4.1 ERMUSR 04-08-20254r,;.
Elk Riv
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Melissa Karpinski — Finance Manager
MEETING DATE:
AGENDA ITEM NUMBER:
April 8, 2025
4.1
SUBJECT:
2024 Financial Audit
ACTION REQUESTED:
Receive and file the 2024 Annual
Financial Report
BACKGROUND:
Audit fieldwork was completed February 20 and 21 by our auditors, Abdo. Again, this year Abdo
completed and compiled the enclosed audit report and issued an opinion letter. Elk River
Municipal Utilities staff has reviewed for approval.
DISCUSSION:
Mr. Justin Nilson of Abdo will be at our meeting to present the 2024 audit and answer any
questions you may have. There were two audit adjustments resulting from General Accounting
Standards Board (GASB) reporting requirements related to Pensions and Leases. These
adjustments are provided by Abdo. These items are discussed in Note 2 and 4 of the financials.
FINANCIAL IMPACT:
None
ATTACHMENTS:
• Abdo Audit Presentation
• Abdo Executive Governance Summary
• ERMU Annual Financial Report for the Year Ended December 31, 2024
Page 1 of 1
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11%,o4c)
Lighting the path forward
Elk River
Municipal Utilities
2024 Financial Statement Audit
oaf►#�k,L.-J.-
47
Introduction
Audit Results
• Electric Fund Results
Water Fund Results
At%# %AA C ) 48
KA
Audit Results
Auditor's Opinion
Unmodified/Clean
Opinion
Minnesota Legal
Compliance
No Compliance Findings
Reported
At%# %AA C ) 49
Electric Fund Expenditures by Type
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
Purchased Power
■
Production and
Distribution
T
Customer Accounts
2022 ■ 2023 ■ 2024
0
Depreciation
1
General and
Administrative
ALF: '�%�M 50
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$ 20,0 00,0 00
$15,000,000
$10,000,000
$5,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
AI'D % 40
2021 2021 2022 2022 2023 2023 2024 2024
■ Operating Receipts ■ Operating Disbursements ■ Debt Payments
2021 2022 2023 2024
Unrestricted Cash � Restricted for Debt Service—Ar--Unrestricted Designated Cash Reserve
51
Electric
Fund
Cash Flows from
Operations and
Cash Balances
Electric Operations
$ 50,0 00,0 00 F
$45,000,000
$40,000,000
$35,000,000
$ 30,0 00,0 00
$ 25,0 00,0 00
$ 20,0 00,0 00
$15,0 00,0 00
$10,0 00,0 00
$5,000,000
2022 2023
Operating Revenues Operating Expenses ■ Cash and Investments
2024
Bonds Payable
ALF:M 52
Water Fund Expenditures by Type
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
R M
M
M
M
Production
Distribution
Depreciation
Customer accounts
■ 2022 12023 ■ 2024
General and
administrative
ALF: ,AAC)M 53
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
2021 2021 2022 2022 2023 2023 2024 2024
■Operating Receipts ■ Operating Disbursements ■ Debt Payments
$12,0 00,0 00
$10,0 00,0 00
$8,000,000
$6,000,000
$4,000,000
$2,000,000
2021 2022 2023 2024
� Unrestricted Cash Balance —*--Unrestricted Designated Reserve
Water
Fund
Cash Flows from
Operations and
Cash Balances
Alk%% 0 s
wM 54
Water Operations
$12,0 00,0 00
$10,0 00,0 00
$8,000,000
$6,000,000
$4,000,000
$2,000,000
t
2022
2023
■ Operating Revenues ■ Operating Expenses
2024
■ Cash Bonds Payable
ALF:M 55
Authorized
Description
and Issued
Electric Revenue Bonds, Series 2016A
$ 9,755,000
G.O. Water Revenue Bonds, Series 2021 C
1,615,000
Electric Revenue Bonds, Series 2018A
10,000,000
Electric Revenue Bonds, Series 2021 B
11,810,000
Totals
Total Remaining Interest Payments
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
2025 2026 2027 2028 2029
Principal
Bonds
Year of
Outstanding
Maturity
$ 7,020,000
2036
1,445,000
2041
8,815,000
2048
11,170,000
2051
$ 28,450,000
$ 10,176,111
2030 2031 2032 2033 2034
Interest
Debt
Obligati
ons
AI'D.040
56
10
Cash and Investments Balance
$30,000,000
$ 25,0 00,0 00
$20,000,000
$15,000,000
$10,000,000
$5,000,000
2022 2023 2024
■ Electric ■ Water
ALF: '�%011
M 57
Your Abdo Team
Justin Nilson, CPA
Partner
justin.nilson@abdosolutions.com
Jason Fagan
Associate
jason.fagan@abdosolutions.com
Amanda Schmidt
Associate
amanda.schmidt@abdosolutions.com
Hannah Anderson
Associate
hannah.anderson@abdosolutions.com
ALF: '�%012
M 58
a
Executive Governance
Summary
Elk River Municipal Utilities
Elk River, Minnesota
For the year ended December 31, 2024
Edina office
05201 Eden Avenue, Ste 250
AIL�00%f o%4AEdina, MN 55436
Lightirmg the path)Ibrward P 952.635.91090
Mankato Office
104 Wamen Street, Ste 640
Mankato, M N 56001
P 507.625.2727
Scottsdale Office
14500 N Northsight B Ivd, Ste 233
Scottsdale, AZ 95260
P 480.864.5579
59
ALowof%*64AoAbdoSolutions.com
April 1, 2025
Management and Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
We have audited the financial statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk River,
Minnesota, (the City) as of and for year ended December 31, 2024. Professional standards require that we provide you
with information about our responsibilities under generally accepted auditing standards as well as certain information
related to the planned scope and timing of our audit. We have communicated such information in our letter dated
December 6, 2024. Professional standards require that we provide you with the following information related to our audit.
Significant Audit Findings
In planning and performing our audit of the financial statements, we considered the Utilities internal control over financial
reporting (internal control) as a basis for designing the 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 Utilities internal control. Accordingly, we do not express an opinion on the effectiveness of the
Utilities 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 entity'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.
Compliance
As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we
performed tests of compliance with certain provisions of laws, regulations, contracts and grants, 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. The results of our tests disclosed no instances of noncompliance
or other matters that are required to be reported under statutes set forth by the State of Minnesota.
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2
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting
policies used by the Utilities are described in Note 1 to the financial statements. The Utilities changed accounting policies
during the year ended December 31, 2024 related to the accounting and financial reporting for compensated absences
(GASB 101). We noted no transactions entered into by the Utilities during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management's knowledge and experience about past and current events and assumptions about future events. Certain
accounting estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ significantly from those expected. The most sensitive
estimates affecting the financial statements were as follows:
• Management's estimate of depreciation is based on estimated useful lives of the assets. Depreciation is
calculated using the straight-line method.
• Allocations of gross wages and payroll benefits are approved by the Commission within the Utilities' budget and
are derived from each employee's estimated time to be spent servicing the respective functions of the Utilities.
These allocations are also used in allocating accrued compensated absences payable.
• Management's estimate of its pension liability is based on several factors including, but not limited to, anticipated
investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity
payment upon retirement.
• Management's estimates of its lease receivable are based on several factors including, but not limited to, a
discount rate based on the estimated incremental borrowing rate.
We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is
reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are
neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their
significance to financial statement users.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than
those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such
misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in aggregate, to each opinion unit's financial statements taken as a
whole.
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated April 1, 2025.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting,
reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our
audit.
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Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting
principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be
expressed on those statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the Utilities' auditors. However, these discussions occurred in the normal
course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the required supplementary information (RSI) (Management's Discussion and
Analysis, the Schedules of Employer's Share of the Net Pension Liability, the Schedules of Employer's Contributions, and
the Schedule of Changes in Net Pension Liability (Asset) and Related Ratios), which is information that supplements the
basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not
audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the supplementary information (Schedule of Operating Revenues and Expense), which
accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain
inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the
information complies with accounting principles generally accepted in the United States of America, the method of
preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit
of the financial statements. We compared and reconciled the supplementary information to the underlying accounting
records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section or statistical sections, which accompany the financial
statements but are not RSI. We did not audit or perform other procedures on this other information, and we do not
express an opinion or provide any assurance on them.
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact
on future Utilities financial statements:
GASB Statement No. 102 - Certain Risk Disclosures
GASB Statement No. 103 - Financial Reporting Model Improvements
GASB Statement No. 104 - Disclosure of Certain Capital Assets
Further information on upcoming GASB pronouncements.
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Effective: 1213112025
Effective: 1213112026
Effective: 1213112026
Restriction on Use
This communication is intended solely for the information and use of the Public Utilities Commission, City Council,
management, and the Minnesota Office of the State Auditor and is not intended to be and should not be used by anyone
other than these specified parties.
The comments and recommendations in this report are purely constructive in nature, and should be read in this context.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of
accounting records and related data.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your
convenience. We wish to thank you for the opportunity to be of service and for the courtesy and cooperation extended to
us by your staff.
Abdo
Minneapolis, Minnesota
April 1, 2025
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63
Y
ANNUAL FINANCIAL REPORT
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
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65
Elk River Municipal Utilities
Elk River, Minnesota
Table of Contents
For the Year Ended December 31, 2024
Page No.
Introductory Section
Public Utilities Commission and Administration 7
Financial Section
Independent Auditor's Report 11
Management's Discussion and Analysis 15
Financial Statements
Statement of Net Position 22
Statement of Revenues, Expenses and Changes in Net Position 25
Statement of Cash Flows 26
Notes to the Financial Statements 29
Required Supplementary Information
Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability -
General Employees Fund 52
Schedule of Employer's Public Employees Retirement Association Contributions -
General Employees Fund 52
Notes to the Required Supplementary Information - General Employees Fund 53
Supplementary Information
Schedule of Operating Revenues and Expenses 56
Electric Fund
Summary of Operations and Unaudited Statistics 58
Water Fund
Summary of Operations and Unaudited Statistics 60
Other Report
Independent Auditor's Report
on Minnesota Legal Compliance 65
3
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67
INTRODUCTORY SECTION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
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.•
Name
John Dietz
Mary Stewart
Matt Westgaard
Paul Bell
Nick Zerwas
Name
Mark Hanson
Melissa Karpinski
Tom Geiser
Chris Sumstad
Dave Ninow
Mike Tietz
Sara Youngs
Tony Mauren
Elk River Municipal Utilities
Elk River, Minnesota
Public Utilities Commission and Administration
For the Year Ended December 31, 2024
COMMISSION
ADMINISTRATION
Title
Chairperson
Vice -Chair
Commissioner
Commissioner
Commissioner
Title
General Manager
Finance Manager
Operations Director
Electric Superintendent
Water Superintendent
Technical Services Superintendent
Administrations Director
Governance & Communications Manager
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71
FINANCIAL SECTION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
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AbdoSolutionmom
INDEPENDENT AUDITOR'S REPORT
Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
Report on the Financial Statements
Opinion
We have audited the accompanying financial statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk
River, Minnesota (the City), as of and for the year ended December 31, 2024, and the related notes to the financial
statements, as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
the Utilities as of December 31, 2024, and the changes in financial position and cash flows thereof 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). 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 Utilities 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.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the Utilities 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.
