt Service Principal (1,315,000) Refunding Bond Proceeds 845,000 Bond Discount (13,629) Transfers In 609, , ,878 1,297,257 Transfers Out (678,625) (106,305) (784,930) (1,560,004) Total Other Financing Sources (Uses) (68,850) 158,798 89,948 (732,820) Net Change in Fund Balances 3,263 (269,862) (266,599) (1,461,243) FUND BALANCE, BEGINNING OF YEAR 1,299,893 1,394,909 2,694,802 4,156,045 FUND BALANCE, END OF YEAR $ 1,303,156 $ 1,125,047 $ 2,428,203 $ 2,694,802 See accompanying Notes to the Financial Statements 15

30 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, Total Net Change in Fund Balances - Governmental Funds $ (266,599) $ (1,461,243) Amounts reported for governmental activities in the Statement of Activities are different because Governmental funds reported capital outlays 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 750,903 1,018,960 Depreciation Expense (627,427) (601,833) Disposal of Assets (141,921) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Deferred Revenue, End of Year 566, ,554 Deferred Revenue, Beginning of Year (611,554) (657,671) 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 governmental funds. Net OPEB Asset 31,934 41,399 Compensated Absences (1,250) 25,204 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Long-Term Debt Proceeds (845,000) Issuance Costs 13,629 Principal Retirement of Long-Term Debt 575,499 1,839,992 Change in Accrued Interest Payable 11,708 19,014 Amortization of Bond Issuance Costs (7,773) (32,204) Internal service funds are used by management to charge the costs of equipment to the individual funds. The net revenue (expenditure) of the internal service fund is reported with governmental activities. 491, ,330 Change in Net Assets - Governmental Activities $ 913,524 $ 507,210 See accompanying Notes to the Financial Statements 16

31 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, Over (Under) Budgeted Amounts Final Original Final Actual Budget Actual REVENUES Taxes $ 1,621,823 $ 1,621,823 $ 1,508,863 $ (112,960) $ 1,473,873 Licenses and Permits 66,725 66, ,245 36,520 98,540 Intergovernmental 1,724,922 1,724,922 1,766,701 41,779 2,018,612 Charges for Services 167, , ,720 31, ,983 Fines and Forfeits 21,000 21,000 26,240 5,240 26,586 Interest Income 38,000 38,000 2,160 (35,840) 7,671 Miscellaneous 1,500 1,500 39,162 37,662 23,114 Total Revenues 3,641,620 3,641,620 3,645,091 3,471 3,869,379 EXPENDITURES General Government 725, , ,986 (109,744) 740,975 Public Safety 1,686,016 1,686,016 1,606,533 (79,483) 1,631,629 Public Works 838, , ,510 (69,002) 765,793 Culture and Recreation 495, , ,250 (62,605) 441,458 Miscellaneous 413, , ,699 (265,582) 94,168 Total Expenditures 4,159,394 4,159,394 3,572,978 (586,416) 3,674,023 Excess (Deficiency) of Revenues Over (Under) Expenditures (517,774) (517,774) 72, , ,356 OTHER FINANCING SOURCES (USES) Sale or Compensation for Property 2,000 2,000 (2,000) 13,556 Transfers In 628, , ,775 (19,000) 505,999 Transfers Out (113,000) (113,000) (678,625) (565,625) (942,160) Total Other Financing Sources (Uses) 517, ,775 (68,850) (586,625) (422,605) Net Change in Fund Balances $ 1 $ 1 3,263 $ 3,262 (227,249) FUND BALANCE, BEGINNING OF YEAR 1,299,893 1,527,142 FUND BALANCE, END OF YEAR $ 1,303,156 $ 1,299,893 See accompanying Notes to the Financial Statements 17

32 STATEMENT OF NET ASSETS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Governmental Activities - Business-Type Activities - Enterprise Funds Internal Service Funds Totals Liquor Sewer Electric Water ASSETS Current Assets Cash and Investments $ 947,607 $ 1,424,809 $ 6,479,061 $ 1,228,324 $ 10,079,801 $ 10,229,684 $ 1,948,742 $ 1,970,251 Cash with Fiscal Agent 613,465 50, , ,690 Accounts Receivable (Net) ,478 1,051,582 87,678 1,418,780 1,292,941 Due from Other Governmental Units 216,408 72, , ,617 8,774 5,839 Inventories 194, , , ,766 Prepaid Expenses 3,229 15,952 20,449 3,629 43,259 38,684 Advance to Other Funds 432, ,492 Total Current Assets 1,145,384 2,550,112 8,090,089 1,319,631 13,105,216 13,461,382 2,390,125 2,417,582 Noncurrent Assets Restricted Assets Cash - Sinking Fund Account 1,123, ,215 1,276,625 1,252,330 Capital Assets Non-Depreciable 22,606 11,517,880 14,710, ,493 26,494,411 19,364,519 Depreciable, Net 32,343 14,602,920 4,451,769 5,625,677 24,712,709 25,002,878 2,738,585 2,370,675 Deferred Charges 9, , , ,815 17,213 19,392 Net OPEB Asset 11,659 29,148 75,858 11, ,324 97,351 Total Noncurrent Assets 66,608 27,282,608 19,510,108 6,034,044 52,893,368 46,017,893 2,755,798 2,390,067 Total Assets $ 1,211,992 $ 29,832,720 $ 27,600,197 $ 7,353,675 $ 65,998,584 $ 59,479,275 $ 5,145,923 $ 4,807,649 See accompanying Notes to the Financial Statements 18

