6.2 SR 06-03-2024The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community
engagement that encourages and inspires prosperity
Request for Action
To
City Council
Item Number
6.2
Meeting Date
June 3, 2024
Prepared By
Lori Stich, Finance Manager
Item Description
Annual Comprehensive Financial Report for Year
ended December 31, 2023
Reviewed by
Lori Stich
Joe Stremcha
Cal Portner
Tina Allard
Action Requested
Accept, by motion, the Annual Comprehensive Financial Report for the City of Elk River for the year ended
December 31, 2023.
Background/Discussion
The city is required to have an annual independent audit of its financial statements in which the audit firm
issues an opinion on the city’s financial statements.
BerganKDV conducted the city’s audit for the year 2023 and will present a summary of the 2023 financial
report and audit results.
Financial Impact
N/A
Mission/Policy/Goal
Responsible for every dollar - good stewards
Attachments
1. City of Elk River 2023 ACFR - FINAL
2. City of Elk River 2023 CL - FINAL
3. City of Elk River 2023 GAS.UG.LC Reports - FINAL
4. 2023 Elk River Audit Presentation-updated
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CITY OF ELK RIVER
ELK RIVER, MINNESOTA
ANNUAL COMPREHENSIVE
FINANCIAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2023
PREPARED BY:
FINANCE DEPARTMENT
Member of Governmental Finance Officers
Association of the United States and Canada
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City of Elk River, Minnesota
Table of Contents
Page
Introductory Section
Letter of Transmittal 3
Elected Officials and Administration 7
Organizational Chart 9
GFOA Certificate of Achievement for Excellence in Financial Reporting 11
Financial Section
Independent Auditor's Report 15
Management's Discussion and Analysis 19
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 36
Statement of Activities 38
Fund Financial Statements
Governmental Funds
Balance Sheet 40
Reconciliation of the Balance Sheet to the Statement of Net Position 41
Statement of Revenues, Expenditures, and Changes in Fund Balances 42
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances to the Statement of Activities 43
Statement of Revenues, Expenditures, and Changes in Fund Balances
– Budget and Actual – General Fund 45
Proprietary Funds
Statement of Net Position 46
Statement of Revenues, Expenses, and Changes in Net Position 50
Statement of Cash Flows 52
Notes to Basic Financial Statements 57
Required Supplementary Information
Schedule of Changes in Total OPEB Liability and Related Ratios
– Municipal Retirees Health Plan 104
Schedule of City's Proportionate Share of Net Pension Liability
– General Employees Retirement Fund 106
Schedule of City's Proportionate Share of Net Pension Liability
– Public Employees Police and Fire Retirement Fund 107
Schedule of City Contributions – General Employees Retirement Fund 108
Schedule of City Contributions – Public Employees Police and Fire Retirement
Fund 109
Schedule of Changes in Net Pension Liability and Related Ratios
– Elk River Fire Relief Association 110
Schedule of City Contributions – Elk River Fire Relief Association 110
Notes to Required Supplementary Information 113
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds 123
Combining Balance Sheet 124
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 125
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City of Elk River, Minnesota
Table of Contents
Page
Combining and Individual Fund Financial Statements and Schedules (Continued)
Nonmajor Special Revenue Funds
Combining Balance Sheet 126
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 128
Budgeted Special Revenue Funds
Schedule of Revenues, Expenditures, and Changes in Fund Balances
– Budget and Actual
Library 130
Multipurpose Facility 131
Economic Development Authority 133
Nonmajor Capital Projects Funds
Combining Balance Sheet 134
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 138
Nonmajor Debt Service Funds
Combining Balance Sheet 142
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 144
Component Unit Financial Statements
Housing and Redevelopment Authority
Balance Sheet 147
Statement of Revenues, Expenses, and Change in Fund Balance 148
Statistical Section (Unaudited)
Table Page
Financial Trends
Net Position by Component 1 152
Changes in Net Position 2 154
Fund Balances of Governmental Funds 3 158
Changes in Fund Balances of Governmental Funds 4 160
Revenue Capacity
Electric Sales 5 162
Principal Electric Customers 6 163
Tax Capacity, Market Value, and Estimated Value of Taxable Property 7 164
Property Tax Rates – Direct and Overlapping Governments 8 167
Debt Capacity
Principal Property Taxpayers 9 168
Property Tax Levies and Collections 10 169
Ratios of Outstanding Debt by Type 11 170
Ratios of General Bonded Debt Outstanding 12 171
Direct and Overlapping Governmental Activities Debt 13 173
Legal Debt Margin Information 14 174
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City of Elk River, Minnesota
Table of Contents
Table Page
Statistical Section (Unaudited) (Continued)
Debt Capacity (Continued)
Pledged-Revenue Coverage 15 176
Demographic and Economic Information
Demographic and Economic Statistics 16 177
Operating Information
Principal Employers 17 178
Full-Time Equivalent Employees by Function 18 179
Operating Indicators by Function 19 180
Capital Asset Statistics by Function 20 181
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INTRODUCTORY SECTION
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2023
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J
May 13, 2024
Honorable Mayor, Members
of the City Council, and
Citizens of Elk River
Elk River, Minnesota
The Annual Comprehensive Financial Report for the City of Elk River for the fiscal year ended
December 31, 2023, is hereby submitted. Minnesota State Statutes and the City’s ordinance require
an annual audit of the City’s accounts by the Office of the State Auditor or an independent certified
public accountant. The firm of BerganKDV was selected to perform the City’s audit and their
unmodified opinion has been included in this report. The independent auditors’ report is included in
the financial section of this report.
The responsibility for the completeness and accuracy of this data, as well as the fairness of this
presentation including all enclosures, rests with the City. To the best of my knowledge and belief, the
enclosed data are accurate in all material respects and are recorded in a manner designed to present
fairly the financial position and the results of operations of the various funds of the City. To provide a
reasonable basis for making these representations, management has established a comprehensive
internal control framework that is designed to both protect the City’s assets from loss, theft, or
misuse, and to compile sufficient reliable information for the preparation of these financial
statements in accordance with generally accepted accounting principles (GAAP). Because the cost of
internal control should not exceed anticipated benefits, the objective is to provide reasonable but not
absolute assurance that the financial statements are free of any material misstatements.
GAAP requires management to provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This
letter of transmittal is designed to complement the MD&A and should be read in conjunction with it.
The City’s MD&A can be found immediately following the independent auditor’s report.
Profile of the City
Elk River was originally incorporated in 1880 and consolidated with Elk River Township in 1978 to form
a City of roughly 44 square miles. Elk River is the Sherburne County Seat and is located approximately
halfway between the metropolitan areas of Minneapolis/St. Paul and St. Cloud along the Mississippi
River. The City has been growing and will not reach full development in the near future. The current
population is approximately 27,001. Urban services are available to about one-third of the City’s land
area.
Elk River operates as a Statutory Plan A form of government consisting of a four-member City council
and an at-large mayor who is also a voting member. Council members are elected by ward to a four-
year term with two council seats up for election each even year. The mayor is also elected to a four-
year term. The mayor and council are responsible for adopting the City’s budget and tax levy, passing
resolutions and ordinances, all hiring and firing decisions, policy making, development and growth
planning, and overall direction of the City.
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The City provides a full range of services and amenities including police and fire protection, building
safety inspections, planning and zoning, economic development, environmental services, recreation
programming, street and park maintenance, and snow removal. The City also manages municipal
water, sanitary sewer, garbage/recycling, and electric services. Elk River also owns and operates two
municipal off-sale liquor stores, the City library, community event center and over 40 active and
passive parks.
The annual budget serves as the foundation for the City’s financial planning and control. The City
administrator must prepare estimates for an annual budget and submit them to the City council for
approval. The council is required to adopt a final budget by late December for the subsequent year.
The budget is prepared by fund, function (e.g., public works), and department (e.g., streets).
Department directors are allowed to make administrative budget amendments (excluding personal
service and capital outlay) throughout the year if the total department budget does not change and
the amendment is approved by the City administrator and finance manager. Budget amendments to
the total budgeted expenditures require City council approval.
Budget-to-actual comparisons are provided in this report for each individual governmental fund for
which an appropriated annual budget has been adopted. For the General Fund, this comparison is
presented as part of the basic financial statements for the Governmental Funds. For other
Governmental Funds with appropriated annual budgets, this comparison is presented in the
Governmental Fund subsection of this report.
Local Economy
The local economy has continued to grow as indicated by building permits with a construction value of
$105,925,954 issued in 2023. New construction accounts for $53,720,802 and additions/remodels
make up the $52,205,152 balance. In 2022, residential growth was stable as the City issued 93 new
housing permits, slightly less than the 95 permits issued in 2022. Single family homes accounted for 92
of the new permits, in addition to one new multi-family apartment buildings with a total of 52 units.
The average value home decreased to $340,300 from $344,100 in 2022.
The recent market trend shows stable property values on existing properties and new
construction/remodeling. There remains continued interest in both affordable and market rate multi-
family housing projects, as well as protecting property values of the existing housing stock.
Many of Elk River’s employers reported stable employment levels during 2023 and are expected to
remain stable. This is largely due to the diverse industry sectors of manufacturing, retail trade,
government, and health services that drive the local economy within the region. The
commercial/industrial sector has experienced modest growth and the economic outlook in this region
looks promising with recent development projects that should continue to spur tax base growth and
employment.
Long-term Financial Planning
The City has developed a financial management plan that provides a long-range forecast projecting
future expenditures, revenues, and development. The council diligently maintains a level tax rate and
the plan provides the guidance needed to develop and sustain City services while keeping the
property taxes stable. The council reviews and updates the financial management plan annually as
part of the annual budget and Capital Improvement Plan (CIP) process. The CIP is a comprehensive
five-year planning tool that forecasts the City’s capital needs based on the City’s long-range plans,
goals, and policies.
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Relevant Financial Policies
The council has adopted a comprehensive set of Financial Management Policies that provide the basic
framework for the overall fiscal management of the City. The policies provide guidance for revenues,
property taxes, investments, purchasing, financial reporting, reserves, fund balance, capital
investment, and debt. Financial stability requires reserve funds for unanticipated expenditures or
unforeseen emergencies, and adequate working capital for current operating needs to avoid short-
term borrowing. City policy requires the unassigned funds in the General Fund be maintained at not
less than 40-45% of budgeted operating expenditures; however, this may fluctuate with each year’s
budget objectives.
Major Initiatives
Elk River was selected for $157 million state transportation funding to redesign and reconstruct three
miles of Highway 169 which runs north-south through the City. The Highway 169 corridor is an
important arterial route serving commuters, recreational uses, and connecting economic centers in
the state. The project which began in 2022 will convert Highway 169 to a new freeway by removing
five stop lights from the Mississippi River north through Elk River. During 2022, the interchanges at the
north and south ends of the project area were completed. In 2023, two more interchanges were
added. Construction on the final interchange will be done in 2024. When complete, the project will
increase capacity, improve overall traffic flow, and improve accessibility and safety.
The City replaced aging storage buildings at the Youth Athletic Complex and Woodland Trails park in
2023. These new buildings will provide secure space to store equipment that is frequently used at the
parks and save staff time by not having to transport equipment from the Public Works building.
Maintenance on City facilities continues to be a priority and in 2023 the roofs on the public safety
building, City hall and Northbound Liquor were replaced.
Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Elk River for its Annual
Comprehensive Financial Report (ACFR) for the fiscal year ending December 31, 2022. This was the
34th consecutive year the City has received this prestigious award. To be awarded the certificate, a
government must publish an easily readable and efficiently organized ACFR. This report must satisfy
both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. We believe that our current ACFR will
meet the program’s requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate.
The preparation of this report is made possible by the efficient and dedicated services of the entire
staff of the finance division, all City departments, and through the helpful guidance and assistance
from our auditing firm, BerganKDV. Credit must also be given to the mayor and City council for their
diligence and resolve in maintaining high standards in the financial management of the City.
Respectfully submitted,
Lori Stich
Finance Manager
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City of Elk River, Minnesota
Elected Officials and Administration
December 31, 2023
Elected Officials Position Term Expires
John Dietz Mayor December 31, 2026
Cory Grupa Council Member December 31, 2026
Matthew Westgaard Council Member December 31, 2024
Mike Beyer Council Member December 31, 2024
Jennifer Wagner Council Member December 31, 2026
Administration Position
Calvin Portner City Administrator
Joe Stremcha Assistant City Administrator/Business Services Director
Ron Nierenhausen Chief of Police
Mark Dickinson Fire Chief
Zachary Carlton Community Development Director
Justin Femrite Public Works Director/Chief Engineer
Suzanne Fischer Environmental & Special Projects Director
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FINANCIAL SECTION
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2023
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Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Elk River
Elk River, Minnesota
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, and the aggregate remaining
fund information of the City of Elk River, as of and for the year ended December 31, 2023, and the
related notes to the basic financial statements, which collectively comprise the City's basic financial
statements as listed in the Table of Contents.
In our opinion, based on our report and the report of other auditors, the accompanying financial
statements present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, the discretely presented component unit, each
major fund, and the aggregate remaining fund information of the City of Elk River, as of
December 31, 2023, and the respective changes in financial position and, where applicable, cash
flows thereof, and the budgetary comparison for the General Fund for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America (GAAS) 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
The City of Elk River's 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, which raise substantial doubt about the City's
ability to continue as a going concern for twelve months beyond the financial statement date,
including any currently known information that may raise substantial doubt shortly thereafter.
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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 GAAS 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 GAAS 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.
Our responsibility is to express opinions on these financial statements based on our audit. We did not
audit the financial statements of the Electric and Water proprietary funds, which represent 68% of
the assets and deferred outflows, 61% of the net position, and 77% of the revenues of the proprietary
funds and business-type activities. Those financial statements were audited by other auditors whose
report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts
included for the proprietary funds and business-type activities, is based solely on the report of the
other auditors.
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Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis, which follows this report letter, and Required Supplementary
Information 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 (GASB), who
considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the Required Supplementary Information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency with
management's responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We do not express an opinion or provide
any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Elk River's basic financial statements. The accompanying
supplementary information identified in the Table of Contents is presented for purposes of additional
analysis and are not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial
statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the accompanying supplementary information is 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 Comprehensive Financial
Report. The other information comprises the introductory and statistical 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.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 13,
2024, on our consideration of the City of Elk River's internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and 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 internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards in considering the City's internal control over financial reporting and compliance.
Minneapolis, Minnesota
May 13, 2024
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City of Elk River
Management’s Discussion and Analysis
As management of the City of Elk River, Minnesota (the City), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City for the fiscal
year ended December 31, 2023. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in our letter of transmittal, which
can be found starting on page 3 of this report.
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 $253,740,871 (net position).
Of this amount, $52,639,649 (unrestricted net position) may be used to meet the City’s ongoing
obligations to citizens and creditors.
The net position of business-type activities increased by $5,728,390 and net position of the
governmental activities increased by $2,696,722. This resulted in a total net position increase
of $8,425,112 for the City.
As of the close of the current fiscal year, the City’s governmental funds reported combined
ending fund balances of $42,785,245, an increase of $263,062 from the prior year.
At the end of the current fiscal year, unassigned fund balance for the General Fund was
$9,240,805. The City’s policy is to maintain a minimum of 40-45% of the following year’s budget
in unassigned fund balance. At year end, the unassigned fund balance is 43% of the 2024
budgeted General Fund expenditures.
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 comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the basic financial statements.
This report also contains other supplemental information in addition to the basic financial
statements themselves.
The financial statements also include notes that explain some of the information in the financial
statements and provide more detailed data. The statements are followed by a section of “combining
and individual fund financial statements and schedules” that further explains and supports the
information in the financial statements. Figure 1 shows how the required parts of this annual report
are arranged and relate to one another. In addition to these required elements, we have included a
section with “combining and individual fund financial statements and schedules” that provide details
about nonmajor governmental funds, which are added together and presented in a single column for
governmental activities in the basic governmental financial statements.
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City of Elk River
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)
The following chart shows how the various parts of this annual report are arranged and related to
one another:
Figure 1
Required Components of the City’s Annual Financial Report
Figure 2 summarizes the major features of the City’s financial statements, including the portion of
the City government they cover and the types of information they contain. The remainder of this
overview section of management’s discussion and analysis explains the structure and contents of
each of the statements.
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City of Elk River
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)
Figure 2
Major Features of the Government-wide and Fund Financial Statements
Fund Financial Statements
Government-Wide
Statements
Governmental Funds
Proprietary Funds
Scope Entire City government
and the City’s
component units
The activities of the City that
are not proprietary or
fiduciary, such as police, fire
and parks
Activities the City operates
similar to private businesses,
such as the water and sewer
system
Required
financial
statements
Statement of Net
Position
Statement of
Activities
Balance Sheet
Statement of Revenues,
Expenditures and Changes
in Fund Balances
Statement of Net Position
Statement of Revenues,
Expenses and Changes in
Net Position
Statement of Cash Flows
Accounting basis
and
measurement
focus
Accrual accounting and
economic resources
focus
Modified accrual accounting
and current financial
resources focus
Accrual accounting and
economic resources focus
Type of
asset/liability
information
All assets and liabilities,
both financial and
capital, and short-term
and long-term
Only assets expected to be
used up and liabilities that
come due during the year or
soon thereafter; no capital
assets included
All assets and liabilities,
both financial and capital,
and short-term and long-
term
Type of
deferred
outflows/inflow
s of resources
information
All deferred
outflows/inflows of
resources, regardless of
when cash is received or
paid
Only deferred outflows of
resources expected to be
used up and deferred inflows
of resources that come due
during the year or soon
thereafter; no capital assets
included
All deferred
outflows/inflows of
resources, regardless of
when cash is received or
paid
Type of
inflow/outflow
information
All revenues and
expenses during year,
regardless of when cash
is received or paid
Revenues for which cash is
received during or soon after
the end of the year;
expenditures when goods or
services have been received
and payment is due
during the year or soon
thereafter
All revenues and expenses
during the year, regardless
of when cash is received or
paid
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City of Elk River
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)
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.
The Statement of Net Position presents information on all of the City’s assets and deferred outflows of
resources and liabilities and deferred inflows of resources, with the difference between the four
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 revenue (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, community development, and
interest on long-term debt. The business-type activities of the City include municipal liquor, sewer,
garbage, storm water, electric, and water utilities.
The government-wide financial statements include not only the City itself (known as the primary
government), but also a legally separate Housing and Redevelopment Authority (HRA) which are
backed by the full faith and credit of the City of Elk River. Financial information for this component
unit is discretely presented for the primary government.
The government-wide financial statements start on page 36 of 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 three categories:
governmental funds, proprietary funds, and fiduciary 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 government’s
near-term financing requirements.
Page 143 of 464
23
City of Elk River
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)
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 by the government’s near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund statement
of revenues, expenditures and changes in fund balances (deficits) provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City maintains several individual governmental funds, five of which are Debt Service funds.
Information is presented separately in the governmental fund balance sheet and in the governmental
fund statement of revenues, expenditures, and changes in fund balances for the General Fund and
Pavement Management, which are considered to be 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 is provided in the form of combining statements or schedules
elsewhere in this report.
The City adopts an annual appropriated budget for its General, Library, Multipurpose Facility, and
Economic Development Funds. A budgetary comparison statement or schedule has been provided for
these funds to demonstrate compliance with this budget.
The basic governmental fund financial statements start on page 40 of this report.
Proprietary Funds. The City maintains one type 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 liquor, sewer, garbage, storm water,
electric, and water operations.
Proprietary funds provide the same type of information as the government-wide financial
statements, only in more detail. The proprietary funds financial statements provide separate
information for each of the enterprise funds which are considered to be major funds of the City.
The basic proprietary funds financial statements start on page 46 of this report.
Notes to the Basic Financial Statements. The notes 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 start on page 57 of this report.
Required Supplementary Information. In addition to the basic financial statements and
accompanying notes, this report also presents certain Required Supplementary Information
concerning the City of Elk River’s share of net pension liabilities for defined benefit plans, schedule
of contributions, and progress in funding its obligation to provide pension and other postemployment
benefits to its employees. Required Supplementary Information can be found starting on page 104 of
this report.
Page 144 of 464
24
City of Elk River
Management’s Discussion and Analysis
OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)
Other Information. The combining statements referred to earlier in connection with nonmajor
governmental funds are presented following the notes to the financial statements. Combining and
individual fund financial statements and schedules start on page 123 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial
position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred
inflows by $253,740,871 at the close of the most recent fiscal year.
By far, the largest portion of the City’s net position (72.4%) reflects its investment in capital assets
(e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets
that are still outstanding. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City’s investment in
its capital assets is reported net of related debt , it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be
used to liquidate these liabilities.
Page 145 of 464
25
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
City of Elk River’s Summary of Net Position
2023 2022
Increase
(Decrease)2023 2022
Increase
(Decrease)
Assets
Current and other assets 52,338,622$ 52,094,579$ 244,043$ 53,501,629$ 53,468,950$ 32,679$
Capital assets 144,232,117 144,536,694 (304,577) 134,870,351 131,672,213 3,198,138
Total assets 196,570,739 196,631,273 (60,534) 188,371,980 185,141,163 3,230,817
Deferred Outflows of Resources
Deferred OPEB resources 80,414 81,827 (1,413) 10,052 11,058 (1,006)
Deferred pension resources 10,565,477 12,666,297 (2,100,820) 1,081,073 1,866,126 (785,053)
Total deferred outflows of resources 10,645,891 12,748,124 (2,102,233) 1,091,125 1,877,184 (786,059)
Liabilities
Other liabilities 9,322,393 9,773,646 (451,253) 9,326,634 10,166,258 (839,624)
Noncurrent liabilities 67,468,390 81,137,474 (13,669,084) 40,379,748 43,707,769 (3,328,021)
Total liabilities 76,790,783 90,911,120 (14,120,337) 49,706,382 53,874,027 (4,167,645)
Deferred Inflows of Resources
Deferred OPEB resources 152,862 107,304 45,558 19,107 14,500 4,607
Deferred pension resources 10,043,971 750,069 9,293,902 1,290,188 83,351 1,206,837
Deferred lease resources 150,894 229,506 (78,612) 4,784,677 5,112,108 (327,431)
Total deferred inflows of resources 10,347,727 1,086,879 9,260,848 6,093,972 5,209,959 884,013
Net Position
Net investment in capital assets 86,306,541 83,281,488 3,025,053 97,325,836 93,539,999 3,785,837
Restricted 15,689,829 9,676,717 6,013,112 1,779,016 1,779,016 -
Unrestricted 18,081,750 24,423,193 (6,341,443) 34,557,899 32,615,346 1,942,553
Total net position 120,078,120$ 117,381,398$ 2,696,722$ 133,662,751$ 127,934,361$ 5,728,390$
Governmental Activities Business-Type Activities
An additional portion of the City’s net position (6.9%) represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net position
(20.7%) may be used to meet the City’s ongoing obligations to citizens and creditors.
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 City as a whole, as well as for its separate governmental and
business-type activities. The same situation held true for the prior fiscal year.
Governmental Activities. Governmental activities increased the City’s net position by $2,696,722,
thereby accounting for 32.0% of the growth in the net position of the City. Key elements of this
change are as follows.
Page 146 of 464
26
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
Governmental Activities (Continued)
City of Elk River’s Changes in Net Position
2023 2022
Increase
(Decrease)2023 2022
Increase
(Decrease)
Revenues
Program revenues
Charges for services 4,149,080$ 3,805,379$ 343,701$ 62,761,120$ 61,806,702$ 954,418$
Operating grants
and contributions 2,553,557 1,905,073 648,484 - - -
Capital grants and
contributions 3,843,438 8,005,633 (4,162,195) 1,583,273 8,149,583 (6,566,310)
General revenues
Property taxes 16,077,123 15,250,309 826,814 - - -
Franchise and gravel taxes 1,712,109 1,722,678 (10,569) - - -
Sales taxes 3,810,301 3,862,154 (51,853) - - -
Grants and contributions not restricted 1,217,658 734,932 482,726 - - -
Unrestricted investment earnings 2,233,568 (2,079,797) 4,313,365 1,177,123 (1,947,278) 3,124,401
Gain on disposal
of capital assets 805,210 108,455 696,755 58,346 32,788 25,558
Miscellaneous revenues 539,436 537,061 2,375 - - -
Total revenues 36,941,480 33,851,877 3,089,603 65,579,862 68,041,795 (2,461,933)
Expenses
General government 5,993,465 5,180,758 812,707 - - -
Public safety 12,082,411 11,558,469 523,942 - - -
Public works 6,469,657 8,498,158 (2,028,501) - - -
Culture and recreation 7,261,458 6,139,661 1,121,797 - - -
Economic development 685,115 527,673 157,442 - - -
Interest and fiscal charges 1,506,222 1,615,250 (109,028) - - -
Municipal liquor - - - 7,342,192 7,785,027 (442,835)
Sewer - - - 3,970,547 3,759,165 211,382
Garbage - - - 1,702,811 1,670,454 32,357
Storm water - - - 980,969 663,420 317,549
Electric - - - 42,868,962 43,262,804 (393,842)
Water - - - 3,232,421 3,208,929 23,492
Total expenses 33,998,328 33,519,969 478,359 60,097,902 60,349,799 (251,897)
Increase in Net
Assets before transfers 2,943,152 331,908 2,611,244 5,481,960 7,691,996 (2,210,036)
Transfers (246,430) 2,885,633 (3,132,063) 246,430 (2,885,633) 3,132,063
Changes in Net Position 2,696,722 3,217,541 (520,819) 5,728,390 4,806,363 922,027
Net position, January 1 117,381,398 114,163,857 3,217,541 127,934,361 123,127,998 4,806,363
Net position, December 31 120,078,120$ 117,381,398$ 2,696,722$ 133,662,751$ 127,934,361$ 5,728,390$
Governmental Activities Business-Type Activities
Property taxes represent approximately 43.5% of total revenues in 2023 in governmental
activities.
The largest revenue variance was an increase in unrestricted investment income due to the
increase of market value of investments held by the City.
The largest expense variance was a decrease in the public works function as a result of capital
project work that was completed in 2022.
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27
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
Governmental Activities (Continued)
The following graph depicts various governmental activities and shows the revenues and expenses
directly related to those activities.
General
Government Public Safety Public Works
Culture and
Recreation
Economic
Development
Interest and
Fiscal
Charges
Expenses $5,993,465 $12,082,411 $6,469,657 $7,261,458 $685,115 $1,506,222
Program revenues 970,789 3,136,804 4,128,599 2,094,793 215,090 -
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
Expenses and Program Revenues - Governmental Activities
Page 148 of 464
28
City of Elk River
Management’s Discussion and Analysis
Revenues by Source – Governmental Activities
Charges for Services
11.23%
Operating Grants and
Contributions
6.91%
Capital Grants and
Contributions
10.40%
Property Taxes
43.52%
Franchise and
Gravel Taxes
4.63%
Sales Taxes
10.31%
Grants and
Contributions
Unrestricted
3.30%
Unrestricted
Investment Earnings
6.05%
Sale of Capital Assets
2.18%Miscellaneous
Revenues
1.46%
Page 149 of 464
29
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
Business-type Activities. Business-type activities increased the City’s net position by $5,728,390
primarily due to the operating income of the Electric Fund. Elements of the increase are as follows:
Municipal
Liquor Sewer Garbage
Storm
Water Electric Water
Expenses $7,342,192 $3,970,547 $1,702,811 $980,969 $42,868,962 $3,232,421
Program revenues 7,978,894 3,614,557 1,920,516 905,891 45,868,744 4,055,791
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
Expenses and Program Revenues - Business-Type Activities
Page 150 of 464
30
City of Elk River
Management’s Discussion and Analysis
Charges for
Services
95.79%
Capital Grants and
Contributions
2.42%
Unrestricted Investment
Earnings
1.80%
Revenues by Source - Business-Type Activities
Page 151 of 464
31
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
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, unrestricted fund balance may serve as a useful
measure of a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending
fund balances of $42,785,245, an increase of $263,062 in comparison with the prior year.
Approximately 18% of this total amount ($7,596,889) constitutes unassigned fund balance, which is
available for spending at the City’s discretion. The remainder of fund balance ($35,188,356) is not
available for new spending because it is either 1) nonspendable ($214,251), 2) restricted
($15,918,585), 3) committed ($7,291,361), or 4) assigned ($11,764,159) for the purposes described in
the fund balance section of each balance sheet.
Increase
2023 2022 (Decrease)
General 9,323,318$ 8,888,888$ 434,430$
Pavement Management 3,273,427$ 6,274,764$ (3,001,337)$
The Pavement Management Fund is a major capital projects
fund with a total fund balance of $3,273,427. Fund balance
decreased $3,001,337 from 2022 due to increased street
improvement projects during the year.
Fund Balance December 31,
Major Funds
The General Fund is the chief operating fund of the City.
The General Fund had an increase in fund balance of
$434,430. The fund had net transfers of $2,728,500
during the year, which contributed to the increase.
Proprietary Funds. The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail. Unrestricted net position of the
enterprise funds at the end of the year amounted to $34,557,899. The total increase in net position
for the funds was $5,728,390.
General Fund Budgetary Highlights
The City’s General Fund budget was not amended during the year. The budget called for no change
in fund balance. The General Fund had an actual increase of $434,430 in 2023. Some of the larger
variances are as follows:
Revenues were over budget by $163,036 with charges for services revenue being over budget by
$83,608. Investment income was over budget by $82,618.
Expenditures were under budget by $271,394, in part due to culture and recreation being under
budget by $233,797 based on salaries and benefits coming in under anticipated amounts.
Page 152 of 464
32
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
Capital Asset and Debt Administration
Capital Assets. The City’s investment in capital assets for its governmental and business-type
activities as of December 31, 2023, amounts to $279,102,468 (net of accumulated depreciation). This
investment in capital assets includes land, structures, improvements, machinery and equipment,
park facilities, roads, highways and bridges.
Major capital asset events during the current fiscal year included the following:
Reroof of city hall, Northbound liquor store, and public safety facility
Construction in progress of Rolling Hills sewer extension
Purchases of vehicles
Purchase of new Zamboni ice resurfacer
Various street improvement projects
City of Elk River’s Capital Assets
(Net of Accumulated Depreciation)
2023 2022
Increase
(Decrease)2023 2022
Increase
(Decrease)
Land 38,838,959$ 38,838,959$ -$ 1,965,026$ 1,965,026$ -$
Construction in progress 20,000 1,913,782 (1,893,782) 3,828,700 2,351,587 1,477,113
Buildings 55,397,058 56,533,406 (1,136,348) 27,466,772 27,401,128 65,644
Improvements other than buildings 9,006,154 9,567,471 (561,317) 142,755 158,677 (15,922)
Equipment 8,370,431 7,743,980 626,451 7,186,638 7,005,001 181,637
Infrastructure 32,305,395 29,530,007 2,775,388 69,985,042 68,750,797 1,234,245
Intangible assets - - - 24,262,932 23,997,909
Leased equipment 294,120 409,089 (114,969) 32,486 42,088 (9,602)
Total 144,232,117$ 144,536,694$ (304,577)$ 134,870,351$ 131,672,213$ 2,933,115$
Governmental Activities Business-Type Activities
Additional information on the City’s capital assets can be found in Note 8 starting on page 73 of this
report.
Page 153 of 464
33
City of Elk River
Management’s Discussion and Analysis
GOVERNMENT-WIDE FINANCIAL ANALYSIS (CONTINUED)
Capital Asset and Debt Administration (Continued)
Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of
$89,455,000. While all of the City’s bonds have revenue streams, they are also all backed by the full
faith and credit of the City.
City of Elk River’s Outstanding Debt
2023 2022
Increase
(Decrease)2023 2022
Increase
(Decrease)
General obligation bonds 23,685,000$ 25,760,000$ (2,075,000)$ -$ -$ -$
General obligation revenue bonds 29,625,000 30,515,000 (890,000) 8,185,000 8,765,000 (580,000)
Revenue bonds - - - 27,960,000 28,875,000 (915,000)
Total 53,310,000$ 56,275,000$ (2,965,000)$ 36,145,000$ 37,640,000$ (1,495,000)$
Governmental Activities Business-Type Activities
The City’s bond rating is AA+ from Standard and Poor’s. Additional information on the City’s long-
term debt can be found in Note 9 starting on page 76 of this report.
Economic Factors and Next Year’s Budgets and Rates
The City of Elk River estimates that the demand for City services will continue at stable growth
levels due to the economic environment and the outlook of recent building activity. This was taken
into consideration in preparation of the City’s 2024 budget. The property tax levy is set annually and
is adjusted as necessary to fund the cost of providing services to our citizens and customers. Charges
for services are evaluated each year and adjusted if warranted. The City expects to keep the tax levy
consistent in upcoming years.
Requests for Information
This financial report is 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 finance
department, City of Elk River, 13065 Orono Pkwy, Elk River, Minnesota 55330 or by calling 763-635-
1000.