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 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.
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In performing an audit in accordance with GAAS, 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
Utilities 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 Utilities 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.
Emphasis of Matter
As discussed in Note 1 B, the financial statements present only the Electric and Water enterprise funds and do not purport
to, and do not present fairly the financial position of the Utilities as of December 31, 2024, the changes in its financial
position, its cash flows for the year then ended in accordance with accounting principles generally accepted in the United
States of America. Our opinion is not modified with respect to this matter.
Change in Accounting Principle
The Utilities has adopted the provisions of Governmental Accounting Standard Board (GASB) Statement No. 101,
Compensated Absences, for the year ended December 31, 2024. Adoption of the provisions of these statements results in
significant change to the classifications of the components of the financial statements. Our opinion is not modified with
respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's Discussion and
Analysis Page 15 and the Schedule of Employer's Share of the Net Pension Liability, the Schedule of Employer's
Contributions to be presented to supplement the basic financial statements. Such information, although not a part of the
financial statements, is required by the Government Accounting Standards Board, who considers it to be an essential part
of financial reporting for placing the 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.
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Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Utilities' basic financial statements. The schedule of operating revenues and expenses 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 schedule of operating revenues and expenses are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information comprises the
introductory section, summary of operations and unaudited statistics 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.
Abdo
Minneapolis, Minnesota
April 1, 2025
A
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Management's Discussion and Analysis
This section of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota annual financial report
presents our analysis of the Utilities' financial performance during the fiscal year that ended December 31, 2024. Please
read it in conjunction with the financial statements which follow this section.
Financial Highlights
• The assets and deferred outflows of resources of the Utilities exceeded its liabilities and deferred inflows of
resources at the close of the most recent fiscal year by $84,854,552 (net position). Net Position increased by
$3,153,304 or 3.9 percent. The increase is mainly due to revenues in excess of expenses during the year.
• The Utilities' cash balance at the close of the current fiscal year was $24,755,146.
• Electric usage overall was down an average of 3.9 percent from the prior year. Residential usage decreased 4.0
percent, Commercial usage decreased 3.0 percent, and Industrial usage decreased 4.0 percent.
• Water usage overall was down an average of 16.3 percent from the prior year. Residential usage decreased 19.8
percent, and Commercial usage decreased 12.6 percent.
Overview of the Financial Statements
This annual report consists of three parts: Management's Discussion and Analysis, Financial Statements, and
Supplementary Information. The Financial Statements also include notes that explain in more detail some of the
information in the financial statements.
Required Financial Statements
The financial statements of the Utilities report information about the Utilities using accounting methods similar to those
used by the private sector. These statements offer short-term and long-term financial information about its activities. The
Statement of Net Position includes all of the Utilities' assets and liabilities and provides information about the nature and
amounts of investments in resources (assets) and the obligations to Utilities' creditors (liabilities). It also provides the
basis for computing rate of return, evaluating the capital structure of the Utilities and assessing the liquidity and financial
flexibility of the Utilities. All of the current year's revenues and expenses are accounted for in the Statements of Revenues,
Expenses and Changes in Net Position. This statement measures the success of the Utilities' operations over the past
year and can be used to determine whether the Utilities has successfully recovered all its costs through its user fees and
other charges, profitability, and credit worthiness. The final required financial statement is the Statements of Cash Flows.
The primary purpose of this statement is to provide information about the Utilities' cash receipts and cash payments
during the reporting period. The statement reports cash receipts, cash payments and net changes in cash resulting from
operations, investing and financing activities and provides answers to such questions as where cash came from, what
was cash used for and what was the change in the cash balance during the reporting period.
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78
Financial Analysis of the Utilities
Our analysis of the Utilities begins on page 22 in the Financial Section. One of the most important questions asked about
the Utilities' finances is "Is the Utilities as a whole better off or worse off as a result of this year's activities?" The
Statement of Net Position, and the Statement of Revenues, Expenses and Changes in Net Position report information
about the Utilities' activities in a way that will help answer this question. These two statements report the net position of
the Utilities and changes in the net position. You can think of the Utilities' net position (the difference between assets and
liabilities) as one way to measure financial health or financial position. Over time, increases or decreases in the Utilities'
net position is one indicator of whether its financial health is improving or deteriorating. However, you will need to
consider other non -financial factors such as changes in economic conditions, population growth, zoning, and new or
changed government legislation.
Net Position. To begin our analysis, a summary of the Utilities' Statements of Net Position is presented in Table A-1. As
can be seen from the Table, net position increased in fiscal 2024 from fiscal 2023.
Assets
Current and other
Capital and other non -current
Total Assets
Total Deferred Outflows of Resources
Liabilities
Current
Non -current
Total Liabilities
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Unrestricted
Total Net Position
Net Position as a Percent of Total
Net investment in capital assets
Restricted
Unrestricted
Table A-1
Condensed Statement of Net Position
2024
$ 29,660,285
101,204,766
130,865,051
2023
$ 31,866,563
96,673,875
128,540,438
Increase
(Decrease)
$ (2,206,278)
4,530,891
2,324,613
383,601 816,369 (432,768)
9,760,324
30,737,715
40,498,039
8,837,628
33,043,134
41,880,762
922,696
(2,305,419)
(1,382,723)
5,896,061 5,774,797 121,264
66,966,175
1,779,016
16,109,361
61,103,248
1,779,016
18,818,984
5,862,927
(2,709,623)
$ 84,854,552 $ 81,701,248 $ 3,153,304
78.9 % 74.8 %
2.1 2.2
19.0 23.0
100.0 % 100.0 %
16
79
Electric and Water Rates. Electric - The Utilities' electric rates had a zero -rate increase effective January 2025. The
monthly base charges are based upon the type of service. The monthly charges are $15.00 for residential, $32.00 for non -
demand, $77.00 for demand and $115.00 for large industrial demand customers. In addition to the base charges the
residential rate is $.1373/kWh for June -October usage, and $.1255/kWh for November -May usage; the non -demand rate is
$.1330/kWh for June -October, and $.1114/kWh for November -May; the demand rate is $.0704/kWh energy charge year
round with a demand charge of $16.75/kW June -October, and $11.75AW for November -May; the large industrial demand
rate is $.0696/kWh energy charge year round with a demand charge of $16.25/kW June -October, and $11.25/kW
November -May.
Water - The latest increase in the Utilities' water rates was effective January 2025. The monthly base charge for
residential customers is $10.23 per month. In addition to the base charge, the Utilities currently charges its residential
customers $2.04 per 1,000 gallons up to 9,000 gallons, $3.64 per 1,000 gallons between 9,000 gallons and 15,000 gallons,
and $4.20 per 1,000 gallons for usage above 15,000 gallons. Commercial customer base charges are based upon meter
size and range from $12.27 to $129.60. An irrigation meter is $21.83 per month. There is also a charge per 1,000 gallons,
the same tiers as the residential rates of $2.04, $3.64, and $4.20, except the graduation from the lower tier to the higher
tier(s) is calculated based on previous consumption.
The Utilities requires payment of all utility bills to be paid by the due date stated on the monthly bill. A ten percent penalty
is assessed for payments not received by the due date. The Utilities may discontinue service of a customer not complying
with the disconnect policy of the Utilities after receiving a written disconnect notice. Residential and
Commercial/Industrial single phase electric customers that have their service discontinued will be charged a minimum of
$50.00 to have their service reconnected. Commercial/Industrial three phase electric customers that have their service
discontinued will be charged a minimum of $150.00 to have their service reconnected. Residential and
Commercial/Industrial water customers that have their water shut-off will be charged a fee of $100.00 to have their water
turned on/reconnected. There are no reconnections after 3:30 pm and payments for reconnection/turn on are not
accepted at the property site; payments must be made prior to dispatching reconnection. Customers can come into the
office between the hours of 8:00 am and 4:30 pm to make payment by cash, money order or credit card; or pay online or
by phone with a credit card. The Utilities abides by the Cold Weather Rules.
Deposit Policy. Per our Deposit Policy, the Utilities collects social security numbers from new accounts and utilizes a
credit risk assessment tool called "Online Utility Exchange" to determine if a deposit is necessary as a proactive measure
to try and reduce uncollectible accounts. The amount of the deposit required will depend on the risk identified with the
customer. For residential customers, if there is above 90 percent probability of non -default and no negative history (no
disconnection for non-payment or late payments two or more times within 12 months) there is no deposit required. If
there is a lower than 90 percent probability of non -default, a deposit appropriate to the services supplied will be required
before utility service will be extended. If the customer chooses not to provide a social security number, the deposit is
automatically required. Residential deposit amounts are $100 for apartments, $100 for homes with water and sewer, $150
for homes with electric only services, and $250 for homes with all services (electric, water, and sewer).
For commercial and industrial customers, a service agreement would need to be signed. Generally, a deposit of 2 times
the estimated highest monthly bill will be required, with a minimum deposit of $250 for non -demand customers, and
minimum deposit of $1,000 for demand customers. The deposit shall be in the form of a cash deposit, or an irrevocable
letter of credit. The irrevocable letter of credit will be renewed as required and failure to do so will result in a charge equal
to the amount of the letter of credit applied to the monthly utility bill and held by the Utilities as a cash deposit.
Deposits will be retained until the account is closed. The deposit will be returned to the customer within 45 days of
termination of service, provided that the customer has paid in full all amounts due on the account. The appropriate
interest will be applied to the account per state statutes.
