HomeMy WebLinkAbout2014/06/02 - ADMIN - Minutes - City Council - Study Session /IfSt. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION
ST. LOUIS PARK,MINNESOTA
JUNE 2, 2014
The meeting convened at 6:34 p.m.
Councilmembers present: Mayor Jeff Jacobs, Steve Hallfin, Gregg Lindberg, Anne Mavity,
Susan Sanger, and Jake Spano.
Councilmembers absent: Tim Brausen.
Staff present: City Manager(Mr. Harmemng), Deputy City Manager/Human Resources Director
(Ms. Deno), Controller (Mr. Swanson), Finance Supervisor (Mr. Heintz), and Recording
Secretary(Ms. Hughes).
Guest: David Mol, CPA (HLB Tautges Redpath, Ltd.)
1. 2013 Financial Statements—Auditors Discussion and Review
Mr. Swanson presented the staff report and introduced David Mol, CPA.
Mr. Mol explained that the reports issued by the auditor include an opinion on the fair
presentation of the financial statements, a report on internal controls, a report on compliance with
the Minnesota legal compliance audit guide for political subdivisions, a report on compliance
with Federal program requirements, and a report on communication with those charged with
governance. He advised that HLB Tautges Redpath audited the financial statements that are the
responsibility of management using GAAS and GAGAS audit standards resulting in a clean or
unmodified audit opinion on the 2013 financial statements. He congratulated the City on
receiving the Government Finance Officers Association award for "Certificate of Achievement
for Excellence in Financial Reporting" for the 2012 financial statements. He stated the report on
internal controls noted one item regarding revenue recognition and explained that this item was
detected by City staff and is related to the timing of the City's receipt of antenna income that is
paid once per year and the financial statements should have shown an accrual at year end, adding
that it was their opinion this was not a critical issue.
Mr. Swanson advised that the City has several leases throughout the City for its antennas and the
payments are due January 1st and the City previously recorded the revenue in December. He
added that the City adjusted this item for 2012 and has made the same adjustment for 2013.
Mr. Mol stated that the auditors selected a sample of transactions to test for compliance with
Minnesota statutory provisions and there were no findings of noncompliance for 2013. He stated
that a single audit related to compliance with Federal program requirements is required whenever
there is an expenditure of Federal funds exceeding $500,000 in a single year and the Highway
7/Louisiana Avenue project and the FEMA project were selected for testing and there were no
findings of noncompliance. He discussed the report on communication with those charged with
governance and noted that GASB No. 65 was required to be implemented in 2013 and includes
the City's OPEB obligation of$1.9 million at the end of 2013. He indicated there was also one
uncorrected misstatement•on the financial statements that does not materially misrepresent the
City's financial statements related to understatement of property taxes receivable.
Mr. Swanson explained that when tax court cases are settled and result in a reduction in property
taxes, the amount is reduced on the City's tax settlements and the County reports that amount on
Special Study Session Minutes -2- June 2, 2014
the delinquent tax line thus understating the City's property taxes receivable each year. He
stated that staff has worked with Hennepin County on this issue and the County will have a new
system in place in 2015 that will correct this issue, adding that most cities in Hennepin County
have this same issue.
Mr. Mol advised that there were no disagreements with management and no difficulties
encountered in performing the audit. He then presented the 2013 financial summary, 2013
revenue sources for all funds, and 2013 expenditures and stated the City had approximately $57
million in its fund balance at year end. He also presented the General Fund working capital
needs throughout the year as well as a history of the General Fund balance and stated that the
targeted fund balance is 35-50% of subsequent years budgeted expenditures and the unassigned
balance at December 31, 2013, was 47% of subsequent years budgeted expenditures. He also
discussed the City's debt service funds and the balance of debt outstanding.
Mr. Swanson indicated the City has approximately $25 million in outstanding debt and has
approximately $140 million worth of capacity to issue more debt before hitting its legal debt
margin.
Mr. Mol presented information regarding the Water Utility Fund and advised that 2013 expenses
in this fund increased over 2012 primarily due to expensing of the water tower painting that
occurred in 2013. He also presented information regarding the Sewer Utility and Solid Waste
Funds, as well as the City's tax levy and tax rates.
Mr. Swanson stated that revenues in the Water Utility decreased slightly in 2013 partially due to
Novartis leaving the City, adding that staff will present Council with a recommendation to
increase utility rates per the City's long range financial management plan.
Mr. Mol advised that GASB No. 68 takes effect in 2015 related to pension obligations and
explained that PERA has an unfunded benefit obligation of approximately $5 billion that will
require PERA to prepare an allocation to all its participating employers representing their share
of the unfunded pension liability and participants are required to report that liability in their
financial statements.
Mr. Harmening commended Mr. Swanson and Mr. Heintz and all the Finance Department staff
for their outstanding work on the audit and the City's financial statements.
Councilmember Mavity requested that staff continue to provide Council with the narrative about
the City's funds and their performance, adding that this information was helpful in planning the
City's budget.
The meeting adjourned at 7:19 p.m.
Written reports provided and documented for recording purposes only:
2. Update Connect the Park!
Nancy Stroth, City Clerk Jeff4s,s, ayor