07-12-2010 Council Minutes - Laserfiche WebLink

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t,, MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, July 12, 2010 7:00 o'clock p.m. • 4. 2009 COMPREHENSIVE ANNUAL FINANCIAL REPORT Craig Popenhagen and Michelle Bruley with Larson Allen were present. Popenhagen addressed the City Council regarding the 2009 CAFR. As it relates to required communication, Popenhagen indicated they did receive all requested information from Staff in a timely manner, which enabled them to complete all the financial statements on time and allow them to apply to the Government Finance Officers Association for the Certificate of Achievement in Excellence in Financial Reporting. The audit provides reasonable but not absolute assurance that all financial statements are in compliance with all accounting principles. Popenhagen indicated there is one new accounting policy adopted this year regarding post - employment benefits. Post - employment benefits is an actuarial calculation that looks at the value employees earn over the life of their career with the City as it relates to post - employment health insurance. Larson Allen has issued a clean opinion on all the financial statements, which means the City was in compliance with all accounting standards. As it relates to internal controls, preparation of financial statements and segregation of duties, given the small number of staff working on the financials, it makes it difficult to achieve a full segregation of all the duties without hiring additional staff. Popenhagen indicated bank account reconciliations were late but have been brought up to date. Minnesota legal compliance is a report that is issued following a litany of audit programs that are • published by the State Auditor's Office. There were no exceptions this year in regard to that. Brueey pointed out in 2005 there was a spike in the other government funds unreserved fund balances due to the purchase of Big Island in 2005 and the issuance of street bonds in 2008. As it relates to revenue, in 2005, the state grant for Big Island was received and in 2007 municipal state aid for the bridge project was received, which resulted in some spikes in revenue. The majority of the revenues consist of property taxes. Licenses and permits were down in 2009 due to the economy and state budget cuts. As it relates to expenditures, in 2006 there was the purchase of Big Island, which resulted in a spike that year in expenditures. Popenhagen indicated the enterprise funds chart is a new chart from last year and compares the operating income after the operating funds have been expended from the water, sewer, and storm water funds. All funds are operating at a slight loss. In 2007, there was a very significant amount of operating income for two development projects and increased the City's income in that year. As it relates to unrestricted enterprise assets, the utility funds are at a financially healthy, stable level. The golf course has experienced losses over the past three years. That improved somewhat in 2009 due to a higher number of rounds of golf being played but it is still at a slightly negative cash flow The golf course after 2009 will likely need some financial support from other sources. Bruley illustrated the future debt service of the City for the next five years if no new debt is issued. There will be a slight drop in the City's debt service in 2014 due to the 2004 B Bonds being paid off. Two new standards, GASB No. 51, which governs accounting and financial reporting for easements, will become • effective in 2010, and GASB No. 54 relates to fund balance reporting and goes into effect in 2011. Page 4 of 16