17
80
Statements of Revenues, Expenses and Changes in Net Position. While the Statements of Net Position show the change
in financial assets/deferred outflows and liabilities/deferred inflows, the Statements of Revenues, Expenses and Changes
in Net Position, provide answers as to the nature and source of these changes. As can be seen in Table A-2, revenues in
excess of expenses were the main source of the increase in net position in fiscal 2024. A closer examination of the
individual categories affecting the source of changes in net position is discussed below:
Table A-2
Condensed Statements of Revenues,
Expenses and Changes in Net Position
Revenues
Operating
Nonoperating
Total Revenues
Expenses
Operating
Nonoperating
Total Expenses
Income Before Contributions and Operating Transfers
Capital Contributions - Developer Infrastructure and Connection Fees
Contribution from Customers
Transfers from Other City Funds
Transfers to Other City Funds
Change in Net Position
Net Position, January 1
Net Position, December 31
2024
$ 46,082,215
1,776,015
47,858,230
43,560,442
807,697
44,368,139
2023
$ 47,834,738
1,625,170
49,459,908
45,253,729
847,654
46,101,383
Increase
(Decrease)
$ (1,752,523)
150,845
(1,601,678)
(1,693,287)
(39,957)
(1,733,244)
3,490,091
3,358,525
131,566
477,998
253,341
224,657
712,844
489,452
223,392
-
1,348,943
(1,348,943)
(1,527,629)
(1,620,378)
92,749
3,153,304
3,829,883
(676,579)
81,701,248
77,871,365
3,829,883
$ 84,854,552
$ 81,701,248
$ 3,153,304
Revenues. Table A-2 shows that operating revenue decreased by 3.7 percent in 2024 for the Electric and Water
Departments combined.
Nonoperating revenue is comprised of transmission rebate revenue in the Electric Department, and water tower lease
revenue in the Water Department. Regarding transmission rebates, in 2007 the Electric Department partnered with
Midwest Municipal Transmission Group (MMTG) in order to have our transmission assets recognized in the Midwest
Independent Transmission System Operator (MISO) market. In doing so, our transmission assets generate a revenue
rebate, which in turn helps keep our rates down. In 2024, rebates received from our 2022 filings averaged approximately
$52,104 per month. The Water Department is receiving lease revenue from Sprint and Verizon for antennas on the water
towers. In 2024 this amount was approximately $398,737 and will continue for the duration of the multi -year contracts.
11
Total Expenses. In reviewing total expenses in Table A-2 you will notice that there was a decrease overall, with the electric
department decreasing and the water department increasing from the prior year. Purchased Power is the biggest electric
department expense, and it decreased 8.5 percent.
Capital Assets and Debt Administration
Capital Assets. The Utilities' investment in capital assets for its business -type activities as of December 31, 2024 is
shown below (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements,
and equipment. A table summarizing the balances by fund follows:
Land
Intangible
Land Improvements
Buildings
Machinery and Equipment
Infrastructure
Construction in Progress
Total
Percent increase (decrease)
2024
$ 898,584
24,540,931
8,079
15,236,051
2,343,954
53,368,273
325,998
Increase
2023 (Decrease)
$ 898,584
24,262,932
9,307
14,957,145
2,609,644
46,892,112
2,310,731
$ 96,721,870 $ 91,940,455
The Utilities' investment in capital assets for the current fiscal year increased in total.
Major capital asset events during the current fiscal year included the following:
277,999
(1,228)
278,906
(265,690)
6,476,161
(1,984,733)
$ 4,781,415
5.2%
• The Electric Department makes a loss of revenue payment as part of the cost of the territory acquisition
increasing Intangibles.
• Completion of the new field services facility was built for both the Electric and Water Department which makes up
the majority of the increase in Buildings.
• The Electric and Water Departments completed a portion of an Advanced Metering Infrastructure project that
contributed to the increase in Infrastructure.
Additional information on the Utilities' capital assets can be found in Note 2C starting on page 38 of this report.
Long-term Debt. At year end, the Utilities had $29,755,695 in long-term debt which decreased from fiscal 2023. More
detailed information about the Utilities' long-term liabilities can be found in Note 2D starting on page 39 and below:
G.O. Revenue Bonds
Revenue Bonds
Unamortized Premium on Bonds
Total
Percent increase (decrease)
Increase
2024 2023 (Decrease)
$ 1,445,000 $ 1,505,000 $ (60,000)
27,005,000 27,960,000 (955,000)
1,305,695 1,372,207 (66,512)
$ 29,755,695 $ 30,837,207 $ (1,081,512)
(3.5%)
19
82
Economic Factors and Next Year's Budgets and Rates
The increased emphasis toward renewable energy and away from coal -based energy, the challenge to reduce energy and
water consumption while still maintaining the existing infrastructure and the smart grid developments are all factors that
point to potential increased cost in the coming years. It is the Utilities' goal to not have to rely on increasing rates to meet
those increases but continue to look for ways to increase efficiency and reduce costs, while providing excellent customer
service. Elk River Municipal Utilities' mission is to provide safe, cost-effective, reliable, quality utilities in an
environmentally and financially responsible manner. We have met that mission in our customer service delivery and our
successful financial results and will continue to strive to meet that mission in the future.
Contacting the Utilities Finance Manager
This financial report is designed to provide our citizens, customers, investors, and creditors with a general overview of the
Utilities' finances and to demonstrate the Utilities' accountability for the money it receives. Questions concerning any of
the information provided in this report or requests for additional financial information should be addressed to Melissa
Karpinski, Elk River Municipal Utilities, PO Box 430, Elk River, Minnesota 55330-0430 or at 13069 Orono Parkway in Elk
River, MN.
20
83
FINANCIAL STATEMENTS
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
21
84
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Net Position (Continued on the Following Page)
December 31, 2024
Assets
Current Assets
Cash and temporary investments
Receivables
Accrued interest
Accounts, net of allowance
Special assessments
Leases
Other
Due from other City funds
Inventories
Prepaid expenses
Total Current Assets
Non -current Assets
Lease receivable
Capital Assets
Land
Intangible
Land improvements
Buildings
Machinery and equipment
Infrastructure
Construction in progress
Capital Assets, Cost
Less Accumulated Depreciation
Total Capital Assets, Net
Total Non -current Assets
Other Assets
Restricted cash
Total Assets
Deferred Outflows of Resources
Deferred pension resources
Electric Water Total
$ 13,014,941 $ 9,961,189 $ 22,976,130
3,634
40,402
44,036
2,009,904
133,264
2,143,168
7,317
24,331
31,648
-
250,524
250,524
140,250
137,945
278,195
3,570
150,760
154,330
1,637,839
56,846
1,694,685
252,217
56,336
308,553
17,069,672
10,811,597
27,881,269
-
4,482,896
4,482,896
697,870
200,714
898,584
28,715,624
-
28,715,624
34,081
-
34,081
15,645,663
3,279,913
18,925,576
5,286,801
683,346
5,970,147
61,322,374
45,397,485
106,719,859
323,516
2,482
325,998
112,025,929 49,563,940 161,589,869
(40,957,293) (23,910,706) (64,867,999)
71,068,636 25,653,234 96,721,870
71,068,636 30,136,130 101,204,766
1,779,016 - 1,779,016
89,917,324 40,947,727 130,865,051
322,181 61,420 383,601
The notes to the financial statements are an integral part of this statement.
22
85
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Net Position (Continued)
December 31, 2024
Current Liabilities
Accounts payable
Salaries and benefits payable
Accrued interest payable
Due to other City funds
Due to other governments
Customer deposits payable
Unearned revenue
Compensated absences
Bonds payable - current portion
Total Current Liabilities
Non -current Liabilities
Bonds payable, net - less current portion
Net pension liability
Total Non -current Liabilities
Total Liabilities
Deferred Inflows of Resources
Deferred pension resources
Deferred lease resources
Total Deferred Inflows of Resources
Net Position
Net investment in capital assets
Restricted for debt service
Unrestricted
Total Net Position
Electric Water Total
$ 3,735,783 $ 277,044 $ 4,012,827
315,039 62,002 377,041
341,232 16,333 357,565
1,144,737 243,473 1,388,210
184,382 8,621 193,003
1,132,673 121,073 1,253,746
4,305 151,263 155,568
863,148 104,216 967,364
990,000 65,000 1,055,000
8,711,299 1,049,025 9,760,324
27,210,400 1,490,295 28,700,695
1,708,036 328,984 2,037,020
28,918,436 1,819,279 30,737,715
37,629,735 2,868,304 40,498,039
1,206,975 231,840 1,438,815
- 4,457,246 4,457,246
1,206,975 4,689,086 5,896,061
42,868,236 24,097,939 66,966,175
1,779,016 - 1,779,016
6,755,543 9,353,818 16,109,361
$ 51,402,795 $ 33,451,757 $ 84,854,552
The notes to the financial statements are an integral part of this statement.
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24
87
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Revenues, Expenses and Changes in Net Position
For the Year Ended December 31, 2024
Operating Revenues
Charges for services
Substation credit
Connection maintenance
Customer penalties
Total Operating Revenues
Operating Expenses
Purchased power
Production
Distribution
Depreciation
Customer accounts
General and administrative
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Interest income (loss)
Miscellaneous revenue
Interest expense and other
Gain/(Loss) on sale of capital assets
Total Nonoperating Revenues (Expenses)
Income (Loss) before Contributions and Transfers
Capital Contributions -
Connection Fees
Contribution from Customers
Transfers to Other City Funds
Total Contributions and Transfers
Change in Net Position
Net Position, January 1
Net Position, December 31
Electric
Water
Total
$ 42,557,925
$ 2,803,602
$ 45,361,527
4,800
-
4,800
317,234
72,409
389,643
295,143
31,102
326,245
43,175,102
2,907,113
46,082,215
28,590,698
-
28,590,698
266,783
780,844
1,047,627
2,437,569
462,083
2,899,652
3,317,829
1,223,033
4,540,862
659,755
96,615
756,370
4,718,264
1,006,969
5,725,233
39,990,898
3,569,544
43,560,442
3,184,204 (662,431) 2,521,773
338,157
104,286
442,443
925,800
429,016
1,354,816
(773,748)
(33,949)
(807,697)
(16,154)
(5,090)
(21,244)
474,055
494,263
968,318
3,658,259 (168,168) 3,490,091
- 477,998 477,998
690,934 21,910 712,844
(11527,629) - (1,527,629)
(836,695) 499,908 (336,787)
2,821,564 331,740 3,153,304
48,581,231 33,120,017 81,701,248
$ 51,402,795 $ 33,451,757 $ 84,854,552
The notes to the financial statements are an integral part of this statement.