Page 154 of 464
34
Page 155 of 464
35
BASIC FINANCIAL STATEMENTS
Page 156 of 464
See notes to basic financial statements. 36
Primary Government
Governmental
Activities
Business-Type
Activities Total
Housing and
Redevelopment
Authority
Assets
Cash and investments 44,524,699$ 40,880,486$ 85,405,185$ 821,348$
Restricted cash - 1,779,016 1,779,016 -
Taxes receivable 1,068,315 - 1,068,315 10,424
Accounts receivable 713,845 2,518,344 3,232,189 1,917
Interest receivable 205,725 132,897 338,622 -
Notes and loans receivable 1,230,006 - 1,230,006 562,108
Leases receivable 150,894 4,968,455 5,119,349 -
Special assessments receivable 1,143,117 465,215 1,608,332 -
Due from other governments 2,657,701 - 2,657,701 -
Due from primary government - - - 161,823
Due from component unit 8,469 - 8,469 -
Internal balances 138,940 (138,940) - -
Inventory - 2,675,346 2,675,346 -
Land held for resale 175,000 - 175,000 382,000
Prepaid items 214,251 220,810 435,061 -
Pension asset 107,660 - 107,660 -
Capital assets not
being depreciated
Land 38,838,959 1,965,026 40,803,985 315,900
Construction in progress 20,000 3,828,700 3,848,700 -
Capital assets being depreciated/amortized
Buildings and building improvements 81,818,173 41,406,580 123,224,753 -
Improvements other
than buildings 15,175,353 266,259 15,441,612 174,290
Infrastructure 82,670,355 - 82,670,355 -
Collection and distribution systems - 147,904,911 147,904,911 -
Intangible assets - 27,769,490 27,769,490 -
Equipment and furniture 19,798,937 13,519,301 33,318,238 -
Leased equipment 507,518 48,008 555,526 -
Less accumulated depreciation/amortization (94,597,178) (101,837,924) (196,435,102) (128,781)
Total assets 196,570,739 188,371,980 384,942,719 2,301,029
Deferred Outflows of Resources
Deferred outflows of resources
related to OPEB 80,414 10,052 90,466 -
Deferred outflows of resources
related to pensions 10,565,477 1,081,073 11,646,550 14,392
Total deferred outflows
of resources 10,645,891 1,091,125 11,737,016 14,392
Total assets and deferred
outflows of resources 207,216,630$ 189,463,105$ 396,679,735$ 2,315,421$
Component Unit
City of Elk River
Statement of Net Position
December 31, 2023
Page 157 of 464
See notes to basic financial statements. 37
Primary Government
Governmental
Activities
Business-Type
Activities Total
Housing and
Redevelopment
Authority
Liabilities
Accounts payable 2,297,022$ 4,659,711$ 6,956,733$ 27$
Salaries and benefits payable 529,932 356,608 886,540 3,476
Contracts and deposits payable 311,252 1,196,691 1,507,943 -
Due to other governments 30,893 249,841 280,734 -
Due to primary government - - - 8,469
Due to component unit 161,823 - 161,823 -
Unearned revenue 2,138,861 290,620 2,429,481 -
Interest payable
Payable within one year 343,457 409,714 753,171 -
Compensated absences payable
Payable within one year 917,398 610,843 1,528,241 -
Payable after one year 1,075,480 62,879 1,138,359 -
Total OPEB liability
Payable within one year 73,127 8,125 81,252 -
Payable after one year 661,416 83,693 745,109 -
Lease liability
Payable within one year 113,628 9,481 123,109 -
Payable after one year 181,506 23,198 204,704 -
Net bonds payable
Payable within one year 2,405,000 1,535,000 3,940,000 -
Payable after one year 55,225,442 36,009,515 91,234,957 -
Net pension liability
Payable after one year 10,324,546 4,200,463 14,525,009 53,256
Total liabilities 76,790,783 49,706,382 126,497,165 65,228
Deferred Inflows of Resources
Deferred inflows of resources
related to OPEB 152,862 19,107 171,969 -
Deferred inflows of resources
related to pensions 10,043,971 1,290,188 11,334,159 16,314
Deferred inflows of resources
related to leases 150,894 4,784,677 4,935,571 -
Total deferred inflows
of resources 10,347,727 6,093,972 16,441,699 16,314
Net Position
Net investment in capital assets 86,306,541 97,325,836 183,632,377 361,409
Restricted for
Fiscal recovery 147,725 - 147,725 -
Public safety 1,152,060 - 1,152,060 -
Parks and recreation improvements 1,773,916 - 1,773,916 -
Capital projects 902,987 - 902,987 -
Economic development 1,668,171 - 1,668,171 -
Debt service 9,001,361 1,779,016 10,780,377 -
Pensions 107,660 - 107,660 -
Landfill mitigation 935,949 - 935,949 -
Housing and redevelopment - - - 1,872,470
Unrestricted 18,081,750 34,557,899 52,639,649 -
Total net position 120,078,120 133,662,751 253,740,871 2,233,879
Total liabilities, deferred
inflows of resources, and
net position 207,216,630$ 189,463,105$ 396,679,735$ 2,315,421$
Component Unit
City of Elk River
Statement of Net Position
December 31, 2023
Page 158 of 464
See notes to basic financial statements. 38
Program Revenues
Expenses
Charges for
Services
Operating
Grants and
Contributions
Capital Grants
and
Contributions
Primary government
Governmental activities
General government 5,993,465$ 926,657$ 44,132$ -$
Public safety 12,082,411 1,267,373 1,869,431 -
Public works 6,469,657 88,288 481,359 3,558,952
Culture and recreation 7,261,458 1,745,735 64,572 284,486
Economic development 685,115 121,027 94,063 -
Interest and fiscal charges 1,506,222 - - -
Total governmental activities 33,998,328 4,149,080 2,553,557 3,843,438
Business-type activities
Municipal liquor 7,342,192 7,978,894 - -
Sewer 3,970,547 2,774,077 - 840,480
Garbage 1,702,811 1,920,516 - -
Storm water 980,969 905,891 - -
Electric 42,868,962 45,379,292 - 489,452
Water 3,232,421 3,802,450 - 253,341
Total business-type activities 60,097,902 62,761,120 - 1,583,273
Total primary governmental 94,096,230$ 66,910,200$ 2,553,557$ 5,426,711$
Component Unit
Housing and Redevelopment Authority 286,876$ -$ 236$ -$
General revenues
Property taxes
Franchise and gravel taxes
Sales taxes
Grants and contributions not restricted to specific programs
Unrestricted investment income
Gain on sale of assets
Miscellaneous revenues
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning
Net position - ending
Functions/Programs
City of Elk River
Statement of Activities
Year Ended December 31, 2023
Page 159 of 464
39
Primary Component Unit
Governmental
Activities
Business-Type
Activities Total
Housing and
Redevelopment
Authority
(5,022,676)$ -$ (5,022,676)$ -$
(8,945,607) - (8,945,607) -
(2,341,058) - (2,341,058) -
(5,166,665) - (5,166,665) -
(470,025) - (470,025) -
(1,506,222) - (1,506,222) -
(23,452,253) - (23,452,253) -
- 636,702 636,702 -
- (355,990) (355,990) -
- 217,705 217,705 -
- (75,078) (75,078) -
- 2,999,782 2,999,782
- 823,370 823,370
- 4,246,491 4,246,491 -
(23,452,253) 4,246,491 (19,205,762) -
- - - (286,640)
16,077,123 - 16,077,123 394,515
1,712,109 - 1,712,109 -
3,810,301 - 3,810,301 -
1,217,658 - 1,217,658 -
2,233,568 1,177,123 3,410,691 7,652
805,210 58,346 863,556 -
539,436 - 539,436 -
(246,430) 246,430 - -
26,148,975 1,481,899 27,630,874 402,167
2,696,722 5,728,390 8,425,112 115,527
117,381,398 127,934,361 245,315,759 2,118,352
120,078,120$ 133,662,751$ 253,740,871$ 2,233,879$
Net (Expense) Revenues and Changes in Net Position
Page 160 of 464
See notes to basic financial statements. 40
General Fund
Pavement
Management
Nonmajor
Governmental
Funds
Total
Governmental
Funds
Assets
Cash and investments 9,243,274$ 3,342,219$ 31,939,206$ 44,524,699$
Taxes receivable 363,035 - 705,280 1,068,315
Accounts receivable 15,666 147,740 550,439 713,845
Interest receivable 49,729 19,324 136,672 205,725
Notes and loans receivable - - 1,230,006 1,230,006
Leases receivable - - 150,894 150,894
Special assessments receivable
Delinquent - - 17,762 17,762
Deferred - 8,568 1,116,787 1,125,355
Due from other funds 388,063 262,257 988,218 1,638,538
Due from other governments 65,571 2,565,750 26,380 2,657,701
Due from component unit 8,469 - - 8,469
Advances to other funds - - 200,000 200,000
Land held for resale - - 175,000 175,000
Prepaid items 82,513 - 131,738 214,251
Total assets 10,216,320$ 6,345,858$ 37,368,382$ 53,930,560$
Liabilities
Accounts payable 286,556$ 289,702$ 1,720,764$ 2,297,022$
Salaries and benefits payable 486,480 - 43,452 529,932
Contracts and deposits payable - 208,411 102,841 311,252
Due to other funds - - 1,499,598 1,499,598
Due to other governments 15,976 - 14,917 30,893
Due to component unit - - 161,823 161,823
Advances from other funds - - 200,000 200,000
Unearned revenue - 2,138,861 2,138,861
Total liabilities 789,012 498,113 5,882,256 7,169,381
Deferred Inflows of Resources
Unavailable revenue - property taxes 103,990 - 15,086 119,076
Unavailable revenue - special assessments - 8,568 1,131,646 1,140,214
Unavailable revenue - other - 2,565,750 - 2,565,750
Deferred inflow related to leases receivable - - 150,894 150,894
Total deferred inflows of resources 103,990 2,574,318 1,297,626 3,975,934
Fund Balances
Nonspendable 82,513 - 131,738 214,251
Restricted - - 15,918,585 15,918,585
Committed - 3,273,427 4,017,934 7,291,361
Assigned - - 11,764,159 11,764,159
Unassigned 9,240,805 - (1,643,916) 7,596,889
Total fund balances 9,323,318 3,273,427 30,188,500 42,785,245
Total liabilities, deferred inflows
of resources, and fund balances 10,216,320$ 6,345,858$ 37,368,382$ 53,930,560$
City of Elk River
Balance Sheet - Governmental Funds
December 31, 2023
Page 161 of 464
See notes to basic financial statements. 41
Total fund balances - governmental funds 42,785,245$
Capital assets used in governmental activities are not current financial resources and, therefore,
are not reported as assets in governmental funds.
Cost of capital assets 238,829,295
Less accumulated depreciation/amortization (94,597,178)
Long-term liabilities, including bonds payable, are not due and payable in the current period and,
therefore, are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
Bond principal payable (53,310,000)
Revenue bonds payable
Unamortized bond premiums/discounts (4,320,442)
Lease liability (295,134)
Compensated absences payable (1,992,878)
Total OPEB liability (734,543)
Net pension liability (10,324,546)
Net pension asset 107,660
Delinquent receivables will be collected in subsequent years, but are not available soon enough
to pay for the current period's expenditures and, therefore, are deferred in the funds.
Property taxes 119,076
Deferred outflows of resources and deferred inflows of resources are created as a result of
various differences related to pensions and OPEB that are not recognized in the governmental
funds.
Deferred inflows of resources related to pensions (10,043,971)
Deferred outflows of resources related to pensions 10,565,477
Deferred outflows of resources related to OPEB 80,414
Deferred inflows of resources related to OPEB (152,862)
Revenues in the Statement of Activities that do not provide current financial resources are not
reported as revenues in the funds.
Deferred special assessments 1,140,214
State shared taxes 2,565,750
Governmental funds do not report a liability for accrued interest on long-term debt until due and
payable. (343,457)
120,078,120$
City of Elk River
the Statement of Net Position - Governmental Funds
Reconciliation of the Balance Sheet to
Amounts reported for governmental activities in the Statement of Net Position are different because:
Total net position - governmental activities
December 31, 2023
Page 162 of 464
See notes to basic financial statements. 42
General Fund
Pavement
Management
Nonmajor
Governmental
Funds
Total
Governmental
Funds
Revenues
Property taxes 13,785,282$ -$ 2,493,822$ 16,279,104$
Sales taxes - - 3,810,301 3,810,301
Other taxes 156,365 1,555,744 - 1,712,109
Special assessments - - 224,426 224,426
Licenses and permits 976,260 - - 976,260
Intergovernmental 706,917 768,365 2,525,536 4,000,818
Charges for services 1,247,308 - 1,820,795 3,068,103
Fines and forfeitures 169,910 - - 169,910
Other revenue
Investment income 202,618 655,353 1,375,597 2,233,568
Contributions and donations - - 275,685 275,685
Refunds and reimbursements 188,548 17,931 200,088 406,567
Landfill expansion fee - - 2,193,833 2,193,833
Miscellaneous revenue 54,828 - 128,052 182,880
Total revenues 17,488,036 2,997,393 15,048,135 35,533,564
Expenditures
Current
General government 4,908,703 - 246,936 5,155,639
Public safety 9,696,200 - 93,273 9,789,473
Public works 2,630,313 - 71,120 2,701,433
Culture and recreation 2,432,803 - 2,278,714 4,711,517
Economic development - - 580,422 580,422
Capital outlay
General government - - 1,450,553 1,450,553
Public safety 3,830 - 1,212,445 1,216,275
Public works - 5,998,730 1,769,775 7,768,505
Culture and recreation - - 974,439 974,439
Economic development - - 85,709 85,709
Debt service
Principal 105,484 - 2,972,213 3,077,697
Interest and other charges 4,773 - 1,791,155 1,795,928
Total expenditures 19,782,106 5,998,730 13,526,754 39,307,590
Excess of revenues over (under) expenditures (2,294,070) (3,001,337) 1,521,381 (3,774,026)
Other Financing Sources (Uses)
Proceeds from sale of capital asset - - 805,210 805,210
Transfers in 3,165,000 - 1,829,167 4,994,167
Transfers out (436,500) - (1,325,789) (1,762,289)
Total other financing sources (uses) 2,728,500 - 1,308,588 4,037,088
Net change in fund balances 434,430 (3,001,337) 2,829,969 263,062
Fund Balances
Beginning of year 8,888,888 6,274,764 27,358,531 42,522,183
End of year 9,323,318$ 3,273,427$ 30,188,500$ 42,785,245$
City of Elk River
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds
Year Ended December 31, 2023
Page 163 of 464
See notes to basic financial statements. 43
263,062$
Capital outlays are reported in governmental funds as expenditures. However, in the Statement
of Activities, the cost of those assets is allocated over the estimated useful lives as depreciation
expense.
Capital outlays 9,291,684
Depreciation/amortization expense (7,466,896)
Completed CIP transferred to enterprise funds (2,129,365)
Some expenses are recognized as paid in the governmental funds but recognized as the expense is
incurred in the Statement of Activities.
Compensated absences payable (126,448)
Total other post employment benefits (OPEB) liability 13,399
Principal payments on long-term debt are recognized as expenditures in the governmental funds
but as an increase in the net position in the Statement of Activities.
Bond principal payments 2,965,000
Lease principal payments 112,697
Governmental funds report the effects of bond premiums and discounts when debt is first issued,
whereas these amounts are deferred and amortized in the Statement of Activities. 251,933
Interest on long-term debt in the Statement of Activities differs from the amount reported in the
governmental funds because interest is recognized as an expenditure in the funds when it is due
and thus requires use of current financial resources. In the Statement of Activities, however,
interest expense is recognized as the interest accrues, regardless of when it is due. 37,773
Governmental funds recognize pension contributions as expenditures at the time of payment
whereas the Statement of Activities factors in items related to pensions on a full accrual
perspective.
Pension expense (1,102,930)
Revenues in the Statement of Activities that do not provide current financial resources are not
reported as revenues in the funds.
State shared taxes 966,427
Certain revenues are recognized as soon as they are earned. Under the modified accrual basis of
accounting certain revenues cannot be recognized until they are available to liquidate liabilities
of the current period.
Property taxes (201,981)
Special assessments (177,633)
2,696,722$
Expenditures, and Changes in Fund Balances to the
City of Elk River
Reconciliation of the Statement of Revenues,
Statement of Activities - Governmental Funds
Change in net position - governmental activities
Total change in fund balances - governmental funds
Amounts reported for governmental activities in the Statement of Activities are different because:
Year Ended December 31, 2023
Page 164 of 464
44
Page 165 of 464
See notes to basic financial statements. 45
City of Elk River
Statement of Revenues, Expenditures, and
Changes in Fund Balances -
Budget and Actual - General Fund
Year Ended December 31, 2023
Original Final
Revenues
Property taxes 13,893,000$ 13,893,000$ 13,785,282$ (107,718)$
Other taxes 225,000 225,000 156,365 (68,635)
Licenses and permits 1,004,300 1,004,300 976,260 (28,040)
Intergovernmental 634,000 634,000 706,917 72,917
Charges for services 1,163,700 1,163,700 1,247,308 83,608
Fines and forfeitures 130,000 130,000 169,910 39,910
Other revenue
Investment income 120,000 120,000 202,618 82,618
Refunds and reimbursements 125,000 125,000 188,548 63,548
Miscellaneous revenue 30,000 30,000 54,828 24,828
Total revenues 17,325,000 17,325,000 17,488,036 163,036
Expenditures
Current
General government 4,907,100 4,907,100 4,908,703 1,603
Public safety 9,857,300 9,857,300 9,696,200 (161,100)
Public works 2,622,500 2,622,500 2,630,313 7,813
Culture and recreation 2,666,600 2,666,600 2,432,803 (233,797)
Debt service
Principal - - 105,484 105,484
Interest and other charges - - 4,773 4,773
Capital outlay
Public safety - - 3,830 3,830
Total expenditures 20,053,500 20,053,500 19,782,106 (271,394)
Excess of revenues over
(under) expenditures (2,728,500) (2,728,500) (2,294,070) 434,430
Other Financing Sources (Uses)
Transfers in 3,165,000 3,165,000 3,165,000 -
Transfers out (436,500) (436,500) (436,500) -
Total other financing sources (uses) 2,728,500 2,728,500 2,728,500 -
Net change in fund balances -$ -$ 434,430 434,430$
Fund Balances
Beginning of year 8,888,888
End of year 9,323,318$
Budgeted Amounts Actual
Amounts
Variance with
Final Budget -
Over (Under)
Page 166 of 464
See notes to basic financial statements. 46
Municipal
Liquor Sewer Garbage Storm Water
Assets
Current assets
Cash and investments 3,526,983$ 8,853,336$ 802,786$ 1,921,645$
Restricted cash - - - -
Accounts receivable - 34,185 - -
Interest receivable 20,392 52,868 4,641 11,163
Due from other funds - 392,567 160,360 53,291
Leases receivable - -- -
Special assessments receivable - 420,834 2,393 291
Inventory 1,609,734 - - -
Prepaid items - - - -
Total current assets 5,157,109 9,753,790 970,180 1,986,390
Noncurrent assets
Leases receivable - - - -
Capital assets
Land 753,961 302,581 - 9,900
Construction in progress - 1,517,969 - -
Buildings and building improvements 3,051,851 20,312,707 - -
Improvements other
than buildings - 232,178 - -
Collection and distribution - 29,354,608 - 20,449,218
Intangible assets - -- -
Equipment and furniture 167,743 7,524,358 - 27,821
Leased equipment 20,873 27,135 - -
Total capital assets 3,994,428 59,271,536 - 20,486,939
Less accumulated depreciation/amortization (2,498,852) (27,484,683) - (10,839,472)
Net capital assets 1,495,576 31,786,853 - 9,647,467
Total noncurrent assets 1,495,576 31,786,853 - 9,647,467
Total assets 6,652,685 41,540,643 970,180 11,633,857
Deferred Outflows of Resources
Deferred outflows of resources
related to OPEB 5,361 4,691 - -
Deferred outflows of resources
related to pensions 150,077 107,889 6,738 -
Total deferred outflows
of resources 155,438 112,580 6,738 -
Total assets and deferred
outflows of resources 6,808,123$ 41,653,223$ 976,918$ 11,633,857$
Business-Type Activities - Enterprise Funds
City of Elk River
Statement of Net Position - Proprietary Funds
December 31, 2023
Page 167 of 464
47
Electric Water Total
14,896,235$ 10,879,501$ 40,880,486$
1,779,016 - 1,779,016
2,363,576 120,583 2,518,344
1,954 41,879 132,897
3,442 217,223 826,883
- 235,035 235,035
4,529 37,168 465,215
1,048,510 17,102 2,675,346
185,599 35,211 220,810
20,282,861 11,583,702 49,734,032
- 4,733,420 4,733,420
697,870 200,714 1,965,026
834,236 1,476,495 3,828,700
15,119,753 2,922,269 41,406,580
34,081 - 266,259
55,723,788 42,377,297 147,904,911
27,769,490 - 27,769,490
5,141,084 658,295 13,519,301
- - 48,008
105,320,302 47,635,070 236,708,275
(37,746,565) (23,268,352) (101,837,924)
67,573,737 24,366,718 134,870,351
67,573,737 29,100,138 139,603,771
87,856,598 40,683,840 189,337,803
- - 10,052
690,058 126,311 1,081,073
690,058 126,311 1,091,125
88,546,656$ 40,810,151$ 190,428,928$
Business-Type Activities - Enterprise Funds
Page 168 of 464
See notes to basic financial statements. 48
Municipal
Liquor Sewer Garbage Storm Water
Liabilities
Current liabilities
Accounts payable 369,896$ 101,528$ 128,109$ 28,876$
Salaries and benefits payable 40,947 26,407 1,599 -
Contracts and deposits payable - - - -
Interest payable 13 35,365 - -
Unearned revenue 5,655 - - -
Due to other funds - 580 2,006 856
Due to other governments 86,645 10 - -
Current compensated absences 43,297 45,434 - -
Current total OPEB liability 4,333 3,792 - -
Lease liability due within one year 4,122 5,359 - -
Bonds payable due within one year - 520,000 - -
Total current liabilities 554,908 738,475 131,714 29,732
Noncurrent liabilities
Compensated absences 37,036 25,843 - -
Total OPEB liability 44,637 39,056 - -
Lease liability 10,086 13,112 - -
Bonds payable - 6,187,308 - -
Net pension liability 555,358 399,244 24,934 -
Total noncurrent liabilities 647,117 6,664,563 24,934 -
Total liabilities 1,202,025 7,403,038 156,648 29,732
Deferred Inflows of Resources
Deferred inflows of resources
related to OPEB 10,190 8,917 - -
Deferred inflows of resources
related to pensions 170,127 122,303 7,638 -
Deferred inflows of resources
related to leases - - - -
Total deferred inflows
of resources 180,317 131,220 7,638 -
Net Position
Net investment in capital assets 1,495,576 25,079,545 - 9,647,467
Restricted for debt service - - - -
Unrestricted 3,930,205 9,039,420 812,632 1,956,658
Total net position 5,425,781 34,118,965 812,632 11,604,125
Total liabilities, deferred
inflows of resources, and
net position 6,808,123$ 41,653,223$ 976,918$ 11,633,857$
Business-Type Activities - Enterprise Funds
December 31, 2023
City of Elk River
Statement of Net Position - Proprietary Funds
Page 169 of 464
49
Electric Water Total
3,822,240$ 209,062$ 4,659,711$
243,235 44,420 356,608
1,067,795 128,896 1,196,691
357,003 17,333 409,714
142,988 141,977 290,620
928,921 33,460 965,823
160,414 2,772 249,841
470,277 51,835 610,843
- - 8,125
- - 9,481
955,000 60,000 1,535,000
8,147,873 689,755 10,292,457
- - 62,879
- - 83,693
- - 23,198
28,260,262 1,561,945 36,009,515
2,720,477 500,450 4,200,463
30,980,739 2,062,395 40,379,748
39,128,612 2,752,150 50,672,205
- - 19,107
836,813 153,307 1,290,188
- 4,784,677 4,784,677
836,813 4,937,984 6,093,972
38,358,475 22,744,773 97,325,836
1,779,016 - 1,779,016
8,443,740 10,375,244 34,557,899
48,581,231 33,120,017 133,662,751
88,546,656$ 40,810,151$ 190,428,928$
Business-Type Activities - Enterprise Funds
Page 170 of 464
See notes to basic financial statements. 50
Municipal Liquor Sewer Garbage Storm Water
Sales and Cost of Sales
Sales 7,974,201$ -$ -$ -$
Cost of sales (5,762,668) - - -
Gross profit 2,211,533 - - -
Operating Revenues
User charges - 2,581,293 1,918,204 633,969
Delinquent collections - 1,735 2,312 212
Other 4,693 191,049 - 271,710
Total operating revenues 4,693 2,774,077 1,920,516 905,891
Operating Expenses
Personnel services 1,119,287 827,512 46,318 -
Materials and supplies 38,089 307,724 3,017 757
Purchased power - - - -
Other services and charges 359,657 906,050 1,653,476 485,419
Depreciation/amortization 62,030 1,710,941 - 494,793
Equipment - 134,413 - -
Total operating expenses 1,579,063 3,886,640 1,702,811 980,969
Operating income (loss) 637,163 (1,112,563) 217,705 (75,078)
Nonoperating Revenues (Expenses)
Investment income 329,638 515,308 30,921 85,586
Gain (loss) on sale of asset (4,150) - - -
Interest and other charges (461) (83,907) - -
Miscellaneous revenue - - - -
Total nonoperating revenues 325,027 431,401 30,921 85,586
Income (loss) before capital
contributions and transfers 962,190 (681,162) 248,626 10,508
Capital Contributions
Contributions from Governmental - 1,641,841 - 487,524
Contributions from Customers - - - -
Connection Fees - 840,480 - -
Transfers out (1,250,000) (170,000) (56,500) (135,000)
Change in net position (287,810) 1,631,159 192,126 363,032
Net Position
Beginning of year 5,713,591 32,487,806 620,506 11,241,093
End of year 5,425,781$ 34,118,965$ 812,632$ 11,604,125$
Business-Type Activities - Enterprise Funds
City of Elk River
Statement of Revenues, Expenses, and Changes
in Net Position - Proprietary Funds
Year Ended December 31, 2023
Page 171 of 464
51
Electric Water Totals
-$ -$ 7,974,201$
- - (5,762,668)
- - 2,211,533
43,986,269 3,305,148 52,424,883
- - 4,259
464,470 78,851 1,010,773
44,450,739 3,383,999 53,439,915
3,387,478 774,117 6,154,712
239,587 389,274 978,448
31,232,788 - 31,232,788
4,020,779 857,834 8,283,215
3,177,120 1,174,752 6,619,636
- - 134,413
42,057,752 3,195,977 53,403,212
2,392,987 188,022 2,248,236
158,310 57,360 1,177,123
59,556 2,940 58,346
(811,210) (36,444) (932,022)
928,553 418,451 1,347,004
335,209 442,307 1,650,451
2,728,196 630,329 3,898,687
- 1,348,943 3,478,308
489,452 - 489,452
- 253,341 1,093,821
(1,620,378) - (3,231,878)
1,597,270 2,232,613 5,728,390
46,983,961 30,887,404 127,934,361
48,581,231$ 33,120,017$ 133,662,751$
Business-Type Activities - Enterprise Funds
Page 172 of 464
See notes to basic financial statements. 52
Municipal
Liquor Sewer Garbage Storm Water
Cash Flows - Operating Activities
Receipts from customers and users 7,979,017$ 2,773,990$ 1,920,516$ 905,891$
Payments to suppliers (6,214,428) (1,383,934) (1,655,507) (477,121)
Payments to employees (1,109,417) (795,430) (43,621) -
Other operating receipts - - - -
Net cash flows - operating activities 655,172 594,626 221,388 428,770
Cash Flows - Noncapital
Financing Activities
Borrowing (payments) on
interfund balances - (19,205) (2,483) (3,249)
Transfer to other funds (1,250,000) (170,000) (56,500) (135,000)
Net cash flows - noncapital financing activities (1,250,000) (189,205) (58,983) (138,249)
Cash Flows - Capital and Related
Financing Activities
Special assessments received - 81,467 (79) 176
Connection charges collected - 840,480 - -
Principal paid on bonds - (520,000) - -
Interest paid on debt (465) (88,539) - -
Principal paid on leases (4,007) (5,209) - -
Proceeds from sale of capital assets - - -
Acquisition of capital assets (182,250) (443,690) - -
Net cash flows - capital and related
financing activities (186,722) (135,491) (79) 176
Cash Flows - Investing Activities
Interest and dividends received 330,267 505,125 29,508 82,601
Net change in cash and cash equivalents (451,283) 775,055 191,834 373,298
Cash and Cash Equivalents
3,978,266 8,078,281 610,952 1,548,347
3,526,983$ 8,853,336$ 802,786$ 1,921,645$
City of Elk River
Statement of Cash Flows - Proprietary Funds
Year Ended December 31, 2023
December 31
January 1
Business-Type Activities - Enterprise Funds
Page 173 of 464
53
Electric Water Total
45,858,458$ 3,365,455$ 62,803,327$
(35,929,492) (1,397,690) (47,058,172)
(3,108,487) (750,613) (5,807,568)
980,012 549,528 1,529,540
7,800,491 1,766,680 11,467,127
(90,372) (108,448) (223,757)
(1,620,378) - (3,231,878)
(1,710,750) (108,448) (3,455,635)
- - 81,564
- 253,341 1,093,821
(915,000) (60,000) (1,495,000)
(886,134) (44,095) (1,019,233)
- - (9,216)
72,630 2,940 75,570
(4,517,495) (1,057,219) (6,200,654)
(6,245,999) (905,033) (7,473,148)
156,646 58,718 1,162,865
388 811,917 1,701,209
16,674,863 10,067,584 40,958,293
16,675,251$ 10,879,501$ 42,659,502$
Business-Type Activities - Enterprise Funds
Page 174 of 464
See notes to basic financial statements. 54
Municipal
Liquor Sewer Garbage Storm Water
Reconciliation of Operating
Income (Loss) to Net Cash Flows -
Operating Activities
Operating income (loss)637,163$ (1,112,563)$ 217,705$ (75,078)$
Adjustments to reconcile operating
income (loss) to net cash flows -
operating activities
Other revenues - - - -
Bad debt expense - - - -
Depreciation/amortization expense 62,030 1,710,941 -494,793
Pension expense 30,931 24,085 2,631 -
Accounts receivable - (87) - -
Special assessments receivable - -- -
Lease receivable - -- -
Other receivables - -- -
Due from other governments - -- -
Prepaid items - -- -
Inventory (105,551) - - -
Accounts payable 59,570 (35,757) 986 9,055
Contracts and deposits payable - - - -
Due to other governmental units (8,033) 10 - -
Salaries and benefits payable 1,602 2,068 66 -
Unearned revenue 123 - - -
OPEB expense (5,327) (4,663) - -
Compensated absences payable (17,336) 10,592 - -
Deferred lease resources - - - -
Total adjustments 18,009 1,707,189 3,683 503,848
Net cash flows
- operating activities 655,172$ 594,626$ 221,388$ 428,770$
Supplemental Schedule of
Noncash Capital and Related
Financing Activities
Contributions of capital assets -$ 1,641,841$ -$ 487,524$
Gain (Loss) on disposal of capital assets (4,150) - - -
Book value of disposed capital assets 65,660 - - -
Capital assets purchased on account - - - -
Amortization of bond premium - - - -
Business-Type Activities - Enterprise Funds
City of Elk River
Statement of Cash Flows - Proprietary Funds
Year Ended December 31, 2023
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55
Electric Water Total
2,392,987$ 188,022$ 2,248,236$
928,553 418,451 1,347,004
29,142 (28) 29,114
3,177,120 1,174,752 6,619,636
211,279 19,272 288,198
1,408,119 1,512 1,409,544
(400) (20,056)(20,456)
- 220,218 220,218
(90,917) 208,467 117,550
8,263 -8,263
70,788 18,537 89,325
63,325 11,286 (30,940)
(631,281) (92,117) (689,544)
63,101 (59,129) 3,972
(40,288) (101) (48,412)
24,430 2,202 30,368
142,988 793 143,904
- - (9,990)
43,282 2,030 38,568
- (327,431)(327,431)
5,407,504 1,578,658 9,218,891
7,800,491$ 1,766,680$ 11,467,127$
489,452$ 1,348,943$ 3,967,760$
(13,074) - (17,224)
44,574 - 110,234
947,461 6,111 953,572
59,862 6,651 66,513
Business-Type Activities - Enterprise Funds
Page 176 of 464
56
Page 177 of 464
57
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Elk River, Minnesota (the City) operates under the "Optional Plan A" form of government
as defined in Minnesota Statutes. Under this plan, the City Council is composed of an elected mayor
and four elected Council Members. The Council appoints personnel responsible for the proper
administration of all affairs relating to the City. The basic financial statements and the accounting
policies of the City conform to accounting principles generally accepted in the United States of
America as applicable to governmental units. The Governmental Accounting Standards Board (GASB)
is the accepted standard setting body for establishing governmental accounting and financial
reporting principles.
As required by accounting principles generally accepted in the United States of America, the
financial statements of the reporting entity include those of the City of Elk River (the primary
government) and its component units. The Elk River Municipal Utilities is considered to be part of the
primary government. The Elk River Municipal Utilities was established, and statutory authority is
provided in accordance with Chapter 412.321 of the Minnesota Statutes and is considered to be part
of the City. The Utilities Commission has five council approved members who serve overlapping
three-year terms. The statutes provide the City Council all the discretionary authority necessary to
operate the utilities, except as its powers have been delegated to the Commission. The Utility funds
are included with the enterprise funds of this report. Separate financial statements for the Utilities
may be obtained at the Elk River Municipal Utilities, 13069 Orono Pkwy, Elk River, Minnesota, 55330.
