FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012
FINANCIAL STATEMENTS For the Fiscal Year Ended December 31, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Elected and Appointed Officials Organizational Chart REFERENCE PAGE i ii FINANCIAL SECTION Independent Auditor's Report 1 Management's Discussion and Analysis 3 Basic Financial Statements Government-wide Financial Statements Statement of Net Position FORM A-1 17 Statement of Activities FORM A-2 18 Fund Financial Statements Balance Sheet - Governmental Funds FORM B-1 22 Reconciliation of Net Position in the Government-wide Financial Statements and Fund Balances in the Fund Basis Financial Statements FORM B-2 25 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds FORM B-3 26 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities FORM B-4 29 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund FORM B-5 30 Combining Statement of Net Position - Proprietary Funds FORM C-1 31 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds FORM C-2 32 Combining Statement of Cash Flows - Proprietary Funds FORM C-3 33 Notes to Financial Statements 37 Required Supplemental Information Schedule of Funding Progress - Other Post Employment Benefits FORM D-1 73 Combining Nonmajor Fund Statements and Schedules Combining Balance Sheet - Nonmajor Governmental Funds FORM E-1 78 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds FORM E-2 79 Combining Balance Sheet - Nonmajor Special Revenue Funds FORM F-1 80 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Special Revenue Funds FORM F-2 81 Combining Balance Sheet - Nonmajor Debt Service Funds FORM G-1 82 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Debt Service Funds FORM G-2 84 Combining Balance Sheet - Nonmajor Capital Project Funds FORM H-1 86 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Capital Project Funds FORM H-2 88 OTHER REPORT SECTION Independent Auditor's Report on Minnesota Legal Compliance 93
INTRODUCTORY SECTION December 31, 2012
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ELECTED AND APPOINTED OFFICIALS December 31, 2012 POSITION NAME TERM EXPIRES City Council: ELECTED OFFICIALS Mayor Keith Franke December 31, 2015 Council Member Jennifer Cheesman December 31, 2015 Council Member Tim Jones December 31, 2015 Council Member Sandi Dingle December 31, 2013 Council Member Jeff Swenson December 31, 2013 APPOINTED OFFICIALS City Administrator Kevin Walsh Continuous City Clerk Sharon Ornquist Continuous Finance Officer Kimberly Sommerland Continuous i
Organizational Chart Citizens City Council (5) Advisory Commissions (4) City Administrator (1) Attorney (Contracted) Engineer (Contracted) Building Official (Contracted) Planner (Contracted) Administration Police Fire Public Works City Clerk (1) Police Chief (1) Fire Chief (1) Public Works Supervisor (1) Finance Officer (1) Sergeant (1) Asst. Chief (1) Public Works Asst Supervisor (1) Accounting Clerk (1) Administrative Assistant (1) Patrol Officers (7) Community Service Officer (1) Safety Officer (1) Captains (3) Chief Engineer (1) Maintenance Workers (5) Volunteer Firefighters (27) ii
FINANCIAL SECTION December 31, 2012
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INDEPENDENT AUDITOR S REPORT Honorable Mayor and Members of the City Council City of St. Paul Park Report on the Financial Statements 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 St. Paul Park, as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. The prior year comparative information has been derived from the City's 2011 financial statements and, in our report dated June 27, 2012, 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. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1
Honorable Mayor and Members of the City Council City of St. Paul Park Page 2 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 St. Paul Park, as of December 31, 2012, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management s Discussion and Analysis on pages 3 through 13 and the Schedule of Funding Progress Other Post- Employment Benefits on page 73 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 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of St. Paul Park's financial statements. The introductory section and combining nonmajor fund financial statements listed in the Financial Section of the Table of Contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section has not been subjected 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. Maplewood, Minnesota June 12, 2013 2