25
88
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Cash Flows (Continued on the Following Page)
For the Year Ended December 31, 2024
Cash Flows from Operating Activities
Receipts from customers and users
Other operating cash receipts
Payments to suppliers
Payments to employees
Net Cash Provided
by Operating Activities
Cash Flows from
Noncapital Financing Activities
Transfers to City
(Increase) decrease in due from other City funds
(Decrease) increase in due to other City funds
Net Cash Provided (Used) by Noncapital
Financing Activities
Cash Flows from Capital
and Related Financing Activities
Acquisition of capital assets
Proceeds from connection fees
Proceeds on sale of capital assets
Principal payments on bonds
Interest paid on bonds
Net Cash Provided (Used) by Capital
and Related Financing Activities
Cash Flows from Investing Activities
Interest on investments
Net Increase (Decrease)
in Cash and Cash Equivalents
Cash and Cash Equivalents, January 1
Cash and Cash Equivalents, December 31
Reconciliation of Cash and Cash
Equivalents to the Statement of Net Position
Cash and temporary investments
Restricted cash
Total Cash and Cash Equivalents
Electric Water Total
$ 43,214,708 $ 2,903,410 $ 46,118,118
425,678 141,645 567,323
(33,345,078) (1,414,839) (34,759,917)
(3,342,719) (808,326) (4,151,045)
952.589 821.890 7.774.479
(1,527,629) - (1,527,629)
(129) 66,463 66,334
215,816 210,013 425,829
(1,311,942) 276,476 (1,035,466)
(6,063,793) (2,498,840) (8,562,633)
- 477,998 477,998
9,755 - 9,755
(955,000) (60,000) (1,015,000)
(849,381) (41,600) (890,981)
(7,858,419) (2,122,442) (9,980,861)
336.478
105,764 442,242
(1,881,294) (918,312) (2,799,606)
16,675,251 10,879,501 27,554,752
$ 14,793,957 $ 9,961,189 $ 24,755,146
$ 13,014,941 $
1,779,016
9,961,189
$ 22,976,130
1,779,016
$ 14,793,957 $ 9,961,189 $ 24,755,146
The notes to the financial statements are an integral part of this statement.
26
89
Elk River Municipal Utilities
Elk River, Minnesota
Statement of Cash Flows (Continued)
For the Year Ended December 31, 2024
Reconciliation of Operating Income (Loss) to
Net Cash Provided by Operating Activities
Operating income
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Other revenue related to operations
Bad debt expense
Depreciation
(Increase) decrease in assets/deferred outflows:
Accounts receivable
Other receivables
Special assessments receivable
Lease receivable
Inventories
Prepaid expenses
Deferred pension resources
Increase (decrease) in liabilities/deferred inflows:
Accounts payable
Salaries and benefits payable
Unearned revenue
Compensated absences payable
Due to other governments
Customer deposits payable
Net pension liability
Deferred pension resources
Deferred lease resources
Net Cash Provided by Operating Activities
Noncash Capital and
Related Financing Activities
Amortization of Bond Premium
Gain (Loss) on Disposal of Capital Assets
Book Value of Disposed Capital Assets
Capital Assets Purchased on Account
Contribution of Capital Assets
Electric
$ 3,184,204
925,800
15,203
3,317,829
42,394
155,825
(2,788)
(589,329)
(66,618)
367,877
(170,367)
71,804
(138,683)
392,871
23,968
64,878
(1,012,441)
370,162
Water
(662,431)
429,016
20
1,223,033
(16,540)
(134,106)
12,837
235,035
(39,744)
(21,125)
64,891
74,093
17,582
9,286
52,381
5,849
(7,823)
(171,466)
78,533
(327,431)
$ 6,952,589 $ 821,890
$ 59,862
$ (16,154)
25,909
1,031,371
690,934
$ 6,650
$ (5,090)
5,090
21,910
Total
2,521,773
1,354,816
15,223
4,540,862
25,854
21,719
10,049
235,035
(629,073)
(87,743)
432,768
(96,274)
89,386
(129,397)
445,252
29,817
57,055
(1,183,907)
448,695
(327,431)
$ 7,774,479
$ 66,512
$ (21,244)
30,999
1,031,371
712,844
The notes to the financial statements are an integral part of this statement.
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Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies
A. Nature of the Business
The Elk River Municipal Utilities (the Utilities) is a municipal utility established by action of the City of Elk River (the City)
pursuant to Minnesota statute 412.321 and consequently it's Electric and Water funds are enterprise funds of the City.
The Public Utilities Commission (the Commission) members are appointed by the City Council. The Commission
determines all matters of policy. The Commission appoints personnel responsible for the proper administration of all
affairs relating to the Utilities. The Utilities distribute electricity to the residents and businesses of Elk River and parts of
Dayton, Big Lake Township and Otsego, Minnesota. The Utilities distributes water to the residents and businesses of Elk
River, Minnesota.
The Utilities 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 Utilities are such that exclusion would cause the Utilities' 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. There are no component units.
B. Measurement Focus, Basis of Accounting and Basis of Presentation
The accounts of the Utilities are organized and operated on the basis of funds. A fund is an independent fiscal and
accounting entity with a self -balancing set of accounts. Fund accounting segregates funds according to their intended
purpose and is used to aid management in demonstrating compliance with finance -related legal and contractual
provisions. The minimum number of funds is maintained consistently with legal and managerial requirements.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded
on an accrual basis when the exchange takes place.
Non -exchange transactions, in which the Utilities receives value without directly giving equal value in return, include
grants, entitlements and donations. Revenue from grants, entitlements and donations is recognized in the year in which all
eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year
when the resources are required to be used or the year when use is first permitted, matching requirements, in which the
Utilities must provide local resources to be used for a specified purpose, and expenditure requirements, in which the
resources are provided to the Utilities on a reimbursement basis.
Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of the financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of
accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are
incurred. Proprietary funds include the following fund type:
Enterprise funds account for those operations that are financed and operated in a manner similar to private business or
where the Utilities has decided that the determination of revenues earned, costs incurred and/or net income is necessary
for management accountability.
29
92
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies (Continued)
The Utilities reports the following major proprietary funds:
The Electric fund accounts for the electric distribution operations.
The Water fund accounts for the water distribution operations.
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 Electric and Water enterprise funds are
charges to customers for sales and service. 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.
C. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position
Cash and Cash Equivalents
The Utilities' 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. The proprietary funds' portion in the
government -wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of
the statements of cash flows.
Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other
authorized investments. Earnings from such investments are allocated on the basis of applicable participation by each of
the funds.
The Utilities may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the
highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a
final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated "A" or better; revenue obligations
rated "AA" or better.
4. General obligations of the Minnesota Housing Finance Agency rated "A" or better.
5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest
category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute
section 126C.55.
6. Bankers' acceptances of United States banks eligible for purchase by the Federal Reserve System.
7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries of highest quality
category by at least two nationally recognized rating agencies and maturing in 270 days or less.
8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a "depository' by the government entity, with banks that are members of the Federal Reserve System
with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal
Reserve Bank of New York, or certain Minnesota securities broker -dealers.
30
93
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies (Continued)
9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the
pool is the same as the fair value of the shares. The Utilities 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. The Utilities' recurring fair value
measurements are listed in detail on page 36 and are valued using a matrix pricing model (Level 2 inputs).
The Utilities has the following recurring fair value measurements as of December 31, 2024:
• Negotiable certificates of deposit of $3,603,115 are valued using a matrix pricing model (Level 2 inputs).
• Asset backed securities of $2,486,378 are valued using a matrix pricing model (Level 2 inputs).
Restricted Assets
The amounts in the restricted cash account are set aside in accordance with the issuing resolution for specific bond
issues. They will be used for future debt service.
Accounts Receivable
Accounts receivable include amounts billed for services provided before year end. The Utilities has established a reserve
for uncollectible accounts which is adjusted annually based on the receivable activity. No substantial losses from present
receivable balances are anticipated. A summary of the uncollectible account balances at December 31, 2024 is as
follows:
Electric
Water
Total
Interfund Receivables and Payables
25,355
250
$ 25,605
Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the
fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or
"advances to/from other funds" (i.e., the non -current portion of interfund loans). All other outstanding balances between
funds are reported as "due to/from other funds".
Inventories and Prepaid items
Inventories of materials and supplies are recorded at average cost, using the first -in, first -out (FIFO) method.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.
31
94
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies (Continued)
Lease Receivable
The Utilities' lease receivable is measured at the present value of lease payments expected to be received during the
lease term. Under the lease agreement, the Utilities may receive variable lease payments that are dependent upon the
lessee's revenue. The variable payments are recorded as an inflow of resources in the period the payment is received.
A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of
the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized
on a straight-line basis over the term of the lease.
Capital Assets
Capital assets are stated at cost. Capital assets are defined by the Utilities as assets with an initial individual cost of more
than $5,000 and an estimated useful life in excess of two years. Expenditures for maintenance and repairs are charged to
operations and expenditures that extend the useful life of the asset are capitalized and depreciated. When assets are
retired or sold, the related cost and accumulated depreciation are removed from the accounts and any gain or loss on
disposition is included as non -operating revenues or expenses. Donated capital assets are recorded at acquisition value
at the date of donation.
Major expenditures for improvements or capital asset projects are capitalized as projects are constructed.
The Utilities follow the policy of providing depreciation on the straight-line method over the estimated useful lives of the
assets, which are as follows:
Lives in Years
Description Electric Water
Production 4 - 20 25 - 50
Transmission 30 0
Distribution 10 - 33 25 - 50
General 10 - 50 10 - 50
Machinery, Tools and Equipment 5 - 10 5 - 10
Automobiles 3-8 3-8
Deferred Outflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure)
until then. The Utilities has one item, deferred pension resources, which qualifies for reporting in this category. Deferred
pension resources result from actuarial calculation and current year pension contributions subsequent to the
measurement date.
Compensated Absences
Vacation: All vacation benefits can carry over from year to year and will be payable upon termination or retirement. Upon
retirement, vacation can also be converted to cash and deposited into their Post Employment Health Care Savings Plan
account. Unused vacation carryover is limited to the number of hours accrued during the previous year.