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
Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in
determining financial accountability. These criteria include appointing a voting majority of an
organization's governing body, and (1) the ability of the primary government to impose its will on
that organization or (2) the potential for the organization to provide specific benefits to, or impose
specific financial burdens on, the primary government. Based upon the application of these criteria,
the City has the following component units:
1. Blended Component Unit
The Economic Development Authority (EDA) was created to carry out economic and industrial
development and redevelopment within the City in accordance with policies established by the
City Council. The seven-member board consists of three Council Members, the Mayor and three
other council approved members. The criteria that result in the EDA being reported as a blended
component unit include the fact that the EDA may not exercise any of its authorized powers
without prior approval of the City Council and the City having operational responsibility. The EDA
is reported as a special revenue fund and does not issue separate financial statements.
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City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Reporting Entity (Continued)
2. Discretely Presented Component Unit
The Housing and Redevelopment Authority (HRA) is a legally separate entity created to carry out
community development consistent with policies established by the City Council. The HRA is
governed by five council appointed members, one of which is a Council Member; however, the
City does not have a financial benefit or burden relationship and does not have operational
responsibility. The criteria that result in the HRA being reported as a discretely presented
component unit include 1) the five council appointed member board and 2) the ability of the City
to impose its will on the HRA by significantly influencing the programs, projects, activities, or
level of service performed by the HRA by approving the HRA's budget. The HRA does not issue
separate financial statements and are included in the financial section of this report.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. The fiduciary funds are
only reported in the statement of fiduciary net position and the statement of changes in fiduciary
net position at the fund financial statement level. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from business-type
activities, which rely to a significant extent on fees and charges for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Interest on general long-term debt is considered an
indirect expense and is reported separately in the Statement of Activities. 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 and 2) grants and contributions that are restricted
to meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues. Internally dedicated revenues are reported as general revenues rather than program
revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in
the year for which they are levied. Grants and similar items are recognized as revenue as soon as all
eligibility requirements imposed by the provider have been met.
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City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as
they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the City considers revenues to be available if they are collected within 60
days of the end of the current period. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to compensated absences and claims and judgments, are recorded only when payment is
due.
Property taxes, franchise taxes, licenses, and interest associated with the current period are all
considered to be susceptible to accrual and so have been recognized as revenues of the current
period. Only the portion of special assessments receivable due within the current period is
considered to be susceptible to accrual as revenue of the current period. All other revenue items are
considered to be measurable and available only when cash is received by the City.
Description of Funds:
Major Governmental Funds:
General Fund – This fund is the City's primary operating fund. It accounts for all financial
resources of the general government, except those required to be accounted for in another fund.
Pavement Management Fund – This fund accounts for franchise taxes collected to fund
expenditures for the ongoing maintenance and repair of the City streets.
Proprietary Funds:
Municipal Liquor Fund – This fund accounts for the operations of the City's off-sale liquor stores.
Sewer Fund – This fund accounts for the sewer service charges which are used to finance the
sanitary sewer system operating expenses.
Garbage Fund – This fund accounts for the activities of the garbage and recycling collection
programs.
Storm Water Fund – This fund accounts for the activities of the storm water collection
system.
Electric Fund – This fund accounts for the activities of the electric distribution system.
Water Fund – This fund accounts for the activities of the water distribution system.
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60
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are charges between the City's utility functions
and various other functions of the City. Elimination of these charges would distort the direct costs
and program revenues reported for the various functions concerned.
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 are charges to customers for sales and services. The City also
recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting
new customers to the system. Operating expenses for enterprise funds include the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
1. Deposits and Investments
Cash and investments include balances from all funds that are combined and invested to the
extent available in various securities as authorized by state law. Earnings from the pooled
investments are allocated to the individual funds based on the average of month-end cash and
investment balances.
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and
short-term investments with original maturities of three months or less from the date of
acquisition.
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and
instrumentalities, shares of investment companies whose only investments are in the
aforementioned securities, obligations of the State of Minnesota or its municipalities, bankers'
acceptances, future contracts, repurchase and reverse repurchase agreements, and commercial
paper of the highest quality with a maturity of no longer than 270 days and in the Minnesota
Municipal Investment Pool.
Certain investments for the City are reported at fair value as disclosed in Note 3. The City
categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. 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; Level 3 inputs are significant unobservable
inputs.
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City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
(Continued)
1. Deposits and Investments (Continued)
In accordance with GASB Statement No. 79, the Minnesota Municipal Investment Pool securities
are valued at amortized cost, which approximates fair value. There are no restrictions or
limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be
deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period
will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days'
notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn
prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the
Series for any charges, losses, and other costs attributable to the early redemption.
2. Receivables
All trade and property tax receivables are shown at a gross amount since both are assessable to
the property taxes and are collectible upon the sale of the property.
The City Council annually adopts a tax levy and certifies it to the County in December for
collection in the following year. The County is responsible for collecting all property taxes for the
City. These taxes attach an enforceable lien on taxable property within the City on January 1 and
are payable by the property owners in two installments. The taxes are collected by the County
and tax settlements are made to the City during January, July, and December each year.
The County Auditor submits the list of taxes and special assessments to be collected on each
parcel of property to the County Treasurer in January of each year.
Accounts receivable include amounts billed for services provided before year end. Unbilled utility
enterprise fund receivables are also included for services provided in 2023. The City annually
certifies delinquent accounts to the County for collection in the following year. Therefore, there
has been no allowance for doubtful accounts established.
Special assessments represent the financing for public improvements paid for by benefiting
property owners. These assessments are recorded as receivable upon certification to the County.
Special assessments are recognized as revenue when they are received in cash or within 60 days
after year end. All governmental special assessments receivable are offset by a deferred inflow of
resources in the fund financial statements unless related to unpaid charges and are due within
one year.
3. Inventory and Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements. Prepaid items
are recorded as an expenditure at the time of consumption.
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62
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
(Continued)
3. Inventory and Prepaid Items (Continued)
Inventory is valued at cost using the first in, first out (FIFO) method. Inventories of enterprise
funds are recorded as expenditures when consumed rather than when purchased.
Property held for resale consists of property that the City and Housing and Redevelopment
Authority component unit holds for resale. Properties held for resale are reported as an asset at
the lower of cost or estimated fair value.
4. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
sidewalks, and similar items), are reported in the applicable governmental or business-type
activities columns in the government-wide financial statements. Capital assets are defined by the
City as assets with an initial cost of more than $10,000 and an estimated useful life in excess of
two years.
In the case of initial capitalization of general infrastructure assets (i.e., those reported by
governmental activities) the City chose to include all items previously accounted for. The City
had already accounted for its prior infrastructure at historical cost for the initial reporting of
these assets. As the City constructs or acquires capital assets each period, including
infrastructure assets, they are capitalized and reported at historical cost. The reported value
excludes normal maintenance and repairs which are essentially amounts spent in relation to
capital assets that do not increase the capacity or efficiency of the item or extend its useful life
beyond the original estimate. In the case of donations, the City values these capital assets at
acquisition value of the item at the date of its donation.
Property, plant, and equipment of the City, as well as the component unit, are depreciated using
the straight-line method over the following useful lives:
Buildings and improvements 10-40
Other park improvements 10-20
Machinery and equipment 3-20
Public domain infrastructure 15-50
System infrastructure 4-50
Classification Years
The City recognizes lease liabilities and intangible right-to-use lease assets (leased assets) in the
government-wide financial statements. The City recognizes lease liabilities with an initial,
individual value of $10,000 or more for equipment leases, and an initial, individual value of
$25,000 or more property, plant and infrastructure leases.
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63
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
(Continued)
5. Lease Receivable
The City is a lessor for numerous noncancellable leases. The City recognizes a lease receivable
and a deferred inflow of resources in the government-wide and governmental fund financial
statements.
At the commencement of a lease, the City measures the lease receivable at the present value of
payments expected to be received during the lease term. Subsequently, the lease receivable is
reduced by the principal portion of lease payments received. The deferred inflow of resources is
initially measured as the initial amount of the lease receivable, adjusted for lease payments
received at or before the lease commencement date.
Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease
term in a systematic and rational manner.
Key estimates and judgments include how the City determines (1) the discount rate, (2) lease
term, (3) lease receipts, and (4) amortization.
The City determines the discount rate for leases based on the applicable State and Local
Government Securities (SLGS) rate. The lease term includes the noncancellable period of the
lease. Lease receipts included in the measurement of the lease receivable is composed of fixed
payments from the lessee.
6. Right-to-Use Lease Assets/Lease Liabilities
The City recorded right-to-use lease assets as a result of implementing GASB Statement No. 87,
Leases. The right-to-use lease assets are initially measured at an amount equal to the initial
measurement of the lease liability plus any payments made prior to the lease term, less lease
incentives, and plus ancillary charges necessary to place the lease into service. The right-to-use
assets are amortized on a straight-line basis over the life of the related lease.
Key estimates and judgments related to leases include (1) the discount rate, (2) lease term, (3)
lease payments, and (4) amortization.
The City uses the interest rate charged by the lessor as the discount rate. When the interest rate
charged by the lessor is not provided, the City determines its estimated borrowing rate based on
the applicable State and Local Government Securities rate. The lease term includes the
noncancellable period of the lease. Lease payments included in the measurement of the lease
liability are composed of fixed payments and purchase option the City is reasonably certain to
exercise.
The City monitors changes in circumstances that would require a re-measurement of the leases
and will remeasure the right-to-use lease assets and liabilities if certain changes occur that are
expected to significantly affect the amount of the lease liability.
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64
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
(Continued)
7. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element represents a
consumption of net assets that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/expenditure) until that time. The City has two items that qualify
for reporting in this category. The City presents deferred outflows of resources on the Statement
of Net Position for deferred outflows of resources related to pensions and OPEB for various
estimate differences that will be amortized and recognized over future years.
In addition to liabilities, the statement of financial position and fund financial statements will
sometimes report a separate section for deferred inflows of resources. This separate financial
statement element represents an acquisition of net assets that applies to a future period(s) and
so will not be recognized as an inflow of resources (revenue) until that time. The City has four
items that qualify for reporting in this category. The City presents deferred inflows of resources
on the Governmental Fund Balance Sheet as unavailable revenue. The governmental funds report
unavailable revenues from three sources: property taxes, special assessments, and other. These
amounts are deferred and recognized as an inflow of resources in the period that the amounts
become available. The City presents deferred inflows of resources on the Statement of Net
Position for deferred inflows of resources related to pensions and OPEB for various estimate
differences that will be amortized and recognized over future years. Deferred inflows of
resources related to leases receivable is reported in both the government-wide Statement of Net
Position, the Governmental Funds Balance Sheet, and the Proprietary Funds Statement of Net
Position.
8. Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay
benefits. Unused vacation can be accrued by the employees up to a maximum of 240 hours, the
limit of which is determined by years of service. All vacation pay is accrued when incurred in the
government-wide and proprietary fund financial statements.
A liability for these amounts is reported in governmental funds only if they have matured, for
example, as a result of employee resignations and retirements. In the event a liability is recorded
in the governmental funds, the General fund would be used to liquidate the compensated
absences payable. Employees can also accrue an unlimited amount of unused sick leave.
Employees with two or more years of service are entitled to receive severance pay equal to 50% of
unused sick leave, up to a maximum of 480 hours. The liability for severance pay is accounted for
the same as accrued vacation pay.
9. Long-Term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt, and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type Statement
of Net Position. Bond premiums and discounts are deferred and amortized over the life of the
bonds using the straight-line method.
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65
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity
(Continued)
9. Long-Term Obligations (Continued)
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.
Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as
debt service expenditures.
10. Pensions
For purposes of measuring the net pension liability, net pension asset, deferred outflows/inflows
of resources, and pension expense, information about the fiduciary net position of the Public
Employees Retirement Association (PERA) and the relief association and additions to/deductions
from PERA's and the relief association's fiduciary net position have been determined on the same
basis as they are reported by PERA and the relief association except that PERA's fiscal year end is
June 30. 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.
11. Postemployment Benefits
The City of Elk River and its discretely presented component unit provide a single employer
defined benefit healthcare plan to eligible retirees and their spouses. The plan offers medical
insurance benefits. The total OPEB liability, deferred outflows of resources and deferred inflows
of resources related to OPEB and OPEB expense were measured actuarially in accordance with
GASB Statement No. 75, based on entry age normal cost method.
12. Unearned Revenue
Unearned revenue arises when assets are recognized before revenue recognition criteria have
been satisfied. Grants and entitlements received before eligibility requirements are met are also
recorded as unearned revenue.
13. Fund Balance
In the fund financial statements, governmental funds report various levels of spending
constraints.
Nonspendable Fund Balances – These are amounts that cannot be spent because they are not
in spendable form as they are legally or contractually required to be maintained intact and
include prepaid items, inventory, and advances to other funds.
Restricted Fund Balances – These are subject to externally enforceable legal restrictions.
Committed Fund Balances – The government's highest level of decision making authority is the
City Council. The formal action to establish or modify a commitment is made through
resolution. Committed amounts cannot be used for any other purpose unless the City Council
modifies or rescinds the commitment by resolution.
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66
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
13. Fund Balance (Continued)
In the fund financial statements, governmental funds report various levels of spending
constraints.
Assigned Fund Balances – Amounts constrained for specific purposes that are internally
imposed. In governmental funds other than the General Fund, assigned fund balance
represents all remaining amounts that are not classified as nonspendable and are neither
restricted nor committed. The City Council has adopted a fund balance policy which
delegates the authority to assign amounts for specific purposes to the City Administrator.
Minimum Fund Balance Policy – The City has formally adopted a fund balance policy for the
General Fund. The City's policy is to maintain a minimum unassigned fund balance of 40-45%
of budgeted operating expenditures for cash-flow timing needs.
The City will spend restricted funds first for expenditures that meet the intended purpose before
using unrestricted fund balance. Additionally, the City would first use committed, then assigned,
and lastly unassigned amounts of unrestricted fund balance when expenditures are made for the
purposes intended.
E. Net Position
Net position represents the difference between assets and deferred outflows of resources and
liabilities and deferred inflows of resources in the government-wide financial statements. Net
investment in capital assets, consists of capital assets, net accumulated depreciation, reduced by
the outstanding balance of any long-term debt used to build or acquire the capital assets. Net
position is reported as restricted in the government-wide financial statement when there are
limitations on use through external restrictions imposed by creditors, grantors, or laws or regulations
of other governments.
F. 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
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Estimates also affect the reported amounts of revenue and
expenditures/expense during the reporting period. Actual results could differ from those estimates.
G. Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America. Annual appropriated budgets are legally adopted for the General Fund
and the Library, Multipurpose Facility, and Economic Development Authority special revenue funds.
Project-length financial plans are adopted for all capital projects funds. All annual appropriations
lapse at fiscal year-end.
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67
City of Elk River
Notes to Basic Financial Statements
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. Budgetary Information (Continued)
On or before July 1 of each year, all departments and agencies of the City submit requests for
appropriation to the City's administrator so that a budget may be prepared. Before September 30,
the proposed budget is presented to the City Council for review and approval. The City Council holds
public hearings and may add to, subtract from, or change appropriations. Any changes in the budget
must be within the revenue and reserves estimated as available or the revenue estimates must be
changed by an affirmative vote by a majority of the City Council.
The budget is prepared by fund, function, and activity and includes information on the past year,
current year estimates, and requested appropriations for the next fiscal year. Expenditures may not
legally exceed budgeted appropriations at the fund level without Council approval. Spending control
is established by the amount of expenditures budgeted for the fund, but management control is
exercised at the department level. Reported budget amounts are as originally adopted or as
amended by Council approved supplemental appropriations and budget transfers.
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Deficit Fund Balances
The following funds had a deficit fund balance at December 31, 2023:
Amount
Nonmajor Special Revenue
Multipurpose Facility 207,655$
Insurance Reserve 52,165
Nonmajor Capital Projects
TIF Districts 1,252,358
Fund
The deficits will be funded with future charges for services, refunds and reimbursements, transfers
and tax increment revenue.
NOTE 3 – DEPOSITS AND INVESTMENTS
Cash balances of the City's funds that are intended to be invested on a long-term basis are combined
(pooled) and invested to the extent available in various investments authorized by Minnesota
Statutes. Each fund's portion of this pool (or pools) is displayed in the financial statements as "cash
and investments". For purposes of identifying risk of investing public funds, the balances and related
restrictions are summarized as follows.
A. Deposits
Custodial Credit Risk – Deposits: This is the risk that in the event of a bank failure, the City's
deposits may not be returned to it. The City (including Elk River Municipal Utilities) has an
investment policy in place to address custodial credit risk for deposits, stating all deposits and
investments must be in compliance with Minnesota Statutes § 118A, with collateralization levels of
110% of the market value of the principal and accrued interest. As of December 31, 2023, the City's
bank balance of $25,595,122 was not exposed to custodial credit risk because it was insured and fully
collateralized by federal depository insurance and collateral pledged. The book balance as of
December 31, 2023, was $27,027,395.
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City of Elk River
Notes to Basic Financial Statements
NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED)
A. Deposits (Continued)
Discretely Presented Component Unit
As of December 31, 2023, the HRA's bank balance of $821,348 was not exposed to custodial credit
risk because it was fully collateralized. The HRA's book balance of all deposits at December 31, 2023,
totaled $821,348.
B. Investments
Credit Fair Less than Greater than
Rating Value One Year 1-5 Years 5 Years No Maturity
Negotiable certificates of deposit N/A
8,399,209$ 1,778,477$ 6,620,732$ -$ -$
Municipal bonds AA to AAA 36,987,667 3,763,582 19,048,767 14,175,318 -
Government Securities N/A 493,765 493,765 - - -
Asset Backed Securities N/A 2,240,741 - 580,470 - 300,096
N/A 681,760 - - - 681,760
N/A 11,342,221 - - - 11,342,221
Other money market funds N/A
5,943 5,943 - - -
Total 60,151,306$ 6,041,767$ 26,249,969$ 14,175,318$ 12,324,077$
Investment Maturities
Investment Type
UBS Select Prime Institutional Money
Market
Minnesota Municipal Money Market
(4M Fund)
Concentration Risk: This is the risk associated with investing a significant portion of the City's
investment (considered 5% or more) in the securities of a single issuer and no more than 50% of the
City's total investment portfolio may be invested in certificates of deposit or commercial paper. As of
December 31, 2023, the City had invested 5% or more of its total investment portfolio in one single
issuer, the Minnesota Municipal Money Market (4M Fund).
Credit Risk: Credit risk is the risk that an issuer to an investment will not fulfill its obligation. State
law limits investments in state and local securities and commercial paper to those with specified
rating by nationally recognized rating agencies. U.S. treasury obligations are not considered to have
credit risk. The City's investment policy does not further limit the ratings of their investments.
Interest Rate Risk: This is the risk that fair values of securities in a portfolio would decrease due to
changes in fair value interest rates. The City's investment policy uses diversification of maturity
dates as a means of managing exposure to fair value by stating that no more than 30% of the City's
investments may extend beyond a five-year maturity.
Custodial Credit Risk – Investments: This is the risk in the event of the failure of the counterparty
the City will not be able to recover the value of its investments or collateral securities that are in
the possession of an outside party. The City typically limits its exposure by purchasing insured or
registered investments, or by the control of who holds the securities. As of December 31, 2023, all
investments were insured or registered, or securities were held by the City or its agent in the City's
name.
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NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED)
B. Investments (Continued)
The City has the following recurring fair value measurements as of December 31, 2023:
Brokered certificates of deposit of $8,399,209, municipal bonds of $36,987,667, and
government securities of $493,765, and asset backed securities of $2,240,741 are valued using
a matrix pricing model (Level 2 inputs)
C. Deposits and Investments
Summary of cash deposits and investments as of December 31, 2023, were as follows:
Deposits 27,027,395$ 821,348$ 27,848,743$
Investments 60,151,306 - 60,151,306
Petty cash 5,500 - 5,500
Total deposits and investments 87,184,201$ 821,348$ 88,005,549$
Primary
Government
Component
Unit HRA Total
Deposits and investments are presented in the December 31, 2023, basic financial statements as
follows:
Statement of Net Position
Cash and investments 85,405,185$ 821,348$ 86,226,533$
Restricted cash 1,779,016 - 1,779,016
Total deposits and investments 87,184,201$ 821,348$ 88,005,549$
Primary
Government
Component
Unit HRA Total
NOTE 4 – NOTES RECEIVABLE/CONTRACT FOR DEED
The City has made several business subsidy loans to local businesses, some of which were funded
with grant proceeds received from the state and federal governments. The terms of repayment vary
with each loan and will be repaid over a period of 10 years. Under the terms of the grant agreement,
the City retains the grant repayments. Notes receivable of $212,868 in the Revolving Loan Fund and
$125,535 in the State DEED Fund are outstanding at December 31, 2023.
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NOTE 4 – NOTES RECEIVABLE/CONTRACT FOR DEED (CONTINUED)
In 2015, the City issued a $1,288,589 long-term note receivable related to the sale of property to a
developer under an abatement agreement. The note shall be payable in semiannual installments as
tax abatement revenues are received, commencing on August 1, 2017, and maturing February 1,
2037. A note receivable of $604,205 in the Development Fund is outstanding at December 31, 2023.
In 2021, the City entered into a $320,000 contract for deed for property, equipment, and buildings
located at property commonly referred to as Pinewood Golf Course, located in Elk River, Minnesota.
The contract for deed is to be repaid annually at 4% interest beginning July 2022. The contract for
deed matures on August 1, 2037. The balance of this contract for deed is $287,398 at December 31,
2023.
In 2006, the HRA issued a loan to a developer to assist in the financing of a housing development for
the benefit of low and moderate income residents which was funded with state grant proceeds.
Repayment of the loan is deferred for 30 years, payable in one lump sum at an interest rate of 1%.
Notes receivable of $400,000 in the HRA is outstanding at December 31, 2023.
Starting in 2015, the HRA issued loans to applicants under the rehabilitation loan program. The terms
of each loan vary and are payable over five to 15 years with rates from 1.25% to 3.25%. Notes
receivable of $162,108 in the HRA are outstanding at December 31, 2023.
NOTE 5 – LEASES RECEIVABLE
The City has various leases for building space. The lease agreements include annual principal and
interest payments. Interest and discount rates on the lease agreements range from 3.0% to 3.9%.
Revenue from these leases for the year ended December 31, 2023, was $65,395.
There are also multiple leases with Verizon and Sprint that allows Elk River Municipal Utilities to
place antennas on water towers. The lease payments increase yearly. Interest and discount rates on
the lease agreements range from 1.41% to 1.78%. As of December 31, 2023, the lease principal
receivable balance was $5,119,349. This is partially offset with a deferred inflow of lease resources.
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NOTE 6 – INTERFUND ASSETS/LIABILITIES
At December 31, 2023, interfund balances for the City were as follows:
Amount
Due from/to other funds
General Fund Nonmajor Governmental Funds 226,443$
General Fund Electric 128,160
General Fund Water 33,460
Pavement Management Electric 262,257
Nonmajor Governmental Funds Nonmajor Governmental Funds 884,132
Nonmajor Governmental Funds Electric 104,086
Sewer Nonmajor Governmental Funds 171,800
Sewer Electric 220,767
Garbage Electric 160,360
Storm Water Electric 53,291
Electric Sewer 580
Electric Garbage 2,006
Electric Storm Water 856
Water Nonmajor Governmental Funds 217,223
Total due from/to other funds 2,465,421$
Advances to/from other funds
Nonmajor Governmental Funds Nonmajor Governmental Funds 200,000$
Due from/to component unit
Primary Government - General Fund Component Unit - HRA 8,469$
Component Unit - HRA Primary Government - Nonmajor Governmental Funds 161,823
Total due from/to component unit 170,292$
Payable FundReceivable Fund
The interfund receivable/payable balances result from the distribution of utility collections and the
lending/borrowing between funds for operating or capital purposes.
The advance between nonmajor governmental funds represents an interfund balance related to the
purchase of a Zamboni ice resurfacer. In 2023, an amount of $200,000 was advanced from the Capital
Outlay Reserve Fund to the Multipurpose Facility Fund. Annual principal payments of $20,000 will be
made along with interest at a rate of four percent annually until the year 2033.
The outstanding balance between the primary government and the component unit represents the
transfer for administrative services and the lending/borrowing arrangement to finance construction
costs. The $161,823 payable to the HRA will be paid with the collection of tax increment revenue
and will not be repaid within one year.
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NOTE 7 – INTERFUND TRANSFERS
Transfers during the year ended December 31, 2023, were as follows:
Nonmajor
Governmental
Transfers Out General Funds Total
General -$ 436,500$ 436,500$
Nonmajor governmental funds 423,500 902,289 1,325,789
Municipal Liquor 1,000,000 250,000 1,250,000
Sewer 170,000 - 170,000
Garbage 56,500 - 56,500
Storm Water 135,000 - 135,000
Electric 1,380,000 240,378 1,620,378
Total 3,165,000$ 1,829,167$ $4,994,167
Transfers In
Interfund transfers are used to provide additional capital funding or to move revenues from the fund
with collection authorization to debt service funds as principal and interest payments come due. In
addition, interfund transfers are occasionally authorized to allow redistribution of resources between
funds for the most efficient use of funds.
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NOTE 8 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2023, was as follows:
Primary Government
Beginning Ending
Balance Increases Decreases Balance
Governmental activities
Capital assets not being depreciated
Land 38,838,959$ -$ -$ 38,838,959$
Construction in progress 1,913,782 18,875 1,912,657 20,000
Total capital assets
not being depreciated 40,752,741 18,875 1,912,657 38,858,959
Other capital assets
Buildings 80,179,661 1,702,712 64,200 81,818,173
Other Improvements 15,044,458 130,895 - 15,175,353
Equipment 18,517,735 1,876,870 595,668 19,798,937
Infrastructure 78,753,214 5,345,624 1,428,483 82,670,355
Leased equipment 510,027 - 2,509 507,518
Total other capital assets
at historical cost 193,005,095 9,056,101 2,090,860 199,970,336
Less accumulated depreciation for
Buildings 23,646,255 2,839,060 64,200 26,421,115
Other Improvements 5,476,987 692,212 - 6,169,199
Equipment 10,773,755 1,250,419 595,668 11,428,506
Infrastructure 49,223,207 2,570,236 1,428,483 50,364,960
Less accumulated amortization for
Leased equipment 100,938 114,969 2,509 213,398
Total accumulated
depreciation and amortization 89,221,142 7,466,896 2,090,860 94,597,178
Total other capital
assets, net 103,783,953 1,589,205 - 105,373,158
Governmental activities capital
assets, net 144,536,694$ 1,608,080$ 1,912,657$ 144,232,117$
Depreciation and amortization expense was charged to functions/programs of the governmental
activities as follows:
Governmental activities
General government 378,590$
Public safety 1,381,142
Public works 3,264,341
Culture and recreation 2,442,823
Total depreciation and amortization expense - governmental activities 7,466,896$
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NOTE 8 – CAPITAL ASSETS (CONTINUED)
Primary Government (Continued)
Beginning Ending
Balance Increases Decreases Balance
Business-type activities
Capital assets not being depreciated
Land 1,965,026$ -$ -$ 1,965,026$
Construction in progress 2,351,587 4,755,746 3,278,633 3,828,700
Total capital assets not
being depreciated 4,316,613 4,755,746 3,278,633 5,793,726
Other capital assets
Buildings and improvements 40,144,257 1,305,623 43,300 41,406,580
Improvements other than buildings 266,259 - - 266,259
Equipment and furniture 12,929,995 1,077,877 488,571 13,519,301
Intangible assets 26,836,332 933,158 - 27,769,490
Collection and distribution 142,832,184 5,072,727 - 147,904,911
Leased equipment 48,008 - - 48,008
Total other capital assets
at historical cost 223,057,035 8,389,385 531,871 230,914,549
Less accumulated depreciation for
Buildings and improvements 12,743,129 1,235,829 39,150 13,939,808
Improvements other than buildings 107,582 15,922 - 123,504
Equipment and furniture 5,924,994 851,666 443,997 6,332,663
Intangible assets 2,838,423 668,135 - 3,506,558
Collection and distribution 74,081,387 3,838,482 - 77,919,869
Less accumulated amortization for
Leased equipment 5,920 9,602 - 15,522
Total accumulated
depreciation and amortization 95,701,435 6,619,636 483,147 101,837,924
Total other capital
assets, net 127,355,600 1,769,749 48,724 129,076,625
Business-type activities
capital assets, net 131,672,213$ 6,525,495$ 3,327,357$ 134,870,351$
Depreciation and amortization expense was charged to functions/programs of the business-type
activities as follows:
Business-type activities
Municipal liquor 62,030$
Sewer 1,710,941
Storm water 494,793
Electric 3,177,120
Water 1,174,752
Total depreciation expense - business-type activities 6,619,636$
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NOTE 8 – CAPITAL ASSETS (CONTINUED)
Capital asset activity for the HRA for the year ended December 31, 2022, was as follows:
Discretely Presented Component Unit
Beginning Ending
Balance Increases Decreases Balance
Capital assets not being depreciated
Land 315,900$ -$ -$ 315,900$
Capital assets being depreciated
Improvements other than buildings 174,290 - - 174,290
Less accumulated depreciation for
Improvements other than buildings 117,162 11,619 - 128,781
Total capital assets being
depreciated, net 57,128 (11,619) - 45,509
Component unit
capital assets, net 373,028$ (11,619)$ -$ 361,409$
Depreciation expense was charged to functions/programs of the HRA as follows:
Business-type activities
Housing and Redevelopment Authority 11,619$
NOTE 9 – LONG-TERM DEBT
A. General Obligation Bonds
The City issues general obligation (G.O.) bonds to provide for the construction of major capital
improvements having a relatively long life. They are payable from special assessments levied and
collected on local improvements to property and are backed by the full faith and credit of the City.
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NOTE 9 – LONG-TERM DEBT (CONTINUED)
B. Components of Long-Term Liabilities
Primary Government
Issue Interest Original Final Balance
Date Rates Issue Maturity End of Year
Governmental activities
General obligation bonds
EDA G.O. Refunding Bonds, Series 2013A 02/12/13 2.00%-3.00% 9,685,000$ 02/01/33 6,485,000$
G.O. Sales Tax Revenue Bonds, Series 2019A 09/19/19 2.50%-5.00% 32,715,000 12/01/44 29,625,000
G.O. Capital Improvement Bonds, Series 2020A 12/29/20 1.00%-5.00% 9,435,000 02/01/42 9,100,000
12/29/20 1.00%-5.00% 5,340,000 02/01/33 3,530,000
05/20/21 1.35%-5.00% 4,805,000 02/01/42 4,570,000
Total general obligation bonds 53,310,000
Unamortized bond premium/discount 4,320,442
Lease liability 295,134
Compensated absences 1,992,878
Total governmental activities 59,918,454
Business-type activities
General obligation revenue bonds
12/29/20 1.00%-1.70% 7,200,000 02/01/35 6,680,000
G.O. Water Revenue Bonds, Series 2021C 06/10/21 2.00%-4.00% 1,615,000 08/01/41 1,505,000
Total general obligation revenue bonds 8,185,000
Revenue Bonds
Electric Revenue Bonds, Series 2016A 07/14/16 2.00%-4.00% 9,755,000 02/01/36 7,515,000
Electric Revenue Bonds, Series 2018A 09/26/18 3.50%-5.00% 10,000,000 08/01/48 9,025,000
Electric Revenue Bonds, Series 2021B 05/13/21 2.00%-5.00% 11,810,000 08/01/51 11,420,000
Total revenue bonds 27,960,000
Total bonds 36,145,000
Unamortized bond premium/discount 1,399,515
Lease liability 32,679
Compensated absences 673,722
Total business-type activities 38,250,916
Total all long-term liabilities 98,169,370$
G.O. Capital Improvement Refunding Bonds,
Series 2020B
G.O. Capital Improvement and Equipment Bonds,
Series 2021A
G.O. Sewer Revenue Refunding Bonds,
Series 2020C
Long-term bonded indebtedness listed above were issued to finance equipment and the acquisition
and construction of capital facilities or to refinance (refund) previous bond issues.
