HomeMy WebLinkAbout06(B) - Resolution Approving the 2023 Annual Financial Report and Management Letter ReportCITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Financial Statements
and Supplementary Information
Year Ended
December 31, 2023
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INTRODUCTORY SECTION
ELECTED AND APPOINTED OFFICIALS 1
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 2–5
MANAGEMENT’S DISCUSSION AND ANALYSIS 6–20
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 21
Statement of Activities 22–23
Fund Financial Statements
Governmental Funds
Balance Sheet 24–25
Reconciliation of the Balance Sheet to the Statement of Net Position 26
Statement of Revenues, Expenditures, and Changes in Fund Balances 27–28
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities 29
Statement of Revenues, Expenditures, and Changes in Fund Balances –
General Fund – Budget and Actual 30
Proprietary Funds
Statement of Net Position 31–32
Statement of Revenues, Expenses, and Changes in Net Position 33–34
Statement of Cash Flows 35–38
Notes to Basic Financial Statements 39–78
REQUIRED SUPPLEMENTARY INFORMATION
PERA – General Employees Retirement Fund
Schedule of City’s and Nonemployer Proportionate Share
of Net Pension Liability 79
Schedule of City Contributions 79
PERA – Public Employees Police and Fire Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 80
Schedule of City Contributions 80
Prior Lake Fire Relief Association
Schedule of Changes in the Relief Association’s Net Pension Liability (Asset)
and Related Ratios 81–82
Schedule of City Contributions 83
Other Post-Employment Benefits Plan
Schedule of Changes in the City’s Total OPEB Liability
and Related Ratios 84
Notes to Required Supplementary Information 85–91
CITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Table of Contents
Page
SUPPLEMENTARY INFORMATION
Combining and Individual Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet 92
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 93
Nonmajor Special Revenue Funds
Combining Balance Sheet 94–95
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 96–97
Nonmajor Capital Projects Funds
Combining Balance Sheet 98–101
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 102–105
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual 106–111
Debt Service Fund
Balance Sheet by Account 112–115
Schedule of Revenues, Expenditures, and Changes in Fund Balances by Account 116–119
Internal Service Funds
Combining Statement of Net Position 120
Combining Statement of Revenues, Expenses, and Changes in Net Position 121
Combining Statement of Cash Flows 122
OTHER INFORMATION SECTION
Summary Financial Report
Revenues and Expenditures for General Operations 123
Combined Schedule of Indebtedness 124–125
Bond Schedules 126–130
Debt Service Requirements 131–132
Tax Levies and Collections, and Special Assessment Levies and Collections 133
Schedules of Market Value, Tax Levy, Tax Capacity Values, Tax Capacity Rate,
and Market Value Rate 134
Key Financial Indicators 135
OTHER REQUIRED REPORTS
Independent Auditor’s Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards 136–137
Independent Auditor’s Report on Minnesota Legal Compliance 138
Schedule of Findings and Responses 139
CITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Table of Contents (continued)
INTRODUCTORY SECTION
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Term Expires
Kirt Briggs Mayor 12/31/2024
Zach Braid Councilmember 12/31/2024
Kevin Burkart Councilmember 12/31/2024
Kimberly Churchill Councilmember 12/31/2026
Victor Lake Councilmember 12/31/2026
Jason Wedel City Manager
Lori Olson Assistant City Manager
Cathy Erickson Finance Director
Nicole Klekner Assistant Finance Director
ELECTED
APPOINTED
CITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Elected and Appointed Officials
as of December 31, 2023
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FINANCIAL SECTION
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INDEPENDENT AUDITOR’S REPORT
To the City Council and Management
City of Prior Lake, Minnesota
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINIONS
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Prior Lake,
Minnesota (the City) as of and for the year ended December 31, 2023, and the related notes to the financial
statements, which collectively comprise the City’s basic financial statements as listed in the table of
contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City as of December 31, 2023, and the respective
changes in financial position, and, where applicable, cash flows thereof, and the budgetary comparison for
the General Fund for the year then ended in accordance with accounting principles generally accepted in
the United States of America.
BASIS FOR OPINIONS
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our
report. We are required to be independent of the City and to meet our other ethical responsibilities in
accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
EMPHASIS OF MATTER
Change in Accounting Principle
As described in Note 1 of the notes to basic financial statements, in fiscal 2023, the City adopted new
accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 96,
Subscription-Based Information Technology Arrangements. Our opinion is not modified with respect to
this matter.
continued)
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a
going concern for 12 months beyond the financial statements date, including any currently known
information that may raise substantial doubt shortly thereafter.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinions. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is
not a guarantee that an audit conducted in accordance with generally accepted auditing standards and
Government Auditing Standards will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgement made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control related matters
that we identified during the audit.
continued)
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REQUIRED SUPPLEMENTARY INFORMATION
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and the required supplementary information (RSI), as listed in the table of contents,
be presented to supplement the basic financial statements. Such information is the responsibility of
management and, although not a part of the basic financial statements, is required by the GASB, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the
RSI in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements,
and other knowledge we obtained during our audit of the basic financial statements. We do not express an
opinion or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
SUPPLEMENTARY INFORMATION
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The accompanying combining and individual fund financial
statements and schedules, as listed in the table of contents, are presented for purpose of additional analysis
and are not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used
to prepare the basic financial statements. The information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare
the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the accompanying combining and individual fund financial statements and schedules are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
OTHER INFORMATION
Management is responsible for the other information included in the annual report. The other information
comprises the introductory and other information sections, but does not include the basic financial
statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the
other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
basic financial statements, or the other information otherwise appears to be materially misstated. If, based
on the work performed, we conclude that an uncorrected material misstatement of the other information
exists, we are required to describe it in our report.
PRIOR YEAR COMPARATIVE INFORMATION
We have previously audited the City’s 2022 financial statements, and we expressed unmodified audit
opinions on the respective financial statements of the governmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information in our report dated May 5, 2023. In our
opinion, the partial comparative information presented herein as of and for the year ended December 31,
2022 is consistent, in all material respects, with the audited financial statements from which it has been
derived.
continued)
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OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 30, 2024,
on our consideration of the City’s internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of
that report is solely to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City ’s
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the City’s internal control
over financial reporting and compliance.
Minneapolis, Minnesota
May 30, 2024
CITY OF PRIOR LAKE
Management’s Discussion and Analysis
Fiscal Year Ended December 31, 2023
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As the management of the City of Prior Lake, Minnesota (the City), we offer readers of the City’s
financial statements this narrative overview and analysis of the financial activities of the City for the
fiscal year ended December 31, 2023.
FINANCIAL HIGHLIGHTS
The assets and deferred outflows of resources of the City exceeded its liabilities and deferred
inflows of resources at the close of the most recent fiscal year by $260,743,930 (net position). Of
this amount, $30,227,057 (unrestricted net position) may be used to meet the government’s
ongoing obligations to citizens and creditors.
The City’s total net position increased by $11,413,014.
As of the close of the current fiscal year, the City’s governmental funds reported combined
ending fund balances of $32,876,500, a decrease of $30,989 in comparison with the prior year.
At the end of the current fiscal year, the total fund balance for the General Fund was $11,005,244,
or 52.3 percent, of budgeted 2024 expenditures and transfers out of $21,046,603. Of the total fund
balance of $11,005,244, $465,200 is assigned for future projects and programs. The total fund
balance reflects an increase of $546,847 from the prior year.
During the year ended December 31, 2023, the City implemented Governmental Accounting
Standards Board (GASB) Statement No. 96, Subscription-Based Information Technology
Arrangements (SBITAs). This statement provides guidance on the accounting and financial
reporting for SBITAs for government end users. The implementation of this new GASB
statement in the current year resulted in the City reporting new capital assets and long-term debt
for technology subscriptions, but did not change beginning net position in the government -wide
financial statements in the current year. See Notes 1, 4, and 6 for additional details on this change
in the current year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City’s basic financial
statements. The City’s basic financial statements include three components: 1) government-wide financial
statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also
contains supplemental information in addition to the basic financial statements themselves.
Government-Wide Financial Statements – The government-wide financial statements are designed to
provide readers with a broad overview of the City’s finances, in a manner similar to a private sector
business.
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The Statement of Net Position presents information on all of the City’s assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference between them reported as net
position. Over time, increases or decreases in net position may serve as a useful indicator of whether the
financial position of the City is improving or deteriorating. The Statement of Activities presents
information showing how the City’s net position changed during the most recent fiscal year. All changes
in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of
the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some
items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned, but
unused, vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type
activities). The governmental activities of the City include general government, public safety, public
works, culture and recreation, and economic development. The business-type activities of the City include
water, sewer, and water quality operations.
The government-wide financial statements can be found in the financial section following this report.
Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City, like other state and
local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the City can be divided into two categories: governmental funds and
proprietary funds.
Governmental Funds – Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a city’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements. By doing
so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both
the governmental funds Balance Sheet and the governmental funds Statement of Revenues, Expenditures,
and Changes in Fund Balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
The City maintains numerous individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and in the governmental funds Statement of Revenues, Expenditures,
and Changes in Fund Balances for the General Fund, Debt Service Fund, and Construction Fund, all of
which are considered major funds. Data from the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these nonmajor governmental funds are
provided in the form of combining statements elsewhere in this report.
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement
has been provided for this fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found in the financial section of this report
immediately following the government-wide financial statements.
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Proprietary Funds – The City maintains two types of proprietary funds. Enterprise funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for its water, sewer, and water quality operations.
Proprietary funds provide the same type of information as shown in the government-wide financial
statements, only in more detail. The proprietary fund financial statements provide separate information
for the enterprise funds, all of which are considered to be major funds of the City.
Internal service funds are an accounting device used to accumulate and allocate costs internally among
the City’s various functions. The City uses internal service funds to account for severance compensation
and insurance benefits. All internal service funds are combined into a single, aggregated presentation in
the proprietary fund financial statements, labeled Governmental Activities – Internal Service Funds.
Because these internal service fund activities predominantly benefit governmental rather than
business-type functions, they have been included within governmental activities in the government -wide
financial statements. Individual fund data for the internal service funds is provided in the form of
combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found in the financial section of this report
immediately following the governmental fund statements.
Notes to Basic Financial Statements – The notes to basic financial statements provide additional
information that is essential to a full understanding of the data provided in the government-wide and fund
financial statements. The notes to basic financial statements can be found following the proprietary fund
statements within the financial section of this report.
Other Information – In addition to the basic financial statements and accompanying notes, the financial
section also presents required supplementary information, and the combining and individual fund
statements and schedules (presented as supplementary information) referred to earlier in connection with
nonmajor governmental funds and internal service funds, which are presented immediately following the
basic financial statements.
The other information section has been included as part of the financial statements to facilitate additional
analysis.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a city’s financial position. In the
case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of
resources by $260,743,930 at the close of the most recent fiscal year.
The City’s investment in capital assets (e.g., land, buildings, and machinery and equipment), less any
related debt used to acquire those assets that is still outstanding, totaled 83.6 percent of total net position.
The City uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City’s investment in its capital assets is reported net of related
debt, it should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to liquidate these liabilities.
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The following table provides the City’s Summary of Net Position:
2023 2022 2023 2022 2023 2022
Assets
Current and other assets 45,479,912$ 44,262,357$ 17,086,059$ 14,232,134$ 62,565,971$ 58,494,491$
Capital assets, net 172,992,464 165,315,011 75,913,636 75,373,736 248,906,100 240,688,747
Total assets 218,472,376$ 209,577,368$ 92,999,695$ 89,605,870$ 311,472,071$ 299,183,238$
Deferred outflows of resources
Pension and OPEB plan deferments 9,860,595$ 11,193,049$ 350,095$ 502,375$ 10,210,690$ 11,695,424$
Liabilities
Long-term liabilities 39,724,257$ 50,946,133$ 3,030,044$ 3,817,064$ 42,754,301$ 54,763,197$
Other liabilities 3,181,915 3,119,847 577,432 322,322 3,759,347 3,442,169
Total liabilities 42,906,172$ 54,065,980$ 3,607,476$ 4,139,386$ 46,513,648$ 58,205,366$
Deferred inflows of resources
Revenue for subsequent years 5,050,251$ 2,440,198$ –$ –$ 5,050,251$ 2,440,198$
Pension and OPEB plan deferments 8,992,547 863,012 382,385 39,170 9,374,932 902,182
Total deferred inflows of resources 14,042,798$ 3,303,210$ 382,385$ 39,170$ 14,425,183$ 3,342,380$
Net position
Net investment in capital assets 143,656,868$ 133,708,934$ 74,313,470$ 73,472,594$ 217,970,338$ 207,181,528$
Restricted 12,546,535 11,269,953 – – 12,546,535 11,269,953
Unrestricted 15,180,598 18,422,340 15,046,459 12,457,095 30,227,057 30,879,435
Total net position 171,384,001$ 163,401,227$ 89,359,929$ 85,929,689$ 260,743,930$ 249,330,916$
Summary of Net Position
as of December 31, 2023 and 2022
Table 1
Governmental Activities Business-Type Activities Total
An additional portion of the City’s net position, $12,546,535, or 4.8 percent, represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted net
position, $30,227,057, may be used to meet the government’s ongoing obligations to citizens and
creditors.
The significant changes in deferred outflows of resources, long-term liabilities and deferred inflows of
resources relates to changes in the Public Employees Retirement Association pension plans in 2023. The
GASB Statement No. 68 requires the City to recognize its proportionate share of pension benefit
obligations. Deferred inflows of resources also increased for state municipal street aid revenue received
by the City in advance of allotments that will be reported as revenue in subsequent years.
The increase in current and other assets is mainly the result of positive operative results during the year in
the enterprise funds. The increase in capital assets is related to continuing development activity in the
current year. The increase in restricted net position is mainly in amounts restricted for debt service.
At the end of the current fiscal year, the City is able to report positive balances in all three categories of
net position, both for the government as a whole, as well as for its separate governmental and
business-type activities. The same situation held true for the prior fiscal year.
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2023 2022 2023 2022 2023 2022
Revenues
Program revenues
Charges for services 2,298,357$ 2,194,554$ 12,166,243$ 11,664,260$ 14,464,600$ 13,858,814$
Operating grants and
contributions 3,706,641 2,367,925 27,150 18,747 3,733,791 2,386,672
Capital grants and
contributions 5,306,575 8,802,839 64,325 3,155,776 5,370,900 11,958,615
General revenues
Property taxes and tax
increments 17,802,929 16,085,103 – – 17,802,929 16,085,103
Franchise taxes 1,636,676 1,641,679 – – 1,636,676 1,641,679
Grants and contributions not
restricted to specific programs 456 602 – – 456 602
Investment income (losses)1,708,687 (904,982) 678,270 (372,374) 2,386,957 (1,277,356)
Miscellaneous 576,207 973,995 40,888 8,687 617,095 982,682
Gain (loss) on sale of assets 64,915 115,425 (94,246) 139,046 (29,331) 254,471
Total revenues 33,101,443 31,277,140 12,882,630 14,614,142 45,984,073 45,891,282
Expenses
General government 4,264,884 4,183,035 – – 4,264,884 4,183,035
Public safety 10,815,305 9,198,988 – – 10,815,305 9,198,988
Public works 6,005,415 6,162,534 – – 6,005,415 6,162,534
Culture and recreation 3,032,441 2,925,166 – – 3,032,441 2,925,166
Economic development 735,775 1,273,677 – – 735,775 1,273,677
Interest on long-term debt 807,850 735,966 – – 807,850 735,966
Water – – 4,380,943 3,783,170 4,380,943 3,783,170
Sewer – – 3,708,995 3,768,963 3,708,995 3,768,963
Water quality – – 819,451 900,535 819,451 900,535
Total expenses 25,661,670 24,479,366 8,909,389 8,452,668 34,571,059 32,932,034
Increase in net position
before transfers 7,439,773 6,797,774 3,973,241 6,161,474 11,413,014 12,959,248
Transfers 543,001 254,777 (543,001) (254,777) – –
Changes in net position 7,982,774 7,052,551 3,430,240 5,906,697 11,413,014 12,959,248
Net position
Beginning of year 163,401,227 156,348,676 85,929,689 80,022,992 249,330,916 236,371,668
End of year 171,384,001$ 163,401,227$ 89,359,929$ 85,929,689$ 260,743,930$ 249,330,916$
Governmental Activities Business-Type Activities Total
Table 2
Changes in Net Position
for the Years Ended December 31, 2023 and 2022
Governmental activities increased the City’s net position by $7,982,774. Key elements of this increase are
seen in the table above. Property tax increases were the result of an increased levy in the current year. The
decrease in capital grants and contributions was lower due to having almost $3 million of federal grant
revenue from the Coronavirus State and Local Fiscal Recovery Funds program, a part of the American
Rescue Plan Act in 2022. The increase in investment income is related to an increase in income from
investments, due to improved market conditions in the current year. The increase in public safety
expenses is mostly related to increased staffing of full-time firefighters in the City. Twelve full-time
firefighters started with the City on July 1, 2023.
The business-type activities increased the City’s net position in total by $3,430,240. Capital grants and
contributions decreased, mostly in contributions from developers for street and development projects in
2023.
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Below are specific graphs that provide comparisons of the governmental activities program revenues and
expenses. The City’s emphasis on public safety continued in 2023 with the addition of 12 full-time
firefighters and the addition of 1 civilian to manage the police property room. General government
revenue will vary by year, based on grant funding for operations and capital projects. Public works
revenue will vary by year, based on development projects and transportation projects. Fiscal 2023
included two street reconstruction projects, as compared to one street project in 2022.
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
General
Government
Public Safety Public Works Culture and
Recreation
Economic
Development
Interest on
Long-Term
Debt
Expenses Program Revenues
Governmental Activities – Revenue by Source
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Business-Type Activities – Below are graphs showing the business-type activities program revenues and
expense comparisons.
Revenues are collected to fund operations, current and future capital improvements, debt service, and the
utility work completed as part of the street projects identified in the Five-Year Capital Improvement
Program.
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
Water Sewer Water Quality
Expenses Program Revenues
Business-Type Activities – Revenue by Source
13-
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental Funds – The focus of the City’s governmental funds is to provide information on
near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing
the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure
of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $32,876,500, a decrease of $30,989 in comparison with the prior year.
The General Fund is the chief operating fund of the City. At the end of the recent fiscal year, total fund
balance reached $11,005,244. As a measure of the General Fund’s liquidity, it may be useful to compare
the total fund balance to total fund expenditures. Total fund balance represents about 52.3 percent of total
2024 General Fund budgeted expenditures and transfers out of $21,046,603. Of the total fund balance of
11,005,244, $465,200 is assigned for future projects and programs. This leaves an unassigned fund
balance in the General Fund of $10,540,044.
The total fund balance reflects an increase of $546,847 from the prior year and an increase of $883,146
above the amended budget, which reflected the use of fund balance of $336,299. The components of the
546,847 increase in fund balance are revenues and other financing sources over budget by $176,582 and
expenditures less than budget by $706,564.
The Debt Service Fund balance increased by $50,946. The City manages cash flow in all debt service
accounts and ensures adequate resources exist to fund future obligations.
The Construction Fund balance decreased by $1,712,210, due to timing differences between project
financing inflows and capital outlays.
Proprietary Funds – The City’s proprietary funds provide the same information for the business-type
activities found in the government-wide financial statements, but in more detail.
14-
GENERAL FUND BUDGETARY HIGHLIGHTS
The original budget reflected use of fund balance of $32,000.
The City amends its budget at various points during the year. The General Fund budget was amended in
2023 to increase the spending of the fund balance by $304,299, primarily for streets, including personal
costs and maintenance projects.
Actual revenues and other financing sources were $176,582 over budget in 2023. Investment income was
higher than budget by $440,266, due to market conditions. Licenses and permits were less than budget by
199,427 as nonbusiness permit activity was less than projected, due to a slowdown in residential
development.
Actual expenditures were $706,564 less than budget in 2023. Expenditures were less than budget in most
program areas, due to open positions and fuel savings across multiple departments. Police department
expenditures were lower than budget by $254,596 for fuel, small equipment, and new technology
purchases. Fuel was budgeted at a higher rate, but the price subsequently dropped through the end of
2023. Parks was lower than budget by $193,366, primarily for maintenance projects and contracted
projects.
CAPITAL ASSETS AND LONG-TERM LIABILITIES
Capital Assets – The City’s investment in capital assets for its governmental and business-type activities
as of December 31, 2023 amounts to $248,906,100 (net of accumulated depreciation/amortization). This
investment in capital assets includes items, such as land, buildings and improvements, machinery and
equipment, park facilities, roads, highways, and bridges.
2023 2022 2023 2022 2023 2022
Land 34,311,351$ 33,183,201$ –$ –$ 34,311,351$ 33,183,201$
Utility access agreement – – 2,499,970 2,499,970 2,499,970 2,499,970
Easements 56,152,920 56,152,920 218,912 218,912 56,371,832 56,371,832
Construction in progress 16,010,957 10,033,602 54,625 34,314 16,065,582 10,067,916
Land improvements 782,146 853,545 26,421 30,808 808,567 884,353
Machinery and equipment 3,216,610 2,812,657 870,336 833,562 4,086,946 3,646,219
Vehicles 2,389,626 2,804,267 424,739 457,314 2,814,365 3,261,581
Infrastructure 59,697,281 59,474,819 71,818,633 71,298,856 131,515,914 130,773,675
Technology subscriptions 431,573 – – – 431,573 –
Total 172,992,464$ 165,315,011$ 75,913,636$ 75,373,736$ 248,906,100$ 240,688,747$
Table 3
Capital Assets
Net of Depreciation/Amortization)
TotalBusiness-TypeActivitiesGovernmentalActivities
Additional information on the City’s capital assets can be found in Note 4 of the notes to basic financial
statements.
15-
Long-Term Liabilities – At the end of the current fiscal year, the City had total long-term liabilities of
42,754,301. This amount includes debt backed by the full faith and credit of the City. The City’s total
long-term liabilities decreased during the current fiscal year, due to scheduled payments on debt
obligations and energy loans payable and changes in the net pension liability previously discussed.
2023 2022 2023 2022 2023 2022
G.O. bonds 13,875,000$ 13,835,000$ –$ –$ 13,875,000$ 13,835,000$
G.O. special assessment bonds 7,910,000 9,795,000 – – 7,910,000 9,795,000
G.O. tax increment bonds 30,000 60,000 – – 30,000 60,000
G.O. revenue bonds 4,505,000 4,985,000 1,440,000 1,700,000 5,945,000 6,685,000
Premium (discount) on bonds payable 2,186,515 2,262,852 160,166 201,140 2,346,681 2,463,992
Energy loan payable 441,532 728,225 – – 441,532 728,225
Compensated absences payable 1,141,513 1,075,640 209,648 194,481 1,351,161 1,270,121
Subscription liabilities 417,549 – – – 417,549 –
Total OPEB obligation 819,675 927,372 148,527 186,590 968,202 1,113,962
Net pension liability – GERF and PEPFF 8,397,473 17,277,044 1,071,703 1,534,851 9,469,176 18,811,895
Total 39,724,257$ 50,946,133$ 3,030,044$ 3,817,062$ 42,754,301$ 54,763,195$
Table 4
Long-Term Liabilities
TotalGovernmentalActivitiesBusiness-Type Activities
The City’s statutory debt limit is equal to 3 percent of estimated taxable market value of property located
within the City. The taxable market value totals $5,302,936,749, which calculates to a debt limit of
159,088,102. Debt financed partially or entirely by special assessments, tax increments, and other
revenue sources is not applied against the City’s debt limit, nor is debt financed by proprietary fund
revenues. Currently, the City has $13,875,000 of general obligation debt outstanding, leaving a debt limit
of $145,213,102.
Additional information on the City’s long-term debt can be found in Note 6 of the notes to basic financial
statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City adopted a general fund operating budget of $21,046,603 for expenditures and other
financing uses for fiscal 2024, an increase of $1,931,905, or 10.1 percent, from the 2023 final
budget. Fiscal 2024 expenditures include 12 months of full-time firefighter staff as compared to
6 months of full-time firefighter expenditures in 2023. The budget also includes personnel
funding for a new recreation programmer and funding for state and county mandated costs for
elections, joint prosecution, and police holiday pay. In 2023, the City received one-time public
safety state aid funding approved by the state Legislature. The City’s portion totaled $1,217,937.
The 2024 budget includes $267,100 for a new police officer and public safety technology capital
items that will be funded by this one-time state aid. The outstanding public safety state aid of
approximately $950,000 will be used for future public safety needs as directed by the City
Council.
The City’s local tax capacity will increase 4.3 percent for property taxes payable in 2024.
16-
Although construction activity was slower in 2023 than recent years, the City continues to grow.
The City issued 68 single-family building permits in 2023, compared to an average of
122 single-family permits over the previous 10 years.
Over the past five years (2019–2023) the City has issued 670 single-family home permits.
From 2005–2023, the City has consistently ranked in the top 25 in the Twin Cities metro area in
total number of residential units and ranked in the top 15 in the Twin Cities metro area in total
single-family residential units. (Source: Metropolitan Council, Community Profile, Building
Permits, Residential, Twin Cities Region (7-county metro area).)
From 2016–2023, the City has issued permits for 6 multi-family residential buildings with a total
of 440 units. So far in 2024, the City has issued a permit for a new 197 -unit multi-family
residential building and anticipates issuing another permit for a 140-unit building in 2024.
Total building permit valuation (new and addition/alteration) has remained consistent over the
past five years (2019–2023), with an average of $72.6 million per year.
Commercial building permit valuation (new and addition/alteration) has an average annual
valuation of $10.5 million over the past five years (2019–2023).
Continued staged development of land within the City and areas to be annexed under the orderly
annexation agreement with Spring Lake Township will provide most of the City’s anticipated
market value growth over the course of the next 10 to 15 years.
To meet the City’s water needs as it continues to grow, the City entered into a Water Purchase
and Facility Expansion Agreement with the Shakopee Mdewakanton Sioux Community. The
plant can supply additional water to the City and will have future expansion available to meet the
City’s long-term needs. This approach provides the City with the flexibility to evaluate the pace
and timing of development in the Orderly Annexation Area before a substantial investment is
needed to construct the expansion of the water treatment plant. The initial improvements,
combined with the long-term water purchase agreement, could provide the City with enough
water capacity for the next 15 to 20 years, depending on the rate of development.
Economic indicators, including a slowdown in residential construction and inflationary impacts,
will be evaluated and incorporated in future budget cycles. Staffing represents 71 percent of the
City’s General Fund annual budget. Three-year labor agreements are in place for 2022–2024.
Negotiations for the next labor cycle are anticipated to occur during the Fall of 2024.
Financial Management Policies
The City has set a goal to establish “Financial Performance Standards” to measure the financial health of
the City. These standards serve multiple purposes:
a) To serve as best practice measures to strengthen the City’s financial position and maximize the
return of the taxpayer dollar.
b) To communicate the fiscal performance and condition of the City to residents in a consistent
manner.
c) To facilitate the setting of policy and financial direction by the City Council with resident input.
17-
Objective 1: Aa2 Bond Rating
Maintain or improve current Aa2 Bond Rating – Strong credit rating by Moody’s Investors Service
Moody’s), provides low-cost financing for the City’s general obligation bonds. In April 2010, Moody’s
recalibrated the City’s bond rating to the global rating scale and, therefore, changed the City’s bond rating
from Aa3 to an Aa2. The Aa2 bond rating was reaffirmed with the 2015 bond issuances. The City also
received an initial bond rating of AA+ from Standard & Poors (S&P) in 2015. The AA+ bond rating was
reaffirmed with the 2016, 2017, 2018, 2019, 2021, and 2022 bond issuance. The City received a bond
rating upgrade to AAA from S&P in 2023.
S&P
2016 AA+
2017 AA+
2018 AA+
2019 AA+
2020 N/A
2021 AA+
2022 AA+
2023 AAA
Objective 2: General Fund Reserve Balance
Maintain a 40 to 50 percent General Fund reserve balance – The Office of the State Auditor recommends
a reserve balance between 35 to 50 percent to provide adequate cash flow, offset revenue shortfalls, and
insurance for unforeseen catastrophic events. The City Council adopted a revision to the Comprehensive
Financial Management Policy, which established a fund balance policy regarding the minimum
unrestricted fund balance for the General Fund. The policy established that the City will strive to maintain
an unrestricted General Fund balance (which includes committed, assigned, and unassigned
classifications) within a range from 40 to 50 percent of projected expenditures for the subsequent year.
14,656,748 $15,077,717
16,585,887
18,810,399
21,046,603
67%
54%
56%63%
52%
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
22,000,000
24,000,000
2019 2020 2021 2022 2023
Subsequent Year’s Budget Actual Fund Balance
18-
Objective 3: Property Taxes
Maintain or improve property tax rank when compared to a broader list of metro area cities. The favorable
tax rate provides stimulus for growth of residential and commercial property tax base. This data reflects
the tax capacity rate, which is based on the levies approved by the City Council to fund general services,
such as police, fire, street maintenance, parks, recreation, finance, and general administration, as well as
the Economic Development Authority (EDA). Beginning in 2021, the EDA tax capacity rate is shown
separately and no longer a component of the City of Prior Lake tax capacity rate. The tables do not reflect
the market value rate, which is a tax based on market referenda approved by the City’s voters to finance
the construction of two fire stations and improvements to the City’s parks and library.
Economic
Seven-County City of Development
Year Metro Area Prior Lake Authority
2018 42.19 33.04 N/A
2019 41.43 33.02 N/A
2020 40.87 32.96 N/A
2021 39.35 30.27 0.84
2022 41.19 30.47 0.74
2023 48.60 28.11 0.62
Average Tax Capacity Rate
N/A – Not Applicable
Source: League of Minnesota Cities
19-
Objective 4: Property Taxes/Household
Maintain a level of property taxes on a per household basis, which takes into account the cost of inflation
and community growth. The goal is to have a tax levy per household that is at or below the rate of
inflation and growth over time. This chart reflects community growth and the cost of inflation using the
Minneapolis-St. Paul Consumer Price Index (CPI).
1,000
1,050
1,100
1,150
1,200
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Property Tax Levy Per Household
Property Tax Levy/HH Expected Property Tax Levy/HH
The increase in the property tax levy per household from 2023 to 2024 is primarily due to the
implementation of full-time firefighter staffing and unfunded state and county mandated expenditures.
20-
Objective 5: General Fund Expenditures/Household
Maintain a level of General Fund operational expenditures on a per household basis, which takes into
account the cost of inflation and community growth. The goal is to maintain General Fund operating
expenditures per household at or below the rate of inflation over time. This chart reflects community
growth and the cost of inflation using the Minneapolis-St. Paul CPI.
