07-11-2016 Council Packet - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, June 27, 2016 7:00 o’clock p.m. _____________________________________________________________________________________ Page 2 3. 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT PRESENTATION (continued) Hoffmann reported there was one exception noted related to the prompt payment of bills. Out of 25 disbursements selected for testing, three invoices were past the 30-day deadline. Hoffmann reviewed the City’s General Fund as it relates to the unreserved/unassigned fund balance for the past five years. Overall the General Fund unassigned increased in 2015 and is currently sitting at 16.5 percent of annual expenditures. This is an increase of $385,710 over 2014 and is primarily the result of higher than budgeted building related fees, which accounted for an additional $117,000. The City’s largest revenue source is property taxes, followed by user fees, licenses and permits, other revenues and intergovernmental transfers. The City also received additional revenue from the golf course and the police contract. Major General Fund expenditures have remained relatively consistent over the past few years, with slight increases noted in the categories of public safety, general government, and streets, but nothing of significance. Main expenditures include debt service and capital outlay, with a slight decrease in capital outlay in 2015. Hoffmann noted in 2014 the City had the police garage project, which had increased that category in 2014. As it relates to other government funds, these are used to account for revenue derived from specific revenue sources that are legally restricted to expenditures for specific purposes. There are two main categories – restricted and assigned. Hoffmann noted the restricted category increased a little bit from some transfers into the fund. Park dedication fees also increased from $50,000 in 2014 to $300,000 in 2015 as a result of the Lakeview development. Hoffmann noted all enterprise funds except for sewer increased slightly in 2015. Unrestricted includes the water fund, sewer fund, storm water fund, recycling and cable television. All enterprise funds experienced an increase in operating costs. Hoffmann noted the fees for the Metropolitan Council increased in 2015, which caused the operating income for the sewer fund to go down. Hoffmann reviewed the City’s debt service and noted that the debt service will go up slightly in 2016 and then down for two years. The City’s debt service is projected to go back up in 2019. As it relates to the City’s tax rate, Orono is one of the lowest compared to the statewide city average and neighboring cities. Other items included in the audit include the following: GASB 68 and 71 implemented in 2015, required Orono to report a net pension liability for their allocation of the state administered pension plans, PERA and PEPFF. Hoffmann stated it basically added several additional pages of footnote disclosures and supplementary information. Hoffmann noted a number of states have net pension liabilities and that the Government Accounting Standards Board wanted people to become more aware of that. Overall the State of Minnesota is fairly well off in regards to their unfunded pension liabilities compared to a number of other states.