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NOTE 9 – LONG-TERM DEBT (CONTINUED)
C. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2023, was as follows:
Primary Government
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities
Bonds payable
General obligation bonds 25,760,000$ -$ (2,075,000)$ 23,685,000$ 1,470,000$
General obligation revenue bonds 30,515,000 - (890,000) 29,625,000 935,000
Unamortized bond premiums 4,572,375 - (251,933) 4,320,442 -
Total bonds payable 60,847,375 - (3,216,933) 57,630,442 2,405,000
Lease liability 407,831 - (112,697) 295,134 113,628
Compensated absences payable 1,866,430 902,039 (775,591) 1,992,878 917,398
Governmental activities
long-term liabilities 63,121,636$ 902,039$ (4,105,221)$ 59,918,454$ 3,436,026$
Business-type activities
Bonds payable
General obligation revenue bonds 8,765,000$ -$ (580,000)$ 8,185,000$ 580,000$
Revenue bonds 28,875,000 - (915,000) 27,960,000 955,000
Unamortized bond premiums 1,468,489 - (68,974) 1,399,515 -
Total bonds payable 39,108,489 - (1,563,974) 37,544,515 1,535,000
Lease liability 41,895 - (9,216) 32,679 9,481
Compensated absences payable 635,154 610,436 (571,868) 673,722 610,843
Business-type activities
long-term liabilities 39,785,538$ 610,436$ (2,145,058)$ 38,250,916$ 2,155,324$
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NOTE 9 – LONG-TERM DEBT (CONTINUED)
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Primary Government
Year Ending
December 31, Principal Interest Principal Interest Principal Interest
2024 1,470,000$ 589,285$ 935,000$ 984,838$ 113,628$ 4,167$
2025 1,530,000 531,760 1,000,000 938,088 115,099 2,696
2026 1,590,000 473,060 1,030,000 888,088 54,996 1,192
2027 1,640,000 412,616 1,080,000 836,588 11,411 67
2028 1,705,000 353,966 1,135,000 782,588 - -
2029-2033 9,085,000 1,024,443 6,450,000 3,145,788 - -
2034-2038 3,580,000 418,540 7,550,000 2,045,056 - -
2039-2043 3,085,000 112,490 8,580,000 1,014,725 - -
2044 - - 1,865,000 55,950 - -
Total 23,685,000$ 3,916,160$ 29,625,000$ 10,691,709$ 295,134$ 8,122$
Year Ending
December 31, Principal Interest Principal Interest Principal Interest
2024 580,000$ 123,835$ 955,000$ 849,381$ 9,481$ 805$
2025 595,000 116,185 990,000 811,306 9,754 533
2026 605,000 108,260 1,035,000 774,406 10,035 252
2027 605,000 100,110 1,075,000 738,256 3,409 20
2028 620,000 91,910 1,105,000 700,606 - -
2029-2033 3,225,000 312,740 6,130,000 2,909,631 - -
2034-2038 1,655,000 78,195 5,730,000 1,938,006 - -
2039-2043 300,000 12,000 4,340,000 1,279,006 - -
2044-2048 - - 4,985,000 630,856 - -
2049 - - 1,615,000 73,240 - -
Total 8,185,000$ 943,235$ 27,960,000$ 10,704,694$ 32,679$ 1,610$
G.O. Revenue Bonds Revenue Bonds Lease Liability
G.O. Revenue BondsG.O. Bonds Lease Liability
Governmental Activities
Business-Type Activities
E. Lease Liability
The City entered into lease agreements for copiers, a mail machine, body cameras, fleet cameras,
and tasers. The lease agreements include annual principal and interest payments as noted above.
Interest and discount rates on the lease agreements range from 0.36% to 2.84%.
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NOTE 10 – FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the
respective funds.
Nonmajor
General Pavement Governmental
Fund Management Funds Total
Nonspendable
Prepaid items 82,513$ -$ 131,738$ 214,251$
Restricted
Park and recreation improvements - - 1,773,916 1,773,916
Debt service - - 9,337,777 9,337,777
Landfill mitigation - - 935,949 935,949
Law enforcement - - 6,459 6,459
Fiscal recovery - - 147,725 147,725
Economic development - - 1,668,171 1,668,171
Public safety - - 1,145,601 1,145,601
Capital projects - - 902,987 902,987
Total restricted - - 15,918,585 15,918,585
Committed
Capital projects - - 99,206 99,206
Street improvements - 3,273,427 - 3,273,427
Library operations - - 226,186 226,186
Economic development - - 3,692,542 3,692,542
Total committed - 3,273,427 4,017,934 7,291,361
Assigned
Building construction/improvements - - 4,757,755 4,757,755
Economic development - - 728,192 728,192
Capital equipment - - 3,264,650 3,264,650
Street improvements - - 496,997 496,997
Other improvement projects - - 2,208,428 2,208,428
Park improvements - - 308,137 308,137
Total assigned - - 11,764,159 11,764,159
Unassigned 9,240,805 - (1,643,916) 7,596,889
Total fund balances 9,323,318$ 3,273,427$ 30,188,500$ 42,785,245$
Major Funds
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City of Elk River
Notes to Basic Financial Statements
NOTE 11 – 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; injuries to employees; and natural disasters for which the City carries
insurance. The City obtains insurance through participation in the League of Minnesota Cities
Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental
units. The City pays an annual premium to LMCIT for its workers compensation and property and
casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for
claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded
the City's coverage in any of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred, and the amount of the loss can
be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred
but not reported (IBNRs). The City's management is not aware of any incurred but not reported
claims.
NOTE 12 – PENSION PLANS
The City participates in various pension plans. Total pension expense for the year ended
December 31, 2023, was $3,485,532. The components of pension expense are noted in the following
plan summaries.
The General Fund and Municipal Liquor, Sewer, Electric, and Water Funds typically liquidate the
liability related to the pensions.
Public Employees' Retirement Association
A. Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit pension plans
administered by PERA. PERA's defined benefit pension plans are established and administered in
accordance with Minnesota Statutes Chapters 353 and 356. PERA's defined benefit pension plans are
tax qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan
All full-time and certain part-time employees of the City are covered by the General Employees Plan.
General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are
covered by Social Security.
Public Employees Police and Fire Plan
The Police and Fire Plan, originally established for police officers and firefighters not covered by a
local relief association, now covers all police officers and firefighters hired since 1980. Effective
July 1, 1999, the Police and Fire Plan also covers police officers and firefighters belonging to local
relief associations that elected to merge with and transfer assets and administration to PERA.
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
B. Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute 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.
General Employees Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for any 5 successive
years of allowable service, age, and years of credit at termination of service. Two methods are used
to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1, 1989,
receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after
June 30, 1989. Under Method 1, the accrual rate for a Coordinated members is 1.2% for each of the
first 10 years of service and 1.7% for each additional year. Under Method 2, the accrual rate for
Coordinated members is 1.7% for all years of service. For members hired prior to July 1, 1989, a full
annuity is available when age plus years of service equal 90 and normal retirement age is 65. For
members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social
Security benefits capped at 66.
Benefit increases are provided to benefit recipients each January. The postretirement increase is
equal to 50% of the cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase
of at least 1% and a maximum of 1.5%. 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 reduced prorated increase.
In 2023, legislation repealed the statute delaying increases for members retiring before full
retirement age.
Police and Fire Plan Benefits
Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1,
2014, vest on a prorated basis from 50% after five years up to 100% after 10 years of credited service.
Benefits for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis
from 50% after 10 years up to 100% after 20 years of credited service. The annuity accrual rate is 3%
of average salary for each year of service. For Police and Fire Plan members who were first hired
prior to July 1, 1989, a full annuity is available when age plus years of service equal at least 90.
Benefit increases are provided to benefit recipients each January. The postretirement increase is
fixed at 1%. Recipients that have been receiving the annuity or benefit for at least 36 months as of
the June 30 before the effective date of the increase will receive the full increase. Recipients
receiving the annuity or benefit for at least 25 months but less than 36 months as of the June 30
before the effective date of the increase will receive a reduced prorated increase.
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
C. Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions.
Contribution rates can only be modified by the state Legislature.
General Employees Fund Contributions
Coordinated Plan members were required to contribute 6.5% of their annual covered salary in fiscal
year 2023 and the City and HRA were required to contribute 7.5% for Coordinated Plan members. The
City and HRA contributions to the General Employees Fund for the year ended December 31, 2023,
were $972,578 and $5,799, respectively. The contributions were equal to the required contributions
as set by state statute.
Police and Fire Fund Contributions
Police and Fire Plan members were required to contribute 11.8% of their annual covered salary in
fiscal year 2023, and the City was required to contribute 17.7% for Police and Fire Plan members.
The City's contributions to the Police and Fire Fund for the year ended December 31, 2023, were
$779,420. The City's contributions were equal to the required contributions as set by state statute.
D. Pension Costs
General Employees Fund Pension Costs
At December 31, 2023, the City and HRA reported liabilities of $9,033,562 and $53,256, respectively,
for their proportionate shares of the General Employees Fund's net pension liability. The City and
HRA net pension liabilities reflected a reduction due to the State of Minnesota's contribution of $16
million. The State of Minnesota is considered a non-employer 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 and HRA totaled $249,055
and $1,468, respectively.
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Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
General Employees Fund Pension Costs (Continued)
The net pension liability was measured as of June 30, 2023, and the total pension liability used to
calculate the net pension liability was determined by an actuarial valuation as of that date. The
City's proportionate share of the net pension liability was based on the City's contributions received
by PERA during the measurement period for employer payroll paid dates from July 1, 2022, through
June 30, 2023, relative to the total employer contributions received from all of PERA's participating
employers. The City's proportionate share was 0.1599% at the end of the measurement period and
0.1606% for the beginning of the period. The HRA's proportionate share was 0.0010% at the end of
the measurement period and 0.0008% for the beginning of the period.
City's proportionate share of the net pension liability 9,033,562$
HRA's proportionate share of the net pension liability 53,256
State of Minnesota's proportionate share of the net pension
liability associated with the City 250,523
Total 9,337,341$
For the year ended December 31, 2023, the City and HRA recognized pension expense of $1,581,793
and $10,561, respectively, for their proportionate share of General Employees Plan's pension
expense. Included in the amount, the City recognized $662 and the HRA recognized $65 as pension
expense (and grant revenue), respectively, for their proportionate share of the State of Minnesota's
contribution of $16 million to the General Employees Fund.
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
General Employees Fund Pension Costs (Continued)
At December 31, 2023, the City and HRA reported its proportionate share of the General Employees
Plan's deferred outflows of resources and deferred inflows of resources, related to pensions from the
following sources:
Primary Government
Differences between expected and actual economic experience 296,181$ 59,511$
Changes in actuarial assumptions 1,400,657 2,476,022
Net difference between projected and actual investment earnings - 235,213
Changes in proportion 206,704 -
Contributions paid to PERA subsequent
to the measurement date 483,600 -
Total 2,387,142$ 2,770,746$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Discretely Presented Component Unit
Differences between expected and actual economic experience 1,747$ 351$
Changes in actuarial assumptions 8,265 14,597
Net difference between projected and actual investment earnings - 1,366
Changes in proportion 1,480 -
Contributions paid to PERA subsequent
to the measurement date 2,900 -
Total 14,392$ 16,314$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
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City of Elk River
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
General Employees Fund Pension Costs (Continued)
Discretely Presented Component Unit (Continued)
The $486,500 for the City and the $2,900 for the HRA reported as deferred outflows of resources
related to pensions resulting from City and HRA contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the year ended December 31, 2024.
Other amounts reported as deferred outflows and deferred inflows of resources related to pensions
will be recognized in pension expense as noted on the following page.
Primary Government
Pension
Year Ending Expense
December 31,Amount
2024 342,866$
2025 (1,226,982)
2026 212,879
2027 (195,967)
Total (867,204)$
Discretely Presented Component Unit
Pension
Year Ending Expense
December 31,Amount
2024 2,159$
2025 (7,126)
2026 1,301
2027 (1,156)
Total (4,822)$
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs (Continued)
At December 31, 2023, the City reported a liability of $5,491,447 for its proportionate share of the
Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30,
2023, and the total pension liability used to calculate the net pension liability was determined by an
actuarial valuation as of that date. The City's proportionate share of the net pension liability was
based on the City's contributions received by PERA during the measurement period for employer
payroll paid dates from July 1, 2022, through June 30, 2023, relative to the total employer
contributions received from all of PERA's participating employers. The City's proportionate share was
0.3180% at the end of the measurement period and 0.3277% for the beginning of the period.
The State of Minnesota contributed $18 million to the Police and Fire Fund in the plan fiscal year
ended June 30, 2023. The contribution consisted of $9 million in direct state aid that meets the
definition of a special funding situation and $9 million in supplemental state aid that does not meet
the definition of a special funding situation. The $9 million direct state aid was paid on October 1,
2022. Thereafter, by October 1 of each year, the State will pay $9 million to the Police and Fire Fund
until full funding is reached or July 1, 2048, whichever is earlier. The $9 million in supplemental
state aid will continue until the fund is 90% funded, or until the State Patrol Plan (administered by
the Minnesota State Retirement System) is 90% funded, whichever occurs later. The State of
Minnesota's proportionate share of the net pension liability associated with the City totaled
$221,260.
City's proportionate share of the net pension liability 5,491,447$
State of Minnesota's proportionate share of the net pension
liability associated with the City 221,260
Total 5,712,707$
The State of Minnesota is included as a non-employer contributing entity in the Police and Fire
Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by Employer
(pension allocation schedules for the $9 million in direct state aid. Police and Fire Plan employers
need to recognize their proportionate share of the State of Minnesota's pension expense (and grant
revenue) under GASB 68 special funding situation accounting and financial reporting requirements.
For the year ended December 31, 2023, the City recognized pension expense of $1,621,320 for its
proportionate share of the Police and Fire Plan's pension expense. Included in this amount, the City
recognized ($13,326) as pension expense (and grant revenue) for its proportionate share of the State
of Minnesota's contribution of $9 million to the Police and Fire Fund.
The State of Minnesota is not included as a non-employer contributing entity in the Police and Fire
Pension Plan pension allocation schedules for the $9 million in supplemental state aid. The City also
recognized $28,620 for the year ended December 31, 2023, as revenue and an offsetting reduction of
the net pension liability for its proportionate share of the State of Minnesota's on-behalf
contributions to the Police and Fire Fund.
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs (Continued)
At December 31, 2023, the City reported its proportionate share of the Police and Fire Plan's
deferred outflows of resources and deferred inflows of resources related to pensions from the
following sources.
Differences between expected and actual economic experience 1,520,273$ -$
Changes in actuarial assumptions 6,456,480 7,719,530
Net difference between projected and actual investment earnings - 138,390
Changes in proportion 183,567 414,567
Contributions paid to PERA subsequent
to the measurement date 389,710 -
Total 8,550,030$ 8,272,487$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
The $389,710 reported as deferred outflows of resources related to pensions resulting from City
contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows
and inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ending Pension Expense
December 31,Amount
2024 268,098$
2025 76,767
2026 1,357,037
2027 (381,250)
2028 (1,432,819)
Total (112,167)$
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
E. Long-Term Expected Return on Investment
The State Board of Investment, which manages the investments of 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 table on the following page.
Expected Real
Rate of Return
Domestic equity 35.5 % 5.10 %
Private markets 25.0 5.90
Fixed income 20.0 0.75
International equity 17.5 5.90
Cash equivalents 2.0 0.00
Total 100.0 %
Long-Term
Asset Class Target Allocation
F. Actuarial Methods and Assumptions
The total pension liability in the June 30, 2023, actuarial valuation was determined using an
individual entry-age normal actuarial cost method. The long-term rate of return on pension plan
investments used in the determination of the total liability is 7.0%. This assumption is based on a
review of inflation and investments return assumptions from a number of national investment
consulting firms. The review provided a range of return investment return rates deemed to be
reasonable by the actuary. An investment return of 7.0% was deemed to be within that range of
reasonableness for financial reporting purposes.
Inflation is assumed to be 2.25% for the General Employees Plan and 2.25% for the Police and Fire
Plan. Benefit increases after retirement are assumed to be 1.25% for the General Employees Plan and
1% for the Police and Fire Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25%
after one year of service to 3.0% after 27 years of service. In the Police and Fire Plan, salary growth
assumptions range from 11.75% after one year of service to 3.0% 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 PERA's experience.
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NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
F. Actuarial Methods and Assumptions (Continued)
Actuarial assumptions for the General Employees Plan are reviewed every four years. The most
recent four-year experience study for the General Employees Plan was completed in 2022. The
assumption changes were adopted by the Board and became effective with the July 1, 2023,
actuarial valuation. The most recent four-year experience study for the Police and Fire Plan was
completed in 2020 and was adopted by the Board and became effective with the July 1, 2021,
actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2023:
General Employees Fund
Changes in Actuarial Assumptions
The investment return assumption and single discount rate were changed from 6.5% to 7.0%.
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, non-compounding benefit increase of 2.5% minus the actual 2024 adjustment will
be payable in a lump sum for calendar year 2024 by March 31, 2024.
Police and Fire Fund
Changes in Actuarial Assumptions
The investment return assumption and single discount rate were changed from 6.5% to 7.0%.
The single discount rate changed from 5.4% to 7.0%.
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% vesting after five years,
increasing incrementally to 100% after 10 years.
A one-time, non-compounding benefit increase of 3.0% 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.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
G. Discount Rate
The discount rate used to measure the total pension liability in 2023 was 7.0%. 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 positions of the General Employees and Police and Fire Plans 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 presents the City and HRA's proportionate shares of the net pension liability for all
plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, 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:
Primary Government
1% Decrease in Current 1% Increase in
City's proportionate share of
the General Employees Fund
net pension liability 15,981,095$ 9,033,562$ 3,318,950$
1% Decrease in Current 1% Increase in
City's proportionate share of
the Police and Fire Fund
net pension liability (asset) 10,895,685$ 5,491,447$ 1,048,440$
Discount Rate
(6.0%)
Discount Rate
(7.0%)
Discount Rate
(8.0%)
Discount Rate
(6.0%)
Discount Rate
(7.0%)
Discount Rate
(8.0%)
Discretely Presented Component Unit
1% Decrease in Current 1% Increase in
HRA's proportionate share of
the General Employees Fund
net pension liability 94,215$ 53,256$ 19,567$
Discount Rate
(6.0%)
Discount Rate
(7.0%)
Discount Rate
(8.0%)
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.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Public Employees Defined Contribution Plan (Defined Contribution Plan)
Three council members of the City of Elk River are covered by the Defined Contribution Plan, a
multiple employer deferred compensation plan administered by PERA. The Defined Contribution Plan
is a tax qualified plan under Section 401(a) of the Internal Revenue Code and all contributions by or
on behalf of employees are tax deferred until time of withdrawal.
The defined contribution plan consists of individual accounts paying a lump-sum benefit. Plan
benefits depend solely on amounts contributed to the plan plus investment earnings, less
administrative expenses; therefore, there is no future liability to the City. Minnesota Statutes
Chapter 353D.03, specifies plan provisions, including the employee and employer contribution rates
for those qualified personnel who elect to participate. An eligible elected official who decides to
participate contributes 5% of 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 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,
PERA receives 2% of employer contributions and twenty-five hundredths of 1% (.25%) of the assets in
each member's account annually.
Pension expense for the year is equal to the contributions made. Total contributions made by the
City during fiscal year 2023 were:
Contribution Amount Percentage of Covered Payroll
Employee Employer Employee Employer Required Rate
850$ 850$ 5% 5% 5%
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association
A. Plan Description
The Elk River Firefighter's Relief Association is the administrator of a single employer defined benefit
pension plan established to provide benefits for members of the Elk River Fire Department per
Minnesota State Statutes.
B. Benefits Provided
Volunteer firefighters of the City are members of the Elk River Firefighter's Relief Association. Full
retirement benefits are payable to members who have reached age 50 and have completed 20 years
of service for lump sum service pensions. Partial benefits are payable to members who have reached
50 and have completed 5 years of service. Disability benefits and widow and children's survivor
benefits are also payable to members, or their beneficiaries based upon requirements set forth in the
bylaws. These benefit provisions and all other requirements are consistent with enabling state
statutes.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association
C. Employees Covered by Benefit Terms
At December 31, 2022, the following employees were covered by the benefit terms:
Inactive employees entitled to but not yet receiving benefit payments 14
Active employees 53
Total 67
D. Contributions
Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis.
The minimum support rates from the municipality and from State aids are determined as the amount
required to meet the normal cost plus amortizing any existing prior service costs over a ten year
period. The City's obligation is the financial requirement for the year less state aids. Any additional
payments by the City shall be used to amortize the unfunded liability of the relief association. The
Association is comprised of volunteers: therefore, there are no payroll expenditures (i.e., there are
no covered payroll percentage calculations). During the year, the City recognized as revenue and as
an expenditure on behalf payment of $275,775 made by the State of Minnesota for the Relief
Association.
E. Net Pension Liability
The City's net pension liability was measured as of December 31, 2022, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date.
The total pension liability in the December 31, 2022, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.50 % Per year
Discount rate 5.00 % Per year
Investment rate of return 5.00 %
The demographic assumption of mortality is based on the rates use in the July 1, 2020, Minnesota
PERA Police & Fire Plan actuarial valuation as described below.
Healthy Pre-retirement: Pub-2010 Public Safety Employee mortality tables with projected
mortality improvements based on scale MP-2021.
Healthy Post-retirement: Pub-2010 Healthy Retired Public Safety mortality tables with projected
mortality improvements based on scale MP-2021 with male rates being adjusted by a factor of 0.98.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association (Continued)
E. Net Pension Liability (Continued)
Disabled: Pub-2010 Public Safety Disabled Retiree mortality tables with projected mortality
improvements based on scale MP-2021. Male rates are adjusted by a factor of 1.05.
The 5.00% long-term expected rate of return on pension plan investments was determined using a
building-block method in which best estimates for expected future real rates of return (expected
returns, net of inflation) were developed for each asset class using the plan's target investment
allocation along with long-term return expectations by asset class. Inflation expectations were
applied to derive the nominal rate of return for the portfolio.
Best estimates of arithmetic real rates of return for each major asset class included in the pension
plan's target asset allocation as of the measurement date are summarized in the table below.
Domestic equity 32.0 % 4.10 %
International equity 23.0 4.64
Fixed income 25.0 1.05
Real estate and alternatives 5.0 3.54
Cash and equivalents 15.0 -0.45
Total 100.0 %
Target AllocationAsset Class
Long-Term
Expected Real
Rate of Return
The discount rate used to measure the total pension liability was 5.00%. The projection of cash flows
used to determine the discount rate assumed that contributions to the plan will be made as specified
in statute. Based on that assumption and considering the funding ratio of the plan, the fiduciary net
position was projected to be available to make all projected future benefit payments of current
active and inactive 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.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association (Continued)
F. Changes in the Net Pension Liability
Total Plan Fiduciary Net
Pension Net Pension
Liability Position Liability
(a) (b) (a) - (b)
Balances at December 31, 2022 3,828,551$ 4,394,086$ (565,535)$
Changes for the year
Service cost 196,328 - 196,328
Interest cost 179,830 - 179,830
Differences between expected
and actual experience (162,665) - (162,665)
Changes of assumptions (11,236) - (11,236)
Contributions - State and local - 285,658 (285,658)
Net investment income - (525,860) 525,860
Benefit payments (856,550) (856,550) -
Administrative expense - (15,416) 15,416
Net changes (654,293) (1,112,168) 457,875
Balances at December 31, 2023 3,174,258$ 3,281,918$ (107,660)$
Increase (Decrease)
Sensitivity of the net pension liability to changes in the discount rate. The following table on the
next page presents the net pension liability of the City, calculated using the discount rate of 5.00%,
as well as what the City's net pension liability would be if it were calculated using a discount rate
that is 1-percentage-point lower (4.00%) or 1-percentage-point higher (6.00%) than the current rate:
1% Decrease in Current 1% Increase in
Discount Rate Discount Rate Discount Rate
(4.00%) (5.00%) (6.00%)
City's proportionate share of
the Plan net pension liability (asset) (11,049)$ (107,660)$ (199,559)$
Detailed information about the pension plan's fiduciary net position is available in the separately
issued relief association financial report.
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association (Continued)
G. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions
For the year ended December 31, 2023, the City recognized pension expense of ($37,767). At
December 31, 2023, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Differences between expected and actual liability 14,692$ 280,993$
Changes in actuarial assumptions 46,663 9,933
Net collective difference between projected
and actual investment earnings 342,248 -
Contributions paid to the plan subsequent
to the measurement date 305,775 -
Total 709,378$ 290,926$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
The $305,775 reported as deferred outflows of resources related to pensions resulting from
contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ended December 31, 2024. Other amounts reported as deferred outflows
and inflows of resources related to pensions will be recognized in pension expense as shown on the
following page:
Year Ending Pension Expense
December 31,Amount
2024 (35,209)$
2025 38,997
2026 71,655
2027 116,660
2028 (29,572)
Thereafter (49,854)
Total 112,677$
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City of Elk River
Notes to Basic Financial Statements
NOTE 12 – PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Firefighter's Relief Association (Continued)
H. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions (Continued)
NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN
A. Plan Description
The City provides other postemployment health insurance benefits for retired employees through a
defined benefit plan: Municipal Retirees Health Plan (MRHP), a single employer defined benefit
healthcare plan. The plan provides benefits for eligible retirees and their dependents through the
City's group health insurance plans, which cover both active and retired members. Since the premium
is a blended rate determined on the active and retiree population, the retirees are receiving an
implicit rate subsidy. The MRHP does not issue publicly available financial reports.
Elk River Municipal Utilities has switched to age-based medical premiums and no longer has an OPEB
liability. Since medical premiums are age-based, the premiums are equal to the expected true cost
of retiree coverage. As a result, there is no implicit subsidy for these benefits. There is also no
explicit subsidy since retirees must pay the full premium to remain covered during retirement.
B. Funding Policy
Contribution requirements are reviewed at the time changes are made to the plans. Benefit
provisions for MRHP are established and amended by the City. Eligible retirees receiving benefits are
required to pay 100% of the total premium.
C. Members
As of the valuation date of January 1, 2023, the following were covered by the benefit terms:
Active employees electing coverage 135
Retirees receiving payments 7
Spouses receiving payments 4
Total 146
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City of Elk River
Notes to Basic Financial Statements
NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
D. Actuarial Assumptions
The total OPEB liability was determined by an actuarial valuation measured as of January 1, 2023,
using the following actuarial assumptions, applied to all periods included in the measurement, unless
otherwise specified:
Discount rate 4.00%
Salary increases Service graded table
Inflation 2.50%
Medical trend rate
Mortality assumption Pub-2010 Public Retirement Plans
Headcount-Weighted Mortality Tables
(General, Safety) with MP-2021
Generational Improvement Scale
Key Methods and Assumptions Used in Valuation of Total OPEB Liability
6.25% in 2023, grading to 5.00% over 6
years and then to 4.00% over the next 48
years
The actuarial assumptions used in the January 1, 2023, valuation were based on the results of an
actuarial experience study for the period January 1, 2022 to December 31, 2022.
The discount rate used to measure the total OPEB liability was 4.00% based on 20-year municipal
bond rates.
E. Total OPEB Liability
The City's total OPEB liability of $826,361 was measured as of January 1, 2023, and was determined
by an actuarial valuation as of that date.
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City of Elk River
Notes to Basic Financial Statements
NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
E. Total OPEB Liability (Continued)
Changes in the total OPEB liability are as follows:
Balance at December 31, 2022 902,334$
Changes for the year
Service cost 49,594
Interest 18,488
Differences between expected and actual experience
economic experience 5,939
Changes of assumptions (94,638)
Benefit payments (55,356)
Net changes (75,973)
Balance at December 31, 2023 826,361$
The General Fund and Municipal Liquor and Sewer Funds typically liquidate the liability related to
OPEB. No assets are accumulated in a trust to pay related benefits.
F. OPEB Liability Sensitivity
The following presents the City's total OPEB liability calculated using the discount rate of 2.00% as
well as the liability measured using 1% lower and 1% higher than the current discount rate.
1% Decrease Current 1% Increase
3.00% 4.00% 5.00%
883,804$ 826,361$ 772,895$
Total OPEB Liability
The table below 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% lower and 1%
higher than the current healthcare cost trend rates.
1% Decrease Current 1% Increase
754,703$ 826,361$ 909,635$
Total OPEB Liability
(5.25% Decreasing
to 3.0%)
(6.25% Decreasing
to 4.0%)
(7.25% Decreasing
to 5.0%)
Page 219 of 464
99
City of Elk River
Notes to Basic Financial Statements
NOTE 13 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
G. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB
For the year ended December 31, 2023, the City recognized OPEB expense of $33,351. At
December 31, 2023, the City reported deferred outflows of resources and deferred inflows of
resources related to OPEB from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual liability 5,090$ 82,894$
Changes of assumptions 28,636 89,075
Contributions between measurement date and reporting date 56,740 -
Total 90,466$ 171,969$
The $56,740 reported as deferred outflows of resources related to OPEB resulting from City
contributions subsequent to the measurement date will be recognized as a reduction of the OPEB
liability in the year ended December 31, 2024. Other amounts reported as deferred outflows of
resources related to OPEB will be recognized in pension expense as shown on the following page:
Total
(34,731)$
(34,723)
(18,257)
(25,188)
(12,671)
(12,673)
Total (138,243)$
Year Ending
December 31,
Thereafter
2024
2025
2026
2027
2028
Page 220 of 464
100
City of Elk River
Notes to Basic Financial Statements
NOTE 14 – COMMITMENTS AND CONTINGENCIES
A. Commitments
At December 31, 2023, The City had a construction commitment for the Rolling Hills Sewer Extension
project outstanding totaling $420,162.
The Utilities entered into an agreement in 2007 with Central Minnesota Municipal Power Agency
(CMMPA) to acquire an interest in the CAPX Initiative Brookings Project, a power transmission line in
Minnesota. The project is a 250-mile, 345 kV AC transmission line with a rating of 2,300 MW,
between Brookings, South Dakota, and the Southeast Twin Cities. In 2011, there was increased
opportunity for investment, and subsequent agreements provide the Utilities with an ownership share
of $5.6 million or 18.89%. Revenues have been less than originally projected due to the decrease in
Rate of Return (ROE) issued by FERC. The original ROE 12.38% has been reduced to 10.52% on this
investment through CMMPA is designed to provide approximately $80K annually over the 40-year
project life. With majority of the distribution once the bonds are paid off, the projected over
recovery in 2023 is estimated to be $104K. The bond obligations are satisfied first, distribution to
participants is directly affected by under recovery. The over recovery is rolled forward under the
true up. However, the over recovery in 2023 (approximately $104K) would be included in the revenue
requirements in 2025. The transmission payments for 2023 were $48,540, all of which was a
receivable at December 31, 2023.
B. Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor
agencies, principally the federal government. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that
may be disallowed by the grantor cannot be determined at this time, although the government
expects such amounts, if any, to be immaterial.
The City's tax increment districts are subject to review by the state of Minnesota Office of the State
Auditor (OSA). Any disallowed claims or misuse of tax increments could become a liability of the
applicable fund. The City's management is not aware of any instances of noncompliance which would
have a material effect on the financial statements.
NOTE 15 – TAX ABATEMENTS
The City of Elk River has established a tax abatement program pursuant to Minnesota Statutes
Sections 469.1812 through 469.1815. As part of the City's program the City enters into agreements
through the use of tax increment financing districts under Minnesota Statutes Section 469.174 to
469.179 (the Tax Increment Act). Under these statutes, the City annually abates taxes collected
above the district's base tax capacity which is established during adoption of the tax increment
district. These agreements are established to foster economic development and redevelopment
through creating jobs, removing blight, and providing affordable housing.
For fiscal year ending December 31, 2023, the City has five agreements established under Minnesota
Statutes Section 469.174 to 469.179 which resulted in property taxes totaling $371,412 being abated.
Individual abatement payments which constituted more than 1% of the City's 2023 tax levy include:
A pay-as-you-go note resulting in an abatement amount of $165,276, for a financial
institution.
Page 221 of 464
101
City of Elk River
Notes to Basic Financial Statements
NOTE 15 – TAX ABATEMENTS (CONTINUED)
As part of the City's tax abatement program, the City also enters into agreements with local
businesses in the form of business subsidy agreements established under Minnesota Statutes Section
116J.993 through 116J.995. These agreements must meet a public purpose which may include, but
may not be limited to, increasing the tax base.
In 2021, the City of Elk River had four business subsidy agreements in place which resulted in
property taxes totaling $94,212 being abated. Individual agreements which result in taxes abated in
excess of 1% of the City's total tax levy would be disclosed individually. There were no such payments
made in 2022 or 2023 in excess of this amount.
NOTE 16 – CONDUIT DEBT
From time-to-time, the City has issued revenue bonds to provide financial assistance to private-
sector entities for the acquisition and construction of industrial and commercial, multi-family and
educational facilities deemed to be in the public interest. The bonds are secured by the property
financed and are payable solely from payment received from the benefited entity. Neither the City,
the state, nor any political subdivision thereof is obligated in any manner for repayment of the
bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial
statements. As of December 31, 2023, there was one series of revenue bonds outstanding, with a
principal payable amount of $2,755,000.
NOTE 17 – OTHER INFORMATION
A. Territorial Acquisition Agreement
In 2015, the Utilities entered into an agreement to transfer ownership of electric plant and electric
service to customers in eight designated areas receiving service from Connexus Energy. Specific
payment terms have been negotiated for five years, and if any of the eight areas are not acquired
within this timeframe, the payment terms may be renegotiated. In 2019, the Utilities acquired the
final service areas.
The agreed cost of property purchased from Connexus Energy is net book value, integration
expenses, and a loss of revenue payment. The loss of revenue payment for each area acquired is
based on a formula outlined in the agreement, payable for the subsequent ten years after initial
purchase.
The Utilities acquired designated service area one in 2015 for $877,807, service area two in 2016 for
$663,586, service areas three and four in 2017 for $276,776, service areas five and six in 2018 for
$298,736 and service areas seven and eight in 2019 for $78,457. The loss of revenue payments made
were $411,157 in 2017, $570,725 in 2018, $751,860 in 2019, $834,185 in 2020, $857,538 in 2021,
$924,187 in 2022, $940,467 in 2023, and $933,159 in 2024. All amounts paid are included in property
and equipment, and loss of revenue payments are included in intangible assets.
Page 222 of 464
102
City of Elk River
Notes to Basic Financial Statements
NOTE 17 – OTHER INFORMATION (CONTINUED)
B. Joint Ventures
The City has agreements with government and other entities which provide reduced costs, better
service, and additional benefits to the participants. In 2007, the City and neighboring municipalities
formed the Sherburne/Wright Cable Communications Commission (the Commission). The purpose of
the organization is to monitor the operation and activities of cable communications of the member
municipalities. The Commission also provides coordination, administration, and enforcement of the
franchises for the cable communication system. The City has no ongoing financial interest or
responsibility with regards to the Cable Commission. Financial statements for the Commission can be
obtained by writing to: Sherburne/Wright Cable Communications Commission at 444 Cedar Street,
Suite 950, St. Paul, Minnesota 55101.
