HomeMy WebLinkAbout06(A) - Resolution Approving the 2024 Annual Financial Report and Management Letter Report
CITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Financial Statements
and Supplementary Information
Year Ended
December 31, 2024
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Page
INTRODUCTORY SECTION
ELECTED AND APPOINTED OFFICIALS 1
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 2–4
MANAGEMENT’S DISCUSSION AND ANALYSIS 5–20
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 85–92
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 93
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 94
Nonmajor Special Revenue Funds
Combining Balance Sheet 95–96
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 97–98
Nonmajor Capital Projects Funds
Combining Balance Sheet 99–102
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 103–106
General Fund
Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual 107–112
Debt Service Fund
Balance Sheet by Account 113–115
Schedule of Revenues, Expenditures, and Changes in Fund Balances by Account 116–118
Internal Service Funds
Combining Statement of Net Position 119
Combining Statement of Revenues, Expenses, and Changes in Net Position 120
Combining Statement of Cash Flows 121
OTHER INFORMATION SECTION
Summary Financial Report
Revenues and Expenditures for General Operations 122
Combined Schedule of Indebtedness 123–124
Bond Schedules 125–129
Debt Service Requirements 130
Tax Levies and Collections, and Special Assessment Levies and Collections 131
Schedules of Market Value, Tax Levy, Tax Capacity Values, Tax Capacity Rate,
and Market Value Rate 132
Key Financial Indicators 133
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 134–135
Independent Auditor’s Report on Minnesota Legal Compliance 136
CITY OF PRIOR LAKE
SCOTT COUNTY, MINNESOTA
Table of Contents (continued)
INTRODUCTORY SECTION
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Term Expires
Kirt Briggs Mayor 12/31/2028
Zach Braid Councilmember 12/31/2028
Kimberly Churchill Councilmember 12/31/2026
Ethan Hellier Councilmember 12/31/2028
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, 2024
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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, 2024, 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, 2024, 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 generall y 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.
RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of the 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 statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
(continued)
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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 judgment 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.
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 Governmental
Accounting Standards Board, 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.
(continued)
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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
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 combining and individual nonmajor 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
Malloy, Montague, Karnowski, Radosevich & Co., P.A. previously audited the City’s 2023 financial
statements and 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 their report dated May 30, 2024. In our opinion, the partial comparative information
presented herein as of and for the year ended December 31, 2023, is consistent, in all material respects,
with the audited financial statements from which it has been derived.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 28, 2025 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.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota
May 28, 2025
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CITY OF PRIOR LAKE
Management’s Discussion and Analysis
Fiscal Year Ended December 31, 2024
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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, 2024.
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 $272,889,712 (net position). Of
this amount, $33,813,702 (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 $12,145,782.
• As of the close of the current fiscal year, the City’s governmental funds reported combined
ending fund balances of $33,841,298, an increase of $964,798 in comparison with the prior year.
• At the end of the current fiscal year, the total fund balance for the General Fund was $13,411,569,
or 60.5 percent, of budgeted 2025 expenditures and transfers out of $22,168,668. Of the total fund
balance, $522,771 is assigned for future projects and programs. The total fund balance reflects an
increase of $2,406,325 from the prior 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, Construction Capital Projects
Fund, and Permanent Improvement Revolving Capital Projects 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 funds 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 t he 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 $272,889,712 at the close of the most recent fiscal year.
The City’s investment in capital assets (e.g., land, buildings, and machinery and equipment), less any
related debt used to acquire those assets that is still outstanding, totaled 82.9 percent of total net position.
The City uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending. Although the City’s investment in its capital assets is reported net of related
debt, it should be noted that the resources needed to repay this debt must be provided from other sources,
since the capital assets themselves cannot be used to liquidate these liabilities.
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The following table provides the City’s Summary of Net Position:
2024 2023 2024 2023 2024 2023
Assets
Current and other assets 45,827,258$ 45,479,912$ 20,628,826$ 17,086,059$ 66,456,084$ 62,565,971$
Capital assets, net 175,413,322 172,992,464 78,659,980 75,913,636 254,073,302 248,906,100
Total assets 221,240,580$ 218,472,376$ 99,288,806$ 92,999,695$ 320,529,386$ 311,472,071$
Deferred outflows of resources
Pension and OPEB plan deferments 8,813,333$ 9,860,595$ 177,890$ 350,095$ 8,991,223$ 10,210,690$
Liabilities
Long-term liabilities 35,699,376$ 39,724,257$ 3,514,536$ 3,030,044$ 39,213,912$ 42,754,301$
Other liabilities 2,851,682 3,181,915 702,782 577,432 3,554,464 3,759,347
Total liabilities 38,551,058$ 42,906,172$ 4,217,318$ 3,607,476$ 42,768,376$ 46,513,648$
Deferred inflows of resources
Revenue for subsequent years 3,866,944$ 5,050,251$ –$ –$ 3,866,944$ 5,050,251$
Pension and OPEB plan deferments 9,485,364 8,992,547 510,213 382,385 9,995,577 9,374,932
Total deferred inflows of resources 13,352,308$ 14,042,798$ 510,213$ 382,385$ 13,862,521$ 14,425,183$
Net position
Net investment in capital assets 149,536,208$ 143,656,868$ 76,823,473$ 74,313,470$ 226,359,681$ 217,970,338$
Restricted 12,716,329 12,546,535 – – 12,716,329 12,546,535
Unrestricted 15,898,010 15,180,598 17,915,692 15,046,459 33,813,702 30,227,057
Total net position 178,150,547$ 171,384,001$ 94,739,165$ 89,359,929$ 272,889,712$ 260,743,930$
Summary of Net Position
as of December 31, 2024 and 2023
Table 1
Governmental Activities Business-Type Activities Total
An additional portion of the City’s net position, $12,716,329, or 4.7 percent, represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted net
position, $33,813,702, may be used to meet the government’s ongoing obligations to citizens and
creditors.
The significant changes in deferred outflows of resources and deferred inflows of resources relate to
changes in the Public Employees Retirement Association pension plans in 2024. Governmental
Accounting Standards Board Statement No. 68 requires the City to recognize its proportionate share of
pension benefit obligations. Deferred inflows of resources also increased for state municipal street aid
revenue received by the City in advance of allotments that will be reported as revenue in subsequent
years.
The increase in current and other assets is mainly the result of positive operative results during the year in
the enterprise funds. The increase in capital assets is related to continuing development activity in the
current year. The decrease in long-term liabilities is the result of payments on outstanding debt.
At the end of the current fiscal year, the City is able to report positive balances in all three categories of
net position, both for the government as a whole, as well as for its separate governmental and
business-type activities. The same situation held true for the prior fiscal year.
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2024 2023 2024 2023 2024 2023
Revenues
Program revenues
Charges for services 2,668,089$ 2,298,357$ 11,721,041$ 12,166,243$ 14,389,130$ 14,464,600$
Operating grants and
contributions 3,745,857 3,706,641 72,146 27,150 3,818,003 3,733,791
Capital grants and
contributions 5,991,477 5,306,575 4,587 64,325 5,996,064 5,370,900
General revenues
Property taxes and tax
increments 19,695,282 17,802,929 – – 19,695,282 17,802,929
Franchise taxes 1,640,516 1,636,676 – – 1,640,516 1,636,676
Grants and contributions not
restricted to specific programs – 456 – – – 456
Investment income 1,686,246 1,708,687 693,818 678,270 2,380,064 2,386,957
Miscellaneous 774,285 576,207 21,185 40,888 795,470 617,095
Gain (loss) on sale of assets 299,790 64,915 – (94,246) 299,790 (29,331)
Total revenues 36,501,542 33,101,443 12,512,777 12,882,630 49,014,319 45,984,073
Expenses
General government 4,744,079 4,264,884 – – 4,744,079 4,264,884
Public safety 11,342,029 10,815,305 – – 11,342,029 10,815,305
Public works 6,632,534 6,005,415 – – 6,632,534 6,005,415
Culture and recreation 3,321,497 3,032,441 – – 3,321,497 3,032,441
Economic development 1,376,697 735,775 – – 1,376,697 735,775
Interest on long-term debt 666,504 807,850 – – 666,504 807,850
Water – – 3,806,405 4,380,943 3,806,405 4,380,943
Sewer – – 4,160,496 3,708,995 4,160,496 3,708,995
Water quality – – 818,296 819,451 818,296 819,451
Total expenses 28,083,340 25,661,670 8,785,197 8,909,389 36,868,537 34,571,059
Increase in net position
before transfers 8,418,202 7,439,773 3,727,580 3,973,241 12,145,782 11,413,014
Transfers (1,651,656) 543,001 1,651,656 (543,001) – –
Changes in net position 6,766,546 7,982,774 5,379,236 3,430,240 12,145,782 11,413,014
Net position
Beginning of year 171,384,001 163,401,227 89,359,929 85,929,689 260,743,930 249,330,916
End of year 178,150,547$ 171,384,001$ 94,739,165$ 89,359,929$ 272,889,712$ 260,743,930$
Governmental Activities Business-Type Activities Total
Table 2
Changes in Net Position
for the Years Ended December 31, 2024 and 2023
Governmental activities increased the City’s net position by $6,766,546. Property tax increases were the
result of an increased levy in the current year. The increase in miscellaneous income includes $364,063
for the City’s portion of excess tax increment from the decertification of Shepherd’s Path TIF District 6-1
and $103,632 from a change in the pass-through of court fines to the City from the state of Minnesota.
Capital grants and contributions increased, mainly from special assessment revenues. The increase in
public works expenses is due to an increase in transportation and development-related costs. The increase
in public safety expenses includes a full year of full-time firefighters in 2024, as compared to six months
of expense in 2023. Twelve full-time firefighters started with the City on July 1, 2023. Additionally,
police personnel costs include a change in the pass-through of court fines paid to Scott County. The
increase in economic development expenses is due to the decertification of Shepherd’s Path TIF
District 6-1. The City paid the county for the excess TIF balance and the county allocated the fund
balance to three taxing entities, including the school district, city, and county.
The business-type activities increased the City’s net position in total by $5,379,236. The charges for
services decrease was the result of less water and sewer consumption during the year due to less
irrigation, the result of more precipitation. Total expenses were down due to lower water treatment and
repair and maintenance supplies. The increase in transfers was due to more infrastructure contributed to
the enterprise funds.
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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 2024. Public safety includes a full year of
full-time firefighters in 2024, as compared to six months of expnse in 2023. Twelve full-time firefighters
started with the City on July 1, 2023. General government and culture and recreation 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 2024 included the Wilds/Jeffers area
street overlay project.
$–
$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
Water Sewer Water Quality
Expenses Program Revenues
Business-Type Activities – Revenue by Source
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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.
At the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $33,841,298, an increase of $964,798 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 $13,411,569. 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 60.5 percent of total
2025 General Fund budgeted expenditures and transfers out of $22,168,668. Of the total fund balance of
$13,411,569, $522,771 is assigned for future projects and programs. This leaves an unassigned fund
balance in the General Fund of $12,888,798.
The total fund balance reflects an increase of $2,406,325 from the prior year and an increase of
$2,722,100 above the amended budget, which reflected the use of fund balance of $315,775. The
components of the $2,406,325 increase in fund balance are revenues and other financing sources over
budget by $1,711,515 and expenditures less than budget by $1,010,585. Additions to revenue above
budget are primarily from interest income, building permit/fees on a multifamily residential building, and
excess TIF from the Shepherd’s Path TIF District closeout. Expenditures are lower than budget due to
personnel savings due to open positions, lower fuel rate and usage, lower utility usage, and deferred repair
and maintenance projects.
The Debt Service Fund balance increased by $872,402. The City manages cash flow in all debt service
accounts and ensures adequate resources exist to fund future obligations.
The Construction Capital Projects Fund balance decreased by $599,278, due to timing differences
between project financing inflows and capital outlays.
The Permanent Improvement Revolving Capital Projects Fund balance decreased by $985,848, 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.
-13-
GENERAL FUND BUDGETARY HIGHLIGHTS
The original budget reflected no change in fund balance.
The City amends its budget at various points during the year. The General Fund budget was amended in
2024 to increase the spending of the fund balance by $315,775, primarily for street/trail/sidewalk
maintenance and police vehicle equipment and technology costs.
Actual revenues and other financing sources were $1,711,515 over budget in 2024. Investment income
was higher than budget by $532,555, due to market conditions. Licenses and permits were more than
budget by $251,698 as nonbusiness permit activity was more than projected, due to an increase in
building/permit fees on a multi-family residential development. Miscellaneous was over budget due to
excess TIF from the Shepherd’s Path TIF District closeout.
Actual expenditures were $1,010,585 less than budget in 2024. Expenditures were less than budget in
most program areas, due to open positions, fuel and utilities savings across multiple departments , and
deferral of maintenance projects. Police department expenditures were lower than budget by $224,730 for
fuel, small equipment, and technology purchases. Fuel costs were budgeted at a higher rate, but the price
subsequently dropped through the end of 2024. Public works expenditures were lower than budget by
$280,235, primarily for fuel and snow and ice management material savings.
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, 2024 amounts to $254,073,302 (net of accumulated depreciation/amortization). This
investment in capital assets includes items, such as land, buildings and improvements, machinery and
equipment, park facilities, roads, highways, and bridges.
2024 2023 2024 2023 2024 2023
Land 35,016,051$ 34,311,351$ –$ –$ 35,016,051$ 34,311,351$
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 9,052,106 16,010,957 719,749 54,625 9,771,855 16,065,582
Land improvements 716,947 782,146 22,034 26,421 738,981 808,567
Machinery and equipment 3,227,605 3,216,610 780,435 870,336 4,008,040 4,086,946
Vehicles 2,488,171 2,389,626 393,696 424,739 2,881,867 2,814,365
Infrastructure 68,450,401 59,697,281 74,025,184 71,818,633 142,475,585 131,515,914
Technology subscriptions 309,121 431,573 – – 309,121 431,573
Total 175,413,322$ 172,992,464$ 78,659,980$ 75,913,636$ 254,073,302$ 248,906,100$
Table 3
Capital Assets
(Net of Depreciation/Amortization)
TotalBusiness-Type ActivitiesGovernmental Activities
Additional information on the City’s capital assets can be found in Note 4 of the notes to basic financial
statements.
-14-
Long-Term Liabilities – At the end of the current fiscal year, the City had total long-term liabilities of
$39,213,912. This amount includes debt backed by the full faith and credit of the City. The City’s total
long-term liabilities decreased during the current fiscal year, due to scheduled payments on debt
obligations and energy loans payable and changes in the net pension liability previously discussed.
2024 2023 2024 2023 2024 2023
G.O. bonds 12,150,000$ 13,875,000$ –$ –$ 12,150,000$ 13,875,000$
G.O. special assessment bonds 7,830,000 7,910,000 – – 7,830,000 7,910,000
G.O. tax increment bonds – 30,000 – – – 30,000
G.O. revenue bonds 4,010,000 4,505,000 2,350,000 1,440,000 6,360,000 5,945,000
Premium (discount) on bonds payable 1,919,978 2,186,515 187,600 160,166 2,107,578 2,346,681
Energy loan payable 148,731 441,532 – – 148,731 441,532
Compensated absences payable 1,664,718 1,141,513 225,891 209,648 1,890,609 1,351,161
Subscription liabilities 285,857 417,549 – – 285,857 417,549
Total OPEB obligation 849,713 819,675 136,338 148,527 986,051 968,202
Net pension liability – GERF and PEPFF 6,840,379 8,397,473 614,707 1,071,703 7,455,086 9,469,176
Total 35,699,376$ 39,724,257$ 3,514,536$ 3,030,044$ 39,213,912$ 42,754,301$
Table 4
Long-Term Liabilities
TotalGovernmental Activities Business-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 $5,485,388,057, which calculates to a debt limit of
$164,561,642. 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 $12,150,000 of general obligation debt outstanding, leaving a debt limit
of $152,411,642.
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 $22,168,668 for expenditures and other
financing uses for fiscal 2025, an increase of $806,290, or 3.8 percent, from the 2024 final
budget. Fiscal 2025 expenditures include a new fire marshal and an increase in police officer and
sergeant wages based on 2025 labor agreements with the Law Enforcement Labor Services
officer and sergeant union.
• The City’s local tax capacity increased 3.7 percent for property taxes payable in 2024.
-15-
• Although detached single-family residential construction activity was slower in 2024 than in
recent years due to a low vacant lot inventory, the City continues to grow. The City issued
51 single-family detached building permits in 2024, compared to an average of 114 single-family
permits over the previous 10 years.
• Over the past five years (2020–2024) the City has issued 522 single-family home permits.
• Since 2005, the City has consistently ranked in the top 25 in the Twin Cities metro area in total
number of residential units and in the top 15 in total single-family residential units. (Source:
Metropolitan Council, Community Profile, Building Permits, Residential, Twin Cities Region
(7-county metro area).)
• Since 2016, the City has issued permits for seven multi-family residential buildings, with a total
of 637 units. Two additional multi-family residential buildings totaling 154 units are anticipated
in 2025.
• Total building permit valuation (new and addition/alteration) had remained consistent over the
past five years (2020–2024), averaging $76.2 million per year. The total building permit valuation
in 2024 was $95.9 million.
• Commercial building permit valuation (new and addition/alteration) had an average annual
valuation of $10.6 million over the past five years (2020–2024). The total commercial building
permit valuation in 2024 was $14.9 million.
• The City and Spring Lake Township entered into a new Orderly Annexation Agreement in
September 2024, which includes 1,900 acres of land for future residential and
commercial/industrial development. 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 72 percent of the
City’s General Fund annual budget. A one-year labor agreement is in place for 2025.
Negotiations for the next labor cycle are anticipated to occur during the fall of 2025.
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.
-16-
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 grade to AAA from S&P in 2023. Moody’s upgraded the City’s bond rating to Aa1 in 2024.
Moody’s S&P
2010 Aa2
2011 Aa2
2012 Aa2
2013 Aa2
2014 Aa2
2015 Aa2 AA+
2016 AA+
2017 AA+
2018 AA+
2019 AA+
2020 N/A
2021 AA+
2022 AA+
2023 AAA
2024 Aa1 AAA
-17-
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 would 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.
$15,077,717
$16,585,887
$18,810,399
$21,046,603 $22,168,668
63%67%
52%56%
61%
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2020 2021 2022 2023 2024
Subsequent Year’s Budgeted Expenditures 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’s 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
2019 41.43 33.02 N/A
2020 40.87 32.50 N/A
2021 39.35 30.27 0.84
2022 41.19 30.47 0.74
2023 48.60 28.11 0.62
2024 50.04 30.30 0.63
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
$1,800
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Property Tax Levy Per Household
Property Tax Levy/HH Expected Property Tax Levy/HH
The increase in the property tax levy per household from 2024 to 2025 is primarily due to the additional
funding for public safety.
-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
$2,150
$2,200
$2,250
$2,300
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
General Fund Total Operating
Expenditures Per Household
Expected Operating Expenditures/HH Operating Expenditures/HH
As reflected in the chart above, the 2025 operating expenditures per household continues to be less than
the level which reflects the cost of inflation and growth.
REQUESTS FOR INFORMATION
These financial statements are designed to provide a general overview of the City’s finances for all those
with an interest in the City’s finances. Questions concerning any of the information provided in this
report, or requests for additional financial information should be addressed to the office of the City’s
Finance Director at the City of Prior Lake, 4646 Dakota Street Southeast, Prior Lake, Minnesota
55372-1714.