MANAGEMENT S DISCUSSION AND ANALYSIS As management of the City of St. Paul Park, we offer readers of the City of St. Paul Park's financial statements this narrative overview and analysis of the financial activities of the City of St. Paul Park for the fiscal year ended December 31, 2012, with comparative data for the fiscal year ended December 31, 2011. FINANCIAL HIGHLIGHTS The assets of the City of St. Paul Park exceeded its liabilities at the close of the most recent fiscal year by $20,844,909 (net position). Of this amount, $3,578,837 (unrestricted net position) may be used to meet the City s ongoing obligations to citizens and creditors in accordance with the City s fund designations and fiscal policies. The City s total net position increased by $1,547,843. As of the close of the current fiscal year, the City of St. Paul Park governmental funds reported combined ending fund balances of $3,507,987. The amount of these fund balances that was restricted was $2,268,434, the nonspendable amount (related to prepaid expenses) was $10,572 and the assigned amount was $373,625. At the end of the current fiscal year, unassigned and assigned fund balance for the general fund was $1,575,268 or 63 percent of total general fund expenditures. The City of St. Paul Park increased long-term liabilities by $223,574 during the current fiscal year, primarily due to the issuance of the 2012 General Obligation Improvement Bonds. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of St. Paul Park's basic financial statements. The City of St. Paul Park's basic financial statements are comprised of the following three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of St. Paul Park's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of St. Paul Park's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of St. Paul Park is improving or deteriorating. The statement of activities presents information showing how the City s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). 3
MANAGEMENT S DISCUSSION AND ANALYSIS Both of the government-wide financial statements distinguish functions of the City of St. Paul Park that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of St. Paul Park include general government, public safety, highways and streets, compost, and parks and recreation. The business-type activities of the City of St. Paul Park include the sewer and water funds. The government-wide financial statements can be found on pages 17-19 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of St. Paul Park, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of St. Paul Park can be divided into two categories: governmental funds and proprietary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on nearterm inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of St. Paul Park maintains twenty-two individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General fund, the Tax Increment Funds District 2 fund, the Improvement Bonds of 2009-A fund, the Improvement Bonds of 2011-A fund and the 2007 Street Reconstruction fund, which are considered to be major funds. Individual fund data for the other seventeen nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City of St. Paul Park adopts an annual budget for its general fund. Budgetary comparison statements have been provided for this fund (page 30) to demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 22-29 of this report. Proprietary funds. The City of St. Paul Park maintains one type of proprietary fund which is enterprise funds. Enterprise funds are used to report the same functions presented as businesstype activities in the government-wide financial statements. The City of St. Paul Park uses enterprise funds to account for its sewer and water operations. 4
MANAGEMENT S DISCUSSION AND ANALYSIS Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the sewer and water funds, which are considered to be major funds of the City of St. Paul Park. The basic proprietary fund financial statements can be found on pages 31-33 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 government-wide and fund financial statements. The notes to the financial statements can be found on pages 37-70 of this report. Other information. The combining statements referred to earlier in connection with non-major governmental funds can be found on pages 78-89 of this report. IMPORTANT REMINDERS: Infrastructure Assets. The City of St. Paul Park implemented GASB Statement 34 for its fiscal year ended December 31, 2004 and elected to record infrastructure assets prospectively, rather than retroactively for general government activities. Historically, governmental fixed assets, particularly infrastructure assets, have only been accounted for using the current financial resources (budgeted resources) method, and have not been expensed annually through depreciation or accounted for otherwise. Additionally, significant infrastructure assets have been constructed by developers and contributed to the City over the years but have never been recorded. All 2004 and future acquisitions of infrastructure assets have and will be recorded under the GASB Statement 34 reporting model. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the City of St. Paul Park, assets exceeded liabilities by $20,844,909 at the close of the most recent fiscal year. The largest portion of the City of St. Paul Park's net position ($14,997,638 or 72 percent) reflects its investment in capital assets (e.g. land, buildings, machinery and equipment) less any related debt used to acquire those assets that is still outstanding. The City of St. Paul Park uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of St. Paul Park's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 5