C. Segment Information
The City maintains six enterprise funds that account for the municipal liquor operations, garbage
collections, sewer, storm water, water, and electric utilities. The City considers each of its
enterprise funds to be a segment. Since the required segment information is already included in the
City's proprietary funds' balance sheet and statement of revenues, expenses, and changes in net
position balance, this information has not been repeated in the notes to the basic financial
statements.
Page 223 of 464
103
REQUIRED SUPPLEMENTARY INFORMATION
Page 224 of 464
See notes to required supplementary information. 104
December 31, December 31, December 31, December 31,
2018 2019 2020 2021
Total OPEB Liability
Service cost 58,939$ 44,470$ 53,284$ 62,443$
Interest 30,051 31,024 32,766 27,703
Differences between expected
and actual experience - (87,455) - (101,343)
Changes of assumptions - (27,862) 48,516 13,730
Benefit payments (47,958) (42,048) (51,790) (49,504)
Net change in total OPEB liability 41,032 (81,871) 82,776 (46,971)
Beginning of year 875,478 916,510 834,639 917,415
End of year 916,510$ 834,639$ 917,415$ 870,444$
8,658,239$ 9,076,855$ 9,349,161$ 10,007,339$
Total OPEB liability as a percentage of
covered payroll 10.59% 9.20% 9.81% 8.70%
Note 1: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Note 2: No assets are accumulated in a trust.
Covered payroll
City of Elk River
Schedule of Changes in Total OPEB Liability
and Related Ratios - Municipal Retirees Health Plan
Page 225 of 464
105
December 31, December 31,
2022 2023
64,316$ 49,594$
18,192 18,488
- 5,939
- (94,638)
(50,618) (55,356)
31,890 (75,973)
870,444 902,334
902,334$ 826,361$
10,307,559$ 11,694,646$
8.75% 7.07%
Page 226 of 464
106
Primary Government
City's Covered-
Employee
Payroll
2014 0.1587% 7,454,930$ -$ 7,454,930$ 8,332,262$ 89.47% 78.70%
2015 0.1438% 7,452,462 - 7,452,462 8,712,032 85.54% 78.19%
2016 0.1435% 11,651,488 152,173 11,803,661 8,902,000 130.89% 68.91%
2017 0.1515% 9,611,075 120,624 9,731,699 9,695,118 99.13% 75.90%
2018 0.1444% 8,060,648 261,004 8,321,652 9,702,980 83.07% 79.53%
2019 0.1443% 7,977,792 247,930 8,225,722 10,216,960 78.08% 80.23%
2020 0.1503% 9,013,814 277,843 9,291,657 10,715,865 84.12% 79.06%
2021 0.1548% 6,610,551 201,689 6,812,240 11,138,929 59.35% 87.00%
2022 0.1606% 12,716,785 372,972 13,089,757 12,032,776 105.68% 76.67%
2023 0.1599% 9,033,562 249,055 9,282,616 12,846,330 70.32% 83.10%
Component Unit - Housing and Redevelopment Authority
HRA's Covered-
Employee
Payroll
2014 0.0010% 46,966$ -$ 46,966$ 52,493$ 89.47% 78.70%
2015 0.0009% 46,951 - 46,951 54,886 85.54% 78.19%
2016 0.0009% 73,404 959 74,363 59,083 124.24% 68.91%
2017 0.0010% 60,586 1,170 61,756 61,433 98.62% 75.90%
2018 0.0009% 51,835 1,698 53,533 62,892 82.42% 79.53%
2019 0.0010% 55,520 1,725 57,245 66,193 83.88% 80.23%
2020 0.0009% 51,316 1,582 52,898 61,042 84.07% 79.06%
2021 0.0006% 25,725 785 26,510 43,351 59.34% 87.00%
2022 0.0008% 66,148 1,940 68,088 62,584 105.70% 76.67%
2023 0.0010% 53,256 1,468 54,725 75,724 70.33% 83.10%
HRA's
Proportionate
Share of the
Net Pension
Liability (Asset)
as a Percentage
of its Covered-
Employee
Payroll
Plan Fiduciary
Net Position as
a Percentage of
the Total
Pension
Liability
City of Elk River
Schedule of City's Proportionate Share
of Net Pension Liability - General Employees Retirement Fund
Last Ten Years
City's
Proportionate
Share of the
Net Pension
Liability and
the State's
Proportionate
Share of the
Net Pension
Liability
Associated with
the City
For Fiscal
Year Ended
June 30,
City's
Proportionate
Share
(Percentage) of
the Net Pension
Liability (Asset)
City's
Proportionate
Share (Amount)
of the Net
Pension
Liability (Asset)
State's
Proportionate
Share (Amount)
of the Net
Pension
Liability
Associated with
the City
City's
Proportionate
Share of the
Net Pension
Liability (Asset)
as a Percentage
of its Covered-
Employee
Payroll
Plan Fiduciary
Net Position as
a Percentage of
the Total
Pension
Liability
HRA's
Proportionate
Share of the
Net Pension
Liability and
the State's
Proportionate
Share of the
Net Pension
Liability
Associated with
the HRA
For Fiscal
Year Ended
June 30,
HRA's
Proportionate
Share
(Percentage) of
the Net Pension
Liability (Asset)
HRA's
Proportionate
Share (Amount)
of the Net
Pension
Liability (Asset)
State's
Proportionate
Share (Amount)
of the Net
Pension
Liability
Associated with
the HRA
Page 227 of 464
107
For Fiscal
Year Ended
June 30,
City's
Proportion of
the Net Pension
Liability (Asset)
City's
Proportionate
Share of the
Net Pension
Liability (Asset)
State's
Proportionate
Share (Amount)
of the Net
Pension
Liability
Associated with
the City
City's
Proportionate
Share of the
Net Pension
Liability and
the State's
Proportionate
Share of the
Net Pension
Liability
Associated with
the City
City's Covered-
Employee
Payroll
City's
Proportionate
Share of the
Net Pension
Liability (Asset)
as a Percentage
of its Covered-
Employee
Payroll
Plan Fiduciary
Net Position as
a Percentage of
the Total
Pension
Liability
2014 0.2990% 3,229,323$ -$ 3,229,323$ 2,440,932$ 132.30% 86.61%
2015 0.3040% 3,454,151 - 3,454,151 2,788,952 123.85% 86.61%
2016 0.3060% 12,280,312 53,870 12,334,182 2,952,673 415.90% 63.88%
2017 0.3140% 4,239,374 43,337 4,282,711 3,211,726 132.00% 85.43%
2018 0.3045% 3,245,656 - 3,245,656 3,220,233 100.79% 88.84%
2019 0.3175% 3,380,110 - 3,380,110 3,352,444 100.83% 89.26%
2020 0.2998% 3,951,685 93,106 4,044,791 3,390,212 116.56% 87.19%
2021 0.3115% 2,404,450 108,129 2,512,579 3,682,040 65.30% 93.66%
2022 0.3277% 14,260,210 622,936 14,883,146 3,981,040 358.20% 70.53%
2023 0.3180% 5,491,447 221,260 5,712,707 4,176,503 131.48% 86.47%
City of Elk River
of Net Pension Liability - Public Employees Police and Fire Retirement Fund
Last Ten Years
Schedule of City's Proportionate Share
Page 228 of 464
108
Primary Government
2014 615,331$ 615,331$ -$ 8,487,324$ 7.25%
2015 668,633 668,633 - 8,915,107 7.50%
2016 690,811 690,811 - 9,210,813 7.50%
2017 706,711 706,711 - 9,422,813 7.50%
2018 736,804 736,804 - 9,824,053 7.50%
2019 753,933 753,933 - 10,052,440 7.50%
2020 810,637 810,637 - 10,808,493 7.50%
2021 886,693 886,693 - 11,822,573 7.50%
2022 923,995 923,995 - 12,319,933 7.50%
2023 972,578 972,578 - 12,967,707 7.50%
Component Unit - Housing and Redevelopment Authority
2014 3,877$ 3,877$ -$ 53,476$ 7.25%
2015 4,212 4,212 - 56,160 7.50%
2016 4,352 4,352 - 58,027 7.50%
2017 4,494 4,494 - 59,920 7.50%
2018 4,810 4,810 - 64,133 7.50%
2019 5,040 5,040 - 67,200 7.50%
2020 4,629 4,629 - 61,720 7.50%
2021 3,678 3,678 - 49,040 7.50%
2022 4,665 4,665 - 62,200 7.50%
2023 5,799 5,799 - 77,320 7.50%
City of Elk River
Schedule of City Contributions -
General Employees Retirement Fund
Last Ten Years
Fiscal Year
Ending
December 31,
Statutorily
Required
Contribution
Contributions
in Relation to
the Statutorily
Required
Contributions
Contribution
Deficiency
(Excess)
City's Covered-
Employee
Payroll
Contributions
as a
Percentage of
Covered-
Employee
Payroll
Contribution
Deficiency
(Excess)
City's Covered-
Employee
Payroll
Contributions
as a
Percentage of
Covered-
Employee
Payroll
Statutorily
Required
Contribution
Contributions
in Relation to
the Statutorily
Required
Contributions
Fiscal Year
Ending
December 31,
Page 229 of 464
109
2014 418,280$ 418,280$ -$ 2,581,975$ 16.20%
2015 478,192 478,192 - 2,951,802 16.20%
2016 495,478 495,478 - 3,058,506 16.20%
2017 508,774 508,774 - 3,140,580 16.20%
2018 533,296 533,296 - 3,291,951 16.20%
2019 631,494 631,494 - 3,725,628 16.95%
2020 610,950 610,950 - 3,451,695 17.70%
2021 690,006 690,006 - 3,898,339 17.70%
2022 724,413 724,413 - 4,092,729 17.70%
2023 779,420 779,420 - 4,403,503 17.70%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Schedule of City Contributions -
Public Employees Police and Fire Retirement Fund
City of Elk River
Last Ten Years
Fiscal Year
Ending
December 31,
Statutorily
Required
Contribution
Contributions
in Relation to
the Statutorily
Required
Contributions
Contribution
Deficiency
(Excess)
City's Covered-
Employee
Payroll
Contributions
as a
Percentage of
Covered-
Employee
Payroll
Page 230 of 464
110
2015 2016 2017 2018
Service cost $ 93,312 $ 99,459 $ 107,095 $ 101,600
126,522 127,413 142,222 146,894
Differences between expected
and actual experience - - (147,992) -
Changes of assumptions - 297,706 - 11,196
Changes of benefit terms 62,318 - 55,532 -
Benefit payments - (423,760) (147,015) -
Net change in TPL 282,152 100,818 9,842 259,690
TPL - beginning 1,953,814 2,235,966 2,336,784 2,346,626
TPL - ending 2,235,966$ 2,336,784$ 2,346,626$ 2,606,316$
Plan fiduciary net position (PFNP)
Contributions - State 164,825$ 177,826$ 179,192$ 182,297$
Contributions - City 30,000 30,000 30,000 30,000
Net investment income 124,109 (143,580) 229,424 457,331
Other additions - - - -
Benefit payments - (423,760) (147,015) -
Administrative expense (8,634) (13,663) (12,884) (12,907)
Net change in PFNP 310,300 (373,177) 278,717 656,721
PFNP - beginning 2,880,579 3,190,879 2,817,702 3,096,419
PFNP - ending 3,190,879$ 2,817,702$ 3,096,419$ 3,753,140$
$ (954,913)(480,918)$ (749,793)$ (1,146,824)$
142.71% 120.58% 131.95% 144.00%
2015 2016 2017 2018
Statutorily required contribution (a) $ 174,826 $ 179,192 $ 182,297 $ 189,502
204,826 209,192 212,297 219,502
Contribution deficiency (excess) (a-b) (30,000) (30,000) (30,000) (30,000)
* This schedule is intended to show information for ten years. Additional years will be displayed
as they become available.
Interest on the pension liability
Total pension liability (TPL)
City of Elk River
Schedule of Changes in Net Pension Liability and Related Ratios -
Elk River Fire Relief Association
Last Ten Years*
Actual contributions paid (b)
Net pension liability/(asset) - ending
Plan fiduciary net position as a
percentage of the total pension
liability
Schedule of City Contributions -
Elk River Fire Relief Association
Last Ten Years*
Page 231 of 464
111
2019 2020 2021 2022 2023
$ 107,610 $ 138,202 $ 154,084 $ 141,264 $ 196,328
146,432 164,617 158,331 153,908 179,830
(14,808) - (141,716)19,130 (162,665)
39,541 25,224 16,270 - (11,236)
645,281 - - 725,544 -
(334,581) (396,875) (228,840) (296,383) (856,550)
589,475 (68,832) (41,871) 743,463 (654,293)
2,606,316 3,195,791 3,126,959 3,085,088 3,828,551
3,195,791$ 3,126,959$ 3,085,088$ 3,828,551$ 3,174,258$
189,502$ 199,451$ 206,496$ 220,909$ 255,658$
30,000 30,000 30,000 30,000 30,000
(224,880) 540,907 326,613 377,358 (525,860)
- - - - -
(334,581) (396,875) (228,840) (296,383) (856,550)
(11,963) (16,374) (13,085) (17,309) (15,416)
(351,922) 357,109 321,184 314,575 (1,112,168)
3,753,140 3,401,218 3,758,327 4,079,511 4,394,086
3,401,218$ 3,758,327$ 4,079,511$ 4,394,086$ 3,281,918$
(205,427)$ (631,368)$ (994,423)$ (565,535)$ (107,660)$
106.43% 120.19% 132.23% 114.77% 103.39%
2019 2020 2021 2022 2023
$ 199,424 $ 206,496 $ 220,909 $ 252,658 $ 275,775
229,424 236,496 250,909 282,658 305,775
(30,000) (30,000) (30,000) (30,000) (30,000)
Page 232 of 464
112
Page 233 of 464
City of Elk River
Notes to Required Supplementary Information
113
General Employees Fund
2023 Changes
Changes in Actuarial Assumptions
The investment return assumption and single discount rate were changed from 6.5% to 7.0%.
Changes in Plan Provisions
An additional one-time direct state aid contribution of $170.1 million was 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, non-compounding benefit increase of 2.5% minus the actual 2024 adjustment will
be payable in a lump sum for calendar year 2024 by March 31, 2024.
2022 Changes
Changes in Actuarial Assumptions
The mortality improvement scale was changed from scale MP-2020 to scale MP-2021.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2021 Changes
Changes in Actuarial Assumptions
The investment return and single discount rates were changed from 7.5% to 6.5% for financial
reporting purposes.
The mortality improvement scale was changed from scale MP-2019 to scale MP-2020.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2020 Changes
Changes in Actuarial Assumptions
The price inflation assumption was decreased from 2.5% to 2.25%.
The payroll growth assumption was decreased from 3.25% to 3.0%.
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% 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 changes 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 2-5 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 Scale MP-2018 to Scale MP-2019.
The assumed spouse age difference was changed from two years older for females to one year
older.
Page 234 of 464
City of Elk River
Notes to Required Supplementary Information
114
General Employees Fund (Continued)
2020 Changes (Continued)
Changes in Actuarial Assumptions (Continued)
The assumed number of married male new retirees electing the 100% Joint and Survivor
option changed from 35% to 45%. The assumed number of married female new retires electing
the 100% Joint and Survivor option changed from 15% to 30%. The corresponding number of
married new retirees electing the Life annuity option was adjusted accordingly.
Changes in Plan Provisions
Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020
through December 31, 2023, and 0.0% thereafter. Augmentation was eliminated for
privatizations occurring after June 30, 2020.
2019 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions
The employer supplemental contribution was changed prospectively, decreasing from $31.0
million to $21.0 million per year. The State's special funding contribution was changed
prospectively, requiring $16.0 million due per year through 2031.
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per
year thereafter to 1.25% per year.
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% to 3.00%, beginning July 1,
2018.
Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that
has already accrued for deferred members will still apply.
Contribution stabilizer provisions were repealed.
Annual increases were changed from 1.00% per year with a provision to increase to 2.50%
upon attainment of 90.00% funding ratio to 50.00% of the Social Security Cost of Living
Adjustment, not less than 1.00% and not more than 1.50%, 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
Changes in Actuarial Assumptions
The CSA loads were changed from 0.8% for active members and 60% for vested and non-vested
deferred members. The revised CSA loads are now 0.0% for active member liability, 15% for
vested deferred member liability and 3% for non-vested deferred member liability.
Page 235 of 464
City of Elk River
Notes to Required Supplementary Information
115
General Employees Fund (Continued)
2017 Changes (Continued)
Changes in Actuarial Assumptions (Continued)
The assumed post-retirement benefit increase rate was changed from 1.0% per year for all
years to 1.0% per year through 2044 and 2.5% per year thereafter.
Changes in Plan Provisions
The State's contribution for the Minneapolis Employees Retirement Fund equals $16,000,000
in 2017 and 2018, and $6,000,000 thereafter.
The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund
changed from $21,000,000 to $31,000,000 in calendar years 2019 to 2031. The State's
contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2035 and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was
changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, the inflation was decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2015 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2030 and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year
thereafter.
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 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.
Page 236 of 464
City of Elk River
Notes to Required Supplementary Information
116
Police and Fire Fund
2023 Changes
Changes in Actuarial Assumptions
The investment return assumption was changed from 6.5% to 7.0%.
The single discount rate changed from 5.4% to 7.0%.
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% vesting after five years,
increasing incrementally to 100% after 10 years.
A one-time, non-compounding benefit increase of 3.0% 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
Changes in Actuarial Assumptions
The mortality improvement scale was changed from scale MP-2020 to scale MP-2021.
The single discount rate was changed from 6.5% to 5.4%.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2021 Changes
Changes in Actuarial Assumptions
The investment return and single discount rates were changed from 7.5% to 6.5% for financial
reporting purposes.
The inflation assumption was changed from 2.5% to 2.25%.
The payroll growth assumption was changed from 3.25% to 3.0%.
The base mortality table for healthy annuitants and employees was changed from the RP-2014
table to the Pub-2010 Public Safety mortality table. The mortality improvement scale was
changed from MP-2019 to MP-2020.
The base mortality table for disabled annuitants was changed from the RP-2014 healthy
annuitant mortality table (with future mortality improvement according to scale MP-2019) to
the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality
improvement according to scale MP-2020).
Assumed rates of salary increase were modified as recommended in the July 14, 2020,
experience study. The overall impact is a decrease in gross salary increase rates.
Assumed rates of retirement were changed as recommended in the July 14, 2020, experience
study. The changes resulted 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 resulted in more assumed terminations.
Assumed rates of disability were increased for ages 25-44 and decreased for ages over 49.
Overall, proposed rates resulted in more projected disabilities.
Assumed percent married for active female members was changed from 60% to 70%. Minor
changes to form of payment assumptions were applied.
Page 237 of 464
City of Elk River
Notes to Required Supplementary Information
117
Police and Fire Fund (Continued)
2021 Changes (Continued)
Changes in Plan Provisions
There have been no changes since the prior valuation.
2020 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2018 to MP-2019.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2019 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2016 to MP-2017.
Changes in Plan Provisions
Annual increases were changed to 1.00% 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% funding, or July 1, 2048, if earlier.
Member contributions were changed from 10.80% to 11.30% of pay, effective January 1, 2019,
and 11.80% of pay, effective January 1, 2020.
Employer contributions were changed from 16.20% to 16.95% of pay, effective January 1,
2019, and 17.70% of pay, effective January 1, 2020.
Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1,
2018.
Deferred augmentation was changed to 0.00%, 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
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% lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The CSA load was 30% for vested and non-vested deferred members. The CSA has been
changed to 33% for vested members and 2% for non-vested 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.
Page 238 of 464
City of Elk River
Notes to Required Supplementary Information
118
Police and Fire Fund (Continued)
2017 Changes (Continued)
Changes in Actuarial Assumptions (Continued)
Assumed termination rates were decreased to 3% 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% to 60%.
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 annual benefit increase rate was changed from 1% for all years to 1% per year
through 2064 and 2.5% thereafter.
The single discount rate was changed from 5.6% per annum to 7.5% per annum.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2037 and 2.5% thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
changed from 7.9% to 5.6%.
The single discount rate changed from 7.90% to 5.60%.
The assumed future salary increases, payroll growth, and inflation was decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
Changes in Plan Provisions
There have been no changes since the prior valuation.
2015 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2030 and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year
thereafter.
Changes in Plan Provisions
The post-retirement benefit increase to be paid after attainment of the 90% funding threshold
was changed, from inflation up to 2.5%, to a fixed rate of 2.5%.
Page 239 of 464
City of Elk River
Notes to Required Supplementary Information
119
Post Employment Benefits Plan
No assets are accumulated in a trust to pay related benefits.
2023 Changes
Changes in Actuarial Assumptions
The discount rate was changed from 2.00% to 4.00% based on updated 20-year municipal bond
rates.
The inflation rate changed from 2.00% to 2.50%.
The health care 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.
2022 Changes
Changes in Actuarial Assumptions
None noted
2021 Changes
Changes in Actuarial Assumptions
The discount rate was changed from 2.90% to 2.00% based on updated 20-year municipal bond
rates.
The inflation rate changed from 2.50% to 2.00%.
The health care 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 retirement and withdrawal rates for non-public safety employees were updated.
The salary increase rates were changed from a flat 3.00% per year for all employees to rates
which vary by service and contract group.
2020 Changes
Changes in Actuarial Assumptions
The discount rate was changed from 3.80% to 2.90% based on updated 20-year municipal bond
rates.
2019 Changes
Changes in Actuarial Assumptions
The discount rate was changed from 3.30% to 3.80% based on updated 20-year municipal bond
rates.
The health care trend rates were changed to better anticipate short-term and long-term
medical increases.
Page 240 of 464
City of Elk River
Notes to Required Supplementary Information
120
Post Employment Benefits Plan (Continued)
2019 Changes (Continued)
Changes in Actuarial Assumptions (Continued)
The mortality tables were updated from the RP-2014 White Collar Mortality Tables with MP-
2016 Generational Improvement Scale (with Blue Collar adjustment for Police and Fire
Personnel) to the RP-2014 White Collar Mortality Tables with MP-2018 Generational
Improvement Scale (with Blue Collar adjustment for Police and Fire Personnel).
2018 Changes
Changes in Actuarial Assumptions
The discount rate was changed from 3.50% to 3.30% based on updated 20-year municipal bond
rates.
Page 241 of 464
121
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
Page 242 of 464
122
Page 243 of 464
123
City of Elk River
Nonmajor Governmental Funds
Special Revenue Funds
Special revenue funds are established to account for specific revenue or other sources that are
designated for financing particular functions or activities as required by deferral regulations,
Minnesota Statute, local ordinances, or specific grant agreements. Most of the special revenue funds
are related to specific federal and state housing programs or grants for specific activities.
Capital Projects Funds
Capital project funds are established to account for the resources used for the acquisition of capital
facilities and infrastructure for the City with the exception of those financed by the enterprise
funds.
Debt Service Funds
The Debt Service funds are established to account for the collection of ad valorem taxes, special
assessments, and tax increment revenue transfers as well as the payment of principal and interest of
general long-term debt.
Page 244 of 464
124
Special
Revenue
Capital
Projects Debt Service
Total
Nonmajor
Governmental
Funds
Assets
Cash and investments 6,816,923$ 16,503,210$ 8,619,073$ 31,939,206$
Taxes receivable 15,801 53 689,426 705,280
Accounts receivable 192,463 357,976 - 550,439
Interest receivable 20,493 74,571 41,608 136,672
Notes and loans receivable 942,608 287,398 - 1,230,006
Leases receivable 13,235 137,659 - 150,894
Special assessment receivable
Delinquent - 17,382 380 17,762
Deferred - 1,116,787 - 1,116,787
Due from other funds 890,180 98,038 - 988,218
Due from other governments - 26,380 - 26,380
Advances to other funds - 200,000 - 200,000
Land held for resale 175,000 - - 175,000
Prepaid items 131,468 270 - 131,738
Total assets 9,198,171$ 18,819,724$ 9,350,487$ 37,368,382$
Liabilities
Accounts payable 106,753$ 1,612,487$ 1,524$ 1,720,764$
Salaries and benefits payable 41,751 1,701 - 43,452
Contracts and deposits payable 38,253 64,588 - 102,841
Due to other funds 262,078 1,237,139 381 1,499,598
Due to other governments 14,917 - - 14,917
Due to component unit - 161,823 - 161,823
Advances from other funds 200,000 - - 200,000
Unearned revenue 1,371,172 767,689 - 2,138,861
Total liabilities 2,034,924 3,845,427 1,905 5,882,256
Deferred Inflows of Resources
Unavailable revenue - property taxes 4,608 53 10,425 15,086
Unavailable revenue - special assessments - 1,131,266 380 1,131,646
Deferred inflow related to leases receivable 13,235 137,659 - 150,894
Total deferred inflows of resources 17,843 1,268,978 10,805 1,297,626
Fund Balances
Nonspendable 131,468 270 - 131,738
Restricted 2,758,304 3,822,504 9,337,777 15,918,585
Committed 3,918,728 99,206 - 4,017,934
Assigned 728,192 11,035,967 - 11,764,159
Unassigned (391,288) (1,252,628) - (1,643,916)
Total fund balances 7,145,404 13,705,319 9,337,777 30,188,500
Total liabilities, deferred inflows
of resources, and fund balances 9,198,171$ 18,819,724$ 9,350,487$ 37,368,382$
City of Elk River
Nonmajor Governmental Funds
Combining Balance Sheet
December 31, 2023
Page 245 of 464
125
Special
Revenue
Capital
Projects Debt Service
Total
Nonmajor
Governmental
Funds
Revenues
Property taxes 597,131$ 395,079$ 1,501,612$ 2,493,822$
Sales taxes - - 3,810,301 3,810,301
Special assessments - 178,747 45,679 224,426
Intergovernmental 834,087 1,691,449 - 2,525,536
Charges for services 1,509,496 311,299 - 1,820,795
Other revenue
Investment income 275,801 902,797 196,999 1,375,597
Contributions and donations - 31,589 244,096 275,685
Refunds and reimbursements 97,488 102,600 - 200,088
Landfill expansion fee - 2,193,833 - 2,193,833
Miscellaneous revenue 19,787 108,265 - 128,052
Total revenues 3,333,790 5,915,658 5,798,687 15,048,135
Expenditures
Current
General government 150,841 96,095 - 246,936
Public safety 36,769 56,504 - 93,273
Public works 33,006 38,114 - 71,120
Culture and recreation 1,924,013 354,701 - 2,278,714
Economic development 365,316 215,106 - 580,422
Capital outlay
General government 283,595 1,166,958 - 1,450,553
Public safety - 1,212,445 - 1,212,445
Public works - 1,769,775 - 1,769,775
Culture and recreation 209,055 765,384 - 974,439
Economic development 85,709 - - 85,709
Debt service
Principal 7,213 - 2,965,000 2,972,213
Interest and other charges 838 95,948 1,694,369 1,791,155
Total expenditures 3,096,355 5,771,030 4,659,369 13,526,754
Excess of revenues over
expenditures 237,435 144,628 1,139,318 1,521,381
Other Financing Sources (Uses)
Proceeds from sale of capital asset 699,130 106,080 - 805,210
Transfers in 28,000 1,042,878 758,289 1,829,167
Transfers out (489,000) (836,789) - (1,325,789)
Total other financing sources (uses) 238,130 312,169 758,289 1,308,588
Net change in fund balances 475,565 456,797 1,897,607 2,829,969
Fund Balances
Beginning of year 6,669,839 13,248,522 7,440,170 27,358,531
End of year 7,145,404$ 13,705,319$ 9,337,777$ 30,188,500$
City of Elk River
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Year Ended December 31, 2023
Page 246 of 464
126
Library
Multipurpose
Facility Landfill Revolving Loan
Assets
Cash and investments 235,776$ -$ 931,252$ 913,749$
Taxes receivable 2,030 - - -
Accounts receivable - 190,406 490 -
Interest receivable 1,242 - 5,384 5,283
Notes and loans receivable - - - 212,868
Leases receivable - 13,235 - -
Due from other funds - - - -
Land held for resale - - - -
Prepaid items - - - -
Total assets 239,048$ 203,641$ 937,126$ 1,131,900$
Liabilities
Accounts payable 12,226$ 85,886$ 1,177$ 1,125$
Salaries and benefits payable - 36,538 - -
Contracts and deposits payable - - - -
Due to other funds 60,720 - -
Due to other governments - 14,917 - -
Advances from other funds - 200,000 - -
Unearned revenue - - - -
Total liabilities 12,226 398,061 1,177 1,125
Deferred Inflows of Resources
Unavailable revenue - property taxes 636 - - -
Deferred inflow related to leases receivable - 13,235 - -
Total deferred inflows of resources 636 13,235 - -
Fund Balances
Nonspendable - - - -
Restricted - - 935,949 -
Committed 226,186 - - 1,130,775
Assigned - - - -
Unassigned - (207,655) - -
Total fund balances 226,186 (207,655) 935,949 1,130,775
Total liabilities, deferred inflows
of resources, and fund balances 239,048$ 203,641$ 937,126$ 1,131,900$
City of Elk River
Nonmajor Special Revenue Funds
Combining Balance Sheet
December 31, 2023
Page 247 of 464
127
State DEED
Development
Fund
Insurance
Reserve Drug Forfeiture CRF Grant EDA
Total
Nonmajor
Special
Revenue Funds
400,993$ 1,104,919$ -$ 6,500$ 1,517,330$ 1,706,404$ 6,816,923$
- 3,418 - - - 10,353 15,801
- - - - 1,567 - 192,463
2,319 6,231 - 34 - - 20,493
125,535 604,205 - - - - 942,608
- - - - - - 13,235
- 884,132 6,048 - - - 890,180
- - - - - 175,000 175,000
- - 131,468 - - - 131,468
528,847$ 2,602,905$ 137,516$ 6,534$ 1,518,897$ 1,891,757$ 9,198,171$
-$ 1,909$ 2,136$ 75$ -$ 2,219$ 106,753$
- - - - - 5,213 41,751
- 38,253 - - - - 38,253
- - 187,545 - - 13,813 262,078
- - - - - - 14,917
- - - - - - 200,000
- - - - 1,371,172 - 1,371,172
- 40,162 189,681 75 1,371,172 21,245 2,034,924
- 976 - - - 2,996 4,608
- - - - - - 13,235
- 976 - - - 2,996 17,843
- - 131,468 - - 131,468
528,847 - - 6,459 147,725 1,139,324 2,758,304
- 2,561,767 - - - - 3,918,728
- - - - - 728,192 728,192
- - (183,633) - - - (391,288)
528,847 2,561,767 (52,165) 6,459 147,725 1,867,516 7,145,404
528,847$ 2,602,905$ 137,516$ 6,534$ 1,518,897$ 1,891,757$ 9,198,171$
Page 248 of 464
128
Library
Multipurpose
Facility Landfill Revolving Loan
Revenues
Property taxes 74,297$ -$ -$ -$
Intergovernmental - - 10,631 -
Charges for services - 1,480,863 14,633 -
Other revenue
Investment income 5,565 1,945 61,822 57,927
Refunds and reimbursements - 51,756 - -
Miscellaneous revenue - 12,052 - 3,628
Total revenues 79,862 1,546,616 87,086 61,555
Expenditures
Current
General government - - - -
Public safety - - - -
Public works - - 33,006 -
Culture and recreation 113,668 1,810,345 - -
Economic development - - - 1,466
Capital outlay
General government - - - -
Culture and recreation 9,211 199,844 - -
Economic development - - - -
Debt service
Principal - 7,213 - -
Interest and other charges - 838 - -
Total expenditures 122,879 2,018,240 33,006 1,466
Excess of revenues over
(under) expenditures (43,017) (471,624) 54,080 60,089
Other Financing Sources (Uses)
Proceeds from sale of capital asset - 30,000 - -
Transfers in 28,000 - - -
Transfers out - - - -
Total other financing sources (uses) 28,000 30,000 - -
Net change in fund balances (15,017) (441,624) 54,080 60,089
Fund Balances
Beginning of year 241,203 233,969 881,869 1,070,686
End of year 226,186$ (207,655)$ 935,949$ 1,130,775$
City of Elk River
Nonmajor Special Revenue Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Year Ended December 31, 2023
Page 249 of 464
129
State DEED
Development
Fund
Insurance
Reserve Drug Forfeiture CRF Grant EDA
Total
Nonmajor
Special
Revenue Funds
-$ 130,387$ -$ -$ -$ 392,447$ 597,131$
- 94,063 - - 729,161 232 834,087
- 10,000 - - - 4,000 1,509,496
21,441 (33,188) 337 275 108,490 51,187 275,801
- - 45,732 - - - 97,488
4,107 - - - - - 19,787
25,548 201,262 46,069 275 837,651 447,866 3,333,790
- - 150,841 - - - 150,841
- - - 36,769 - - 36,769
- - - - - - 33,006
- - - - - - 1,924,013
- 120,373 - - - 243,477 365,316
- - - - 283,595 - 283,595
- - - - - - 209,055
- 85,709 - - - - 85,709
- - - - - - 7,213
- - - - - - 838
- 206,082 150,841 36,769 283,595 243,477 3,096,355
25,548 (4,820) (104,772) (36,494) 554,056 204,389 237,435
- 669,130 - - - - 699,130
- - - - - - 28,000
- - - - (444,000) (45,000) (489,000)
- 669,130 - - (444,000) (45,000) 238,130
25,548 664,310 (104,772) (36,494) 110,056 159,389 475,565
503,299 1,897,457 52,607 42,953 37,669 1,708,127 6,669,839
528,847$ 2,561,767$ (52,165)$ 6,459$ 147,725$ 1,867,516$ 7,145,404$
Page 250 of 464
130
Budget and Actual
Library Special Revenue Fund
Year Ended December 31, 2023
Original Final
Actual
Amounts
Revenues
Property taxes 75,000$ 75,000$ 74,297$ (703)$
Other revenue
Investment income 5,000 5,000 5,565 565
Total revenues 80,000 80,000 79,862 (138)
Expenditures
Current
Culture and recreation 108,000 108,000 113,668 5,668
Capital outlay
Culture and recreation 10,000 10,000 9,211 (789)
Total expenditures 118,000 118,000 122,879 4,879
Excess of revenues
under expenditures (38,000) (38,000) (43,017) (5,017)
Other Financing Sources (Uses)
Transfers in 28,000 28,000 28,000 -
Net change in fund balances (10,000)$ (10,000)$ (15,017) (5,017)$
Fund Balances
Beginning of year 241,203
End of year 226,186$
Budgeted Amounts Variance with
Final Budget -
Over (Under)
Page 251 of 464
131
City of Elk River
Schedule of Revenues, Expenditures, and
Changes in Fund Balances -
Budget and Actual
Multipurpose Facility Special Revenue Fund
Year Ended December 31, 2023
Original Final
Actual
Amounts
Revenues