BASIC FINANCIAL STATEMENTS
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Governmental Business-Type
Activities Activities Total
Assets
Cash and investments 36,110,812$ 18,984,584$ 55,095,396$
Receivables
Delinquent taxes 186,087 – 186,087
Accounts 563,609 1,532,366 2,095,975
Leases 2,578,337 – 2,578,337
Special assessments 2,878,027 107,445 2,985,472
Due from other governmental agencies 872,352 4,431 876,783
Restricted assets – temporarily restricted
Cash and investments held in escrow 31,365 – 31,365
Assets held for resale 1,315,577 – 1,315,577
Net pension asset – fire relief 1,291,092 – 1,291,092
Capital assets not being depreciated/amortized 100,221,077 3,438,631 103,659,708
Capital assets net of accumulated depreciation/amortization 75,192,245 75,221,349 150,413,594
Total assets 221,240,580 99,288,806 320,529,386
Deferred outflows of resources
Pension plan deferments – GERF and PEPFF 7,926,556 151,043 8,077,599
Pension plan deferments – fire relief 719,456 – 719,456
OPEB plan deferments 167,321 26,847 194,168
Total deferred outflows of resources 8,813,333 177,890 8,991,223
Total assets and deferred outflows of resources 230,053,913$ 99,466,696$ 329,520,609$
Liabilities
Accounts and contracts payable 1,361,240$ 507,456$ 1,868,696$
Accrued salaries and employee benefits payable 509,330 81,449 590,779
Due to other governmental agencies 198,957 91,271 290,228
Deposits payable 563,349 1,575 564,924
Accrued interest payable 64,252 21,031 85,283
Unearned revenue 154,554 – 154,554
Total OPEB liability
Due within one year 68,290 11,794 80,084
Due in more than one year 781,423 124,544 905,967
Net pension liability
GERF and PEPFF – due in more than one year 6,840,379 614,707 7,455,086
Bonds, energy loans, subscription liabilities, and compensated absences payable
Due within one year 4,953,194 353,767 5,306,961
Due in more than one year 23,056,090 2,409,724 25,465,814
Total liabilities 38,551,058 4,217,318 42,768,376
Deferred inflows of resources
Lease revenue for subsequent years 2,392,011 – 2,392,011
State aid for subsequent years 1,474,933 – 1,474,933
Pension plan deferments – GERF and PEPFF 8,834,859 481,595 9,316,454
Pension plan deferments – fire relief 472,150 – 472,150
OPEB plan deferments 178,355 28,618 206,973
Total deferred inflows of resources 13,352,308 510,213 13,862,521
Net position
Net investment in capital assets 149,536,208 76,823,473 226,359,681
Restricted for debt service 5,231,550 – 5,231,550
Restricted for net pension asset 1,291,092 – 1,291,092
Restricted for capital improvements 2,326,380 – 2,326,380
Restricted for development 1,866,721 – 1,866,721
Restricted for other purposes 2,000,586 – 2,000,586
Unrestricted 15,898,010 17,915,692 33,813,702
Total net position 178,150,547 94,739,165 272,889,712
Total liabilities, deferred inflows of resources, and net position 230,053,913$ 99,466,696$ 329,520,609$
CITY OF PRIOR LAKE
Statement of Net Position
as of December 31, 2024
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 4,744,079$ 725,323$ 203,106$ –$
Public safety 11,342,029 1,375,785 2,865,388 –
Public works 6,632,534 21,919 642,796 5,490,691
Culture and recreation 3,321,497 517,195 31,310 500,786
Economic development 1,376,697 27,867 3,257 –
Interest on long-term debt 666,504 – – –
Total governmental activities 28,083,340 2,668,089 3,745,857 5,991,477
Business-type activities
Water 3,806,405 4,976,415 21,166 6,248
Sewer 4,160,496 5,116,182 9,919 4,911
Water quality 818,296 1,628,444 41,061 (6,572)
Total business-type activities 8,785,197 11,721,041 72,146 4,587
Total 36,868,537$ 14,389,130$ 3,818,003$ 5,996,064$
General revenues
Taxes
Property taxes, levied for general purposes
Property taxes, levied for debt service
Tax increments
Franchise taxes
Investment income
Miscellaneous
Gain 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, 2024
See notes to basic financial statements -22-
Governmental Business-Type
Activities Activities Total
(3,815,650)$ –$ (3,815,650)$
(7,100,856) – (7,100,856)
(477,128) – (477,128)
(2,272,206) – (2,272,206)
(1,345,573) – (1,345,573)
(666,504) – (666,504)
(15,677,917) – (15,677,917)
– 1,197,424 1,197,424
– 970,516 970,516
– 844,637 844,637
– 3,012,577 3,012,577
(15,677,917) 3,012,577 (12,665,340)
15,837,423 – 15,837,423
3,188,595 – 3,188,595
669,264 – 669,264
1,640,516 – 1,640,516
1,686,246 693,818 2,380,064
774,285 21,185 795,470
299,790 – 299,790
(1,651,656) 1,651,656 –
22,444,463 2,366,659 24,811,122
6,766,546 5,379,236 12,145,782
171,384,001 89,359,929 260,743,930
178,150,547$ 94,739,165$ 272,889,712$
Changes in Net Position
Net (Expense) Revenues and
-23-
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FUND FINANCIAL STATEMENTS
Formerly
Nonmajor
Permanent
Debt Improvement
General Service Construction Revolving
Assets
Cash and investments 14,098,872$ 3,159,010$ 3,023,456$ 807,184$
Cash and investments held in escrow – – – –
Receivables
Delinquent taxes 182,795 – – –
Accounts 182,730 15,311 22,654 280,137
Lease 2,546,401 – – –
Special assessments
Delinquent – 13,656 3,099 –
Deferred 10,268 2,075,689 24,210 748,417
Due from other governmental agencies 517,198 34,017 282,000 24,108
Due from other funds 2,688 – – –
Assets held for resale – – – –
Total assets 17,540,952$ 5,297,683$ 3,355,419$ 1,859,846$
Liabilities
Accounts and contracts payable 295,565$ 1,881$ 559,591$ 109,883$
Accrued salaries and employee benefits payable 504,107 – – –
Due to other governmental agencies 198,190 – – –
Due to other funds 2,688 – – –
Deposits payable 477,888 – – –
Unearned revenue 99,018 – – –
Total liabilities 1,577,456 1,881 559,591 109,883
Deferred inflows of resources
Lease revenue for subsequent years 2,359,373 – – –
State aid for subsequent years – – 1,569,701 –
Unavailable revenue from delinquent taxes 182,795 – – –
Unavailable revenue from special assessments 9,759 2,089,345 27,309 748,417
Total deferred inflows of resources 2,551,927 2,089,345 1,597,010 748,417
Fund balances
Restricted – 3,206,457 467,452 –
Assigned 522,771 – 731,366 1,001,546
Unassigned 12,888,798 – – –
Total fund balances 13,411,569 3,206,457 1,198,818 1,001,546
Total liabilities, deferred inflows
of resources, and fund balances 17,540,952$ 5,297,683$ 3,355,419$ 1,859,846$
Capital Projects Funds
CITY OF PRIOR LAKE
Balance Sheet
Governmental Funds
as of December 31, 2024
See notes to basic financial statements -24-
Nonmajor Total
Governmental Governmental
Funds Funds
14,144,658$ 35,233,180$
31,365 31,365
3,292 186,087
58,288 559,120
31,936 2,578,337
– 16,755
2,688 2,861,272
15,029 872,352
– 2,688
1,315,577 1,315,577
15,602,833$ 43,656,733$
394,320$ 1,361,240$
5,223 509,330
767 198,957
– 2,688
85,461 563,349
55,536 154,554
541,307 2,790,118
32,638 2,392,011
– 1,569,701
3,292 186,087
2,688 2,877,518
38,618 7,025,317
5,439,290 9,113,199
9,583,618 11,839,301
– 12,888,798
15,022,908 33,841,298
15,602,833$ 43,656,733$
-25-
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33,841,298$
Capital assets are included in net position,but are excluded from fund balances because they do not
represent financial resources.
Cost of capital assets 265,930,497
Less accumulated depreciation/amortization (90,517,175)
Net pension assets are included in net position,but are excluded from fund balances because they do
not represent financial resources.1,291,092
Long-term liabilities are included in net position,but are excluded from fund balances until due and
payable.
Bond principal payable (23,990,000)
Energy loan payable (148,731)
Total OPEB liability (849,713)
Net pension liability – GERF and PEPFF (6,840,379)
Subscription liabilities (285,857)
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.(1,919,978)
Accrued interest payable on long-term debt is included in net position,but is excluded from fund
balances until due and payable.(64,252)
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.(782,597)
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 94,768
Delinquent taxes 186,087
Special assessments 2,877,518
Deferred outflows of resources – GERF and PEPFF pension plans 7,926,556
Deferred outflows of resources – fire relief pension plan 719,456
Deferred outflows of resources – OPEB 167,321
Deferred inflows of resources – GERF and PEPFF pension plans (8,834,859)
Deferred inflows of resources – fire relief pension plan (472,150)
Deferred inflows of resources – OPEB (178,355)
Total net position – governmental activities 178,150,547$
Amounts reported for governmental activities in the Statement of Net Position are different because:
as of December 31, 2024
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-
Formerly
Nonmajor
Permanent
Debt Improvement
General Service Construction Revolving
Revenues
Taxes 13,950,980$ 3,187,883$ –$ –$
Franchise taxes 543,869 – – 1,096,647
Special assessments 5,057 1,733,818 6,198 981,717
Licenses and permits 868,936 – – –
Intergovernmental 3,586,085 – 1,192,300 23,573
Charges for services 1,511,428 – – –
Fines and forfeits 103,766 – – –
Investment income 692,555 143,719 170,313 49,832
Miscellaneous 613,956 17,000 – –
Total revenues 21,876,632 5,082,420 1,368,811 2,151,769
Expenditures
Current
General government 4,084,901 – – –
Public safety 10,642,427 – – –
Public works 2,657,086 – – –
Culture and recreation 2,602,420 – – –
Economic development – – – –
Capital outlay 116,471 – 2,329,447 5,298,444
Debt service
Principal – 4,202,801 – –
Interest and other – 973,206 – 46,531
Total expenditures 20,103,305 5,176,007 2,329,447 5,344,975
Excess (deficiency) of revenues
over expenditures 1,773,327 (93,587) (960,636) (3,193,206)
Other financing sources (uses)
Bonds issued – – – 1,580,000
Premium on bonds issued – – – 106,507
Transfers in 876,400 968,114 706,702 615,441
Transfers out (248,488) (2,125) (345,344) (94,590)
Sale of capital assets 5,086 – – –
Total other financing sources (uses)632,998 965,989 361,358 2,207,358
Net change in fund balances 2,406,325 872,402 (599,278) (985,848)
Fund balances
Beginning of year, as previously reported 11,005,244 2,334,055 1,798,096 –
Change within financial reporting
entity (nonmajor to major fund)– – – 1,987,394
Beginning of year, restated 11,005,244 2,334,055 1,798,096 1,987,394
End of year 13,411,569$ 3,206,457$ 1,198,818$ 1,001,546$
Capital Projects Funds
CITY OF PRIOR LAKE
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Year Ended December 31, 2024
See notes to basic financial statements -27-
Nonmajor Total
Governmental Governmental
Funds Funds
2,515,591$ 19,654,454$
– 1,640,516
787 2,727,577
– 868,936
621,449 5,423,407
814,503 2,325,931
– 103,766
596,472 1,652,891
102,000 732,956
4,650,802 35,130,434
187,187 4,272,088
16,441 10,658,868
– 2,657,086
9,590 2,612,010
186,360 186,360
4,647,007 12,391,369
– 4,202,801
– 1,019,737
5,046,585 38,000,319
(395,783) (2,869,885)
– 1,580,000
– 106,507
424,000 3,590,657
(1,051,724) (1,742,271)
294,704 299,790
(333,020) 3,834,683
(728,803) 964,798
17,739,105 32,876,500
(1,987,394) –
15,751,711 32,876,500
15,022,908$ 33,841,298$
-28-
THIS PAGE INTENTIONALLY LEFT BLANK
964,798$
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 10,605,415
Depreciation/amortization expense (5,385,236)
Contributed capital asset 704,700
Capital contributions to enterprise funds (3,500,042)
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.(3,979)
Net pension assets are only recorded in the government-wide financial statements,as they are not current financial resources to
governmental funds.433,271
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 (1,580,000)
Premium on debt issued (106,507)
Principal repayments 4,202,801
Subscription liability payments 131,692
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 (30,038)
Net pension liability – GERF and PEPFF 1,557,094
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.(19,811)
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. 373,044
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.(389,297)
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 11,422
Delinquent property taxes 40,828
Special assessments 296,470
Deferred outflows of resources – GERF and PEPFF pension plans (915,858)
Deferred outflows of resources – fire relief pension plan (114,085)
Deferred outflows of resources – OPEB (17,319)
Deferred inflows of resources – GERF and PEPFF pension plans (517,779)
Deferred inflows of resources – fire relief pension plan (8,671)
Deferred inflows of resources – OPEB 33,633
6,766,546$ Change in net position – governmental activities
CITY OF PRIOR LAKE
Year Ended December 31, 2024
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 14,047,266$ 14,047,266$ 13,950,980$ (96,286)$
Franchise taxes 559,000 559,000 543,869 (15,131)
Special assessments 4,000 4,000 5,057 1,057
Licenses and permits 617,238 617,238 868,936 251,698
Intergovernmental 3,348,632 3,348,632 3,586,085 237,453
Charges for services 1,328,267 1,328,267 1,511,428 183,161
Fines and forfeits – – 103,766 103,766
Investment income 160,000 160,000 692,555 532,555
Miscellaneous 129,800 129,800 613,956 484,156
Total revenues 20,194,203 20,194,203 21,876,632 1,682,429
Expenditures
Current
General government 4,404,927 4,409,566 4,084,901 (324,665)
Public safety
Police 7,119,892 7,213,327 6,988,597 (224,730)
Fire and rescue 2,749,058 2,749,058 2,759,232 10,174
Other 913,492 913,492 894,598 (18,894)
Public works 2,847,321 2,937,321 2,657,086 (280,235)
Culture and recreation 2,626,785 2,666,785 2,602,420 (64,365)
Capital outlay 136,640 224,341 116,471 (107,870)
Total expenditures 20,798,115 21,113,890 20,103,305 (1,010,585)
Excess (deficiency) of revenues
over expenditures (603,912) (919,687) 1,773,327 2,693,014
Other financing sources (uses)
Transfers in 852,400 852,400 876,400 24,000
Transfers out (248,488) (248,488) (248,488) –
Sale of assets – – 5,086 5,086
Total other financing sources (uses)603,912 603,912 632,998 29,086
Net change in fund balances –$ (315,775)$ 2,406,325 2,722,100$
Fund balances
Beginning of year 11,005,244
End of year 13,411,569$
CITY OF PRIOR LAKE
Budgeted Amounts
Year Ended December 31, 2024
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
See notes to basic financial statements -30-
2024 2023 2024 2023
Current assets
Cash and investments 9,692,062$ 8,282,496$ 5,120,355$ 4,472,264$
Receivables
Accounts 545,183 498,878 723,878 619,348
Special assessments
Delinquent 48,657 34,853 49,112 36,177
Deferred 150 300 – –
Due from other governmental agencies 3,660 3,120 771 179
Total current assets 10,289,712 8,819,647 5,894,116 5,127,968
Noncurrent assets
Capital assets not being depreciated/amortized 2,689,488 2,575,270 94,106 54,625
Depreciable/amortizable capital assets 58,510,807 56,617,188 40,691,472 39,060,741
Accumulated depreciation/amortization (16,039,305) (14,956,985) (11,612,718) (10,944,470)
Total noncurrent assets 45,160,990 44,235,473 29,172,860 28,170,896
Total assets 55,450,702 53,055,120 35,066,976 33,298,864
Deferred outflows of resources
Pension plan deferments – GERF 82,755 165,026 52,185 110,988
OPEB plan deferments 14,598 17,064 9,315 11,943
Total deferred outflows of resources 97,353 182,090 61,500 122,931
Total assets and deferred outflows of resources 55,548,055$ 53,237,210$ 35,128,476$ 33,421,795$
Current liabilities
Accounts and contracts payable 29,081$ 84,008$ 416,641$ 176,501$
Accrued salaries and employee benefits payable 46,305 32,403 29,081 29,289
Due to other governmental agencies 86,757 82,228 2,429 4,284
Deposits payable 1,575 7,993 – –
Accrued interest payable 1,300 1,540 1,300 1,540
Current portion of total OPEB liability 6,066 6,066 4,245 4,245
Current portion of compensated absences payable 32,272 40,033 21,475 27,888
Current portion of bonds payable 135,000 135,000 135,000 135,000
Total current liabilities 338,356 389,271 610,171 378,747
Noncurrent liabilities
Compensated absences payable 98,767 84,304 50,651 50,852
Bonds premium (discount)63,923 80,083 63,923 80,083
Bonds payable 450,000 585,000 450,000 585,000
Net pension liability – GERF 336,793 558,553 212,380 375,653
Total OPEB liability 68,067 69,688 43,061 48,774
Total noncurrent liabilities 1,017,550 1,377,628 820,015 1,140,362
Total liabilities 1,355,906 1,766,899 1,430,186 1,519,109
Deferred inflows of resources
Pension plan deferments – GERF 263,862 179,272 166,390 120,569
OPEB plan deferments 15,561 19,592 9,930 13,712
Total deferred inflows of resources 279,423 198,864 176,320 134,281
Net position
Net investment in capital assets 44,512,067 43,435,390 28,523,937 27,370,813
Unrestricted 9,400,659 7,836,057 4,998,033 4,397,592
Total net position 53,912,726 51,271,447 33,521,970 31,768,405
Total liabilities, deferred inflows of
resources, and net position 55,548,055$ 53,237,210$ 35,128,476$ 33,421,795$
CITY OF PRIOR LAKE
Statement of Net Position
Proprietary Funds
as of December 31, 2024
Business-Type Activities – Enterprise Funds
Water Sewer
(With Partial Comparative Information as of December 31, 2023)
See notes to basic financial statements -31-
Governmental
Activities –
Internal Service
2024 2023 2024 2023 Funds
4,172,167$ 2,928,569$ 18,984,584$ 15,683,329$ 877,632$
263,305 203,303 1,532,366 1,321,529 4,489
9,526 6,572 107,295 77,602 –
– – 150 300 –
– – 4,431 3,299 –
4,444,998 3,138,444 20,628,826 17,086,059 882,121
655,037 143,612 3,438,631 2,773,507 –
4,991,928 4,577,416 104,194,207 100,255,345 –
(1,320,835) (1,213,761) (28,972,858) (27,115,216) –
4,326,130 3,507,267 78,659,980 75,913,636 –
8,771,128 6,645,711 99,288,806 92,999,695 882,121
16,103 40,624 151,043 316,638 –
2,934 4,450 26,847 33,457 –
19,037 45,074 177,890 350,095 –
8,790,165$ 6,690,785$ 99,466,696$ 93,349,790$ 882,121$
61,734$ 146,698$ 507,456$ 407,207$ –$
6,063 8,238 81,449 69,930 –
2,085 2,710 91,271 89,222 –
– – 1,575 7,993 –
18,431 – 21,031 3,080 –
1,483 1,483 11,794 11,794 –
10,020 2,916 63,767 70,837 548,491
20,000 – 290,000 270,000 –
119,816 162,045 1,068,343 930,063 548,491
12,706 3,655 162,124 138,811 1,116,227
59,754 – 187,600 160,166 –
1,160,000 – 2,060,000 1,170,000 –
65,534 137,497 614,707 1,071,703 –
13,416 18,271 124,544 136,733 –
1,311,410 159,423 3,148,975 2,677,413 1,116,227
1,431,226 321,468 4,217,318 3,607,476 1,664,718
51,343 44,131 481,595 343,972 –
3,127 5,109 28,618 38,413 –
54,470 49,240 510,213 382,385 –
3,787,469 3,507,267 76,823,473 74,313,470 –
3,517,000 2,812,810 17,915,692 15,046,459 (782,597)
7,304,469 6,320,077 94,739,165 89,359,929 (782,597)
8,790,165$ 6,690,785$ 99,466,696$ 93,349,790$ 882,121$
Water Quality Totals
-32-
2024 2023 2024 2023
Operating revenues
