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City of Orono, Minnesota <br />Reconciliation of the Statement of Revenues, Expenditures and <br />Changes in Fund Balances to the Statement of Activities <br />Governmental Funds <br />For the Year Ended December 31, 2020 <br />Amounts reported for governmental activities in the statement of activities are different because <br />Total Net Change in Fund Balances - Governmental Funds (565,808)$ <br />Capital outlays are reported in governmental funds as expenditures. However, in the statement of <br />activities, the cost of those assets is allocated over the estimated useful lives as depreciation expense. <br />Capital outlays 2,782,167 <br />Depreciation expense (973,216) <br />Governmental funds report a gain (loss) on sale of capital assets to the extent of cash exchanged, whereas the <br />disposition of the assets book value is included in the total gain (loss) in the statement of activities.(3,594) <br />The issuance of long-term debt provides current financial resources to governmental funds, while the <br />repayment of principal of long-term debt consumes the current financial resources of governmental <br />funds. Neither transaction, however, has any effect on net position. Also, governmental funds report <br />the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts <br />are amortized in the statement of activities. <br />Principal repayments 925,000 <br />Current year amortization of deferred charges 25,950 <br />Interest on long-term debt in the statement of activities differs from the amount reported in the <br />governmental fund because interest is recognized as an expenditure in the funds when it is due, <br />and thus requires the use of current financial resources. In the statement of activities, however, <br />interest expense is recognized as the interest accrues, regardless of when it is due.423 <br />Internal service funds are used by the City to charge the cost of compensated absences, liability, <br />property, and workers compensation insurance, vehicles and equipment, centralized purchase <br />of consumable office supplies, maintaining facilities, and maintenance of computer systems. <br />These balances are reported with governmental activities in the statement of activities.31,135 <br />Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of accounting, <br />certain revenues cannot be recognized until they are available to liquidate liabilities of the current period. <br />Special assessments (1,617) <br />Property taxes 38,535 <br />Intergovernmental 48,805 <br />Some expenses reported in the statement of activities do not require the use of current financial resources <br />and therefore are not reported as expenditures in governmental funds. <br />Compensated absences (60,897) <br />Other postemployment benefits (123,649) <br />Long-term pension activity is not reported in governmental funds. <br />Pension expense (965,052) <br />Pension revenue from State contributions 23,861 <br />Change in Net Position - Governmental Activities 1,182,043$ <br />The notes to the financial statements are an integral part of this statement.