09-25-2017 Council Packet - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, September 11, 207 7:00 o'clock p.m. PUBLIC COMMENTS None PRESENTATION 12. 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT PRESENTATION Michelle Hoffinan, Clifton, Larson, Allen representative, gave a synopsis of the City's 2016 Comprehensive Annual Financial Report, noting that the final report will be issued in a couple of days. Hoffman noted the audit provides reasonable but not absolute assurance and there were no major changes in accounting policies enacted this pas t year. Significant accounting estimates used in the audit include useful lives of capital assets, valuation of investments, post -employment benefits, net pension liability, and related deferred outflowed and deferred inflows. During the audit full cooperation was received from Orono management. Hoffman stated her firm did issue an unmodified or clean opinion on the financial statements, which is the best opinion the City can receive. The exceptions noted related to internal controls and include preparation of financial statements and segregation of duties, which is normal in a smaller city. Hoffman noted Orono has made some improvement in that regard from the previous year. In addition, no exceptions were noted to Minnesota legal compliance standards and statutes. Hoffman noted last year there was one exception due to some invoices being paid late. Hoffman stated Orono's General Fund has been steadily increasing since 2012 and is now slightly under $4.5 million. General Fund revenue has also been steady, with property taxes being the City's main source of revenue followed by user fees. General Fund expenditures have gone up slightly due to inflation and an increase in public safety services. Hoffman stated Orono has done a good job in keeping expenditures under control every year with no wild variations or unexplained variations. Hoffman noted the increase in Other Government Funds in the restricted category is a result of the City issuing a refunding bond, which was not paid off until February of 2017. Those funds were used to pay off 2008 bonds. Other governmental fund expenditures included a number of large capital outlays due to the police garage project and debt service, which was similar to the previous year. As it relates to Orono's Enterprise Funds, the water fund and sewer fund did decrease from the prior year but is still strong. Recycling and cable television revenue increased slightly from the previous year and the stormwater fund has increased for the last five years. Hoffman noted the water fund and the recycling fund had a slight net operating loss in 2016. Hoffman noted the City's future debt service is expected to decrease in 2017 and 2018 and then increase in 2019 through 2021. A state-wide tax rate comparison shows the City of Orono is around 16 percent, which is below the other surrounding cities and the statewide average of 45 percent. Hoffman stated Orono received the GFOA Certificate of Achievement for Excellence in Financial Reporting for 2015 and that she expects the City will receive that certificate in 2016 as well. Page 2 of 17