1,150
1,200
1,250
1,300
1,350
1,400
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
General Fund Total Operating
Expenditures Per Household
Expected Operating Expenditures/HH Operating Expenditures/HH
As reflected in the chart above, the 2024 operating expenditures per household continues to be less than
the level which reflects the cost of inflation and growth.
REQUESTS FOR INFORMATION
These financial statements are designed to provide a general overview of the City’s finances for all those
with an interest in the City’s finances. Questions concerning any of the information provided in this
report, or requests for additional financial information should be addressed to the office of the City’s
Finance Director at the City of Prior Lake, 4646 Dakota Street Southeast, Prior Lake, Minnesota
55372-1714.
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BASIC FINANCIAL STATEMENTS
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Governmental Business-Type
Activities Activities Total
Assets
Cash and investments 36,981,286$ 15,683,329$ 52,664,615$
Receivables
Delinquent taxes 145,259 – 145,259
Accounts 540,675 1,321,529 1,862,204
Leases 2,602,985 – 2,602,985
Special assessments 2,582,065 77,902 2,659,967
Due from other governmental agencies 653,918 3,299 657,217
Restricted assets – temporarily restricted
Cash and investments held in escrow 50,889 – 50,889
Assets held for resale 1,065,014 – 1,065,014
Net pension asset – fire relief 857,821 – 857,821
Capital assets not being depreciated/amortized 106,475,228 2,773,507 109,248,735
Capital assets net of accumulated depreciation/amortization 66,517,236 73,140,129 139,657,365
Total assets 218,472,376 92,999,695 311,472,071
Deferred outflows of resources
Pension plan deferments – GERF and PEPFF 8,842,414 316,638 9,159,052
Pension plan deferments – fire relief 833,541 – 833,541
OPEB plan deferments 184,640 33,457 218,097
Total deferred outflows of resources 9,860,595 350,095 10,210,690
Total assets and deferred outflows of resources 228,332,971$ 93,349,790$ 321,682,761$
Liabilities
Accounts and contracts payable 1,972,895$ 407,207$ 2,380,102$
Accrued salaries and employee benefits payable 408,008 69,930 477,938
Due to other governmental agencies 147,216 89,222 236,438
Deposits payable 561,055 7,993 569,048
Accrued interest payable 44,441 3,080 47,521
Unearned revenue 48,300 – 48,300
Total OPEB liability
Due within one year 64,885 11,794 76,679
Due in more than one year 754,790 136,733 891,523
Net pension liability
GERF and PEPFF – due in more than one year 8,397,473 1,071,703 9,469,176
Bonds, energy loans, subscription liabilities, and compensated absences payable
Due within one year 4,827,700 340,837 5,168,537
Due in more than one year 25,679,409 1,468,977 27,148,386
Total liabilities 42,906,172 3,607,476 46,513,648
Deferred inflows of resources
Lease revenue for subsequent years 2,572,115 – 2,572,115
State aid for subsequent years 2,478,136 – 2,478,136
Pension plan deferments – GERF and PEPFF 8,317,080 343,972 8,661,052
Pension plan deferments – fire relief 463,479 – 463,479
OPEB plan deferments 211,988 38,413 250,401
Total deferred inflows of resources 14,042,798 382,385 14,425,183
Net position
Net investment in capital assets 143,656,868 74,313,470 217,970,338
Restricted for debt service 4,773,882 – 4,773,882
Restricted for net pension asset 1,227,883 – 1,227,883
Restricted for capital improvements 2,625,125 – 2,625,125
Restricted for other purposes 3,919,645 – 3,919,645
Unrestricted 15,180,598 15,046,459 30,227,057
Total net position 171,384,001 89,359,929 260,743,930
Total liabilities, deferred inflows of resources, and net position 228,332,971$ 93,349,790$ 321,682,761$
CITY OF PRIOR LAKE
Statement of Net Position
as of December 31, 2023
See notes to basic financial statements -21-
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Governmental activities
General government 4,264,884$ 725,588$ 3,098$ 1,832,265$
Public safety 10,815,305 990,666 3,525,709 –
Public works 6,005,415 30,923 177,766 3,474,310
Culture and recreation 3,032,441 526,592 61 –
Economic development 735,775 24,588 7 –
Interest on long-term debt 807,850 – – –
Total governmental activities 25,661,670 2,298,357 3,706,641 5,306,575
Business-type activities
Water 4,380,943 6,063,587 86 3,714
Sewer 3,708,995 4,689,458 47 64,605
Water quality 819,451 1,413,198 27,017 (3,994)
Total business-type activities 8,909,389 12,166,243 27,150 64,325
Total 34,571,059$ 14,464,600$ 3,733,791$ 5,370,900$
General revenues
Taxes
Property taxes, levied for general purposes
Property taxes, levied for debt service
Tax increments
Franchise taxes
Grants and contributions not restricted
to specific programs
Investment income
Miscellaneous
Gain (loss) on sale of assets
Transfers
Total general revenues and transfers
Change in net position
Net position
Beginning of year
End of year
CITY OF PRIOR LAKE
Statement of Activities
Year Ended December 31, 2023
See notes to basic financial statements -22-
Governmental Business-Type
Activities Activities Total
1,703,933)$ –$ (1,703,933)$
6,298,930) – (6,298,930)
2,322,416) – (2,322,416)
2,505,788) – (2,505,788)
711,180) – (711,180)
807,850) – (807,850)
14,350,097) – (14,350,097)
1,686,444 1,686,444
1,045,115 1,045,115
616,770 616,770
3,348,329 3,348,329
14,350,097) 3,348,329 (11,001,768)
13,839,707 – 13,839,707
3,349,737 – 3,349,737
613,485 – 613,485
1,636,676 – 1,636,676
456 – 456
1,708,687 678,270 2,386,957
576,207 40,888 617,095
64,915 (94,246) (29,331)
543,001 (543,001) –
22,332,871 81,911 22,414,782
7,982,774 3,430,240 11,413,014
163,401,227 85,929,689 249,330,916
171,384,001$ 89,359,929$ 260,743,930$
Changes in Net Position
Net (Expense) Revenues and
23-
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FUND FINANCIAL STATEMENTS
Debt
General Service Construction
Assets
Cash and investments 11,963,416$ 2,300,584$ 5,002,315$
Cash and investments held in escrow – – –
Receivables
Delinquent taxes 142,679 – –
Accounts 176,529 14,352 11,632
Lease 2,594,989 – –
Special assessments
Delinquent – 23,197 –
Deferred 10,776 2,009,722 32,280
Other (Green Acres)– 451,350 –
Due from other governmental agencies 520,130 21,000 102,475
Assets held for resale – – –
Total assets 15,408,519$ 4,820,205$ 5,148,702$
Liabilities
Accounts and contracts payable 590,229$ 1,882$ 846,318$
Accrued salaries and employee benefits payable 404,290 – –
Due to other governmental agencies 144,509 – 2,152
Deposits payable 456,050 – –
Unearned revenue – – –
Total liabilities 1,595,078 1,882 848,470
Deferred inflows of resources
Lease revenue for subsequent years 2,564,133 – –
State aid for subsequent years 91,626 – 2,469,856
Unavailable revenue from delinquent taxes 142,679 – –
Unavailable revenue from special assessments 9,759 2,484,268 32,280
Total deferred inflows of resources 2,808,197 2,484,268 2,502,136
Fund balances
Restricted – 2,334,055 –
Assigned 465,200 – 1,798,096
Unassigned 10,540,044 – –
Total fund balances 11,005,244 2,334,055 1,798,096
Total liabilities, deferred inflows
of resources, and fund balances 15,408,519$ 4,820,205$ 5,148,702$
CITY OF PRIOR LAKE
Balance Sheet
Governmental Funds
as of December 31, 2023
See notes to basic financial statements -24-
Nonmajor Total
Governmental Governmental
Funds Funds
16,970,680$ 36,236,995$
50,889 50,889
2,580 145,259
334,240 536,753
7,996 2,602,985
386 23,583
54,354 2,107,132
451,350
10,313 653,918
1,065,014 1,065,014
18,496,452$ 43,873,878$
534,466$ 1,972,895$
3,718 408,008
555 147,216
105,005 561,055
48,300 48,300
692,044 3,137,474
7,982 2,572,115
2,561,482
2,580 145,259
54,741 2,581,048
65,303 7,859,904
6,542,190 8,876,245
11,196,915 13,460,211
10,540,044
17,739,105 32,876,500
18,496,452$ 43,873,878$
25-
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32,876,500$
Capital assets are included in net position,but are excluded from fund balances because they do not
represent financial resources.
Cost of capital assets 258,875,500
Less accumulated depreciation/amortization (85,883,036)
Net pension assets are included in net position,but are excluded from fund balances because they
do not represent financial resources.857,821
Long-term liabilities are included in net position,but are excluded from fund balances until due and
payable.
Bond principal payable (26,320,000)
Energy loan payable (441,532)
Total OPEB liability (819,675)
Net pension liability – GERF and PEPFF (8,397,473)
Subscription liabilities (417,549)
Debt issuance premiums and discounts are excluded from net position until amortized,but are
included in fund balances upon issuance as other financing sources and uses.(2,186,515)
Accrued interest payable on long-term debt is included in net position,but is excluded from fund
balances until due and payable.(44,441)
Internal service funds are used by management to charge certain costs to individual funds.The
assets and liabilities of the internal service funds are included in governmental activities in the
Statement of Net Position.(393,300)
The recognition of certain revenues and expenses/expenditures differ between the full accrual
governmental activities financial statements and the modified accrual governmental fund financial
statements.
State aid 83,346
Delinquent taxes 145,259
Special assessments 2,581,048
Deferred outflows of resources – GERF and PEPFF pension plans 8,842,414
Deferred outflows of resources – fire relief pension plan 833,541
Deferred outflows of resources – OPEB 184,640
Deferred inflows of resources – GERF and PEPFF pension plans (8,317,080)
Deferred inflows of resources – fire relief pension plan (463,479)
Deferred inflows of resources – OPEB (211,988)
Total net position – governmental activities 171,384,001$
Amounts reported for governmental activities in the Statement of Net Position are different because:
as of December 31, 2023
CITY OF PRIOR LAKE
Reconciliation of the Balance Sheet to the
Statement of Net Position
Governmental Funds
Total fund balances – governmental funds
See notes to basic financial statements -26-
Debt
General Service Construction
Revenues
Taxes 12,119,339$ 3,349,737$ –$
Franchise taxes 557,579 – –
Special assessments 5,499 771,408 12,159
Licenses and permits 694,943 – –
Intergovernmental 3,007,580 – 3,392,958
Charges for services 1,344,465 – –
Fines and forfeits 2,895 – –
Investment income 544,766 146,684 269,802
Miscellaneous 117,243 – 132,768
Total revenues 18,394,309 4,267,829 3,807,687
Expenditures
Current
General government 3,671,376 – –
Public safety 9,140,389 – –
Public works 2,513,194 – –
Culture and recreation 2,281,006 – –
Economic development – – –
Capital outlay 168,281 – 9,725,897
Debt service
Principal – 4,261,693 –
Interest and other – 1,024,891 64,106
Total expenditures 17,774,246 5,286,584 9,790,003
Excess (deficiency) of revenues
over expenditures 620,063 (1,018,755) (5,982,316)
Other financing sources (uses)
Bonds issued – – 1,620,000
Premium on bonds issued – – 205,439
Transfers in 555,000 1,243,438 2,686,801
Transfers out (633,888) (173,737) (242,134)
Sale of capital assets 5,672 – –
Total other financing sources (uses)(73,216) 1,069,701 4,270,106
Net change in fund balances 546,847 50,946 (1,712,210)
Fund balances
Beginning of year 10,458,397 2,283,109 3,510,306
End of year 11,005,244$ 2,334,055$ 1,798,096$
CITY OF PRIOR LAKE
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Year Ended December 31, 2023
See notes to basic financial statements -27-
Nonmajor Total
Governmental Governmental
Funds Funds
2,323,672$ 17,792,748$
1,079,097 1,636,676
88,207 877,273
694,943
1,217,937 7,618,475
658,909 2,003,374
2,895
730,593 1,691,845
215,554 465,565
6,313,969 32,783,794
3,576 3,674,952
61,270 9,201,659
2,513,194
65,817 2,346,823
180,687 180,687
3,878,662 13,772,840
4,261,693
1,088,997
4,190,012 37,040,845
2,123,957 (4,257,051)
1,620,000
205,439
217,500 4,702,739
1,380,696) (2,430,455)
122,667 128,339
1,040,529) 4,226,062
1,083,428 (30,989)
16,655,677 32,907,489
17,739,105$ 32,876,500$
28-
THIS PAGE INTENTIONALLY LEFT BLANK
30,989)$
Capital outlays are recorded in net position and the cost is allocated over their estimated useful lives as
depreciation/amortization expense;however,fund balances are reduced for the full cost of capital outlays at the time of
purchase.
Capital outlay 12,984,546
Capital contributions 1,128,150
Depreciation/amortization expense (5,185,985)
Capital contributions to enterprise funds (1,729,283)
A gain or loss on the disposal of capital assets,including the difference between the carrying value and any related sale
proceeds,is included in the change in net position.However,only the sale proceeds are included in the change in fund
balance.(63,424)
Net pension assets are only recorded in the government-wide financial statements,as they are not current financial resources
to governmental funds.(812,093)
The amount of debt issued is reported in the governmental funds as a source of financing.Debt obligations are not revenues
in the Statement of Activities,but rather constitute long-term liabilities.Repayment of long-term debt does not affect the
change in net position; however, it reduces fund balances.
Debt issued (1,620,000)
Premium on debt issued (205,439)
Principal repayments 4,261,693
Subscription liability payments 125,900
Certain expenses are included in the change in net position,but do not require the use of current funds,and are not included
in the change in fund balances.
Total OPEB liability 107,697
Net pension liability – GERF and PEPFF 8,879,571
Interest on long-term debt is included in the change in net position as it accrues,regardless of when the payment is due;
however, it is included in the change in fund balances when due.(629)
Debt issuance premiums and discounts are included in the change in net position as they are amortized over the life of the
debt; however, they are included in the change in fund balances upon issuance as other financing sources and uses. 281,776
Internal service funds are used by management to charge certain costs to individual funds.The net revenue (expense)of
certain activities of the internal service funds is reported with governmental activities in the government-wide financial
statements.112,985
The recognition of certain revenues and expenses/expenditures differ between the full accrual governmental activities
financial statements and the modified accrual governmental fund financial statements.
State aid (443,408)
Delinquent property taxes 10,636
Special assessments (356,941)
Deferred outflows of resources – GERF and PEPFF pension plans (1,846,501)
Deferred outflows of resources – fire relief pension plan 485,999
Deferred outflows of resources – OPEB 28,048
Deferred inflows of resources – GERF and PEPFF pension plans (8,188,626)
Deferred inflows of resources – fire relief pension plan 188,174
Deferred inflows of resources – OPEB (129,083)
7,982,774$ Change in net position – governmental activities
CITY OF PRIOR LAKE
Year Ended December 31, 2023
Governmental Funds
to the Statement of Activities
Amounts reported for governmental activities in the Statement of Activities are different because:
Total net change in fund balances – governmental funds
Revenues, Expenditures, and Changes in Fund Balances
Reconciliation of the Statement of
See notes to basic financial statements -29-
THIS PAGE INTENTIONALLY LEFT BLANK
Actual Variance With
Original Final Amounts Final Budget
Revenues
Taxes
Property taxes 12,161,475$ 12,161,475$ 12,119,339$ (42,136)$
Franchise taxes 599,000 599,000 557,579 (41,421)
Special assessments 4,000 4,000 5,499 1,499
Licenses and permits 894,370 894,370 694,943 (199,427)
Intergovernmental 2,833,610 2,833,610 3,007,580 173,970
Charges for services 1,442,444 1,442,444 1,344,465 (97,979)
Fines and forfeits – – 2,895 2,895
Investment income 104,500 104,500 544,766 440,266
Miscellaneous 184,000 184,000 117,243 (66,757)
Total revenues 18,223,399 18,223,399 18,394,309 170,910
Expenditures
Current
General government 3,685,929 3,771,600 3,671,376 (100,224)
Public safety
Police 6,540,159 6,574,064 6,319,468 (254,596)
Fire and rescue 1,972,848 1,980,883 1,973,268 (7,615)
Other 933,613 938,471 847,653 (90,818)
Public works 2,491,244 2,676,395 2,513,194 (163,201)
Culture and recreation 2,524,218 2,501,010 2,281,006 (220,004)
Capital outlay 28,500 38,387 168,281 129,894
Total expenditures 18,176,511 18,480,810 17,774,246 (706,564)
Excess (deficiency) of revenues
over expenditures 46,888 (257,411) 620,063 877,474
Other financing sources (uses)
Transfers in 555,000 555,000 555,000 –
Transfers out (633,888) (633,888) (633,888) –
Sale of assets – – 5,672 5,672
Total other financing sources (uses)(78,888) (78,888) (73,216) 5,672
Net change in fund balances (32,000)$ (336,299)$ 546,847 883,146$
Fund balances
Beginning of year 10,458,397
End of year 11,005,244$
CITY OF PRIOR LAKE
Budgeted Amounts
Year Ended December 31, 2023
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
See notes to basic financial statements -30-
2023 2022 2023 2022
Current assets
Cash and investments 8,282,496$ 6,761,735$ 4,472,264$ 3,979,440$
Receivables
Accounts 498,878 478,911 619,348 617,565
Special assessments
Delinquent 34,853 33,993 36,177 34,679
Deferred 300 450 – –
Due from other governmental agencies 3,120 3,763 179 146
Total current assets 8,819,647 7,278,852 5,127,968 4,631,830
Noncurrent assets
Capital assets not being depreciated/amortized 2,575,270 2,575,270 54,625 34,314
Depreciable/amortizable capital assets 56,617,188 55,799,579 39,060,741 37,930,664
Accumulated depreciation/amortization (14,956,985) (13,897,668) (10,944,470) (10,262,966)
Total noncurrent assets 44,235,473 44,477,181 28,170,896 27,702,012
Total assets 53,055,120 51,756,033 33,298,864 32,333,842
Deferred outflows of resources
Pension plan deferments – GERF 165,026 197,049 110,988 192,097
OPEB plan deferments 17,064 13,290 11,943 12,584
Total deferred outflows of resources 182,090 210,339 122,931 204,681
Total assets and deferred outflows of resources 53,237,210$ 51,966,372$ 33,421,795$ 32,538,523$
Current liabilities
Accounts and contracts payable 84,008$ 95,124$ 176,501$ 30,373$
Accrued salaries and employee benefits payable 32,403 44,637 29,289 26,572
Due to other governmental agencies 82,228 84,306 4,284 3,883
Deposits payable 7,993 6,493 – –
Accrued interest payable 1,540 1,660 1,540 1,660
Current portion of total OPEB liability 6,066 – 4,245 –
Current portion of compensated absences payable 40,033 45,709 27,888 26,997
Current portion of bonds payable 135,000 130,000 135,000 130,000
Total current liabilities 389,271 407,929 378,747 219,485
Noncurrent liabilities
Compensated absences payable 84,304 64,543 50,852 39,589
Bonds premium (discount)80,083 100,571 80,083 100,571
Bonds payable 585,000 720,000 585,000 720,000
Net pension liability – GERF 558,553 642,308 375,653 626,164
Total OPEB liability 69,688 78,704 48,774 74,522
Total noncurrent liabilities 1,377,628 1,606,126 1,140,362 1,560,846
Total liabilities 1,766,899 2,014,055 1,519,109 1,780,331
Deferred inflows of resources
Pension plan deferments – GERF 179,272 9,411 120,569 9,175
OPEB plan deferments 19,592 7,036 13,712 6,662
Total deferred inflows of resources 198,864 16,447 134,281 15,837
Net position
Net investment in capital assets 43,435,390 43,526,610 27,370,813 26,751,441
Unrestricted 7,836,057 6,409,260 4,397,592 3,990,914
Total net position 51,271,447 49,935,870 31,768,405 30,742,355
Total liabilities, deferred inflows of
resources, and net position 53,237,210$ 51,966,372$ 33,421,795$ 32,538,523$
CITY OF PRIOR LAKE
Statement of Net Position
Proprietary Funds
as of December 31, 2023
Business-Type Activities – Enterprise Funds
Water Sewer
With Partial Comparative Information as of December 31, 2022)
See notes to basic financial statements -31-
Governmental
Activities –
Internal Service
2023 2022 2023 2022 Funds
2,928,569$ 2,138,668$ 15,683,329$ 12,879,843$ 744,291$
203,303 178,790 1,321,529 1,275,266 3,922
6,572 3,994 77,602 72,666 –
300 450 –
3,299 3,909 –
3,138,444 2,321,452 17,086,059 14,232,134 748,213
143,612 143,612 2,773,507 2,753,196 –
4,577,416 4,157,304 100,255,345 97,887,547 –
1,213,761) (1,106,373) (27,115,216) (25,267,007) –
3,507,267 3,194,543 75,913,636 75,373,736 –
6,645,711 5,515,995 92,999,695 89,605,870 748,213
40,624 81,721 316,638 470,867 –
4,450 5,634 33,457 31,508 –
45,074 87,355 350,095 502,375 –
6,690,785$ 5,603,350$ 93,349,790$ 90,108,245$ 748,213$
146,698$ 14,884$ 407,207$ 140,381$ –$
8,238 10,429 69,930 81,638 –
2,710 2,301 89,222 90,490 –
7,993 6,493 –
3,080 3,320 –
1,483 – 11,794 – –
2,916 10,360 70,837 83,066 503,124
270,000 260,000 –
162,045 37,974 930,063 665,388 503,124
3,655 7,283 138,811 111,415 638,389
160,166 201,142 –
1,170,000 1,440,000 –
137,497 266,379 1,071,703 1,534,851 –
18,271 33,364 136,733 186,590 –
159,423 307,026 2,677,413 3,473,998 638,389
321,468 345,000 3,607,476 4,139,386 1,141,513
44,131 3,903 343,972 22,489 –
5,109 2,983 38,413 16,681 –
49,240 6,886 382,385 39,170 –
3,507,267 3,194,543 74,313,470 73,472,594 –
2,812,810 2,056,921 15,046,459 12,457,095 (393,300)
6,320,077 5,251,464 89,359,929 85,929,689 (393,300)
6,690,785$ 5,603,350$ 93,349,790$ 90,108,245$ 748,213$
Water Quality Totals
32-
2023 2022 2023 2022
Operating revenues
Sewer charges –$ –$ 3,548,689$ 3,701,296$
Water charges 4,682,735 4,229,199 – –
Storm water charges – – – –
Base fees 1,314,590 1,282,495 1,140,769 1,113,370
Meter sales 66,262 83,379 – –
Charges for services – – – –
Miscellaneous/other – – – –
Total operating revenues 6,063,587 5,595,073 4,689,458 4,814,666
Operating expenses
Personal services 1,149,241 842,905 670,526 860,440
Supplies 372,929 422,500 61,551 46,788
Repairs and maintenance 593,495 374,245 76,355 108,643
Other services and charges 179,591 159,938 131,492 127,332
Insurance 6,717 13,744 7,539 14,391
Utilities 995,819 890,574 79,813 74,103
Disposal charges – – 1,931,514 1,824,681
Miscellaneous 4,592 13,783 279 300
Depreciation/amortization 1,059,317 1,037,601 730,684 684,405
Total operating expenses 4,361,701 3,755,290 3,689,753 3,741,083
Operating income 1,701,886 1,839,783 999,705 1,073,583
Nonoperating revenues (expenses)
Intergovernmental 86 14,839 61,762 2,742
Investment income (loss)358,376 (191,272) 195,576 (112,865)
Interest expense (19,242) (27,880) (19,242) (27,880)
Gain (loss) on sale of assets – – (94,246) 139,046
Miscellaneous 18,374 4,809 5,100 3,878
Total nonoperating revenues (expenses)357,594 (199,504) 148,950 4,921
Income before contributions and transfers 2,059,480 1,640,279 1,148,655 1,078,504
Special assessments 3,714 1,453 – –
Capital grants – – 2,890 885
Capital contributions from other funds 768,036 1,672,156 541,136 787,994
Capital contributions from developers – 1,055,853 – 1,457,489
Transfers in 163,937 – 78,197 –
Transfers out (1,659,590) (1,744,715) (744,828) (847,903)
Change in net position 1,335,577 2,625,026 1,026,050 2,476,969
Net position
Beginning of year 49,935,870 47,310,844 30,742,355 28,265,386
End of year 51,271,447$ 49,935,870$ 31,768,405$ 30,742,355$
Business-Type Activities – Enterprise Funds
CITY OF PRIOR LAKE
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
Year Ended December 31, 2023
Water Sewer
With Partial Comparative Information for the Year Ended December 31, 2022)
See notes to basic financial statements -33-
Governmental
Activities –
Internal Service
2023 2022 2023 2022 Funds
3,548,689$ 3,701,296$ –$
4,682,735 4,229,199 –
1,413,198 1,254,521 1,413,198 1,254,521 –
2,455,359 2,395,865 –
66,262 83,379 –
50,914
110,617
1,413,198 1,254,521 12,166,243 11,664,260 161,531
193,742 354,290 2,013,509 2,057,635 80,424
30,881 35,798 465,361 505,086 –
434,091 371,694 1,103,941 854,582 –
53,257 40,860 364,340 328,130 –
92 – 14,348 28,135 –
1,075,632 964,677 –
1,931,514 1,824,681 –
4,871 14,083 –
107,388 97,893 1,897,389 1,819,899 –
819,451 900,535 8,870,905 8,396,908 80,424
593,747 353,986 3,295,338 3,267,352 81,107
27,017 1,166 88,865 18,747 –
124,318 (68,237) 678,270 (372,374) 31,878
38,484) (55,760) –
94,246) 139,046 –
17,414 – 40,888 8,687 –
168,749 (67,071) 675,293 (261,654) 31,878
762,496 286,915 3,970,631 3,005,698 112,985
3,994) 3,994 (280) 5,447 –
2,890 885 –
420,111 – 1,729,283 2,460,150 –
636,102 – 3,149,444 –
242,134 – –
110,000) (122,309) (2,514,418) (2,714,927) –
1,068,613 804,702 3,430,240 5,906,697 112,985
5,251,464 4,446,762 85,929,689 80,022,992 (506,285)
6,320,077$ 5,251,464$ 89,359,929$ 85,929,689$ (393,300)$
Water Quality Totals
34-
2023 2022 2023 2022
Cash flows from operating activities
Cash received from customers 6,045,053$ 5,543,926$ 4,686,144$ 4,870,590$
Cash payments to suppliers (2,166,337) (1,812,036) (2,142,014) (2,173,226)
Cash payments to employees (1,023,429) (824,311) (727,475) (840,701)
Miscellaneous/other revenue 18,374 4,809 5,100 142,924
Net cash flows from operating
activities 2,873,661 2,912,388 1,821,755 1,999,587
Cash flows from noncapital financing activities
Intergovernmental revenue 86 14,839 61,762 2,742
Transfers in (out)(1,495,653) (1,744,715) (666,631) (847,903)
Net cash flows from noncapital
financing activities (1,495,567) (1,729,876) (604,869) (845,161)
Cash flows from capital and related financing
activities
Special assessments 3,714 1,453 – –
Capital grants – – 2,890 885
Acquisition of capital assets (49,573) (88,092) (752,678) (209,247)
Payments on bonds payable (130,000) (125,000) (130,000) (125,000)
Interest paid on long-term debt (39,850) (44,850) (39,850) (44,850)
Net cash flows from capital
and related financing activities (215,709) (256,489) (919,638) (378,212)
Cash flows from investing activities
Interest received (paid)358,376 (191,272) 195,576 (112,865)
Net increase (decrease) in cash and cash
equivalents 1,520,761 734,751 492,824 663,349
Cash and cash equivalents, January 1 6,761,735 6,026,984 3,979,440 3,316,091
Cash and cash equivalents, December 31 8,282,496$ 6,761,735$ 4,472,264$ 3,979,440$
Water Sewer
Business-Type Activities – Enterprise Funds
CITY OF PRIOR LAKE
Statement of Cash Flows
Proprietary Funds
Year Ended December 31, 2023
With Partial Comparative Information for the Year Ended December 31, 2022)
See notes to basic financial statements -35-
Governmental
Activities –
Internal Service
2023 2022 2023 2022 Funds
1,386,107$ 1,238,678$ 12,117,304$ 11,653,194$ 50,339$
386,098) (452,311) (4,694,449) (4,437,573) –
264,862) (353,159) (2,015,766) (2,018,171) (14,551)
17,414 – 40,888 147,733 110,577
752,561 433,208 5,447,977 5,345,183 146,365
27,017 1,166 88,865 18,747 –
110,000) (122,309) (2,272,284) (2,714,927) –
82,983) (121,143) (2,183,419) (2,696,180) –
3,994) 3,994 (280) 5,447 –
2,890 885 –
1) (178,101) (802,252) (475,440) –
260,000) (250,000) –
79,700) (89,700) –
3,995) (174,107) (1,139,342) (808,808) –
124,318 (68,237) 678,270 (372,374) 31,878
789,901 69,721 2,803,486 1,467,821 178,243
2,138,668 2,068,947 12,879,843 11,412,022 566,048
2,928,569$ 2,138,668$ 15,683,329$ 12,879,843$ 744,291$
TotalsWaterQuality
36-(continued)
2023 2022 2023 2022
Reconciliation of operating income to net
cash flows from operating activities
Operating income 1,701,886$ 1,839,783$ 999,705$ 1,073,583$
Adjustments to reconcile operating income
to net cash flows from operating activities
Depreciation/amortization 1,059,317 1,037,601 730,684 684,405
Sale of assets – – – 139,046
Miscellaneous/other revenue 18,374 4,809 5,100 3,878
Increase) decrease in assets
and deferred outflows of resources
Accounts receivable (19,967) (18,515) (1,783) 54,234
Special assessments receivable (710) 2,976 (1,498) 1,696
Due from other governments 643 (1,347) (33) (6)
Deferred outflows of resources – GERF 32,023 72,713 81,109 63,933
Deferred outflows of resources – OPEB (3,774) 3,051 641 2,062
Increase (decrease) in liabilities
and deferred inflows of resources
Accounts and contracts payable (11,116) 9,932 146,128 22,990
Accrued salaries and employee benefits payable (12,234) 16,470 2,717 (8,948)
Due to other governmental agencies (2,078) 52,816 401 22
Deposits payable 1,500 (34,261) – –
Compensated absences payable 14,085 (19,956) 12,154 (8,256)
Net pension liability – GERF (83,755) 281,988 (250,511) 284,187
Total OPEB liability (2,950) (11,571) (21,503) (6,390)
Deferred inflows of resources – GERF 169,861 (321,165) 111,394 (304,573)
Deferred inflows of resources – OPEB 12,556 (2,936) 7,050 (2,276)
Net cash flows from operating
activities 2,873,661$ 2,912,388$ 1,821,755$ 1,999,587$
Schedule of noncash activities from capital and
related financing activities
Capital assets contributed from other funds 768,036$ 1,672,156$ 541,136$ 787,994$
Capital assets contributed by developers –$ 1,055,853$ –$ 1,457,489$
Business-Type Activities – Enterprise Funds
Water
CITY OF PRIOR LAKE
Sewer
Statement of Cash Flows (continued)
Proprietary Funds
Year Ended December 31, 2023
With Partial Comparative Information for the Year Ended December 31, 2022)
See notes to basic financial statements -37-
Governmental
Activities –
Internal Service
2023 2022 2023 2022 Funds
593,747$ 353,986$ 3,295,338$ 3,267,352$ 81,107$
107,388 97,893 1,897,389 1,819,899 –
139,046 –
17,414 – 40,888 8,687 –
24,513) (11,849) (46,263) 23,870 (615)
2,578) (3,994) (4,786) 678 –
610 (1,353) –
41,097 28,139 154,229 164,785 –
1,184 922 (1,949) 6,035 –
131,814 (4,162) 266,826 28,760 –
2,191) (965) (11,708) 6,557 –
409 203 (1,268) 53,041 –
1,500 (34,261) –
11,072) (12,012) 15,167 (40,224) 65,873
128,882) 119,640 (463,148) 685,815 –
13,610) (2,852) (38,063) (20,813) –
40,228 (130,723) 321,483 (756,461) –
2,126 (1,018) 21,732 (6,230) –
752,561$ 433,208$ 5,447,977$ 5,345,183$ 146,365$
420,111$ –$ 1,729,283$ 2,460,150$ –$
636,102$ –$ 3,149,444$ –$
TotalsWaterQuality
38-
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF PRIOR LAKE
Notes to Basic Financial Statements
December 31, 2023
39-
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The City of Prior Lake, Minnesota (the City) operates under “Optional Plan B” as defined in Minnesota
Statutes. Under this plan, the government of the City is directed by a City Council composed of an elected
mayor and four elected councilmembers. The City Council exercises legislative authority and determines
all matters of policy. The City Council appoints personnel responsible for the proper administration of all
affairs relating to the City. The City has considered all potential units for which it is financially accountable,
and other organizations for which the nature and significance of their relationship with the City are such
that exclusion would cause the City’s financial statements to be misleading or incomplete.