MANAGEMENT S DISCUSSION AND ANALYSIS City of St. Paul Park's Net Position Governmental Activities Business-type Activities Total 2012 2011 2012 2011 2012 2011 Current and other assets $ 5,761,854 $ 5,665,575 $ 939,821 $ 725,796 $ 6,701,675 $ 6,391,371 Capital assets 17,066,255 16,172,210 1,944,664 1,305,929 19,010,919 17,478,139 Total assets 22,828,109 21,837,785 2,884,485 2,031,725 25,712,594 23,869,510 Long-term liabilities outstanding 4,343,280 4,129,606 86,522 76,622 4,429,802 4,206,228 Other liabilities 402,070 304,377 35,813 61,839 437,883 366,216 Total liabilities 4,745,350 4,433,983 122,335 138,461 4,867,685 4,572,444 Net position: Invested in capital assets, net of related debt 13,052,974 12,360,236 1,944,664 1,305,929 14,997,638 13,666,165 Restricted 2,268,434 2,638,090 2,268,434 2,638,090 Unrestricted 2,761,351 2,405,476 817,486 587,335 3,578,837 2,992,811 Total net position $ 18,082,759 $ 17,403,802 $ 2,762,150 $ 1,893,264 $ 20,844,909 $ 19,297,066 An additional portion of the City of St. Paul Park's net position (11 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($3,578,837) may be used to meet the government s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of St. Paul Park is able to report positive balances in all categories of net position, both for the government as a whole, as well as for its business-type activities. The same situation held true for the prior fiscal year. Governmental activities. Governmental activities account for 87% of the City of St. Paul Park's net position. The total increase in net position for governmental activities was $678,957, accounting for 44% of the growth in the net position of the City of St. Paul Park. Key elements of this increase are as follows: Property taxes increased by $101,797 (4.9 percent) from the previous year. Capital grant contributions for governmental activities increased by $67,718, primarily due to emergency management grants received which furnished resources for capital expenditures of the public safety and parks and recreation functions. 6
MANAGEMENT S DISCUSSION AND ANALYSIS Business-type activities. Business-type activities increased the City of St. Paul Park's net position by $868,886, accounting for 56% of the growth in the net position of the City of St. Paul Park. This increase is due primarily to the contribution of water and sewer infrastructure from the governmental funds. During the year, a utility rate study was completed and it was determined that an increase in rates was necessary. The increased rates were implemented in October 2012 to ensure adequate cash balances are maintained for the payment of operating expenses and annual ongoing capital maintenance. City of St. Paul Park's Change in Net Position Governmental Activities Business-type Activities Total 2012 2011 2012 2011 2012 2011 Revenues: Program revenues: Charges for services $ 873,868 $ 827,852 $ 1,208,305 $ 1,072,800 $ 2,082,173 $ 1,900,652 Operating grants and contributions 198,332 233,702 198,332 233,702 Capital grants and contributions 954,673 886,955 728,352 4,793 1,683,025 891,748 General revenues: Property taxes 2,175,682 2,073,885 2,175,682 2,073,885 Grants and contributions not restricted to specific programs 146,134 229,953 146,134 229,953 Other 169,664 155,272 2,231 3,731 171,895 159,003 Total revenues 4,518,353 4,407,619 1,938,888 1,081,324 6,457,241 5,488,943 Expenses: General government 576,112 578,214 576,112 578,214 Public safety 1,343,122 1,270,757 1,343,122 1,270,757 Highways and streets 1,487,019 907,730 1,487,019 907,730 Compost 10,255 11,595 10,255 11,595 Parks and recreation 315,124 285,911 315,124 285,911 Interest on long-term debt 123,564 128,775 123,564 128,775 Sewer and water 1,054,202 1,042,082 1,054,202 1,042,082 Total expenses 3,855,196 3,182,982 1,054,202 1,042,082 4,909,398 4,225,064 Increase (decrease) in net position before transfers 663,157 1,224,637 884,686 39,242 1,547,843 1,263,879 Transfers 15,800 (15,800) Increase in net position 678,957 1,224,637 868,886 39,242 1,547,843 1,263,879 Net position, beginning of year 17,403,802 16,179,165 1,893,264 1,854,022 19,297,066 18,033,187 Net position, end of year $ 18,082,759 $ 17,403,802 $ 2,762,150 $ 1,893,264 $ 20,844,909 $ 19,297,066 7