32
95
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies (Continued)
Sick Leave: Sick leave can accumulate to a maximum of 960 hours from year to year. Upon termination employees will
have 50 percent of unused sick leave, up to a maximum of 960 hours, converted to cash and deposited into their Post
Employment Health Care Savings Plan account. Upon retirement employees will have 50-100 percent of unused sick
leave, up to a maximum of 960 hours, converted to cash and deposited into their Post Employment Health Care Savings
Plan account.
The liability for vacation and sick pay is reported as a liability in the respective funds at year end.
Postemployment Benefits other than Pensions
Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue
coverage indefinitely in an employer -sponsored health care plan, under the following conditions: 1) Retirees must be
receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group
plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent coverage
immediately before retirement. Elk River Utilities has switched to age -based medical premiums and no longer has an
Other Post -Employment Benefits 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.
Pensions
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense,
information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions
to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA
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.
The total pension expense for all plans recognized by the Utilities for the year ended December 31, 2024 was $140,028.
The components of pension expense are noted in the plan summaries in Note 4.
Long-term Obligations
Long-term debt is reflected as a liability in the fund issuing the obligation. Bond premiums and discounts are amortized
over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense in the period
incurred.
Performance Metrics and Incentive Compensation
Through the Utilities Performance Metric -based Incentive Compensation system (UPMIC) the Utilities employees will have
an opportunity, as a group, to each earn a maximum of 3 percent of their total gross wage paid during the Measurement
Period. The percentage of UMPIC is calculated using a Score Card. The Score Card has three categories: Safety, Reliability
and Quality of Utility Services which are divided into various weighted factors. This incentive was created to help the
Utilities to become more efficient and successful in meeting strategic goals and mission and deliver improved value to
the Utilities customers. The liability at year end is recorded as part of accrued wages.
33
96
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 1: Summary of Significant Accounting Policies (Continued)
Deferred Inflows of Resources
In addition to liabilities, the statement of net position and fund financial statements will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
resources (revenue) until that time. The Utilities has two types of items which qualify for reporting in this category. The
items, deferred pension resources and deferred lease resources, are reported in the statement of net position and results
from actuarial calculations and future lease receipts.
Net Position
Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred
inflows of resources. Net position is displayed in three components:
a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any
outstanding debt attributable to acquired capital assets.
b. Restricted net position - Consists of net position restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c. Unrestricted net position -All other net positions that do not meet the definition of "restricted" or "net investment
in capital assets".
When both restricted and unrestricted resources are available for use, it is the Utilities' policy to use restricted resources
first, then unrestricted resources as they are needed.
Note 2: Detailed Notes on All Funds
A. Deposits and Investments
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the Utilities' deposits and
investments may not be returned or the Utilities will not be able to recover collateral securities in the possession of an
outside party. In accordance with Minnesota statutes and as authorized by the Commission, the Utilities maintains
deposits at those depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all Utilities deposits be protected by insurance, surety bond or collateral. The fair value of
collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds, with the exception of
irrevocable standby letters of credit issued by Federal Home Loan Banks as this type of collateral only requires collateral
pledged equal to 100 percent of the deposits not covered by insurance or bonds.
34
97
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Authorized collateral in lieu of a corporate surety bond includes:
• United States government Treasury bills, Treasury notes, Treasury bonds;
• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
• General obligation securities of any state or local government with taxing powers which is rated "A" or better by a
national bond rating service, or revenue obligation securities of any state or local government with taxing powers
which is rated "AA" or better by a national bond rating service;
• General obligation securities of a local government with taxing powers may be pledged as collateral against funds
deposited by that same local government entity;
• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by
written evidence that the bank's public debt is rated "AA" or better by Moody's Investors Service, Inc., or Standard
& Poor's Corporation; and
• Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the government entity.
At December 31, 2024, the Utilities' carrying amount of deposits, bank balance, FDIC coverage and pledged collateral are
shown in the chart below.
Carrying amount of deposits $ 13,578,803
Bank Balance $ 13,459,228
Covered by FDIC (379,784)
Collateralized with securities pledged in the Utilities' name $ 13,079,444
35
98
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Investments
The Utilities' investment balances were as follows for December 31, 2024:
Credit Segmented
Quality/ Time
Types of Investments Ratings (1) Distribution (2)
Pooled Investments
Broker Money Markets N/A less than 1 year
Non -pooled Investments
Fair Value Measurement Using
Amount Level Level Level
$ 5,086,050 $ $ $
Negotiable certificates of deposits
N/A
less than 1 year
954,262
954,262
Negotiable certificates of deposits
N/A
1 - 5 years
2,648,853
2,648,853
Asset backed securities
N/A
1 - 5 years
2,247,693
2,247,693
Asset backed securities
N/A
more than 5 years
238,685
238,685
Total Non -pooled Investments
6,089,493
6,089,493
Total Investments
$ 11,175,543 $
$ 6,089,493 $
(1) Ratings were provided by various credit rating agencies where applicable to indicate associated credit risk.
(2) Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicates not applicable.
A reconciliation of cash and temporary investments as shown in the financial statements for the Utilities follows:
Deposits
Investments
Cash on Hand
Total
Cash and Temporary Investments
Unrestricted
Restricted
2024
$ 13,578,803
11,175,543
800
$ 24,755,146
$ 22,976,130
1,779,016
Total $ 24,755,146
36
99
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
The investments of the Utilities are subject to the following risks:
• Credit Risk. Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings
are provided by various credit rating agencies and where applicable, indicate associated credit risk. Minnesota
statutes and the Utilities' investment policy limit the Utilities' investments to the list on page 30 of the notes.
• Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party. According to their investment policy the Utilities'
portfolio maturities shall be staggered to avoid undue concentration of assets with one broker -dealer or financial
institution.
• Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a
single issuer. According to their investment policy the Utilities' portfolio maturities shall be staggered to avoid
undue concentration of assets in any one type of instrument. As of December 31, 2024 the Utilities has no
individual issuers invested in 5.0 percent or more of its total investment portfolio.
• Interest Rate Risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment.
According to their investment policy the Utilities' will stagger maturities to avoid undue concentration of assets at
a specific maturity sector.
B. Lease Receivable
The Utilities has multiple leases with Sprint and Verizon that allows them to place antennas on water towers. The lease
payments increase yearly. As of December 31, 2024, the Utilities' lease and interest receivable balance was $4,772,914.
The lease receivable is partially offset with deferred inflow of lease resources.
Lease
Receivable Interest
Authorized Interest Issue Maturity Balance at Receivable at Balance at
Description and Issued Rate Date Date Year End Year End Year End
Sprint Lease on Johnson St.
$ 741,068
1.41 %
06/01/10
05/31/35
$ 611,347
$ 5,046 $
616,393
Sprint Lease on Gary St.
694,752
1.41
06/01 /10
05/31 /35
573,138
4,731
577,869
Sprint Lease on Auburn St.
694,752
1.41
06/01 /10
05/31 /35
573,138
4,731
577,869
Verizon Lease on Johnson St.
837,781
1.60
09/01/14
08/31/39
743,869
3,950
747,819
Verizon Lease on Gary St.
837,781
1.59
09/01/14
08/31/39
743,869
3,950
747,819
Verizon Lease on Auburn St.
909,094
1.70
01/01/17
12/31/42
824,663
14,129
838,792
Verizon Lease on Freeport St.
724,310
1.78
10/01 /20
09/30/45
663,396
2,957
666,353
Total Lease Receivable
$ 4,772,914
37
100
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Future lease receivable payments are as follows:
Year Ending
December 31,
Principal
Interest
Total
2025
$ 250,524
$ 74,806
$ 325,330
2026
266,714
70,966
337,680
2027
283,634
66,879
350,513
2028
301,313
62,531
363,844
2029
319,783
57,912
377,695
2030 - 2034
1,906,000
209,896
2,115,896
2035 - 2039
1,038,579
81,316
1,119,895
2040 - 2044
366,873
15,954
382,827
Total
$ 4,733,420
$ 640,260
$ 5,373,680
C. Capital Assets
Capital asset activity for the year ended December 31, 2024 was as follows:
Beginning
Ending
Balance Increases
Decreases
Balance
Capital Assets not
being Depreciated
Land
$ 898,584 $
- $
$ 898,584
Intangible
6,223,278
946,134
7,169,412
Construction in progress
2,310,731
6,746,325 (8,731,058)
325,998
Total Capital Assets
not being Depreciated
9,432,593
7,692,459 (8,731,058)
8,393,994
Capital Assets being Depreciated
Intangible
21,546,212
21,546,212
Land improvements
34,081
-
34,081
Buildings
18,042,022
883,554
18,925,576
Machinery and equipment
5,799,379
197,631
(26,863)
5,970,147
Infrastructure
98,101,085
9,310,690
(691,916)
106,719,859
Total Capital Assets
being Depreciated
143,522,779
10,391,875
(718,779)
153,195,875
Less Accumulated
Depreciation for
Intangible
(3,506,558)
(668,135)
(4,174,693)
Land improvements
(24,774)
(1,228)
(26,002)
Buildings
(3,084,877)
(604,648)
-
(3,689,525)
Machinery and equipment
(3,189,735)
(463,321)
26,863
(3,626,193)
Infrastructure
(51,208,973)
(2,803,530)
660,917
(53,351,586)
Total Accumulated
Depreciation
(61,014,917)
(4,540,862)
687,780
(64,867,999)
Total Capital Assets
being Depreciated, Net
82,507,862
5,851,013
(30,999)
88,327,876
Business -type Activities
Capital Assets, Net
$ 91,940,455
$ 13,543,472
$ (8,762,057)
$ 96,721,870
38
101
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Depreciation expense was charged to functions/programs of the Utilities as follows:
Business -type Activities
Electric
Water
Total Depreciation Expense - Business -type Activities
D. Long-term Debt
General Obligation Revenue Bonds
,)n)a
$ 3,317,829
1,223,033
$ 4,540,862
The City of Elk River issues general obligation bonds to provide funds for the acquisition and construction of major capital
facilities. The following bonds are to be paid out of Utilities' revenues and are backed by the full faith and credit of the
City.