The accounting policies of the City conform to accounting principles generally accepted in the United States
of America as applicable to governmental units.
B. Reporting Entity
As required by accounting principles generally accepted in the United States of America, these financial
statements include the City (the primary government) and its component units. Component units are legally
separate entities for which the primary government is financially accountable, or for which the exclusion
of the component unit would render the financial statements of the primary government misleading. The
criteria used to determine if the primary government is financially accountable for a component unit
includes whether or not the primary government appoints the voting majority of the potential compone nt
unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial
benefit or burden with the potential component unit, or is fiscally depended upon by the potential
component unit.
As a result of applying these criteria, certain organizations have been included or disclosed in this report as
follows:
Blended Component Unit – The Prior Lake Economic and Development Authority (EDA) was created
pursuant to Minnesota Statutes § 469.090 through § 469.108 to carryout economic and industrial
development and redevelopment within the City in accordance with policies established by the City
Council. The five-member Board of Directors consists of two councilmembers and three members
appointed from the community by the City Council. The EDA is reported as a blended component unit
within the EDA Special Revenue Fund. Separate financial statements are not issued for this component
unit. The EDA may not exercise any of the powers enumerated by the authorizing statutes without prior
approval of the City Council.
C. Government-Wide Financial Statements
The government-wide financial statements (Statement of Net Position and Statement of Activities) display
information about the reporting government as a whole. These statements include all of the financial
activities of the City. Governmental activities, which are normally supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which significantly rely
upon sales, fees, and charges for support.
40-
NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include: 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment, 2) operating grants and contributions, and 3) capital grants and contributions, including special
assessments that are restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other internally directed revenues are reported as general revenues.
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments
are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items
are recognized when all eligibility requirements imposed by the provider have been met.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. However, charges between the City’s enterprise funds and other functions are not eliminated,
as that would distort the direct costs and program revenues reported in those functions. The City applies
restricted resources first when an expense is incurred for which both restricted and unrestricted resources
are available. Depreciation/amortization expense is included in the direct expenses of each function. Interest
on long-term debt is considered an indirect expense and is reported separately on the Statement of
Activities.
D. Fund Financial Statement Presentation
Separate fund financial statements are provided for governmental and proprietary funds. Major individual
governmental and enterprise funds are reported as separate columns in the fund financial statements.
Aggregated information for the remaining nonmajor governmental funds is reported in a single column in
the fund financial statements.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded
in the following manner:
1. Revenue Recognition – Revenue is recognized when it becomes measurable and available.
Measurable” means the amount of the transaction can be determined and “available” means
collectible within the current period or soon enough thereafter to be used to pay liabilities of the
current period. For this purpose, the City considers revenues to be available if they are collected
within 60 days after year-end. Only the portion of special assessments receivable due within the
current fiscal period is considered to be susceptible to accrual as revenue of the current period.
Grants and similar items are recognized when all eligibility requirements imposed by the provider
have been met. Proceeds of long-term debt and acquisitions under subscription liabilities are
reported as other financing sources.
Major revenue that is susceptible to accrual includes property taxes, franchise taxes, special
assessments, intergovernmental revenue, charges for services, and interest earned on investments.
Major revenue that is not susceptible to accrual includes licenses and permits, fees, and
miscellaneous revenue. Such revenue is recorded only when received because it is not measurable
until collected.
2. Recording of Expenditures – Expenditures are generally recorded when a liability is incurred,
except for principal and interest on long-term debt, compensated absences, subscription liabilities
and other long-term liabilities, which are recognized as expenditures to the extent they have
matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental
funds.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Proprietary fund financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting, similar to the government-wide financial statements. Proprietary funds
distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a
proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise
funds and internal service funds are charges to customers for sales and services. The operating expenses for
the enterprise funds and internal service funds include the cost of sales and services, administrative
expenses, and depreciation/amortization on capital assets. All revenues and expenses that do not meet this
definition are reported as nonoperating revenues and expenses.
Aggregated information for the internal service funds is reported in a single column in the proprietary fund
financial statements. Because the principal user of the internal services is the City’s governmental activities,
the financial statements of the internal service funds are consolidated into the governmental column when
presented in the government-wide financial statements. The cost of these services is reported in the
appropriate functional activity.
Description of Funds
The City reports the following major governmental funds:
General Fund – This is the general operating fund of the City. It is used to account for all financial
resources except those required to be accounted for in another fund.
Debt Service Fund – This fund accounts for the resources accumulated to provide repayment of the
City’s general obligation debt.
Construction Capital Project Fund – This fund accounts for the resources accumulated and payments
made for city projects.
The City reports the following major proprietary funds:
Water Fund – This fund is used to account for the operation, maintenance, and improvement of the
City’s water system.
Sewer Fund – This fund is used to account for the operation, maintenance, and improvement of the
City’s sewer collection operations.
Water Quality Fund – This fund accounts for the costs associated with the City’s storm water system.
The City also reports the following fund type:
Internal Service Funds – Internal service funds account for the financing of goods and services
provided to other departments or agencies of the City on a cost-reimbursement basis. The City utilizes
a Severance Compensation Internal Service Fund and an Insurance Internal Service Fund in managing
city operations.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. Cash and Investments
1. Deposits and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand deposits,
government securities, and short-term investments with original maturities of three months or less
from the date of acquisition.
Cash balances from all funds are combined and invested to the extent available in short-term
investments. Earnings from the pooled investments are allocated to the individual funds based on
the average monthly cash and investment balances of the respective funds.
The Minnesota Municipal Money Market (4M) Fund is a customized cash management and
investment program for Minnesota public funds. Sponsored and governed by the League of
Minnesota Cities since 1987, the 4M Fund is a unique investment alternative designed to address
the daily and long-term investment needs of Minnesota cities and other municipal entities.
Allowable under Minnesota Statutes, the 4M Fund is comprised of top quality-related investments.
Investments are generally stated at fair value, except for investments in external investment pools,
which are stated at amortized cost. Short-term, highly liquid debt instruments (including bankers’
acceptance and U.S. treasury and agency obligations) purchased with a remaining maturity of
one year or less may also be reported at amortized cost. Investment income is accrued at the Balance
Sheet date.
Cash held in escrow includes balances held in escrow accounts for future capital projects from cash
deposits in the police department and the Cable Franchise Fund. Earnings on these accounts are
allocated directly to those funds.
The City categorizes its fair value measurements within the fair value hierarchy established by
accounting principles generally accepted in the United States of America. The hierarchy is based
on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices
in active markets for identical assets; Level 2 inputs are significant other observable inputs; and
Level 3 inputs are significant unobservable inputs.
Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing
technique. Matrix pricing is used to value securities based on the securities’ relationship to
benchmark quoted prices.
See Note 2 for the City’s recurring fair value measurements as of year-end.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. Investment Policy
The City’s investment policy contains the following restrictions:
a) Allowable Investments
The City may invest in any type of security allowed by Minnesota Statutes and may be amended
from time to time. The City has chosen to limit its allowable investments to those instruments
listed below:
1) Bonds, notes, certificates of indebtedness, treasury bills, or other securities now or
hereafter issued by the United States of America, its agencies and allowable
instrumentalities.
2) Interest-bearing checking and savings accounts, or any other investments constituting
direct obligations of any bank.
3) Certificates of deposit at state and federally-chartered institutions that are limited to
the amount of coverage provided by the Federal Deposit Insurance Corporation
FDIC).
4) Money market accounts that are invested in the above referenced government
securities.
5) State and local securities, which have at the time of investment one of the three highest
credit ratings by a nationally recognized rating agency.
6) Investments may be made only in those savings banks or savings and loan associations
the shares, or investment certificates, of which are insured by the FDIC.
7) Bankers’ acceptances issued by United States banks and commercial paper issued by
a United States corporation or its Canadian subsidiary that is rated in the highest quality
category by at least two nationally recognized rating agencies and mature in 270 days
or less.
8) Investment products that are considered as derivatives are specifically excluded from
approved investments.
b) Diversification
It is the policy of the City to diversify its investment portfolio. Investments shall be diversified
to eliminate the risk of loss resulting in over concent ration in a specific maturity, issuers, or
class of securities. Diversification strategies shall be determined and revised periodically by
the City’s finance director. The diversification of the allowable investments noted above shall
be as follows:
1) Up to 100 percent of 2. a) 1)
2) Up to 100 percent of 2. a) 2) and 2. a) 3)
3) Up to 25 percent of 2. a) 4)
4) Up to 25 percent of 2. a) 5)
5) Up to 10 percent of 2. a) 6 and 2. a) 7)
c) Duration
It is the policy of the City to require that all investment maturities shall not extend beyond
10 years with no more than 20 percent maturing beyond 5 years. Subject to market conditions
and cash flow requirements, it is desirable for the City’s investments to be laddered over time
in an effort to reduce interest rate market risk.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. Receivables
Accounts receivable include amounts billed for services provided before year-end. The City annually
certifies delinquent water and sewer accounts to the county for collection in the following year. Therefore,
there has been no allowance for doubtful accounts established. Receivables not expected to be collected in
one year include taxes, leases, and special assessments.
G. Property Taxes
Property tax levies are set by the City Council in December of each year and are certified to Scott County
for collection in the following year. In Minnesota, counties act as collection agents for all property taxes.
The county spreads all levies over taxable property. Such taxes become a lien on January 1 and are recorded
as receivables by the City on that date. Real property taxes may be paid by taxpayers in two equal
installments on May 15 and October 15. Personal property taxes are due in full on May 15. The county
provides tax settlements to cities and other taxing districts three times a year; in July, December, and
January. Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable.
Property taxes are recognized as revenue in the year levied in the government-wide financial statements. In
the governmental fund financial statements, taxes are recognized as revenue when received in cash or within
60 days after year-end. Taxes which remain unpaid at December 31, are classified as delinquent taxes
receivable, and are offset by a deferred inflow of resources in the governmental fund financial statements.
H. Special Assessments
Special assessments represent the financing for public improvements paid for by benefiting property
owners. These assessments are recorded as delinquent (levied, but unremitted) or deferred (certified, but
not yet levied), or other (Green Acres) special assessments receivable. Deferred contingent special
assessments represent assessments on undeveloped property that will not be levied and collected until the
properties are subdivided or developed.
I. Assets Held for Resale
Assets held for resale are reported as an asset in the government-wide and fund financial statements. These
assets are reported at the lower of cost or acquisition value.
J. Interfund Receivables and Payables
In the fund financial statements, activity between funds that is representative of lending or borrowing
arrangements is reported as either “due to/from other funds” (current portion) or “advances to/from other
funds.” All other outstanding balances between funds are reported as “due to/from other funds.” Any
residual balances outstanding between the governmental activities and business-type activities are reported
in the government-wide financial statements as “internal balances.”
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
K. Capital Assets
Capital assets, which include property, buildings, improvements, equipment, infrastructure assets (roads,
bridges, sidewalks, and similar items), technology subscriptions and intangible assets, such as water access
agreements and easements, are reported in the applicable governmental or business-type activities columns
in the government-wide financial statements. Such assets are capitalized at historical cost, or estimated
historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital
assets at their estimated acquisition value on the date of donation. The City defines capital assets as those
with an initial, individual cost of $10,000 or more with an estimated useful life in excess of one year,
including technology subscriptions. Assets purchased with federal funding is capitalized when the cost
exceeds $5,000. The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental
activities) the City chose to include items dating back to June 30, 1980. The City was able to estimate the
historical cost for the initial reporting of these assets through back-trending (i.e., estimating the current
replacement cost of the infrastructure to be capitalized and using an appropriate price-level index to deflate
the cost to the acquisition year or estimated acquisition year).
Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not
reported in the governmental fund financial statements. Property, plant, and equipment of the City are
depreciated/amortized using the straight-line method over the following estimated useful lives:
Useful Lives
Assets in Years
Land improvements 5–20
Machinery and equipment 5–30
Vehicles 8–25
Infrastructure 10–65
Technology subscriptions are amortized in a systematic and rational manner over the shorter of the
subscription term or the useful life of the underlying information technology (IT) assets. Land, utility access
agreements, easements, and construction in progress are not depreciated.
L. Compensated Absences
It is the City’s policy to permit employees to accumulate earned but unused vacation and sick leave. Upon
separation, unused vacation and 50 percent of sick pay are paid to the employee if employed longer than
five years. The majority of separation benefits are paid into a retirement health savings plan.
As benefits accrue to employees, vacation, and vested sick leave is reported as expense and liability in the
government-wide and proprietary fund financial statements. Accrued vacation, and the portion of sick leave
payable to employees upon termination are reported as expenditures in the governmental fund that will pay
them when they become due and payable.
The City has provided funding for these obligations in the Severance Compensation Internal Service Fund
and enterprise funds.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
M. Long-Term Liabilities
In the government-wide and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the
life of the bonds using the straight-line method.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well
as bond issuance costs, during the current period. The face amount of debt issued is reported as other
financing sources. Premiums received on debt issuances are reported as other financing sources , while
discounts on debt issuances are reported as other financing uses.
N. Subscription-Based Information Technology Arrangements (SBITAs)
A SBITA is a contract that conveys control of the right to use another party’s IT software, alone or in
combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period
of time in an exchange or exchange-like transaction. The City has entered into certain technology
subscriptions for public safety software solutions. Capital assets associated with SBITAs are presented
separately from other capital assets in Note 4. SBITAs related liabilities are reported in Note 6, which
include the terms and related disclosures associated with any subscription liabilities.
O. Other Post-Employment Benefits (OPEB)
Under Minnesota Statutes § 471.61, Subd. 2b, public employers must allow retirees and their dependents
to continue coverage indefinitely in an employer-sponsored healthcare plan, under the following
conditions: 1) retirees must be receiving (or be eligible to receive) an annuity from a Minnesota public
pension plan; 2) coverage must continue in a group plan until age 65, and retirees must pay no more than
the group premium; and 3) retirees may obtain dependent coverage immediately before retirement. All
premiums are funded on a pay-as-you-go basis.
P. State-Wide Pension Plans
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension
expense, information about the fiduciary net position of the Public Employees Retirement Association
PERA) and additions to/deductions from the PERA’s fiduciary net position have been determined on the
same basis as they are reported by the PERA. For this purpose, plan contributions are recognized as of
employer payroll paid dates and benefit payments, and refunds are recognized when due and payable in
accordance with the benefit terms. Investments are reported at fair value.
Q. Deferred Outflows/Inflows of Resources
In addition to assets and liabilities, statements of financial position, or balance sheets, will sometimes report
a separate section for deferred outflows and deferred inflows of resources. These separate financial
statement elements represent a consumption or acquisition of net assets that applies to future periods and
so will not be recognized as an outflow of resources (expense/expenditure) or an inflow of financial
resources (revenue) until then.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The City reports deferred outflows and inflows of resources related to pensions and OPEB in the
government-wide and enterprise funds Statement of Net Position. These deferred outflows and inflows
result from differences between expected and actual experience, changes in proportion, changes of
assumptions, difference between projected and actual earnings on pension plan investments, and from
contributions to the plan subsequent to the measurement date and before the end of the reporting period.
These amounts are deferred and amortized as required under pension and OPEB standards.
The City reports deferred inflows of resources related to lease receivables in the government-wide
Statement of Net Position and governmental funds Balance Sheet, which requires lessors to recognize
deferred inflows of resources to correspond to lease receivables. These amounts are deferred and amortized
in a systematic and rationale manner over the term of the lease. The City reports deferred inflows of
resources related to municipal state aid. The amounts received in advance of state aid allotments are
deferred and reported as revenue in the year allotted to the City.
Unavailable revenue arises only under a modified accrual basis of accounting and, therefore, is only
reported in the governmental funds Balance Sheet. The governmental funds report unavailable revenue
from two sources: property taxes and special assessments. These amounts are deferred and recognized as
an inflow of resources in the period that the amounts become available.
R. Net Position
In the government-wide and proprietary fund financial statements, net position represents the difference
between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position
is displayed in three components:
Net Investment in Capital Assets – Consists of capital assets, net of accumulated
depreciation/amortization, reduced by any outstanding debt attributable to acquire capital assets.
Restricted Net Position – Consists of net position restricted when there are limitations imposed
on their use through external restrictions imposed by creditors, grantors, or laws or regulations of
other governments.
Unrestricted Net Position – All other elements of net position that do not meet the definition of
restricted” or “net investment in capital assets.”
The City applies restricted resources first when an expense is incurred for which both restricted and
unrestricted resources are available.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
S. Fund Balance Classifications
In the fund financial statements, governmental funds report fund balance in classifications that disclose
constraints for which amounts in those funds can be spent. These classifications are as follows:
Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items,
inventory, and other long-term assets.
Restricted – Consists of amounts related to externally imposed constraints established by creditors,
grantors, or contributors; or constraints imposed by state statutory provisions.
Committed – Consists of internally imposed constraints that are established by resolution of the
City Council. Those committed amounts cannot be used for any other purpose unless the City
Council removes or changes the specified use by taking the same type of action it employed to
previously commit those amounts.
Assigned – Consists of internally imposed constraints. These constraints consist of amounts
intended to be used by the City for specific purposes but do not meet the criteria to be classified as
restricted or committed. In governmental funds, assigned amounts represent intended uses
established by the governing body itself or by an official to which the governing body delegates
the authority. Pursuant to City Council resolution, the finance director is authorized to establish
assignments of fund balance.
Unassigned – The residual classification for the General Fund, which also reflects negative residual
amounts in other funds.
When both restricted and unrestricted resources are available for use, it is the City’s policy to first use
restricted resources, then use unrestricted resources as they are needed. When committed, assigned, or
unassigned resources are available for use, it is the City’s policy to use resources in the following
order: 1) committed, 2) assigned, and 3) unassigned.
T. Comparative Data
The basic financial statements include certain prior year partial comparative information in total, but not at
the level of detail required for a presentation in conformity with accounting principles generally accepted
in the United States of America. Accordingly, such information should be read in conjunction with the
City’s financial statements for the year ended December 31, 2022, from which the summarized information
was derived. Also, certain amounts presented in the prior year data have been reclassified in order to be
consistent with the current year’s presentation.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
U. Budgets and Budgetary Accounting
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the
United States of America for the General Fund. All annual appropriations lapse at year-end. The City does
not use encumbrance accounting.
In June of each year, all departments of the City submit requests for appropriations to the finance director
so that a budget may be prepared. In September, the proposed budget is presented to the City Council for
review. The City Council holds public hearings and a final budget is prepared and adopted in early
December.
The appropriated budget is prepared by fund, function, and department. The City’s department heads may
make transfers of appropriations within a department. Transfers of appropriations between departments
require the approval of the city manager. The legal level of budgetary control is the fund level.
V. Statement of Cash Flows
For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an
original maturity from the time of purchase by the City of three months or less to be cash equivalents. The
proprietary funds’ portion in the government-wide cash and investment management pool is considered to
be cash equivalent.
W. Risk Management
The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets;
errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities
Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers’
compensation, and other miscellaneous insurance coverages. The LMCIT operates as a common risk
management and insurance program for a large number of cities in Minnesota. The City pays an annual
premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be
self-sustaining through member premiums and will reinsure through commercial companies for claims in
excess of certain limits. Settled claims did not exceed insurance coverage in the past three fiscal years.
There were no significant reductions in insurance coverage in the current year.
X. Restricted Assets
Restricted assets are cash, investments, and interest accrued thereon; the use of which is limited by external
requirements, such as a bond indenture or trust agreements.
Y. Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the
United States of America, requires management to make estimates and assumptions that affect amounts
reported in the financial statements during the reporting period. Actual results could differ from those
estimates.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Z. Change in Accounting Principle
During the year ended December 31, 2023, the City implemented GASB Statement No. 96,
Subscription-Based Information Technology Arrangements (SBITAs). This statement provides guidance
on the accounting and financial reporting for SBITAs for government end users. A SBITA is defined as a
contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or
in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a
period of time in an exchange or exchange-like transaction. Under this statement, a government generally
should recognize a right-to-use subscription asset–an intangible asset–and a corresponding subscription
liability. Certain amounts necessary to fully restate fiscal year 2022 financial information are not
determinable; therefore, prior year comparative amounts have not been restated. The implementation of this
new GASB statement in the current year resulted in the City reporting new capital assets and long-term
debt for subscription liabilities, but did not change beginning net position in the government-wide financial
statements in the current year. See Notes 4 and 6 for additional details on this change in the current year.
51-
NOTE 2 – CASH AND INVESTMENTS
A. Components of Cash and Investments
Cash and investments at year-end consist of the following:
Deposits 1,427,327$
Investments 51,287,227
Cash on hand 950
Total 52,715,504$
Cash and investments are presented in the financial statements as follows:
Statement of Net Position
Cash and investments 52,664,615$
Restricted assets – temporarily restricted –
cash and investments held in escrow 50,889
Total 52,715,504$
B. Deposits
In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks
authorized by the City Council, including checking accounts and certificates of deposit.
The following is considered the most significant risk associated with deposits:
Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the
City’s deposits may be lost.
Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety
bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not
covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury
bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better;
revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal
Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as
collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at
a trust department of a commercial bank or other financial institution that is not owned or controlled
by the financial institution furnishing the collateral. The City has no additional deposit policies
addressing custodial credit risk.
At year-end, the carrying amount of the City’s deposits was $1,427,327, while the balance on the bank
records was $2,620,183. At December 31, 2023, all deposits were fully covered by federal deposit
insurance, surety bonds, or by collateral held by the City’s agent in the City’s name.
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NOTE 2 – CASH AND INVESTMENTS (CONTINUED)
C. Investments
The City has the following investments at year-end:
Fair Value
Investment Type Rating Agency Measurement Less Than 1 1 to 5 6 to 10 Total
U.S. treasuries AAA Moody’s Level 1 –$ 2,253,013$ –$ 2,253,013$
U.S. treasuries AAA Moody’s Level 2 – 441,055 – 441,055
U.S. agency securities AAA Moody’s Level 2 192,022 – – 192,022
U.S. agency securities AA S&P Level 2 – 6,847,414 – 6,847,414
Local government securities AAA S&P Level 2 199,680 1,024,076 – 1,223,756
Local government securities AAA Moody’s Level 2 681,902 892,491 – 1,574,393
Local government securities AA S&P Level 2 653,831 2,940,878 456,820 4,051,529
Local government securities AA Moody’s Level 2 1,348,823 3,323,733 238,607 4,911,163
Local government securities A S&P Level 2 278,097 – 197,327 475,424
Negotiable certificates of deposit N/R N/A Level 2 3,562,154 11,028,733 248,548 14,839,435
6,916,509$ 28,751,393$ 1,141,302$ 36,809,204
Investment pools/mutual funds
4M Fund N/R N/A Amortized Cost 11,039,930
Government Obligation Fund AAA S&P Level 1 3,438,093
Total investment pools/
mutual funds 14,478,023
Total investments 51,287,227$
N/A – Not Applicable
N/R – Not Rated
Credit Risk Segmented Time Distribution in Years
Interest Risk –
The City’s investments include investment pools managed by the 4M Fund, which is an external investment
pool regulated by Minnesota Statutes and is not registered with the Securities and Exchange Commission.
The City’s investments in this investment pool are measured at the net asset value per share provided by
the pools, which are based on amortized cost methods that approximate fair value. The 4M Fund is
sponsored by the League of Minnesota Cities. Investments are purchased and regulated according to
Minnesota Statutes. For this investment pool, there are no unfunded commitments, redemption frequency
is daily, and there is no redemption notice required for the Liquid Class; the redemption notice period is
14 days for the Plus Class.
Investments are subject to various risks, the following of which are considered the most significant:
Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty
to an investment transaction (typically a broker-dealer) the City would not be able to recover the value
of its investments or collateral securities that are in the possession of an outside party . The City does
not have a formal investment policy addressing this risk, but typically limits its exposure by purchasing
insured or registered investments, or by the control of who holds the securities.
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NOTE 2 – CASH AND INVESTMENTS (CONTINUED)
Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations
guaranteed by the United States or its agencies; shares of investment companies registered under the
Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the
two highest rating categories by a statistical rating agency, and all of the investments have a final
maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA”
or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’
acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial
paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less;
Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of
a foreign bank, or a United States insurance company, and with a credit quality in one of the top
two highest categories; repurchase or reverse purchase agreements and securities lending agreements
with financial institutions qualified as a “depository” by the government entity, with banks that are
members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary
reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain
Minnesota securities broker-dealers. The City’s investment policy as described in Note 1 addresses
credit risk.
Concentration Risk – This is the risk associated with investing a significant portion of the City’s
investment (considered 5.0 percent or more) in the securities of a single issuer, excluding
U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. At December 31,
2023, the City had 6.7 percent of its portfolio invested with Federal Home Loan Bank and 6.7 percent
invested in Federal Farm Credit Bank. The City’s investment policy as described in Note 1, addresses
concentration risk.
Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments
resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the
greater the risk). The City has an investment policy as described in Note 1, which addresses interest
rate risk.
NOTE 3 – LEASE RECEIVABLE
The City has entered into 16 lease receivable agreements for cell tower rental and space rental at various
city sites. The lease terms include interest rates ranging from 0.2 percent to 3.0 percent with final maturities
through 2036. These leases are reported as lease receivables totaling $2,602,985. These receivables are
offset by deferred inflows of resources as lease revenue for subsequent years totaling $2,572,115. During
the current year, the City received principal and interest payments of $285,143 and $15,029, respectively,
on these leases. The deferred inflows of resources are being amortized to revenue over the life of the leases.
54-
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2023 was as follows:
A. Changes in Capital Assets Used in Governmental Activities
Change in Transfers and
Beginning Accounting Completed
of Year Principle Additions Deletions Construction End of Year
Capital assets, not depreciated
Land 33,183,201$ –$ 1,128,150$ –$ –$ 34,311,351$
Easements 56,152,920 – – – – 56,152,920
Construction in progress 10,033,602 – 11,363,589 – (5,386,234) 16,010,957
Total capital assets, not depreciated 99,369,723 – 12,491,739 – (5,386,234) 106,475,228
Capital assets, depreciated/amortized
Land improvements 2,832,128 – – – – 2,832,128
Machinery and equipment 7,847,076 – 864,280 (234,304) – 8,477,052
Vehicles 7,647,200 – 297,847 (124,259) 50,660 7,871,448
Infrastructure 128,611,074 – 458,830 – 3,606,291 132,676,195
Technology subscriptions – 543,449 – – – 543,449
Total capital assets, depreciated/amortized 146,937,478 543,449 1,620,957 (358,563) 3,656,951 152,400,272
Less accumulated depreciation/amortization on
Land improvements (1,978,583) – (71,399) – – (2,049,982)
Machinery and equipment (5,034,419) – (401,111) 175,088 – (5,260,442)
Vehicles (4,842,933) – (758,940) 120,051 – (5,481,822)
Infrastructure (69,136,255) – (3,842,659) – – (72,978,914)
Technology subscriptions – – (111,876) – – (111,876)
Total accumulated depreciation/amortization (80,992,190) – (5,185,985) 295,139 – (85,883,036)
Net capital assets, depreciated/amortized 65,945,288 543,449 (3,565,028) (63,424) 3,656,951 66,517,236
Total capital assets, net 165,315,011$ 543,449$ 8,926,711$ (63,424)$ (1,729,283)$ 172,992,464$
The change in accounting principle is further described in Note 1 to the basic financial statements.