MANAGEMENT S DISCUSSION AND ANALYSIS Below are specific graphs that provide comparisons of the governmental activities direct program revenues with their expenditures. Any shortfalls in direct revenues are primarily supported by property tax levy or general state aid. Expenses and Program Revenues - Governmental Activities Program revenues Expenses $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 General government Public safety Highways and streets Compost Parks Revenues by Source - Governmental Activities Grants and contributions not restricted to specific programs 3% Interest and other 4% Charges for services 19% Property taxes 48% Capital grants and contributions 21% Operating grants and contributions 5% 8
MANAGEMENT S DISCUSSION AND ANALYSIS The following graphs relate the business-type activity s program revenues with its expenditures. Since this activity requires significant physical assets to operate, any excess revenues are held for planned capital expenditures to keep pace with growing demand for services. Expenses and Program Revenues - Business-type Activities Program revenues Expenses $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Water Sewer Revenues by Source - All Business-type Activities Capital grants and contributions 38% Interest and other 0% Charges for services 62% 9
MANAGEMENT S DISCUSSION AND ANALYSIS Financial Analysis of the Government s Funds As noted earlier, the City of St. Paul Park uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of St. Paul Park's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of St. Paul Park's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of St. Paul Park's governmental funds reported combined ending fund balances of $3,507,987, an increase of $18,239 from the prior year. Approximately 35 percent of total fund balance, or $1,228,981, constitutes assigned and unassigned fund balance, which is available for spending at the government s discretion. The remainder of the fund balance ($2,279,006) is restricted or nonspendable to indicate that it is not available for new spending because it has already been restricted by creditors, grantors or regulations of other governments or has been expensed for prepaid items. The general fund is the chief operating fund of the City of St. Paul Park. At the end of the current fiscal year, unassigned fund balance of the general fund was $1,513,717. As a measure of the general fund s liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures. Unassigned fund balance represents 61 percent of total general fund expenditures. The fund balance of the City of St. Paul Park's general fund improved by $224,781 during the current fiscal year. The main factor for the General fund's change in fund balance was an increase in general property taxes collected. The Tax Increment Funds District 2 fund decreased its fund balance by $558,815 due primarily to capital outlay expenditures for infrastructure improvements in excess of property taxes collected. The Improvement Bonds of 2009-A fund decreased its fund balance by $51,413 due primarily to scheduled bond payments in excess of property taxes and special assessments collected in the fund. The Improvement Bonds of 2011-A fund balance increased by $134,710 due mainly to the receipt of levied special assessments in excess of scheduled debt service payments. The fund balance of the 2007 Street Reconstruction fund increased by $65,375 due to the receipt of levied special assessments. The special revenue funds increased their collective fund balance by $57,128. This was mainly due to charges for services in the storm water management fund in excess of current expenditures in the funds. 10
MANAGEMENT S DISCUSSION AND ANALYSIS The debt service funds, other than the Tax Increment Funds District 2, Improvement Bonds of 2009-A and Improvement Bonds of 2011-A funds described previously, increased their overall fund balances by $38,038 due primarily to collections of property taxes, special assessments and intergovernmental revenue in excess of scheduled debt service expenditures. The capital project funds, other than the 2007 Street Reconstruction fund described previously, increased their collective fund balance by $108,435 due primarily to the proceeds from the issuance of the 2012 General Obligation Improvement Bonds. Proprietary funds. The City of St. Paul Park's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted assets for water operations at the end of the year amounted to $565,412, and those for sewer operations amounted to $252,074. The total growth in net position for both funds was $497,156 and $371,730, respectively. Other factors concerning the finances of these two funds have already been addressed in the discussion of the City of St. Paul Park's business-type activities. General Fund Budgetary Highlights Differences between the original budget and the final amended budget for the General fund amounted to $16,352. Main components of the change include the elimination of a budgeted transfer of $35,000 and increased appropriations that totaled $20,648 for carryover projects from the