33 STATEMENT OF NET ASSETS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Governmental Activities - Business-Type Activities - Enterprise Funds Internal Service Funds Totals Liquor Sewer Electric Water LIABILITIES AND NET ASSETS Liabilities Current Liabilities (From Current Assets) Accounts and Contracts Payable $ 29,109 $ 856,688 $ 709,567 $ 5,927 $ 1,601,291 $ 1,762,254 $ 6,215 $ 4,886 Accrued Salaries 6,549 11,483 26,104 5,615 49,751 49,636 Accrued Interest Payable 102, ,694 31, , ,682 Deposits Payable 34,343 34,343 28,004 Due to Other Governmental Units 10,424 6,194 3,166 19,784 53,181 Total Current Liabilities (From Current Assets) 46, ,906 1,014,559 80,109 2,111,656 2,312,757 6,215 4,886 Current Liabilities (From Restricted Assets) Current Portion of Long-Term Debt 930, , ,767 1,768,102 1,410, , ,000 Total Current Liabilities (From Restricted Assets) 46,082 1,901,241 1,619, ,876 3,879,758 3,723, , ,886 Noncurrent Liabilities Long-Term Debt, Net of Current Portion 9,571 16,928,561 15,613,253 2,145,284 34,696,669 30,003,583 1,120,000 1,275,000 Total Liabilities 55,653 18,829,802 17,232,812 2,458,160 38,576,427 33,727,048 1,281,215 1,434,886 Net Assets Invested in Capital Assets, Net of Related Debt 54,949 8,376,443 4,763,957 3,494,194 16,689,543 14,869,901 1,463, ,675 Restricted for Debt Service 1,123, ,215 1,276,625 1,252,330 Unrestricted 1,101,390 1,503,065 5,603,428 1,248,106 9,455,989 9,629,996 2,401,123 2,432,088 Total Net Assets 1,156,339 11,002,918 10,367,385 4,895,515 27,422,157 25,752,227 3,864,708 3,372,763 Total Liabilities and Net Assets $ 1,211,992 $ 29,832,720 $ 27,600,197 $ 7,353,675 $ 65,998,584 $ 59,479,275 $ 5,145,923 $ 4,807,649 See accompanying Notes to the Financial Statements 19

34 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Governmental Activities - Business-Type Activities - Enterprise Funds Internal Service Funds Totals Liquor Sewer Electric Water OPERATING REVENUES Sales $ 1,929,216 $ $ $ $ 1,929,216 $ 1,887,947 $ $ Cost of Goods Sold (1,475,876) (1,475,876) (1,461,770) Gross Profit on Sales 453, , , Charges for Services 2,727,602 9,450, ,161 13,071,756 12,159, , ,266 Other 11,996 47,676 59,672 49,159 Total Operating Revenues 453,340 2,739,598 9,498, ,161 13,584,768 12,635, , ,266 OPERATING EXPENSES Salaries and Benefits 196, , , ,220 Supplies 19, , , ,871 Other Services and Charges 88, , , ,334 61,272 70,358 Purchased Power 5,597,663 65,120 5,662,783 4,977,247 Production Expenses 400,346 39, , ,650 Distribution Expenses 528, , , ,945 Administrative and General 599,984 45, , ,449 Depreciation 6, , , ,304 1,151,591 1,216, , ,672 Total Operating Expenses 310,027 1,775,186 7,411, ,255 10,272,327 9,680, , ,030 Operating Income (Loss) 143, ,412 2,086, ,906 3,312,441 2,954,507 (193,861) (215,764) NONOPERATING REVENUES (EXPENSES) Taxes 123,709 91,412 Intergovernmental 1,771,512 44,136 9,792 Interest Income 1,588 4,408 12,550 2,515 21,061 98,705 4,213 12,677 Interest and Amortization Expense (293,783) (671,177) (90,523) (1,055,483) (901,115) (51,952) (32,933) Refunds and Reimbursements 10,943 10,943 10,060 State Grants 19,800 Loss on Asset Disposal (57,481) Miscellaneous ,031 28,408 39,066 28,866 (2,450) (8,931) Total Nonoperating Revenues (Expenses) 2,215 (279,344) (619,276) (88,008) (984,413) 950, ,656 91,817 Income (Loss) Before Transfers 145, ,068 1,467,534 29,898 2,328,028 3,905,054 (76,205) (123,947) TRANSFERS Transfers In 200, , , , ,696 Transfers Out (59,000) (161,750) (605,478) (31,870) (858,098) (738,530) (9,631) (21,419) Total Transfers (59,000) 38,250 (605,478) (31,870) (658,098) (538,530) 568, ,277 Change in Net Assets 86, , ,056 (1,972) 1,669,930 3,366, , ,330 NET ASSETS, BEGINNING OF YEAR 1,069,811 10,279,600 9,505,329 4,897,487 25,752,227 22,388,703 3,372,763 2,695,433 NET ASSETS, END OF YEAR $ 1,156,339 $ 11,002,918 $ 10,367,385 $ 4,895,515 $ 27,422,157 $ 25,755,227 $ 3,864,708 $ 3,372,763 See accompanying Notes to the Financial Statements 20