Charges for services 1,551,100$ 1,551,100$ 1,480,863$ (70,237)$
Other revenue
Investment income 4,000 4,000 1,945 (2,055)
Refunds and reimbursements - - 51,756 51,756
Miscellaneous revenue 24,900 24,900 12,052 (12,848)
Total revenues 1,580,000 1,580,000 1,546,616 (33,384)
Expenditures
Current
Culture and recreation 1,478,350 1,478,350 1,810,345 331,995
Capital outlay
Culture and recreation 202,000 202,000 199,844 (2,156)
Debt service
Principal - - 7,213 7,213
Interest and other charges - - 838 838
Total expenditures 1,680,350 1,680,350 2,018,240 337,890
Excess of revenues
under expenditures (100,350) (100,350) (471,624) (371,274)
Other Financing Sources (Uses)
Proceeds from sale of capital asset - - 30,000 30,000
Net change in fund balances (100,350)$ (100,350)$ (441,624) (341,274)$
Fund Balances
Beginning of year 233,969
End of year (207,655)$
Budgeted Amounts Variance with
Final Budget -
Over (Under)
Page 252 of 464
132
Page 253 of 464
133
City of Elk River
Schedule of Revenues, Expenditures, and
Changes in Fund Balances -
Budget and Actual
Economic Development Authority Special Revenue Fund
Year Ended December 31, 2023
Original Final
Actual
Amounts
Revenues
Property taxes 396,000$ 396,000$ 392,447$ (3,553)$
Intergovernmental - - 232 232
Charges for services 4,000 4,000 4,000 -
Other revenue
Investment income 5,000 5,000 51,187 46,187
Total revenues 405,000 405,000 447,866 42,866
Expenditures
Current
Economic development 360,000 360,000 243,477 (116,523)
Excess of revenues over
expenditures 45,000 45,000 204,389 159,389
Other Financing Sources (Uses)
Transfers out (45,000) (45,000) (45,000) -
Net change in fund balances -$ -$ 159,389 159,389$
Fund Balances
Beginning of year 1,708,127
End of year 1,867,516$
Budgeted Amounts Variance with
Final Budget -
Over (Under)
Page 254 of 464
134
Park
Dedication
Capital Outlay
Reserve
Government
Buildings GRE Reserve
Assets
Cash and investments 1,375,439$ 2,334,028$ 3,928,242$ 757,901$
Taxes receivable - - 9 -
Accounts receivable - - 320,637 -
Interest receivable 7,952 15,807 22,712 4,382
Notes and loans receivable 287,398 - - -
Leases receivable - - 137,659 -
Special assessment receivable
Delinquent - 8 - -
Deferred - 4,796 - -
Due from other funds - - - -
Due from other governments - 26,380 - -
Advances to other funds - 200,000 - -
Prepaid items - - - -
Total assets 1,670,789$ 2,581,019$ 4,409,259$ 762,283$
Liabilities
Accounts payable 36,283$ 6,826$ -$ -$
Salaries and benefits payable - 1,701 - -
Contracts and deposits payable - - - -
Due to other funds - - - -
Due to component unit - - - -
Unearned revenue 767,689 - - -
Total liabilities 803,972 8,527 - -
Deferred Inflows of Resources
Unavailable revenue - property taxes - - 9 -
Unavailable revenue - special assessments - 4,796 - -
Deferred inflow related to leases receivable - - 137,659 -
Total deferred inflows of resources - 4,796 137,668 -
Fund Balances
Nonspendable - - - -
Restricted 866,817 1,145,601 - -
Committed - - - -
Assigned - 1,422,095 4,271,591 762,283
Unassigned - - - -
Total fund balances 866,817 2,567,696 4,271,591 762,283
Total liabilities, deferred inflows
of resources, and fund balances 1,670,789$ 2,581,019$ 4,409,259$ 762,283$
City of Elk River
Nonmajor Capital Projects Funds
Combining Balance Sheet
December 31, 2023
Page 255 of 464
135
Street
Improvements
Improvement
Projects
Equipment
Replacement
Active ER
Projects
Public Safety
Building / Fire
Station #3
Park
Improvements
Developer
Deposits
493,870$ 1,754,284$ 1,811,278$ 1,492,469$ 902,987$ 328,671$ 1,255,652$
- - - 44 - - -
- - - - - 1,188 -
2,855 8,461 10,472 - - 1,731 -
- - - - - - -
- - - - - - -
3,855 13,519 - - - - -
9,953 1,102,038 - - - - -
- - 98,038 - - - -
- - - - - - -
- - - - - - -
- - - - - - 270
510,533$ 2,878,302$ 1,919,788$ 1,492,513$ 902,987$ 331,590$ 1,255,922$
-$ 166,262$ 96,098$ -$ -$ 23,453$ 1,255,922$
- - - - - - -
- 64,588 - - - - -
- 88,373 - - - - -
- - - - - - -
- - - - - - -
- 319,223 96,098 - - 23,453 1,255,922
- - - 44 - - -
13,536 1,112,934 - - - - -
- - - - - - -
13,536 1,112,934 - 44 - - -
- - - - - - 270
- - - 907,099 902,987 - -
- - - 99,206 - - -
496,997 1,446,145 1,823,690 486,164 - 308,137 -
- - - - - - (270)
496,997 1,446,145 1,823,690 1,492,469 902,987 308,137 -
510,533$ 2,878,302$ 1,919,788$ 1,492,513$ 902,987$ 331,590$ 1,255,922$
Page 256 of 464
136
Page 257 of 464
137
TIF Districts
Technology
Replacement
Total
Nonmajor
Capital
Projects Funds
Assets
Cash and investments 33,965$ 34,424$ 16,503,210$
Taxes receivable - - 53
Accounts receivable 36,151 - 357,976
Interest receivable - 199 74,571
Notes and loans receivable - -287,398
Leases receivable - -137,659
Special assessment receivable
Delinquent - - 17,382
Deferred - - 1,116,787
Due from other funds - - 98,038
Due from other governments - - 26,380
Advances to other funds - - 200,000
Prepaid items - - 270
Total assets 70,116$ 34,623$ 18,819,724$
Liabilities
Accounts payable 11,885$ 15,758$ 1,612,487$
Salaries and benefits payable - - 1,701
Contracts and deposits payable - - 64,588
Due to other funds 1,148,766 - 1,237,139
Due to component unit 161,823 - 161,823
Unearned revenue - - 767,689
Total liabilities 1,322,474 15,758 3,845,427
Deferred Inflows of Resources
Unavailable revenue - property taxes - - 53
Unavailable revenue - special assessments - - 1,131,266
Deferred inflow related to leases receivable - - 137,659
Total deferred inflows of resources - - 1,268,978
Fund Balances
Nonspendable - - 270
Restricted - - 3,822,504
Committed - - 99,206
Assigned - 18,865 11,035,967
Unassigned (1,252,358) - (1,252,628)
Total fund balances (1,252,358) 18,865 13,705,319
Total liabilities, deferred inflows
of resources, and fund balances 70,116$ 34,623$ 18,819,724$
City of Elk River
Nonmajor Capital Projects Funds
Combining Balance Sheet
December 31, 2023
Page 258 of 464
138
Park
Dedication
Capital Outlay
Reserve
Government
Buildings GRE Reserve
Revenues
Property taxes -$ -$ -$ -$
Special assessments - 1,788 - -
Intergovernmental - 1,175,883 - -
Charges for services 259,486 - - -
Other revenue
Investment income 116,124 15,410 257,764 49,251
Contributions and donations - 24,571 - -
Refunds and reimbursements - - - -
Landfill expansion fee - - 2,193,833 -
Miscellaneous revenue - - 45,473 -
Total revenues 375,610 1,217,652 2,497,070 49,251
Expenditures
Current
General government - 12,492 12,575 -
Public safety - 32,383 8,716 -
Public works - 38,114 - -
Culture and recreation 147,905 - 29,692 -
Economic development - - - -
Capital outlay
General government - 96,562 862,581 -
Public safety - - 588,525 -
Public works - - - -
Culture and recreation 270,349 - - -
Debt service
Interest and other charges 51,257 - - -
Total expenditures 469,511 179,551 1,502,089 -
Excess of revenues over
(under) expenditures (93,901) 1,038,101 994,981 49,251
Other Financing Sources (Uses)
Proceeds from sale of capital asset - - - -
Transfers in - - - -
Transfers out - (78,500) (758,289) -
Total other financing sources (uses) - (78,500) (758,289) -
Net change in fund balances (93,901) 959,601 236,692 49,251
Fund balances
Beginning of year 960,718 1,608,095 4,034,899 713,032
End of year 866,817$ 2,567,696$ 4,271,591$ 762,283$
City of Elk River
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Year Ended December 31, 2023
Page 259 of 464
139
Street
Improvements
Improvement
Projects
Equipment
Replacement
Active ER
Projects
Public Safety
Building / Fire
Station #3
Park
Improvements
-$ -$ -$ -$ -$ -$
15,658 161,301 - - - -
23,980 - 466,586 25,000 - -
- - - - - 51,813
34,715 254,675 87,732 31,050 51,755 7,028
- - - - - 7,018
- - - 10,000 - -
- - - - - -
- - - - - -
74,353 415,976 554,318 66,050 51,755 65,859
- - - - - -
- - - - 15,405 -
- - - - - -
- - - - - 177,104
- - - - - -
- - 207,815 - - -
- - 292,591 - 331,329 -
55,567 1,322,192 392,016 - - -
- - 389,965 86,910 - 18,160
- - - - - -
55,567 1,322,192 1,282,387 86,910 346,734 195,264
18,786 (906,216) (728,069) (20,860) (294,979) (129,405)
- - 106,080 - - -
- - 792,878 - - 250,000
- - - - - -
- - 898,958 - - 250,000
18,786 (906,216) 170,889 (20,860) (294,979) 120,595
478,211 2,352,361 1,652,801 1,513,329 1,197,966 187,542
496,997$ 1,446,145$ 1,823,690$ 1,492,469$ 902,987$ 308,137$
Page 260 of 464
140
Page 261 of 464
141
TIF Districts
Technology
Replacement
Total Nonmajor
Capital Projects
Funds
Revenues
Property taxes 395,079$ -$ 395,079$
Special assessments - - 178,747
Intergovernmental - - 1,691,449
Charges for services - - 311,299
Other revenue
Investment income - (2,707) 902,797
Contributions and donations - - 31,589
Refunds and reimbursements - 92,600 102,600
Landfill expansion fee - - 2,193,833
Miscellaneous revenue 62,792 - 108,265
Total revenues 457,871 89,893 5,915,658
Expenditures
Current
General government - 71,028 96,095
Public safety - - 56,504
Public works - - 38,114
Culture and recreation - - 354,701
Economic development 215,106 - 215,106
Capital outlay
General government - - 1,166,958
Public safety - - 1,212,445
Public works - - 1,769,775
Culture and recreation - - 765,384
Debt service
Interest and other charges 44,691 - 95,948
Total expenditures 259,797 71,028 5,771,030
Excess of revenues over
expenditures 198,074 18,865 144,628
Other Financing Sources (Uses)
Proceeds from sale of capital asset - - 106,080
Transfers in - - 1,042,878
Transfers out - - (836,789)
Total other financing sources (uses) - - 312,169
Net change in fund balances 198,074 18,865 456,797
Fund balances
Beginning of year (1,450,432) - 13,248,522
End of year (1,252,358)$ 18,865$ 13,705,319$
Year Ended December 31, 2023
City of Elk River
Nonmajor Capital Projects Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Page 262 of 464
142
Government
Building Bonds
Sales Tax
Bonds YMCA Bonds
2020A Capital
Improvement
Bonds
Assets
Cash and investments 157,372$ 6,936,543$ 718,035$ 487,451$
Taxes receivable 1,732 652,032 12,293 14,236
Interest receivable 829 36,528 - 2,567
Special assessment receivable
Delinquent - 380 - -
Total assets 159,933$ 7,625,483$ 730,328$ 504,254$
Liabilities
Accounts payable 381$ 381$ -$ 381$
Due to other funds - - 381 -
Total liabilities 381 381 381 381
Deferred Inflows of Resources
Unavailable revenue - property taxes 1,615 - 3,764 3,073
Unavailable revenue - special assessments - 380 - -
Total deferred inflows of resources 1,615 380 3,764 3,073
Fund Balances
Restricted 157,937 7,624,722 726,183 500,800
Total deferred inflows of resources
and fund balances 159,933$ 7,625,483$ 730,328$ 504,254$
City of Elk River
Nonmajor Debt Service Funds
Combining Balance Sheet
December 31, 2023
Page 263 of 464
143
2021A Capital
Improvement
Bonds
Total
Nonmajor Debt
Service Funds
319,672$ 8,619,073$
9,133 689,426
1,684 41,608
- 380
330,489$ 9,350,487$
381$ 1,524
- 381
381 1,905
1,973 10,425
- 380
1,973 10,805
328,135 9,337,777
330,489$ 9,350,487$
Page 264 of 464
144
Government
Building Bonds
Sales Tax
Bonds YMCA Bonds
2020A Capital
Improvement
Bonds
Revenues
Property taxes -$ -$ 513,233$ 602,161$
Sales taxes - 3,810,301 - -
Special assessments - 45,679 - -
Other revenue
Investment income 992 164,511 20,148 6,850
Contributions and donations - - 244,096 -
Total revenues 992 4,020,491 777,477 609,011
Expenditures
Debt service
Principal 940,000 890,000 565,000 335,000
Interest and other charges 129,241 1,030,269 170,769 231,729
Total expenditures 1,069,241 1,920,269 735,769 566,729
Excess of revenues over
(under) expenditures (1,068,249) 2,100,222 41,708 42,282
Other Financing Sources (Uses)
Transfers in - - - 454,611
Net change in fund balances (1,068,249) 2,100,222 41,708 496,893
Fund Balances
Beginning of year 1,226,186 5,524,500 684,475 3,907
End of year 157,937$ 7,624,722$ 726,183$ 500,800$
City of Elk River
Nonmajor Debt Service Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Year Ended December 31, 2023
Page 265 of 464
145
2021A Capital
Improvement
Bonds
Total
Nonmajor Debt
Service Funds
386,218$ 1,501,612$
- 3,810,301
- 45,679
4,498 196,999
- 244,096
390,716 5,798,687
235,000 2,965,000
132,361 1,694,369
367,361 4,659,369
23,355 1,139,318
303,678 758,289
327,033 1,897,607
1,102 7,440,170
328,135$ 9,337,777$
Page 266 of 464
146
City of Elk River
Component Unit Financial Statements
The Housing and Redevelopment Authority of Elk River is a component unit of the City. Its operations
are presented as a separate column on the combined financial statements.
Housing and Redevelopment Authority Fund
This governmental fund is used to account for housing and redevelopment activities. Revenues are
derived from the HRA property tax levy.
Page 267 of 464
147
Housing and
Redevelopment
Authority
Assets
Cash and investments 821,348$
Taxes receivable 10,424
Accounts receivable 1,917
Notes receivable 562,108
Due from primary government 161,823
Land held for resale 382,000
Total assets 1,939,620$
Liabilities
Accounts payable 27$
Salaries and benefits payable 3,476
Due to primary government 8,469
Total liabilities 11,972
Deferred Inflows of Resources
Unavailable revenue - property taxes 2,955
Fund Balances
Nonspendable 562,108
Restricted for housing and redevelopment 1,362,585
Total fund balances 1,924,693
Total liabilities, deferred inflows
of resources, and fund balances 1,939,620$
Total fund balances reported above 1,924,693$
Amounts reported for the Housing and Redevelopment Authority in the
Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources, and therefore,
are not reported in the funds
Land 315,900
Other improvements 174,290
Less accumulated depreciation (128,781)
Some receivables are not available soon enough to pay for the current period's expenditures,
and therefore are reported as unavailable revenue in the funds
Delinquent taxes receivable 2,955
The net pension liability and related deferred inflows and deferred outflows are recorded
only on the Statement of Net Position. Balances at year-end are:
Net pension liability (53,256)
Deferred inflows of resources related to pensions (16,314)
Deferred outflows of resources related to pensions 14,392
Total net position - Housing and Redevelopment Authority 2,233,879$
City of Elk River
Balance Sheet - Governmental Fund
Housing and Redevelopment Authority Component Unit
December 31, 2023
Page 268 of 464
148
Housing and
Redevelopment
Authority
Revenues
Property taxes 398,899$
Intergovernmental 236
Other revenue
Investment income 7,652
Total revenues 406,787
Expenditures
Current
Economic development 264,696
Net change in fund balances 142,091
Fund Balances
Beginning of year 1,782,602
End of year 1,924,693$
Amounts reported for the Housing and Redevelopment Authority in the
Statement of Activities are different because:
Net changes in fund balances - Housing and Redevelopment Authority 142,091$
Capital outlays are reported in governmental funds as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their estimated useful
lives as depreciation expense.
Depreciation expense (11,619)
Certain revenues are recognized as soon as they are earned. Under the modified accrual
basis of accounting, certain revenues cannot be recognized until they are available to
liquidate liabilities of the current period.
Property taxes (4,384)
Pension expenditures in the governmental funds are measured by current year employee
contributions. Pension expenses on the Statement of Activities are measured by the
change in net position liability and the related deferred inflows and deferred outflows
of resources.(10,561)
Change in net position - Housing and Redevelopment Authority 115,527$
Housing and Redevelopment Authority Component Unit
Statement of Revenues, Expenditures, and Change in Fund Balances
Year Ended December 31, 2023
City of Elk River
Page 269 of 464
149
STATISTICAL SECTION (UNAUDITED)
CITY OF ELK RIVER
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2023
Page 270 of 464
150
Page 271 of 464
151
City of Elk River
Statistical Section (Unaudited)
This part of the City of Elk River's comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements,
note disclosures, and required supplementary information says about the City's overall financial
health.
Financial Trends 152
These schedules contain trend information to help the reader understand how the government's
financial performance and well-being have changed over time.
Revenue Capacity 162
These schedules contain information to help the reader assess the government's most significant
local revenue source, property taxes.
Debt Capacity 168
These schedules present information to help the reader assess the affordability of the
government's current level of outstanding debt and the government's ability to issue additional
debt in the future.
Demographic and Economic Information 177
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the government's financial activities take place.
Operating Information 178
These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the City provides and the
activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
annual comprehensive financial reports for the relevant year.
Page 272 of 464
152
City of Elk River
Statistical Section (Unaudited)
Net Position by Component
Last Ten Fiscal Years
2014 2015 2016 2017
Governmental Activities
Net investment in capital assets 84,921,650$ 75,030,579$ 78,119,790$ 78,958,608$
Restricted 4,192,856 3,675,588 11,990,647 2,925,562
Unrestricted 24,902,387 20,170,751 6,584,209 15,779,965
Total governmental
activities net position 114,016,893$ 98,876,918$ 96,694,646$ 97,664,135$
Business-Type Activities
Net investment in capital assets 62,392,972$ 76,747,269$ 82,230,963$ 83,919,324$
Restricted 490,500 490,500 997,660 997,660
Unrestricted 24,718,391 24,504,299 21,466,617 21,912,125
Total business-type
activities net position 87,601,863$ 101,742,068$ 104,695,240$ 106,829,109$
Total Primary Government
Net investment in capital assets 151,777,848$ 160,350,753$ 162,877,932$ 162,196,792$
Restricted 4,166,088 12,988,307 3,923,222 5,497,407
Unrestricted 44,675,050 28,050,826 37,692,090 41,994,114
Total primary government 200,618,986$ 201,389,886$ 204,493,244$ 209,688,313$
Fiscal Year
Page 273 of 464
153
Table 1
2018 2019 2020 2021 2022 2023
77,092,055$ 78,288,782$ 78,477,651$ 75,360,937$ 83,281,488$ 86,306,541$
4,236,048 3,741,368 17,138,100 12,112,762 9,676,717 15,689,829
17,685,456 19,823,663 14,546,321 26,690,158 24,423,193 18,081,750
99,013,559$ 101,853,813$ 110,162,072$ 114,163,857$ 117,381,398$ 120,078,120$
85,104,737$ 84,327,032$ 86,155,217$ 87,943,523$ 93,539,999$ 97,325,836$
1,261,359 1,261,359 1,261,359 1,779,016 1,779,016 1,779,016
24,308,658 27,656,995 31,499,220 33,405,459 32,615,346 34,557,899
110,674,754$ 113,245,386$ 118,915,796$ 123,127,998$ 127,934,361$ 133,662,751$
162,615,814$ 164,632,868$ 163,304,460$ 176,821,487$ 176,821,487$ 183,632,377$
5,002,727 18,399,459 13,891,778 11,455,733 11,455,733 17,468,845
47,480,658 46,045,541 60,095,617 57,038,539 57,038,539 52,639,649
215,099,199$ 229,077,868$ 237,291,855$ 245,315,759$ 245,315,759$ 253,740,871$
Fiscal Year
Page 274 of 464
154
City of Elk River
Statistical Section (Unaudited)
Changes in Net Position
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2014 2015 2016 2017
Expenses
Governmental activities
General government 3,554,136$ 3,619,293$ 3,996,316$ 3,932,100$
Public safety 6,615,593 6,720,283 9,231,492 7,670,839
Public works 6,860,673 5,351,630 5,539,045 6,803,504
Culture and recreation 4,088,992 3,970,704 4,014,737 4,157,960
Economic development 1,091,125 959,414 954,723 1,221,761
Interest and fiscal charges 1,075,408 1,084,902 996,933 549,303
Total governmental activities expenses 23,285,927 21,706,226 24,733,246 24,335,467
Business-type activities
Municipal liquor 5,776,873 5,945,126 6,063,922 6,030,973
Sewer 2,156,329 2,318,709 2,473,139 3,377,828
Garbage 1,303,943 1,382,890 1,475,027 1,521,803
Storm water - 736,411 645,596 774,805
Water 2,459,319 2,478,904 2,532,653 2,856,343
Electric 29,597,247 30,012,830 32,190,114 33,688,690
Total business-type activities expenses 41,293,711 42,874,870 45,380,451 48,250,442
Total expenses 64,579,638$ 64,581,096$ 70,113,697$ 72,585,909$
Program Revenues
Governmental activities
Charges for services
General government 385,238$ 439,826$ 678,679$ 756,586$
Public safety 1,063,725 1,194,458 1,041,141 1,471,063
Public works 233,593 174,452 199,034 177,802
Culture and recreation 906,291 925,591 931,674 1,051,312
Economic development 77,430 92,716 32,961 87,842
Operating grants and contributions 1,049,744 1,033,338 1,692,517 1,319,377
Capital grants and contributions 4,020,851 3,574,036 1,333,057 3,187,830
Total governmental activities program revenue 7,736,872 7,434,417 5,909,063 8,051,812
Business-type activities
Charges for services
Municipal liquor 6,825,342 6,974,336 7,009,574 6,951,988
Sewer 1,734,141 1,818,476 1,921,190 2,116,900
Garbage 1,304,750 1,321,301 1,342,900 1,352,728
Storm water - 355,454 477,377 509,365
Water 2,290,824 2,379,835 2,370,221 2,553,651
Electric 31,596,217 32,831,209 34,746,098 36,465,382
Operating grants and contributions - - - -
Capital grants and contributions 935,909 2,708,564 1,758,131 2,196,626
Total governmental activities program revenue 44,687,183 48,389,175 49,625,491 52,146,640
Total program revenues 52,424,055 55,823,592 55,534,554 60,198,452
Fiscal Year
Page 275 of 464
155
Table 2
2018 2019 2020 2021 2022 2023
3,981,134$ 3,786,257$ 4,526,987$ 4,655,075$ 5,180,758$ $5,993,465
7,398,041 9,188,562 8,372,884 8,082,449 11,558,469 12,082,411
5,619,836 5,920,022 4,468,711 5,340,633 7,638,554 6,469,657
4,474,619 4,094,690 6,080,466 11,070,966 6,139,661 7,261,458
969,443 540,497 691,956 433,530 527,673 685,115
486,630 979,755 1,490,127 1,796,294 1,615,250 1,506,222
22,929,703 24,509,783 25,631,131 31,378,947 32,660,365 33,998,328
6,233,700 6,772,414 7,119,662 7,683,695 7,785,027 7,342,192
3,504,489 3,550,622 3,672,176 3,743,503 3,759,165 3,970,547
1,588,956 1,456,482 1,565,482 1,623,785 1,670,454 1,702,811
634,073 1,024,928 571,170 612,527 663,420 980,969
2,666,149 35,200,295 34,565,317 38,462,316 43,262,804 42,868,962
35,680,220 2,703,390 2,697,201 3,210,394 3,208,929 3,232,421
50,307,587 50,708,131 50,191,008 55,336,220 60,349,799 60,097,902
73,237,290$ 75,217,914$ 75,822,139$ 86,715,167$ 93,010,164$ 94,096,230$
648,183$ 765,646$ 647,010$ 853,100$ 800,973$ $926,657
1,219,783 1,267,920 1,176,435 1,211,025 1,184,261 1,267,373
111,740 94,832 51,986 65,332 380,000 88,288
1,071,902 810,476 448,022 1,148,991 1,338,079 1,745,735
91,503 57,075 83,785 246,301 102,066 121,027
1,381,151 1,396,313 3,354,583 1,328,148 1,905,073 2,553,557
1,721,638 1,509,650 3,254,122 5,916,070 8,005,633 3,843,438
6,245,900 5,901,912 9,015,943 10,768,967 13,716,085 10,546,075
7,203,155 7,617,790 7,927,706 8,620,643 8,531,414 7,978,894
2,301,428 2,383,196 2,481,522 2,517,025 2,633,732 2,774,077
1,553,498 1,645,115 1,686,664 1,773,620 1,889,247 1,920,516
485,484 510,889 564,699 586,049 609,101 905,891
2,757,237 2,552,630 2,936,855 3,412,990 44,729,379 45,379,292
39,151,208 38,663,268 38,469,516 41,396,708 3,413,829 3,802,450
- 1,200 - - - -
2,295,004 1,277,596 3,331,984 4,308,960 7,289,979 1,583,273
55,747,014 54,651,684 57,398,946 62,615,995 69,096,681 64,344,393
61,992,914 60,553,596 66,414,889 73,384,962 82,812,766 74,890,468
Fiscal Year
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156
City of Elk River
Statistical Section (Unaudited)
Changes in Net Position (Continued)
Last Ten Fiscal Years
(Accrual Basis of Accounting)
2014 2015 2016 2017
Net (Expenses) Revenues
Governmental activities (15,549,055)$ (14,271,809)$ (18,824,183)$ (16,283,655)$
Business-type activities 3,393,472 5,514,305 4,245,040 3,896,198
Total primary government (12,155,583)$ (8,757,504)$ (14,579,143)$ (12,387,457)$
General Revenues and Other
Changes in Net Position
Governmental activities
Taxes
Property taxes 10,509,231$ 10,931,945$ 11,136,310$ 11,645,328$
Sales taxes - - - -
Other taxes 1,441,259 1,513,621 1,552,499 1,543,086
Unrestricted grants and contributions 1,749,886 1,642,098 1,820,248 1,720,932
Unrestricted investment earnings 1,137,024 512,193 311,469 498,235
Miscellaneous 29,593 2,796,041 29,695 116,012
Capital contributions (313,287) (11,188,695) - -
Gain on sale of capital assets - - - -
Transfers 1,332,023 297,362 1,791,690 1,971,250
Total governmental activities expenses 15,885,729 6,504,565 16,641,911 17,494,843
Business-type activities
Unrestricted investment earnings 557,659 259,494 167,849 231,599
Miscellaneous 29,525 8,899 331,973 17,500
Capital contributions 313,287 11,188,695 - -
Gain on sale of capital assets - - - -
Transfers (1,332,023) (297,362) (1,791,690) (1,971,250)
Total business-type activities expenses (431,552) 11,159,726 (1,291,868) (1,722,151)
Total primary government 15,454,177$ 17,664,291$ 15,350,043$ 15,772,692$
Change in Net Position
Governmental activities 336,674$ (7,767,244)$ (2,182,272)$ 1,211,188$
Business-type activities 2,961,920 16,674,031 2,953,172 2,174,047
Total primary government 3,298,594$ 8,906,787$ 770,900$ 3,385,235$
Fiscal Year
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157
Table 2 Continued
2018 2019 2020 2021 2022 2023
(16,683,803)$ (18,607,871)$ (16,615,188)$ (20,609,980)$ (18,944,280)$ (23,452,253)$
5,439,427 3,943,553 7,207,938 7,279,775 8,746,882 4,246,491
(11,244,376)$ (14,664,318)$ (9,407,250)$ (13,330,205)$ (10,197,398)$ (19,205,762)$
12,192,911$ 13,022,991$ 13,972,068$ 14,290,673$ 15,250,309$ 16,077,123$
- 652,665 3,030,938 3,469,146 3,862,154 3,810,301
1,591,663 1,636,333 1,698,040 1,754,189 1,722,678 1,712,109
1,754,373 2,588,461 2,644,469 747,226 734,932 1,217,658
430,642 1,420,677 1,240,595 (56,944) (2,079,797) 2,233,568
- - 56,457 522,275 537,061 539,436
- - - - - -
- 41,698 - 1,053,072 108,455 805,210
2,063,638 2,085,300 2,280,880 2,832,128 2,026,029 (246,430)
18,033,227 21,448,125 24,923,447 24,611,765 22,161,821 26,148,975
467,294 704,099 716,582 (75,566) (1,947,278) 1,177,123
2,462 - - - - -
- - - - - -
- 8,280 26,770 (159,879) 32,788 58,346
(2,063,638) (2,085,300) (2,280,880) (2,832,128) (2,026,029) 246,430
(1,593,882) (1,372,921) (1,537,528) (3,067,573) (3,940,519) 1,481,899
16,439,345$ 20,075,204$ 23,385,919$ 21,544,192$ 18,221,302$ 27,630,874$
1,349,424$ 2,840,254$ 8,308,259$ 4,001,785$ 3,217,541$ 2,696,722$
3,845,545 2,570,632 5,670,410 4,212,202 4,806,363 5,728,390
5,194,969$ 5,410,886$ 13,978,669$ 8,213,987$ 8,023,904$ 8,425,112$
Fiscal Year
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158
City of Elk River
Statistical Section (Unaudited)
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2014 2015 2016 2017
General Fund
Nonspendable 22,725$ 23,676$ 20,964$ 88,038$
Restricted - 7,000 - -
Committed 317,929 376,943 - -
Assigned - - 266,832 356,174
Unassigned 5,822,948 6,157,179 6,470,281 6,853,298
Total general fund 6,163,602$ 6,564,798$ 6,758,077$ 7,297,510$
All other governmental funds
Nonspendable 101,910$ 103,295$ 108,176$ -$
Restricted 13,925,683 13,202,500 12,245,679 3,104,196
Committed 5,829,001 8,099,951 9,250,014 10,354,648
Assigned 15,883,279 15,579,524 12,632,948 10,984,072
Unassigned (2,527,613) (2,438,049) (2,660,264) (2,627,513)
Total all other governmental funds 33,212,260$ 34,547,221$ 31,576,553$ 21,815,403$
Fiscal Year
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159
Table 3
2018 2019 2020 2021 2022 2023
124,064$ 187,305$ 282,860$ 160,019$ -$ 82,513$
- - - - - -
- - - - - -
237,813 - - - - -
7,299,540 7,684,153 7,967,868 8,590,610 8,888,888 9,240,805
7,661,417$ 7,871,458$ 8,250,728$ 8,750,629$ 8,888,888$ 9,323,318$
114,976$ 62,017$ 16$ 432$ 114,967$ 131,738$
3,150,743 28,548,680 26,250,482 12,443,162 12,149,090 15,918,585
12,068,614 10,182,700 11,705,506 11,880,096 9,583,438 7,291,361
10,716,044 13,177,577 14,950,419 13,784,749 13,064,623 11,764,159
(2,934,515) (2,824,246) (2,652,806) (1,691,896) 7,610,065 (1,643,916)
23,115,862$ 49,146,728$ 50,253,617$ 36,416,543$ 42,522,183$ 33,461,927$
Fiscal Year
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160
City of Elk River
Statistical Section (Unaudited)
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(Modified Accrual Basis of Accounting)
2014 2015 2016 2017
Revenues
Property taxes 10,640,251$ 10,953,633$ 11,171,496$ 11,642,778$
Sales taxes - - - -
Other taxes 1,441,259 1,513,621 1,552,499 1,543,086
Licenses and permits 559,286 639,791 655,607 1,007,543
Intergovernmental 838,573 3,913,721 1,681,666 3,928,374
Charges for services 2,091,107 1,761,958 1,851,408 2,226,936
Fines and forfeitures 160,298 169,459 167,526 205,456
Special assessments 881,271 315,259 456,666 241,304
Investment earnings 1,146,462 512,193 311,469 498,235
Miscellaneous 2,358,709 2,169,789 1,455,555 2,313,388
Total revenues 20,117,216 21,949,424 19,303,892 23,607,100
Expenditures
General government 3,181,547 3,365,570 3,601,468 3,524,634
Public safety 5,909,653 6,203,211 6,859,139 6,791,738
Public works 2,974,219 2,318,123 1,861,251 1,974,095
Culture and recreation 2,881,985 2,816,411 2,872,281 2,937,333
Economic development 1,095,535 954,673 949,205 1,122,261
Capital outlay 2,277,477 5,251,352 2,682,358 7,165,286
Debt service
Principal 1,535,000 1,505,000 5,100,000 10,675,000
Interest and fiscal charges 1,105,114 1,113,963 1,148,535 725,732
Total expenditures 20,960,530 23,528,303 25,074,237 34,916,079
Deficiency of revenues under expenditures (843,314) (1,578,879) (5,770,345) (11,308,979)
Other financing sources (uses)
Bonds issued - - - -
Premium on bonds issued - - - -
Sale of capital assets 44,827 3,017,674 80,587 116,012
Payment to refunding escrow agent - - - -
Lease issuance - - - -
Transfers in 4,837,016 4,703,787 6,524,537 4,275,797
Transfers out (3,504,993) (4,406,425) (4,832,400) (2,304,547)
Total other financing sources (uses) 1,376,850 3,315,036 1,772,724 2,087,262
Net change in fund balances 533,536$ 1,736,157$ (3,997,621)$ (9,221,717)$
Debt service as a percentage of non capital expenditures 14.1% 14.3% 27.4% 38.4%
Fiscal Year
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161
Table 4
2018 2019 2020 2021 2022 2023
12,214,702$ 13,011,977$ 13,975,014$ 14,286,904$ 15,016,982$ 16,279,104$
- 652,665 3,030,938 3,469,146 3,862,154 3,810,301
1,591,663 1,636,333 1,698,040 1,754,189 1,722,678 1,712,109
790,831 822,899 665,519 1,015,529 939,133 976,260
1,405,931 1,396,706 3,865,069 8,114,298 2,573,156 4,000,818
2,182,917 1,723,091 1,473,581 2,575,843 3,083,542 3,068,103
157,492 166,787 107,018 161,183 147,484 169,910
379,054 58,416 122,000 339,278 230,872 224,426
430,642 1,420,677 1,240,595 (56,944) (2,079,797) 2,233,568
2,212,818 3,202,501 2,899,380 3,278,522 3,218,201 3,058,965
21,366,050 24,092,052 29,077,154 34,937,948 28,714,405 35,533,564
3,733,746 4,004,917 4,333,018 4,439,105 4,638,041 5,155,639
7,325,724 7,620,997 7,764,843 8,335,808 9,100,633 9,789,473
1,875,645 2,217,650 2,274,616 2,421,631 2,528,964 2,701,433
3,438,103 2,968,847 3,056,757 3,891,907 4,326,742 4,711,517
964,926 540,763 693,157 454,657 517,691 580,422
2,431,103 16,631,953 24,556,635 28,183,763 9,210,937 11,495,481
1,575,000 1,315,000 1,900,000 2,195,000 2,375,772 3,077,697
507,661 713,023 1,865,033 1,847,335 1,917,993 1,795,928
21,851,908 36,013,150 46,444,059 51,769,206 34,616,773 39,307,590
(485,858) (11,921,098) (17,366,905) (16,831,258) (5,902,368) (3,774,026)
- 32,715,000 14,775,000 4,805,000 - -
- 3,234,515 1,364,913 428,885 - -
86,586 127,190 432,271 1,053,072 108,455 805,210
- - - (5,625,000) - -
- - - - 263,291 -
3,354,035 3,288,938 4,533,426 4,128,325 4,085,115 4,994,167
(1,290,397) (1,203,638) (2,252,546) (1,296,197) (1,199,482) (1,762,289)
2,150,224 38,162,005 18,853,064 3,494,085 3,257,379 4,037,088
1,664,366$ 26,240,907$ 1,486,159$ (13,337,173)$ (2,644,989)$ 263,062$
10.4% 10.4% 18.1% 15.1% 16.1% 16.2%
Fiscal Year
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162
Table 5
Fiscal Number of Total
Year Customers KWh's Sold Billings
2014 9,449 274,546,059 31,517,888$
2015 10,499 282,265,268 32,704,279
2016 10,816 305,337,641 34,569,098
2017 11,448 313,952,561 36,458,061
2018 11,983 331,124,011 39,039,573
2019 12,244 325,981,176 37,640,985
2020 12,365 324,469,638 37,714,965
2021 12,789 341,047,710 39,719,268
2022 12,955 333,644,951 42,395,048
2023 13,232 329,773,349 43,986,269
Source: Elk River Municipal Utilities
Electric Sales
Last Ten Fiscal Years
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163
Table 6
Percentage Percentage
Total kWh Total of Total Total kWh Total of Total
Customer Sold Billings Billings Sold Billings Billings
Customer 1 53,179,200 4,367,314$ 9.93% - $ - 0.00%
Customer 2 23,289,600 2,004,845 4.56% - - 0.00%
Customer 3 5,130,400 454,836 1.03% 4,728,000 294,913 2.07%
Customer 4 5,175,000 447,280 1.02% 3,778,185 229,776 1.62%
Customer 5 4,587,600 440,566 1.00% 5,900,000 368,017 2.59%
Customer 6 4,714,680 400,272 0.91% 4,984,200 260,384 1.83%
Customer 7 3,340,950 307,784 0.70% 2,957,490 205,306 1.44%
Customer 8 3,387,500 302,564 0.69% - - -
Customer 9 2,809,400 242,663 0.55% 3,306,400 209,682 1.47%
Customer 10 2,241,000 226,381 0.51% 2,727,760 200,647 1.41%
Customer 11 2,417,301 157,186 1.11%
Customer 12 1,682,784 131,001 0.92%
Total 107,855,330 9,194,505$ 20.90% 32,482,120 2,056,912$ 14.46%
Minnesota Statute 13.685 considers data on customers of municipal electric utilities as private data
and will no longer be disclosing customer names.