prior year, severance payments and fire department wages. Additional amendments were made to the budget to account for various grants awarded during the year. Those grants increased appropriations for training of firefighters, the modernization of a fire boat, repairs to a local park and recycling program expenditures. Major variances between the final amended budget and actual amounts consist of the following: Other general government revenues exceeded budget by $35,751 due primarily to the receipt of unanticipated insurance dividends. Expenditures for general government contracted services, including legal, engineering, planning, and building inspection, were less than budget by $31,943. Though expenditures for contracted services remained low in 2012, the budget for contracted services has been maintained at the actual three-year high (with limited exceptions) to allow for unanticipated need. Salaries and benefits for police were less than budget by $35,749 due, in part, to salary savings realized with a temporary vacancy and budgeted set-aside of funds for future retirements. Capital Asset and Debt Administration Capital assets. The City of St. Paul Park's investment in capital assets for its governmental and business-type activities as of December 31, 2012, amounts to $19,010,919 (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, roads, and highways. The total increase in the City of St. Paul Park's reported investment in capital assets for the current fiscal 11
MANAGEMENT S DISCUSSION AND ANALYSIS year was $1,532,780, or 9 percent. This increase is primarily a result of current year construction in progress related to the 2012 street and utility improvements project and completion of the 2011 street and utility improvements project. City of St. Paul Park Capital Assets (net of depreciation) Governmental Activities Business-type Activities Total 2012 2011 2012 2011 2012 2011 Land $ 1,296,373 $ 1,307,833 $ 39,000 $ 39,000 $ 1,335,373 $ 1,346,833 Construction in progress 996,720 2,422,435 996,720 2,422,435 Buildings 1,862,816 1,739,010 1,830,671 1,173,815 3,693,487 2,912,825 Improvements other than buildings 126,533 58,593 126,533 58,593 Machinery and equipment 736,699 427,081 74,993 93,114 811,692 520,195 Infrastructure 12,047,114 10,217,258 12,047,114 10,217,258 Total $ 17,066,255 $ 16,172,210 $ 1,944,664 $ 1,305,929 $ 19,010,919 $ 17,478,139 Additional information on the City of St. Paul Park's capital assets can be found in Note 3C on pages 52-53 of this report. Long-term debt. At the end of the current fiscal year, the City of St. Paul Park had $4,098,000 in bonds and certificates outstanding. The entire $4,098,000 outstanding comprises debt backed by the full faith and credit of the government. City of St. Paul Park's Outstanding Debt General Obligation Bonds and Certificates Governmental Activities Business-type Activities Total 2012 2011 2012 2011 2012 2011 General obligation bonds $ 4,000,000 $ 3,740,000 $ $ $ 4,000,000 $ 3,740,000 General obligation certificates 98,000 144,500 98,000 144,500 Total $ 4,098,000 $ 3,884,500 $ $ $ 4,098,000 $ 3,884,500 The City of St. Paul Park's total bonds and certificates payable increased by $213,500 during the current fiscal year. The increase was due primarily to the issuance of the City s 2012 General Obligation Improvement Bonds. The City of St. Paul Park maintains an AA- bond rating from Standard & Poor s for general obligation debt. State statutes limit the amount of general obligation debt a Minnesota City may issue to 3% of its market value of taxable property. The debt limitation for the City of St. Paul Park in 2012 was $8,653,545. The City s outstanding obligations applicable to the debt limit total $1,088,000, which is significantly less than the statutory limitation. A more detailed breakdown of these obligations can be found in Note 3D, beginning on page 54 of this report. 12
Requests for Information CITY OF ST. PAUL PARK MANAGEMENT S DISCUSSION AND ANALYSIS This financial report is designed to provide a general overview of the City of St. Paul Park's finances for all those with an interest in the City s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Office of the City Administrator, 600 Portland Avenue, St. Paul Park, MN 55071. Sincerely, Kimberly Sommerland Finance Officer Kevin Walsh City Administrator 13
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GOVERNMENT-WIDE FINANCIAL STATEMENTS December 31, 2012