35 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED DECEMBER 31, 2010 WITH PARTIAL COMPARATIVE AMOUNTS FOR THE YEAR ENDED DECEMBER 31, 2009 Governmental Activities - Business-Type Activities - Enterprise Funds Internal Service Funds Totals Liquor Sewer Electric Water CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers $ 1,929,174 $ 2,713,693 $ 9,410,562 $ 881,377 $ 14,934,806 $ 13,966,598 $ 333,507 $ 347,266 Payments to Suppliers (1,608,023) (869,051) (6,500,302) (410,364) (9,387,740) (8,456,683) (59,943) (69,278) Payments to Employees (198,675) (397,298) (611,102) (41,861) (1,248,936) (1,334,183) Net Cash Provided (Used) by Operating Activities 122,476 1,447,344 2,299, ,152 4,298,130 4,175, , ,988 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Taxes 120,774 90,699 Intergovernmental 347,209 (72,106) 275,103 1,207,895 4,136 9,792 Other Miscellaneous Receipts ,031 39,351 50,009 38,925 19,800 Transfers In from Other Funds 200, , , , ,696 Transfers Out to Other Funds (59,000) (161,750) (605,478) (31,870) (858,098) (738,530) (9,631) (21,418) Net Cash Provided (Used) by Noncapital Financing Activities (58,373) 395,490 (638,233) (31,870) (332,986) 708, , ,569 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets (6,407,815) (1,773,357) (8,181,172) (14,903,897) (834,006) (700,320) Principal Reduction on Long-Term Debt (896,000) (325,000) (225,767) (1,446,767) (1,036,767) (155,000) (90,000) Net Proceeds of Bonds, Notes and Certificates 6,503,084 6,503,084 9,718, ,000 Bond Issuance Costs (160,044) (12,940) Advance to Other Funds 8,883 19,815 Interest and Fiscal Agent Fees Paid on Bonds and Notes (271,986) (683,548) (93,627) (1,049,161) (823,642) (52,223) (31,401) Net Cash Provided (Used) for Capital and Related Financing Activities 0 (1,072,717) (2,781,905) (319,394) (4,174,016) (7,206,077) (1,032,346) (164,846) CASH FLOW FROM INVESTING ACTIVITIES Interest Income 1,586 4,408 12,550 2,515 21,059 98,705 4,213 12,677 Net Increase (Decrease) in Cash and Cash Equivalents 65, ,525 (1,108,430) 80,403 (187,813) (2,223,350) (21,509) 1,047,388 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 881,918 2,387,159 7,637,491 1,301,136 12,207,704 14,431,054 1,970, ,863 CASH AND CASH EQUIVALENTS, END OF YEAR $ 947,607 $ 3,161,684 $ 6,529,061 $ 1,381,539 $ 12,019,891 $ 12,207,704 $ 1,948,742 $ 1,970,251 RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and Investments $ 947,607 $ 2,038,274 $ 6,529,061 $ 1,228,324 $ 10,743,266 $ 10,955,374 $ 1,948,742 $ 1,970,251 Restricted Cash 1,123, ,215 1,276,625 1,252,330 Total Cash and Cash Investments $ 947,607 $ 3,161,684 $ 6,529,061 $ 1,381,539 $ 12,019,891 $ 12,207,704 $ 1,948,742 $ 1,970,251 See accompanying Notes to the Financial Statements 21