Authorized Interest Issue Maturity Balance at
Description and Issued Rate Date Date Year End
G.O. Water Revenue
Bonds, Series 2021 C 1,615,000 2.00 - 4.00 % 06/10/21 08/01 /41 $ 1,445,000
The annual debt service requirements to maturity for the general obligation revenue bonds are as follows:
Year Ending
December 31, Principal Interest Total
2025
$ 65,000 $
39,200
$ 104,200
2026
70,000
36,600
106,600
2027
70,000
33,800
103,800
2028
75,000
31,000
106,000
2029
75,000
28,000
103,000
2030 - 2034
420,000
97,500
517,500
2035 - 2039
470,000
48,700
518,700
2040 - 2041
200,000
6,000
206,000
Total
$ 1,445,000 $
320,800
$ 1,765,800
In 2024, annual principal and interest payment on the bonds required about 3.5 percent of revenues from the Water fund.
The principal and interest paid and total customer revenues for the Water fund were $101,600 and $2,907,113,
respectively.
39
102
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Revenue Bonds
The revenue bonds were issued to facilitate the membership buy -in with MMPA and construction of major capital
facilities and are to be repaid from future revenue pledged from the Electric fund. They will be retired from net revenues of
the fund.
Authorized
Interest
Issue
Maturity
Balance at
Description
and Issued
Rate
Date
Date
Year End
Electric Revenue Bonds, Series 2016A
$ 9,755,000
2.00 - 4.00 %
07/14/16
02/01/36
$
7,020,000
Electric Revenue Bonds, Series 2018A
10,000,000
3.50 - 5.00
09/26/18
08/01/48
8,815,000
Electric Revenue Bonds, Series 2021 B
11,810,000
2.00 - 5.00
05/13/21
08/01/51
11,170,000
Total Revenue Bonds
$
27,005,000
The annual debt service requirements to
maturity for the revenue bonds are as follows:
Year Ending
December 31,
Principal
Interest
Total
2025
$
990,000
$ 811,306
$
1,801,306
2026
1,035,000
774,406
1,809,406
2027
1,075,000
738,256
1,813,256
2028
1,105,000
700,606
1,805,606
2029
1,140,000
663,606
1,803,606
2030 - 2034
6,330,000
2,707,856
9,037,856
2035 - 2039
5,210,000
1,778,056
6,988,056
2040 - 2044
4,460,000
1,159,756
5,619,756
2045 - 2049
4,570,000
484,563
5,054,563
2050 - 2051
1,090,000
36,900
1,126,900
Total
$
27,005,000
$ 9,855,311
$
36,860,311
In 2024, annual principal and interest payment on the bonds required about 4.2 percent of revenues from the Electric fund.
The principal and interest paid and total customer revenues for the Electric fund were $1,804,381 and $43,175,102,
respectively.
40
103
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Changes in Long-term Liabilities
Long-term liability activity for the year ended December 31, 2024 was as follows:
Beginning
Ending
Due Within
Balance Increases Decreases
Balance
One Year
Business -type Activities
Bonds Payable
General obligation
revenue bonds
$ 1,505,000 $ $ (60,000)
$ 1,445,000
$ 65,000
Revenue bonds
27,960,000 (955,000)
27,005,000
990,000
Unamortized premium
on bonds
1,372,207 (66,512)
1,305,695
-
Total Bonds Payable, Net
30,837,207 - (1,081,512)
29,755,695
1,055,000
Compensated
Absences Payable
522,112 981,478 (536,226)
967,364
967,364
Business -type Activity
Long-term
Liabilities
$ 31,359,319 $ 981,478 $ (1,617,738)
$ 30,723,059
$ 2,022,364
41
104
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
E. Interfund Receivables, Payables and Transfers
Interfunds
The composition of interfund balances at year end is as follows:
Receivable Fund Payable Fund
Electric City $
Total Electric Fund Receivable From City
Water City
Water City
Total Water Fund Receivable From City
Total Receivable From City
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
City
Electric
Amount Purpose
3,570 December billing services
3,570
21,910
City share of hydrant project
128,850
TIF 22 Water Access Charge
150,760
$ 154,330
$ 259,809
4th quarter franchise fees
232,326
Billed sewer on behalf of City
164,444
Billed garbage on behalf of City
102,355
December transfer of revenue
56,712
Billed stormwater on behalf of City
201,862
Fiber project share
116,179
Shared costs
5,478
Parts and labor
3,976
Fuel
1,320
Continuing disclosures
276
Supplies
Total Electric Fund Payable to City 1,144,737
City
Water
147,949
Fiber project share
City
Water
93,287
Shared costs
City
Water
1,118
Fuel
City
Water
679
Parts and labor
City
Water
440
Continuing disclosures
Total Water Fund Payable to City
Total Payable to City
243,473
$ 1,388,210
42
105
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 2: Detailed Notes on All Funds (Continued)
Transfers
During the year ended December 31, 2024, the Utilities made the following transfers:
Electric
Transferto
Other
City Funds
$ 1,527,629
• The transfer out of the Electric fund was the annual transfer of 4 percent of 2024 Elk River revenues to City funds.
Note 3: Other Information
A. Territorial Acquisition Agreement
In 2015, the Utilities entered into an agreement to transfer ownership of electric plants and electric service to customers
in eight designated areas receiving service from Connexus Energy. Specific payment terms have been negotiated for 5
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 1 in 2015 for $877,807, service area 2 in 2016 for $663,586, service areas 3
and 4 in 2017 for $276,776, service areas 5 and 6 in 2018 for $298,736, and service areas 7 and 8 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, $933,159 in 2024, and $946,133 in 2025. All amounts paid are included in
property and equipment, and loss of revenue payments are included in intangible assets.
B. Risk Management
The Utilities are 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 Utilities carries commercial insurance. The Utilities
obtain 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 Utilities 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
Utilities' 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 Utilities'
management is not aware of any incurred but not reported claims.
43
106
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
December 31, 2024
Note 3: Other Information (Continued)
C. Commitments
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 percent. 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 10.48%. The current return of 10.48% 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 under recovery in 2024 is estimated to be $146K.
The bond obligations are satisfied first, distribution to participants is directly affected by under recovery. The under
recovery is rolled forward under the true up. However, the under recovery in 2024 (approximately $146K) would be
included in the revenue requirements in 2026. The transmission payments for 2024 were $0.
44
107
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
For the Year Ended December 31, 2024
Note 4: Defined Benefit Pension Plans - Statewide
A. Plan Description
The Utilities participates in the following cost -sharing multiple -employer defined benefit pension plans administered by
the Public Employees Retirement Association of Minnesota (PERA). These plan provisions are established and
administered according to Minnesota Statutes chapters 353, 353D, 353E, 353G, and 356. Minnesota Statutes chapter
356 defines each plan's financial reporting requirements. PERA's defined benefit pension plans are tax qualified plans
under Section 401(a) of the Internal Revenue Code.
General Emplovees Retirement Plan (General Plan)
Membership in the General Plan includes employees of counties, cities, townships, schools in non -certified positions,
and other governmental entities whose revenues are derived from taxation, fees, or assessments. Plan membership is
required for any employee who is expected to earn more than $425 in a month, unless the employee meets exclusion
criteria.
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. When a member is
"vested," they have earned enough service credit to receive a lifetime monthly benefit after leaving public service and
reaching an eligible retirement age. Members who retire at or over their Social Security full retirement age with at least
one year of service qualify for a retirement benefit.
General Employees Plan Benefits
General Employees Plan requires three years of service to vest. Benefits are based on a member's highest average
salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods
are used to compute benefits for General Plan members. Members hired prior to July 1, 1989, receive the higher of the
Step or Level formulas. Only the Level formula is used for members hired after June 30,1989. Under the Step formula,
General Plan members receive 1.2 percent of the highest average salary for each of the first 10 years of service and 1.7
percent for each additional year. Under the Level formula, General Plan members receive 1.7 percent of highest average
salary for all years of service. For members hired prior to July 1, 1989 a full retirement benefit is available when age plus
years of service equal 90 and normal retirement age is 65. Members can receive a reduced requirement benefit as early
as age 55 if they have three or more years of service. Early retirement benefits are reduced by .25 percent for each
month under age 65. Members with 30 or more years of service can retire at any age with a reduction of 0.25 percent
for each month the member is younger than age 62. The Level formula allows General Plan members to receive a full
retirement benefit at age 65 if they were first hired before July 1, 1989 or at age 66 if they were hired on or after July 1,
1989. Early retirement begins at age 55 with an actuarial reduction applied to the benefit.
Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50 percent of
the cost -of -living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1 percent and a
maximum of 1.5 percent. The 2024 annual increase was 1.5 percent. Recipients that have been receiving the annuity or
benefit for at least a full year as of the June 30 before the effective date of the increase will receive the full increase.
Recipients receiving the annuity or benefit for at least one month but less than a full year as of the June 30 before the
effective date of the increase will receive a prorated increase.
45
108
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
For the Year Ended December 31, 2024
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
C. Contributions
Minnesota Statutes chapters 353, 353E, 353G, and 356 set the rates for employer and employee contributions.
Contribution rates can only be modified by the state Legislature.
General Employees Fund Contributions
General Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2024 and
the Utilities was required to contribute 7.50 percent for General Plan members. The Utilities' contributions to the General
Employees Fund for the years ending December 31, 2024, 2023 and 2022, were $349,758, $339,650 and $333,178,
respectively. The Utilities' contributions were equal to the required contributions for each year as set by state statute.
D. Pension Costs
General Employees Fund Pension Costs
At December 31, 2024, the Utilities reported a liability of $2,037,020 for its proportionate share of the General
Employees Fund's net pension liability. The Utilities' net pension liability 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 Utilities totaled $52,673.
Utilities' Proportionate Share of the Net Pension Liability $ 2,037,020
State of Minnesota's Proportionate Share of the Net Pension
Liability Associated with the Utilities 52,673
Total $ 2,089,693
The net pension liability was measured as of June 30, 2024, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of that date. The Utilities's proportion of the net pension
liability was based on the Utilities's contributions received by PERA during the measurement period for employer payroll
paid dates from July 1, 2023 through June 30, 2024, relative to the total employer contributions received from all of
PERA's participating employers. The Utilities's proportionate share was 0.0551 percent at the end of the measurement
period and 0.0576 percent for the beginning of the period.
For the year ended December 31, 2024, the Utilities recognized pension expense of $47,314 for its proportionate share
of the General Employees Plan's pension expense. In addition, the Utilities recognized an additional negative $1,011 as
pension expense (and grant revenue) for its proportionate share of the State of Minnesota's contribution of $16 million
to the General Employees Fund.