Sewer charges –$ –$ 3,909,836$ 3,548,689$
Water charges 3,525,016 4,682,735 – –
Storm water charges – – – –
Base fees 1,389,992 1,314,590 1,206,346 1,140,769
Meter sales 61,407 66,262 – –
Charges for services – – – –
Miscellaneous/other – – – –
Total operating revenues 4,976,415 6,063,587 5,116,182 4,689,458
Operating expenses
Personal services 1,043,398 1,149,241 655,407 670,526
Supplies 422,363 372,929 89,879 61,551
Repairs and maintenance 279,045 593,495 362,870 76,355
Other services and charges 155,715 179,591 127,091 131,492
Insurance 7,514 6,717 8,576 7,539
Utilities 793,367 995,819 72,154 79,813
Disposal charges – – 2,055,457 1,931,514
Miscellaneous 4,433 4,592 – 279
Depreciation/amortization 1,082,320 1,059,317 770,812 730,684
Total operating expenses 3,788,155 4,361,701 4,142,246 3,689,753
Operating income (loss)1,188,260 1,701,886 973,936 999,705
Nonoperating revenues (expenses)
Intergovernmental 21,166 86 9,919 61,762
Investment income 355,389 358,376 177,775 195,576
Interest expense (18,250) (19,242) (18,250) (19,242)
Gain (loss) on sale of assets – – – (94,246)
Miscellaneous 14,935 18,374 6,250 5,100
Total nonoperating revenues (expenses)373,240 357,594 175,694 148,950
Income before contributions and transfers 1,561,500 2,059,480 1,149,630 1,148,655
Special assessments (payback)6,248 3,714 – –
Capital grants – – 4,911 2,890
Capital contributions from other funds 1,856,220 768,036 1,229,310 541,136
Transfers in 257,313 163,937 88,032 78,197
Transfers out (1,040,002) (1,659,590) (718,318) (744,828)
Change in net position 2,641,279 1,335,577 1,753,565 1,026,050
Net position
Beginning of year 51,271,447 49,935,870 31,768,405 30,742,355
End of year 53,912,726$ 51,271,447$ 33,521,970$ 31,768,405$
Business-Type Activities – Enterprise Funds
CITY OF PRIOR LAKE
Statement of Revenues, Expenses, and Changes in Net Position
Proprietary Funds
Year Ended December 31, 2024
Water Sewer
(With Partial Comparative Information for the Year Ended December 31, 2023)
See notes to basic financial statements -33-
Governmental
Activities –
Internal Service
2024 2023 2024 2023 Funds
–$ –$ 3,909,836$ 3,548,689$ –$
– – 3,525,016 4,682,735 –
1,628,444 1,413,198 1,628,444 1,413,198 –
– – 2,596,338 2,455,359 –
– – 61,407 66,262 –
– – – – 59,195
– – – – 41,358
1,628,444 1,413,198 11,721,041 12,166,243 100,553
198,984 193,742 1,897,789 2,013,509 523,205
36,097 30,881 548,339 465,361 –
306,278 434,091 948,193 1,103,941 –
117,802 53,257 400,608 364,340 –
127 92 16,217 14,348 –
– – 865,521 1,075,632 –
– – 2,055,457 1,931,514 –
– – 4,433 4,871 –
107,074 107,388 1,960,206 1,897,389 –
766,362 819,451 8,696,763 8,870,905 523,205
862,082 593,747 3,024,278 3,295,338 (422,652)
41,061 27,017 72,146 88,865 –
160,654 124,318 693,818 678,270 33,355
(51,934) – (88,434) (38,484) –
– – – (94,246) –
– 17,414 21,185 40,888 –
149,781 168,749 698,715 675,293 33,355
1,011,863 762,496 3,722,993 3,970,631 (389,297)
(6,572) (3,994) (324) (280) –
– – 4,911 2,890 –
414,512 420,111 3,500,042 1,729,283 –
2,395 – 347,740 242,134 –
(437,806) (110,000) (2,196,126) (2,514,418) –
984,392 1,068,613 5,379,236 3,430,240 (389,297)
6,320,077 5,251,464 89,359,929 85,929,689 (393,300)
7,304,469$ 6,320,077$ 94,739,165$ 89,359,929$ (782,597)$
Water Quality Totals
-34-
2024 2023 2024 2023
Cash flows from operating activities
Cash received from customers 4,909,498$ 6,045,053$ 4,998,125$ 4,686,144$
Cash payments to suppliers (1,712,835) (2,166,337) (2,477,742) (2,142,014)
Cash payments to employees (1,080,879) (1,023,429) (727,745) (727,475)
Miscellaneous/other revenue 14,935 18,374 6,250 5,100
Net cash flows from operating
activities 2,130,719 2,873,661 1,798,888 1,821,755
Cash flows from noncapital financing activities
Intergovernmental revenue 21,166 86 9,919 61,762
Transfers in (out)(782,689) (1,495,653) (630,286) (666,631)
Net cash flows from noncapital
financing activities (761,523) (1,495,567) (620,367) (604,869)
Cash flows from capital and related financing
activities
Special assessments 6,248 3,714 – –
Capital grants – – 4,911 2,890
Acquisition of capital assets (151,617) (49,573) (543,466) (752,678)
Bonds issued – – – –
Premium on bonds issued – – – –
Payments on bonds payable (135,000) (130,000) (135,000) (130,000)
Interest paid on long-term debt (34,650) (39,850) (34,650) (39,850)
Net cash flows from capital
and related financing activities (315,019) (215,709) (708,205) (919,638)
Cash flows from investing activities
Interest received 355,389 358,376 177,775 195,576
Net increase (decrease) in cash and cash
equivalents 1,409,566 1,520,761 648,091 492,824
Cash and cash equivalents, January 1 8,282,496 6,761,735 4,472,264 3,979,440
Cash and cash equivalents, December 31 9,692,062$ 8,282,496$ 5,120,355$ 4,472,264$
Business-Type Activities – Enterprise Funds
CITY OF PRIOR LAKE
Statement of Cash Flows
Proprietary Funds
Year Ended December 31, 2024
(With Partial Comparative Information for the Year Ended December 31, 2023)
Water Sewer
See notes to basic financial statements -35-
Governmental
Activities –
Internal Service
2024 2023 2024 2023 Funds
1,565,488$ 1,386,107$ 11,473,111$ 12,117,304$ 58,762$
(545,893) (386,098) (4,736,470) (4,694,449) –
(230,555) (264,862) (2,039,179) (2,015,766) –
– 17,414 21,185 40,888 41,224
789,040 752,561 4,718,647 5,447,977 99,986
41,061 27,017 72,146 88,865 –
(435,411) (110,000) (1,848,386) (2,272,284) –
(394,350) (82,983) (1,776,240) (2,183,419) –
(6,572) (3,994) (324) (280) –
– – 4,911 2,890 –
(511,425) (1) (1,206,508) (802,252) –
1,180,000 – 1,180,000 – –
61,001 – 61,001 – –
– – (270,000) (260,000) –
(34,750) – (104,050) (79,700) –
688,254 (3,995) (334,970) (1,139,342) –
160,654 124,318 693,818 678,270 33,355
1,243,598 789,901 3,301,255 2,803,486 133,341
2,928,569 2,138,668 15,683,329 12,879,843 744,291
4,172,167$ 2,928,569$ 18,984,584$ 15,683,329$ 877,632$
TotalsWater Quality
-36-(continued)
2024 2023 2024 2023
Reconciliation of operating income to net
cash flows from operating activities
Operating income (loss)1,188,260$ 1,701,886$ 973,936$ 999,705$
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities
Depreciation/amortization 1,082,320 1,059,317 770,812 730,684
Miscellaneous/other revenue 14,935 18,374 6,250 5,100
(Increase) decrease in assets
and deferred outflows of resources
Accounts receivable (46,305) (19,967) (104,530) (1,783)
Special assessments receivable (13,654) (710) (12,935) (1,498)
Due from other governments (540) 643 (592) (33)
Deferred outflows of resources – GERF 82,271 32,023 58,803 81,109
Deferred outflows of resources – OPEB 2,466 (3,774) 2,628 641
Increase (decrease) in liabilities
and deferred inflows of resources
Accounts and contracts payable (54,927) (11,116) 240,140 146,128
Accrued salaries and employee benefits payable 13,902 (12,234) (208) 2,717
Due to other governmental agencies 4,529 (2,078) (1,855) 401
Deposits payable (6,418) 1,500 – –
Compensated absences payable 6,702 14,085 (6,614) 12,154
Net pension liability – GERF (221,760) (83,755) (163,273) (250,511)
Total OPEB liability (1,621) (2,950) (5,713) (21,503)
Deferred inflows of resources – GERF 84,590 169,861 45,821 111,394
Deferred inflows of resources – OPEB (4,031) 12,556 (3,782) 7,050
Net cash flows from operating
activities 2,130,719$ 2,873,661$ 1,798,888$ 1,821,755$
Schedule of noncash activities from capital and
related financing activities
Capital assets contributed from other funds 1,856,220$ 768,036$ 1,229,310$ 541,136$
Trade-in of capital asset –$ –$ 135,957$ –$
Amortization of premium (discount)16,160$ 20,488$ 16,160$ 20,488$
Business-Type Activities – Enterprise Funds
Water
CITY OF PRIOR LAKE
Sewer
Statement of Cash Flows (continued)
Proprietary Funds
Year Ended December 31, 2024
(With Partial Comparative Information for the Year Ended December 31, 2023)
See notes to basic financial statements -37-
Governmental
Activities –
Internal Service
2024 2023 2024 2023 Funds
862,082$ 593,747$ 3,024,278$ 3,295,338$ (422,652)$
107,074 107,388 1,960,206 1,897,389 –
– 17,414 21,185 40,888 –
(60,002) (24,513) (210,837) (46,263) (567)
(2,954) (2,578) (29,543) (4,786) –
– – (1,132) 610 –
24,521 41,097 165,595 154,229 –
1,516 1,184 6,610 (1,949) –
(84,964) 131,814 100,249 266,826 –
(2,175) (2,191) 11,519 (11,708) –
(625) 409 2,049 (1,268) –
– – (6,418) 1,500 –
16,155 (11,072) 16,243 15,167 523,205
(71,963) (128,882) (456,996) (463,148) –
(4,855) (13,610) (12,189) (38,063) –
7,212 40,228 137,623 321,483 –
(1,982) 2,126 (9,795) 21,732 –
789,040$ 752,561$ 4,718,647$ 5,447,977$ 99,986$
414,512$ 420,111$ 3,500,042$ 1,729,283$ –$
–$ –$ 135,957$ –$ –$
1,247$ –$ 33,567$ 40,976$ –$
TotalsWater Quality
-38-
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF PRIOR LAKE
Notes to Basic Financial Statements
December 31, 2024
-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 component
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.
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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 coll ected
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. Debt proceeds 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 and other long-term obligations, which are
recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported
as capital outlay expenditures in 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.
Permanent Improvement Revolving 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. Technology subscriptions are recorded
based on the measurement of any subscription liability plus any payments due to the subscription vendor at
the commencement of the subscription term, including any applicable initial implementation costs . 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. Groups of similar assets acquired at
or near the same time for a single objective, with individual acquisition costs below this threshold, are also
capitalized if the cost of the assets is considered significant in the aggregate. 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.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
L. Compensated Absences
The City recognizes a liability for compensated absences for leave time that (1) has been earned for services
previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years,
and (3) is more likely than not to be used as time off or settled during or upon separation from employment.
Based on these criteria, two types of leave qualify for liability recognition for compensated absences,
vacation and sick leave. The liability for compensated absences is reported as incurred in the
government-wide and proprietary fund financial statements. A liability for compensated absences is
recorded in the governmental funds only if the liability has matured because of employee resignations or
retirements. The liability for compensated absences includes salary-related benefits, where applicable.
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.
The City has provided funding for these obligations in the Severance Compensation Internal Service Fund
and enterprise funds.
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.
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NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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, 2023, 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 2 – CASH AND INVESTMENTS
A. Components of Cash and Investments
Cash and investments at year-end consist of the following:
Deposits 1,451,740$
Investments 53,674,171
Cash on hand 850
Total 55,126,761$
Cash and investments are presented in the financial statements as follows:
Statement of Net Position
Cash and investments 55,095,396$
Restricted assets – temporarily restricted –
cash and investments held in escrow 31,365
Total 55,126,761$
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 cont rolled
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 $1,451,740, while the balance on the bank
records was $1,678,149. At December 31, 2024, all deposits were fully covered by federal deposit
insurance, surety bonds, or by collateral held by the City’s agent in the City’s name.
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NOTE 2 – CASH AND INVESTMENTS (CONTINUED)
C. Investments
The City has the following investments at year-end:
Fair Value
Investment Type Rating Agency Measurement Less Than 1 1 to 5 6 to 10 Total
U.S. treasuries AAA Moody’s Level 1 289,695$ 1,984,650$ –$ 2,274,345$
U.S. treasuries AAA Moody’s Level 2 – 450,275 – 450,275
U.S. agency securities AA S&P Level 2 2,571,194 5,050,288 2,583,855 10,205,337
Local government securities AAA S&P Level 2 860,058 1,676,857 – 2,536,915
Local government securities AAA Moody’s Level 2 – 898,263 – 898,263
Local government securities AA S&P Level 2 577,227 3,341,664 – 3,918,891
Local government securities AA Moody’s Level 2 1,631,432 2,317,102 905,160 4,853,694
Local government securities A S&P Level 2 – 201,067 – 201,067
Negotiable certificates of deposit AA S&P Level 2 – 245,147 – 245,147
Negotiable certificates of deposit N/R N/A Level 2 1,684,945 12,209,282 – 13,894,227
7,614,551$ 28,374,595$ 3,489,015$ 39,478,161
Investment pools/mutual funds
4M Fund AAA S&P Amortized Cost 10,842,474
U.S. Treasuries Fund AAA S&P Level 1 3,276,255
Government Obligation Fund AAA S&P Level 1 77,281
Total investment pools/
mutual funds 14,196,010
Total investments 53,674,171$
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 poss ession 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,
2024, the City had 8.1 percent of its portfolio invested with Federal Home Loan Bank and 10.3 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 2037. These leases are reported as lease receivables totaling $2,578,337. These receivables are
offset by deferred inflows of resources as lease revenue for subsequent years totaling $2,392,011. During
the current year, the City received principal and interest payments of $155,457 and $15,045, respectively,
on these leases. The deferred inflows of resources are being amortized to revenue over the life of the leases.
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NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2024 was as follows:
A. Changes in Capital Assets Used in Governmental Activities
Transfers and
Beginning Completed
of Year Additions Deletions Construction End of Year
Capital assets, not depreciated/amortized
Land 34,311,351$ 704,700$ –$ –$ 35,016,051$
Easements 56,152,920 – – – 56,152,920
Construction in progress 16,010,957 9,337,130 – (16,295,981) 9,052,106
Total capital assets, not depreciated/amortized 106,475,228 10,041,830 – (16,295,981) 100,221,077
Capital assets, depreciated/amortized
Land improvements 2,832,128 – – – 2,832,128
Machinery and equipment 8,477,052 469,263 (129,742) – 8,816,573
Vehicles 7,871,448 786,422 (625,334) 81,015 8,113,551
Infrastructure 132,676,195 12,600 – 12,714,924 145,403,719
Technology subscriptions 543,449 – – – 543,449
Total capital assets, depreciated/amortized 152,400,272 1,268,285 (755,076) 12,795,939 165,709,420
Less accumulated depreciation/amortization on
Land improvements (2,049,982) (65,199) – – (2,115,181)
Machinery and equipment (5,260,442) (458,268) 129,742 – (5,588,968)
Vehicles (5,481,822) (764,913) 621,355 – (5,625,380)
Infrastructure (72,978,914) (3,974,404) – – (76,953,318)
Technology subscriptions (111,876) (122,452) – – (234,328)
Total accumulated depreciation/amortization (85,883,036) (5,385,236) 751,097 – (90,517,175)
Net capital assets, depreciated/amortized 66,517,236 (4,116,951) (3,979) 12,795,939 75,192,245
Total capital assets, net 172,992,464$ 5,924,879$ (3,979)$ (3,500,042)$ 175,413,322$
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 54,625 1,144,902 – (479,778) 719,749
Total capital assets, not depreciated 2,773,507 1,144,902 – (479,778) 3,438,631
Capital assets, depreciated
Land improvements 87,740 – – – 87,740
Machinery and equipment 1,947,810 24,206 – – 1,972,016
Vehicles 580,398 – – – 580,398
Infrastructure 97,639,397 173,357 (238,521) 3,979,820 101,554,053
Total capital assets, depreciated 100,255,345 197,563 (238,521) 3,979,820 104,194,207
Less accumulated depreciation on
Land improvements (61,319) (4,387) – – (65,706)
Machinery and equipment (1,077,474) (114,107) – – (1,191,581)
Vehicles (155,659) (31,043) – – (186,702)
Infrastructure (25,820,764) (1,810,669) 102,564 – (27,528,869)
Total accumulated depreciation (27,115,216) (1,960,206) 102,564 – (28,972,858)
Net capital assets, depreciated 73,140,129 (1,762,643) (135,957) 3,979,820 75,221,349
Total capital assets, net 75,913,636$ (617,741)$ (135,957)$ 3,500,042$ 78,659,980$
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NOTE 4 – CAPITAL ASSETS (CONTINUED)
C. Depreciation/Amortization Expense by Function
Depreciation/amortization expense for the year ended December 31, 2024 was charged to the following
functions:
Governmental activities
General government 506,461$
Public safety 786,421
Public works 3,494,553
Culture and recreation 597,801
Total depreciation/amortization expense – governmental activities 5,385,236$
Business-type activities
Water 1,082,320$
Sewer 770,812
Water quality 107,074
Total depreciation expense – business-type activities 1,960,206$
NOTE 5 – TRANSFERS AND INTERFUND BALANCES
A. Transfers
A schedule of interfund transfers is as follows:
Permanent
Improvement
Transfers Out General Debt Service Construction Revolving Nonmajor Water Sewer Water Quality Total
Governmental funds
General –$ 248,488$ –$ –$ –$ –$ –$ –$ 248,488$
Debt Service – 2,124 – – – – – – 2,124
Construction – – – – – 257,313 88,032 – 345,345
Permanent Improvement Revolving – – – – 94,590 – – – 94,590
Nonmajor 291,100 102,852 352,362 – 305,410 – – – 1,051,724
Proprietary funds
Water 237,000 614,650 81,915 94,437 12,000 – – – 1,040,002
Sewer 235,000 – 81,915 389,403 12,000 – – – 718,318
Water Quality 113,300 – 190,510 131,601 – – – 2,395 437,806
876,400$ 968,114$ 706,702$ 615,441$ 424,000$ 257,313$ 88,032$ 2,395$ 3,938,397$
Governmental Funds Proprietary Funds
Transfer In
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 and interfund balances are reported in the fund financial statements but are eliminated in the
government-wide financial statements, as applicable.
B. Interfund Balances
The General Fund has a due to/from balance of $2,688. Nonmajor governmental funds have a due to/from
balance of $2,688. These balances are the result of cash flow deficits. These balances will be repaid from
future revenue sources.