Source: Elk River Municipal Utilities
City of Elk River
Principal Electric Customers
Current Year and Nine Years Ago
2023 2014
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164
2014 2015 2016 2017 2018
Tax capacity
Real property 20,047,632$ 21,060,822$ 21,850,219$ 22,672,085$ 23,858,008$
Personal property 367,641 366,113 385,056 381,355 384,540
Total tax capacity 20,415,273 21,426,935 22,235,275 23,053,440 24,242,548
Tax increment (116,513) (198,997) (204,017) (184,717) (196,166)
Taxable net tax capacity 20,298,760$ 21,227,938$ 22,031,258$ 22,868,723$ 24,046,382$
Total tax capacity rate 48.544% 47.190% 46.170% 46.193% 46.011%
Taxable market value
Real property 1,622,624,100$ 1,735,898,300$ 1,826,858,800$ 1,909,814,070$ 2,026,119,675$
Personal property 18,736,600 18,585,200 19,469,900 19,234,400 19,393,900
Taxable market value 1,641,360,700$ 1,754,483,500$ 1,846,328,700$ 1,929,048,470$ 2,045,513,575$
Estimated actual market value
of taxable property 1,796,401,800$ 1,900,894,800$ 1,978,763,900$ 2,060,082,600$ 2,178,621,000$
Taxable market value as a percentage
of estimated actual market value 91.37%92.30%93.31%93.64%93.89%
Note: Property in the county is reassessed annually. The county assessor's market value of property is approximately 95 percent
of actual value for all types of real and personal property.
Source: Sherburne County Assessor
Fiscal Year
City of Elk River
Tax Capacity, Market Value and Estimated Actual Value of
Taxable Property
Last Ten Fiscal Years
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165
Table 7
2019 2020 2021 2022 2023
25,796,978$ 27,658,820$ 29,276,840$ 31,408,437$ 37,852,795$
408,699 375,332 396,605 467,376 540,816
26,205,677 28,034,152 29,673,445 31,875,813 38,393,611
(199,061) (211,066) (263,732) (294,137) (371,512)
26,006,616$ 27,823,086$ 29,409,713$ 31,581,676$ 38,022,099$
45.907% 46.241% 44.556% 43.967% 39.700%
2,219,031,172$ 2,394,547,946$ 2,558,852,731$ 2,766,271,639$ $3,387,630,626
20,605,300 18,945,900 20,009,600 23,548,900 27,213,700
2,239,636,472$ 2,413,493,846$ 2,578,862,331$ 2,789,820,539$ 3,414,844,326$
2,374,405,900$ 2,547,475,200$ 2,707,389,000$ 2,912,167,000$ $3,517,039,400
94.32%94.74%95.25%95.80%97.09%
Fiscal Year
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166
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167
Table 8
Total
Direct and
Fiscal Debt Referendum Special Overlapping
Year Operating Service Total County Operating Mkt. Value Districts Rates
2014 46.740 1.804 48.544 54.861 51.286 0.156 4.987 159.834
2015 45.433 1.757 47.190 51.979 42.483 0.209 4.779 146.640
2016 44.507 1.663 46.170 50.478 39.268 0.215 4.778 140.909
2017 44.584 1.609 46.193 50.460 36.659 0.219 4.509 138.040
2018 44.474 1.537 46.011 49.356 36.137 0.218 4.269 135.991
2019 44.099 1.808 45.907 47.928 32.865 0.216 2.496 129.412
2020 44.013 2.228 46.241 47.426 34.371 0.320 2.533 130.891
2021 42.452 2.104 44.556 45.835 31.717 0.306 2.328 124.742
2022 42.059 1.908 43.967 44.080 30.889 0.305 2.200 121.441
2023 37.082 2.618 39.700 38.630 26.605 0.289 2.099 107.323
1 Overlapping rates are those of local and county governments that apply to property owners within the City of Elk
River. Not all overlapping rates apply to all City of Elk River property owners (e.g., the rates for special districts
apply only to the proportion of the city's property owners whose property is located within the geographic
Source: Sherburne County Auditor/Treasurer
boundaries of the special district.
City of Elk River Overlapping Rates
School District
City of Elk River
Property Tax Rates
Direct and Overlapping1 Governments
Last Ten Fiscal Years
Page 288 of 464
168
Table 9
Percentage Percentage
Net Tax of Total Net Net Tax of Total Net
Taxpayer Capacity Rank Tax Capacity Capacity Rank Tax Capacity
Great River Energy 838,532$ 1 2.21% 1,159,164$ 1 5.71%
Cristobal Ventures LLC 631,612 2 1.66 - - -
Minnegasco 514,768 3 1.35 137,404 9 0.68
Target Corporation 430,174 4 1.13 270,230 5 1.33
Freeport Elk River LLC 363,692 5 0.96 - - -
Walmart Stores 305,064 6 0.80 274,298 4 1.35
St Elk River MN LLC 284,740 7 0.75 - - -
Menard, Inc 218,482 8 0.57 181,316 6 0.89
Elk River Senior Properties LLC 209,974 9 0.55 - - -
BIGO-Evans Meadows LLC 193,024 10 0.51 - - -
JPM Capital Corporation - - - 383,250 2 1.89
BRE Retail Residual Owner, LLC - - - 277,088 3 1.37
Envision Company LLC - 151,068 7 0.74
Home Depot - - - 138,084 8 0.68
ARHC ERELKMN01 LLC - - - 112,478 10 0.55
Total 3,990,062$ 13.37% 3,084,380$ 16.00%
Source: Sherburne County Assessor
2023 2014
City of Elk River
Principal Taxpayers
Current Year and Nine Years Ago
Page 289 of 464
169
Table 10
Collections in
Fiscal Total Year's Percentage Subsequent Percentage
Year Tax Levy Amount of Levy Years Amount of Levy
2014 10,315,213$ 10,300,688$ 99.86 12,924$ 10,313,612$ 99.98
2015 10,541,718 10,511,527 99.71 27,864 10,539,391 99.98
2016 10,852,545 10,843,359 99.92 7,950 10,851,309 99.99
2017 11,397,665 11,362,631 99.69 34,310 11,396,941 99.99
2018 11,910,489 11,899,143 99.90 11,009 11,910,152 100.00
2019 12,749,645 12,706,730 99.66 42,124 12,748,854 99.99
2020 13,632,710 13,647,883 100.11 (19,070) 13,628,813 99.97
2021 13,922,492 13,911,413 99.92 982 13,912,395 99.93
2022 14,725,913 14,679,784 99.69 23,707 14,703,491 99.85
2023 15,973,005 15,892,157 99.49 - 15,892,157 99.49
Collected within the
Fiscal Year of the Levy Total Collections to Date
City of Elk River
Property Tax Levies and Collections
Last Ten Fiscal Years
Page 290 of 464
170 General General Total PercentageFiscal General Obligation Special Lease Obligation Revenue Notes Lease Primary of Personal PerYearObligationRevenueAssessmentLiabilityOtherRevenueBondsPayableLiabilityGovernmentIncome1Capita12014 34,023,916$ -$ 1,246,612$ -$ 1,410,000$ 12,868,388$ 3,634,845$ 1,599,876$ -$ 54,783,637$ 7.14% 2,316$ 2015 32,789,690 - 924,765 - 1,410,000 12,564,299 3,020,935 1,408,368 - 52,118,057 6.69% 2,183 2016 29,365,466 - 607,918 - - 11,858,552 12,462,779 1,214,076 - 55,508,791 6.81% 2,294 2017 18,951,241 - 296,071 - - 11,132,723 11,781,983 1,018,860 - 43,180,878 5.19% 1,758 2018 17,632,016 - - - - 10,381,894 21,528,442 820,608 - 50,362,960 5.89% 2,023 2019 16,277,791 35,913,322 - - - 9,233,625 21,004,411 619,692 - 83,048,841 9.49% 3,290 2020 31,028,479 35,235,066 - - - 16,053,687 19,741,758 415,740 - 102,474,730 11.44% 4,004 2021 29,062,498 34,301,810 - - - 16,737,477 31,305,891 209,124 - 111,616,800 12.50% 4,320 2022 27,518,821 33,328,554 - 407,831 - 8,918,365 30,190,124 - 41,895 100,405,590 10.02% 3,785 2023 25,320,144 32,310,298 - 295,134 - 8,329,253 29,215,262 - 32,679 95,502,770 8.25% 3,525 Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.1 See the Schedule of Demographic and Economic Statistics for personal income and population data.Governmental ActivitiesCity of Elk RiverRatios of Outstanding Debt by TypeLast Ten Fiscal YearsBusiness-Type Activities Page 291 of 464
171
City of Elk River
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Table 12
Less
Amounts Less Percentage Net
General Restricted Cash with Net of Net Bonded Bonded
Fiscal Bonded for Debt Fiscal Bonded Debt to Tax Debt per
Year Debt1 Service Agent Debt Capacity2 Capita3
2014 31,001,667$ 1,599,852$ 9,580,144$ 19,821,671$ 99.50% 838$
2015 28,986,667 1,154,728 9,423,440 18,408,499 97.65% 771
2016 25,728,333 1,556,232 9,284,303 14,887,798 86.72% 611
2017 15,331,667 1,608,880 0 13,722,787 60.01% 559
2018 14,220,000 1,473,230 - 12,746,770 53.01% 512
2019 13,076,667 1,553,879 - 11,522,788 44.31% 456
2020 26,676,667 7,510,704 - 19,165,963 68.89% 749
2021 24,646,667 2,019,928 - 22,626,739 76.94% 876
2022 23,410,000 1,915,672 - 21,494,328 68.06% 814
2023 21,523,333 1,713,055 - 19,810,278 52.10% 734
Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
1 Only includes debt supported by tax levy; does not include sales tax revenue bonds.
2 See the Schedule of Tax Capacity, Market Value and Estimated Actual Value of Taxable
Property for property value data.
3 Population data can be found in the Schedule of Demographic and Economic Statistics.
Page 292 of 464
172
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173
Direct and Overlapping Governmental Activities Debt
December 31, 2023
Table 13
Percent
of Debt City's
Outstanding Applicable Share
Debt to City1 of Debt
Direct Debt:
City of Elk River2 57,925,576$ 100.00% 57,925,576$
Overlapping Debt:
Sherburne County 37,726,121 26.11% 9,848,456
School District #728 285,730,000 28.94% 82,678,073
Total overlapping debt 323,456,121 92,526,529
Total direct and overlapping debt 381,381,697$ 150,452,105$
Debt Ratios:
Ratio of debt per capita (27,001 population)$5,561
Ratios of debt to taxable market value of $3,414,844,326 4.40%
1 The percentage of overlapping debt applicable is estimated using taxable market property values.
Applicable percentages were estimated by determining the portion of the county's and school
district's taxable market value that is within the city's boundaries and dividing it by the county's
and school district's total taxable market value.
2 Excludes debt payable from enterprise revenue.
Note: Overlapping governments are those that coincide, at least in part, with the geographic
boundaries of the city. This schedule estimates the portion of the outstanding debt of those
overlapping governments that is borne by the residents and business of the City of Elk River.
This process recognizes that, when considering the city's ability to issue and repay
long-term debt, the entire debt burden borne by the residents and businesses should be taken
into account. However, this does not imply that every taxpayer is a resident, and therefore
responsible for repaying the debt of each overlapping government.
Source: Sherburne County and School District #728
City of Elk River
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174
2014 2015 2016 2017 2018
Debt limit 53,892,054$ 57,026,844$ 59,362,917$ 61,802,478$ 65,358,630$
Bonds 30,071,667 28,986,667 25,706,667 15,331,667 14,220,000
Reserves 10,743,409 10,673,852 10,560,614 1,377,746 1,457,117
Total net debt applicable to limit 19,328,258 18,312,815 15,146,053 13,953,921 12,762,883
Legal debt margin 34,563,796$ 38,714,029$ 44,216,864$ 47,848,557$ 52,595,747$
Total net debt applicable to the
limit as a percentage of debt limit 35.86% 32.11% 25.51% 22.58% 19.53%
Note: Under state law, the City of Elk River's outstanding general obligation debt should not exceed
3 percent of the market value of taxable property. By law, the general obligation debt subject to the
limitation may be offset by amounts set aside for the extinguishment of those obligations.
1 Only 2/3 of the $7,050,000 GO EDA Refunding Bonds, Series 2013A
are subject to the debt limit. The remaining 1/3 will be paid by the YMCA.
Fiscal Year
City of Elk River
Legal Debt Margin Information
Last Ten Fiscal Years
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175
Table 14
2019 2020 2021 2022 2023
71,232,177$ 76,424,256$ 77,365,870$ 83,694,616$ 102,445,330$
13,076,667 26,676,667 24,646,667 23,410,000 21,523,333
1,528,399 7,511,416 1,780,459 1,785,970 1,682,530
11,548,268 19,165,251 22,866,208 21,624,030 19,840,803
59,683,909$ 57,259,005$ 54,499,662$ 62,070,586$ 82,604,527$
16.21% 25.08% 29.56% 25.84% 19.37%
Legal Debt Margin Calculation for Fiscal Year 2023
Estimated taxable market value $3,414,844,326
Debt limit (3% of market value) $102,445,330
Debt applicable to limit:
G.O. capital improvement bonds 17,200,000
G.O. EDA bonds1 4,323,333
Less: Cash and investments in related
debt service funds (1,682,530)
Total net debt applicable to limit 19,840,803
Legal debt margin 82,604,527$
Fiscal Year
Page 296 of 464
176 Table 15 Net Special Fiscal Gross Operating Revenue Debt Service Assessment Debt Service YearRevenue 2Expenses 3AvailablePrincipalInterestCoverageCollectionsPrincipalInterestCoverage2014 35,249,153$ 29,806,010$ 5,443,143$ 3,940,000$ 282,209$ 1.29 182,191$ 375,000$ 29,000$ 0.45 2015 36,586,235 30,281,264 6,304,971 900,000 464,938 4.62 162,519 310,000 21,550 0.49 2016 38,559,107 32,376,907 6,286,971 2,860,000 183,634 2.07 135,447 305,000 15,400 0.42 2017 40,563,969 34,509,407 6,182,200 1,355,000 673,662 3.05 106,349 300,000 8,900 0.34 2018 43,542,520 35,946,427 7,596,093 1,390,000 627,528 3.77 - 295,000 2,950 0.00 2019 42,781,499 34,883,488 7,898,011 1,620,000 924,505 3.10 - - - 0.00 2020 43,078,573 34,310,476 8,768,097 1,625,000 1,023,466 3.31 - - - 0.00 2021 46,398,629 38,450,863 7,947,766 1,915,000 927,535 2.80 - - - 0.00 2022 49,445,623 43,409,827 6,035,796 8,865,000 1,262,155 0.60 - - - 0.00 2023 50,608,815 43,077,556 7,531,259 1,435,000 973,191 3.13 - - - 0.00 Note: Details regarding the government's outstanding debt can be found in the notes to the financial statements.1 Includes Liquor, Sewer, Water and Electric revenue bonds2 Gross revenue excludes interest income, connection fees and miscellaneous revenues3 Expenses exclude depreciation, interest on bonds and miscellaneous expensesRevenue Bonds 1Special Assessment BondsCity of Elk RiverPledged-Revenue CoverageLast Ten Fiscal Years Page 297 of 464
177
Table 16
Personal
Fiscal Income Per Capita Median School Unemployment
Year Population1 (in thousands)Income2 Age3 Enrollment4 Rate5
2014 23,730 767,666$ 32,350$ 36 13,627 4.1%
2015 23,987 782,528 32,623 35 13,751 4.0%
2016 24,368 815,597 33,470 36 14,077 3.4%
2017 24,567 832,784 33,899 36 14,294 4.0%
2018 24,891 854,433 34,327 36 14,448 3.8%
2019 25,243 875,452 34,681 36 14,623 3.9%
2020 25,590 895,676 35,001 36 14,280 4.9%
2021 25,835 893,090 34,569 37 14,169 3.7%
2022 26,406 997,143 37,762 37 14,956 2.9%
2023 27,001 1,154,158 42,745 36 15,041 3.0%
Data Sources
1 State Demographer
2 Bureau of Economic Analysis
3 US Census Bureau
4 School District
5 Minnesota Department of Employment and Economic Development
n/a - not available
City of Elk River
Demographic and Economic Statistics
Last Ten Fiscal Years
Page 298 of 464
178
Table 17
Percentage Percentage
of Total City of Total City
Employer Employees Rank Employment Employees Rank Employment
Independent School District 728 1 2,100 1 16.86% 1,421 1 11.28%
Sherburne County 697 2 5.60% 616 2 4.89%
Guardian Angels of Elk River 374 3 3.00% 374 3 2.97%
Walmart 354 4 2.84% 354 4 2.81%
City of Elk River 243 5 1.95% 214 5 1.70%
Great River Energy 210 6 1.69% 210 6 1.67%
Sportech, Inc. 185 7 1.49% 185 7 1.47%
Menards 173 8 1.39% 173 8 1.37%
Tescom Corporation 170 9 1.37% 170 9 1.35%
First National Financial Services 142 10 1.14% - - -
Cornerstone Auto Resource - - - 138 10 1.10%
Total 4,648 37.33% 3,855 30.61%
Total Employment 2 12,453 12,599
1 Total District
2 Minnesota Department of Employment and Economic Development
20142023
City of Elk River
Principal Employers
Current Year and Nine Years Ago
Page 299 of 464
179
Table 18
Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
General government 28.3 29.3 29.3 29.3 30.3 29.3 29.8 29.9 31.3 31.5
Public safety:
Police
Officers 31.0 32.0 32.0 32.0 34.0 34.0 34.0 34.0 34.0 34.0
Civilians 9.0 9.0 9.0 9.0 9.0 9.0 10.0 10.0 10.0 11.0
Fire
Fire administration 2.73.03.03.03.05.05.05.05.05.0
Paid on-call volunteers 40.0 44.0 44.0 44.0 45.0 45.0 45.0 45.0 45.0 45.0
Other public safety 9.09.09.09.09.07.07.07.07.07.0
Public works 15.0 15.0 15.0 15.0 15.0 16.0 15.5 15.6 15.6 16.6
Culture and recreation 18.5 17.5 17.5 17.8 18.3 18.6 19.7 23.6 24.6 24.9
Economic development 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0
Municipal liquor 13.0 13.0 13.0 13.0 13.0 13.5 13.5 13.5 13.5 13.5
Sewer 6.0 6.0 6.0 6.0 6.0 6.0 6.0 7.0 7.0 7.0
Storm Water - 1.0 1.0 1.0 1.0 1.0 1.0 0.0 0.0 0.0
Water 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.5 8.5 8.5
Electric 31.0 34.0 34.0 34.0 34.0 36.0 36.0 37.0 36.4 37.2
Total 213.5 222.8 222.8 223.1 227.6 230.4 232.5 238.1 239.9 243.2
Source: City of Elk River Finance Department
Fiscal Year
City of Elk River
Full-Time Equivalent Employees by Function
Last Ten Fiscal Years
Page 300 of 464
180 Table 19Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Planning Land use applications 85 118 138 122 103 102 126 89 112 115Police Police calls 21,585 21,930 24,728 26,329 27,061 26,209 24,083 25,449 23,982 24,314 Traffic citations 1,930 2,778 2,818 3,294 2,309 2,575 1,570 2,339 1,751 2,533Fire Fire calls 411 436 442 473 483 497 497 577 547 613Building/environmental Permits issued 1,956 1,722 1,804 2,245 2,316 2,466 2,701 2,747 2,456 2,734 Valuation of permits 47,037$ 57,965$ 51,368$ 106,983$ 66,048$ 70,313$ 81,056$ 137,788$ 109,930$ 105,926$ (thousands of dollars)Public works Street sweeping (hours) 1,888 1,824 1,520 1,314 991 1,000 1,100 950 825 800 Snowplowing (hours) 5,872 3,018 3,368 3,812 5,122 4,200 3,900 4,160 5,500 4,800 Equipment repair (hours) 5,210 3,575 3,688 4,196 5,140 5,100 5,200 5,440 4,950 4,947Culture and recreation Recreation participants 27,330 27,348 27,452 27,787 27,637 33,522 12,285 36,752 41,061 26,789 Ice arena usage (hours)4,5685,4694,5834,5184,4594,2342,1081,8705,0356,796 Sewer Average daily treatment flow 1,200 1,200 1,300 1,300 1,300 1,300 1,350 1,350 1,350 1,350 (thousands of gallons)Water Number of customers 4,676 4,672 4,903 5,011 5,140 5,256 5,320 5,430 5,551 5,611 Average daily consumption 2,143 2,192 2,196 2,159 2,254 2,133 2,391 2,677 2,429 2,751 (thousands of gallons)Electric Number of customers 9,449 10,499 10,816 11,448 11,983 12,244 12,365 12,789 12,955 13,232 Average daily consumption 790 773 837 878 931 922 923 953 943 936 (thousands of KWh's)Sources: Various city departmentsFiscal YearCity of Elk RiverOperating Indicators by FunctionLast Ten Fiscal YearsPage 301 of 464
181 Table 20Function 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023Public safety Police: Stations 1 111111111 Patrol units 12 131313141414141617 Fire Stations 2 222222233Public works Streets (miles) 151 151 155 155 155 155 157 160 164 164Culture and recreation Parks 46 4646464640 140 40 40 40 Parks acreage 1,392 1,392 1,392 1,392 1,392 1,392 1,392 1,392 1,392 1,392Sewer Sanitary sewers (miles) 80 8080808080828713687 Lift stations 21 21 21 21 21 21 22 23 23 23 Maximum daily treatment capacity 2,200 2,200 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 (thousands of gallons)Water Maximum daily capacity 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 (thousands of gallons)Electric Generating facilities 6 666666666Note: No capital asset indicators are available for the general government function.1 Several smaller parks were consolidated into Woodland Trails Regional ParkSources: Various city departmentsFiscal YearCity of Elk RiverCapital Asset Statistics by FunctionLast Ten Fiscal YearsPage 302 of 464
City of Elk River
Sherburne County, Minnesota
Communications Letter
December 31, 2023
Page 303 of 464
City of Elk River
Table of Contents
Report on Matters Identified as a Result of
the Audit of the Basic Financial Statements 1
Required Communication 3
Financial Analysis 7
Emerging Issues 22
Page 304 of 464
1
Report on Matters Identified as a Result of
the Audit of the Basic Financial Statements
Honorable Mayor, Members of the
City Council, and Management
City of Elk River
Elk River, Minnesota
In planning and performing our audit of the basic financial statements of the governmental activities,
business-type activities, the aggregate discretely presented component unit, each major fund, and
the aggregate remaining fund information of the City of Elk River, Minnesota, as of and for the year
ended December 31, 2023, 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, 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 over financial reporting.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies
may exist that have not been identified. In addition, because of inherent limitations in internal
control, including the possibility of management override of controls, misstatements due to error, or
fraud may occur and not be detected by such controls.
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 over financial reporting, such that there is a
reasonable possibility that a material misstatement of the City's basic financial statements will not
be prevented, or detected and corrected, on a timely basis. A reasonable possibility exists when the
likelihood of an event occurring is either reasonably possible or probable as defined as follows:
Reasonably possible. The chance of the future event or events occurring is more than remote
but less than likely.
Probable. The future event or events are likely to occur.
We did not identify any deficiencies in internal control that we consider to be material weaknesses.
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.
Page 305 of 464
2
The accompanying memorandum also includes financial analysis provided as a basis for discussion.
The matters discussed herein were considered by us during our audit and they do not modify the
opinion expressed in our Independent Auditor's Report dated May 13, 2024, on such statements.
The purpose of this communication, which is an integral part of our audit, is to describe for the
Members of the City Council and management and others within the City and state oversight agencies
the scope of our testing of internal control and the results of that testing. Accordingly, this
communication is not intended to be and should not be used for any other purpose.
Minneapolis, Minnesota
May 13, 2024
Page 306 of 464
3
City of Elk River
Required Communication
We have audited the basic financial statements of the governmental activities, business-type
activities, the aggregate discretely presented component unit, each major fund, and the aggregate
remaining fund information of the City as of and for the year ended December 31, 2023. Professional
standards require that we advise you of the following matters related to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter, our responsibility, as described by professional
standards, is to form and express opinions about whether the basic financial statements prepared by
management with your oversight are presented fairly, in all material respects, in accordance with
accounting principles generally accepted in the United States of America. Our audit of the basic
financial statements does not relieve you or management of its respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the basic financial statements are free of
material misstatement. An audit of the basic financial statements includes consideration of internal
control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, as part of our audit, we considered the
internal control of the City solely for the purpose of determining our audit procedures and not to
provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgement, relevant to your responsibilities in overseeing the financial reporting
process. However, we are not required to design procedures for the purpose of identifying other
matters to communicate to you.
Generally accepted accounting principles provide for certain Required Supplementary Information
(RSI) to supplement the basic financial statements. Our responsibility with respect to the RSI, which
supplements the basic financial statements, is to apply certain limited procedures in accordance
with generally accepted auditing standards. However, the RSI was not audited and, because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance, we do not express an opinion or provide any assurance on the RSI.
Our responsibility for the supplementary information accompanying the basic financial statements,
as described by professional standards, is to evaluate the presentation of the supplementary
information in relation to the basic financial statements as a whole and to report on whether the
supplementary information is fairly stated, in all material respects, in relation to the basic financial
statements as a whole.
Our responsibility with respect to the other information in documents containing the audited basic
financial statements and auditor's report does not extend beyond the basic financial information
identified in the report. We have no responsibility for determining whether this other information is
properly stated. This other information was not audited, and we do not express an opinion or provide
any assurance on it.
Page 307 of 464
4
City of Elk River
Required Communication
Our Responsibility in Relation to Government Auditing Standards
As communicated in our engagement letter, part of obtaining reasonable assurance about whether
the basic financial statements are free of material misstatement, we performed tests of the City's
compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of basic
financial statement amounts. However, the objective of our tests was not to provide an opinion on
compliance with such provisions.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated
to you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, our firm, and our network firms have
complied with all relevant ethical requirements regarding independence.
Significant Risks Identified
We have identified the following significant risks of material misstatement:
Management Override of Controls – Management override of internal control is considered a
risk in substantially all engagements as management may be incentivized to produce better
results.
Misappropriation of Assets – If duties cannot be appropriately segregated, there is a risk of
unauthorized disbursements being made by the City. In addition, generally this results in less
review taking place as transactions are recorded in the financial statements.
Improper Revenue Recognition – Revenue recognition is considered a fraud risk on
substantially all engagements as it generally has a significant impact on the results of the
government's operations. In addition, complexities exist surrounding the calculation and
recording of various revenue sources.
Pension Valuation – Net Pension Liability, Deferred Outflows of Resources Related to Pensions,
and Deferred Inflows of Resources Related to Pensions are generally material to the financial
statements and involve significant estimates.
Qualitative Aspects of the City's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of
the significant accounting policies adopted by the City is included in the notes to the basic financial
statements. There have been no initial selection of accounting policies and no changes to significant
accounting policies or their application during 2023. No matters have come to our attention that
would require us, under professional standards, to inform you about (1) the methods used to account
for significant unusual transactions and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the basic financial statements prepared by management
and are based on management's current judgements. Those judgements are normally based on
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 basic
financial statements and because of the possibility that future events affecting them may differ
markedly from management's current judgements.