During the plan year ended June 30, 2024, the State of Minnesota contributed $170.1 million to the General Employees
Fund. The State of Minnesota is not included as a non -employer contributing entity in the General Employees Plan
pension allocation schedules for the $170.1 million in direct state aid because this contribution was not considered to
meet the definition of a special funding situation. The Utilities recognized $93,722 for the year ended December 31,
2024 as revenue and an offsetting reduction of net pension liability for its proportionate share of the State of
Minnesota's on -behalf contributions to the General Employees Fund.
46
109
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
For the Year Ended December 31, 2024
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
At December 31, 2024, the Utilities reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience $ 194,277
Changes in actuarial assumptions 10,289
Net difference between projected and actual investment earnings
on pension plan investments -
Changes in proportion 11,880
Employer contributions paid to PERA subsequent to the
measurement date 167,155
796,520
572,406
69,889
Total $ 383,601 $ 1,438,815
The $167,155 reported as deferred outflows of resources related to pensions resulting from the Utilities' employer
contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2025. Other amounts reported as deferred outflows and deferred inflows of resources related
to pensions will be recognized in pension expense as follows:
2025
2026
2027
2028
E. Long-term Expected Return on Investment
$ (666,852)
(146,780)
(252,612)
(156,125)
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 following table:
Long-term
Target
Expected Return
Asset Class
Allocation
on Investment
Domestic Equity
33.5 %
5.10 %
International Equity
16.5
5.30
Fixed Income
25.0
0.75
Private Markets
25.0
5.90
Total
100.0 %
47
110
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
For the Year Ended December 31, 2024
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
F. Actuarial Methods and Assumptions
The total pension liability for each of the cost -sharing defined benefit plans was determined by an actuarial valuation as
of June 30, 2024, using the entry age normal actuarial cost method. The long-term rate of return on pension plan
investments used to determine the total liability is 7%. The 7% assumption is based on a review of inflation and
investment return assumptions from a number of national investment consulting firms. The review provided a range of
investment return rates considered reasonable by the actuary. An investment return of 7% is within that range.
Inflation is assumed to be 2.25% for the General Employees Plan. Benefit increases after retirement are assumed to be
1.25% for the General Employees Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25% after one year of
service to 3% after 27 years of service. Mortality rates for the General Employees Plan are based on the Pub-2010
General Employee Mortality Table.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The General Employees Plan was
last reviewed in 2022. The assumption changes were adopted by the board and became effective with the July 1, 2023
actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2024:
General Employees Fund
Changes in Actuarial Assumptions:
• Rates of merit and seniority were adjusted, resulting in slightly higher rates.
• Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight
adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2
members.
• Minor increase in assumed withdrawals for males and females.
• Lower rates of disability.
• Continued use of Pub-2010 general mortality table with slight rate adjustments as recommended in the most recent
experience study.
• Minor changes to form of payment assumptions for male and female retirees.
• Minor changes to assumptions made with respect to missing participant data.
Changes in Plan Provisions:
•The workers' compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated to
reflect the changes in assumptions.
48
111
Elk River Municipal Utilities
Elk River, Minnesota
Notes to the Financial Statements
For the Year Ended December 31, 2024
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
G. Discount Rate
The discount rate used to measure the total pension liability in 2024 was 7.0 percent. The projection of cash flows usec
to determine the discount rate assumed that contributions from plan members and employers will be made at rates set
in Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees 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 Utilities's proportionate share 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 Utilities' proportionate
share of the net pension liability would be if it were calculated using a discount rate one percentage point lower or one
percentage point higher than the current discount rate:
1 Percent 1 Percent
Decrease (6.0%) Current (7.0%) Increase (8.0%)
General Employees Fund $ 4,449,179 $ 2,037,020 $ 52,799
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.
49
112
THIS PAGE IS LEFT
BLANK INTENTIONALLY
50
113
REQUIRED SUPPLEMENTARY INFORMATION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
51
114
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information
For the Year Ended December 31, 2024
Schedule of Employer's Share of Public Employees Retirement Association Net Pension Liability - General Employees
Fund
Utilities
State's
Proportionate
Proportionate
Share of the
Utilities
Share of
Net Pension
Proportionate
the Net Pension
Liability as a
Plan Fiduciary
Utilities
Share of
Liability
Utilities
Percentage of
Net Position
Fiscal
Proportion of
the Net Pension
Associated with
Covered
Covered
as a Percentage
Year
the Net Pension
Liability
the Utilities
Total
Payroll
Payroll
of the Total
Ending
Liability
(a)
(b)
(a+b)
(c)
(a/c)
Pension Liability
06/30/24
0.0551 %
$ 2,037,020
$ 52,673
$ 2,089,693
$ 4,663,185
43.7 %
86.7 %
06/30/23
0.0576
3,220,927
88,808
3,309,735
4,581,529
70.3
83.1
06/30/22
0.0570
4,514,419
132,415
4,646,834
4,272,380
105.7
76.7
06/30/21
0.0550
2,348,746
71,625
2,420,371
3,957,147
59.4
87.0
06/30/20
0.0540
3,237,547
99,718
3,337,265
3,848,179
84.1
79.0
06/30/19
0.0520
2,874,964
89,329
2,964,293
3,680,233
78.1
80.2
06/30/18
0.0520
2,884,747
94,615
2,979,362
3,494,641
82.5
79.5
06/30/17
0.0540
3,447,324
43,337
3,490,661
3,478,022
99.1
75.9
06/30/16
0.0508
4,124,708
53,908
4,178,616
3,151,720
130.9
68.9
06/30/15
0.0478
2,477,244
-
2,477,244
2,811,834
88.1
78.2
Schedule of Employer's Public Employees Retirement Association Contributions - General Employees Fund
Year
Ending
Statutorily
Required
Contribution
(a)
Contributions in
Relation to the
Statutorily
Required
Contribution
(b)
Contribution
Deficiency
(Excess)
(a-b)
Utilities
Covered
Payroll
(c)
Contributions as
a Percentage of
Covered Payroll
(b/c)
12/31 /24
$ 349,758 $
349,758 $
- $ 4,663,435
7.5 %
12/31 /23
339,650
339,650
- 4,528,667
7.5
12/31 /22
333,178
333,178
- 4,442,376
7.5
12/31/21
312,376
312,376
- 4,165,013
7.5
12/31/20
289,644
289,644
- 3,861,920
7.5
12/31 /19
285,668
285,668
- 3,808,909
7.5
12/31/18
265,424
265,424
- 3,538,988
7.5
12/31 /17
257,780
257,780
- 3,437,072
7.5
12/31 /16
244,012
244,012
- 3,253,493
7.5
12/31 /15
230,074
230,074
- 3,067,659
7.5
52
115
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2024
Notes to the Required Supplementary Information - General Employees Fund
Chanaes in Actuarial Assumptions
2024 - The following changes in assumptions are effective with the July 1, 2024 valuation, as recommended in the most
recent experience study (dated June 29, 2023): Rates of merit and seniority were adjusted, resulting in slightly higher
rates. Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight
adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2 members
Minor increase in assumed withdrawals for males and females. Lower rates of disability. Continued use of Pub-2010
general mortality table with slight rate adjustments as recommended in the most recent experience study. Minor changes
to form of payment assumptions for male and female retirees. Minor changes to assumptions made with respect to
missing participant data.
2023 - The investment return assumption and single discount rate were changed from 6.5 percent to 7.00 percent.
2022 - The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial
reporting purposes. The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
2020 - The price inflation assumption was decreased from 2.50% to 2.25%. The payroll growth assumption was
decreased from 3.25% to 3.00%. 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 changed as
recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the
previous rates for years 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. The assumed number of married
male new retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married
female new retirees electing the 100% Joint & Survivor option changed from 15% to 30%. The corresponding number of
married new retirees electing the Life annuity option was adjusted accordingly.
2019 - The mortality projection scale was changed from MP-2017 to MP-2018.
2018 - The morality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was
changed from 1.00 percent per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year.
2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for
vested and non -vested deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0
percent for vested deferred member liability and 3.0 percent for non -vested deferred member liability. The assumed post -
retirement benefit increase rate was changed from 1.0 percent per year for all years to 1.0 percent per year through 2044
and 2.5 percent per year thereafter.
2016 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5
percent per year thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from
7.9 percent to 7.5 percent. The single discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions
were changed pursuant to the experience study dated June 30, 2015. The assumed future salary increases, payroll
growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and 2.50 percent for inflation.
53
116
Elk River Municipal Utilities
Elk River, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2024
Notes to the Required Supplementary Information - General Employees Fund (Continued)
Chanaes in Actuarial Assumptions (Continued)
2015 - The assumed post -retirement benefit increase rate was changed from 1.0 percent per year through 2030 and 2.5
percent per year thereafter to 1.0 percent per year through 2035 and 2.5 percent per year thereafter.
Changes in Plan Provisions
2024 - The workers' compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated
to reflect the changes in assumptions.
2023 - 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 percent minus the actual 2024 adjustment will be
payable in a lump sum for calendar year 2024 by March 31, 2024.
2022 - There were no changes in plan provisions since the previous valuation.
2021 - There were no changes in plan provisions since the previous valuation.
2020 - Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through
December 31, 2023 and 0.0% after. Augmentation was eliminated for privatizations occurring after June 30, 2020.
2019 - 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 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019,
resulting in actuarial equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.00
percent to 3.00 percent, beginning July 1, 2018. Deferred augmentation was changed to 0.00 percent, effective
January 1, 2019. Augmentation that has already accrued for deferred members will still apply. Contribution stabilizer
provisions were repealed. Postretirement benefit increases were changed from 1.00 percent per year with a provision to
increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of
Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019. For retirements
on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not
apply to Rule of 90 retirees, disability benefit recipients, or survivors. Actuarial equivalent factors were updated to reflect
revised mortality and interest assumptions.
2017 - 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 - There were no changes in plan provisions since the previous valuation.
2015 - 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 million, which meets the
special funding situation definition, was due September 2015.