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NOTE 6 – LONG-TERM DEBT
A. Components of Long-Term Debt
Final Balance –
Original Issue Interest Rate Issue Date Maturity Date End of Year
Governmental activities
General obligation bonds
Street Reconstruction Bonds of 2016A 760,000$ 2.00%05/01/2016 12/15/2026 75,000$
Improvement Bonds of 2018A 2,485,000$ 4.00–5.00%08/15/2018 12/15/2028 1,035,000
Improvement Bonds of 2019A 1,665,000$ 5.00%06/27/2019 12/15/2029 940,000
Improvement Bonds of 2021A 5,270,000$ 1.00–3.00%07/15/2021 12/15/2031 3,800,000
Improvement Bonds of 2021B 4,990,000$ 5.00%07/26/2021 12/15/2029 3,155,000
Improvement Bonds of 2022A 1,910,000$ 4.00–5.00%09/08/2022 12/15/2032 1,620,000
Improvement Bonds of 2023A 1,620,000$ 5.00%07/19/2023 12/15/2033 1,525,000
Total general obligation bonds 12,150,000
Improvement Bonds of 2015A 4,640,000$ 2.00–3.00%05/14/2015 12/15/2030 3,660,000
Improvement Bonds of 2016A 1,105,000$ 2.00%05/01/2016 12/15/2026 220,000
Improvement Bonds of 2017A 4,135,000$ 2.00–2.25%06/29/2017 12/15/2027 1,225,000
Improvement Bonds of 2018A 3,145,000$ 4.00–5.00%08/15/2018 12/15/2028 1,145,000
Improvement Bonds of 2024A 1,580,000$ 5.00%08/20/2024 12/15/2029 1,580,000
Total general obligation special
assessment bonds 7,830,000
General obligation revenue bonds
General Obligation Improvement
Bonds of 2015A 5,360,000$ 1.00–3.00%05/14/2015 12/15/2031 4,010,000
Premium (discount) on bonds payable 1,919,978
Energy loan payable 2,667,924$ 2.12%12/08/2014 06/19/2025 148,731
Subscription liabilities 543,449$ 2.60%08/15/2022 06/30/2028 285,857
Compensated absences payable 1,664,718
Total governmental activity
long-term liabilities 28,009,284
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 1,170,000
General Obligation Improvement
Bonds of 2024A 1,180,000$ 4.00–5.00%08/20/2024 12/15/2044 1,180,000
Total general obligation revenue bonds 2,350,000
Premium (discount) on bonds payable 187,600
Compensated absences payable 225,891
Total business-type activity
long-term liabilities 2,763,491
Total government-wide
long-term liabilities 30,772,775$
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NOTE 6 – LONG-TERM DEBT (CONTINUED)
B. Changes in Long-Term Debt
Balance –
Beginning Balance –Due Within
of Year Additions Deletions End of Year One Year
Governmental activities
Bonds payable
G.O. bonds 13,875,000$ –$ 1,725,000$ 12,150,000$ 1,790,000$
G.O. special assessment bonds 7,910,000 1,580,000 1,660,000 7,830,000 1,825,000
G.O. tax increment bonds 30,000 – 30,000 – –
G.O. revenue bonds 4,505,000 – 495,000 4,010,000 515,000
Premium (discount) on bonds payable 2,186,515 106,507 373,044 1,919,978 –
Total bonds payable, net of premium (discount)28,506,515 1,686,507 4,283,044 25,909,978 4,130,000
Energy loan payable 441,532 – 292,801 148,731 148,731
Subscription liabilities 417,549 – 131,692 285,857 125,972
Compensated absences payable 1,141,513 534,736 11,531 1,664,718 548,491
Governmental activities long-term liabilities 30,507,109$ 2,221,243$ 4,719,068$ 28,009,284$ 4,953,194$
Business-type activities
Bonds payable
G.O. revenue bonds 1,440,000$ 1,180,000$ 270,000$ 2,350,000$ 290,000$
Premium (discount) on bonds payable 160,166 61,001 33,567 187,600 –
Total bonds payable, net of premium (discount)1,600,166 1,241,001 303,567 2,537,600 290,000
Compensated absences payable 209,648 72,816 56,573 225,891 63,767
Business-type activities long-term liabilities 1,809,814$ 1,313,817$ 360,140$ 2,763,491$ 353,767$
The deletions of $131,692 for subscription liabilities are reported as current expenditures within the General
Fund to be consistent with budgeting practices.
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NOTE 6 – LONG-TERM DEBT (CONTINUED)
C. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term debt are as follows:
Year Ending
December 31,Principal Interest Principal Interest Principal Interest Principal Interest Principal Interest
2025 1,790,000$ 502,315$ 1,825,000$ 288,674$ 515,000$ 109,750$ 148,731$ 1,576$ 125,972$ 7,683$
2026 1,890,000 423,765 1,715,000 210,738 530,000 99,450 – – 129,228 4,427
2027 1,955,000 340,665 1,580,000 154,813 550,000 86,200 – – 20,027 1,655
2028 1,995,000 253,515 1,185,000 101,100 570,000 72,450 – – 10,630 567
2029 1,880,000 164,965 955,000 52,850 590,000 55,350 – – – –
2030–2033 2,640,000 180,130 570,000 17,100 1,255,000 56,850 – – – –
12,150,000$ 1,865,355$ 7,830,000$ 825,275$ 4,010,000$ 480,050$ 148,731$ 1,576$ 285,857$ 14,332$
Subscription Liabilities
Governmental Activities
Energy Loan PayableGeneral Obligation G.O. Special Assessment G.O. Revenue
Year Ending
December 31,Principal Interest
2025 290,000$ 125,330$
2026 320,000 94,650
2027 340,000 78,650
2028 365,000 61,650
2029 45,000 43,400
2030–2034 270,000 180,550
2035–2039 325,000 119,200
2040–2044 395,000 48,400
2,350,000$ 751,830$
Business-Type Activities
G.O. Revenue
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.
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NOTE 6 – LONG-TERM DEBT (CONTINUED)
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 compensated absences balances as described in Note 1
of the notes to basic financial statements.
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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, 2024 is $3,817,653.
G. Revenue Pledged
Future revenue pledged for the payment of long-term debt is as follows:
Percent of Remaining Principal Pledged
Use of Total Term of Principal and Interest Revenue
Bond Issue Proceeds Type Debt Service Pledge and Interest Paid Received
General Obligation Partial refunding Utility charges 100%2015–2031 4,490,050$ 614,650$ 4,976,415$
Bonds of 2015A
General Obligation Water and sewer Utility charges 100%2018–2028 1,320,500$ 339,300$ 10,092,597$
Bonds of 2018A improvements
General Obligation Water quality Utility charges 100%2024–2044 1,781,330$ –$ 1,628,444$
Bonds of 2024A improvements
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 $5,485,388,057, which calculates to a debt limit of
$164,561,642. 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 $12,150,000 of general obligation debt outstanding, leaving a debt margin of
$152,411,642.
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NOTE 7 – NET POSITION/FUND BALANCES
A. Net Investment in Capital Assets
The government-wide Statement of Net Position at December 31, 2024 includes the City’s net investment
in capital assets calculated as follows:
Governmental Business-Type
Activities Activities Total
Net investment in capital assets:
Capital assets
Nondepreciable/amortized 100,221,077$ 3,438,631$ 103,659,708$
Depreciable, net of accumulated depreciation/amortization 75,192,245 75,221,349 150,413,594
Less capital-related long-term debt outstanding (24,424,588) (2,350,000) (26,774,588)
Less bond premiums (discounts)(1,919,978) (187,600) (2,107,578)
Add unused bond proceeds 467,452 701,093 1,168,545
Total net investment in capital assets 149,536,208$ 76,823,473$ 226,359,681$
B. Classifications
At December 31, 2024, a summary of the City’s governmental fund balance classifications are as follows:
Permanent
Improvement
Debt Construction Revolving Nonmajor
General Fund Service Fund Fund Fund Funds Total
Restricted
Future debt service –$ 3,206,457$ –$ –$ –$ 3,206,457$
Economic development – – – – 222,768 222,768
Forfeiture sales – – – – 103,264 103,264
Public safety – – – – 570,866 570,866
Capital improvements – – 467,452 – 2,326,380 2,793,832
Development – – – – 1,866,721 1,866,721
Communications – – – – 116,408 116,408
Tax increment – – – – 232,883 232,883
Total restricted – 3,206,457 467,452 – 5,439,290 9,113,199
Assigned
Subsequent year’s budget 260,460 – – – – 260,460
Capital improvements – – 731,366 1,001,546 9,583,618 11,316,530
Future chip seal 98,857 – – – – 98,857
Shop with a cop 10,196 – – – – 10,196
Charitable gambling donations 42,708 – – – – 42,708
Tree planting 110,550 – – – – 110,550
Total assigned 522,771 – 731,366 1,001,546 9,583,618 11,839,301
Unassigned 12,888,798 – – – – 12,888,798
Total 13,411,569$ 3,206,457$ 1,198,818$ 1,001,546$ 15,022,908$ 33,841,298$
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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,
2024, the total fund balance of the General Fund was 60.5 percent of the subsequent year’s budgeted
expenditures and transfers out of $22,168,668.
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. These plan provisions are established and administered according
to Minnesota Statutes, Chapters 353 and 356. Minnesota Statutes Chapter 356 defines each plan’s financial
reporting requirements. 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, 2024:
Net Deferred Deferred
Pension Outflows of Inflows of Pension
Pension Plans Liabilities Resources Resources Expense
GERF 2,627,523$ 645,625$ 2,058,546$ 230,848$
PEPFF 4,827,563 7,431,974 7,257,908 1,146,494
Total 7,455,086$ 8,077,599$ 9,316,454$ 1,377,342$
1. General Employees Retirement Fund (GERF)
Membership in the GERF includes employees of counties, cities, townships, schools in noncertified
positions, and other governmental entities whose revenues are derived from taxation, fees, or
assessments. Plan membership is required for any employee who is expected to earn more than
$425 in a month, unless the employee meets exclusion criteria.
2. Public Employees Police and Fire Fund (PEPFF)
Membership in the PEPFF includes full-time, licensed police officers and firefighters who meet the
membership criteria defined in Minnesota Statutes Section 353.64 and who are not earning service
credit in any other PERA retirement plan or a local relief association for the same service.
Employers can provide PEPFF coverage for part-time positions and certain other public safety
positions by submitting a resolution adopted by the entity’s governing body. The resolution must
state that the position meets plan requirements.
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. When a member is “vested,” they have earned enough service credit to
receive a lifetime monthly benefit after leaving public service and reaching an eligible retirement age.
Members who retire at or over their Social Security full retirement age with at least one year of service
qualify for a retirement benefit.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
1. GERF Benefits
The GERF requires three years of service to vest. 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 GERF members. Members hired prior to
July 1, 1989, receive the higher of the Step or Level formulas. Only the Level formula is used for
members hired after June 30, 1989. Under the Step formula, GERF members receive 1.2 percent
of the highest average salary for each of the first 10 years of service, and 1.7 percent for each
additional year. Under the Level formula, GERF members receive 1.7 percent of highest average
salary for all years of service. For members hired prior to July 1, 1989, a full retirement benefit is
available when age plus years of service equal 90, and normal retirement age is 65. Members can
receive a reduced retirement benefit as early as age 55 if they have three or more years of service.
Early retirement benefits are reduced by 0.25 percent for each month under age 65. Members with
30 or more years of service can retire at any age with a reduction of 0.25 percent for each month
the member is younger than age 62. The Level formula allows GERF members to receive a full
retirement benefit at age 65 if they were first hired before July 1, 1989 or at age 66 if they were
hired on or after July 1, 1989. Early retirement begins at age 55 with an actuarial reduction applied
to the benefit.
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.
The 2024 annual increase was 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 receiving 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
prorated increase.
2. PEPFF Benefits
Benefits for PEPFF members first hired before July 1, 2010, are vested after three years of service.
Members hired on or after July 1, 2010, are 50.0 percent vested after five years of service, and
100.0 percent vested after 10 years. After five years, vesting increases by 10.0 percent each full
year of service until members are 100.0 percent vested after ten years. Police and Fire Plan
members receive 3.0 percent of highest average salary for all years of service. Police and Fire
Plan members receive a full retirement benefit when they are age 55 and vested, or when their
age plus their years of service equals 90 or greater if they were first hired before July 1, 1989.
Early retirement starts at age 50, and early retirement benefits are reduced by 0.417 percent each
month members are younger than age 55.
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 prorated increase.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
C. Contributions
Minnesota Statutes, Chapter 353 and 356 set the rates for employer and employee contributions.
Contribution rates can only be modified by the State Legislature.
1. GERF Contributions
General Plan members were required to contribute 6.50 percent of their annual covered salary in
fiscal year 2024, and the City was required to contribute 7.50 percent for General Plan members.
The City’s contributions to the GERF for the year ended December 31, 2024, were $459,747. 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 2024, 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, 2024, were
$946,330. The City’s contributions were equal to the required contributions as set by state statutes.
D. Pension Costs
1. GERF Pension Costs
At December 31, 2024, the City reported a liability of $2,627,523 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 $67,942.
City’s proportionate share of net pension liability 2,627,523$
State’s proportionate share of the net pension liability
associated with the City 67,942
Total 2,695,465$
The net pension liability was measured as of June 30, 2024, 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 proportion 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, 2023 through
June 30, 2024, relative to the total employer contributions received from all of the PERA’s
participating employers. The City’s proportionate share was 0.711 percent at the end of the
measurement period and 0.766 percent for the beginning of the period.
For the year ended December 31, 2024, the City recognized pension expense of $229,027 for its
proportionate share of the GERF’s pension expense. In addition, the City recognized an additional
$1,821 as pension expense (and grant revenue) for its proportionate share of the state of
Minnesota’s contribution of $16.0 million to the GERF.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
During the plan year ended June 30, 2024, the state of Minnesota contributed $170.1 million to the
General Employees Fund. The state of Minnesota is not included as a nonemployer contributing
entity in the General Employees Plan pension allocation schedules for the $170.1 million in direct
state aid because this contribution was not considered to meet the definition of a special funding
situation. The City recognized $120,890 for the year ended December 31, 2024 as revenue and an
offsetting reduction of net pension liability for its proportionate share of the state of Minnesota’s
on-behalf contributions to the General Employees Fund.
At December 31, 2024, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 252,578$ –$
Changes in actuarial assumptions 13,141 1,050,946
Net difference between projected and actual earnings
on pension plan investments – 775,805
Changes in proportion 150,481 231,795
Employer contributions subsequent to the
measurement date 229,425 –
Total 645,625$ 2,058,546$
The $229,425 reported as deferred outflows of resources related to pensions resulting from city
contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ending December 31, 2025. Other amounts reported as deferred
outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Pension
Year Ending Expense
December 31,Amount
2025 (870,117)$
2026 (164,947)$
2027 (405,899)$
2028 (201,383)$
2. PEPFF Pension Costs
At December 31, 2024, the City reported a liability of $4,827,563 for its proportionate share of the
PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2024, 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, 2023 through June 30, 2024, relative to the total employer contributions
received from all of the PERA’s participating employers. The City’s proportionate share was
0.3669 percent at the end of the measurement period and 0.3003 percent for the beginning of the
period.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The state of Minnesota contributed $37.4 million to the PEPFF in the plan fiscal year ended
June 30, 2024. The contribution consisted of $9.0 million in direct state aid that meets the definition
of a special funding situation, additional one-time direct state aid contribution of $19.4 million, and
$9.0 million in supplemental state aid that does not meet the definition of a special funding
situation. Additionally, the $9.0 million supplemental state aid was paid on October 1, 2024.
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
$184,025.
City’s proportionate share of net pension liability 4,827,563$
State’s proportionate share of the net pension liability
associated with the City 184,025
Total 5,011,588$
For the year ended December 31, 2024, the City recognized pension expense of $1,125,911 for its
proportionate share of the Police and Fire Plan’s pension expense. The City recognized $20,583 as
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 special funding situation.
The state of Minnesota is not included as a nonemployer contributing entity in the Police and Fire
Pension Plan pension allocation schedules for the $28.4 million in supplemental state aid because
this contribution was not considered to meet the definition of a special funding situation. The City
recognized $104,201 for the year ended December 31, 2024 as revenue and an offsetting reduction
of net pension liability for its proportionate share of the state of Minnesota ’s on-behalf
contributions to the PEPFF.
At December 31, 2024, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 1,622,345$ –$
Changes in actuarial assumptions 4,172,326 5,815,829
Net difference between projected and actual
earnings on pension plan investments – 1,442,079
Changes in proportion 1,142,561 –
Employer contributions subsequent to the
measurement date 494,742 –
Total 7,431,974$ 7,257,908$
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The $494,742 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, 2025. 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
2025 $ 61,718
2026 $ 1,119,169
2027 $ (409,973)
2028 $ (1,394,648)
2029 $ 303,058
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 for each of the cost-sharing defined benefit plans was determined by an actuarial
valuation as of June 30, 2024, using the 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 investment return rates considered reasonable
by the actuary. An investment return of 7.00 percent is within that range.
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.
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
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 in annual increments 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 General
Employees Plan was last reviewed in 2022. The assumption changes were adopted by the Board and became
effective with the July 1, 2023 actuarial valuation. The Police and Fire Plan was reviewed in 2024. The
PERA anticipates the experience study will be approved by the Legislative Commission on Pensions and
Retirement and become effective with the July 1, 2025 actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2024:
1. GERF
CHANGES IN ACTUARIAL ASSUMPTIONS
• Rates of merit and seniority were adjusted, resulting in slightly higher rates.
• Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced
retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early
retirement rates for Tier 1 and Tier 2 members.
• Minor increase in assumed withdrawals for males and females.
• Lower rates of disability.
• Continued use of Pub-2010 General Mortality Table, with slight rate adjustments as
recommended in the most recent experience study.
• Minor changes to form of payment assumptions for male and female retirees.
• Minor changes to assumptions made with respect to missing participant data.
CHANGES IN PLAN PROVISIONS
• The workers’ compensation offset for disability benefits was eliminated. The actuarial
equivalent factors were updated to reflect the changes in assumptions.
2. PEPFF
CHANGES IN PLAN PROVISIONS
• The state contribution of $9.0 million per year will continue until the earlier of 1) both the
Police and Fire Plan and the State Patrol Retirement Fund attain 90.00 percent funded status
for three consecutive years (on an actuarial value of assets basis) or 2) July 1, 2048. The
contribution was previously due to expire after attaining a 90.00 percent funded status for
one year.
• The additional $9.0 million contribution will continue until the Police and Fire Plan is fully
funded for a minimum of three consecutive years on an actuarial value of assets basis, or July 1,
2048, whichever is earlier. This contribution was previously due to expire upon attainment of
fully funded status on an actuarial value of assets basis for one year (or July 1, 2048 if earlier).
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NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
G. Discount Rate
The discount rate used to measure the total pension liability in 2024 was 7.00 percent. The projection of
cash flows used to determine the discount rate assumed that contributions from plan members and
employers will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net
position of the General Employees Fund and the Police and Fire Fund were projected to be available to
make all projected future benefit payments of current plan members. Therefore, the long-term expected rate
of return on pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability.
H. Pension Liability Sensitivity
The following table presents the City’s proportionate share of the net pension liability for all plans it
participates in, calculated using the discount rate disclosed in the preceding section, as well as what the
City’s proportionate share of the net pension liability would be if it were calculated using a discount rate
1 percentage point lower or 1 percentage point higher than the current discount rate:
City’s proportionate share of
the GERF net pension liability
City’s proportionate share of
the PEPFF net pension liability
(6.00%)(7.00%)(8.00%)
1% Decrease in
Discount Rate
Current 1% Increase in
Discount Rate Discount Rate
11,408,475$ 4,827,563$ (576,742)$
5,738,933$ 2,627,523$ 68,104$
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 and 356, 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 administering 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.
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NOTE 9 – DEFINED CONTRIBUTION PLAN (CONTINUED)
Total contributions made by the City during fiscal year 2024 were:
Required Rate
for Employees
Employee Employer Employee Employer and Employers
2,351$ 2,351$ 5.00%5.00%5.00%
Contribution Amount Percentage of Covered Payroll
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 26 active firefighters and 12 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.
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NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
(CONTINUED)
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
$372,220 in fire state aid to the plan on behalf of the Department for the year ended December 31, 2024,
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, 2024
were $372,220. 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.
D. Pension Costs
At December 31, 2024, the City reported a net pension liability (asset) of ($1,291,092) for the plan. The net
pension liability (asset) was measured as of December 31, 2023. The total pension liability used to calculate
the net pension liability (asset) in accordance with Governmental Accounting Standards Board (GASB)
Statement No. 68 was determined by applying an actuarial formula to specific census data certified by the
Department as of December 31, 2023.
For the year ended December 31, 2024, the City recognized pension expense of $645,297. The City also
recognized $334,782 as revenue for the state of Minnesota’s on-behalf contributions to the Department.