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STATEMENT OF NET POSITION December 31, 2012 With Comparative Totals for December 31, 2011 FORM A-1 Governmental Business-type Total Activities Activities 2012 2011 ASSETS Cash and investments $ 3,705,620 $ 634,422 $ 4,340,042 $ 4,061,802 Receivables (net of allowance for uncollectibles) 2,025,546 303,050 2,328,596 2,309,889 Due from other governmental units 20,116 20,116 13,941 Prepaid items 10,572 2,349 12,921 5,739 Capital assets: Nondepreciable 2,293,093 39,000 2,332,093 3,769,268 Depreciable, net 14,773,162 1,905,664 16,678,826 13,708,871 Total assets 22,828,109 2,884,485 25,712,594 23,869,510 LIABILITIES Accounts payable 259,060 15,622 274,682 195,295 Accrued interest payable 47,129 47,129 45,200 Accrued expenses 1,267 1,267 1,039 Customer deposits 18,904 18,904 Deferred revenue 75,710 20,191 95,901 124,682 Noncurrent liabilities: Due within one year 817,284 42,594 859,878 819,913 Due in more than one year 3,525,996 43,928 3,569,924 3,386,315 Total liabilities 4,745,350 122,335 4,867,685 4,572,444 NET POSITION Net investment in capital assets 13,052,974 1,944,664 14,997,638 13,666,165 Restricted 2,268,434 2,268,434 2,638,090 Unrestricted 2,761,351 817,486 3,578,837 2,992,811 Total net position $ 18,082,759 $ 2,762,150 $ 20,844,909 $ 19,297,066 See Notes to Financial Statements 17
STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 With Comparative Totals for the Year Ended December 31, 2011 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General government $ 576,112 $ 472,340 $ 33,639 $ 9,582 Public safety 1,343,122 170,339 99,954 219,777 Highways and streets 1,487,019 210,472 57,779 629,362 Compost 10,255 9,883 Parks and recreation 315,124 10,834 6,960 95,952 Interest on long-term debt 123,564 Total governmental activities 3,855,196 873,868 198,332 954,673 Business-type activities: Water 480,973 597,634 394,524 Sewer 573,229 610,671 333,828 Total business-type activities 1,054,202 1,208,305 728,352 Total $ 4,909,398 $ 2,082,173 $ 198,332 $ 1,683,025 General revenues: General property taxes Grants and contributions not restricted to specific programs Interest income Gain on sale of assets Net transfers Miscellaneous Total general revenues Change in net position Net position - beginning Net position - ending See Notes to Financial Statements 18
FORM A-2 Net (Expense) Revenue and Changes in Net Position Governmental Business-type Total Activities Activities 2012 2011 $ (60,551) $ (60,551) $ (234,432) (853,052) (853,052) (1,005,934) (589,406) (589,406) 403,510 (372) (372) (1,683) (201,378) (201,378) (267,159) (123,564) (123,564) (128,775) (1,828,323) (1,828,323) (1,234,473) $ 511,185 511,185 22,416 371,270 371,270 13,095 882,455 882,455 35,511 (1,828,323) 882,455 (945,868) (1,198,962) 2,175,682 2,175,682 2,073,885 146,134 146,134 229,953 33,597 2,231 35,828 103,262 85,277 85,277 14,426 15,800 (15,800) 50,790 50,790 41,315 2,507,280 (13,569) 2,493,711 2,462,841 678,957 868,886 1,547,843 1,263,879 17,403,802 1,893,264 19,297,066 18,033,187 $ 18,082,759 $ 2,762,150 $ 20,844,909 $ 19,297,066 19
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FUND FINANCIAL STATEMENTS December 31, 2012
BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2012 With Comparative Totals for December 31, 2011 Tax Increment Improvement Improvement Funds - Bonds of Bonds of General District 2 2009 - A 2011 - A Assets Cash and investments $ 999,282 $ 568,683 $ 188,148 $ 138,356 Receivables (net of allowance for uncollectibles) Accounts 56,640 Taxes 105,119 10,530 6,450 Special assessments 2,336 319,882 420,701 Notes 44,768 Prepaid expenses 10,274 Due from other funds 618,189 Due from other governmental units 20,116 TOTAL ASSETS $ 1,856,724 $ 579,213 $ 514,480 $ 559,057 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 60,848 $ $ $ Accrued liabilities 1,267 Escrow deposits Due to other funds Deferred revenue 209,067 7,633 325,442 419,526 Total liabilities 271,182 7,633 325,442 419,526 Fund Balance Nonspendable 10,274 Restricted 571,580 189,038 139,531 Assigned 61,551 Unassigned 1,513,717 Total fund balance (deficit) 1,585,542 571,580 189,038 139,531 TOTAL LIABILITIES AND FUND BALANCE $ 1,856,724 $ 579,213 $ 514,480 $ 559,057 See Notes to Financial Statements 22
FORM B-1 Other 2007 Street Governmental Total Governmental Funds Reconstruction Funds 2012 2011 $ $ 1,811,151 $ 3,705,620 $ 3,609,259 41,677 98,317 102,030 23,611 145,710 120,910 367,364 626,468 1,736,751 1,813,963 44,768 298 10,572 5,472 618,189 748,733 20,116 13,941 $ 367,364 $ 2,503,205 $ 6,380,043 $ 6,414,308 $ $ 198,212 $ 259,060 $ 180,708 1,267 1,039 18,904 18,904 582,284 35,905 618,189 748,733 365,979 646,989 1,974,636 1,994,080 948,263 900,010 2,872,056 2,924,560 298 10,572 5,472 1,368,285 2,268,434 2,638,090 312,074 373,625 303,456 (580,899) (77,462) 855,356 542,730 (580,899) 1,603,195 3,507,987 3,489,748 $ 367,364 $ 2,503,205 $ 6,380,043 $ 6,414,308 23