B. Changes in Capital Assets Used in Business-Type Activities
Transfers and
Beginning Completed
of Year Additions Deletions Construction End of Year
Capital assets, not depreciated
Utility access agreements 2,499,970$ –$ –$ –$ 2,499,970$
Easements 218,912 – – – 218,912
Construction in progress 34,314 389,037 – (368,726) 54,625
Total capital assets, not depreciated 2,753,196 389,037 – (368,726) 2,773,507
Capital assets, depreciated
Land improvements 87,740 – – – 87,740
Machinery and equipment 1,798,781 149,029 – – 1,947,810
Vehicles 580,398 – – – 580,398
Infrastructure 95,420,628 264,186 (143,426) 2,098,009 97,639,397
Total capital assets, depreciated 97,887,547 413,215 (143,426) 2,098,009 100,255,345
Less accumulated depreciation on
Land improvements (56,932) (4,387) – – (61,319)
Machinery and equipment (965,219) (112,255) – – (1,077,474)
Vehicles (123,084) (32,575) – – (155,659)
Infrastructure (24,121,772) (1,748,172) 49,180 – (25,820,764)
Total accumulated depreciation (25,267,007) (1,897,389) 49,180 – (27,115,216)
Net capital assets, depreciated 72,620,540 (1,484,174) (94,246) 2,098,009 73,140,129
Total capital assets, net 75,373,736$ (1,095,137)$ (94,246)$ 1,729,283$ 75,913,636$
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NOTE 4 – CAPITAL ASSETS (CONTINUED)
C. Depreciation/Amortization Expense by Function
Depreciation/amortization expense for the year ended December 31, 2023 was charged to the following
functions:
Governmental activities
General government 502,897$
Public safety 690,515
Public works 3,460,669
Culture and recreation 531,904
Total depreciation expense – governmental activities 5,185,985$
Business-type activities
Water 1,059,317$
Sewer 730,684
Water quality 107,388
Total depreciation expense – business-type activities 1,897,389$
NOTE 5 – TRANSFERS
A schedule of interfund transfers is as follows:
Transfers Out General Debt Service Construction Nonmajor Water Sewer Total
Governmental funds
General –$ 233,888$ 400,000$ –$ –$ –$ 633,888$
Debt Service – 173,737 – – – – 173,737
Construction – – – – 163,937 78,197 242,134
Nonmajor – 228,600 1,152,096 – – – 1,380,696
Proprietary funds
Water 223,000 607,213 720,627 108,750 – – 1,659,590
Sewer 222,000 – 414,078 108,750 – – 744,828
Water Quality 110,000 – – – – – 110,000
555,000$ 1,243,438$ 2,686,801$ 217,500$ 163,937$ 78,197$ 4,944,873$
Governmental Funds
Transfer In
Proprietary Funds
Transfers are used to move revenues from the funds in which they are collected to the funds where they are
to be spent in accordance with statutory, budgetary, or contractual requirements.
Transfers are reported in the fund financial statements, but are eliminated in the government-wide financial
statements, as applicable.
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NOTE 6 – LONG-TERM DEBT
A. Components of Long-Term Debt
Final Balance –
Original Issue Interest Rate Issue Date Maturity Date End of Year
Governmental activities
General obligation bonds
Street Reconstruction Bonds of 2016A 760,000$ 2.00%05/01/2016 12/15/2026 110,000$
Improvement Bonds 2017A 370,000$ 2.00–2.25%06/29/2017 12/15/2024 55,000
Improvement Bonds 2018A 2,485,000$ 4.00–5.00%08/15/2018 12/15/2028 1,295,000
Improvement Bonds 2019A 1,665,000$ 5.00%06/27/2019 12/15/2029 1,110,000
Improvement Bonds 2021A 5,270,000$ 1.00–3.00%07/15/2021 12/15/2031 4,260,000
Improvement Bonds 2021B 4,990,000$ 5.00%07/26/2021 12/15/2029 3,645,000
Improvement Bonds 2022A 1,910,000$ 4.00–5.00%09/08/2022 12/15/2032 1,780,000
Improvement Bonds 2023A 1,620,000$ 5.00%07/19/2023 12/15/2033 1,620,000
Total general obligation bonds 13,875,000
Improvement Bonds of 2015A 4,640,000$ 2.00–3.00%05/14/2015 12/15/2030 4,235,000
Improvement Bonds of 2016A 1,105,000$ 2.00%05/01/2016 12/15/2026 330,000
Improvement Bonds of 2017A 4,135,000$ 2.00–2.25%06/29/2017 12/15/2027 1,615,000
Improvement Bonds of 2018A 3,145,000$ 4.00–5.00%08/15/2018 12/15/2028 1,405,000
Improvement Bonds of 2019A 400,000$ 5.00%06/27/2019 12/15/2024 90,000
Improvement Bonds of 2021B 880,000$ 5.00%07/26/2021 12/15/2024 235,000
Total general obligation special
assessment bonds 7,910,000
Tax increment bonds
Tax Increment Refunding Bonds of 2011A 290,000$ 1.80–3.00%08/31/2011 12/15/2024 30,000
General obligation revenue bonds
General Obligation Improvement
Bonds of 2015A 5,360,000$ 1.00–3.00%05/14/2015 12/15/2031 4,505,000
Premium (discount) on bonds payable 2,186,515
Energy loan payable 2,667,924$ 2.12%12/08/2014 06/19/2025 441,532
Subscription liabilities 543,449$ 2.60%08/15/2022 06/30/2028 417,549
Compensated absences payable 1,141,513
Total governmental activity
long-term liabilities 30,507,109
Business-type activities
General obligation revenue bonds
General Obligation Improvement
Bonds of 2018A 2,640,000$ 4.00–5.00%08/15/2018 12/15/2028 1,440,000
Premium (discount) on bonds payable 160,166
Compensated absences payable 209,648
Total business-type activity
long-term liabilities 1,809,814
Total government-wide
long-term liabilities 32,316,923$
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NOTE 6 – LONG-TERM DEBT (CONTINUED)
B. Changes in Long-Term Debt
Balance –Change in
Beginning Accounting Balance –Due Within
of Year Principle Additions Deletions End of Year One Year
Governmental activities
Bonds payable
G.O. bonds 13,835,000$ –$ 1,620,000$ 1,580,000$ 13,875,000$ 1,725,000$
G.O. special assessment bonds 9,795,000 – – 1,885,000 7,910,000 1,660,000
G.O. tax increment bonds 60,000 – – 30,000 30,000 30,000
G.O. revenue bonds 4,985,000 – – 480,000 4,505,000 495,000
Premium (discount) on bonds payable 2,262,852 – 205,439 281,776 2,186,515 –
Total bonds payable, net of premium (discount)30,937,852 – 1,825,439 4,256,776 28,506,515 3,910,000
Energy loan payable 728,225 – – 286,693 441,532 292,801
Subscription liabilities – 543,449 – 125,900 417,549 121,775
Compensated absences payable 1,075,640 – 157,275 91,402 1,141,513 503,124
Governmental activities long-term liabilities 32,741,717$ 543,449$ 1,982,714$ 4,760,771$ 30,507,109$ 4,827,700$
Business-type activities
Bonds payable
G.O. revenue bonds 1,700,000$ –$ –$ 260,000$ 1,440,000$ 270,000$
Premium (discount) on bonds payable 201,142 – – 40,976 160,166 –
Total bonds payable, net of premium (discount)1,901,142 – – 300,976 1,600,166 270,000
Compensated absences payable 194,481 – 17,024 1,857 209,648 70,837
Business-type activities long-term liabilities 2,095,623$ –$ 17,024$ 302,833$ 1,809,814$ 340,837$
The change in accounting principle is further described in Note 1 to the basic financial statements.
C. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term debt are as follows:
Year Ending
December 31,Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest
2024 1,725,000$ 606,915$ 1,660,000$ 232,588$ 30,000$ 900$ 495,000$ 119,650$ 292,801$ 7,813$ 121,775$ 11,881$
2025 1,790,000 502,315 1,560,000 184,438 – – 515,000 109,750 148,731 1,576 125,972 7,683
2026 1,890,000 423,765 1,410,000 144,988 – – 530,000 99,450 – – 129,228 4,427
2027 1,955,000 340,665 1,260,000 104,313 – – 550,000 86,200 – – 20,027 1,088
2028 1,995,000 253,515 850,000 66,600 – – 570,000 72,450 – – 20,547 567
2029–2033 4,520,000 345,095 1,170,000 52,200 – – 1,845,000 112,200 – – – –
13,875,000$ 2,472,270$ 7,910,000$ 785,127$ 30,000$ 900$ 4,505,000$ 599,700$ 441,532$ 9,389$ 417,549$ 25,646$
Subscription Liabilities
Governmental Activities
Energy LoanPayableGeneralObligationG.O. Special Assessment G.O. Tax Increment G.O. Revenue
Year Ending
December 31,Principal Interest
2024 270,000$ 69,300$
2025 270,000 58,500
2026 280,000 45,000
2027 300,000 31,000
2028 320,000 16,000
1,440,000$ 219,800$
Business-Type Activities
G.O. Revenue
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NOTE 6 – LONG-TERM DEBT (CONTINUED)
D. Other Long-Term Liabilities
The City offers a number of benefits to its employees, including compensated absences payable. The details
of these various benefit liabilities are discussed elsewhere in these notes. Such benefits are financed
primarily from the General Fund, enterprise funds, and internal service funds.
E. Descriptions and Restrictions of Long-Term Debt
General Obligation Bonds – The City issues general obligation bonds to provide funds for the acquisition
and construction of major capital facilities. They will be repaid with ad valorem taxes. General obligation
bonds have been issued for general government activities. In addition, general obligation bonds have been
issued to refund bond issues. General obligation bonds are direct obligations and pledge the full faith and
credit of the City.
General Obligation Special Assessment Bonds – Special assessment bonds were issued to finance various
improvements and will be repaid primarily from special assessments levied on the properties benefiting
from the improvements. Some issues, however, are partly financed by ad valorem tax levies. All special
assessment debt is backed by the full faith and credit of the City.
General Obligation Tax Increment Bonds – These bonds were issued for downtown redevelopment
projects. The additional tax increments resulting from increased tax capacity of the redeveloped properties
will be used to retire related debt.
General Obligation Revenue Bonds – These bonds were used to finance maintenance and building
improvements. They will be repaid with ad valorem taxes and revenue from the utilities . The bonds are
backed by the full faith and credit of the City.
Energy Loan Payable – In 2014, the City entered into an energy loan payable for the purpose of furnishing
certain equipment and work designed to reduce energy consumption and operational costs in the City. In
this energy loan payable agreement, the provider guarantees a minimum level of energy and operational
savings in the City. Payments on the loan will be made semiannually in the amount of $150,307
commencing December 19, 2015 and each June and December 19 thereafter, until final payment is made
on June 19, 2025.
If the City fails to make loan payments specified in this agreement or otherwise defaults on the loan, the
lender may declare the loan fully due and payable, take possession of the equipment identified in this
agreement without terminating the agreement, exclude the City from possession of the equipment and
attempt to sell the equipment identified in the loan, or take legal actions to force the City to comply with
the terms of the loan.
Subscription Liabilities – The City entered into an agreement to finance the use of technology software,
which calls for monthly principal and interest payments through 2028. This subscription liability is paid by
the General Fund. The total amount of the underlying technology subscriptions assets and the related
accumulated amortization is presented in Note 4 to the basic financial statements.
Compensated Absences – This liability represents vested benefits earned by employees through the end
of the year, which will be paid at termination of employment in future years. The Severance Compensation
Internal Service Fund, General Fund, and enterprise funds will be used to liquidate this liability.
59-
NOTE 6 – LONG-TERM DEBT (CONTINUED)
F. Conduit Debt Obligations
Conduit debt obligations are certain limited-obligation revenue bonds or similar instruments issued for the
express purpose of providing capital financing for a specific third party. The City has issued revenue bonds
to provide funding to private sector entities for projects deemed to be in the public interest. Although these
bonds bear the name of the City, the City has no obligation for such debt . Accordingly, the bonds are not
reported as liabilities in the financial statements of the City. The aggregate amount of all conduit debt
outstanding at December 31, 2023 is $19,494,566.
G. Revenue Pledged
Future revenue pledged for the payment of long-term debt is as follows:
Percent of Remaining Principal Pledged
Use of Total Term of Principal and Interest Revenue
Bond Issue Proceeds Type Debt Service Pledge and Interest Paid Received
Tax Increment Refunding Street and site Tax increment 100%2011–2024 30,900$ 31,800$ 140,894$
Bonds of 2011A improvements financing
General Obligation Partial refunding Utility charges 100%2015–2031 5,104,700$ 609,250$ 6,063,587$
Bonds of 2015A
General Obligation Water and sewer Utility charges 100%2018–2028 1,659,800$ 339,700$ 10,753,045$
Bonds of 2018A improvements
Revenue Pledged Current Year
H. Legal Debt Margin
The City’s statutory debt limit is equal to 3 percent of estimated taxable market value of property located
within the City. The taxable market value totals $5,302,936,749, which calculates to a debt limit of
159,088,102. Debt financed partially or entirely by special assessments, tax increments, and other revenue
sources, is not applied against the City’s debt limit, nor is debt financed by proprietary fund revenues.
Currently, the City has $13,875,000 of general obligation debt outstanding, leaving a debt margin of
145,213,102.
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NOTE 7 – NET POSITION/FUND BALANCES
A. Net Investment in Capital Assets
The government-wide Statement of Net Position at December 31, 2023 includes the City’s net investment
in capital assets calculated as follows:
Governmental Business-Type
Activities Activities Total
Net investment in capital assets:
Capital assets
Nondepreciable/amortized 106,475,228$ 2,773,507$ 109,248,735$
Depreciable, net of accumulated depreciation/amortization 66,517,236 73,140,129 139,657,365
Less capital-related long-term debt outstanding (27,149,081) (1,440,000) (28,589,081)
Less bond premiums (discounts)(2,186,515) (160,166) (2,346,681)
Total net investment in capital assets 143,656,868$ 74,313,470$ 217,970,338$
B. Classifications
At December 31, 2023, a summary of the City’s governmental fund balance classifications are as follows:
Debt Construction Nonmajor
General Fund Service Fund Fund Funds Total
Restricted
Future debt service –$ 2,334,055$ –$ –$ 2,334,055$
Economic development – – – 137,356 137,356
Forfeiture sales – – – 110,182 110,182
Public safety – – – 1,233,273 1,233,273
Capital improvements – – – 2,625,125 2,625,125
Development – – – 1,600,260 1,600,260
Communications – – – 102,092 102,092
Tax increment – – – 733,902 733,902
Total restricted – 2,334,055 – 6,542,190 8,876,245
Assigned
Subsequent year’s budget 230,840 – – – 230,840
Capital improvements – – 1,798,096 11,196,915 12,995,011
Future chip seal 98,857 – – 98,857
Shop with a cop 10,495 – – – 10,495
Charitable gambling donations 14,458 – – – 14,458
Tree planting 110,550 – – – 110,550
Total assigned 465,200 – 1,798,096 11,196,915 13,460,211
Unassigned 10,540,044 – – – 10,540,044
Total 11,005,244$ 2,334,055$ 1,798,096$ 17,739,105$ 32,876,500$
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NOTE 7 – NET POSITION/FUND BALANCES (CONTINUED)
C. Minimum Unrestricted Fund Balance Policy
The City Council has formally adopted a fund balance policy regarding the minimum unrestricted fund
balance for the General Fund. The policy establishes that the City will strive to maintain an unrestricted
General Fund balance (which includes committed, assigned, and unassigned classifications) between
40.0 and 50.0 percent of the subsequent year’s General Fund budgeted expenditures. At December 31,
2023, the total fund balance of the General Fund was 52.3 percent of the subsequent year’s budgeted
expenditures and transfers out of $21,046,603.
The City Council may consider the judicious use of reserve balances in the following situations:
to fund an expenditure of long-term benefit or legacy to the community
to fund a one-time (nonrecurring) expenditure or grant matching opportunity
to fund a one-time unplanned revenue shortfall
to fund an unplanned expenditure, due to an emergency or disaster
to moderate property taxes
to retire existing debt
to fund policy shifts by other governmental entities having a negative impact on the City
to provide catch-up funding for long-term obligations not previously recognized
In no case will the unrestricted balance be allowed to fall below 40 percent.
In the event that the year-end unrestricted balance is projected to be less than the target level, due to the use
of unrestricted balances for purposes identified above, a plan must be presented to the City Council at the
time the unrestricted funds are appropriated that will reestablish the target level within 24 to 36 months.
If restoration of the unrestricted balance cannot be accomplished within such period without severe hardship
to the City, then the City Council will establish a different time period.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS - STATE-WIDE
A. Plan Description
The City participates in the following cost-sharing, multiple-employer defined benefit pension plans
administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit
pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code (IRC).
The following is a summary of the net pension liabilities, deferred outflows and inflows of resources, and
pension expense reported for these plans as of and for the year ended December 31, 2023:
Net Deferred Deferred
Pension Outflows of Inflows of Pension
Pension Plans Liabilities Resources Resources Expense
GERF 4,283,385$ 1,265,538$ 1,374,785$ 759,977$
PEPFF 5,185,791 7,893,514 7,286,267 1,645,320
Total 9,469,176$ 9,159,052$ 8,661,052$ 2,405,297$
1. General Employees Retirement Fund (GERF)
All full-time and certain part-time employees of the City are covered by the GERF. The GERF
members belong to the Coordinated Plan. Coordinated Plan members are covered by Social
Security.
2. Public Employees Police and Fire Fund (PEPFF)
The Public Employees Police and Fire Fund (PEPFF), originally established for police officers and
firefighters not covered by a local relief association, now covers all police officers and firefighters
hired since 1980. Effective July 1, 1999, the PEPFF also covers police officers and firefighters
belonging to local relief associations that elected to merge with and transfer assets and
administration to the PERA.
B. Benefits Provided
The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statutes and can only be modified by the State Legislature. Vested, terminated employees who are entitled
to benefits, but are not receiving them yet, are bound by the provisions in effect at the time they last
terminated their public service.
1. GERF Benefits
Benefits are based on a member’s highest average salary for any five successive years of allowable
service, age, and years of credit at termination of service. Two methods are used to compute
benefits for the PERA’s Coordinated Plan members. Members hired prior to July 1, 1989, receive
the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after
June 30, 1989. Under Method 1, the accrual rate for Coordinated Plan members is 1.2 percent for
each of the first 10 years of service, and 1.7 percent for each additional year. Under Method 2, the
accrual rate for Coordinated Plan members is 1.7 percent for all years of service. For members
hired prior to July 1, 1989, a full annuity is available when age plus years of service equal 90, and
normal retirement age is 65. For members hired on or after July 1, 1989, normal retirement age is
the age for unreduced Social Security benefits capped at age 66.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
Benefit increases are provided to benefit recipients each January. The post-retirement increase is
equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security
Administration, with a minimum increase of at least 1.0 percent and a maximum of 1.5 percent.
Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30
before the effective date of the increase, will receive the full increase. Recipients receivin g the
annuity or benefit for at least one month, but less than a full year as of the June 30 before the
effective date of the increase, will receive a reduced prorated increase. In 2023, legislation repealed
the statute delaying increases for members retiring before full retirement age.
2. PEPFF Benefits
Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a
prorated basis from 50.0 percent after five years, up to 100.0 percent after 10 years of credited
service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis
from 50.0 percent after 10 years, up to 100.0 percent after 20 years of credited service. The annuity
accrual rate is 3.0 percent of average salary for each year of service. For Police and Fire Plan
members who were first hired prior to July 1, 1989, a full annuity is available when age plus years
of service equal at least 90.
Benefit increases are provided to benefit recipients each January. The post-retirement increase is
fixed at 1.0 percent. Recipients that have been receiving the annuity or benefit for at least 36 months
as of the June 30 before the effective date of the increase, will receive the full increase. Recipients
receiving the annuity or benefit for at least 25 months, but less than 36 months as of the June 30
before the effective date of the increase, will receive a reduced prorated increase.
In 2023, the Legislature allocated funding for a one-time lump-sum payment to General Employee and
Police and Fire Plan benefit recipients. Eligibility criteria and the payment amount is specified in statute.
The one-time payment is noncompounding towards future benefits.
C. Contributions
Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates
can only be modified by the State Legislature.
1. GERF Contributions
Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary
in fiscal year 2023, and the City was required to contribute 7.50 percent for Coordinated Plan
members. The City’s contributions to the GERF for the year ended December 31, 2023, were
447,938. The City’s contributions were equal to the required contributions as set by state statutes.
2. PEPFF Contributions
Police and Fire Plan members were required to contribute 11.80 percent of their annual covered
salary in fiscal year 2023, and the City was required to contribute 17.70 percent for Police and Fire
Plan members. The City’s contributions to the PEPFF for the year ended December 31, 2023, were
774,423. The City’s contributions were equal to the required contributions as set by state statutes.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
D. Pension Costs
1. GERF Pension Costs
At December 31, 2023, the City reported a liability of $4,283,385 for its proportionate share of the
GERF’s net pension liability. The City’s net pension liability reflected a reduction, due to the state
of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer
contributing entity and the state’s contribution meets the definition of a special funding situation.
The state of Minnesota’s proportionate share of the net pension liability associated with the City
totaled $118,061. The net pension liability was measured as of June 30, 2023, and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of
that date. The City’s proportionate share of the net pension liability was based on the City’s
contributions received by the PERA during the measurement period for employer payroll paid dates
from July 1, 2022 through June 30, 2023, relative to the total employer contributions received from
all of the PERA’s participating employers. The City’s proportionate share was 0.0766 percent at
the end of the measurement period and 0.0728 percent for the beginning of the period.
The amount recognized by the City as its proportionate share of the net pension liability, the direct
aid, and total portion of the net pension liability that was associated with the City were as follows:
City’s proportionate share of net pension liability 4,283,385$
State’s proportionate share of the net pension liability
associated with the City 118,061
Total 4,401,446$
For the year ended December 31, 2023, the City recognized pension expense of $759,446 for its
proportionate share of the GERF’s pension expense. In addition, the City recognized an additional
531 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s
contribution of $16.0 million to the GERF.
At December 31, 2023, the City reported its proportionate share of the GERF’s deferred outflows
of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 138,991$ 28,044$
Changes in actuarial assumptions 659,018 1,174,037
Net collective difference between projected and actual
investment earnings – 172,704
Changes in proportion 246,705 –
Contributions paid to the PERA subsequent to the
measurement date 220,824 –
Total 1,265,538$ 1,374,785$
65-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
A total of $220,824 reported as deferred outflows of resources related to pensions resulting from
city contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ending December 31, 2024. Other amounts reported as deferred
outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Pension
Year Ending Expense
December 31,Amount
2024 171,963$
2025 (557,143)$
2026 148,030$
2027 (92,921)$
2. PEPFF Pension Costs
At December 31, 2023, the City reported a liability of $5,185,791 for its proportionate share of
the PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2023,
and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of that date. The City’s proportionate share of the net pension liability was
based on the City’s contributions received by the PERA during the measurement period for
employer payroll paid dates from July 1, 2022 through June 30, 2023, relative to the total
employer contributions received from all of the PERA’s participating employers. The City’s
proportionate share was 0.3003 percent at the end of the measurement period and 0.2998 percent
for the beginning of the period.
The state of Minnesota contributed $18.0 million to the PEPFF in the plan fiscal year ended
June 30, 2023. The contribution consisted of $9.0 million in direct state aid that meets the definition
of a special funding situation and $9.0 million in supplemental state aid that does not meet the
definition of a special funding situation. The $9.0 million direct state aid was paid on October 1,
2022. Thereafter, by October 1 of each year, the state will pay $9.0 million to the PEPFF until full
funding is reached or July 1, 2048, whichever is earlier. The $9.0 million in supplemental state aid
will continue until the fund is 90.0 percent funded, or until the State Patrol Plan (administered by
the Minnesota State Retirement System) is 90.0 percent funded, whichever occurs later. The state
of Minnesota’s proportionate share of the net pension liability associated with the City totaled
208,890.
The amount recognized by the City as its proportionate share of the net pension liability, the
direct aid, and total portion of the net pension liability that was associated with the City were as
follows:
City’s proportionate share of net pension liability 5,185,791$
State’s proportionate share of the net pension liability
associated with the City 208,890
Total 5,394,681$
66-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The state of Minnesota is included as a nonemployer contributing entity in the Police and Fire
Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by
Employer, Current Reporting Period Only (pension allocation schedules) for the $9.0 million in
direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the
state of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation
accounting and financial reporting requirements. For the year ended December 31, 2023, the City
recognized pension expense of $1,657,901 for its proportionate share of the Police and Fire Plan’s
pension expense. The City recognized $12,581 as a reduction to grant revenue and pension expense
for its proportionate share of the state of Minnesota’s pension expense for the contribution of
9.0 million to the PEPFF.
The state of Minnesota is not included as a nonemployer contributing entity in the Police and Fire
Pension Plan pension allocation schedules for the $9.0 million in supplemental state aid. The City
recognized $27,027 for the year ended December 31, 2023 as revenue and an offsetting reduction
of net pension liability for its proportionate share of the state of Minnesota ’s on-behalf
contributions to the PEPFF.
At December 31, 2023, the City reported its proportionate share of the PEPFF’s deferred outflows
of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 1,400,340$ –$
Changes in actuarial assumptions 5,762,622 7,286,267
Net collective difference between projected and actual
investment earnings 15,374 –
Changes in proportion 267,388 –
Contributions paid to the PERA subsequent to the
measurement date 447,790 –
Total 7,893,514$ 7,286,267$
A total of $447,790 reported as deferred outflows of resources related to pensions resulting from
city contributions subsequent to the measurement date that will be recognized as a reduction of the
net pension liability in the year ending December 31, 2024. Other amounts reported as deferred
outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Pension
Year Ending Expense
December 31,Amount
2024 $ 336,578
2025 $ 173,371
2026 $ 1,230,823
2027 $ (298,314)
2028 $ (1,283,001)
67-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
E. Long-Term Expected Return on Investments
The Minnesota State Board of Investment, which manages the investments of the PERA, prepares an
analysis of the reasonableness on a regular basis of the long-term expected rate of return using a
building-block method in which best-estimate ranges of expected future rates of return are developed for
each major asset class. These ranges are combined to produce an expected long-term rate of return by
weighting the expected future rates of return by the target asset allocation percentages. The target allocation
and best-estimates of geometric real rates of return for each major asset class are summarized in the
following table:
Asset Class
Domestic equity 33.50 %5.10 %
International equity 16.50 5.30 %
Fixed income 25.00 0.75 %
Private markets 25.00 5.90 %
Total 100.00 %
Long-Term Expected
Allocation
Target
Real Rate of Return
F. Actuarial Methods and Assumptions
The total pension liability in the June 30, 2023, actuarial valuation was determined using an individual
entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in
the determination of the total liability is 7.00 percent. This assumption is based on a review of inflation and
investments return assumptions from a number of national investment consulting firms. The review
provided a range of return investment return rates deemed to be reasonable by the actuary. An investment
return of 7.00 percent was deemed to be within that range of reasonableness for financial reporting purposes.
Inflation is assumed to be 2.25 percent for the General Employees Plan and the Police and Fire Plan. Benefit
increases after retirement are assumed to be 1.25 percent for the General Employees Plan and 1.00 percent
for the Police and Fire Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent
after one year of service to 3.00 percent after 27 years of service. In the Police and Fire Plan, salary growth
assumptions range from 11.75 percent after one year of service to 3.00 percent after 24 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality
Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee
Mortality tables. The tables are adjusted slightly to fit the PERA’s experience.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent
four-year experience study for the General Employees Plan was completed in 2022. The assumption
changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation. The
most recent four-year experience study for the Police and Fire Plan was completed in 2020, adopted by the
Board, and became effective with the July 1, 2021 actuarial valuation.
68-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The following changes in actuarial assumptions and plan provisions occurred in 2023:
1. GERF
CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return assumption and single discount rate were changed from 6.50 percent to
7.00 percent.
CHANGES IN PLAN PROVISIONS
An additional one-time direct state aid contribution of $170.1 million will be contributed to the
Plan on October 1, 2023.
The vesting period of those hired after June 30, 2010, was changed from five years of allowable
service to three years of allowable service.
The benefit increase delay for early retirements on or after January 1, 2024, was eliminated.
A one-time, noncompounding benefit increase of 2.50 percent minus the actual 2024
adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024.
2. PEPFF
CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return assumption was changed from 6.50 percent to 7.00 percent.
The single discount rate changed from 5.40 percent to 7.00 percent.
CHANGES IN PLAN PROVISIONS
Additional one-time direct state aid contribution of $19.4 million will be contributed to the
Plan on October 1, 2023.
Vesting requirement for new hires after June 30, 2014, was changed from a graded 20 -year
vesting schedule to a graded 10-year vesting schedule, with 50.00 percent vesting after
five years, increasing incrementally to 100.00 percent after 10 years.
A one-time, noncompounding benefit increase of 3.00 percent will be payable in a lump sum
for calendar year 2024 by March 31, 2024.
Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability
benefit for a psychological condition relating to the member’s occupation.
The total and permanent duty disability benefit was increased, effective July 1, 2023.
G. Discount Rate
The discount rate used to measure the total pension liability in 2023 was 7.00 percent. The projection of
cash flows used to determine the discount rate assumed that contributions from plan members and
employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net
position of the General Employees Fund and the Police and Fire Fund were projected to be available to
make all projected future benefit payments of current plan members. Therefore, the long-term expected rate
of return on pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability.
69-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
H. Pension Liability Sensitivity
The following table presents the City’s proportionate share of the net pension liability for all plans it
participates in, calculated using the discount rate disclosed on the preceding page, as well as what the City’s
proportionate share of the net pension liability would be if it were calculated using a discount rate
1 percentage point lower or 1 percentage point higher than the current discount rate:
City’s proportionate share of
the GERF net pension liability
City’s proportionate share of
the PEPFF net pension liability 10,289,227$ 5,185,791$ 990,083$
7,577,654$ 4,283,385$ 1,573,726$
6.00%)(7.00%)(8.00%)
1% Decrease in
Discount Rate
Current 1% Increase in
Discount Rate Discount Rate
I. Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in a separately-issued
PERA financial report that includes financial statements and required supplementary information. That
report may be obtained on the internet at www.mnpera.org.
NOTE 9 – DEFINED CONTRIBUTION PLAN
Councilmembers of the City are covered by the Public Employees Defined Contribution Plan (PEDCP), a
multiple-employer deferred compensation plan administered by the PERA. The PEDCP is a tax qualified
plan under Section 401(a) of the IRC, and all contributions by or on behalf of employees are tax deferred
until time of withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative
expenses. Minnesota Statutes, Chapter 353D.03, specifies plan provisions, including the employee and
employer contribution rates for those qualified personnel who elect to participate. An eligible elected
official who decides to participate contributes 5.00 percent of their salary, which is matched by the elected
official’s employer. For ambulance service personnel, employer contributions are determined by the
employer, and for salaried employees, contributions must be a fixed percentage of salary. Employer
contributions for volunteer personnel may be a unit value for each call or period of alert duty. Employees
who are paid for their services may elect to make member contributions in an amount not to exceed the
employer share. Employer and employee contributions are combined and used to purchase shares in one or
more of the seven accounts of the Minnesota Supplemental Investment Fund. For admini stering the plan,
the PERA receives 2.00 percent of employer contributions and 25 hundredths of 1.00 percent (0.25 percent)
of the assets in each member’s account annually.
Total contributions made by the City during fiscal year 2023 were:
Required Rate
for Employees
Employee Employer Employee Employer and Employers
2,372$ 2,372$ 5.00%5.00%5.00%
Contribution Amount Percentage of Covered Payroll
70-
NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
A. Plan Description
All members of the Prior Lake Fire Department (the Department) are covered by a defined benefit plan
administered by the Prior Lake Fire Department Relief Association (the Association). As of December 31,
2023, the plan covered 27 active firefighters and 14 vested terminated firefighters whose pension benefits
are deferred. The plan was established November 1, 1957, and the Association operates under the provisions
of Minnesota Laws 1965, Chapter 446, as amended and Minnesota Statutes, Chapters 69 and 424A. It is
governed by a Board of Trustees (the Board) made up of six members elected by the members of the
Association for three-year terms, and the mayor, city manager, and fire chief, who serve as ex officio voting
members of the Board of Trustees.