The following table presents the changes in net pension liability (asset) during the year:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
Beginning balance 3,851,347$ 4,709,168$ (857,821)$
Changes for the year
Service cost 120,145 – 120,145
Interest on pension liability (asset)214,058 – 214,058
Municipal contributions – 20,000 (20,000)
Projected investment earnings – 266,714 (266,714)
Contributions (state)– 337,782 (337,782)
Asset (gain) loss – 144,603 (144,603)
Benefit payments (497,485) (497,485) –
Administrative expenses – (1,625) 1,625
Total net changes (163,282) 269,989 (433,271)
Ending balance 3,688,065$ 4,979,157$ (1,291,092)$
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NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
(CONTINUED)
At December 31, 2024, 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 313,944$ –$
Changes in actuarial assumptions 13,292 16,454
Difference between expected and actual economic experience – 83,476
State aid to the City subsequent to the measurement date – 372,220
Contributions from the City subsequent to the measurement date 392,220 –
Total 719,456$ 472,150$
Deferred outflows of resources totaling $392,220 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, 2025. Deferred inflows of resources totaling $372,220 related to state aid
received subsequent to the measurement date will be recognized for its impact on the net pension liability
in the year ending December 31, 2025. Other amounts reported as deferred outflows and inflows of
resources related to the plan will be recognized in pension expense as follows:
Pension
Year Ending Expense
December 31,Amount
2025 65,499$
2026 85,037$
2027 126,886$
2028 (50,116)$
E. Actuarial Methods and Assumptions
The total pension liability (asset) at December 31, 2024 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.
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NOTE 10 – DEFINED BENEFIT PENSION PLANS – FIRE RELIEF ASSOCIATION
(CONTINUED)
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
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)(1,201,229)$ (1,291,092)$ (1,375,948)$
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.
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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 $76,679.
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 $986,051 at year-end was measured as of January 1, 2024 and was
determined by an actuarial valuation as of January 1, 2023.
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NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)
F. Actuarial Methods and Assumptions
The total OPEB liability was determined by an actuarial valuation as of January 1, 2023, using the entry-age,
level percentage of pay actuarial method and the following actuarial assumptions, applied to all periods
included in the measurement, unless otherwise specified:
Discount rate 4.00%
20-year municipal bond yield 4.00%
Inflation rate 2.50%
Salary increases Service graded table
Healthcare trend rate 6.50% , grading to 5.00% over 6 years and then 4.00% over the next 48 years
The actuarial assumptions used in the latest valuation were based on those used to value pension liabilities
for Minnesota city employees. The state pension plans base their assumptions on periodic experience
studies. Economic assumptions are based on input from a variety of published sources of historical and
projected future financial data. Each assumption was reviewed for reasonableness with the source
information, as well as for consistency with the other economic assumptions.
Since the Plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond
yield rate of 4.00 percent, which was set by considering published rate information for 20-year high quality,
tax-exempt, general obligation municipal bonds as of the measurement date.
Mortality rates were based on Pub-2010 Public Retirement Headcount-Weighted Mortality Tables with
MP-2021 Generational Improvement Scale.
Future retirees electing coverage is assumed to be 50 percent when a pre -age 65 subsidy is not available.
Married future retirees electing spouse coverage is assumed to be 25 percent when a pre-age 65 subsidy is
not available.
G. Changes in the Total OPEB Liability
Total OPEB
Liability
Beginning balance 968,202$
Changes for the year
Service cost 59,375
Interest 39,498
Benefit payments – employer-financed (81,024)
Total net changes 17,849
Ending balance 986,051$
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NOTE 11 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)
H. 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 1,055,997$ 921,198$
3.00% 5.00%
1% Decrease in 1% Increase in
Discount Rate Discount Rate
Current
Discount Rate
986,051$
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 891,737$ 1,096,290$
4.00%, then 3.00%6.00%, then 5.00%5.00%, then 4.00%
986,051$
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
Current
I. OPEB Expense and Related Deferred Outflows of Resources and Deferred Inflows of Resources
For the current year ended, the City recognized OPEB expense of $75,029. As of year-end, the City reported
deferred outflows of resources and deferred inflows of resources related to OPEB from the following
sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Changes in actuarial assumptions 89,248$ 158,124$
Difference between expected and actual economic experience 28,241 48,849
Contributions from the City subsequent to the measurement date 76,679 –
194,168$ 206,973$
Deferred outflows of resources totaling $76,679 related to OPEB resulting from city contributions to the
Plan subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in
the year ending December 31, 2025. Other amounts reported as deferred outflows and inflows of resources
related to the plan will be recognized in OPEB expense as follows:
OPEB
Year Ending Expense
December 31 Amount
2025 (23,844)$
2026 (23,844)$
2027 (23,829)$
2028 (5,988)$
2029 (5,988)$
Thereafter (5,991)$
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NOTE 12 – STEWARDSHIP AND ACCOUNTABILITY
Deficit Net Position
As of December 31, 2024, the Severance Compensation Internal Service Fund had a deficit net position of
$1,023,847. This deficit will be eliminated by future charges for services.
NOTE 13 – TAX ABATEMENT AGREEMENTS
The City, in order to spur economic development and redevelopment, has entered into private development
and redevelopment agreements to encourage a developer to construct, expand, or improve new or existing
properties and buildings or clean-up and redevelop blighted areas. The City currently has four agreements
that would be considered tax abatements.
Outstanding
Amount Principal Date of
Abated During Balance Required
Name Purpose the Fiscal Year at Year-End Decertification
1-3 Lakefront 80-unit owner-occupied senior housing
facility and 12,000 square feet of retail
space and related improvements 108,714$ 635,306$ 12/31/2029
5-1 Premier Dance 10,000 square foot commercial facility to
be used as a dance studio 13,922$ 56,326$ 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 –$ 3,012,000$ 12/31/2032
1-5 Gateway Center Acquisition,construction,and equipping
of a 170-unit multi-family senior housing
development 138,225$ 835,131$ 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.
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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, 2024 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
The City has awarded contracts for various construction and remodeling projects. The City’s commitment
for uncompleted work on these contracts at December 31, 2024 is $265,614.
D. Tax Increment Districts
The City’s tax increment districts are subject to review by the Office of the State Auditor. Any disallowed
claims or misuse of tax increments could become a liability of the applicable fund. Management has
indicated that they are not aware of any instances of noncompliance, which would have a material effect
on the financial statements.
E. Water Purchase Agreement
To meet the City’s water needs as it continues to grow, the City entered into a Water Purchase and Facility
Expansion Agreement with the Shakopee Mdewakanton Sioux Community. The agreement can help supply
additional water to the City and will have future expansion available to meet the City’s long-term needs.
This approach provides the City with the flexibility to evaluate the pace and timing of development in the
Orderly Annexation Area before a substantial investment is needed to construct the expansion of the water
treatment plant. The initial improvements, combined with the long-term water purchase agreement, could
provide the City with enough water capacity for the next 15 to 20 years, depending on the rate of
development.
REQUIRED SUPPLEMENTARY INFORMATION
Proportionate
Share of the
City’s Net Pension
Proportionate Liability and City’s
Share of the the City’s Proportionate Plan Fiduciary
State of Share of the Share of the Net Position
City’s City’s Minnesota’s State of Net Pension as a
PERA Fiscal Proportion Proportionate Proportionate Minnesota’s Liability as a Percentage
Year-End Date of the Net Share of the Share of the Share of the City’s Percentage of of the Total
(Measurement Pension Net Pension Net Pension Net Pension Covered Covered Pension
Date)Liability Liability Liability Liability Payroll Payroll Liability
06/30/2015 0.0719% 3,726,231$ –$ 3,726,231$ 4,189,768$ 88.94% 78.2%
06/30/2016 0.0691% 5,610,578$ 73,274$ 5,683,852$ 4,285,600$ 130.92% 68.9%
06/30/2017 0.0692% 4,417,682$ 55,547$ 4,473,229$ 4,457,941$ 99.10% 75.9%
06/30/2018 0.0655% 3,633,671$ 119,282$ 3,752,953$ 4,405,847$ 82.47% 79.5%
06/30/2019 0.0679% 3,754,038$ 116,662$ 3,870,700$ 4,803,433$ 78.15% 80.2%
06/30/2020 0.0714% 4,280,758$ 132,000$ 4,412,758$ 5,090,738$ 84.09% 79.1%
06/30/2021 0.0728% 3,108,888$ 94,910$ 3,203,798$ 5,239,605$ 59.33% 87.0%
06/30/2022 0.0728% 5,765,783$ 169,184$ 5,934,967$ 5,454,052$ 105.72% 76.7%
06/30/2023 0.0766% 4,283,385$ 118,061$ 4,401,446$ 6,093,842$ 70.29% 83.1%
06/30/2024 0.0711% 2,627,523$ 67,942$ 2,695,465$ 6,007,302$ 43.74% 89.1%
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%
459,747$ 459,747$ –$ 6,121,985$ 7.51%
Year Ended December 31, 2024
12/31/2018
12/31/2019
City Fiscal
12/31/2024
Schedule of City Contributions
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
Year Ended December 31, 2024
City Fiscal
Year-End Date
12/31/2015
12/31/2016
12/31/2017
12/31/2024
12/31/2020
12/31/2020
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
12/31/2016
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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% 86.6%
06/30/2016 0.2380% 9,551,354$ –$ 9,551,354$ 2,294,383$ 416.29% 63.9%
06/30/2017 0.2360% 3,186,282$ –$ 3,186,282$ 2,425,426$ 131.37% 85.4%
06/30/2018 0.2463% 2,625,304$ –$ 2,625,304$ 2,595,948$ 101.13% 88.8%
06/30/2019 0.2569% 2,734,960$ –$ 2,734,960$ 2,713,440$ 100.79% 89.3%
06/30/2020 0.2570% 3,387,534$ 79,788$ 3,467,322$ 3,019,145$ 112.20% 87.2%
06/30/2021 0.2638% 2,036,257$ 91,525$ 2,127,782$ 3,117,270$ 65.32% 93.7%
06/30/2022 0.2998% 13,046,112$ 569,932$ 13,616,044$ 3,640,885$ 358.32% 70.5%
06/30/2023 0.3003% 5,185,791$ 208,890$ 5,394,681$ 3,943,912$ 131.49% 86.5%
06/30/2024 0.3669% 4,827,563$ 184,025$ 5,011,588$ 5,081,238$ 95.01% 90.2%
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%
946,330$ 946,330$ –$ 5,346,497$ 17.70%
CITY OF PRIOR LAKE
12/31/2017
12/31/2018
12/31/2019
Schedule of City Contributions
Year Ended December 31, 2024
PERA – Public Employees Police and Fire Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability
Year Ended December 31, 2024
PERA – Public Employees Police and Fire Fund
City Fiscal
12/31/2023
Year-End Date
12/31/2024
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
12/31/2024
12/31/2015
12/31/2016
12/31/2021
12/31/2022
12/31/2020
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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%
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 Ten Years)
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2019 2020 2021 2022 2023 2024
2018 2019 2020 2021 2022 2023
151,350$ 153,304$ 157,137$ 147,320$ 151,003$ 120,145$
220,949 197,843 193,390 194,644 196,874 214,058
(60,490) – (42,606) – (70,586) –
(691,031) (213,500) (658,375) (401,000) (209,168) (497,485)
53,174 – – – (24,682) –
– – 254,366 – 274,789 –
(326,048) 137,647 (96,088) (59,036) 318,230 (163,282)
3,876,642 3,550,594 3,688,241 3,592,153 3,533,117 3,851,347
3,550,594$ 3,688,241$ 3,592,153$ 3,533,117$ 3,851,347$ 3,688,065$
247,610$ 253,651$ 271,275$ 262,564$ 316,956$ 357,782$
(262,184) 685,784 357,043 468,887 (596,082) 411,317
(691,031) (213,500) (658,375) (401,000) (209,168) (497,485)
(2,644) – (13,666) – (5,569) (1,625)
(708,249) 725,935 (43,723) 330,451 (493,863) 269,989
4,898,617 4,190,368 4,916,303 4,872,580 5,203,031 4,709,168
4,190,368$ 4,916,303$ 4,872,580$ 5,203,031$ 4,709,168$ 4,979,157$
(639,774)$ (1,228,062)$ (1,280,427)$ (1,669,914)$ (857,821)$ (1,291,092)$
118.02%133.30%135.65%147.26%122.27%135.01%
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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$
372,220$ 372,220$ –$ 20,000$ 12/31/2024
CITY OF PRIOR LAKE
Prior Lake Fire Relief Association
Schedule of City Contributions
Year Ended December 31, 2024
(Last Ten Years)
12/31/2015
12/31/2023
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
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2018 2019 2020 2021 2022 2023 2024
Total OPEB liability
Service cost 61,214$ 62,717$ 64,598$ 75,099$ 77,355$ 57,646$ 59,375$
Interest 29,555 31,270 32,188 35,042 22,440 22,740 39,498
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) (81,024)
Net change in total OPEB liability 53,081 (109,609) 68,364 209,967 39,107 (145,760) 17,849
Total OPEB liability – beginning of year 853,052 906,133 796,524 864,888 1,074,855 1,113,962 968,202
Total OPEB liability – end of year 906,133$ 796,524$ 864,888$ 1,074,855$ 1,113,962$ 968,202$ 986,051$
Covered employee payroll 6,560,761$ 7,134,065$ 7,348,087$ 8,306,510$ 8,555,705$ 9,121,595$ 9,395,243$
Total OPEB liability as a percentage
of covered employee payroll 13.81% 11.17% 11.77% 12.94% 13.02% 10.61% 10.50%
Note:
Other Post-Employment Benefits Plan
CITY OF PRIOR LAKE
Fiscal Year-End
Year Ended December 31, 2024
OPEB Liability and Related Ratios
Schedule of Changes in the City’s Total
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.
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THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF PRIOR LAKE
Notes to Required Supplementary Information
December 31, 2024
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PERA – GENERAL EMPLOYEES RETIREMENT FUND
2024 CHANGES IN ACTUARIAL ASSUMPTIONS
• Rates of merit and seniority were adjusted, resulting in slightly higher rates.
• Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced
retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early
retirement rates for Tier 1 and Tier 2 members.
• Minor increase in assumed withdrawals for males and females.
• Lower rates of disability.
• Continued use of Pub-2010 General Mortality Table, with slight rate adjustments as
recommended in the most recent experience study.
• Minor changes to form of payment assumptions for male and female retirees.
• Minor changes to assumptions made with respect to missing participant data.
2024 CHANGES IN PLAN PROVISIONS
• The workers’ compensation offset for disability benefits was eliminated. The actuarial
equivalent factors were updated to reflect the changes in assumptions.
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.
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PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED)
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.
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.
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PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED)
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.
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.
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PERA – GENERAL EMPLOYEES RETIREMENT FUND (CONTINUED)
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.
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PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND
2024 CHANGES IN PLAN PROVISIONS
• The state contribution of $9.0 million per year will continue until the earlier of 1) both the
Police and Fire Plan and the State Patrol Retirement Fund attain 90.00 percent funded status
for three consecutive years (on an actuarial value of assets basis) or 2) July 1, 2048. The
contribution was previously due to expire after attaining a 90.00 percent funded status for
one year.
• The additional $9.0 million contribution will continue until the Police and Fire Plan is fully
funded for a minimum of three consecutive years on an actuarial value of assets basis, or July 1,
2048, whichever is earlier. This contribution was previously due to expire upon attainment of
fully funded status on an actuarial value of assets basis for one year (or July 1, 2048 if earlier).
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.
-90-
PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED)
2021 CHANGES IN ACTUARIAL ASSUMPTIONS (CONTINUED)
• 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.
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.
-91-
PERA – PUBLIC EMPLOYEES POLICE AND FIRE FUND (CONTINUED)
2017 CHANGES IN ACTUARIAL ASSUMPTIONS (CONTINUED)
• 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.
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.
-92-
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.