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FORM B-2 CITY OF ST. PAUL PARK RECONCILIATION OF NET POSITION IN THE GOVERNMENT-WIDE FINANCIAL STATEMENTS AND FUND BALANCES IN THE FUND BASIS FINANCIAL STATEMENTS December 31, 2012 Amounts reported for governmental activities in the statement of net position are different because: Total governmental fund balances (pages 22 and 23) $ 3,507,987 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental funds - capital assets $ 22,308,630 Accumulated depreciation (5,242,375) Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. Delinquent property taxes and special assessments $ 120,633 Deferred special assessments 1,733,525 Long-term note receivable 44,768 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Bonds and notes payable $ (4,098,000) Compensated absences (213,286) Post employment benefit obligation (116,713) Accrued interest (47,129) Unamortized premium (50,979) Unamortized discount and bond issuance costs 135,698 17,066,255 1,898,926 (4,390,409) Net position of governmental activities (page 17) $ 18,082,759 See Notes to Financial Statements 25
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2012 With Comparative Totals for the Year Ended December 31, 2011 Tax Increment Improvement Improvement Funds - Bonds of Bonds of General District 2 2009 - A 2011 - A REVENUES Taxes $ 1,494,492 $ 365,763 $ 105,472 $ Special assessments 3,142 185,838 138,779 Licenses and permits 70,971 Intergovernmental revenues 437,163 Charges for services 419,961 Franchise fees 175,100 Fine and forfeits 51,992 Other Revenue Investment earnings 22,439 4,963 137 139 Miscellaneous 40,901 TOTAL REVENUES 2,716,161 370,726 291,447 138,918 EXPENDITURES Current General government 461,153 Public safety 1,297,072 Street 416,478 Compost 10,255 Parks and recreation 311,991 Capital Projects General government Public safety Street 925,840 Parks and recreation Debt Service Bond principal retirement 300,000 Interest and fiscal charges 42,860 20,008 Issuance costs Other expenses 3,701 TOTAL EXPENDITURES 2,496,949 929,541 342,860 20,008 Excess (deficiency) of revenues over (under) expenditures 219,212 (558,815) (51,413) 118,910 OTHER FINANCING SOURCES (USES) Sale of assets 5,569 Transfers from other funds 15,800 Transfers to other funds Issuance of debt Premium (discount) on issuance of debt Total other financing sources (uses) 5,569 15,800 Net change in fund balances 224,781 (558,815) (51,413) 134,710 FUND BALANCES (DEFICIT), beginning 1,360,761 1,130,395 240,451 4,821 FUND BALANCES (DEFICIT), ending $ 1,585,542 $ 571,580 $ 189,038 $ 139,531 See Notes to Financial Statements 26
FORM B-3 Other 2007 Street Governmental Total Governmental Funds Reconstruction Funds 2012 2011 $ $ 199,951 $ 2,165,678 $ 2,069,994 65,375 151,059 544,193 449,631 70,971 62,324 383,011 820,174 566,392 152,343 572,304 549,524 175,100 166,781 51,992 49,223 5,919 33,597 99,530 20,658 61,559 52,194 65,375 912,941 4,495,568 4,065,593 20,794 481,947 493,725 1,297,072 1,223,436 94,853 511,331 518,111 10,255 11,595 311,991 193,540 198,625 198,625 3,074 298,655 298,655 4,113 551,408 1,477,248 2,573,137 37,646 37,646 28,070 301,500 601,500 1,479,500 41,628 104,496 123,892 25,335 25,335 22,835 1,692 5,393 5,212 1,572,136 5,361,494 6,680,240 65,375 (659,195) (865,926) (2,614,647) 46,400 51,969 14,426 15,800 1,920,105 (1,920,105) 815,000 815,000 745,000 1,396 1,396 (6,333) 862,796 884,165 753,093 65,375 203,601 18,239 (1,861,554) (646,274) 1,399,594 3,489,748 5,351,302 $ (580,899) $ 1,603,195 $ 3,507,987 $ 3,489,748 27
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RECONCILIATION OF THE STATEMENT OF REVENUES, CITY OF ST. PAUL PARK EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 FORM B-4 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds (pages 26 and 27) $ 18,239 Governmental funds reported capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay-construction improvement $ 1,441,317 Depreciation expense (547,272) 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 $ 1,898,926 Deferred revenue, beginning of year (1,916,650) 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. Compensated absences, end of year $ (213,286) Compensated absences, beginning of year 229,958 Post employment benefit obligation, end of year (116,713) Post employment benefit obligation, beg. of year 87,674 894,045 (17,724) (12,367) Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Principal retirement on long-term debt $ 601,500 Issuance of long-term debt (815,000) Change in accrued interest, bond premium, bond discount and bond issuance costs 10,264 (203,236) Change in net position of governmental activities (pages 18 and 19) $ 678,957 See Notes to Financial Statements 29