The Association maintains a separate Special Fund to accumulate assets to fund the retirement benefits
earned by the Department’s membership. Funding for the Association is derived from an insurance
premium tax in accordance with the Volunteer Firefighter’s Relief Association Financing Guidelines Act.
Funds are also derived from investment income.
B. Benefits Provided
Retirement Benefits
According to the bylaws of the Association and pursuant to Minnesota Statutes, Chapter 424A.02,
Subdivisions 2 and 4, the Association pays to each member who has served as an active firefighter in the
Department for a period of 20 years or more prior to his/her resignation, and who has reached the age of
50 years or more, $10,500 per year of service. A member who has served in the Department for at least
20 years but has not reached the age of 50, may retire and be placed on the deferred pension roll until he/she
reaches the age of 50. Members who retire with less than 20 years of service, have reached the age of 50,
and have completed at least 10 years of active membership are entitled to a reduced service pension.
Disability Benefits
If a member of the Association becomes totally or permanently disabled, the Association shall pay to such
members the lump sum of $10,500 for each year that they have served as an active member of the
Department.
Death Benefit
Upon the death of any member of the Association who is in good standing at the time of their death, the
Association shall pay to the surviving spouse, if any, and if there is no surviving spouse, to surviving child
or children, if any, and if no child or children survive, to the estate of such deceased member under 10 years
of service, the sum of $10,500 for each year that they served as an active member of the Department.
C. Contributions
Minnesota Statutes Chapter 424A authorizes pension benefits for volunteer fire relief associations. The plan
is funded by fire state aid, investment earnings, and, if necessary, employer contributions as specified in
Minnesota Statutes and voluntary city contributions (if applicable). The state of Minnesota contributed
334,782 in fire state aid to the plan on behalf of the Department for the year ended December 31, 2023,
which was recorded as revenue. Required employer contributions are calculated annually based on statutory
provisions. The City’s statutorily-required contributions to the plan for the year ended December 31, 2023
were $334,782. The City’s contributions were equal to the required contributions as set by state statutes
plus an additional $20,000 voluntary contribution. Furthermore, firefighters have no obligation to
contribute to the plan.
71-
NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
CONTINUED)
D. Pension Costs
At December 31, 2023, the City reported a net pension liability (asset) of ($857,821) for the plan. The net
pension liability (asset) was measured as of December 31, 2022. The total pension liability used to calculate
the net pension liability (asset) in accordance with GASB Statement No. 68 was determined by applying
an actuarial formula to specific census data certified by the Department as of December 31, 2022.
For the year ended December 31, 2023, the City recognized pension expense of $431,876. The City also
recognized $293,956 as revenue for the state of Minnesota’s on-behalf contributions to the Department.
The following table presents the changes in net pension liability (asset) during the year:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
Beginning balance 3,533,117$ 5,203,031$ (1,669,914)$
Changes for the year
Service cost 151,003 – 151,003
Interest on pension liability (asset)196,874 – 196,874
Assumption changes (24,682) – (24,682)
Plan changes 274,789 – 274,789
Municipal contributions – 20,000 (20,000)
Projected investment earnings – 288,978 (288,978)
Contributions (state)– 296,956 (296,956)
Asset (gain) loss (70,586) (885,060) 814,474
Benefit payments (209,168) (209,168) –
Administrative expenses – (5,569) 5,569
Total net changes 318,230 (493,863) 812,093
Ending balance 3,851,347$ 4,709,168$ (857,821)$
At December 31, 2023, the City reported deferred inflows of resources and deferred outflows of resources
related to the pension from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Net difference between projected and actual earnings on
plan investments 455,321$ –$
Changes in actuarial assumptions 19,939 20,568
Difference between expected and actual economic experience 3,499 108,129
State aid to the City subsequent to the measurement date – 334,782
Contributions from the City subsequent to the measurement date 354,782 –
Total 833,541$ 463,479$
72-
NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
CONTINUED)
Deferred outflows of resources totaling $354,782 related to pensions resulting from the City’s contributions
to the plan subsequent to the measurement date will be recognized as a reduction of the net pension liability
in the year ending December 31, 2024. Deferred inflows of resources totaling $334,782 related to state aid
received subsequent to the measurement date will be recognized for its impact on the net pension liability
in the year ending December 31, 2024. Other amounts reported as deferred outflows and inflows of
resources related to the plan will be recognized in pension expense as follows:
Pension
Year Ending Expense
December 31,Amount
2024 7,074$
2025 94,420$
2026 113,958$
2027 155,807$
2028 (21,197)$
E. Actuarial Methods and Assumptions
The total pension liability (asset) at December 31, 2023 was determined using the entry-age normal
actuarial cost method and the following actuarial assumptions:
Retirement eligibility at 100.00 percent service pension at age 50 with 20 years of service, early
vested retirement at age 50 with 10 years of service vested at 60.00 percent and increased by
4.00 percent for each additional year of service, up to 20 and eligibility for deferred service
pension payable at age 50 with 20 years of service
Salary increases – 2.50%
Investment rate of return – 5.75%
20-year municipal bond yield – N/A (no unfunded liabilities)
The 5.75 percent long-term expected rate of return on pension plan investments has been set based on the
plan’s target investment allocation, along with long-term return expectations by asset class. When there is
sufficient historical evidence of market outperformance, historical average returns are considered.
The target allocation and best-estimates of geometric real rates of return for each major asset class are
summarized in the following table:
Asset Class
Cash 10.00 %2.00 %
Fixed income 31.00 3.00 %
Equities 59.00 7.90 %
Total 100.00 %5.75 %
Weight
Portfolio
Class Return
Expected
73-
NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
CONTINUED)
F. Discount Rate
The discount rate used to measure the total pension liability was 5.75 percent. The discount rate was
projected using expected benefit payments and expected asset returns. Expected benefit payments by year
were discounted using the expected asset return assumption for years in which the assets were sufficient to
pay all benefit payments. Any remaining benefit payments after the pension assets are exhausted are
discounted at the municipal bond rate. The equivalent single rate is the discount rate.
G. Pension Liability (Asset) Sensitivity
The following presents the City’s net pension liability (asset) for the plan, calculated using the discount rate
disclosed in the preceding paragraph, as well as what the City’s net pension liability (asset) would be if it
were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate:
1% Decrease in Current 1% Increase in
Discount Rate Discount Rate Discount Rate
4.75%)(5.75%)(6.75%)
Net pension liability (asset)(749,161)$ (857,821)$ (960,654)$
H. Pension Plan Fiduciary Net Position
The Association issues a publicly available financial report. This report may be obtained by writing to the
Prior Lake Fire Relief Association, 4646 Dakota Street SE, Prior Lake, Minnesota 55372.
I. Assumption and Plan Changes
The benefit level changed from $9,000 to $10,500 per year of service. The discount rate was changed from
5.50 percent to 5.75 percent for 2023.
74-
NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN
A. Plan Description
The City provides post-employment insurance benefits to certain eligible employees through its OPEB
Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits are
based on contractual agreements with employee groups. Eligibility for these benefits is based on years of
service and/or minimum age requirements. These contractual agreements do not include any specific
contribution or funding requirements. The Plan does not issue a publicly available financial report. No plan
assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
B. Benefits Provided
All retirees of the City upon retirement have the option under state law to continue their medical insurance
coverage through the City. For members of certain employee groups, the City pays for all or part of the
eligible retiree’s premiums for medical and/or dental insurance from the time of retirement until the
employee reaches the age of eligibility for Medicare. Benefits paid by the City differ by bargaining unit
and date of hire, with some contracts specifying a certain dollar amount per month, and some covering
premium costs as defined within each collective bargaining agreement. Retirees not eligible for these
city-paid premium benefits must pay the full city premium rate for their coverage.
The City is legally required to include any retirees for whom it provides health insurance coverage in the
same insurance pool as its active employees until the retiree reaches Medicare eligibility, whether the
premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive
a secondary benefit known as an “implicit rate subsidy.” This benefit relates to the assumption that the
retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing
insurance on their own, due to being included in the same pool with the City’s younger and statistically
healthier active employees.
C. Contributions
The required contribution is based on projected pay-as-you-go financing requirements, with additional
amounts to prefund benefits as determined periodically by the City. The City’s current year required
pay-as-you-go contributions to finance the benefits described in the previous section totaled $81,024.
Contributions for OPEB are paid by the General Fund and enterprise funds.
D. Membership
Membership in the Plan consisted of the following as of the latest actuarial valuation:
Retirees and beneficiaries receiving benefits 10
Active plan members 99
Total members 109
E. Total OPEB Liability of the City
The City’s total OPEB liability of $968,202 at year-end was measured as of January 1, 2023 and was
determined by an actuarial valuation as of January 1, 2023.
75-
NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)
F. Actuarial Methods and Assumptions
The total OPEB liability was determined by an actuarial valuation as of January 1, 2023, using the entry-age,
level percentage of pay actuarial method and the following actuarial assumptions, applied to all periods
included in the measurement, unless otherwise specified:
Discount rate 4.00%
20-year municipal bond yield 4.00%
Inflation rate 2.50%
Salary increases Service graded table
Healthcare trend rate 6.50% , grading to 5.00% over 6 years and then 4.00% over the next 48 years
The actuarial assumptions used in the latest valuation were based on those used to value pension liabilities
for Minnesota city employees. The state pension plans base their assumptions on periodic experience
studies. Economic assumptions are based on input from a variety of published sources of historical and
projected future financial data. Each assumption was reviewed for reasonableness with the source
information, as well as for consistency with the other economic assumptions.
Since the Plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond
yield rate of 4.00 percent, which was set by considering published rate information for 20-year high quality,
tax-exempt, general obligation municipal bonds as of the measurement date.
Mortality rates were based on Pub-2010 Public Retirement Headcount-Weighted Mortality Tables with
MP-2021 Generational Improvement Scale.
Future retirees electing coverage is assumed to be 50 percent when a pre -age 65 subsidy is not available.
Married future retirees electing spouse coverage is assumed to be 25 percent when a pre-age 65 subsidy is
not available.
G. Changes in Actuarial Assumptions
The healthcare trend rates were changed to better anticipate short -term and long-term medical increases.
The mortality tables were updated from the Pub-2010 Public Retirement Plans Headcount-Weighted
Mortality Tables (General, Safety) with MP-2020 Generational Improvement Scale to the Pub-2010 Public
Retirement Plans Headcount-Weighted Mortality Tables (General, Safety) with MP-2021 Generational
Improvement Scale. The retirement, withdrawal, and salary increase rates for public safety employees were
updated to reflect latest experience study. The inflation rate changed from 2.00 percent to 2.50 percent. The
discount rate was changed from 2.00 percent to 4.00 percent.
H. Changes in the Total OPEB Liability
Total OPEB
Liability
Beginning balance 1,113,962$
Changes for the year
Service cost 57,646
Interest 22,740
Assumption changes (194,243)
Differences between expected and actual experience 37,657
Benefit payments – employer-financed (69,560)
Total net changes (145,760)
Ending balance 968,202$
76-
NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)
I. Total OPEB Liability Sensitivity to Discount and Healthcare Cost Trend Rate Changes
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point
higher than the current discount rate:
OPEB discount rate
Total OPEB liability 1,036,181$ 905,265$
3.00% 5.00%
1% Decrease in 1% Increase in
Discount Rate Discount Rate
Current
Discount Rate
968,202$
4.00%
The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability
would be if it were calculated using healthcare cost trend rates that are 1 percentage point lower or
1 percentage point higher than the current healthcare cost trend rates:
OPEB healthcare trend rate
Total OPEB liability
1% Decrease in 1% Increase in
5.50% decreasing to 7.50% decreasing to
Healthcare Trend Rate
6.50% decreasing to
Healthcare Trend Rate Healthcare Trend Rate
887,029$ 1,062,391$
4.00%, then 3.00%6.00%, then 5.00%5.00%, then 4.00%
968,202$
J. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources
For the current year ended, the City recognized OPEB expense of $56,542. As of year-end, the City reported
deferred outflows of resources and deferred inflows of resources related to OPEB from the following
sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Changes in actuarial assumptions 104,124$ 186,555$
Difference between expected and actual economic experience 32,949 63,846
Contributions from the City subsequent to the measurement date 81,024 –
218,097$ 250,401$
Deferred outflows of resources totaling $81,024 related to OPEB resulting from city contributions to the
Plan subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in
the year ending December 31, 2024. Other amounts reported as deferred outflows and inflows of resources
related to the plan will be recognized in OPEB expense as follows:
OPEB
Year Ending Expense
December 31 Amount
2024 (23,844)$
2025 (23,844)$
2026 (23,844)$
2027 (23,829)$
2028 (5,988)$
Thereafter (11,979)$
77-
NOTE 12 – STEWARDSHIP AND ACCOUNTABILITY
Deficit Net Position
As of December 31, 2023, the Severance Compensation Internal Service Fund had a deficit net position of
585,138. This deficit will be eliminated by future charges for services.
NOTE 13 – TAX ABATEMENT AGREEMENTS
The City, in order to spur economic development and redevelopment, has entered into private development
and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing
properties and buildings or clean-up and redevelop blighted areas. The City currently has four agreements
that would be considered tax abatements.
Outstanding
Amount Principal Date of
Abated During Balance Required
Name Purpose the Fiscal Year at Year-End Decertification
1-3 Lakefront 80-unit owner-occupied senior housing
facility and 12,000 square feet of retail
space and related improvements 105,670$ 690,338$ 12/31/2029
5-1 Premier Dance 10,000 square foot commercial facility to
be used as a dance studio 12,276$ 70,248$ 12/31/2034
6-1 Shepherds Path 80.03 acres,including 442 senior
housing units,a YMCA facility,youth
center,medical office/clinic,bank,park
area,trails,and companion uses to the
existing church 288,242$ 3,012,000$ 12/31/2032
1-5 Gateway Center Acquisition,construction,and equipping
of a 170-unit multi-family senior housing
development 131,747$ 945,805$ 12/31/2034
The City is authorized to create a tax increment financing plan under Minnesota Statutes, Chapter 469.175.
The criteria that must be met under the state statutes are that, in the opinion of the municipality:
The proposed development or redevelopment would not reasonably be expected to occur solely
through private investment within the reasonably foreseeable future;
The increased market value of the site that could reasonably be expected to occur without the use
of tax increment financing would be less than the increase in the market value estimated to result
from the proposed development after subtracting the present value of the projected tax increments
for the maximum duration of the district permitted by the plan. The requirements of this item do
not apply if the district is a housing district;
The tax increment financing plan conforms to the general plan for the development or
redevelopment of the municipality as a whole; and
The tax increment financing plan will afford maximum opportunity, consistent with the sound
needs of the municipality as a whole, for the development or redevelopment of the project by
private enterprise.
The City has entered into private development agreements regarding certain tax increment properties. The
vehicle used for this reimbursement is called a tax increment revenue note.
78-
NOTE 13 – TAX ABATEMENT AGREEMENTS (CONTINUED)
These notes provide for the payment of principal, equal to the developer’s costs, plus interest at a set rate.
Payments on the loan will be made at the lesser of the note payment or the actual net tax increment received
or a reduced percentage received in certain cases) during specific years as stated in the agreement.
Payments are first applied to accrued interest and then to the principal balance. The note is canceled at the
end of the agreement term, whether or not the note has been repaid. Any additional tax increments received
in years following the term are retained by the City.
The outstanding principal balances as of December 31, 2023 for these agreements are listed on the previous
page. These amounts are not included in long-term debt because the nature of these notes is that repayment
is required only if sufficient tax increments are received. The City’s position is that these are obligations to
assign future and uncertain revenue sources and, as such, is not actual debt in-substance.
NOTE 14 – COMMITMENTS AND CONTINGENCIES
A. Federal and State Funding
Amounts received or receivable from federal and state agencies are subject to agency audit and adjustment.
Any disallowed claims, including amounts already collected, may constitute a liability of the applicable
funds. The amount, if any, of funds that may be disallowed by the agencies cannot be determined at this
time although the City expects such amounts, if any, to be immaterial.
B. Legal Claims
The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although the
outcome of these lawsuits is not presently determinable, the City’s management believes that the City will
not incur any material monetary loss resulting from these claims. No loss has been recorded on the City’s
financial statements relating to these claims.
C. Construction Contracts
During fiscal 2023, the City awarded contracts for various construction and remodeling projects. The City’s
commitment for uncompleted work on these contracts at December 31, 2023 is $1,037,332.
D. Tax Increment Districts
The City’s tax increment districts are subject to review by the Office of the State Auditor. Any disallowed
claims or misuse of tax increments could become a liability of the applicable fund. Management has
indicated that they are not aware of any instances of noncompliance, which would have a material effect
on the financial statements.
E. Water Purchase Agreement
To meet the City’s water needs as it continues to grow, the City entered into a Water Purchase and Facility
Expansion Agreement with the Shakopee Mdewakanton Sioux Community. The agreement can help supply
additional water to the City and will have future expansion available to meet the City’s long-term needs.
This approach provides the City with the flexibility to evaluate the pace and timing of development in the
Orderly Annexation Area before a substantial investment is needed to construct the expansion of the water
treatment plant. The initial improvements, combined with the long-term water purchase agreement, could
provide the City with enough water capacity for the next 15 to 20 years, depending on the rate of
development.
NOTE 15 – SUBSEQUENT EVENT
The City entered into a purchase agreement for the purchase of a fire ladder truck totaling about $1,750,000
with delivery in fiscal 2025.
REQUIRED SUPPLEMENTARY INFORMATION
Proportionate
Share of the
City’s Net Pension
Proportionate Liability and City’s
Share of the the City’s Proportionate Plan Fiduciary
State of Share of the Share of the Net Position
City’s City’s Minnesota’s State of Net Pension as a
PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage
Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total
Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension
Date)Liability Liability Liability Liability Payroll Payroll Liability
06/30/2015 0.0719% 3,726,231$ –$ 3,726,231$ 4,189,768$ 88.94% 78.20%
06/30/2016 0.0691% 5,610,578$ 73,274$ 5,683,852$ 4,285,600$ 130.92% 68.90%
06/30/2017 0.0692% 4,417,682$ 55,547$ 4,473,229$ 4,457,941$ 99.10% 75.90%
06/30/2018 0.0655% 3,633,671$ 119,282$ 3,752,953$ 4,405,847$ 82.47% 79.50%
06/30/2019 0.0679% 3,754,038$ 116,662$ 3,870,700$ 4,803,433$ 78.15% 80.20%
06/30/2020 0.0714% 4,280,758$ 132,000$ 4,412,758$ 5,090,738$ 84.09% 79.10%
06/30/2021 0.0728% 3,108,888$ 94,910$ 3,203,798$ 5,239,605$ 59.33% 87.00%
06/30/2022 0.0728% 5,765,783$ 169,184$ 5,934,967$ 5,454,052$ 105.72% 76.70%
06/30/2023 0.0766% 4,283,385$ 118,061$ 4,401,446$ 6,093,842$ 70.29% 83.10%
Contributions Contributions
in Relation to as a
Statutorily the Statutorily Contribution Percentage
Required Required Deficiency Covered of Covered
Contributions Contributions (Excess)Payroll Payroll
314,233$ 314,233$ –$ 4,189,768$ 7.50%
332,258$ 332,258$ –$ 4,430,122$ 7.50%
328,001$ 328,001$ –$ 4,373,614$ 7.50%
344,234$ 344,234$ –$ 4,589,776$ 7.50%
374,803$ 374,803$ –$ 4,999,585$ 7.50%
395,820$ 395,820$ –$ 5,278,601$ 7.50%
406,799$ 406,799$ –$ 5,423,990$ 7.50%
420,458$ 420,458$ –$ 5,606,111$ 7.50%
447,938$ 447,938$ –$ 5,972,500$ 7.50%
Note:
12/31/2020
12/31/2020
The City implemented GASB Statement No.68 in fiscal 2015 (using a June 30,2015 measurement date).This schedule is intended to present
10-year trend information. Additional years will be added as they become available.
Year-End Date
12/31/2015
12/31/2017
12/31/2018
12/31/2019
12/31/2021
12/31/2021
12/31/2022
12/31/2022
12/31/2023
12/31/2023
CITY OF PRIOR LAKE
PERA – General Employees Retirement Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability
PERA – General Employees Retirement Fund
12/31/2016
Schedule of City Contributions
City Fiscal
Year-End Date
12/31/2015
12/31/2016
Year Ended December 31, 2023
12/31/2017
Year Ended December 31, 2023
12/31/2018
12/31/2019
City Fiscal
79-
Proportionate
Share of the
City’s Net Pension
Proportionate Liability and City’s
Share of the the City’s Proportionate Plan Fiduciary
State of Share of the Share of the Net Position
City’s City’s Minnesota’s State of Net Pension as a
PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage
Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total
Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension
Date)Liability Liability Liability Liability Payroll Payroll Liability
06/30/2015 0.2400% 2,726,962$ –$ 2,726,962$ 2,244,215$ 121.51% 86.60%
06/30/2016 0.2380% 9,551,354$ –$ 9,551,354$ 2,294,383$ 416.29% 63.90%
06/30/2017 0.2360% 3,186,282$ –$ 3,186,282$ 2,425,426$ 131.37% 85.40%
06/30/2018 0.2463% 2,625,304$ –$ 2,625,304$ 2,595,948$ 101.13% 88.80%
06/30/2019 0.2569% 2,734,960$ –$ 2,734,960$ 2,713,440$ 100.79% 89.30%
06/30/2020 0.2570% 3,387,534$ 79,788$ 3,467,322$ 3,019,145$ 112.20% 87.20%
06/30/2021 0.2638% 2,036,257$ 91,525$ 2,127,782$ 3,117,270$ 65.32% 93.70%
06/30/2022 0.2998% 13,046,112$ 569,932$ 13,616,044$ 3,640,885$ 358.32% 70.50%
06/30/2023 0.3003% 5,185,791$ 208,890$ 5,394,681$ 3,943,912$ 131.49% 86.50%
Contributions Contributions
in Relation to as a
Statutorily the Statutorily Contribution Percentage
Required Required Deficiency Covered of Covered
Contributions Contributions (Excess)Payroll Payroll
363,525$ 363,525$ –$ 2,244,215$ 16.20%
377,586$ 377,586$ –$ 2,337,729$ 16.15%
400,549$ 400,549$ –$ 2,472,531$ 16.20%
431,541$ 431,541$ –$ 2,666,989$ 16.18%
498,625$ 498,625$ –$ 2,941,707$ 16.95%
555,781$ 555,781$ –$ 3,139,767$ 17.70%
596,631$ 596,631$ –$ 3,370,797$ 17.70%
668,511$ 668,511$ –$ 3,775,388$ 17.71%
774,423$ 774,423$ –$ 4,375,283$ 17.70%
Note:
12/31/2015
12/31/2016
12/31/2021
12/31/2022
12/31/2020
City Fiscal
Year-End Date
12/31/2015
12/31/2016
12/31/2020
12/31/2017
12/31/2018
12/31/2019
12/31/2021
12/31/2023
12/31/2022
CITY OF PRIOR LAKE
The City implemented GASB Statement No. 68 in fiscal 2015 (using a June 30, 2015 measurement date). This schedule is intended to present
10-year trend information. Additional years will be added as they become available.
12/31/2017
12/31/2018
12/31/2019
Schedule of City Contributions
Year Ended December 31, 2023
PERA – Public Employees Police and Fire Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability
Year Ended December 31, 2023
PERA – Public Employees Police and Fire Fund
City Fiscal
12/31/2023
Year-End Date
80-
City fiscal year-end dated December 31,2015 2016 2017 2018
Measurement period – December 31,2014 2015 2016 2017
Total pension liability
Service cost 106,719$ 109,387$ 110,441$ 132,893$
Interest 148,718 164,204 192,181 208,100
Asset (gain) loss – – 28,006 –
Benefit payments – – (34,403) (209,373)
Assumption changes – – – –
Plan changes – 99,450 34,110 304,902
Net change in total pension liability 255,437 373,041 330,335 436,522
Total pension liability – beginning 2,481,307 2,736,744 3,109,785 3,440,120
Total pension liability – ending 2,736,744$ 3,109,785$ 3,440,120$ 3,876,642$
Plan fiduciary net position
Contributions (state and local)215,194$ 228,087$ 235,891$ 237,182$
Net investment income 154,856 (169,276) 320,811 640,986
Benefit payments – – (34,403) (209,373)
Administrative costs (6,647) (6,640) (9,160) (120)
Net change in plan fiduciary net position 363,403 52,171 513,139 668,675
Total plan fiduciary net position – beginning 3,301,229 3,664,632 3,716,803 4,229,942
Total plan fiduciary net position – ending 3,664,632$ 3,716,803$ 4,229,942$ 4,898,617$
Net pension liability (asset) – ending (927,888)$ (607,018)$ (789,822)$ (1,021,975)$
Plan fiduciary net position as a percentage
of the total pension liability 133.90%119.52%122.96%126.36%
Note:The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31, 2014 measurement date). This
information is not available for previous years.
CITY OF PRIOR LAKE
Prior Lake Fire Relief Association
Schedule of Changes in the Relief Association’s
Net Pension Liability (Asset) and Related Ratios
Last Nine Years)
81-
2019 2020 2021 2022 2023
2018 2019 2020 2021 2022
151,350$ 153,304$ 157,137$ 147,320$ 151,003$
220,949 197,843 193,390 194,644 196,874
60,490) – (42,606) – (70,586)
691,031) (213,500) (658,375) (401,000) (209,168)
53,174 – – – (24,682)
254,366 – 274,789
326,048) 137,647 (96,088) (59,036) 318,230
3,876,642 3,550,594 3,688,241 3,592,153 3,533,117
3,550,594$ 3,688,241$ 3,592,153$ 3,533,117$ 3,851,347$
247,610$ 253,651$ 271,275$ 262,564$ 316,956$
262,184) 685,784 357,043 468,887 (596,082)
691,031) (213,500) (658,375) (401,000) (209,168)
2,644) – (13,666) – (5,569)
708,249) 725,935 (43,723) 330,451 (493,863)
4,898,617 4,190,368 4,916,303 4,872,580 5,203,031
4,190,368$ 4,916,303$ 4,872,580$ 5,203,031$ 4,709,168$
639,774)$ (1,228,062)$ (1,280,427)$ (1,669,914)$ (857,821)$
Contributio
118.02%133.30%135.65%147.26%122.27%
82-
Contributions in
Relation to the
Statutorily Statutorily Contribution Voluntary
Required Required Deficiency City
Contributions Contributions (Excess)Contribution
208,087$ 208,087$ –$ 20,000$
215,891$ 215,891$ –$ 20,000$
217,182$ 217,182$ –$ 20,000$
225,610$ 225,610$ –$ 20,000$
234,651$ 234,651$ –$ 20,000$
247,275$ 247,275$ –$ 20,000$
260,564$ 260,564$ –$ 20,000$
293,956$ 293,956$ –$ 20,000$
334,782$ 334,782$ –$ 20,000$
Note:
12/31/2015
12/31/2023
The City implemented GASB Statement No.68 in fiscal 2015 (using a December 31, 2014 measurement date).
This information is not available for previous years.
City Fiscal
Year-End Date
12/31/2016
12/31/2017
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
CITY OF PRIOR LAKE
Prior Lake Fire Relief Association
Schedule of City Contributions
Year Ended December 31, 2023
Last Nine Years)
83-
2018 2019 2020 2021 2022 2023
Total OPEB liability
Service cost 61,214$ 62,717$ 64,598$ 75,099$ 77,355$ 57,646$
Interest 29,555 31,270 32,188 35,042 22,440 22,740
Changes of assumptions – (37,343) – 148,752 – (194,243)
Differences between expected and
actual experiences – (123,346) – (12,906) – 37,657
Benefit payments (37,688) (42,907) (28,422) (36,020) (60,688) (69,560)
Net change in total OPEB liability 53,081 (109,609) 68,364 209,967 39,107 (145,760)
Total OPEB liability – beginning of year 853,052 906,133 796,524 864,888 1,074,855 1,113,962
Total OPEB liability – end of year 906,133$ 796,524$ 864,888$ 1,074,855$ 1,113,962$ 968,202$
Covered employee payroll 6,560,761$ 7,134,065$ 7,348,087$ 8,306,510$ 8,555,705$ 9,121,595$
Total OPEB liability as a percentage
of covered employee payroll 13.81% 11.17% 11.77% 12.94% 13.02% 10.61%
Note:
Fiscal Year-End
CITY OF PRIOR LAKE
Other Post-Employment Benefits Plan
Schedule of Changes in the City’s Total
OPEB Liability and Related Ratios
Year Ended December 31, 2023
The City implemented GASB Statement No.75 in fiscal 2018.This schedule is intended to present 10-year trend information.
Additional years will be added as they become available.
84-
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF PRIOR LAKE
Notes to Required Supplementary Information
December 31, 2023
85-
PERA – GENERAL EMPLOYEES RETIREMENT FUND
2023 CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return assumption and single discount rate were changed from 6.50 percent to
7.00 percent.
2023 CHANGES IN PLAN PROVISIONS
An additional one-time direct state aid contribution of $170.1 million will be contributed to the
Plan on October 1, 2023.
The vesting period of those hired after June 30, 2010, was changed from five years of allowable
service to three years of allowable service.
The benefit increase delay for early retirements on or after January 1, 2024, was eliminated.•
A one-time, noncompounding benefit increase of 2.50 percent minus the actual
2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024.
2022 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
2021 CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return and single discount rates were changed from 7.50 percent to
6.50 percent, for financial reporting purposes.
The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
2020 CHANGES IN ACTUARIAL ASSUMPTIONS
The price inflation assumption was decreased from 2.50 percent to 2.25 percent.
The payroll growth assumption was decreased from 3.25 percent to 3.00 percent.
Assumed salary increase rates were changed as recommended in the June 30, 2019 experience
study. The net effect is assumed rates that average 0.25 percent less than previous rates.
Assumed rates of retirement were changed as recommended in the June 30, 2019 experience
study. The changes result in more unreduced (normal) retirements and slightly fewer
Rule of 90 and early retirements.
Assumed rates of termination were changed as recommended in the June 30, 2019 experience
study. The new rates are based on service and are generally lower than the previous rates for
years two through five, and slightly higher thereafter.
Assumed rates of disability were changed as recommended in the June 30, 2019 experience
study. The change results in fewer predicted disability retirements for males and females.