SUPPLEMENTARY INFORMATION
Special
Revenue Capital Projects Total
Assets
Cash and investments 4,077,442$ 10,067,216$ 14,144,658$
Cash held in escrow 31,365 – 31,365
Receivables
Delinquent taxes 3,292 – 3,292
Accounts 13,314 44,974 58,288
Lease 31,936 – 31,936
Special assessments
Deferred – 2,688 2,688
Due from other governmental agencies 1,521 13,508 15,029
Assets held for resale 1,315,577 – 1,315,577
Total assets 5,474,447$ 10,128,386$ 15,602,833$
Liabilities
Accounts and contracts payable 85,123$ 309,197$ 394,320$
Accrued salaries and employee benefits payable 5,223 – 5,223
Due to other governmental agencies 767 – 767
Deposits payable 85,461 – 85,461
Unearned revenue 55,536 – 55,536
Total liabilities 232,110 309,197 541,307
Deferred inflows of resources
Lease revenue for subsequent years 32,638 – 32,638
Unavailable revenue from delinquent taxes 3,292 – 3,292
Unavailable revenue from special assessments – 2,688 2,688
Total deferred inflows of resources 35,930 2,688 38,618
Fund balances
Restricted 5,206,407 232,883 5,439,290
Assigned – 9,583,618 9,583,618
Total fund balances 5,206,407 9,816,501 15,022,908
Total liabilities, deferred inflows
of resources, and fund balances 5,474,447$ 10,128,386$ 15,602,833$
CITY OF PRIOR LAKE
Nonmajor Governmental Funds
Combining Balance Sheet
as of December 31, 2024
-93-
Special
Revenue Capital Projects Total
Revenue
Taxes 387,197$ 2,128,394$ 2,515,591$
Special assessments – 787 787
Charges for services 124,764 689,739 814,503
Intergovernmental 308,292 313,157 621,449
Investment income 130,642 465,830 596,472
Miscellaneous
Contributions and donations 7,450 – 7,450
Other 4,750 89,800 94,550
Total revenue 963,095 3,687,707 4,650,802
Expenditures
Current
General government 3,577 183,610 187,187
Public safety 16,441 – 16,441
Culture and recreation 6,946 2,644 9,590
Economic development 186,360 – 186,360
Capital outlay 660,552 3,986,455 4,647,007
Total expenditures 873,876 4,172,709 5,046,585
Excess (deficiency) of revenues over expenditures 89,219 (485,002) (395,783)
Other financing sources (uses)
Transfers in – 424,000 424,000
Transfers out (691,100) (360,624) (1,051,724)
Sale of capital assets – 294,704 294,704
Total other financing sources (uses)(691,100) 358,080 (333,020)
Net change in fund balances (601,881) (126,922) (728,803)
Fund balances
Beginning of year, as previously reported 5,808,288 11,930,817 17,739,105
Change within financial reporting
entity (nonmajor to major fund)– (1,987,394) (1,987,394)
Beginning of year, restated 5,808,288 9,943,423 15,751,711
End of year 5,206,407$ 9,816,501$ 15,022,908$
Year Ended December 31, 2024
CITY OF PRIOR LAKE
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
-94-
Capital ED Revolving Cable
Park Loan Franchise EDA
Assets
Cash and investments 1,524,026$ 142,320$ 113,156$ 555,038$
Cash held in escrow – – 25,000 –
Receivables
Delinquent taxes – – – 3,292
Accounts 7,207 903 3,252 632
Lease 31,936 – – –
Due from other governmental agencies – – – 1,521
Assets held for resale – – – 1,315,577
Total assets 1,563,169$ 143,223$ 141,408$ 1,876,060$
Liabilities
Accounts and contracts payable (credit)83,108$ –$ –$ 57$
Accrued salaries and employee benefits payable – – – 5,223
Due to other governmental agencies – – – 767
Deposits payable – – 25,000 –
Unearned revenue 40,986 – – –
Total liabilities 124,094 – 25,000 6,047
Deferred inflows of resources
Lease revenue for subsequent years 32,638 – – –
Unavailable revenue from delinquent taxes – – – 3,292
Total deferred inflows of resources 32,638 – – 3,292
Fund balances
Restricted for economic development – 143,223 – –
Restricted for forfeiture sales – – – –
Restricted for public safety – – – –
Restricted for capital improvements 1,406,437 – – –
Restricted for development – – – 1,866,721
Restricted for communications – – 116,408 –
Total fund balances 1,406,437 143,223 116,408 1,866,721
Total liabilities, deferred inflows
of resources, and fund balances 1,563,169$ 143,223$ 141,408$ 1,876,060$
CITY OF PRIOR LAKE
Nonmajor Special Revenue Funds
Combining Balance Sheet
as of December 31, 2024
-95-
Local
Police MN Public Affordable
Forfeiture DAG Safety Housing Aid Total
102,577$ 990,697$ 570,083$ 79,545$ 4,077,442$
6,365 – – – 31,365
– – – – 3,292
537 – 783 – 13,314
– – – – 31,936
– – – – 1,521
– – – – 1,315,577
109,479$ 990,697$ 570,866$ 79,545$ 5,474,447$
(150)$ 2,108$ –$ –$ 85,123$
– – – – 5,223
– – – – 767
6,365 54,096 – – 85,461
– 14,550 – – 55,536
6,215 70,754 – – 232,110
– – – – 32,638
– – – – 3,292
– – – – 35,930
– – – 79,545 222,768
103,264 – – – 103,264
– – 570,866 – 570,866
– 919,943 – – 2,326,380
– – – – 1,866,721
– – – – 116,408
103,264 919,943 570,866 79,545 5,206,407
109,479$ 990,697$ 570,866$ 79,545$ 5,474,447$
-96-
Capital ED Revolving Cable
Park Loan Franchise EDA
Revenues
Taxes –$ –$ –$ 387,197$
Charges for services 61,610 – 13,368 27,867
Intergovernmental 198,467 – – –
Investment income 69,807 5,867 4,525 16,977
Miscellaneous
Contributions and donations 7,450 – – –
Other – – – –
Total revenues 337,334 5,867 17,893 432,041
Expenditures
Current
General government – – 3,577 –
Public safety – – – –
Culture and recreation 6,946 – – –
Economic development – – – 156,080
Capital outlay 549,043 – – 9,500
Total expenditures 555,989 – 3,577 165,580
Excess (deficiency) of revenues
over expenditures (218,655) 5,867 14,316 266,461
Other financing (uses)
Transfers out – – – –
Net change in fund balances (218,655) 5,867 14,316 266,461
Fund balances
Beginning of year 1,625,092 137,356 102,092 1,600,260
End of year 1,406,437$ 143,223$ 116,408$ 1,866,721$
CITY OF PRIOR LAKE
Nonmajor Special Revenue Funds
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances
Year Ended December 31, 2024
-97-
Local
Police MN Public Affordable
Forfeiture DAG Safety Housing Aid Total
–$ –$ –$ –$ 387,197$
– 21,919 – – 124,764
– – – 109,825 308,292
4,773 – 28,693 – 130,642
– – – – 7,450
4,750 – – – 4,750
9,523 21,919 28,693 109,825 963,095
– – – – 3,577
16,441 – – – 16,441
– – – – 6,946
– – – 30,280 186,360
– 102,009 – – 660,552
16,441 102,009 – 30,280 873,876
(6,918) (80,090) 28,693 79,545 89,219
– – (691,100) – (691,100)
(6,918) (80,090) (662,407) 79,545 (601,881)
110,182 1,000,033 1,233,273 – 5,808,288
103,264$ 919,943$ 570,866$ 79,545$ 5,206,407$
-98-
Revolving Trunk Street
Equipment Reserve Oversizing
Assets
Cash and investments 793,947$ 6,766,141$ –$
Receivables
Accounts (refund)7,232 26,951 –
Special assessments
Deferred – 2,688 –
Due from other governmental agencies 3,429 – –
Total assets 804,608$ 6,795,780$ –$
Liabilities
Accounts and contracts payable 34,353$ –$ –$
Deferred inflows of resources
Unavailable revenue from special assessments – 2,688 –
Fund balances
Restricted for tax increment – – –
Assigned for capital improvements 770,255 6,793,092 –
Total fund balances 770,255 6,793,092 –
Total liabilities, deferred inflows
of resources, and fund balances 804,608$ 6,795,780$ –$
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Balance Sheet
as of December 31, 2024
-99-
Tax Tax Tax
Increment 1-3 Increment 5-1 Increment 6-1
Lakefront Premiere Shepard’s Path
197,838$ 19,966$ –$
687 16 –
– – –
– – –
198,525$ 19,982$ –$
42,481$ 6,961$ –$
– – –
156,044 13,021 –
– – –
156,044 13,021 –
198,525$ 19,982$ –$
-100-(continued)
Tax Revolving
Increment 1-5 Park Facility
Gateway Ctr Equipment Management
Assets
Cash and investments 133,372$ 1,218,090$ 937,862$
Receivables
Accounts (refund)(441) 3,634 6,895
Special assessments
Deferred – – –
Due from other governmental agencies – 9,199 880
Total assets 132,931$ 1,230,923$ 945,637$
Liabilities
Accounts and contracts payable 69,113$ 7,040$ 149,249$
Deferred inflows of resources
Unavailable revenue from special assessments – – –
Fund balances
Restricted for tax increment 63,818 – –
Assigned for capital improvements – 1,223,883 796,388
Total fund balances 63,818 1,223,883 796,388
Total liabilities, deferred inflows
of resources, and fund balances 132,931$ 1,230,923$ 945,637$
as of December 31, 2024
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Balance Sheet (continued)
-101-
Formerly
Nonmajor
Permanent
Improvement
Revolving Total
–$ 10,067,216$
– 44,974
– 2,688
– 13,508
–$ 10,128,386$
–$ 309,197$
– 2,688
– 232,883
– 9,583,618
– 9,816,501
–$ 10,128,386$
-102-
Revolving Trunk Street
Equipment Reserve Oversizing
Revenues
Taxes 796,530$ –$ –$
Special assessments – 787 –
Charges for services – 689,739 –
Intergovernmental – ––
Investment income 28,574 276,922 15,120
Miscellaneous
Other – – –
Total revenues 825,104 967,448 15,120
Expenditures
Current
General government – – –
Culture and recreation – – –
Capital outlay 1,793,792 143,622 –
Total expenditures 1,793,792 143,622 –
Excess (deficiency) of revenues
over expenditures (968,688) 823,826 15,120
Other financing sources (uses)
Transfers in 400,000 – –
Transfers out – – (352,362)
Sale of capital assets 294,704 – –
Total other financing sources (uses)694,704 – (352,362)
Net change in fund balances (273,984) 823,826 (337,242)
Fund balances
Beginning of year, as previously reported 1,044,239 5,969,266 337,242
Change within financial reporting
entity (nonmajor to major fund)– – –
Beginning of year, restated 1,044,239 5,969,266 337,242
End of year 770,255$ 6,793,092$ –$
and Changes in Fund Balances
Year Ended December 31, 2024
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures,
-103-
Tax Tax Tax
Increment 1-3 Increment 5-1 Increment 6-1
Lakefront Premiere Shepard’s Path
144,953$ 15,469$ 363,342$
– – –
– – –
– – –
6,413 573 38,030
– – –
151,366 16,042 401,372
– – –
– – –
113,354 15,204 941,857
113,354 15,204 941,857
38,012 838 (540,485)
– – –
(8,262) – –
– – –
(8,262) – –
29,750 838 (540,485)
126,294 12,183 540,485
– – –
126,294 12,183 540,485
156,044$ 13,021$ –$
-104-(continued)
Tax Revolving
Increment 1-5 Park Facility
Gateway Ctr Equipment Management
Revenues
Taxes 145,500$ 458,181$ 204,419$
Special assessments – – –
Charges for services – – –
Intergovernmental – 313,157 –
Investment income 2,843 39,872 57,483
Miscellaneous
Other – – 89,800
Total revenues 148,343 811,210 351,702
Expenditures
Current
General government – – 183,610
Culture and recreation – 2,644 –
Capital outlay 139,465 90,993 748,168
Total expenditures 139,465 93,637 931,778
Excess (deficiency) of revenues
over expenditures 8,878 717,573 (580,076)
Other financing sources (uses)
Transfers in – – 24,000
Transfers out – – –
Sale of capital assets – – –
Total other financing sources (uses)– – 24,000
Net change in fund balances 8,878 717,573 (556,076)
Fund balances
Beginning of year, as previously reported 54,940 506,310 1,352,464
Change within financial reporting
entity (nonmajor to major fund)– – –
Beginning of year, restated 54,940 506,310 1,352,464
End of year 63,818$ 1,223,883$ 796,388$
Year Ended December 31, 2024
CITY OF PRIOR LAKE
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures,
and Changes in Fund Balances (continued)
-105-
Formerly
Nonmajor
Permanent
Improvement
Revolving Total
–$ 2,128,394$
– 787
– 689,739
– 313,157
– 465,830
– 89,800
– 3,687,707
– 183,610
– 2,644
– 3,986,455
– 4,172,709
– (485,002)
– 424,000
– (360,624)
– 294,704
– 358,080
– (126,922)
1,987,394 11,930,817
(1,987,394) (1,987,394)
– 9,943,423
–$ 9,816,501$
-106-
2023
Variance With
Original Final Actual Final Budget Actual
Revenues
Taxes
Property taxes 14,047,266$ 14,047,266$ 13,950,980$ (96,286)$ 12,119,339$
Franchise taxes 559,000 559,000 543,869 (15,131) 557,579
Total taxes 14,606,266 14,606,266 14,494,849 (111,417) 12,676,918
Special assessments 4,000 4,000 5,057 1,057 5,499
Licenses and permits
Business 88,815 88,815 89,370 555 94,999
Nonbusiness 528,423 528,423 779,566 251,143 599,944
Total licenses and permits 617,238 617,238 868,936 251,698 694,943
Intergovernmental
Federal grants – – 12,350 12,350 3,425
State
Road and bridge aid 467,000 467,000 443,943 (23,057) 417,468
Fire relief aid 319,835 319,835 413,849 94,014 367,001
Police aid 332,500 332,500 427,244 94,744 360,961
Other state aids – – 34,131 34,131 –
County and local
Township fire and rescue aid 959,522 959,522 960,250 728 750,179
Liaison aid 69,775 69,775 84,742 14,967 –
Other local aids – – 9,576 9,576 8,546
Payment in lieu of taxes 1,200,000 1,200,000 1,200,000 – 1,100,000
Total intergovernmental 3,348,632 3,348,632 3,586,085 237,453 3,007,580
Charges for services
Zoning fees 40,000 40,000 37,778 (2,222) 30,950
Plan check fees 244,941 244,941 332,114 87,173 234,816
Park fees 239,216 239,216 289,701 50,485 257,284
Project fees 246,000 246,000 240,223 (5,777) 221,033
Park program revenue 117,000 117,000 137,742 20,742 110,162
Tower leases 260,082 260,082 282,809 22,727 43,311
Park admission/rent 45,000 45,000 59,995 14,995 127,090
Facility rental 134,828 134,828 130,136 (4,692) 317,884
Reports 1,200 1,200 930 (270) 1,935
Total charges for services 1,328,267 1,328,267 1,511,428 183,161 1,344,465
Fines and forfeits – – 103,766 103,766 2,895
Investment income
Interest earnings 160,000 160,000 525,044 365,044 391,392
Amortization – (premium)/discount – – 73,934 73,934 (12,966)
Unrealized gain – – 93,577 93,577 166,340
Total investment income 160,000 160,000 692,555 532,555 544,766
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
2024
Budgeted Amounts
CITY OF PRIOR LAKE
General Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual
Year Ended December 31, 2024
-107-(continued)
2023
Variance With
Original Final Actual Final Budget Actual
Revenues (continued)
Miscellaneous
Other 69,800 69,800 523,543 453,743 78,882
Contributions and donations – – 62,378 62,378 25,225
Developers’ agreements 60,000 60,000 28,035 (31,965) 13,136
Total miscellaneous 129,800 129,800 613,956 484,156 117,243
Total revenues 20,194,203 20,194,203 21,876,632 1,682,429 18,394,309
Expenditures
Current expenditures
General government
Mayor and City Council
Personal services 76,427 76,427 73,600 (2,827) 68,430
Supplies 300 300 111 (189) 158
Other services and charges 6,500 6,500 4,813 (1,687) 9,981
Total Mayor and City Council 83,227 83,227 78,524 (4,703) 78,569
Ordinance
Other services and charges 5,000 5,000 8,453 3,453 3,719
Administration
Personal services 313,089 313,089 320,998 7,909 296,939
Supplies 9,500 9,500 11,885 2,385 11,067
Other services and charges 70,535 70,535 59,438 (11,097) 71,820
Total administration 393,124 393,124 392,321 (803) 379,826
Boards and commissions
Personal services 10,550 10,550 7,750 (2,800) 5,490
Other services and charges 400 400 – (400) 100
Total boards and commissions 10,950 10,950 7,750 (3,200) 5,590
City Clerk
Personal services 130,660 130,660 130,596 (64) 121,704
Supplies 500 500 69 (431) 24
Other services and charges 2,829 6,829 3,637 (3,192) 3,451
Total City Clerk 133,989 137,989 134,302 (3,687) 125,179
Election
Personal services 112,832 112,832 84,660 (28,172) 121
Supplies 1,500 1,500 7,293 5,793 62
Other services and charges 12,000 12,000 13,545 1,545 25,333
Total election 126,332 126,332 105,498 (20,834) 25,516
Year Ended December 31, 2024
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
2024
Schedule of Revenues, Expenditures, and
Budgeted Amounts
General Fund
Changes in Fund Balances – Budget and Actual (continued)
CITY OF PRIOR LAKE
-108-(continued)
2023
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
General government (continued)
Finance
Personal services 704,542 704,542 692,119 (12,423) 618,315
Supplies 1,585 1,585 487 (1,098) 2,409
Other services and charges 31,485 37,485 25,450 (12,035) 38,934
Total finance 737,612 743,612 718,056 (25,556) 659,658
Auditing
Other services and charges 44,700 44,700 42,019 (2,681) 47,345
Assessing
Other services and charges 258,575 258,575 252,942 (5,633) 238,629
Legal services
Other services and charges 267,214 267,214 271,394 4,180 230,049
Personnel
Personal services 316,502 316,502 312,209 (4,293) 320,463
Supplies 250 250 51 (199) 289
Other services and charges 47,600 47,600 46,645 (955) 75,019
Total personnel 364,352 364,352 358,905 (5,447) 395,771
Communications
Personal services 143,422 143,422 142,412 (1,010) 132,267
Supplies – – – – 352
Other services and charges 21,750 21,750 16,651 (5,099) 16,201
Total communications 165,172 165,172 159,063 (6,109) 148,820
Community development
Personal services 348,850 348,850 247,558 (101,292) 304,020
Supplies 3,800 3,800 4,088 288 2,867
Other services and charges 45,000 45,000 34,385 (10,615) 25,464
Total community development 397,650 397,650 286,031 (111,619) 332,351
Technology
Personal services 256,283 256,283 258,175 1,892 240,881
Supplies 59,950 67,373 63,824 (3,549) 41,638
Other services and charges 201,680 213,680 142,133 (71,547) 142,199
Total technology 517,913 537,336 464,132 (73,204) 424,718
Budgeted Amounts
2024
Year Ended December 31, 2024
CITY OF PRIOR LAKE
Changes in Fund Balances – Budget and Actual (continued)
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
Schedule of Revenues, Expenditures, and
General Fund
-109-(continued)
2023
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
General government (continued)
Buildings and plant
Personal services 101,693 101,693 96,880 (4,813) 91,737
Supplies 60,000 60,000 23,970 (36,030) 11,938
Other services and charges 737,424 712,640 684,661 (27,979) 471,961
Total buildings and plant 899,117 874,333 805,511 (68,822) 575,636
Total general government 4,404,927 4,409,566 4,084,901 (324,665) 3,671,376
Public safety
Police
Personal services 6,238,856 6,238,856 6,065,446 (173,410) 5,660,170
Supplies 302,600 345,100 257,278 (87,822) 188,741
Other services and charges 578,436 629,371 665,873 36,502 470,557
Total police 7,119,892 7,213,327 6,988,597 (224,730) 6,319,468
Fire and rescue
Personal services 2,354,931 2,354,931 2,367,944 13,013 1,559,554
Supplies 178,000 178,000 187,194 9,194 160,545
Other services and charges 216,127 216,127 204,094 (12,033) 253,169
Total fire and rescue 2,749,058 2,749,058 2,759,232 10,174 1,973,268
Building inspections
Personal services 830,502 830,502 819,895 (10,607) 789,414
Supplies 12,450 12,450 7,633 (4,817) 5,391
Other services and charges 19,200 19,200 8,992 (10,208) 6,385
Total building inspections 862,152 862,152 836,520 (25,632) 801,190
Emergency management
Supplies – – 15,360 15,360 –
Other services and charges 15,340 15,340 13,918 (1,422) 17,663
Total emergency management 15,340 15,340 29,278 13,938 17,663
Animal control
Other services and charges 36,000 36,000 28,800 (7,200) 28,800
Total other 913,492 913,492 894,598 (18,894)847,653
Total public safety 10,782,442 10,875,877 10,642,427 (233,450) 9,140,389
CITY OF PRIOR LAKE
General Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual (continued)
Year Ended December 31, 2024
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
2024
Budgeted Amounts
-110-(continued)
2023
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Current expenditures (continued)
Public works
Engineering
Personal services 403,645 403,645 391,994 (11,651) 379,493
Supplies 17,500 17,500 8,114 (9,386) 13,124
Other services and charges 50,820 50,820 92,513 41,693 69,951
Total engineering 471,965 471,965 492,621 20,656 462,568
Central garage
Personal services 293,500 293,500 279,196 (14,304) 271,488
Supplies 218,350 218,350 200,956 (17,394) 201,076
Other services and charges 87,200 87,200 76,793 (10,407) 69,664
Total central garage 599,050 599,050 556,945 (42,105) 542,228
Streets
Personal services 582,011 582,011 564,332 (17,679) 525,463
Supplies 517,525 517,525 316,158 (201,367) 369,699
Other services and charges 676,770 766,770 727,030 (39,740) 613,236
Total streets 1,776,306 1,866,306 1,607,520 (258,786) 1,508,398
Total public works 2,847,321 2,937,321 2,657,086 (280,235) 2,513,194
Culture and recreation
Recreation
Personal services 444,525 444,525 382,145 (62,380) 296,538
Supplies 98,000 98,000 105,038 7,038 110,349
Other services and charges 84,980 84,980 95,108 10,128 76,925
Total recreation 627,505 627,505 582,291 (45,214) 483,812
