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S tate of Minnesota OFFICE OF THE STATE AUDITOR SUITE 400 525 PARK STREET SAINT PAUL 55103 ARNE H. CARLSON STATE AUDITOR 296-2651 ■ t I HINNESOTA FINANCIAL HEALTH PROGRAM - A Synopsis - The problems which create fiscal difficulties seldom emerge overnight; rather, they develop slowly, thus making potential difficulties less obvious.- Is Your City Heading For Financial Difficulty? Municipal Finance Officers Association. 1978 Cities and counties in Minnesota have faced a number of factors in the 80J which necessitated constant monitoring of their financial situations by elected officials and community residents. High inflation in the early 80 s gave way to the lower inflation of the past few years. Intergovernmental revenues for cities (funds from the federal, state and county governments) continue the decline that started in the early '80's. Federal revenue sharing was discon tinued in 1986. In addition to factors that influence the state as a whole, regional influences have taken their ton. While the 7-county metro area, which includes Minneapolis and St. Paul, has remained strong, the mining- and farm-dependent areas are feeling the stress associated with declining market values, increasing unemployment and greater needs for welfare, health and social service programs. The Office of State Auditor designed the Minnesota Financial Health Program (MFHP) in 1980 to assist city and county government officials and community residents in monitoring statewide and regional fiscal stress influences. The MFHP then provides needed help in resolving financial problems. The MFHP currently Includes all 87 Minnesota counties and 180 cities with populations of 2,500 or more as of the 1980 census. These cities and counties prepare annual financial statements in conformity with Generally Accepted Accounting Principles (GAAP) and use the Uniform Chart of Accounts, developed the Office of State Auditor. There are, however, 188 cities with populations less than 2,500 which, for the lart two years, have elected to prepare annual fin -Mai statements in accordance with GAAP. Ten of these cities have been added to the MHFP database in 1989. They are: Big Lake, Pine City, Rockford, Plainview, Delano. Melrose. St. Charles. Montgomery. Slayton and Cold Spring. by of Five major fiscal trends have been identified in this program. By analyzing key financial indicators for five-year periods, it is possible to establish trends and patterns. It is from these statistics that interpretations of each loca unit's financial health can be determined. AN EQUAL OPPORTUNITY EMPLOYER