The base mortality table for healthy annuitants and employees was changed from the RP-2014
Table to the Pub-2010 General Mortality Table, with adjustments. The base mortality table for
disabled annuitants was changed from the RP-2014 Disabled Annuitant Mortality Table to the
Pub-2010 General/Teacher Disabled Annuitant Mortality Table, with adjustments.
The mortality improvement scale was changed from MP-2018 to MP-2019.
The assumed spouse age difference was changed from two years older for females to one year
older.
The assumed number of married male new retirees electing the 100.00 percent joint and
survivor option changed from 35.00 percent to 45.00 percent. The assumed number of married
female new retirees electing the 100.00 percent joint and survivor option changed from
15.00 percent to 30.00 percent. The corresponding number of married new retirees electing the
life annuity option was adjusted accordingly.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
86-
PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED)
2020 CHANGES IN PLAN PROVISIONS
Augmentation for current privatized members was reduced to 2.00 percent for the period July 1,
2020 through December 31, 2023, and zero percent thereafter. Augmentation was eliminated
for privatizations occurring after June 30, 2020.
2019 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality projection scale was changed from MP-2017 to MP-2018.
2019 CHANGES IN PLAN PROVISIONS
The employer supplemental contribution was changed prospectively, decreasing from
31.0 million to $21.0 million per year. The state’s special funding contribution was changed
prospectively, requiring $16.0 million due per year through 2031.
2018 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.00 percent per year through 2044, and
2.50 percent per year thereafter, to 1.25 percent per year.
2018 CHANGES IN PLAN PROVISIONS
The augmentation adjustment in early retirement factors is eliminated over a five-year period
starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024.
Interest credited on member contributions decreased from 4.00 percent to 3.00 percent,
beginning July 1, 2018.
Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation
that has already accrued for deferred members will still apply.
Contribution stabilizer provisions were repealed.
Post-retirement benefit increases were changed from 1.00 percent per year with a provision to
increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the
Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than
1.50 percent, beginning January 1, 2019.
For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree
reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit
recipients, or survivors.
Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
87-
PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED)
2017 CHANGES IN ACTUARIAL ASSUMPTIONS
The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active
members and 60.00 percent for vested and nonvested deferred members. The revised CSA
loads are now zero percent for active member liability, 15.00 percent for vested deferred
member liability, and 3.00 percent for nonvested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.00 percent per year for
all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter.
2017 CHANGES IN PLAN PROVISIONS
The state’s contribution for the Minneapolis Employees Retirement Fund equals $16.0 million
in 2017 and 2018, and $6.0 million thereafter.
The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund
changed from $21.0 million to $31.0 million in calendar years 2019 to 2031. The state’s
contribution changed from $16.0 million to $6.0 million in calendar years 2019 to 2031.
2016 CHANGES IN ACTUARIAL ASSUMPTIONS
The assumed post-retirement benefit increase rate was changed from 1.00 percent per year
through 2035, and 2.50 percent per year thereafter, to 1.00 percent per year for all years.
The assumed investment return was changed from 7.90 percent to 7.50 percent. The single
discount rate changed from 7.90 percent to 7.50 percent.
Other assumptions were changed pursuant to the experience study June 30, 2015. The assumed
future salary increases, payroll growth, and inflation were decreased by 0.25 percent to
3.25 percent for payroll growth, and 2.50 percent for inflation.
2015 CHANGES IN ACTUARIAL ASSUMPTIONS
The assumed post-retirement benefit increase rate was changed from 1.00 percent per year
through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2035, and
2.50 percent per year thereafter.
2015 CHANGES IN PLAN PROVISIONS
On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General
Employees Fund, which increased the total pension liability by $1.1 billion and increased the
fiduciary plan net position by $892.0 million. Upon consolidation, state and employer
contributions were revised; the state’s contribution of $6.0 million, which meets the special
funding situation definition, was due September 2015.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
88-
PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND
2023 CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return assumption was changed from 6.50 percent to 7.00 percent.
The single discount rate changed from 5.40 percent to 7.00 percent.
2023 CHANGES IN PLAN PROVISIONS
Additional one-time direct state aid contribution of $19.4 million will be contributed to the
Plan on October 1, 2023.
Vesting requirement for new hires after June 30, 2014, was changed from a graded 20-year
vesting schedule to a graded 10-year vesting schedule, with 50.00 percent vesting after
five years, increasing incrementally to 100.00 percent after 10 years.
A one-time, noncompounding benefit increase of 3.00 percent will be payable in a lump sum
for calendar year 2024 by March 31, 2024.
Psychological treatment is required effective July 1, 2023, prior to approval for a duty disability
benefit for a psychological condition relating to the member’s occupation.
The total and permanent duty disability benefit was increased, effective July 1, 2023.
2022 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
This single discount rate changed from 6.50 percent to 5.40 percent.
2021 CHANGES IN ACTUARIAL ASSUMPTIONS
The investment return and single discount rates were changed from 7.50 percent to
6.50 percent, for financial reporting purposes.
The inflation assumption was changed from 2.50 percent to 2.25 percent.
The payroll growth assumption was changed from 3.25 percent to 3.00 percent.
The base mortality table for healthy annuitants and employees was changed from the RP-2014
Table to the Pub-2010 Public Safety Mortality Table. The mortality improvement scale was
changed from MP-2019 to MP-2020.
The base mortality table for disabled annuitants was changed from the RP-2014 Healthy
Annuitant Mortality Table (with future mortality improvement according to Scale MP-2019)
to the Pub-2010 Public Safety Disabled Annuitant Mortality Table (with future mortality
improvement according to Scale MP-2020).
Assumed rates of salary increase were modified as recommended in the July 14, 2020
experience study. The overall impact is a decrease in gross salary increase rates.
Assumed rates of retirement were changed as recommended in the July 14, 2020 experience
study. The changes result in slightly more unreduced retirements and fewer assumed early
retirements.
Assumed rates of withdrawal were changed from select and ultimate rates to service -based
rates. The changes result in more assumed terminations.
Assumed rates of disability were increased for ages 25–44 and decreased for ages over 49.
Overall, proposed rates result in more projected disabilities.
Assumed percent married for active female members was changed from 60.00 percent to
70.00 percent. Minor changes to form of payment assumptions were applied.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
89-
PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED)
2020 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality projection scale was changed from MP-2018 to MP-2019.
2019 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality projection scale was changed from MP-2017 to MP-2018.
2018 CHANGES IN ACTUARIAL ASSUMPTIONS
The mortality projection scale was changed from MP-2016 to MP-2017.
2018 CHANGES IN PLAN PROVISIONS
Post-retirement benefit increases were changed to 1.00 percent for all years, with no trigger.•
An end date of July 1, 2048 was added to the existing $9.0 million state contribution.•
New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million
thereafter, until the plan reaches 100.00 percent funding, or July 1, 2048, if earlier.•
Member contributions were changed from 10.80 percent to 11.30 percent of pay, effective
January 1, 2019, and 11.80 percent of pay, effective January 1, 2020.•
Employer contributions were changed from 16.20 percent to 16.95 percent of pay, effective
January 1, 2019, and 17.70 percent of pay, effective January 1, 2020.•
Interest credited on member contributions decreased from 4.00 percent to 3.00 percent,
beginning July 1, 2018.•
Deferred augmentation was changed to zero percent, effective January 1, 2019. Augmentation
that has already accrued for deferred members will still apply.•
Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
2017 CHANGES IN ACTUARIAL ASSUMPTIONS
Assumed salary increases were changed as recommended in the June 30, 2016 experience
study. The net effect is proposed rates that average 0.34 percent lower than the previous rates.•
Assumed rates of retirement were changed, resulting in fewer retirements.•
The CSA load was 30.00 percent for vested and nonvested deferred members. The CSA has
been changed to 33.00 percent for vested members, and 2.00 percent for nonvested members.•
The base mortality table for healthy annuitants was changed from the RP-2000 Fully
Generational Table to the RP-2014 Fully Generational Table (with a base year of 2006), with
male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from
Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed
from the RP-2000 Disabled Mortality Table to the mortality tables assumed for healthy retirees.•
Assumed termination rates were decreased to 3.00 percent for the first three years of service.
Rates beyond the select period of three years were adjusted, resulting in more expected
terminations overall.•
Assumed percentage of married female members was decreased from 65.00 percent to
60.00 percent.•
Assumed age difference was changed from separate assumptions for male members (wives
assumed to be three years younger) and female members (husbands assumed to be four years
older) to the assumption that males are two years older than females.•
The assumed percentage of female members electing joint and survivor annuities was
increased.•
The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years,
to 1.00 percent per year through 2064, and 2.50 percent thereafter.•
The single discount rate was changed from 5.60 percent per annum to 7.50 percent per annum.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
90-
PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED)
2016 CHANGES IN ACTUARIAL ASSUMPTIONS
The assumed post-retirement benefit increase rate was changed from 1.00 percent per year
through 2037, and 2.50 percent per year thereafter, to 1.00 percent per year for all future years.
The assumed investment return was changed from 7.90 percent to 7.50 percent.
The single discount rate changed from 7.90 percent to 5.60 percent.
The assumed future salary increases, payroll growth, and inflation were decreased by
0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation.
2015 CHANGES IN ACTUARIAL ASSUMPTIONS
The assumed post-retirement benefit increase rate was changed from 1.00 percent per year
through 2030, and 2.50 percent per year thereafter, to 1.00 percent per year through 2037, and
2.50 percent per year thereafter.
2015 CHANGES IN PLAN PROVISIONS
The post-retirement benefit increase to be paid after attainment of the 90.00 percent funding
threshold was changed from inflation up to 2.50 percent, to a fixed rate of 2.50 percent.
PRIOR LAKE FIRE RELIEF ASSOCIATION
The discount rate was changed from 5.50 percent to 5.75 percent for 2023.
A benefit level increase from $9,000 to $10,500 occurred starting January 1, 2022.
A benefit level increase from $8,500 to $9,000 was reflected in the pension liability for 2021.
The discount rate was changed from 6.00 percent to 5.50 percent for 2019.
A benefit level increase from $8,000 to $8,500 was reflected in the pension liability for 2019.
A benefit level increase from $7,200 to $8,000 was reflected in the pension liability for 2018.
A benefit level increase from $7,100 to $7,200 was reflected in the pension liability for 2017.
A benefit level increase from $6,800 to $7,100 was reflected in the pension liability for 2016.
CITY OF PRIOR LAKE
Notes to Required Supplementary Information (continued)
December 31, 2023
91-
OTHER POST-EMPLOYMENT BENEFITS PLAN
2023 CHANGES IN ACTUARIAL ASSUMPTIONS
The healthcare trend rates were changed to better anticipate short-term and long-term medical
increases.
The mortality tables were updated from the Pub-2010 Public Retirement Plans
Headcount-Weighted Mortality Tables (General, Safety) with MP-2020 Generational
Improvement Scale to the Pub-2010 Public Retirement Plans Headcount-Weighted Mortality
Tables (General, Safety) with MP-2021 Generational Improvement Scale.
The retirement, withdrawal, and salary increase rates for public safety employees were updated
to reflect the latest experience study.
The inflation rate changed from 2.00 percent to 2.50 percent.
The discount rate was changed from 2.00 percent to 4.00 percent.
2021 CHANGES IN ACTUARIAL ASSUMPTIONS
The healthcare trend rates were changed to better anticipate short-term and long-term medical
increases.
The mortality tables were updated from the RP-2014 Mortality Tables (Blue Collar for Public
Safety, White Collar for Others) with MP-2018 Generational Improvement Scale to the
Pub-2010 Public Retirement Plans Headcount-Weighted Mortality Tables (General, Safety)
with MP-2020 Generational Improvement Scale.
The inflation rate changed from 2.50 percent to 2.00 percent.
The salary increase rates were changed from a flat 3.00 percent per year for all employees, to
rates, which vary by service and contract group.
The discount rate was changed from 3.80 percent to 2.00 percent.
2019 CHANGES IN ACTUARIAL ASSUMPTIONS
The healthcare trend rates were changed from 6.25 percent, grading to 5.00 percent over
five years, to 6.50 percent, grading to 5.00 percent over six years.
The mortality tables were updated to meet current actuarial standards.
The discount rate was changed from 3.30 percent to 3.80 percent.
2018 CHANGES IN ACTUARIAL ASSUMPTIONS
The healthcare trend rates were changed from 6.50 percent, grading to 5.00 percent over
six years, to 6.25 percent, grading to 5.00 percent over five years.
The mortality table was updated from RP-2014 adjusted to 2006 White Collar Mortality Tables
with MP-2016 Generational Improvement Scale, to RF-2014 White Collar with MP-2016
Generational Improvement Scale.
The actuarial cost method was changed from entry-age normal level dollar to entry-age level
percent of pay.
The discount rate was changed from 3.50 percent to 3.30 percent.
THIS PAGE INTENTIONALLY LEFT BLANK
SUPPLEMENTARY INFORMATION
Special
Revenue Capital Projects Total
Assets
Cash and investments 4,880,190$ 12,090,490$ 16,970,680$
Cash held in escrow 50,889 – 50,889
Receivables
Delinquent taxes 2,580 – 2,580
Accounts 11,208 323,032 334,240
Lease 7,996 – 7,996
Special assessments
Delinquent – 386 386
Deferred – 54,354 54,354
Due from other governmental agencies 1,755 8,558 10,313
Assets held for resale 1,065,014 – 1,065,014
Total assets 6,019,632$ 12,476,820$ 18,496,452$
Liabilities
Accounts and contracts payable 43,225$ 491,241$ 534,466$
Accrued salaries and employee benefits payable 3,718 – 3,718
Due to other governmental agencies 555 – 555
Deposits payable 104,984 21 105,005
Unearned revenue 48,300 – 48,300
Total liabilities 200,782 491,262 692,044
Deferred inflows of resources
Lease revenue for subsequent years 7,982 – 7,982
Unavailable revenue from delinquent taxes 2,580 – 2,580
Unavailable revenue from special assessments – 54,741 54,741
Total deferred inflows of resources 10,562 54,741 65,303
Fund balances
Restricted 5,808,288 733,902 6,542,190
Assigned – 11,196,915 11,196,915
Total fund balances 5,808,288 11,930,817 17,739,105
Total liabilities, deferred inflows
of resources, and fund balances 6,019,632$ 12,476,820$ 18,496,452$
CITY OF PRIOR LAKE
Nonmajor Governmental Funds
Combining Balance Sheet
as of December 31, 2023
92-
Special
Revenue Capital Projects Total
Revenue
Taxes 369,032$ 1,954,640$ 2,323,672$
Franchise taxes – 1,079,097 1,079,097
Special assessments – 88,207 88,207
Charges for services 190,114 468,795 658,909
Intergovernmental 1,217,937 – 1,217,937
Investment income 131,187 599,406 730,593
Miscellaneous
Contributions and donations 14,300 – 14,300
Other 16,254 185,000 201,254
Total revenue 1,938,824 4,375,145 6,313,969
Expenditures
Current
General government 3,576 – 3,576
Public safety 61,270 – 61,270
Culture and recreation 65,817 – 65,817
Economic development 180,687 – 180,687
Capital outlay 84,104 3,794,558 3,878,662
Total expenditures 395,454 3,794,558 4,190,012
Excess of revenues over expenditures 1,543,370 580,587 2,123,957
Other financing sources (uses)
Transfers in – 217,500 217,500
Transfers out – (1,380,696) (1,380,696)
Sale of capital assets – 122,667 122,667
Total other financing sources (uses)– (1,040,529) (1,040,529)
Net change in fund balances 1,543,370 (459,942) 1,083,428
Fund balances
Beginning of year 4,264,918 12,390,759 16,655,677
End of year 5,808,288$ 11,930,817$ 17,739,105$
Year Ended December 31, 2023
CITY OF PRIOR LAKE
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
93-
Capital ED Revolving Cable
Park Loan Franchise
Assets
Cash and investments 1,694,090$ 136,561$ 98,161$
Cash held in escrow – – 25,000
Receivables
Delinquent taxes – – –
Accounts (refund)5,811 795 3,931
Due from other governmental agencies – – –
Lease 7,996 – –
Assets held for resale – – –
Total assets 1,707,897$ 137,356$ 127,092$
Liabilities
Accounts and contracts payable 41,073$ –$ –$
Accrued salaries and employee benefits payable – – –
Due to other governmental agencies – – –
Deposits payable – – 25,000
Unearned revenue 33,750 – –
Total liabilities 74,823 – 25,000
Deferred inflows of resources
Lease revenue for subsequent years 7,982 – –
Unavailable revenue from delinquent taxes – – –
Total deferred inflows of resources 7,982 – –
Fund balances
Restricted for economic development – 137,356 –
Restricted for forfeiture sales – ––
Restricted for public safety – ––
Restricted for capital improvements 1,625,092 – –
Restricted for development – – –
Restricted for communications – – 102,092
Total fund balances 1,625,092 137,356 102,092
Total liabilities, deferred inflows
of resources, and fund balances 1,707,897$ 137,356$ 127,092$
as of December 31, 2023
CITY OF PRIOR LAKE
Nonmajor Special Revenue Funds
Combining Balance Sheet
94-
Police MN Public
EDA Forfeiture DAG Safety Total
537,461$ 109,729$ 1,070,831$ 1,233,357$ 4,880,190$
25,889 – – 50,889
2,580 – – – 2,580
303 452 – (84) 11,208
1,755 – – – 1,755
7,996
1,065,014 – – – 1,065,014
1,607,113$ 136,070$ 1,070,831$ 1,233,273$ 6,019,632$
2,152$ –$ 43,225$
3,718 – – – 3,718
555 – – – 555
25,888 54,096 – 104,984
14,550 – 48,300
4,273 25,888 70,798 – 200,782
7,982
2,580 – – – 2,580
2,580 – – – 10,562
137,356
110,182 – – 110,182
1,233,273 1,233,273
1,000,033 – 2,625,125
1,600,260 – – – 1,600,260
102,092
1,600,260 110,182 1,000,033 1,233,273 5,808,288
1,607,113$ 136,070$ 1,070,831$ 1,233,273$ 6,019,632$
95-
Capital ED Revolving Cable
Park Loan Franchise
Revenues
Taxes –$ –$ –$
Charges for services 122,904 – 16,448
Intergovernmental – – –
Investment income 80,687 6,432 4,544
Miscellaneous
Contributions and donations 14,300 – –
Other – – –
Total revenues 217,891 6,432 20,992
Expenditures
Current
General government – – 3,576
Public safety – – –
Culture and recreation 65,817 – –
Economic development – – –
Capital outlay 70,866 – –
Total expenditures 136,683 – 3,576
Net change in fund balances 81,208 6,432 17,416
Fund balances
Beginning of year 1,543,884 130,924 84,676
End of year 1,625,092$ 137,356$ 102,092$
CITY OF PRIOR LAKE
Year Ended December 31, 2023
and Changes in Fund Balances
Combining Statement of Revenues, Expenditures,
Nonmajor Special Revenue Funds
96-
Police MN Public
EDA Forfeiture DAG Safety Total
369,032$ –$ –$ –$ 369,032$
24,588 – 26,174 – 190,114
1,217,937 1,217,937
18,069 6,119 – 15,336 131,187
14,300
16,254 – – 16,254
411,689 22,373 26,174 1,233,273 1,938,824
3,576
61,270 – – 61,270
65,817
180,687 – – – 180,687
13,238 – 84,104
180,687 61,270 13,238 – 395,454
231,002 (38,897) 12,936 1,233,273 1,543,370
1,369,258 149,079 987,097 – 4,264,918
1,600,260$ 110,182$ 1,000,033$ 1,233,273$ 5,808,288$
97-
Revolving Trunk Street
Equipment Reserve Oversizing
Assets
Cash and investments 1,090,395$ 5,947,159$ 330,937$
Receivables
Accounts (refund)14,599 22,107 6,305
Special assessments
Delinquent – – –
Deferred – 3,416 –
Due from other governmental agencies 3,887 – –
Total assets 1,108,881$ 5,972,682$ 337,242$
Liabilities
Accounts and contracts payable 64,642$ –$ –$
Due to other governmental agencies – – –
Total liabilities 64,642 – –
Deferred inflows of resources
Unavailable revenue from special assessments – 3,416 –
Fund balances
Restricted for tax increment – – –
Assigned for capital improvements 1,044,239 5,969,266 337,242
Total fund balances 1,044,239 5,969,266 337,242
Total liabilities, deferred inflows
of resources, and fund balances 1,108,881$ 5,972,682$ 337,242$
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Balance Sheet
as of December 31, 2023
98-
Tax Tax Tax
Increment 1-3 Increment 5-1 Increment 6-1
Lakefront Premiere Shepard’s Path
163,747$ 18,304$ 683,495$
657 15 1,110
945 – –
165,349$ 18,319$ 684,605$
39,055$ 6,136$ 144,120$
39,055 6,136 144,120
126,294 12,183 540,485
126,294 12,183 540,485
165,349$ 18,319$ 684,605$
99-(continued)
Tax Revolving
Increment 1-5 Park Facility
Gateway Ctr Equipment Management
Assets
Cash and investments 121,220$ 595,458$ 1,380,525$
Receivables
Accounts (refund)(406) 3,302 5,539
Special assessments
Delinquent – – –
Deferred – – –
Due from other governmental agencies – 2,283 802
Total assets 120,814$ 601,043$ 1,386,866$
Liabilities
Accounts and contracts payable 65,874$ 94,712$ 34,402$
Due to other governmental agencies – 21 –
Total liabilities 65,874 94,733 34,402
Deferred inflows of resources
Unavailable revenue from special assessments – – –
Fund balances
Restricted for tax increment 54,940 – –
Assigned for capital improvements – 506,310 1,352,464
Total fund balances 54,940 506,310 1,352,464
Total liabilities, deferred inflows
of resources, and fund balances 120,814$ 601,043$ 1,386,866$
as of December 31, 2023
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Balance Sheet (continued)
100-
Permanent
Improvement
Revolving Total
1,759,250$ 12,090,490$
269,804 323,032
386 386
50,938 54,354
641 8,558
2,081,019$ 12,476,820$
42,300$ 491,241$
21
42,300 491,262
51,325 54,741
733,902
1,987,394 11,196,915
1,987,394 11,930,817
2,081,019$ 12,476,820$
101-
Revolving Trunk Street
Equipment Reserve Oversizing
Revenues
Taxes 747,710$ –$ –$
Franchise taxes – – –
Special assessments – 1,334 –
Charges for services – 468,795 –
Investment income 41,582 280,370 31,203
Miscellaneous – – –
Total revenues 789,292 750,499 31,203
Expenditures
Capital outlay 1,168,214 – –
Excess (deficiency) of revenues
over expenditures (378,922) 750,499 31,203
Other financing sources (uses)
Transfers in 217,500 – –
Transfers out – (226,252) (925,844)
Sale of capital assets 122,667 – –
Total other financing sources (uses)340,167 (226,252) (925,844)
Net change in fund balances (38,755) 524,247 (894,641)
Fund balances
Beginning of year 1,082,994 5,445,019 1,231,883
End of year 1,044,239$ 5,969,266$ 337,242$
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Year Ended December 31, 2023
102-
Tax Tax Tax
Increment 1-3 Increment 5-1 Increment 6-1
Lakefront Premiere Shepard’s Path
140,894$ 13,641$ 320,269$
6,959 694 27,846
147,853 14,335 348,115
110,110 13,356 289,242
37,743 979 58,873
25,500) – –
25,500) – –
12,243 979 58,873
114,051 11,204 481,612
126,294$ 12,183$ 540,485$
103-(continued)
Tax Revolving
Increment 1-5 Park Facility
Gateway Ctr Equipment Management
Revenues
Taxes 138,681$ 439,181$ 154,264$
Franchise taxes – – –
Special assessments – – –
Charges for services – – –
Investment income 3,911 63,775 66,508
Miscellaneous – 185,000 –
Total revenues 142,592 687,956 220,772
Expenditures
Capital outlay 132,787 1,602,299 220,574
Excess (deficiency) of revenues
over expenditures 9,805 (914,343) 198
Other financing sources (uses)
Transfers in – – –
Transfers out – – –
Sale of capital assets – – –
Total other financing sources (uses)– – –
Net change in fund balances 9,805 (914,343) 198
Fund balances
Beginning of year 45,135 1,420,653 1,352,266
End of year 54,940$ 506,310$ 1,352,464$
Year Ended December 31, 2023
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances (continued)
104-
Permanent
Improvement
Revolving Total
1,954,640$
1,079,097 1,079,097
86,873 88,207
468,795
76,558 599,406
185,000
1,242,528 4,375,145
257,976 3,794,558
984,552 580,587
217,500
203,100) (1,380,696)
122,667
203,100) (1,040,529)
781,452 (459,942)
1,205,942 12,390,759
1,987,394$ 11,930,817$
105-
2022
Variance With
Original Final Actual Final Budget Actual
Revenues
Taxes
Property taxes 12,161,475$ 12,161,475$ 12,119,339$ (42,136)$ 10,219,010$
Franchise taxes 599,000 599,000 557,579 (41,421) 619,660
Total taxes 12,760,475 12,760,475 12,676,918 (83,557) 10,838,670
Special assessments 4,000 4,000 5,499 1,499 4,408
Licenses and permits
Business 81,725 81,725 94,999 13,274 82,553
Nonbusiness 812,645 812,645 599,944 (212,701) 669,468
Total licenses and permits 894,370 894,370 694,943 (199,427) 752,021
Intergovernmental
Federal grants – – 3,425 3,425 9,981
State
Road and bridge aid 463,000 463,000 417,468 (45,532) 457,679
Fire relief aid 280,000 280,000 367,001 87,001 303,666
Police aid 300,500 300,500 360,961 60,461 338,410
Other state aids – – – – 68,182
County and local
Township fire and rescue aid 722,760 722,760 750,179 27,419 548,343
Liaison aid 67,350 67,350 – (67,350) 65,010
Other local aids – – 8,546 8,546 3,839
Payment in lieu of taxes 1,000,000 1,000,000 1,100,000 100,000 1,000,000
Total intergovernmental 2,833,610 2,833,610 3,007,580 173,970 2,795,110
Charges for services
Zoning fees 34,100 34,100 30,950 (3,150) 49,004
Plan check fees 413,942 413,942 234,816 (179,126) 286,444
Park fees 223,652 223,652 257,284 33,632 218,269
Project fees 280,000 280,000 221,033 (58,967) 223,508
Park program revenue 73,800 73,800 110,162 36,362 103,529
Tower leases 252,775 252,775 49,776 (202,999) 313,673
Park admission/rent 103,200 103,200 127,090 23,890 113,519
Facility rental 59,675 59,675 311,419 251,744 60,727
Reports 1,300 1,300 1,935 635 1,737
Total charges for services 1,442,444 1,442,444 1,344,465 (97,979) 1,370,410
CITY OF PRIOR LAKE
General Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual
Year Ended December 31, 2023
With Comparative Actual Amounts for the Year Ended December 31, 2022)
2023
Budgeted Amounts
106-(continued)
2022
Variance With
Original Final Actual Final Budget Actual
Revenues (continued)
Fines and forfeits – – 2,895 2,895 2,998
Investment income (losses)
Interest earnings 104,500 104,500 391,392 286,892 181,134
Amortization – (premium)/discount – – (12,966) (12,966) (80,067)
Unrealized gain (loss)– – 166,340 166,340 (497,596)
Total investment income (losses)104,500 104,500 544,766 440,266 (396,529)
Miscellaneous
Other 54,000 54,000 78,882 24,882 230,046
Contributions and donations – – 25,225 25,225 50,065
Developers’ agreements 130,000 130,000 13,136 (116,864) 65,789
Total miscellaneous 184,000 184,000 117,243 (66,757) 345,900
Total revenues 18,223,399 18,223,399 18,394,309 170,910 15,712,988
Expenditures
Current expenditures
General government
Mayor and City Council
Personal services 74,621 74,621 68,430 (6,191) 64,062
Supplies 300 300 158 (142) 79
Other services and charges 6,500 6,500 9,981 3,481 6,872
Total Mayor and City Council 81,421 81,421 78,569 (2,852) 71,013
Ordinance
Other services and charges 6,000 6,000 3,719 (2,281) 4,958
Administration
Personal services 295,857 295,857 296,939 1,082 290,258
Supplies 9,500 9,500 11,067 1,567 17,105
Other services and charges 61,465 61,465 71,820 10,355 129,133
Total administration 366,822 366,822 379,826 13,004 436,496
Boards and commissions