Parks
Personal services 1,253,181 1,253,181 1,241,217 (11,964) 1,152,928
Supplies 267,150 267,150 241,138 (26,012) 206,830
Other services and charges 446,275 486,275 513,274 26,999 375,818
Total parks 1,966,606 2,006,606 1,995,629 (10,977) 1,735,576
Libraries
Supplies – – 260 260 3,315
Other services and charges 32,674 32,674 24,240 (8,434) 58,303
Total libraries 32,674 32,674 24,500 (8,174) 61,618
Total culture and recreation 2,626,785 2,666,785 2,602,420 (64,365) 2,281,006
Total current expenditures 20,661,475 20,889,549 19,986,834 (902,715) 17,605,965
Budgeted Amounts
Year Ended December 31, 2024
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
Changes in Fund Balances – Budget and Actual (continued)
Schedule of Revenues, Expenditures, and
General Fund
CITY OF PRIOR LAKE
2024
-111-(continued)
2023
Variance With
Original Final Actual Final Budget Actual
Expenditures (continued)
Capital outlay
General government
City hall 87,500 87,500 39,518 (47,982) 33,302
Public safety
Police 45,640 88,540 17,790 (70,750) 19,674
Fire – 20,017 20,017 – 8,684
Public works
Buildings and plant 3,500 28,284 9,060 (19,224) 2,835
Development projects – – 30,086 30,086 72,528
Parks
Infrastructure – – – – 31,258
Total capital outlay 136,640 224,341 116,471 (107,870) 168,281
Total expenditures 20,798,115 21,113,890 20,103,305 (1,010,585) 17,774,246
Excess (deficiency) of revenues
over expenditures (603,912) (919,687) 1,773,327 2,693,014 620,063
Other financing sources (uses)
Transfers in 852,400 852,400 876,400 24,000 555,000
Transfers out (248,488) (248,488) (248,488) – (633,888)
Sale of assets – – 5,086 5,086 5,672
Total other financing
sources (uses)603,912 603,912 632,998 29,086 (73,216)
Net change in fund balances –$ (315,775)$ 2,406,325 2,722,100$ 546,847
Fund balances
Beginning of year 11,005,244 10,458,397
End of year 13,411,569$ 11,005,244$
General Fund
CITY OF PRIOR LAKE
Budgeted Amounts
Schedule of Revenues, Expenditures, and
Changes in Fund Balances – Budget and Actual (continued)
Year Ended December 31, 2024
2024
(With Comparative Actual Amounts for the Year Ended December 31, 2023)
-112-
Water Tax Street
Treatment Increment Fish Reconstruction
Plant 2004 Point GESP Lease 2015
Assets
Cash and investments –$ –$ –$ 18,080$ 355,405$
Receivables
Accounts (refunds)– – – 4,158 2,050
Special assessments
Delinquent – – – – 10,543
Deferred – – 481,461 8,252 160,551
Due from other
governmental agencies – – – 18,054 4,255
Total assets –$ –$ 481,461$ 48,544$ 532,804$
Liabilities
Accounts and contracts payable –$ –$ –$ –$ 210$
Deferred inflows of resources
Unavailable revenue from
special assessments – – 481,461 8,252 171,094
Fund balances
Restricted for debt service – – – 40,292 361,500
Total liabilities, deferred inflows
of resources, and fund balances –$ –$ 481,461$ 48,544$ 532,804$
as of December 31, 2024
Balance Sheet by Account
Debt Service Fund
CITY OF PRIOR LAKE
-113-
Cates, Balsam,
Franklin Trail,
Sycamore Trail,
Maintenance 2018
TH 13, 150th Center Roof Franklin,2019 2019
Manitou Road Street 2016 Improvements Huron,Street Street
Improvement Reconstruction 2017 Woodside Improvements Overlay
57,191$ 18,935$ 294,567$ 320,430$ 73,317$ –$
148 233 1,263 5,046 240 –
408 – 2,705 – – –
38,838 – 191,944 297,973 5,865 –
883 167 1,578 2,298 888 –
97,468$ 19,335$ 492,057$ 625,747$ 80,310$ –$
102$ 105$ 211$ 210$ 208$ –$
39,247 – 194,649 297,972 5,865 –
58,119 19,230 297,197 327,565 74,237 –
97,468$ 19,335$ 492,057$ 625,747$ 80,310$ –$
-114 (continued)
THIS PAGE INTENTIONALLY LEFT BLANK
Fish Downtown Fish Point
Point 2021B South Road
Road Refunding Reconstruction Phase II Total
Assets
Cash and investments 218,986$ 271,790$ 150,393$ 1,379,916$ 3,159,010$
Receivables
Accounts (refunds)1,579 1,167 (606) 33 15,311
Special assessments
Delinquent – – – – 13,656
Deferred 292,824 – 443,302 154,679 2,075,689
Due from other
governmental agencies 1,100 3,747 1,047 – 34,017
Total assets 514,489$ 276,704$ 594,136$ 1,534,628$ 5,297,683$
Liabilities
Accounts and contracts payable 210$ 209$ 208$ 208$ 1,881$
Deferred inflows of resources
Unavailable revenue from
special assessments 292,824 – 443,302 154,679 2,089,345
Fund balances
Restricted for debt service 221,455 276,495 150,626 1,379,741 3,206,457
Total liabilities, deferred inflows
of resources, and fund balances 514,489$ 276,704$ 594,136$ 1,534,628$ 5,297,683$
as of December 31, 2024
CITY OF PRIOR LAKE
Debt Service Fund
Balance Sheet by Account (continued)
-115-
Water Tax Street
Treatment Increment Fish Reconstruction
Plant 2004 Point GESP Lease 2015
Revenues
Taxes –$ –$ –$ 244,951$ 519,859$
Special assessments – – – 2,682 94,929
Investment income – 925 – 2,258 25,382
Miscellaneous
Other – – – 17,000 –
Total revenues – 925 – 266,891 640,170
Expenditures
Debt service
Principal 495,000 30,000 – 292,801 575,000
Interest and other 119,650 900 – 7,813 108,429
Total expenditures 614,650 30,900 – 300,614 683,429
Excess (deficiency) of revenues
over expenditures (614,650) (29,975) – (33,723) (43,259)
Other financing sources (uses)
Transfers in 614,650 8,262 – – –
Transfers out – (1,194) – – –
Total other financing sources (uses)614,650 7,068 – – –
Net change in fund balances – (22,907) – (33,723) (43,259)
Fund balances
Beginning of year – 22,907 – 74,015 404,759
End of year –$ –$ –$ 40,292$ 361,500$
CITY OF PRIOR LAKE
Debt Service Fund
Schedule of Revenues, Expenditures,
and Changes in Fund Balances by Account
Year Ended December 31, 2024
-116-
Cates, Balsam,
Franklin Trail,
Sycamore Trail,
Maintenance 2018
TH 13, 150th Center Roof Franklin,2019 2019
Manitou Road Street 2016 Improvements Huron,Street Street
Improvement Reconstruction 2017 Woodside Improvements Overlay
68,727$ 38,769$ 294,293$ 533,957$ 206,182$ –$
21,161 – 89,529 88,403 1,457 –
4,668 1,174 21,345 20,669 6,118 44
– – – – – –
94,556 39,943 405,167 643,029 213,757 44
110,000 35,000 445,000 520,000 170,000 90,000
7,200 2,305 36,166 130,008 55,708 4,500
117,200 37,305 481,166 650,008 225,708 94,500
(22,644) 2,638 (75,999) (6,979) (11,951) (94,456)
– 2,124 – – – 94,590
– – – – – (931)
– 2,124 – – – 93,659
(22,644) 4,762 (75,999) (6,979) (11,951) (797)
80,763 14,468 373,196 334,544 86,188 797
58,119$ 19,230$ 297,197$ 327,565$ 74,237$ –$
-117-(continued)
THIS PAGE INTENTIONALLY LEFT BLANK
Fish Downtown Fish Point
Point 2021B South Road
Road Refunding Reconstruction Phase II Total
Revenues
Taxes 255,524$ 870,544$ 155,077$ –$ 3,187,883$
Special assessments 67,901 4,339 75,634 1,287,783 1,733,818
Investment income 13,037 23,549 12,097 12,453 143,719
Miscellaneous
Other – – – – 17,000
Total revenues 336,462 898,432 242,808 1,300,236 5,082,420
Expenditures
Debt service
Principal 460,000 725,000 160,000 95,000 4,202,801
Interest and other 106,168 194,703 85,103 114,553 973,206
Total expenditures 566,168 919,703 245,103 209,553 5,176,007
Excess (deficiency) of revenues
over expenditures (229,706) (21,271) (2,295) 1,090,683 (93,587)
Other financing sources (uses)
Transfers in 248,488 – – – 968,114
Transfers out – – – – (2,125)
Total other financing sources (uses)248,488 – – – 965,989
Net change in fund balances 18,782 (21,271) (2,295) 1,090,683 872,402
Fund balances
Beginning of year 202,673 297,766 152,921 289,058 2,334,055
End of year 221,455$ 276,495$ 150,626$ 1,379,741$ 3,206,457$
Debt Service Fund
Schedule of Revenues, Expenditures,
and Changes in Fund Balances by Account (continued)
Year Ended December 31, 2024
CITY OF PRIOR LAKE
-118-
Severance
Compensation Insurance Total
Current assets
Cash and investments 636,829$ 240,803$ 877,632$
Receivables
Accounts 4,042 447 4,489
Total current assets 640,871$ 241,250$ 882,121$
Current liabilities
Current portion of compensated absences payable 548,491$ –$ 548,491$
Noncurrent liabilities
Compensated absences payable 1,116,227 – 1,116,227
Total liabilities 1,664,718 – 1,664,718
Net position
Unrestricted (1,023,847) 241,250 (782,597)
Total liabilities and net position 640,871$ 241,250$ 882,121$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Net Position
as of December 31, 2024
-119-
Severance
Compensation Insurance Total
Operating revenues
Charges for services 59,195$ –$ 59,195$
Miscellaneous/other income
Dividends, reimbursements, and other – 41,358 41,358
Total operating revenues 59,195 41,358 100,553
Operating expenses
Personal services 523,205 – 523,205
Operating income (loss)(464,010) 41,358 (422,652)
Nonoperating revenues
Investment income 25,301 8,054 33,355
Change in net position (438,709) 49,412 (389,297)
Net position
Beginning of year (585,138) 191,838 (393,300)
End of year (1,023,847)$ 241,250$ (782,597)$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Revenues, Expenses, and Changes in Net Position
Year Ended December 31, 2024
-120-
Severance
Compensation Insurance Total
Cash flows from operating activities
Cash received from customers 58,762$ –$ 58,762$
Miscellaneous/other income
Dividends, reimbursements and other – 41,224 41,224
Net cash flows from operating activities 58,762 41,224 99,986
Cash flows from investing activities
Interest received on cash and investments 25,301 8,054 33,355
Net increase in cash and cash equivalents 84,063 49,278 133,341
Cash and cash equivalents, January 1 552,766 191,525 744,291
Cash and cash equivalents, December 31 636,829$ 240,803$ 877,632$
Reconciliation of operating income (loss) to net
cash flows from operating activities
Operating income (loss)(464,010)$ 41,358$ (422,652)$
Adjustments to reconcile operating income (loss)
to net cash flows from operating activities
(Increase) decrease in assets
Accounts receivable (433) (134) (567)
Increase (decrease) in liabilities
Compensated absences payable 523,205 – 523,205
Net cash flows from operating activities 58,762$ 41,224$ 99,986$
CITY OF PRIOR LAKE
Internal Service Funds
Combining Statement of Cash Flows
Year Ended December 31, 2024
-121-
OTHER INFORMATION SECTION
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Percent
Increase
2024 2023 (Decrease)
Revenues
Taxes 19,654,454$ 17,792,748$ 110.5%
Franchise taxes 1,640,516 1,636,676 100.2%
Special assessments 2,727,577 877,273 310.9%
Licenses and permits 868,936 694,943 125.0%
Intergovernmental 5,423,407 7,618,475 71.2%
Charges for services 2,325,931 2,003,374 116.1%
Fines and forfeits 103,766 2,895 3,584.3%
Interest on investments 1,652,891 1,691,845 97.7%
Miscellaneous 732,956 465,565 157.4%
Total revenues 35,130,434$ 32,783,794$ 107.2%
Per capita 1,223$ 1,149$ 106.5%
Expenditures
Current
General government 4,272,088$ 3,674,952$ 116.2%
Public safety 10,658,868 9,201,659 115.8%
Public works 2,657,086 2,513,194 105.7%
Culture and recreation 2,612,010 2,346,823 111.3%
Economic development 186,360 180,687 103.1%
Capital outlay 12,391,369 13,772,840 90.0%
Debt service
Principal 4,202,801 4,261,693 98.6%
Interest and other charges 1,019,737 1,088,997 93.6%
Total expenditures 38,000,319$ 37,040,845$ 102.6%
Per capita 1,323$ 1,298$ 101.9%
Total long-term bonded indebtedness 23,990,000$ 26,320,000$ 91.1%
Per capita 835$ 922$ 90.6%
General Fund balance – December 31 13,411,569$ 11,005,244$ 121.9%
Per capita 467$ 386$ 121.1%
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, 2024 and 2023
CITY OF PRIOR LAKE
Summary Financial Report
Revenues and Expenditures for General Operations
Total
-122-
Final
Issue Maturity
Date Date
Bonded indebtedness
General obligation special assessment bonds
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
G.O. Improvement Bonds of 2024A 5.00 08/20/2024 12/15/2029
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
G.O. Improvement Bonds of 2024A 4.00–5.00 08/20/2024 12/15/2044
Total general obligation revenue bonds
Total bonded indebtedness
Rate
CITY OF PRIOR LAKE
Combined Schedule of Indebtedness
Year Ended December 31, 2024
Interest
-123-
Outstanding Issued Outstanding
Authorized January 1 (Retired)December 31 Principal Interest
4,640,000$ 4,235,000$ (575,000)$ 3,660,000$ 775,000$ 96,225$
1,105,000 330,000 (110,000) 220,000 110,000 4,400
4,135,000 1,615,000 (390,000) 1,225,000 400,000 26,562
3,145,000 1,405,000 (260,000) 1,145,000 275,000 57,250
400,000 90,000 (90,000) – – –
880,000 235,000 (235,000) – – –
1,580,000 – 1,580,000 1,580,000 265,000 104,237
15,885,000 7,910,000 (80,000) 7,830,000 1,825,000 288,674
290,000 30,000 (30,000) – – –
760,000 110,000 (35,000) 75,000 35,000 1,500
370,000 55,000 (55,000) – – –
2,485,000 1,295,000 (260,000) 1,035,000 260,000 51,750
1,665,000 1,110,000 (170,000) 940,000 175,000 47,000
5,270,000 4,260,000 (460,000) 3,800,000 495,000 91,665
4,990,000 3,645,000 (490,000) 3,155,000 530,000 157,750
1,910,000 1,780,000 (160,000) 1,620,000 170,000 76,400
1,620,000 1,620,000 (95,000) 1,525,000 125,000 76,250
19,070,000 13,875,000 (1,725,000) 12,150,000 1,790,000 502,315
5,360,000 4,505,000 (495,000) 4,010,000 515,000 109,750
2,640,000 1,440,000 (270,000) 1,170,000 270,000 58,500
1,180,000 – 1,180,000 1,180,000 20,000 66,830
9,180,000 5,945,000 415,000 6,360,000 805,000 235,080
44,425,000$ 27,760,000$ (1,420,000)$ 26,340,000$ 4,420,000$ 1,026,069$
Due in 2025
-124-
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Final
Issue Maturity
Date Date Principal
General obligation
special assessment bonds
$4,640,000 General Obligation
Improvement Bonds, Series 2015A 05/14/2015 2.00 %12/15/2025 775,000$
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 3,660,000
$1,105,000 General Obligation
Improvement Bonds, Series 2016A 05/01/2016 2.00 12/15/2025 110,000
2.00 12/15/2026 110,000
Total 220,000
$4,135,000 General Obligation
Improvement Bonds, Series 2017A 06/29/2017 2.00 12/15/2025 400,000
2.00 12/15/2026 410,000
2.25 12/15/2027 415,000
Total 1,225,000
$3,145,000 General Obligation
Improvement Bonds, Series 2018A 08/15/2018 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 1,145,000
CITY OF PRIOR LAKE
Bond Schedules
December 31, 2024
Rate
Interest
-125-(continued)
Final
Issue Maturity
Date Date Principal
General obligation
special assessment bonds (continued)
$1,580,000 General Obligation
Improvement Bonds, Series 2024A 08/20/2024 5.00 %12/15/2025 265,000$
5.00 12/15/2026 305,000
5.00 12/15/2027 320,000
5.00 12/15/2028 335,000
5.00 12/15/2029 355,000
1,580,000
Total general obligation special assessment bonds 7,830,000$
Bond Schedules (continued)
December 31, 2024
Interest
Rate
CITY OF PRIOR LAKE
-126-(continued)
Final
Issue Maturity
Date Date Principal
General obligation bonds
$760,000 General Obligation
Street Reconstruction Bonds, Series 2016A 05/01/2016 2.00 %12/15/2025 35,000$
2.00 12/15/2026 40,000
Total 75,000
$2,485,000 General Obligation
Improvement Bonds, Series 2018A 08/15/2018 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 1,035,000
$1,665,000 General Obligation
Improvement Bonds, Series 2019A 06/27/2019 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 940,000
CITY OF PRIOR LAKE
Bond Schedules (continued)
December 31, 2024
Interest
Rate
-127-(continued)
Final
Issue Maturity
Date Date Principal
General obligation bonds (continued)
$5,270,000 General Obligation
Improvement Bonds, Series 2021A 07/15/2021 3.00 %12/15/2025 495,000$
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 3,800,000
$4,990,000 General Obligation
Improvement Bonds, Series 2021B 07/26/2021 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 3,155,000
$1,910,000 General Obligation
Improvement Bonds, Series 2022A 09/08/2022 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 1,620,000
$1,620,000 General Obligation
Improvement Bonds, Series 2023A 07/19/2023 5.00 12/15/2025 125,000
5.00 12/15/2026 125,000
5.00 12/15/2027 130,000
5.00 12/15/2028 130,000
5.00 12/15/2029 185,000
5.00 12/15/2030 195,000
5.00 12/15/2031 200,000
5.00 12/15/2032 215,000
5.00 12/15/2033 220,000
Total 1,525,000
Total general obligation bonds 12,150,000$
CITY OF PRIOR LAKE
Bond Schedules (continued)
December 31, 2024
Interest
Rate
-128-(continued)
Final
Issue Maturity
Date Date Principal
General obligation revenue bonds
$5,360,000 General Obligation Improvement
Bonds, Series 2015A 05/14/2015 2.00 %12/15/2025 515,000$
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 4,010,000
$2,640,000 General Obligation Improvement
Bonds, Series 2018A 08/15/2018 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 1,170,000
$1,180,000 General Obligation Improvement
Bonds, Series 2024A 08/20/2024 5.00 12/15/2025 20,000
5.00 12/15/2026 40,000
5.00 12/15/2027 40,000
5.00 12/15/2028 45,000
5.00 12/15/2029 45,000
5.00 12/15/2030 50,000
5.00 12/15/2031 50,000
5.00 12/15/2032 55,000
4.00 12/15/2033 55,000
4.00 12/15/2034 60,000
4.00 12/15/2035 60,000
4.00 12/15/2036 60,000
4.00 12/15/2037 65,000
4.00 12/15/2038 70,000
4.00 12/15/2039 70,000
4.00 12/15/2040 75,000
4.00 12/15/2041 75,000
4.00 12/15/2042 80,000
4.00 12/15/2043 80,000
4.00 12/15/2044 85,000
Total 1,180,000
Total general obligation revenue bonds 6,360,000$
December 31, 2024
Interest
Rate
CITY OF PRIOR LAKE
Bond Schedules (continued)
-129-
Year Principal Interest Principal Interest Principal Interest
2025 1,790,000$ 502,315$ 1,825,000$ 288,674$ 805,000$ 235,080$
2026 1,890,000 423,765 1,715,000 210,738 850,000 194,100
2027 1,955,000 340,665 1,580,000 154,813 890,000 164,850
2028 1,995,000 253,515 1,185,000 101,100 935,000 134,100
2029 1,880,000 164,965 955,000 52,850 635,000 98,750
2030 1,015,000 82,465 570,000 17,100 665,000 78,800
2031 960,000 55,715 – – 690,000 57,850
2032 445,000 30,950 – – 55,000 36,150
2033 220,000 11,000 – – 55,000 33,400
2034 – – – – 60,000 31,200
2035 – – – – 60,000 28,800
2036 – – – – 60,000 26,400
2037 – – – – 65,000 24,000
2038 – – – – 70,000 21,400
2039 – – – – 70,000 18,600
2040 – – – – 75,000 15,800
2041 – – – – 75,000 12,800
2042 – – – – 80,000 9,800
2043 – – – – 80,000 6,600
2044 – – – – 85,000 3,400
Total 12,150,000$ 1,865,355$ 7,830,000$ 825,275$ 6,360,000$ 1,231,880$
CITY OF PRIOR LAKE
Debt Service Requirements
December 31, 2024
Revenue Bonds
General Obligation General Obligation
General Obligation Bonds Special Assessment Bonds
-130-
Collection Collections
Total of Current of Prior Total
Year Levy Year Levy Years’ Levy Collections
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
2024 18,714,895 18,579,962 99.28 17,543 18,597,505 99.37
Collection Collections
Total of Current of Prior Total
Year Levy Year Levy*Years’ Levy Collections
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
2024 547,895 541,645 98.86 12,703 554,348 101.18
*Excludes prepaid assessment collections
Percentage
Percentage
Percentage
Collected
Percentage
Collectionsof Levy
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
-131-
2022 2023 2024
Taxable market value 4,352,813,862$ 5,302,936,749$ 5,485,388,057$
Tax levy 14,892,761$ 16,863,956$ 18,714,895$
Tax capacity, net of fiscal disparities,
and tax increment 44,570,254$ 55,284,933$ 57,582,426$
Tax capacity rate 30.465% 28.113% 30.303%
Market value rate 0.005% 0.004% 0.005%
EDA tax capacity rate 0.740% 0.622% 0.638%
CITY OF PRIOR LAKE
Schedules of Market Value, Tax Levy, Tax Capacity Values,
Tax Capacity Rate, and Market Value Rate
Last Three Years
-132-
2022 2023 2024
Current population 28,408 28,536 28,716
Tax capacity, net of fiscal disparities,
and tax increment 44,570,254$ 55,284,933$ 57,582,426$
Percent of current property taxes collected 99.67% 99.46% 99.28%
City revenues per capita (governmental funds)971$ 1,149$ 1,223$
City expenditures per capita (governmental funds)1,050$ 1,298$ 1,323$
Ratio of bonded debt to tax capacity 68.15% 50.21% 41.66%
Bond rating AA+ (S&P)AAA (S&P)AAA (S&P)
CITY OF PRIOR LAKE
Key Financial Indicators
Last Three Years
-133-
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OTHER REQUIRED REPORTS
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-134-
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, 2024, 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 28, 2025.