GENERAL FUND Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual For the Year Ended December 31, 2012 With Comparative Totals For the Year Ended December 31, 2011 FORM B-5 2012 Budgeted Amounts Variance Favorable 2011 Original Final Actual (Unfavorable) Actual REVENUES Property taxes $ 1,486,030 $ 1,486,030 $ 1,494,492 $ 8,462 $ 1,271,892 Special assessments 3,142 3,142 1,479 Licenses and permits 64,150 64,150 70,971 6,821 62,324 Intergovernmental 299,268 433,324 437,163 3,839 346,315 Charges for services 185,400 185,400 193,255 7,855 182,449 Franchise fees 166,000 166,000 175,100 9,100 166,781 Fines and forfeits 47,000 47,000 51,992 4,992 49,223 Investment earnings 40,000 40,000 22,439 (17,561) 61,078 Rental income 220,436 220,436 226,706 6,270 220,483 Sale of assets 5,569 5,569 Miscellaneous 5,150 5,150 40,901 35,751 13,973 Total revenues 2,513,434 2,647,490 2,721,730 74,240 2,375,997 EXPENDITURES Current: General government 526,153 538,066 461,153 76,913 459,288 Public safety 1,312,738 1,329,697 1,258,497 71,200 1,222,052 Highways and streets 433,600 433,600 416,478 17,122 398,352 Compost 9,555 9,555 10,255 (700) 11,595 Parks and recreation 206,230 231,242 221,900 9,342 184,958 Total current 2,488,276 2,542,160 2,368,283 173,877 2,276,245 Capital outlay: Public safety 14,000 34,420 38,575 (4,155) Highways and streets 1,000 1,000 1,000 Parks and recreation 10,000 88,400 90,091 (1,691) 8,582 Total capital outlay 25,000 123,820 128,666 (4,846) 8,582 Total Expenditures 2,513,276 2,665,980 2,496,949 169,031 2,284,827 Excess (deficiency) of revenues over (under) expenditures 158 (18,490) 224,781 243,271 91,170 Other Financing Sources (Uses) Transfers in 210,000 Transfers out (35,000) (210,000) Total other financing sources (uses) (35,000) Net change in fund balances (34,842) (18,490) 224,781 243,271 91,170 Fund Balance, January 1 1,360,761 1,360,761 1,360,761 1,269,591 Fund Balance, December 31 $ 1,325,919 $ 1,342,271 $ 1,585,542 $ 243,271 $ 1,360,761 See Notes to Financial Statements 30
PROPRIETARY FUNDS Combining Statement of Net Position December 31, 2012 With Comparative Totals for December 31, 2011 FORM C-1 Water and Sewer Utility Funds Water Sewer Totals Fund Fund 2012 2011 ASSETS Current assets Cash and investments $ 509,235 $ 125,187 $ 634,422 $ 452,543 Accounts receivable and unbilled service 135,670 167,380 303,050 272,986 Prepaid items 1,351 998 2,349 267 Total current assets 646,256 293,565 939,821 725,796 Property and equipment Land 39,000 39,000 39,000 Estimated original cost - plants and mains 1,107,542 1,153,778 2,261,320 1,532,968 Additions to plants and mains 2,096,362 98,522 2,194,884 2,194,884 Equipment and machinery 120,625 184,759 305,384 305,384 Total property and equipment 3,363,529 1,437,059 4,800,588 4,072,236 Less: accumulated depreciation 2,073,482 782,442 2,855,924 2,766,307 Net property and equipment 1,290,047 654,617 1,944,664 1,305,929 TOTAL ASSETS $ 1,936,303 $ 948,182 $ 2,884,485 $ 2,031,725 LIABILITIES AND NET POSITION Current liabilities Accounts payable $ 14,334 $ 1,288 $ 15,622 $ 14,587 Deferred revenue 17,396 2,795 20,191 47,252 Compensated absences 24,753 17,840 42,594 43,338 Total current liabilities 56,483 21,923 78,407 105,177 Noncurrent liabilities Compensated absences and post employment benefit obligation, net of current portion 24,361 19,568 43,928 33,284 Total liabilities 80,844 41,491 122,335 138,461 Net position Net investment in capital assets 1,290,047 654,617 1,944,664 1,305,929 Unrestricted 565,412 252,074 817,486 587,335 Total net position 1,855,459 906,691 2,762,150 1,893,264 TOTAL LIABILITIES AND NET POSITION $ 1,936,303 $ 948,182 $ 2,884,485 $ 2,031,725 See Notes to Financial Statements 31
PROPRIETARY FUNDS Combining Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended December 31, 2012 With Comparative Totals for the Year Ended December 31, 2011 FORM C-2 Water and Sewer Utility Funds Water Sewer Totals Fund Fund 2012 2011 Operating revenues $ 552,901 $ 608,802 $ 1,161,703 $ 1,027,790 Operating expenses Metro waste control 272,405 272,405 274,245 Salaries and wages 216,617 163,803 380,420 372,317 Public employee retirement 14,208 10,867 25,075 25,100 Payroll taxes 16,186 12,258 28,444 27,768 Employee insurance benefits 21,769 18,881 40,650 49,055 Utilities 42,656 802 43,458 40,402 Parts and small tools 8,329 1,306 9,635 17,168 Building supplies and repairs 19,140 5,609 24,749 24,873 Repairs, supplies, chemicals, fuel 25,935 13,321 39,256 45,706 Insurance 13,474 6,296 19,770 14,606 Office expense 4,992 2,132 7,124 3,553 Telephone 1,331 1,331 1,546 Postage 1,413 1,400 2,813 3,215 Conference and travel 1,962 1,773 3,735 3,402 Other services 12,921 2,799 15,720 14,680 Rent expense 25,000 25,000 50,000 50,000 Depreciation 55,040 34,577 89,617 74,446 Total Operating Expenses 480,973 573,229 1,054,202 1,042,082 Operating income (loss) 71,928 35,573 107,501 (14,292) Nonoperating revenues (expenses) Interest income 1,771 460 2,231 3,731 Special assessments 1,469 1,869 3,338 3,410 Rental income 43,264 43,264 41,600 Capital grant 4,793 Total nonoperating revenues (expenses) 46,504 2,329 48,833 53,534 Income before contributions and transfers 118,432 37,902 156,334 39,242 Noncash capital contributions 394,524 333,828 728,352 Transfers out (15,800) (15,800) Change in net position 497,156 371,730 868,886 39,242 Net position, beginning 1,358,303 534,961 1,893,264 1,854,022 Net position, ending $ 1,855,459 $ 906,691 $ 2,762,150 $ 1,893,264 See Notes to Financial Statements 32