Personal services 15,071 15,071 5,490 (9,581) 5,706
Other services and charges 400 400 100 (300) 255
Total boards and commissions 15,471 15,471 5,590 (9,881) 5,961
Schedule of Revenues, Expenditures, and
Budgeted Amounts
General Fund
Changes in Fund Balances – Budget and Actual (continued)
CITY OF PRIOR LAKE
Year Ended December 31, 2023
With Comparative Actual Amounts for the Year Ended December 31, 2022)
2023
107-(continued)
2022
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
General government (continued)
City Clerk
Personal services 122,467 122,467 121,704 (763) 111,329
Supplies – – 24 24 69
Other services and charges 5,750 5,750 3,451 (2,299) 16,583
Total City Clerk 128,217 128,217 125,179 (3,038) 127,981
Election
Personal services – – 121 121 37,875
Supplies 1,000 1,000 62 (938) 987
Other services and charges 42,240 42,240 25,333 (16,907) 13,443
Total election 43,240 43,240 25,516 (17,724) 52,305
Finance
Personal services 659,335 659,335 618,315 (41,020) 533,670
Supplies 1,585 1,585 2,409 824 1,699
Other services and charges 27,230 48,780 38,934 (9,846) 12,039
Total finance 688,150 709,700 659,658 (50,042) 547,408
Auditing
Other services and charges 43,700 43,700 47,345 3,645 35,480
Assessing
Other services and charges 239,135 239,135 238,629 (506) 230,115
Legal services
Other services and charges 210,000 210,000 230,049 20,049 190,928
Personnel
Personal services 299,852 299,852 320,463 20,611 288,141
Supplies 250 250 289 39 –
Other services and charges 46,000 81,121 75,019 (6,102) 32,144
Total personnel 346,102 381,223 395,771 14,548 320,285
Communications
Personal services 134,228 134,228 132,267 (1,961) 124,117
Supplies 200 200 352 152 53
Other services and charges 29,180 29,180 16,201 (12,979) 35,695
Total communications 163,608 163,608 148,820 (14,788) 159,865
General Fund
2023
Year Ended December 31, 2023
CITY OF PRIOR LAKE
Changes in Fund Balances – Budget and Actual (continued)
With Comparative Actual Amounts for the Year Ended December 31, 2022)
Schedule of Revenues, Expenditures, and
Budgeted Amounts
108-(continued)
2022
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
General government (continued)
Community development
Personal services 322,084 322,084 304,020 (18,064) 290,164
Supplies 3,500 3,500 2,867 (633) 1,871
Other services and charges 44,200 44,200 25,464 (18,736) 31,753
Total community development 369,784 369,784 332,351 (37,433) 323,788
Technology
Personal services 247,744 247,744 240,881 (6,863) 216,692
Supplies 34,300 54,300 41,638 (12,662) 19,078
Other services and charges 154,580 154,580 142,199 (12,381) 176,369
Total technology 436,624 456,624 424,718 (31,906) 412,139
Buildings and plant
Personal services 91,849 91,849 91,737 (112) 89,157
Supplies 10,000 10,000 11,938 1,938 16,025
Other services and charges 445,806 454,806 471,961 17,155 494,529
Total buildings and plant 547,655 556,655 575,636 18,981 599,711
Total general government 3,685,929 3,771,600 3,671,376 (100,224) 3,518,433
Public safety
Police
Personal services 5,716,961 5,716,961 5,660,170 (56,791) 5,284,196
Supplies 265,895 309,445 188,741 (120,704) 171,469
Other services and charges 557,303 547,658 470,557 (77,101) 507,452
Total police 6,540,159 6,574,064 6,319,468 (254,596) 5,963,117
Fire and rescue
Personal services 1,557,399 1,557,399 1,559,554 2,155 911,240
Supplies 185,750 185,750 160,545 (25,205) 141,477
Other services and charges 229,699 237,734 253,169 15,435 235,979
Total fire and rescue 1,972,848 1,980,883 1,973,268 (7,615) 1,288,696
Building inspections
Personal services 847,991 847,991 789,414 (58,577) 765,463
Supplies 15,950 15,950 5,391 (10,559) 7,975
Other services and charges 21,952 21,810 6,385 (15,425) 6,125
Total building inspections 885,893 885,751 801,190 (84,561) 779,563
Emergency management
Other services and charges 18,920 23,920 17,663 (6,257) 23,795
Year Ended December 31, 2023
With Comparative Actual Amounts for the Year Ended December 31, 2022)
2023
Budgeted Amounts
CITY OF PRIOR LAKE
General Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual (continued)
109-(continued)
2022
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
Public safety (continued)
Animal control
Other services and charges 28,800 28,800 28,800 – 28,800
Total other 933,613 938,471 847,653 (90,818)832,158
Total public safety 9,446,620 9,493,418 9,140,389 (353,029) 8,083,971
Public works
Engineering
Personal services 370,818 370,818 379,493 8,675 354,213
Supplies 25,000 25,000 13,124 (11,876) 9,656
Other services and charges 51,370 51,353 69,951 18,598 60,090
Total engineering 447,188 447,171 462,568 15,397 423,959
Central garage
Personal services 276,848 276,848 271,488 (5,360) 243,267
Supplies 202,125 202,125 201,076 (1,049) 215,566
Other services and charges 74,650 74,650 69,664 (4,986) 62,345
Total central garage 553,623 553,623 542,228 (11,395) 521,178
Streets
Personal services 483,276 550,079 525,463 (24,616) 509,548
Supplies 427,095 427,095 369,699 (57,396) 281,517
Other services and charges 580,062 698,427 613,236 (85,191) 338,428
Total streets 1,490,433 1,675,601 1,508,398 (167,203) 1,129,493
Total public works 2,491,244 2,676,395 2,513,194 (163,201) 2,074,630
Culture and recreation
Recreation
Personal services 381,021 322,091 296,538 (25,553) 295,426
Supplies 95,000 95,000 110,349 15,349 103,432
Other services and charges 69,750 69,750 76,925 7,175 63,693
Total recreation 545,771 486,841 483,812 (3,029) 462,551
Parks
Personal services 1,184,708 1,176,835 1,152,928 (23,907) 1,121,480
Supplies 274,600 274,600 206,830 (67,770) 224,794
Other services and charges 433,912 477,507 375,818 (101,689) 326,088
Total parks 1,893,220 1,928,942 1,735,576 (193,366) 1,672,362
Budgeted Amounts
Year Ended December 31, 2023
With Comparative Actual Amounts for the Year Ended December 31, 2022)
Changes in Fund Balances – Budget and Actual (continued)
Schedule of Revenues, Expenditures, and
General Fund
CITY OF PRIOR LAKE
2023
110-(continued)
2022
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
Culture and recreation (continued)
Libraries
Supplies 5,000 5,000 3,315 (1,685) 1,465
Other services and charges 80,227 80,227 58,303 (21,924) 73,239
Total libraries 85,227 85,227 61,618 (23,609) 74,704
Total culture and recreation 2,524,218 2,501,010 2,281,006 (220,004) 2,209,617
Total current expenditures 18,148,011 18,442,423 17,605,965 (836,458) 15,886,651
Capital outlay
General government
City hall 17,000 26,887 33,302 6,415 –
Public safety
Police 8,000 8,000 19,674 11,674 54,374
Fire – – 8,684 8,684 –
Public works
Buildings and plant 3,500 3,500 2,835 (665) –
Development projects – – 72,528 72,528 52,820
Parks
Infrastructure – – 31,258 31,258 19,684
Total capital outlay 28,500 38,387 168,281 129,894 126,878
Total expenditures 18,176,511 18,480,810 17,774,246 (706,564) 16,013,529
Excess (deficiency) of revenues
over expenditures 46,888 (257,411) 620,063 877,474 (300,541)
Other financing sources (uses)
Transfers in 555,000 555,000 555,000 – 546,000
Transfers out (633,888) (633,888) (633,888) – (223,838)
Sale of assets – – 5,672 5,672 6,159
Total other financing
sources (uses)(78,888) (78,888) (73,216) 5,672 328,321
Net change in fund balances (32,000)$ (336,299)$ 546,847 883,146$ 27,780
Fund balances
Beginning of year 10,458,397 10,430,617
End of year 11,005,244$ 10,458,397$
Budgeted Amounts
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual (continued)
Year Ended December 31, 2023
2023
With Comparative Actual Amounts for the Year Ended December 31, 2022)
General Fund
CITY OF PRIOR LAKE
111-
Water Tax
Treatment Increment Fish Welcome,
Plant 2004 Point CR 12, Sunset GESP Lease
Assets
Cash and investments –$ 22,730$ –$ –$ 68,224$
Receivables
Accounts – 177 – – 4,043
Special assessments
Delinquent – – – – –
Deferred – – 30,111 – 10,315
Other (Green Acres)– – 451,350 – –
Due from other
governmental agencies – – – – 1,817
Total assets –$ 22,907$ 481,461$ –$ 84,399$
Liabilities
Accounts and contracts payable –$ –$ –$ –$ 69$
Deferred inflows of resources
Unavailable revenue from
special assessments – – 481,461 – 10,315
Fund balances
Restricted for debt service – 22,907 – – 74,015
Total liabilities, deferred inflows
of resources, and fund balances –$ 22,907$ 481,461$ –$ 84,399$
as of December 31, 2023
Balance Sheet by Account
Debt Service Fund
CITY OF PRIOR LAKE
112-
Cates, Balsam,
Franklin Trail,
Sycamore Trail,
Maintenance
Street TH 13, 150th TH 13, 150th Center Roof
Reconstruction Street 2015 Manitou Road Street 2016 Equipment Improvements
2015 Reconstruction Improvement Reconstruction 2016 2017
400,225$ –$ 79,934$ 14,314$ –$ 370,262$
1,667 – 66 17 – 896
9,953 – – – – 2,177
245,184 – 58,258 – – 271,678
3,075 – 832 205 – 2,248
660,104$ –$ 139,090$ 14,536$ –$ 647,261$
208$ –$ 69$ 68$ –$ 210$
255,137 – 58,258 – – 273,855
404,759 – 80,763 14,468 – 373,196
660,104$ –$ 139,090$ 14,536$ –$ 647,261$
113 (continued)
2018
Franklin,2019 2019 Fish
Huron,2018 Street Street Point
Woodside Street Overlay Improvements Overlay Road
Assets
Cash and investments 326,421$ –$ 85,057$ 903$ 199,470$
Receivables
Accounts 4,770 – 164 – 1,416
Special assessments
Delinquent 6,009 – – – 5,058
Deferred 365,130 – 7,038 – 341,856
Other (Green Acres)– – – – –
Due from other governmental agencies 3,666 – 1,072 – 1,997
Total assets 705,996$ –$ 93,331$ 903$ 549,797$
Liabilities
Accounts and contracts payable 314$ –$ 105$ 106$ 210$
Deferred inflows of resources
Unavailable revenue from
special assessments 371,138 – 7,038 – 346,914
Fund balances
Restricted for debt service 334,544 – 86,188 797 202,673
Total liabilities, deferred inflows
of resources, and fund balances 705,996$ –$ 93,331$ 903$ 549,797$
as of December 31, 2023
CITY OF PRIOR LAKE
Debt Service Fund
Balance Sheet by Account (continued)
114-
Downtown Fish Point
2021B South Road
Refunding Reconstruction Phase II Total
292,304$ 151,815$ 288,925$ 2,300,584$
884 39 213 14,352
23,197
4,172 504,114 171,866 2,009,722
451,350
4,788 1,275 25 21,000
302,148$ 657,243$ 461,029$ 4,820,205$
210$ 208$ 105$ 1,882$
4,172 504,114 171,866 2,484,268
297,766 152,921 289,058 2,334,055
302,148$ 657,243$ 461,029$ 4,820,205$
115
Water Tax
Treatment Increment Fish Welcome,
Plant 2004 Point CR 12, Sunset GESP Lease
Revenues
Taxes –$ –$ –$ 171,580$ 289,639$
Special assessments – – – 40,936 2,806
Investment income – 1,283 – 7,617 3,459
Total revenues – 1,283 – 220,133 295,904
Expenditures
Debt service
Principal 480,000 30,000 – 320,000 286,693
Interest and other 129,250 2,295 – 8,688 13,920
Total expenditures 609,250 32,295 – 328,688 300,613
Excess (deficiency) of revenues
over expenditures (609,250) (31,012) – (108,555) (4,709)
Other financing sources (uses)
Transfers in 607,213 25,500 – – 14,881
Transfers out – – – (78,314) –
Total other financing sources (uses)607,213 25,500 – (78,314) 14,881
Net change in fund balances (2,037) (5,512) – (186,869) 10,172
Fund balances
Beginning of year 2,037 28,419 – 186,869 63,843
End of year –$ 22,907$ –$ –$ 74,015$
CITY OF PRIOR LAKE
Debt Service Fund
Schedule of Revenues, Expenditures,
and Changes in Fund Balances by Account
Year Ended December 31, 2023
116-
Cates, Balsam,
Franklin Trail,
Sycamore Trail,
Maintenance
Street TH 13, 150th TH 13, 150th Center Roof
Reconstruction Street 2015 Manitou Road Street 2016 Equipment Improvements
2015 Reconstruction Improvement Reconstruction 2016 2017
324,270$ –$ 73,984$ 39,353$ 59,817$ 302,232$
104,369 – 26,534 – – 93,091
24,174 1,783 5,449 1,021 1,188 24,536
452,813 1,783 105,967 40,374 61,005 419,859
405,000 – 110,000 35,000 60,000 440,000
116,528 – 9,364 2,969 1,269 44,471
521,528 – 119,364 37,969 61,269 484,471
68,715) 1,783 (13,397) 2,405 (264) (64,612)
25,000 22,404 – – – –
22,404) (25,000) – – (14,881) –
2,596 (2,596) – – (14,881) –
66,119) (813) (13,397) 2,405 (15,145) (64,612)
470,878 813 94,160 12,063 15,145 437,808
404,759$ –$ 80,763$ 14,468$ –$ 373,196$
117-(continued)
2018
Franklin,2019 2019 Fish
Huron,2018 Street Street Point
Woodside Street Overlay Improvements Overlay Road
Revenues
Taxes 533,628$ 4,722$ 206,210$ –$ 256,582$
Special assessments 70,455 – 1,505 – 85,335
Investment income 19,393 1,034 6,189 19 12,698
Total revenues 623,476 5,756 213,904 19 354,615
Expenditures
Debt service
Principal 505,000 105,000 160,000 85,000 435,000
Interest and other 153,605 4,305 63,605 8,855 120,218
Total expenditures 658,605 109,305 223,605 93,855 555,218
Excess (deficiency) of revenues
over expenditures (35,129) (103,549) (9,701) (93,836) (200,603)
Other financing sources (uses)
Transfers in 78,314 109,275 – 93,825 233,888
Transfers out – (33,138) – ––
Total other financing sources (uses)78,314 76,137 – 93,825 233,888
Net change in fund balances 43,185 (27,412) (9,701) (11) 33,285
Fund balances
Beginning of year 291,359 27,412 95,889 808 169,388
End of year 334,544$ –$ 86,188$ 797$ 202,673$
Debt Service Fund
Schedule of Revenues, Expenditures,
and Changes in Fund Balances by Account (continued)
Year Ended December 31, 2023
CITY OF PRIOR LAKE
118-
Downtown Fish Point
2021B South Road
Refunding Reconstruction Phase II Total
920,863$ 166,857$ –$ 3,349,737$
4,506 94,151 247,720 771,408
20,989 7,652 8,200 146,684
946,358 268,660 255,920 4,267,829
675,000 130,000 – 4,261,693
229,453 116,096 – 1,024,891
904,453 246,096 – 5,286,584
41,905 22,564 255,920 (1,018,755)
33,138 1,243,438
173,737)
33,138 1,069,701
41,905 22,564 289,058 50,946
255,861 130,357 – 2,283,109
297,766$ 152,921$ 289,058$ 2,334,055$
119-
Severance
Compensation Insurance Total
Current assets
Cash and investments 552,766$ 191,525$ 744,291$
Receivables
Accounts 3,609 313 3,922
Total current assets 556,375$ 191,838$ 748,213$
Current liabilities
Current portion of compensated absences payable 503,124$ –$ 503,124$
Noncurrent liabilities
Compensated absences payable 638,389 – 638,389
Total liabilities 1,141,513 – 1,141,513
Net position
Unrestricted (585,138) 191,838 (393,300)
Total liabilities and net position 556,375$ 191,838$ 748,213$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Net Position
as of December 31, 2023
120-
Severance
Compensation Insurance Total
Operating revenues
Charges for services 50,914$ –$ 50,914$
Miscellaneous/other income
Dividends, reimbursements, and other – 110,617 110,617
Total operating revenues 50,914 110,617 161,531
Operating expenses
Personal services 65,872 14,552 80,424
Operating income (loss)(14,958) 96,065 81,107
Nonoperating revenues
Investment income 25,573 6,305 31,878
Change in net position 10,615 102,370 112,985
Net position
Beginning of year (595,753) 89,468 (506,285)
End of year (585,138)$ 191,838$ (393,300)$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position
Year Ended December 31, 2023
121-
Severance
Compensation Insurance Total
Cash flows from operating activities
Cash received from customers 50,339$ –$ 50,339$
Cash payments to employees 1 (14,552) (14,551)
Miscellaneous/other income
Dividends, reimbursements and other – 110,577 110,577
Net cash flows from operating activities 50,340 96,025 146,365
Cash flows from investing activities
Interest received on cash and investments 25,573 6,305 31,878
Net increase in cash and cash equivalents 75,913 102,330 178,243
Cash and cash equivalents, January 1 476,853 89,195 566,048
Cash and cash equivalents, December 31 552,766$ 191,525$ 744,291$
Reconciliation of operating income (loss) to net
cash flows from operating activities
Operating income (loss)(14,958)$ 96,065$ 81,107$
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities
Increase) decrease in assets
Accounts receivable (575) (40) (615)
Increase (decrease) in liabilities
Compensated absences payable 65,873 – 65,873
Net cash flows from operating activities 50,340$ 96,025$ 146,365$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Cash Flows
Year Ended December 31, 2023
122-
OTHER INFORMATION SECTION
THIS PAGE INTENTIONALLY LEFT BLANK
Percent
Increase
2023 2022 (Decrease)
Revenues
Taxes 17,792,748$ 16,063,850$ 10.8%
Franchise taxes 1,636,676 1,641,679 (0.3%)
Special assessments 877,273 750,283 16.9%
Licenses and permits 694,943 752,021 (7.6%)
Intergovernmental 7,618,475 6,896,648 10.5%
Charges for services 2,003,374 1,682,011 19.1%
Fines and forfeits 2,895 2,998 (3.4%)
Interest on investments 1,691,845 (883,637) (291.5%)
Miscellaneous 465,565 686,211 (32.2%)
Total revenues 32,783,794$ 27,592,064$ 18.8%
Per capita 1,149$ 971$ 18.3%
Expenditures
Current
General government 3,674,952$ 3,518,488$ 4.4%
Public safety 9,201,659 8,135,424 13.1%
Public works 2,513,194 2,074,630 21.1%
Culture and recreation 2,346,823 2,213,019 6.0%
Economic development 180,687 159,042 13.6%
Capital outlay 13,772,840 8,302,248 65.9%
Debt service
Principal 4,261,693 4,325,714 (1.5%)
Interest and other charges 1,088,997 1,100,298 (1.0%)
Total expenditures 37,040,845$ 29,828,863$ 24.2%
Per capita 1,298$ 1,050$ 23.6%
Total long-term bonded indebtedness 26,320,000$ 28,675,000$ (8.2%)
Per capita 922$ 1,009$ (8.6%)
General Fund balance – December 31 11,005,244$ 10,458,397$ 5.2%
Per capita 386$ 368$ 4.8%
The purpose of this report is to provide a summary of financial information concerning the City to interested citizens. The
complete financial statements may be examined at City Hall,4646 Dakota Street Southeast, Prior Lake, Minnesota 55372.
Questions about this report should be directed to the Finance Director at (952) 447-9842.
Governmental Funds
Years Ended December 31, 2023 and 2022
Total
CITY OF PRIOR LAKE
Summary Financial Report
Revenues and Expenditures for General Operations
123-
Final
Issue Maturity
Date Date
Bonded indebtedness
General obligation special assessment bonds
G.O. Improvement Bonds of 2013A 2.00–2.65 %08/15/2013 12/15/2023
G.O. Improvement Bonds of 2015A 2.00–3.00 05/14/2015 12/15/2030
G.O. Improvement Bonds of 2016A 2.00 05/01/2016 12/15/2026
G.O. Improvement Bonds of 2017A 2.00–2.25 06/29/2017 12/15/2027
G.O. Improvement Bonds of 2018A 4.00–5.00 08/15/2018 12/15/2028
G.O. Improvement Bonds of 2019A 5.00 06/27/2019 12/15/2024
G.O. Improvement Bonds of 2021B 5.00 07/26/2021 12/15/2024
Total general obligation special assessment bonds
General obligation tax increment bonds
G.O. Tax Increment Refunding Bonds of 2011A 1.80–3.00 08/31/2011 12/15/2024
General obligation bonds
G.O. Street Reconstruction Bonds of 2016A 2.00 05/01/2016 12/15/2026
G.O. Improvement Bonds of 2017A 2.00–2.25 06/29/2017 12/15/2024
G.O. Improvement Bonds of 2018A 4.00–5.00 08/15/2018 12/15/2028
G.O. Improvement Bonds of 2019A 5.00 06/27/2019 12/15/2029
G.O. Improvement Bonds of 2021A 1.00–3.00 07/15/2021 12/15/2031
G.O. Improvement Bonds of 2021B 5.00 07/26/2021 12/15/2029
G.O. Improvement Bonds of 2022A 4.00–5.00 09/08/2022 12/15/2032
G.O. Improvement Bonds of 2023A 5.00 07/19/2023 12/15/2033
Total general obligation bonds
General obligation revenue bonds
G.O. Improvement Refunding Bonds of 2015A 1.00–3.00 05/14/2015 12/15/2031
G.O. Improvement Bonds of 2018A 4.00–5.00 08/15/2018 12/15/2028
Total general obligation revenue bonds
Total bonded indebtedness
Rate
CITY OF PRIOR LAKE
Combined Schedule of Indebtedness
Year Ended December 31, 2023
Interest
124-
Outstanding Issued Outstanding
Authorized January 1 (Retired)December 31 Principal Interest
3,240,000$ 320,000$ (320,000)$ –$ –$ –$
4,640,000 4,640,000 (405,000) 4,235,000 575,000 107,725
1,105,000 440,000 (110,000) 330,000 110,000 6,600
4,135,000 2,000,000 (385,000) 1,615,000 390,000 34,362
3,145,000 1,765,000 (360,000) 1,405,000 260,000 67,650
400,000 175,000 (85,000) 90,000 90,000 4,500
880,000 455,000 (220,000) 235,000 235,000 11,751
17,545,000 9,795,000 (1,885,000) 7,910,000 1,660,000 232,588
290,000 60,000 (30,000) 30,000 30,000 900
760,000 205,000 (95,000) 110,000 35,000 2,200
370,000 110,000 (55,000) 55,000 55,000 1,100
2,485,000 1,545,000 (250,000) 1,295,000 260,000 62,150
1,665,000 1,270,000 (160,000) 1,110,000 170,000 55,500
5,270,000 4,695,000 (435,000) 4,260,000 460,000 105,465
4,990,000 4,100,000 (455,000) 3,645,000 490,000 182,250
1,910,000 1,910,000 (130,000) 1,780,000 160,000 84,400
1,620,000 – 1,620,000 1,620,000 95,000 113,850
19,070,000 13,835,000 40,000 13,875,000 1,725,000 606,915
5,360,000 4,985,000 (480,000) 4,505,000 495,000 119,650
2,640,000 1,700,000 (260,000) 1,440,000 270,000 69,300
8,000,000 6,685,000 (740,000) 5,945,000 765,000 188,950
44,905,000$ 30,375,000$ (2,615,000)$ 27,760,000$ 4,180,000$ 1,029,353$
Due in 2024
125-
THIS PAGE INTENTIONALLY LEFT BLANK
Final
Issue Maturity
Date Date Principal
General obligation
special assessment bonds
4,640,000 General Obligation
Improvement Bonds, Series 2015A 05/14/2015 2.00 %12/15/2024 575,000$
2.00 12/15/2025 775,000
2.50 12/15/2026 610,000
2.50 12/15/2027 555,000
3.00 12/15/2028 550,000
3.00 12/15/2029 600,000
3.00 12/15/2030 570,000
Total 4,235,000
1,105,000 General Obligation
Improvement Bonds, Series 2016A 05/01/2016 2.00 12/15/2024 110,000
2.00 12/15/2025 110,000
2.00 12/15/2026 110,000
Total 330,000
4,135,000 General Obligation
Improvement Bonds, Series 2017A 06/29/2017 2.00 12/15/2024 390,000
2.00 12/15/2025 400,000
2.00 12/15/2026 410,000
2.25 12/15/2027 415,000
Total 1,615,000
3,145,000 General Obligation
Improvement Bonds, Series 2018A 08/15/2018 4.00 12/15/2024 260,000
5.00 12/15/2025 275,000
5.00 12/15/2026 280,000
5.00 12/15/2027 290,000
5.00 12/15/2028 300,000
Total 1,405,000
CITY OF PRIOR LAKE
Bond Schedules
December 31, 2023
Rate
Interest
126-(continued)
Final
Issue Maturity
Date Date Principal
General obligation
special assessment bonds (continued)
400,000 General Obligation
Improvement Bonds, Series 2019A 06/27/2019 5.00 %12/15/2024 90,000$
880,000 General Obligation
Improvement Bonds, Series 2021B 07/26/2021 5.00 12/15/2024 235,000
Total general obligation special assessment bonds 7,910,000$
General obligation
tax increment bonds
290,000 Tax Increment Refunding
Bonds, Series 2011A 08/31/2011 3.00 12/15/2024 30,000$
Bond Schedules (continued)
December 31, 2023
Interest
Rate
CITY OF PRIOR LAKE
127-(continued)
Final
Issue Maturity
Date Date Principal
General obligation bonds
760,000 General Obligation
Street Reconstruction Bonds, Series 2016A 05/01/2016 2.00 %12/15/2024 35,000$
2.00 12/15/2025 35,000
2.00 12/15/2026 40,000
Total 110,000
370,000 General Obligation
Improvement Bonds of 2017A 06/29/2017 2.00 12/15/2024 55,000
2,485,000 General Obligation
Improvement Bonds, Series 2018A 08/15/2018 4.00 12/15/2024 260,000
5.00 12/15/2025 260,000
5.00 12/15/2026 270,000
5.00 12/15/2027 280,000
5.00 12/15/2028 225,000
Total 1,295,000
1,665,000 General Obligation
Improvement Bonds, Series 2019A 06/27/2019 5.00 12/15/2024 170,000
5.00 12/15/2025 175,000
5.00 12/15/2026 185,000
5.00 12/15/2027 195,000
5.00 12/15/2028 205,000
5.00 12/15/2029 180,000
Total 1,110,000
CITY OF PRIOR LAKE
Bond Schedules (continued)
December 31, 2023
Interest
Rate
128-(continued)
Final
Issue Maturity
Date Date Principal
General obligation bonds (continued)
5,270,000 General Obligation
Improvement Bonds, Series 2021A 07/15/2021 3.00 %12/15/2024 460,000$
3.00 12/15/2025 495,000
3.00 12/15/2026 510,000
3.00 12/15/2027 530,000
3.00 12/15/2028 560,000
3.00 12/15/2029 575,000
1.00 12/15/2030 600,000
1.05 12/15/2031 530,000
Total 4,260,000
4,990,000 General Obligation
Improvement Bonds, Series 2021B 07/26/2021 5.00 12/15/2024 490,000
5.00 12/15/2025 530,000
5.00 12/15/2026 580,000
5.00 12/15/2027 630,000
5.00 12/15/2028 680,000
5.00 12/15/2029 735,000
Total 3,645,000
1,910,000 General Obligation
Improvement Bonds, Series 2022A 09/08/2022 5.00 12/15/2024 160,000
5.00 12/15/2025 170,000
5.00 12/15/2026 180,000
5.00 12/15/2027 190,000
5.00 12/15/2028 195,000
5.00 12/15/2029 205,000
5.00 12/15/2030 220,000
4.00 12/15/2031 230,000
4.00 12/15/2032 230,000
Total 1,780,000
1,620,000 General Obligation
Improvement Bonds, Series 2023A 07/19/2023 5.00 12/15/2024 95,000
5.00 12/15/2025 125,000
5.00 12/15/2026 125,000
5.00 12/15/2027 130,000
5.00 12/15/2028 130,000
5.00 12/15/2029 185,000
5.00 12/15/2030 195,000
5.00 12/15/2031 200,000
5.00 12/15/2032 215,000
5.00 12/15/2033 220,000
Total 1,620,000
Total general obligation bonds 13,875,000$
CITY OF PRIOR LAKE
Bond Schedules (continued)
December 31, 2023
Interest
Rate
129-(continued)
Final
Issue Maturity
Date Date Principal
General obligation revenue bonds
5,360,000 General Obligation Improvement
Bonds, Series 2015A 05/14/2015 2.00 %12/15/2024 495,000$
2.00 12/15/2025 515,000
2.50 12/15/2026 530,000
2.50 12/15/2027 550,000
3.00 12/15/2028 570,000
3.00 12/15/2029 590,000
3.00 12/15/2030 615,000
3.00 12/15/2031 640,000
Total 4,505,000
2,640,000 General Obligation Improvement
Bonds, Series 2018A 08/15/2018 4.00 12/15/2024 270,000
5.00 12/15/2025 270,000
5.00 12/15/2026 280,000
5.00 12/15/2027 300,000
5.00 12/15/2028 320,000
Total 1,440,000
Total general obligation revenue bonds 5,945,000$
December 31, 2023
Interest
Rate
CITY OF PRIOR LAKE
Bond Schedules (continued)
130-
Year Principal Interest Principal Interest
2024 1,725,000$ 606,915$ 1,660,000$ 232,588$
2025 1,790,000 502,315 1,560,000 184,438
2026 1,890,000 423,765 1,410,000 144,988
2027 1,955,000 340,665 1,260,000 104,313
2028 1,995,000 253,515 850,000 66,600
2029 1,880,000 164,965 600,000 35,100
2030 1,015,000 82,465 570,000 17,100
2031 960,000 55,715 – –
2032 445,000 30,950 – –
2033 220,000 11,000 – –
Total 13,875,000$ 2,472,270$ 7,910,000$ 785,127$
CITY OF PRIOR LAKE
Debt Service Requirements
December 31, 2023
General Obligation
General Obligation Bonds Special Assessment Bonds
131-
Principal Interest Principal Interest
30,000$ 900$ 765,000$ 188,950$
785,000 168,250
810,000 144,450
850,000 117,200
890,000 88,450
590,000 55,350
615,000 37,650
640,000 19,200
30,000$ 900$ 5,945,000$ 819,500$
Revenue Bonds
GeneralObligationGeneralObligation
Tax Increment Bonds
132-
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Collection Collections
Total of Current of Prior Total
Year Levy Year Levy Years’ Levy Collections
2014 9,448,918$ 9,448,918$ 100.00 %86,180$ 9,535,098$ 100.91 %
2015 10,394,086 10,394,086 100.00 48,336 10,442,422 100.47
2016 11,078,361 11,034,353 99.60 68,478 11,102,831 100.22
2017 11,568,155 11,520,353 99.59 12,692 11,533,045 99.70
2018 12,077,538 11,994,082 99.31 61,762 12,055,844 99.82
2019 12,778,035 12,697,865 99.37 65,150 12,763,015 99.88
2020 13,326,387 13,260,149 99.50 32,451 13,292,600 99.75
2021 13,965,457 13,962,613 99.98 47,700 14,010,313 100.32
2022 14,892,761 14,843,467 99.67 36,947 14,880,414 99.92
2023 16,863,956 16,772,934 99.46 36,842 16,809,776 99.68
Collection Collections
Total of Current of Prior Total
Year Levy Year Levy*Years’ Levy Collections
2014 526,584$ 460,800$ 87.51 %4,946$ 465,746$ 88.45 %
2015 354,412 365,481 103.12 11,655 377,136 106.41
2016 453,962 475,376 104.72 2,611 477,987 105.29
2017 504,420 474,936 94.15 7,331 482,267 95.61
2018 657,443 635,553 96.67 34,485 670,038 101.92
2019 728,099 699,440 96.06 13,554 712,994 97.93
2020 670,146 653,522 97.52 20,682 674,204 100.61
2021 644,393 633,503 98.31 30,387 663,890 103.03
2022 620,685 604,609 97.41 11,963 616,572 99.34
2023 613,078 603,886 98.50 16,168 620,054 101.14
Excludes prepaid assessment collections
Percentage
Percentage
Percentage
Collected
Percentage
CollectionsofLevy
of Total
of Total
to Levy
CITY OF PRIOR LAKE
Tax Levies and Collections, and
Special Assessment Levies and Collections
Special Assessment Levies and Collections
Last Ten Years
Tax Levies and Collections
of Levy
Collected to Levy
Collections
133-
2021 2022 2023
Taxable market value 4,055,591,900$ 4,352,813,862$ 5,302,936,749$
Tax levy 13,965,457$ 14,892,761$ 16,863,956$
Tax capacity, net of fiscal disparities,
and tax increment 41,663,114$ 44,570,254$ 55,284,933$
Tax capacity rate 30.265% 30.465% 28.113%
Market value rate 0.006% 0.005% 0.004%
EDA tax capacity rate 0.840% 0.740% 0.622%
CITY OF PRIOR LAKE
Schedules of Market Value, Tax Levy, Tax Capacity Values,
Tax Capacity Rate, and Market Value Rate
Last Three Years
134-
2021 2022 2023
Current population 27,917 28,408 28,536
Tax capacity, net of fiscal disparities,
and tax increment 41,663,114$ 44,570,254$ 55,284,933$
Percent of current property taxes collected 99.98% 99.67% 99.46%
City revenues per capita (governmental funds)941$ 971$ 1,149$
City expenditures per capita (governmental funds)1,051$ 1,050$ 1,298$
Ratio of bonded debt to tax capacity 76.73% 68.15% 50.21%
Bond rating AA+ (S&P)AA+ (S&P)AAA (S&P)
CITY OF PRIOR LAKE
Key Financial Indicators
Last Three Years
135-
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OTHER REQUIRED REPORTS
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136-
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Prior Lake, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of Prior
Lake, Minnesota (the City) as of and for the year ended December 31, 2023, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements, and have issued our
report thereon dated May 30, 2024.