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 a 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)
-135-
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.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota
May 28, 2025
-136-
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, 2024, 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 28, 2025.
MINNESOTA LEGAL COMPLIANCE
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 contracting – bid laws, 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,
promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, 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.
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.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota
May 28, 2025
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Management Report
for
City of Prior Lake, Minnesota
December 31, 2024
THIS PAGE INTENTIONALLY LEFT BLANK
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, 2024. 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.
Respectfully submitted,
LB CALRSON, LLP
Minneapolis, Minnesota
May 28, 2025
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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, 2024. 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, 2024:
• We have issued unmodified opinions on the City’s basic financial statements.
• 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 no findings based on our testing of the City’s compliance with Minnesota laws and
regulations.
FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS
As a part of our audit of the City’s financial statements for the year ended December 31, 2024, we
performed procedures to follow-up on the findings and recommendations that resulted from our prior year
audit. We reported the following findings that were corrected by the City in the current year:
• Withholding Affidavit
-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, 2024.
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 used during future
years of employment or 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 28, 2025.
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 supplement 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 2022 fiscal year (the most recent comparative state -wide data available), local ad valorem
property tax levies provided 44.1 percent of the total governmental fund revenues for cities over 2,500 in
population, and 35.2 percent for cities under 2,500 in population. Total property taxes levied by all
Minnesota cities for taxes payable in 2024 increased 7.5 percent compared to the prior year, and
7.7 percent for taxes payable in 2025.
The taxable net tax capacity value of property in Minnesota cities increased about 8.4 percent for the 2024
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 2024 were based on assessed
market values as of January 1, 2023), 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 21.8 percent for taxes payable in 2023 and 3.4 percent for taxes
payable in 2024. 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
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
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 24.0 percent and 4.2 percent for taxes payable in
2023 and 2024, 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
$70,000,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Local Net Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years:
2022 2023 2024
Average tax rate
City 30.5 28.1 30.3
County 30.5 26.5 26.2
School 28.1 21.7 22.1
Special taxing 7.5 6.4 6.5
Total 96.6 82.7 85.1
City of Prior Lake
Rates Expressed as a Percentage of Net Tax Capacity
The City’s average tax rate increased mainly the result of an increased levy. The total average tax rate
increased as well with additional increases in the school and special taxing district average rates, which
was slightly offset by a decrease in the county average tax rate.
-7-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2024, presented both by fund balance classification and by major fund:
2024 2023 Change
Fund balances of governmental funds
Total by classification
Restricted 9,113,199$ 8,876,245$ 236,954$
Assigned 11,839,301 13,460,211 (1,620,910)
Unassigned 12,888,798 10,540,044 2,348,754
Total governmental funds 33,841,298$ 32,876,500$ 964,798$
Total by fund
General 13,411,569$ 11,005,244$ 2,406,325$
Debt Service 3,206,457 2,334,055 872,402
Construction 1,198,818 1,798,096 (599,278)
Permanent Improvement Revolving 1,001,546 1,987,394 (985,848)
Special revenue nonmajor funds 5,206,407 5,808,288 (601,881)
Capital projects nonmajor funds 9,816,501 9,943,423 (126,922)
Total governmental funds 33,841,298$ 32,876,500$ 964,798$
Governmental Funds Change in Fund Balance
Fund Balance
as of December 31,
In total, the fund balances of the City’s governmental funds increased by $964,798 during the year ended
December 31, 2024. The City’s General Fund increased $2,406,325, which is further discussed later in
this report. The overall increase in fund balance also includes increases in the balance within the Debt
Service Fund. These increases are reflected in amounts restricted for debt service. The decreases in the
Construction and Permanent Improvement Revolving Funds relate to current year project spending in the
current year. Most of this change impacts the assigned fund balances. The decrease in the nonmajor
special revenue funds is mostly related to spending in the Minnesota Public Safety Fund.
-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 2022 2023 2024
Population 2,500–10,000 10,000–20,000 20,000–100,000 28,408 28,536 28,716
Property taxes 586$ 549$ 584$ 536$ 602$ 661$
Tax increments 37 38 46 29 21 23
Franchise and other taxes 56 72 58 58 57 57
Special assessments 51 34 50 26 31 95
Licenses and permits 43 47 55 26 24 30
Intergovernmental revenues 400 381 223 243 267 189
Charges for services 154 116 137 59 70 81
Other 32 7 (21) (6) 77 87
Total revenue 1,359$ 1,244$ 1,132$ 971$ 1,149$ 1,223$
December 31, 2022
City of Prior LakeState-Wide
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
In total, the City’s governmental fund revenues for 2024 were $35,130,434, an increase of $2,346,640
(7.2 percent) from the prior year. On a per capita basis, the City received $1,223 in governmental fund
revenue for 2024, an increase of $74 from the prior year. Property taxes increased $59 per capita from an
increase in the levy in the current year. Special assessments increased $64 per capita related to new
assessments in the current year. Intergovernmental revenues decreased $78 per capita as the City
received less public safety state aid and street improvement aids in the current year.
-9-
The expenditures of governmental funds will also vary from state -wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
• Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
• Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
• Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor. Some debt may be repaid
through specific sources, such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
comparative state-wide averages, are presented in the following table:
Year 2022 2023 2024
Population 2,500–10,000 10,000–20,000 20,000–100,000 28,408 28,536 28,716
Current
172$ 145$ 126$ 124$ 129$ 149$
343 312 347 286 322 371
163 167 120 73 88 93
121 137 117 78 82 91
86 88 92 6 6 6
885 849 802 567 627 710
Capital outlay
and construction 509 446 346 292 484 432
Debt service
163 133 117 152 149 146
43 40 32 39 38 36
206 173 149 191 187 182
Total expenditures 1,600$ 1,468$ 1,297$ 1,050$ 1,298$ 1,324$
Interest and fiscal charges
Public safety
Streets and highways
Culture and recreation
All other
Principal
General government
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
December 31, 2022
City of Prior LakeState-Wide
Total expenditures in the City’s governmental funds for 2024 were $38,000,319, an increase of $959,474
(2.6 percent) from the prior year. On a per capita basis, the City expended a total of $1,324 in 2024.
Public safety expenditures increased $49 per capita from prior year, mainly due to costs from the change
to a full-time firefighter staffing model in 2024.
-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.
2020 2021 2022 2023 2024
Fund Balance $10,114,088 $10,430,617 $10,458,397 $11,005,244 $13,411,569
Cash and Inv (Net of Borrowing)$11,068,473 $11,778,939 $11,599,508 $11,963,416 $14,098,872
Expenditures and Transfers Out $14,283,695 $15,848,078 $16,237,367 $18,408,134 $20,351,793
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
General Fund Financial Position
Year Ended December 31,
The City’s General Fund cash and investments balance increased $2,135,456 during the current year.
Total fund balance increased $2,406,325 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, 2024, the
total fund balance of the General Fund was 60.5 percent of the subsequent year’s budgeted expenditures
and transfers out of $22,168,668.
-11-
The following graph reflects the City’s General Fund revenue sources for 2024 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 2024 was $21,876,632, which was $1,682,429 (8.3 percent) more than budget.
Investment income (included in all other in the table above) was more than budget by $532,555, the result
of market conditions. Miscellaneous revenue (included in all other in the table above) was more than
budget by $484,156 mainly from excess tax increment proceeds received in the current year .
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
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
2024 $14,494,849 $868,936 $3,586,085 $1,511,428 $103,766 $1,311,568
$(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
$15,000,000
General Fund Revenue by Source
Year Ended December 31,
Total General Fund revenue for 2024 was $3,482,323 (18.9 percent) higher than last year. Taxes
increased $1,817,931 related to a levy increase. Intergovernmental revenue increased $578,505 in a
variety of categories including public safety and park grants aids. All other revenue increased $644,060
mainly due to excess tax increment proceeds received in the current year.
-12-
The following graph illustrates the components of General Fund spending for 2024 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 2024 were $20,103,305, which was $1,010,585 (4.8 percent) under
budget. Expenditures were less than budget in most program areas, due to open positions, fuel and
utilities savings across multiple departments, and deferral of maintenance projects. Police department
expenditures were lower than budget by $224,730 for fuel, small equipment, and technology purchases.
Fuel costs were budgeted at a higher rate, but the price subsequently dropped through the end of 2024.
Public works expenditures were lower than budget by $280,235, primarily for fuel and snow and ice
management material savings.
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
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
2024 $4,084,901 $10,642,427 $2,657,086 $2,602,420 $116,471
$– $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 $11,000,000 $12,000,000
General Fund Expenditures by Function
Year Ended December 31,
Total General Fund expenditures for 2024 were $2,329,059 (13.1 percent) greater than the previous year.
Public safety expenditures increased $1,502,038. The increase in public safety expenses includes a full
year of full-time firefighters in 2024, as compared to six months of expense in 2023. Twelve full -time
firefighters started with the City on July 1, 2023. General government increased $413,525, mainly in the
election and finance departments due to staffing for the 2024 election and the addition of an accountant
position in the finance department.
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ENTERPRISE FUNDS OVERVIEW
The City maintains a number of enterprise funds to account for services the City provides that are
financed primarily through fees charged to those utilizing the service. This section of the report provides
you with an overview of the financial trends and activities of the City’s enterprise funds, which include
the Water, Sewer, and Water Quality Funds.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2024, presented by both classification and by fund:
2024 2023 Change
Net position of enterprise funds
Total by classification
Net investment in capital assets 76,823,473$ 74,313,470$ 2,510,003$
Unrestricted 17,915,692 15,046,459 2,869,233
Total enterprise funds 94,739,165$ 89,359,929$ 5,379,236$
Total by fund
Water 53,912,726$ 51,271,447$ 2,641,279$
Sewer 33,521,970 31,768,405 1,753,565
Water Quality 7,304,469 6,320,077 984,392
Total enterprise funds 94,739,165$ 89,359,929$ 5,379,236$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
INTERNAL SERVICE FUNDS
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, 2024, this fund had assets
totaling $640,871, while liabilities totaled $1,664,718, leaving a deficit net position balance of
($1,023,847). 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, 2024, this fund had a net position balance of $241,250.
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WATER ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Water Fund:
2020 2021 2022 2023 2024
Operating Revenue $4,784,064 $5,569,995 $5,595,073 $6,063,587 $4,976,415
Operating Expenses $3,243,683 $3,212,458 $3,755,290 $4,361,701 $3,788,155
Operating Income $1,540,381 $2,357,537 $1,839,783 $1,701,886 $1,188,260
Income Before
Depreciation/Amortization $2,495,708 $3,346,673 $2,877,384 $2,761,203 $2,270,580
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Water Enterprise Fund
Year Ended December 31,
The Water Fund ended 2024 with a net position of $53,912,726, an increase of $2,641,279 from the prior
year. Of this, $44,512,067 represents the net investment in capital assets, leaving $9,400,659 in
unrestricted net position. The Water Fund had transfers out totaling $1,040,002 in 2024 to support other
funds, pay debt service, and provide for construction projects.
Operating revenue in the Water Fund decreased $1,087,172 (17.9 percent) from the prior year. This
decrease was due to decreased consumption in the current year partially offset by increased rates.
Water Fund operating expenses for 2024 decreased $573,546 (13.1 percent) from the previous year. This
includes decreases in personnel costs, including wages and benefits, repairs and maintenance and utility
costs.
-15-
SEWER ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Sewer Fund:
2020 2021 2022 2023 2024
Operating Revenue $4,399,718 $4,761,256 $4,814,666 $4,689,458 $5,116,182
Operating Expenses $3,360,286 $3,365,918 $3,741,083 $3,689,753 $4,142,246
Operating Income $1,039,432 $1,395,338 $1,073,583 $999,705 $973,936
Income Before
Depreciation/Amortization $1,653,925 $2,036,083 $1,757,988 $1,730,389 $1,744,748
$–
$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
Sewer Enterprise Fund
Year Ended December 31,
The Sewer Fund ended 2024 with a net position of $33,521,970, an increase of $1,753,565 from the prior
year. Of this, $28,523,937 represents the City’s net investment in capital assets, leaving $4,998,033 in
unrestricted net position. The Sewer Fund had transfers out totaling $718,318 in 2024 to support other
funds, pay debt service, and provide for construction projects.
Operating revenue in the Sewer Fund increased $426,724 (9.1 percent) from the prior year, mainly related
to increased usage and increased rates. Sewer Fund operating expenses for 2024 increased $452,493 from
the previous year mainly in repairs and maintenance.
-16-
WATER QUALITY ENTERPRISE FUND
The following graph presents five years of comparative operating results for the City’s Water Quality
Fund:
2020 2021 2022 2023 2024
Operating Revenue $1,175,189 $1,206,566 $1,254,521 $1,413,198 $1,628,444
Operating Expenses $623,317 $730,212 $900,535 $819,451 $766,362
Operating Income $551,872 $476,354 $353,986 $593,747 $862,082
Income Before
Depreciation/Amortization $668,423 $594,451 $451,879 $701,135 $969,156
$–
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
Water Quality Enterprise Fund
Year Ended December 31,
The Water Quality Fund ended 2024 with a net position of $7,304,469, an increase of $984,392 from the
prior year. Of this, $3,787,469 represents the investment in capital assets, leaving $3,517,000 in
unrestricted net position.
Operating revenue in the Water Quality Fund increased $215,246 from the prior year, due to an increase
in rates in 2024. Water Quality Fund operating expenses for 2024 decreased $53,089 (6.5 percent) from
the previous year, mainly in repairs and maintenance.
-17-
GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government-wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are not always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of the City’s net position as of December 31, 2024 and
2023, for governmental activities and business-type activities:
2024 2023 Change
Net position
Governmental activities
Net investment in capital assets 149,536,208$ 143,656,868$ 5,879,340$
Restricted 12,716,329 12,546,535 169,794
Unrestricted 15,898,010 15,180,598 717,412
Total governmental activities 178,150,547 171,384,001 6,766,546
Business-type activities
Net investment in capital assets 76,823,473 74,313,470 2,510,003
Unrestricted 17,915,692 15,046,459 2,869,233
Total business-type activities 94,739,165 89,359,929 5,379,236
Total net position 272,889,712$ 260,743,930$ 12,145,782$
As of December 31,
The City’s total net position at December 31, 2024, was $12,145,782 higher than the total net position
reported at the previous year-end.
The increase in the governmental activities and business-type activities net investment in capital assets
balance was mostly due to capital outlay and capital contribution activity during fiscal 2024. The increase
in unrestricted net position in governmental activities is mostly related to the improved General Fund
financial position offset by pension and OPEB related activity in the current year. The change in
unrestricted net position in the business-type activities is related to positive operating results in the utility
operations in the current year.
At the end of the current fiscal year, the City is able to present positive balances in all categories of net
position, both for the government as a whole, and for its separate governmental and business-type
activities. The same situation held true for the prior year.
-18-
STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net position. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation/amortization of long-lived capital assets, and other accrual-based
expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2024 and 2023:
2023
Program
Expenses Revenues Net Change Net Change
Governmental activities
General government 4,744,079$ 928,429$ (3,815,650)$ (1,703,933)$
Public safety 11,342,029 4,241,173 (7,100,856) (6,298,930)
Public works 6,632,534 6,155,406 (477,128) (2,322,416)
Culture and recreation 3,321,497 1,049,291 (2,272,206) (2,505,788)
Economic development 1,376,697 31,124 (1,345,573) (711,180)
Interest on long-term debt 666,504 – (666,504) (807,850)
Business-type activities
Water 3,806,405 5,003,829 1,197,424 1,686,444
Sewer 4,160,496 5,131,012 970,516 1,045,115
Water quality 818,296 1,662,933 844,637 616,770
36,868,537$ 24,203,197$ (12,665,340) (11,001,768)
General revenues
Taxes 21,335,798 19,439,605
Unrestricted grants and contributions – 456
Investment income 2,380,064 2,386,957
Miscellaneous 795,470 617,095
Sale of assetsGain (loss) on sale of assets 299,790 (29,331)
Total general revenues 24,811,122 22,414,782
Change in net position 12,145,782$ 11,413,014$
Total net (expense) revenue
Net (expense) revenue
2024
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. 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 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 disclosures should
also include any actions taken by the government to mitigate the risk.
The requirements of this statement are effective for fiscal years beginning after June 15, 2024, and all
reporting periods thereafter. Earlier application is encouraged.
GASB STATEMENT NO. 103, FINANCIAL REPORTING MODEL IMPROVEMENTS
The objective of this statement is to improve key components of the financial reporting model to enhance
its effectiveness in providing information that is essential for decision making and assessing a
government’s accountability. This statement also addresses certain application issues.
This statement continues the requirement that the basic financial statements be preceded by
management’s discussion and analysis (MD&A), which is presented as required supplementary
information (RSI). This statement requires that the information presented in MD&A be limited to the
related topics discussed in five sections: (1) Overview of the Financial Statements, (2) Financial
Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long-Term Financing Activity, and
(5) Currently Known Facts, Decisions, or Conditions. Furthermore, this statement stresses that the
detailed analyses should explain why balances and results of operations changed rather than simply
presenting the amounts or percentages by which they changed. In addition, this statement continues the
requirement that information included in MD&A distinguish between that of the primary government and
its discretely presented component units.
This statement defines unusual or infrequent items as transactions and other events that are either unusual
in nature or infrequent in occurrence, and requires governments to display the inflows and outflows
related to each unusual or infrequent item separately.
-20-
This statement requires that the proprietary fund statement of revenues, expenses, and changes in fund net
position continue to distinguish between operating and nonoperating revenues and expenses. In addition
to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in
fund net position, this statement requires that a subtotal for operating income (loss) and noncapital
subsidies be presented before reporting other nonoperating revenues and expenses.
This statement requires governments to present each major component unit separately in the reporting
entity’s statement of net position and statement of activities if it does not reduce the readability of the
statements. If the readability of those statements would be reduced, combining statements of major
component units should be presented after the fund financial statements.
This statement requires governments to present budgetary comparison information using a single method
of communication—RSI. Governments also are required to present (1) variances between original and
final budget amounts and (2) variances between final budget and actual amounts. An explanation of
significant variances is required to be presented in the notes to RSI.
The requirements of this statement are effective for fiscal years beginning after June 15, 2025, and all
reporting periods thereafter. Earlier application is encouraged.
GASB STATEMENT NO. 104, DISCLOSURE OF CERTAIN CAPITAL ASSETS
The objective of this statement is to provide users of government financial statements with essential
information about certain types of capital assets.
This statement requires certain types of capital assets to be disclosed separately in the capital assets note
disclosures required by GASB Statement No. 34. Lease assets recognized in accordance with Statement
No. 87, Leases, and intangible right-to-use assets recognized in accordance with Statement No. 94,
Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be
disclosed separately by major class of underlying asset in the capital assets note disclosures. Subscription
assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology
Arrangements, also should be separately disclosed. In addition, this statement requires intangible assets
other than those three types to be disclosed separately by major class.
This statement also requires additional disclosures for capital assets held for sale. A capital asset is
considered held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it
is probable that the sale will be finalized within one year of the financial statement date. Governments
should consider relevant factors to evaluate the likelihood of the capital asset being sold within the
established time frame. Capital assets held for sale are required to be evaluated each reporting period.
Governments should disclose (1) the ending balance of capital assets held for sale, with separate
disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying
amount of debt for which the capital assets held for sale are pledged as collateral for each major class of
asset.
The requirements of this statement are effective for fiscal years beginning after June 15, 2025, and all
reporting periods thereafter. Earlier application is encouraged.