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5
City of Elk River
Required Communication
Qualitative Aspects of Significant Accounting Practices (Continued)
Significant Accounting Estimates (Continued)
The most sensitive estimate affecting the basic financial statements relate to:
Net Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows of
Resources Related to Pensions – These balances are based on an allocation by the pension plans
using estimates based on contributions.
We evaluated the key factors and assumptions used to develop the accounting estimates and
determined that they are reasonable in relation to the basic financial statements taken as a whole
and in relation to the applicable opinion units.
Financial Statement Disclosures
Certain basic financial statement disclosures involve significant judgment and are particularly
sensitive because of their significance to financial statement users. The basic financial statement
disclosures are neutral, consistent, and clear.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance
of the audit.
Uncorrected and Corrected Misstatements
For the purposes of this communication, professional standards require us to accumulate all known
and likely misstatements identified during the audit, other than those that we believe are trivial,
and communicate them to the appropriate level of management. Further, professional standards
require us to also communicate the effects of uncorrected misstatements related to prior periods on
the relevant classes of transactions, account balances or disclosures, and the basic financial
statements taken as a whole and each applicable opinion unit. Management did not identify, and we
did not notify them of any uncorrected financial statement misstatements.
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit
procedures. None of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the basic financial statements
taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or
auditing matter, which could be significant to the City's basic financial statements or the auditor's
report. No such disagreements arose during the course of our audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in the
management representation letter.
Page 309 of 464
6
City of Elk River
Required Communication
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management has informed us that, and to our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, significant events
or transactions that occurred during the year, operating and regulatory conditions affecting the City,
and operational plans and strategies that may affect the risks of material misstatement. None of the
matters discussed resulted in a condition to our retention as the City's auditor.
Other Information Included in Annual Reports
Pursuant to professional standards, our responsibility as auditors for other information, whether
financial or nonfinancial, included in the City's annual reports, does not extend beyond the
information identified in the audit report, and we are not required to perform any procedures to
corroborate such other information.
We applied certain limited procedures to the RSI that supplements the basic financial statements.
Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We did not audit the RSI and do not express an opinion or provide any
assurance on the RSI.
With respect to the supplementary information accompanying the financial statements, 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 basic financial statements or to the basic financial
statements themselves.
We were not engaged to report on the other information accompanying the basic 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.
Our responsibility also includes communicating to you any information which we believe is a material
misstatement of fact. Nothing came to our attention that caused us to believe that such information,
or its manner of presentation, is materially inconsistent with the information, or manner of its
presentation, appearing in the basic financial statements.
Page 310 of 464
7
City of Elk River
Financial Analysis
The following pages provide graphic representations of select data pertaining to the financial
position and operations of the City for the past five years. Our analysis of each graph is presented to
provide a basis for discussion of past performance and how implementing certain changes may
enhance future performance. We suggest you view each graph and document if our analysis is
consistent with yours. A subsequent discussion of this information should be useful for planning
purposes.
General Fund – Fund Balance
The following graph illustrates the relationship between cash and investments and fund balance over
the past five years. At December 31, 2023, the General Fund balance consisted of an unrestricted
fund balance of $9,323,318. The total unrestricted fund balance represented just over five and a half
months of expenditures at current levels. The Office of the State Auditor has issued a statement of
position recommending cities maintain an unrestricted fund balance of approximately 35% to 50% of
fund operating revenues, or no less than five months of operating expenditures. The City's fund
balance policy for the General Fund identifies a minimum unassigned fund balance of 40-45% of
budgeted operating expenditures. Based on the 2024 budgeted expenditures of $21,570,600, the
City's unassigned General Fund balance was at 43% at December 31, 2023.
$7,871,458 $8,250,728 $8,750,629
$8,888,888
$9,323,318
$7,511,623 $8,015,854
$8,716,326
$9,307,918
$9,243,274
$-
$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
$13,000,000
$14,000,000
$15,000,000
2019 2020 2021 2022 2023
Cash and Investments and Fund Balance
Fund Balance Cash and Investment Balance
On the following pages, we will discuss the revenues and expenditures of the General Fund and the
variations in the fund balance.
Page 311 of 464
8
City of Elk River
Financial Analysis
General Fund – Revenues and Expenditures
The following table and graph show the overall operations of the General Fund. Revenues have
increased over each of the five years shown from a low of $14,379,312 in 2019 to a high in 2023 of
$17,488,036. Overall, from 2019 to 2023, revenues have increased $3,108,724, or 21.6%. Revenues
increased by $1,070,365 when comparing 2023 to 2022. Similarly, expenditures have increased over
each of the five years presented. In 2023, expenditures were $19,782,106, an increase from the prior
year of $1,118,325. Since 2019, expenditures have increased $4,291,603, or 27.7%.
$14,379,312 $14,656,694 $15,633,492 $16,417,671 $17,488,036
$15,490,503 $15,614,681 $16,829,600 $18,663,781 $19,782,106
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2019 2020 2021 2022 2023
Revenues and Expenditures
Total Revenues Total Expenditures
Page 312 of 464
9
City of Elk River
Financial Analysis
General Fund – Revenues
The following graph presents comparisons of revenues by type, illustrating the majority of revenue
for the City is from taxes, representing 79.7% of total General Fund revenues. Other revenues include
items such as fines and forfeitures, investment earnings, and other miscellaneous items.
Revenues of the General Fund increased from 2022 to 2023 by $1,070,365, or 6.5%. Tax revenue had
the largest increase of $751,231 based on the increase in taxes levied for the fund. The other
revenue category increased $149,299 related to increases in investment income, fines and
forfeitures, and other miscellaneous revenues. Other category sources of revenue had relatively
minor fluctuations when compared to the prior year.
2019 2020 2021 2022 2023
Charges for Services $944,297 $820,666 $1,077,855 $1,164,410 $1,247,308
Other 663,548 369,125 426,864 466,605 615,904
Licenses and Permits 822,899 665,519 1,015,529 939,133 976,260
Intergovernmental 618,488 674,061 581,927 657,107 706,917
Taxes 11,330,080 12,127,323 12,531,317 13,190,416 13,941,647
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
General Fund Revenues
Page 313 of 464
10
City of Elk River
Financial Analysis
General Fund – Expenditures
The graph below represents the breakdown of expenditures by department. Public safety continues
to comprise the largest portion of General Fund expenditures, representing 49.0%. Overall, General
Fund expenditures increased $1,118,325, or 6.0%, from 2022.
Public safety expenditures increased $657,937 with higher salaries and benefits along with additional
costs for equipment and supply needs. General government expenditures increased $445,081 with
increased wages for employees and greater professional service expenditures. Public works
expenditures increased $150,322 with higher salaries and benefits along with additional costs for
supplies and equipment repair and maintenance.
2019 2020 2021 2022 2023
Capital Outlay -37,718 257,243 3,830
Debt Service ---106,845 110,257
Culture and Recreation 2,107,192 1,941,732 2,015,790 2,398,314 2,432,803
Public Works 2,103,742 2,132,913 2,328,853 2,399,494 2,630,313
General Government 3,857,489 4,036,523 4,173,627 4,463,622 4,908,703
Public Safety 7,422,080 7,503,513 8,273,612 9,038,263 9,696,200
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
General Fund Expenditures
Page 314 of 464
11
City of Elk River
Financial Analysis
General Fund – Budgetary Comparison
Actual
Amounts
Revenues
Property taxes $13,893,000 $13,785,282 (107,718)$
Other taxes 225,000 156,365 (68,635)
Licenses and permits 1,004,300 976,260 (28,040)
Intergovernmental 634,000 706,917 72,917
Charges for services 1,163,700 1,247,308 83,608
Fines and forfeitures 130,000 169,910 39,910
Miscellaneous revenues 275,000 445,994 170,994
Total revenues 17,325,000 17,488,036 163,036
Expenditures
General government 4,907,100 4,908,703 1,603
Public safety 9,857,300 9,696,200 (161,100)
Public works 2,622,500 2,549,816 (72,684)
Culture and recreation 2,666,600 2,432,803 (233,797)
Economic development - 80,497 80,497
Debt service - 110,257 110,257
Capital outlay - 3,830 3,830
Total expenditures 20,053,500 19,782,106 (271,394)
Excess of revenues over
(under) disbursements (2,728,500) (2,294,070) 434,430
Other Financing Sources (Uses)
Net transfers 2,728,500 2,728,500 -
Net change in fund balances -$ 434,430$ 434,430$
Variance With
Final Budget -
Over (Under)
Original and
Final Budget
The City had a balanced budget in 2023 with anticipated revenues and net transfers equaling
budgeted expenditures of $20,053,500. Overall, actual revenue was $163,036, or 0.9%, over budget.
The miscellaneous revenues category was $170,994 over budget due in large part to investment
income coming in higher than budgeted. All other revenue categories were relatively consistent with
the budget.
Overall, actual expenditures were less than budgeted amounts by $271,394, or 1.4%. The primary
driver of the expenditures being under budget related to the culture and recreation expenditures,
which were $233,797 under budget based on lesser wages and repair and maintenance costs than
anticipated. Public safety was $161,100 under budget based on personnel costs and less repair and
maintenance expenditures than anticipated. The debt service category had actual expenditure
amounts in 2023 as the result of the required implementation of GASB Statement No. 87, which
changed the accounting for leases, which were not included separately as part of the budget.
Page 315 of 464
12
City of Elk River
Financial Analysis
Multipurpose Facility Operations
The following graph illustrates the current operations of the Multipurpose Facility Fund for the past
three years.
In 2023, the Fund showed revenues of $1,546,616, which was a decrease of $308,354 compared to
2022 as less federal funding from the American Rescue Plan Act was received in the Fund. The
decrease in federal funding was partially offset by increases in revenues from ice rental and
recreation fees along with greater revenue from concessions. Expenditures increased by $426,900
during 2023 with increased equipment purchases along with higher wages, supply costs, contractual
services, and merchandise costs. The Fund entered into an interfund loan with the Capital Outlay
Reserve Fund in 2023 for $200,000 relating to the purchase of a Zamboni. The effect of decreased
revenues and increased expenditures in 2023, along with $30,000 in other financing sources, resulted
in a decrease in fund balance of $441,624. The fund balance at the end of 2023 was ($207,655).
2021 2022 2023
Revenue $1,058,645 $1,854,970 $1,546,616
Expenditures 1,312,075 1,591,340 2,018,240
Revenues over (under) Expenditures ($253,430) $263,630 ($471,624)
Other Financing Sources (Uses)-38,77230,000
Fund Balance (68,433) 233,969 (207,655)
(500,000)
(300,000)
(100,000)
100,000
300,000
500,000
700,000
900,000
$(1,000,000)
$(500,000)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Multipurpose Facility Fund
Page 316 of 464
13
City of Elk River
Financial Analysis
Enterprise funds may be used to account for any activity in which a fee is charged. It is not required
to have the fee support the entire activity; however, the basic premise in establishing an enterprise
fund is that the activity will be operated similar to a business. Therefore, it is expected the
enterprise fund would at least be able to meet its obligations currently and into the future.
Sewer Operations
The following graph illustrates the current operations of the Sewer Fund for the past five years.
Operating income is shown with and without depreciation below.
Operating revenue increased $140,345, or 5.3%, from 2022 with increased rates and increased usage.
Operating expenses increased by $234,847, or 6.4%, due in large part to supply and equipment needs
along with greater depreciation expense. The net effect of the increased revenues and expenses is
an operating loss of $1,112,563 for the year. When not including depreciation and amortization of
capital assets in the calculation, the Sewer Fund had an operating income of $598,378.
2019 2020 2021 2022 2023
Operating Revenues $2,383,196 $2,481,522 $2,517,025 $2,633,732 $2,774,077
Operating Expenses 3,305,817 3,344,218 3,417,504 3,651,793 3,886,640
Operating Income without
Depreciation/Amortization 721,838 773,717 739,615 623,383 598,378
Operating Loss (922,621)(862,696)(900,479)(1,018,061)(1,112,563)
$(2,000,000)
$(1,000,000)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
Sewer Operations
Page 317 of 464
14
City of Elk River
Financial Analysis
Sewer Fund
2019 2020 2021 2022 2023
Cash and Investments $5,245,861 $13,476,183 $14,540,459 $8,078,281 $8,853,336
Unrestricted Net Position 5,261,879 6,602,622 7,726,366 8,305,312 9,039,420
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
Sewer Fund
The above graph shows the cash and investment and unrestricted net position balances as of
December 31 for the last five years. The Sewer Fund cash and investment balance has increased
$3,607,475 since 2019. The cash and investment balance increased $775,055 during 2023 while the
unrestricted net position for the Sewer Fund increased $734,108 during the same time period.
Page 318 of 464
15
City of Elk River
Financial Analysis
Garbage Operations
The following graph illustrates the current operations of the Garbage Fund for the past five years.
The Garbage Fund has shown an operating income in each of the last five years presented. In 2023,
the Fund showed an operating income of $217,705. This is a slight decrease in operating income of
$1,088 from 2022. The Fund experienced an increase in operating revenue of $31,269 based on rates
and usage for the year, while garbage operating expenses increased $32,357 due to increased
contractual service expenses based on garbage customer charges.
2019 2020 2021 2022 2023
Operating Revenues $1,645,115 $1,686,664 $1,773,620 $1,889,247 $1,920,516
Operating Expenses 1,456,482 1,565,482 1,623,785 1,670,454 1,702,811
Operating Income without Depreciation 188,633 121,182 149,835 218,793 217,705
Operating Income (Loss)188,633 121,182 149,835 218,793 217,705
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Garbage Operations
Page 319 of 464
16
City of Elk River
Financial Analysis
Garbage Fund
2019 2020 2021 2022 2023
Cash and Investments $343,379 $442,825 $528,325 $610,952 $802,786
Unrestricted Net Position 348,539 438,738 531,665 620,506 812,632
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Garbage Fund
The graph above shows the cash and investment and unrestricted net position balances as of
December 31 for the last five years. The Garbage Fund cash and investment balance has increased
$459,407 since 2019. In 2023, the Garbage Fund cash and investment balance increased $191,834
while the unrestricted net position increased $192,126 based on positive operations during the year.
Both balances for cash and investments and unrestricted net position were the highest in 2023 of the
five years presented.
Page 320 of 464
17
City of Elk River
Financial Analysis
Storm Water Operations
The following graph illustrates the current operations of the Storm Water Fund for the past five
years. Operating revenue increased $296,790 in 2023 while expenses increased $317,549 due in large
part to grant funding received and related expenses related to an erosion prevention project. The
net effect of the changes in revenues and expenses is an operating loss of $75,078. The Fund had
operating income of $419,715 when excluding depreciation.
2019 2020 2021 2022 2023
Operating Revenues $510,889 $564,699 $586,049 $609,101 $905,891
Operating Expenses 1,024,928 571,170 612,527 663,420 980,969
Operating Income without
Depreciation/Amortization (56,562)456,587 440,918 424,183 419,715
Operating Loss (514,039)(6,471)(26,478)(54,319)(75,078)
$(600,000)
$(400,000)
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Storm Water Operations
Page 321 of 464
18
City of Elk River
Financial Analysis
Storm Water Fund
2019 2020 2021 2022 2023
Cash and Investments $730,463 $1,179,754 $1,433,529 $1,548,347 $1,921,645
Unrestricted Net Position 691,640 1,181,615 1,488,809 1,586,357 1,956,658
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Storm Water Fund
As of December 31, 2023, the Storm Water Fund had an ending net cash and investment balance of
$1,921,645. This is an increase of $373,298 compared to 2022. Unrestricted net position at year-end
was $1,956,658 and also increased $370,301 compared to the prior year, the highest mark of the
five-year period.
Page 322 of 464
19
City of Elk River
Financial Analysis
Municipal Liquor Operations
The following graph illustrates the current operations of the Municipal Liquor Fund for the past five
years. Sales decreased $552,843 in 2023 while cost of sales also decreased $428,842, ending with a
decrease in gross profit of 5.3%. The net effect of the decreases in revenues and expenses is
operating income of $637,163, a decrease of $109,568 compared to 2022.
2019 2020 2021 2022 2023
Gross Profit $2,215,089 $2,245,745 $2,379,769 $2,335,534 $2,211,533
Operating Expenses 1,372,517 1,440,451 1,448,717 1,593,173 1,579,063
Operating Income without
Depreciation/Amortization 968,662 904,042 1,031,887 840,546 699,193
Operating Income 845,376 808,044 936,948 746,731 637,163
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Municipal Liquor Operations
Page 323 of 464
20
City of Elk River
Financial Analysis
Municipal Liquor Fund
2019 2020 2021 2022 2023
Cash and Investments $4,649,254 $5,023,743 $4,713,463 $3,978,266 $3,526,983
Unrestricted Net Position 4,732,801 5,111,153 5,005,721 4,334,085 3,930,205
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
Municipal Liquor Fund
As of December 31, 2023, the Municipal Liquor Fund had an ending net cash and investment balance
of $3,526,983. This is a decrease of $451,283 compared to 2022. Unrestricted net position at year-
end was $3,930,205, a decrease of $403,880 compared to the prior year. Both balances decreased as
transfers out of $1.25 million were made out of the Municipal Liquor Fund for 2023. Unrestricted net
position has decreased by $802,596, or 17.0%, over the last five years when comparing 2023 to 2019.
Page 324 of 464
21
City of Elk River
Financial Analysis
Governmental Activities
The chart below presents the minimum annual principal payments required to retire long-term
liabilities.
2024 2025 2026 2027 2028 2029-2033 2034-2038 2039-2043 2044
YMCA $575,000 $590,000 $605,000 $615,000 $630,000 $3,470,000 $0 $-$-
Sales Tax 935,000 1,000,000 1,030,000 1,080,000 1,135,000 6,450,000 7,550,000 8,580,000 1,865,000
Govt Bldgs 895,000 940,000 985,000 1,025,000 1,075,000 5,615,000 3,580,000 3,085,000 -
$-
$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
Debt Service Funds -Maturities
Page 325 of 464
City of Elk River
Emerging Issues
22
Executive Summary
The following is an executive summary of financial related updates to assist you in staying current on
emerging issues in accounting and finance. This summary will give you a preview of the new
standards that have been recently issued and what is on the horizon for the near future. The most
recent and significant updates include:
Implementation Guide No. 2021-1 – Amending Capitalization Requirements
GASB has issued Implementation Guide No. 2021-1, amending previously issued guidance
regarding capitalization requirements for capital assets that are significant in the aggregate
but below the government's capitalization threshold individually.
Accounting Standard Update – GASB Statement No. 100 – Accounting Changes and Error
Corrections
GASB has issued GASB Statement No. 100 relating to accounting and financial reporting for
accounting changes and error corrections. The requirements of this Statement will improve
the clarity of the accounting and financial reporting requirements for accounting changes and
error corrections, which will result in greater consistency in application in practice. In turn,
more understandable, reliable, relevant, consistent, and comparable information will be
provided to financial statement users for making decisions or assessing accountability.
Accounting Standard Update – GASB Statement No. 101 – Compensated Absences
GASB has issued GASB Statement No. 101 relating to accounting and financial reporting for
compensated absences. The unified recognition and measurement model in this Statement
will result in a liability for compensated absences that more appropriately reflects when a
government incurs an obligation. In addition, the model can be applied consistently to any
type of compensated absence and will eliminate potential comparability issues between
governments that offer different types of leave.
The following are extensive summaries of the current updates. As your continued business partner,
we are committed to keeping you informed of new and emerging issues. We are happy to discuss
these issues with you further and their applicability to your City.
Implementation Guide No. 2021-1 – Amending Capitalization Requirements
Implementation Guide No. 2021-1, amended previously issued guidance contained in Implementation
Guide No. 2015-1 regarding capitalization requirements for capital assets that are significant in the
aggregate.
Original guidance stated that it may be appropriate for a government to establish a capitalization
policy that would require capitalization for certain types of assts with individual acquisition costs
that are less than the threshold for an individual asset.
Amended guidance states that a government should capitalize assets whose individual acquisition
costs are less than the threshold for an individual asset if those assets in the aggregate are
significant. Computers and classroom furniture are common examples of asset types that could be
significant collectively. The amended guidance clarifies that if 100 computers costing $1,500 each
totaling a $150,000 aggregate amount is significant, the government should capitalize the
computers.
Information provided above was obtained from www.gasb.org.
Page 326 of 464
City of Elk River
Emerging Issues
23
Accounting Standard Update – GASB Statement No. 100 – Accounting Changes and Error
Corrections – an Amendment of GASB Statement No. 62
The primary objective of this Statement is to enhance accounting and financial reporting
requirements for accounting changes and error corrections to provide more understandable, reliable,
relevant, consistent, and comparable information for making decisions or assessing accountability.
This Statement defines accounting changes as changes in accounting principles, changes in
accounting estimates, and changes to or within the financial reporting entity and describes the
transactions or other events that constitute those changes. As part of those descriptions, for (1)
certain changes in accounting principles and (2) certain changes in accounting estimates that result
from a change in measurement methodology, a new principle or methodology should be justified on
the basis that it is preferable to the principle or methodology used before the change. That
preferability should be based on the qualitative characteristics of financial reporting –
understandability, reliability, relevance, timeliness, consistency, and comparability. This Statement
also addresses corrections of errors in previously issued financial statements.
This Statement prescribes the accounting and financial reporting for (1) each type of accounting
change and (2) error corrections. This Statement requires that (a) changes in accounting principles
and error corrections be reported retroactively by restating prior periods, (b) changes to or within
the financial reporting entity be reported by adjusting beginning balances of the current period, and
(c) changes in accounting estimates be reported prospectively by recognizing the change in the
current period. The requirements of this Statement for changes in accounting principles apply to the
implementation of a new pronouncement in absence of specific transition provisions in the new
pronouncement.
This Statement also requires that the aggregate amount of adjustments to and restatements of
beginning net position, fund balance, or fund net position, as applicable, be displayed by reporting
unit in the financial statements.
This Statement requires disclosure in notes to financial statements of descriptive information about
accounting changes and error corrections, such as their nature. In addition, information about the
quantitative effects on beginning balances of each accounting change and error correction should be
disclosed by reporting unit in a tabular format to reconcile beginning balances as previously reported
to beginning balances as restated.
Furthermore, this Statement addresses how information that is affected by a change in accounting
principle or error correction should be presented in Required Supplementary Information (RSI) and
Supplementary Information (SI). For periods that are earlier than those included in the basic financial
statements, information presented in RSI or SI should be restated for error corrections, if
practicable, but not for changes in accounting principles.
GASB Statement No. 100 is effective for reporting periods beginning after June 15, 2023. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
Page 327 of 464
City of Elk River
Emerging Issues
24
Accounting Standard Update – GASB Statement No. 101 – Compensated Absences
The objective of this Statement is to better meet the information needs of financial statement users
by updating the recognition and measurement guidance for compensated absences. That objective is
achieved by aligning the recognition and measurement guidance under a unified model and by
amending certain previously required disclosures.
This Statement requires that liabilities for compensated absences be recognized for (1) leave that
has not been used and (2) leave that has been used but not yet paid in cash or settled through
noncash means. A liability should be recognized for leave that has not been used if (a) the leave is
attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely
than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is
attributable to services already rendered when an employee has performed the services required to
earn the leave. Leave that accumulates is carried forward from the reporting period in which it is
earned to a future reporting period during which it may be used for time off or otherwise paid or
settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a
government should consider relevant factors such as employment policies related to compensated
absences and historical information about the use or payment of compensated absences. However,
leave that is more likely than not to be settled through conversion to defined benefit
postemployment benefits should not be included in a liability for compensated absences.
This Statement requires that a liability for certain types of compensated absences – including
parental leave, military leave, and jury duty leave – not be recognized until the leave commences.
This Statement also requires that a liability for specific types of compensated absences not be
recognized until the leave is used.
This Statement also establishes guidance for measuring a liability for leave that has not been used,
generally using an employee's pay rate as of the date of the financial statements. A liability for leave
that has been used but not yet paid or settled should be measured at the amount of the cash
payment or noncash settlement to be made. Certain salary-related payments that are directly and
incrementally associated with payments for leave also should be included in the measurement of the
liabilities.
With respect to financial statements prepared using the current financial resources measurement
focus, this Statement requires that expenditures be recognized for the amount that normally would
be liquidated with expendable available financial resources.
This Statement amends the existing requirement to disclose the gross increases and decreases in a
liability for compensated absences to allow governments to disclose only the net change in the
liability (as long as they identify it as a net change). In addition, governments are no longer required
to disclose which governmental funds typically have been used to liquidate the liability for
compensated absences.
GASB Statement No. 101 is effective for reporting periods beginning after December 15, 2023. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
Page 328 of 464
City of Elk River
Sherburne County, Minnesota
Reports on Compliance with
Government Auditing Standards,
Uniform Guidance, and Legal Compliance
December 31, 2023
Page 329 of 464
City of Elk River
Table of Contents
Schedule of Expenditures of Federal Awards 1
Notes to Schedule of Expenditures of Federal Awards 2
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 3
Report on Compliance for each Major Federal Program and Report on
Internal Control over Compliance in Accordance with the Uniform Guidance 5
Schedule of Findings and Questioned Costs 8
Minnesota Legal Compliance 10
Page 330 of 464
See notes to schedule of expenditures and federal awards. 1
Federal
Expenditures
U.S. Department of the Interior
Passed through the State of Minnesota
Historic Preservation Fund Grants 15.904 460$
Outdoor Recreation Acquisition, Development and Planning 15.916 25,000
Total U.S. Department of the Interior 25,460
U.S. Department of Transportation
Passed through Minnesota Department of Transportation
State and Community Highway Safety 20.600 14,929
Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 24,894
National Priority Safety Programs 20.616 2,921
Total U.S. Department of Transportation 42,744
U.S. Department of Treasury
Passed through the State of Minnesota
Coronavirus Relief Fund - America Rescue Plan 21.027 729,161
Total Federal Expenditures 797,365$
Federal Agency/Pass Through Agency/Program Title
City of Elk River
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2023
Federal
Assistance
Listing
Number
Page 331 of 464
2
City of Elk River
Notes to Schedule of Expenditures of Federal Awards
NOTE 1 – BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") includes the federal
award activity of the City under programs of the federal government for the year-ended
December 31, 2023. The information in this Schedule is presented in accordance with the
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Because the Schedule presents only a selected portion of the operations of the City, it is not
intended to and does not present the financial position, changes in net position, or cash flows of the
City.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the modified accrual basis of accounting.
Such expenditures are recognized following the cost principles contained in the Uniform Guidance,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE 3 – PASS-THROUGH GRANT NUMBERS
All pass-through entities listed above use the same Assistance Listing numbers as the federal grantors
to identify these grants and have not assigned any additional identifying numbers.
NOTE 4 – INDIRECT COST RATE
The City did not elect to use the 10 percent de minimis indirect cost rate, as allowed under the
Uniform Guidance.
Page 332 of 464
3
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
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Elk River
Elk River, 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, the discretely presented component units, each
major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota as of
and for the year ended December 31, 2023, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report thereon dated
May 13, 2024.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the City's
internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal
control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or 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 may exist that have not been identified.
Page 333 of 464
4
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 result 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 communication is not suitable for any other purpose.
Minneapolis, Minnesota
May 13, 2024
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5
Report on Compliance for each Major Federal Program
and Report on Internal Control over Compliance in Accordance with
the Uniform Guidance
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Elk River
Elk River, Minnesota
Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited the City's compliance with the types of compliance requirements identified as
subject to audit in the OMB Compliance Supplement that could have a direct and material effect on
the City's major federal program for the year ended December 31, 2023. The City's major federal
program is identified in the summary of auditor's results section of the accompanying Schedule of
Findings and Questioned Costs.
In our opinion, the City complied in all material respects, with the compliance requirements referred
to above that could have a direct and material effect on its major federal program for the year
ended December 31, 2023.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America (GAAS); the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States (Government
Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part
200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are
further described in the Auditor's Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in
accordance with 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 opinion on
compliance for each major federal program. Our audit does not provide a legal determination of the
City's compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the
design, implementation, and maintenance of effective internal control over compliance with the
requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements
applicable to the City's federal programs.
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6
Auditor's Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the City's compliance based on our audit. 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 GAAS, Government Auditing Standards, and the Uniform Guidance will always
detect material noncompliance when it exists. The risk of not detecting material noncompliance
resulting from fraud is higher than for that resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material, if there
is a substantial likelihood that, individually or in the aggregate, it would influence the judgment
made by a reasonable user of the report on compliance about the City's compliance with the
requirements of each major federal program as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform
Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material noncompliance, 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 City's compliance with the compliance
requirements referred to above and performing such other procedures as we considered
necessary in the circumstances.
Obtain an understanding of the City's internal control over compliance relevant to the audit in
order to design audit procedures that are appropriate in the circumstances and to test and
report on internal control over compliance in accordance with the Uniform Guidance, but not
for the purpose of expressing an opinion on the effectiveness of the City's internal control
over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and any significant deficiencies and material
weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such
that there is a reasonable possibility that material noncompliance with a type of compliance
requirement of a federal program will not be prevented, or detected and corrected, on a timely
basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal
program that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in
Auditor's Responsibilities for the Audit of Compliance section and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal
control over compliance may exist that were not identified.
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7
Report on Internal Control over Compliance (Continued)
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance. Accordingly, no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements
of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance
We have audited the financial statements of the governmental activities, the business-type
activities, the discretely presented component units, each major fund, and the aggregate remaining
fund information of the City of Elk River, Minnesota, as of and for the year ended December 31,
2023, and the related notes to financial statements which collectively comprise the City's basic
financial statements. We issued our report thereon dated May 13, 2024, which contained unmodified
opinions on those financial statements. Our audit was conducted for the purpose of forming opinions
on the financial statements that collectively comprise the basic financial statements. The
accompanying schedule of expenditures of federal awards is presented for purposes of additional
analysis as required by the Uniform Guidance and is not a required part of the 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 financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the financial statements or
to the financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the Schedule of
Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic
financial statements as a whole.
Minneapolis, Minnesota
May 13, 2024
Page 337 of 464
8
City of Elk River
Schedule of Findings and Questioned Costs
SECTION I – SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of auditor's report issued:
We issued an unmodified opinion on
the fair presentation of the financial
statements of the governmental
activities, business-type activities, the
discretely presented component units,
each major fund, and the aggregate
remaining fund information in
accordance with accounting principles
generally accepted in the United
States of America (GAAP).
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None reported
Noncompliance material to financial statements
noted? No
Federal Awards
Type of auditor's report issued on compliance for
major programs: Unmodified
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiency(ies) identified? None reported
Any audit findings disclosed that are required to
be reported in accordance with 2 CFR 200.516(a)? No
Identification of Major Programs
Assistance Listing No.: 21.027
Name of Federal Program or Cluster:
Coronavirus Relief Fund – America
Rescue Plan
Dollar threshold used to distinguish
between type A and type B programs: $750,000
Auditee qualified as low risk auditee? No
Page 338 of 464
9
City of Elk River
Schedule of Findings and Questioned Costs
SECTION II – FINANCIAL STATEMENT FINDINGS
There were no financial statement findings.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
There were no Federal award findings.
There were no questioned costs.
SECTION IV – PRIOR YEAR FINDINGS AND QUESTIONED COSTS
None
Page 339 of 464
10
Minnesota Legal Compliance
Independent Auditor's Report
Honorable Mayor and Members
of the City Council
City of Elk River
Elk River, 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, the discretely presented component units, each
major fund, and the aggregate remaining fund information of the City of Elk River, Minnesota as of
and for the year ended December 31, 2023, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report thereon dated
May 13, 2024.
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 Statute § 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.
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 communication is not
suitable for any other purpose.
Minneapolis, Minnesota
May 13, 2024
Page 340 of 464
City of Elk River
Audit Presentation
Page 341 of 464
Financial Communications
Page 342 of 464
Independent Auditor’s Report “unmodified” or “clean” opinion.
Independent Auditor’s Report in accordance with Government
Auditing Standards – no significant deficiencies or material
weaknesses in internal control reported
Independent Auditor’s Report on Minnesota Legal Compliance – no
compliance findings reported
Independent Auditor’s Report on Compliance on each Major
Federal Program and Report on Internal Control over Compliance
required by the Uniform Guidance – no compliance findings or
internal control findings reported
Independent Auditor’s Report
Page 343 of 464
The Audit
Page 344 of 464
General Fund – Cash and Investments and
Fund Balance
Page 345 of 464
General Fund – Revenues and Expenditures
Page 346 of 464
General Fund - Revenues
Page 347 of 464
General Fund - Expenditures
Page 348 of 464
General Fund – Budgetary Comparison
Page 349 of 464
Sewer Operations
Page 350 of 464
Sewer Fund
Page 351 of 464
Garbage Operations
Page 352 of 464
Garbage Fund
Page 353 of 464
Storm Water Operations
Page 354 of 464
Storm Water Fund
Page 355 of 464
Municipal Liquor Operations
Page 356 of 464
Municipal Liquor Fund
Page 357 of 464
Debt Service Funds - Maturities
Page 358 of 464
Auditor
Page 359 of 464
Andrew Grice
AUDIT SHAREHOLDER
952-563-6862
ANDY.GRICE@CREATIVEPLANNING.COM
Page 360 of 464
Thank You
Page 361 of 464
This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an
attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained
from sources deemed reliable but is not guaranteed.Page 362 of 464