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in
the circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not
express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial
statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness,
yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
or significant deficiencies may exist that were not identified.
continued)
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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137-
REPORT ON COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
financial statements. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed
no instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
May 30, 2024
138-
INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Prior Lake, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America,
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City of Prior
Lake, Minnesota (the City) as of and for the year ended December 31, 2023, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements, and have issued our
report thereon dated May 30, 2024.
MINNESOTA LEGAL COMPLIANCE
In connection with our audit, we noted that the City failed to comply with provisions of the
contracting – bid laws section of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by
the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters as
described in the Schedule of Findings and Responses as finding 2023-001. Also, in connection with our
audit, nothing came to our attention that caused us to believe that the City failed to comply with the
provisions of the depositories of public funds and public investments, conflicts of interest, public
indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing sections of
the Minnesota Legal Compliance Audit Guide for Cities, insofar as they relate to accounting matters.
However, our audit was not directed primarily toward obtaining knowledge of such noncompliance.
Accordingly, had we performed additional procedures, other matters may have come to our attention
regarding the City’s noncompliance with the above referenced provisions, insofar as they relate to
accounting matters.
CITY’S RESPONSE TO FINDING
Government Auditing Standards requires the auditor to perform limited procedures on the City’s response
to the legal compliance finding identified in our audit and described in the accompanying Schedule of
Findings and Responses. The City’s response was not subjected to the other auditing procedures applied in
the audit of the financial statements and, accordingly, we express no opinion on the response.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of that
testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any other
purpose.
Minneapolis, Minnesota
May 30, 2024
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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CITY OF PRIOR LAKE
Schedule of Findings and Responses
Year Ended December 31, 2023
139-
FINDINGS – MINNESOTA LEGAL COMPLIANCE
2023-001 WITHHOLDING AFFIDAVIT
Criteria – Minnesota Statutes § 270C.66.
Condition – Before making final settlement with any contractor under a contract requiring the
employment of employees for wages by said contractor or subcontractors, the City of Prior
Lake, Minnesota (the City) must obtain a certificate by the Commissioner of Revenue that the
contractor or subcontractor has complied with the withholding requirements of Minnesota
Statutes § 270C.66 (either a Commissioner of Revenue Form IC134 or a Contractor ’s
Withholding Affidavit). The City did not obtain the required certificate on a timely basis for
one contract completed during fiscal year 2023.
Questioned Costs – Not applicable.
Context – One contract we tested was not in compliance.
Cause – This was an oversight by city personnel.
Repeat Finding – This is a current year finding.
Effect – The City did not follow state statutes for withholding affidavits for one contract we
tested during the year.
Recommendation – We recommend that the City review payment procedures in place for
contractors to ensure future compliance with this statute.
View of Responsible Official and Planned Corrective Actions – The City agrees with the
finding. The City will review requirements with appropriate staff to assure the planned controls
are being followed and the required Commissioner of Revenue Form IC134 or a Contractor ’s
Withholding Affidavit are obtained.
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Management Report
for
City of Prior Lake, Minnesota
December 31, 2023
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To the City Council and Management
City of Prior Lake, Minnesota
We have prepared this management report in conjunction with our audit of the City of Prior Lake,
Minnesota’s (the City) financial statements for the year ended December 31, 2023. We have organized
this report into the following sections:
Audit Summary
Governmental Funds Overview
Enterprise Funds Overview
Government-Wide Financial Statements
Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
May 30, 2024
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Kalen T. Karnowski, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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1-
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2023. Professional standards require that we provide you with information about our
responsibilities under auditing standards generally accepted in the United States of America and
Government Auditing Standards, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information to you verbally and in our audit engagement letter.
Professional standards also require that we communicate the following information related to our audit.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINIONS AND FINDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2023:
We have issued unmodified opinions on the City’s basic financial statements. Our report included
a paragraph emphasizing the City’s implementation of Governmental Accounting Standards
Board (GASB) Statement No. 96, Subscription-Based Information Technology Arrangements,
during the year. Our opinion was not modified with respect to this matter.
We reported no deficiencies in the City’s internal control over financial reporting that we
considered to be material weaknesses.
The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
We reported one finding based on our testing of the City’s compliance with Minnesota laws and
regulations:
WITHHOLDING AFFIDAVITS
Before making final settlement with any contractor under a contract requiring the
employment of employees for wages by said contractor or subcontractors, the City must
obtain a certificate by the Commissioner of Revenue that the contractor or subcontractor has
complied with the withholding requirements of Minnesota Statutes § 270C.66 (either a
Commissioner of Revenue Form IC134 or a Contractor’s Withholding Affidavit). The City
did not obtain the required certificate on a timely basis for one contract completed during
fiscal year 2023.
2-
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No
new accounting policies were adopted and the application of existing policies was not changed during the
year ended December 31, 2023. However, the City implemented the following governmental accounting
standard during the fiscal year:
As described in Note 1 of the notes to basic financial statements, the City implemented
GASB Statement No. 96, Subscription-Based Information Technology Arrangements, during
fiscal year ended December 31, 2023. This standard changed the way subscription transactions
are reported by the City, but did not result in a restatement of net position in the current year.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Depreciation/Amortization – Management’s estimates of depreciation/amortization expense are
based on the estimated useful lives of the assets.
Compensated Absences – Estimates for compensated absences payable are based on current sick
and vacation leave balances, and the likelihood that balances will ultimately be paid out at
termination.
Total Other Post-Employment Benefits (OPEB) and Net Pension Liabilities – The City has
recorded liabilities and activity for pension benefits and OPEB. These obligations are calculated
using actuarial methodologies described in GASB Statement Nos. 68 and 75. These actuarial
calculations include significant assumptions, including projected changes, healthcare insurance
costs, investment returns, retirement ages, proportionate share, and employee turnover.
Assets Held for Resale – Management’s estimates of the assets are based on net realizable value
lower of cost or acquisition value).
We evaluated the key factors and assumptions used by management to develop these accounting estimates
in determining that they are reasonable in relation to the basic financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial
statement users. The disclosures included in the notes to the basic financial statements related to OPEB
and pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and
complex estimates involved in determining the disclosures.
The financial statement disclosures are neutral, consistent, and clear.
3-
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Management has corrected all such misstatements. In addition, none of the misstatements
detected as a result of audit procedures and corrected by management were material, either individually or
in the aggregate, to each opinion unit’s financial statements taken as a whole.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated May 30, 2024.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards with management each year prior to retention as the City’s auditors. However, these discussions
occurred in the normal course of our professional relationship and our responses were not a condition to
our retention.
4-
OTHER MATTERS
We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the
pension and OPEB-related required supplementary information (RSI) that supplements the basic financial
statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic
financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on
the RSI.
We were engaged to report on the supplementary information, as described in the table of contents, which
accompanies the financial statements, but is not RSI. With respect to this supplementary information, we
made certain inquiries of management and evaluated the form, content, and methods of preparing the
information to determine that the information complies with accounting principles generally accepted in
the United States of America, the method of preparing it has not changed from the prior period, and the
information is appropriate and complete in relation to our audit of the financial statements. We compared
and reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
We were not engaged to report on the introductory and other information sections, which accompany the
financial statements, but are not RSI. Such information has not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or
provide any assurance on it.
5-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds.
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2021 fiscal year (the most recent comparative state -wide data available), local ad valorem
property tax levies provided 44.0 percent of the total governmental fund revenues for cities over 2,500 in
population, and 35.5 percent for cities under 2,500 in population. Total property taxes levied by all
Minnesota cities for taxes payable in 2023 increased 4.2 percent compared to the prior year, and
7.5 percent for taxes payable in 2024.
The taxable net tax capacity value of property in Minnesota cities increased about 17.7 percent for the
2023 levy year. The tax capacity values used for levying property taxes are based on the assessed market
values for the previous fiscal year (e.g., tax capacity values for taxes levied in 2023 were based on
assessed market values as of January 1, 2022), so the trend of change in these tax capacity values lags
somewhat behind the housing market and economy in general.
The City’s taxable market value increased 7.3 percent for taxes payable in 2022 and 21.8 percent for taxes
payable in 2023. The following graph shows the City’s changes in taxable market value over the past
10 years:
1,000,000,000
2,000,000,000
3,000,000,000
4,000,000,000
5,000,000,000
6,000,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Taxable Market Value
6-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value. Each property classification, such as
commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax capacity is affected by the
proportion of its tax base that is in each property classification from year -to-year, as well as legislative
changes to tax rates. The City’s tax capacity increased 7.0 percent and 24.0 percent for taxes payable in
2022 and 2023, respectively.
The following graph shows the City’s change in tax capacities over the past 10 years:
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Local Net Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years:
2021 2022 2023
Average tax rate
City 30.3 30.5 28.1
County 31.0 30.5 26.5
School 29.1 28.1 21.7
Special taxing 7.7 7.5 6.4
Total 98.1 96.6 82.7
City of Prior Lake
Rates Expressed as a Percentage of Net Tax Capacity
The City’s average tax rate declined, mainly the result of the increased tax capacity discussed earlier. The
total average tax rate declined as well with additional decreases in the county, school, and special taxing
district average rates.
7-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2023, presented both by fund balance classification and by major fund:
2023 2022 Change
Fund balances of governmental funds
Total by classification
Restricted 8,876,245$ 7,200,029$ 1,676,216$
Assigned 13,460,211 15,815,073 (2,354,862)
Unassigned 10,540,044 9,892,387 647,657
Total governmental funds 32,876,500$ 32,907,489$ (30,989)$
Total by fund
General 11,005,244$ 10,458,397$ 546,847$
Debt Service 2,334,055 2,283,109 50,946
Construction 1,798,096 3,510,306 (1,712,210)
Special revenue nonmajor funds 5,808,288 4,264,918 1,543,370
Capital project nonmajor funds 11,930,817 12,390,759 (459,942)
Total governmental funds 32,876,500$ 32,907,489$ (30,989)$
Governmental Funds Change in Fund Balance
Fund Balance
as of December 31,
In total, the fund balances of the City’s governmental funds decreased by $30,989 during the year ended
December 31, 2023. The City’s General Fund increased $546,847, which is further discussed later in this
report. The overall decrease in fund balances relates mostly to decreases in the balances within the
Construction Fund, and nonmajor capital project funds. These decreases are mostly reflected in amounts
assigned for future capital improvements. The increase in the nonmajor special revenue funds is mostly
related to unspent Minnesota Public Safety State Aid, which is also impacting the increase in the
restricted fund balance.
8-
GOVERNMENTAL FUNDS REVENUE AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past
three years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as a
city’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year -to-year, due to the effect of inflation and
changes in its operation. Also, certain data in these tables may be classified differently than how they
appear in the City’s financial statements in order to be more comparable to the state-wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of the City. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in
presenting per capita information is the accuracy of the population count, which for most years is based
on estimates.
Year 2021 2022 2023
Population 2,500–10,000 10,000–20,000 20,000–100,000 27,917 28,408 28,536
Property taxes 560$ 529$ 557$ 514$ 536$ 602$
Tax increments 38 36 49 28 29 21
Franchise and other taxes 52 66 53 24 58 57
Special assessments 59 41 56 30 26 31
Licenses and permits 45 46 53 36 26 24
Intergovernmental revenues 421 293 202 104 243 267
Charges for services 135 111 110 175 59 70
Other 60 39 26 30 (6) 77
Total revenue 1,370$ 1,161$ 1,106$ 941$ 971$ 1,149$
December 31, 2021
City of PriorLakeState-Wide
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
In total, the City’s governmental fund revenues for 2023 were $32,783,794, an increase of $5,191,730
18.8 percent) from the prior year. On a per capita basis, the City received $1,149 in governmental fund
revenue for 2023, an increase of $178 from the prior year. Property taxes increased $66 per capita from an
increase in the levy in the current year. Other revenue increased $83 per capita, mainly the result of
increased investment income of $90 per capita, due to improved market conditions in the current year.
9-
The expenditures of governmental funds will also vary from state -wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources, such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
comparative state-wide averages, are presented in the following table:
Year 2021 2022 2023
Population 2,500–10,000 10,000–20,000 20,000–100,000 27,917 28,408 28,536
Current
168$ 131$ 116$ 117$ 124$ 129$
327 296 327 261 286 322
144 124 112 75 73 88
108 124 107 72 78 82
101 79 77 8 6 6
848 754 739 533 567 627
Capital outlay
and construction 525 407 317 325 292 484
Debt service
168 161 110 150 152 149
48 41 34 43 39 38
216 202 144 193 191 187
Total expenditures 1,589$ 1,363$ 1,200$ 1,051$ 1,050$ 1,298$
General government
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
December 31, 2021
City of PriorLakeState-Wide
Interest and fiscal charges
Public safety
Streets and highways
Culture and recreation
All other
Principal
Total expenditures in the City’s governmental funds for 2023 were $37,040,845, an increase of
7,211,982 (24.2 percent) from the prior year. On a per capita basis, the City expended a total of $1,298
in 2023. Public safety expenditures increased $36 per capita from prior year, mainly due to costs from the
change to a full-time firefighter staffing model in 2023. Capital outlay and construction increased $192 in
2023. This spending category fluctuates from year-to-year based on annual capital spending plans of the
City.
10-
GENERAL FUND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and culture
and recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual expenditures and transfers out to reflect the
change in the size of the General Fund operation over the same period.
2019 2020 2021 2022 2023
Fund Balance $7,903,175 $10,114,088 $10,430,617 $10,458,397 $11,005,244
Cash and Inv (Net of Borrowing)$9,604,268 $11,068,473 $11,778,939 $11,599,508 $11,963,416
Expenditures and Transfers Out $13,350,330 $14,283,695 $15,848,078 $16,237,367 $18,408,134
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
General Fund Financial Position
Year Ended December 31,
The City’s General Fund cash and investments balance increased $363,908 during the current year. Total
fund balance increased $546,847 from the prior year.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has grown. This is an important factor because a government, like any
organization, requires a certain amount of equity to operate. A healthy financial position allows the City
to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
the City’s bond rating and resulting interest costs. Maintaining an adequate fund balance has become
increasingly important given the fluctuations in state funding for cities in recent years.
Fund Balance Policy
The City has formally adopted a fund balance policy regarding the minimum unrestricted fund balance for
the General Fund. The policy establishes that the City will strive to maintain an unrestricted General Fund
balance (which includes committed, assigned, and unassigned classifications) between 40.0 percent and
50.0 percent of the subsequent year’s General Fund budgeted expenditures. At December 31, 2023, the
total fund balance of the General Fund was 52.3 percent of the subsequent year’s budgeted expenditures
and transfers out of $21,046,603.
11-
The following graph reflects the City’s General Fund revenue sources for 2023 compared to budget:
All Other
Fines and Forfeits
Charges for Services
Intergovernmental
Licenses and Permits
Taxes
General Fund Revenue
Budget and Actual
Actual Budget
General Fund revenue for 2023 was $18,394,309, which was $170,910 (.9 percent) more than budget.
Investment income (included in all other in the table above) was more than budget by $440,266, the result
of market conditions. Licenses and permits were lower than budget by $199,427 as nonbusiness permits
were lower than projected. Intergovernmental revenue was higher than budgeted by $173,970, due to the
City receiving higher than anticipated fire relief aid, police state aid, and payments in lieu of taxes.
The following graph presents the City’s General Fund revenue by source for the last five years. The graph
reflects the City’s increased reliance on tax revenue in recent years.
Taxes
Licenses
and
Permits Intergovernmental
Charges
for
Services
Fines
and
Forfeits
All Other
2019 $9,007,634 $992,096 $1,925,225 $1,193,113 $996 $454,862
2020 $9,594,699 $900,601 $4,092,040 $1,081,405 $1,652 $351,608
2021 $10,125,022 $999,906 $2,322,956 $1,528,506 $38 $635,157
2022 $10,838,670 $752,021 $2,795,110 $1,370,410 $2,998 $(46,221)
2023 $12,676,918 $694,943 $3,007,580 $1,344,465 $2,895 $667,508
1,500,000)
1,500,000
3,000,000
4,500,000
6,000,000
7,500,000
9,000,000
10,500,000
12,000,000
13,500,000
General Fund Revenue by Source
Year Ended December 31,
Total General Fund revenue for 2023 was $2,681,321 (17.1 percent) higher than last year. Taxes
increased $1,838,248 related to a levy increase. All other revenue increased $713,729, due to investment
income being $941,295 higher than the previous year related to improved market conditions.
12-
The following graph illustrates the components of General Fund spending for 2023 compared to budget:
All Other
Culture and Recreation
Public Works
Public Safety
General Government
General Fund Expenditures
Budget and Actual
Actual Budget
Total General Fund expenditures for 2023 were $17,774,246, which was $706,564 (3.8 percent) under
budget. Public safety was under budget by $353,029, mainly in the police department for fuel savings and
squad and technology equipment purchases delayed until 2024. Culture and recreation was also under
budget by $220,004, mainly in the parks department related to maintenance and trail projects budgeted,
but not completed in the current year.
The following graph presents the City’s General Fund expenditures by function for the last five years:
General
Government Public Safety Public Works Culture and
Recreation All Other
2019 $3,000,056 $6,071,462 $1,954,183 $1,889,264 $100,596
2020 $3,279,680 $6,693,505 $1,999,412 $1,628,772 $144,308
2021 $3,260,266 $7,261,344 $2,099,230 $1,982,787 $131,754
2022 $3,518,433 $8,083,971 $2,074,630 $2,209,617 $126,878
2023 $3,671,376 $9,140,389 $2,513,194 $2,281,006 $168,281
1,000,000 $
2,000,000 $
3,000,000 $
4,000,000 $
5,000,000 $
6,000,000 $
7,000,000 $
8,000,000 $
9,000,000 $
10,000,000
General Fund Expenditures by Function
Year Ended December 31,
Total General Fund expenditures for 2023 were $1,760,717 (11.0 percent) greater than the previous year.
Public safety expenditures increased $1,056,418, mainly in the fire and rescue department for increased
personnel from the change to the full-time firefighter model in fiscal 2023. Public works increased
438,564, mainly in the streets department for maintenance projects.
13-
ENTERPRISE FUNDS OVERVIEW
The City maintains a number of enterprise funds to account for services the City provides that are
financed primarily through fees charged to those utilizing the service. This section of the report provides
you with an overview of the financial trends and activities of the City’s enterprise funds, which include
the Water, Sewer, and Water Quality Funds.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2023, presented by both classification and by fund:
2023 2022 Change
Net position of enterprise funds
Total by classification
Net investment in capital assets 74,313,470$ 73,472,594$ 840,876$
Unrestricted 15,046,459 12,457,095 2,589,364
Total enterprise funds 89,359,929$ 85,929,689$ 3,430,240$
Total by fund
Water 51,271,447$ 49,935,870$ 1,335,577$
Sewer 31,768,405 30,742,355 1,026,050
Water Quality 6,320,077 5,251,464 1,068,613
Total enterprise funds 89,359,929$ 85,929,689$ 3,430,240$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
INTERNAL SERVICE FUND
The City has established a Severance Compensation Internal Service Fund to finance the compensated
absence obligations of the governmental funds of the City. At December 31, 2023, this fund had assets
totaling $556,375, while liabilities totaled $1,141,513, leaving a deficit net position balance of
585,138). We recommend that the City continue to include the financing of these obligations as part of
its long-range financial plans.
The City has also established an Insurance Internal Service Fund to account for risk management
activities, including workers’ compensation, volunteer accident, and property/casualty insurance. At
December 31, 2023, this fund had a net position balance of $191,838.
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WATER ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Water Fund:
2019 2020 2021 2022 2023
Operating Revenue $3,792,321 $4,784,064 $5,569,995 $5,595,073 $6,063,587
Operating Expenses $2,983,966 $3,243,683 $3,212,458 $3,755,290 $4,361,701
Operating Income $808,355 $1,540,381 $2,357,537 $1,839,783 $1,701,886
Income Before
Depreciation/Amortization $1,696,804 $2,495,708 $3,346,673 $2,877,384 $2,761,203
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
Water Enterprise Fund
Year Ended December 31,
The Water Fund ended 2023 with a net position of $51,271,447, an increase of $1,335,577 from the prior
year. Of this, $43,435,390 represents the net investment in capital assets, leaving $7,836,057 in
unrestricted net position. The Water Fund had transfers out totaling $1,659,590 in 2023 to support other
funds, pay debt service, and provide for construction projects.
Operating revenue in the Water Fund increased $468,514 (8.4 percent) from the prior year. This increase
was due to increased rates and consumption in the current year.
Water Fund operating expenses for 2023 increased $606,411 (16.1 percent) from the previous year. This
includes increases in personnel costs, including wages and benefits and repairs and maintenance.
15-
SEWER ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Sewer Fund:
2019 2020 2021 2022 2023
Operating Revenue $3,622,033 $4,399,718 $4,761,256 $4,814,666 $4,689,458
Operating Expenses $3,281,824 $3,360,286 $3,365,918 $3,741,083 $3,689,753
Operating Income $340,209 $1,039,432 $1,395,338 $1,073,583 $999,705
Income Before
Depreciation/Amortization $904,035 $1,653,925 $2,036,083 $1,757,988 $1,730,389
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2,250,000
2,500,000
2,750,000
3,000,000
3,250,000
3,500,000
3,750,000
4,000,000
4,250,000
4,500,000
4,750,000
5,000,000
Sewer Enterprise Fund
Year Ended December 31,
The Sewer Fund ended 2023 with a net position of $31,768,405, an increase of $1,026,050 from the prior
year. Of this, $27,370,813 represents the City’s net investment in capital assets, leaving $4,397,592 in
unrestricted net position. The Sewer Fund had transfers out totaling $744,828 in 2023 to support other
funds, pay debt service, and provide for construction projects.
Operating revenue in the Sewer Fund decreased $125,208 (2.6 percent) from the prior year, mainly
related to decreased usage. Sewer Fund operating expenses for 2023 decreased $51,330 from the previous
year.
16-
WATER QUALITY ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Water Quality
Fund:
2019 2020 2021 2022 2023
Operating Revenue $1,060,295 $1,175,189 $1,206,566 $1,254,521 $1,413,198
Operating Expenses $611,654 $623,317 $730,212 $900,535 $819,451
Operating Income $448,641 $551,872 $476,354 $353,986 $593,747
Income Before
Depreciation/Amortization $583,068 $668,423 $594,451 $451,879 $701,135
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
1,300,000
1,400,000
1,500,000
Water Quality Enterprise Fund
Year Ended December 31,
The Water Quality Fund ended 2023 with a net position of $6,320,077, an increase of $1,068,613 from
the prior year. Of this, $3,507,267 represents the investment in capital assets, leaving $2,812,810 in
unrestricted net position.
Operating revenue in the Water Quality Fund increased $158,677 from the prior year, due to an increase
in rates in 2023. Water Quality Fund operating expenses for 2023 decreased $81,084 (9.0 percent) from
the previous year, mainly in personnel-related expenditures.
17-
GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefo re, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of the City’s net position as of December 31, 2023 and
2022, for governmental activities and business-type activities:
2023 2022 Change
Net position
Governmental activities
Net investment in capital assets 143,656,868$ 133,708,934$ 9,947,934$
Restricted 12,546,535 11,269,953 1,276,582
Unrestricted 15,180,598 18,422,340 (3,241,742)
Total governmental activities 171,384,001 163,401,227 7,982,774
Business-type activities
Net investment in capital assets 74,313,470 73,472,594 840,876
Unrestricted 15,046,459 12,457,095 2,589,364
Total business-type activities 89,359,929 85,929,689 3,430,240
Total net position 260,743,930$ 249,330,916$ 11,413,014$
As of December 31,
The City’s total net position at December 31, 2023, was $11,413,014 higher than the total net position
reported at the previous year-end.
The increase in the governmental activities net investment in capital assets balance was mostly due to
capital outlay and capital contribution activity during fiscal 2023. The increase in the restricted net
position in governmental activities is mostly related to increases in amounts restricted for public safety.
Decreases in unrestricted net position is mostly related to unrestricted net position amounts invested in
capital assets and changes in pension-related obligations in the current year. The change in unrestricted
net position in the business-type activities is related to positive operating results in the utility operations
in the current year.
At the end of the current fiscal year, the City is able to present positive balances in all categories of net
position, both for the government as a whole, and for its separate governmental and business-type
activities. The same situation held true for the prior year.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net position. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation/amortization of long-lived capital assets, and other accrual-based
expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2023 and 2022:
2022
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 4,264,884$ 2,560,951$ (1,703,933)$ (657,090)$
Public safety 10,815,305 4,516,375 (6,298,930) (5,819,509)
Public works 6,005,415 3,682,999 (2,322,416) (157,473)
Culture and recreation 3,032,441 526,653 (2,505,788) (2,495,375)
Economic development 735,775 24,595 (711,180) (1,248,635)
Interest on long-term debt 807,850 – (807,850) (735,966)
Business-type activities
Water 4,380,943 6,067,387 1,686,444 2,884,048
Sewer 3,708,995 4,754,110 1,045,115 2,506,819
Water quality 819,451 1,436,221 616,770 995,248
34,571,059$ 23,569,291$ (11,001,768) (4,727,933)
General revenues
Taxes 19,439,605 17,726,782
Unrestricted grants and contributions 456 602
Investment income (losses)2,386,957 (1,277,356)
Miscellaneous 617,095 982,682
Sale ofassetsGain (loss) on sale of assets (29,331) 254,471
Total general revenues 22,414,782 17,687,181
Change in net position 11,413,014$ 12,959,248$
Total net (expense) revenue
Net (expense) revenue
2023
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such as property taxes and
unrestricted grants. It also shows that the City’s business-type activities are generating sufficient program
revenues (service charges and program-specific grants) to cover expenses. This is critical given the
current downward pressures on the general revenue sources.
19-
ACCOUNTING AND AUDITING UPDATES
The following is a summary of Governmental Accounting Standards Board (GASB) standards expected
to be implemented in the next few years.
GASB STATEMENT NO. 100, ACCOUNTING CHANGES AND ERROR CORRECTIONS – AN AMENDMENT OF
GASB STATEMENT NO. 62
The primary objective of this statement is to enhance accounting and financial reporting requirements for
accounting changes and error corrections to provide more understandable, reliable, relevant, consistent,
and comparable information for making decisions or assessing accountability.
The requirements of this statement will improve the clarity of the accounting and financial reporting
requirements for accounting changes and error corrections, which will result in greater consistency in
application in practice. In turn, more understandable, reliable, relevant, consistent, and comparable
information will be provided to financial statement users for making decisions or assessing accountability.
In addition, the display and note disclosure requirements will result in more consistent, decision useful,
understandable, and comprehensive information for users about accounting changes and error corrections.
The requirements of this statement are effective for accounting changes and error corrections made in
fiscal years beginning after June 15, 2023, and all reporting periods thereafter. Earlier application is
encouraged.
GASB STATEMENT NO. 101, COMPENSATED ABSENCES
The objective of this statement is to better meet the information needs of financial statement users by
updating the recognition and measurement guidance for compensated absences. That objective is
achieved by aligning the recognition and measurement guidance under a unified model and by amending
certain previously required disclosures.
This statement requires that liabilities for compensated absences be recognized for (1) leave that has not
been used and (2) leave that has been used, but not yet paid in cash or settled through noncash means. A
liability should be recognized for leave that has not been used if (a) the leave is attributable to services
already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time
off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already
rendered when an employee has performed the services required to earn the leave. Leave that accumulates
is carried forward from the reporting period in which it is earned to a future reporting period during which
it may be used for time off or otherwise paid or settled.
This statement requires that a liability for certain types of compensated absences —including parental
leave, military leave, and jury duty leave—not be recognized until the leave commences. This statement
also requires that a liability for specific types of compensated absences not be recognized until the leave
is used. This statement also establishes guidance for measuring a liability for leave that has not been used,
generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that
has been used, but not yet paid or settled should be measured at the amount of the cash payment or
noncash settlement to be made. Certain salary-related payments that are directly and incrementally
associated with payments for leave also should be included in the measurement of the liabilities.
With respect to financial statements prepared using the current financial resources measurement focus,
this statement requires that expenditures be recognized for the amount that normally would be liquidated
with expendable available financial resources.
The requirements of this statement are effective for fiscal years beginning after December 15, 2023, and
all reporting periods thereafter. Earlier application is encouraged.
20-
GASB STATEMENT NO. 102, CERTAIN RISK DISCLOSURES
The objective of this statement is to provide users of government financial statements with essential
information about risks related to a government’s vulnerabilities due to certain concentrations or
constraints.
This statement defines a concentration as a lack of diversity related to an aspect of a significant inflow of
resources or outflow of resources. A constraint is a limitation imposed on a government by an external
party or by formal action of the government’s highest level of decision-making authority. Concentrations
and constraints may limit a government’s ability to acquire resources or control spending.
A government will be required to assess whether a concentration or constraint makes the primary
government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the
risk of a substantial impact. Additionally, a government must assess whether an event or events associated
with a concentration or constraint that could cause the substantial impact have occurred, have begun to
occur, or are more likely than not to begin to occur within 12 months of the date the financial statements
are issued.
If a government determines that those criteria for disclosure have been met for a concentration or
constraint, it should disclose information (as outlined in the standard) in the notes to financial statements
in sufficient detail to enable users of financial statements to understand the nature of the circumstances
disclosed and the government’s vulnerability to the risk of a substantial impact.
The requirements of this statement are effective for fiscal years beginning after June 15, 2024, and all
reporting periods thereafter. Earlier application is encouraged.