54
117
SUPPLEMENTARY INFORMATION
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
55
118
Elk River Municipal Utilities
Elk River, Minnesota
Supplementary Information
Schedule of Operating Revenues and Expenses (Continued on the Following Page)
For the Year Ended December 31, 2024
Operating Revenues
Charges for services
Elk River
Otsego
Big Lake
Dayton
Substation credit
Connection maintenance
Customer penalties
Total Operating Revenues
Operating Expenses
Purchased power
Production
Supervision and labor
Natural gas
Supplies and power for pumping
Maintenance of structures
Maintenance of equipment
Maintenance of plant
Total production
Transmission and distribution
Supervision and labor
Maintenance of overhead lines
Maintenance of underground lines
Maintenance of station equipment
Transportation
Maintenance of customer service
Maintenance of customer meters
Miscellaneous
Total transmission and distribution
Services to City
Depreciation and amortization
Customer accounts expense
Meter reading
Billing and collection
Bad debts
Total customer accounts expense
Electric
Water
Total
$ 38,264,528
$ 2,803,602
$ 41,068,130
3,837,845
-
3,837,845
203,394
-
203,394
252,158
-
252,158
4,800
-
4,800
317,234
72,409
389,643
295,143
31,102
326,245
43,175,102
2,907,113
46,082,215
28,590,698
28,590,698
137,836
69,969
207,805
22,086
-
22,086
68,430
317,570
386,000
13,914
118,775
132,689
4,177
274,530
278,707
20,340
-
20,340
266,783
780,844
1,047,627
31,045
7,618
38,663
725,590
-
725,590
446,663
-
446,663
207,866
-
207,866
303,892
18,311
322,203
7,587
73,567
81,154
112,094
335,375
447,469
602,832
27,212
630,044
2,437,569
462,083
2,899,652
229,359
-
229,359
3,317,829
1,223,033
4,540,862
47,698
5,550
53,248
367,495
91,045
458,540
15,203
20
15,223
430,396
96,615
527,011
56
119
Elk River Municipal Utilities
Elk River, Minnesota
Supplementary Information
Schedule of Operating Revenues and Expenses (Continued)
For the Year Ended December 31, 2024
Operating Expenses (Continued)
General and administrative
Salaries
Employee pensions and benefits
Dues
Office supplies and billing expense
Office utilities and maintenance
Consulting fees
Legal and audit
Environmental compliance
Conservation improvement project
Insurance
Telephone
Advertising
Education and meetings
Miscellaneous
Total general and administrative
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Interest income (loss)
Miscellaneous revenue
Interest expense and other
Gain/(loss) on sale of capital assets
Total Nonoperating Revenues
Income before Contributions and Transfers
Capital Contributions
Connection fees
Contributions from customers
Transfers to Other City Funds
Total Contributions and Transfers
Change in Net Position
Net Position, January 1
Net Position, December 31
Electric
Water
Total
$ 885,001
$ 258,534
$ 1,143,535
2,479,110
514,126
2,993,236
123,647
78,201
201,848
95,726
23,419
119,145
34,319
8,579
42,898
40,307
16,317
56,624
54,242
10,974
65,216
31,461
684
32,145
539,992
2,207
542,199
183,582
40,123
223,705
30,987
7,024
38,011
14,071
3,633
17,704
199,542
42,421
241,963
6,277
727
7,004
4,718,264
1,006,969
5,725,233
39,990,898
3,569,544
43,560,442
3,184,204
(662,431)
2,521,773
338,157
104,286
442,443
925,800
429,016
1,354,816
(773,748)
(33,949)
(807,697)
(16,154)
(5,090)
(21,244)
474,055
494,263
968,318
3,658,259
690,934
(1,527,629)
(836,695)
2,821,564
(168,168)
477,998
21,910
499,908
331,740
3,490,091
477,998
712,844
(1,527,629)
(336,787)
3,153,304
48,581,231 33,120,017 81,701,248
$ 51,402,795 $ 33,451,757 $ 84,854,552
57
120
Elk River Municipal Utilities
Elk River, Minnesota
Electric Fund
Summary of Operations and Unaudited Statistics
For the Years Ended December 31, 2015 through December 31, 2024
Summary of Operations
Operating Revenues
Sales of electricity
Other operating revenues (expenses)
Total Operating Revenues
Operating Expenses
Purchased power
Distribution
Services to the City
Depreciation
Other operating expenses
Total Operating Expenses
Operating Income
Capital Contributions
Transfers to Other City Funds
Special Item
Nonoperating Revenues
Net Income
Percent of Change
Sales of electricity
Purchased power
Percent of Revenues
Purchased power
Unaudited Statistics
Miscellaneous
kWh's purchased
kWh's sold
Line loss
Percent of line loss
Revenues Per kWh Sold
Cost Per kWh Purchased
Number of Customers
Total Contribution/Transfers to City
2015 2016 2017 2018
$ 32,704,279 $ 34,569,098 $ 36,458,061 $ 39,039,573
(152,557) (104,702) (337,237) (259,668)
32,551,722 34,464,396 36,120,824 38,779,905
22,034,307
23,991,069
25,402,576
26,710,514
2,330,969
2,041,810
2,385,263
2,660,231
520,727
230,312
202,421
215,296
1,922,359
2,005,093
2,046,935
2,297,349
3,087,792
3,558,315
3,357,276
3,318,016
29,896,154
31,826,599
33,394,471
35,201,406
2,655,568
2,637,797
2,726,353
3,578,499
-
-
209,051
352,104
(824,743)
(1,089,287)
(1,113,264)
(1,188,664)
-
330,923
-
-
267,243
8,991
145,034
218,586
$ 2,098,068
$ 1,888,424
$ 1,967,174
$ 2,960,525
3.776%
5.702%
5.464%
7.081 %
0.180%
8.881 %
5.883%
5.149%
67.690%
69.611 %
70.327%
68.877%
2015
2016
2017
2018
294,441,957
311,990,595
320,349,631
339,917,944
282,265,268
301,838,731
313,952,561
331,124,011
12,176,689
10,151,864
6,397,070
8,793,933
4.136%
3.254%
1.997%
2.587%
$ 0.1159
$ 0.1145 $
0.1161
$ 0.1179
$ 0.0748
$ 0.0769 $
0.0793
$ 0.0786
10,499
10,816
11,448
11,983
$ 824,743
$ 1,089,287 $
1,113,264
$ 1,188,664
58
121
2019
2020
2021
2022
2023
2024
$
37,640,985
$
37,714,965
$
39,719,268
$
42,395,048
$
43,986,269
$
42,557,925
453,648
207,542
1,041,676
1,428,008
464,470
617,177
38,094,633
37,922,507
40,760,944
43,823,056
44,450,739
43,175,102
24,851,301
24,240,440
28,169,146
31,544,604
31,232,788
28,590,698
2,546,634
2,458,699
2,585,796
2,808,964
2,539,170
2,704,352
210,791
229,086
224,814
231,861
253,564
229,359
2,856,258
2,896,839
2,957,685
3,062,751
3,177,120
3,317,829
4,090,102
4,133,940
3,688,401
4,763,425
4,855,110
5,148,660
34,555,086
33,959,004
37,625,842
42,411,605
42,057,752
39,990,898
3,539,547
3,963,503
3,135,102
1,411,451
2,392,987
3,184,204
125,764
174,557
385,316
298,935
489,452
690,934
(1,157,445)
(1,340,218)
(1,407,734)
(1,531,633)
(1,620,378)
(1,527,629)
82,440
98,427
(193,410)
(62,440)
335,209
474,055
$
2,590,306
$
2,896,269
$
1,919,274
$
116,313
$
1,597,270
$
2,821,564
-3.582%
0.197%
5.314%
6.737%
3.753%
-3.247%
-6.961 %
-2.458%
16.207%
11.983%
-0.988%
-8.459%
65.236%
63.921 %
69.108%
71.982%
70.264%
66.220%
2019
2020
2021
2022
2023
2024
336,570,637
337,016,741
347,974,385
344,137,778
341,681,928
327,715,292
325,981,176
324,469,638
341,047,710
333,644,951
329,773,349
316,756,062
10,589,461
12,547,103
6,926,675
10,492,827
11,908,579
10,959,230
3.146%
3.723%
1.991 %
3.049%
3.485%
3.344%
$
0.1155
$
0.1162
$
0.1165
$
0.1271
$
0.1334
$
0.1344
$
0.0738
$
0.0719
$
0.0810
$
0.0917
$
0.0914
$
0.0872
12,244
12,365
12,789
12,955
13,232
13,466
$
1,157,445
$
1,340,218
$
1,407,734
$
1,531,633
$
1,620,378
$
1,527,629
59
122
Elk River Municipal Utilities
Elk River, Minnesota
Water Fund
Summary of Operations and Unaudited Statistics
For the Years Ended December 31, 2015 through December 31, 2024
Summary of Operations
Operating Revenues
Sales of water
Operating Expenses
Operating expenses less depreciation
Services to City
Depreciation
Total Operating Expenses
Total Operating Income (Loss)
Percent of Change
Sales of water
Unaudited Statistics
Miscellaneous
Water Pumped (Gallons)
Water Sold (Gallons)
Percent of Line Loss
Revenues Per 1,000 Gallons Pumped
Revenues Per 1,000 Gallons Sold
Number of Customers
Water Supplier Services
Flushing Hydrants
Back Washing
Fire Department Use
New Water Main Disinfectant and Flushing
Street and Sewer Maintenance
Water Tower Paint and Clean/Maintenance
Well Maintenance
Water Supplier Services (Gallons)
2015 2016 2017 2018
$ 2,202,537 $ 2,173,521 $ 2,326,245 $ 2,515,821
1,277,466 1,325,831 1,614,095 1,430,539
5,719 - - -
$ (211,758) $ (300,620) $ (479,744) $ (108,463)
2.52% (1.32%) 7.03% 8.15%
799,974,000
801,603,000
788,182,000
822,546,000
676,842,000
666,656,000
686,032,000
737,689,000
15.39%
16.83%
12.96%
10.32%
$ 2.75
$ 2.71
$ 2.95
$ 3.06
$ 3.25
$ 3.26
$ 3.39
$ 3.41
4,672
4,903
5,011
5,140
2015
2016
2017
2018
45,000,000
46,816,000
47,470,500
47,894,000
4,000,000
4,430,000
4,125,542
3,823,903
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
473,400
1,800,000
1,550,000
1,550,000
3,700,000
4,000,000
4,000,000
4,000,000
700,000
7,358,000
7,000,000
7,000,000
$ 63,873,400
$ 74,404,000
$ 74,146,042
$ 74,267,903
60
123
2019
2020
2021
2022
2023
2024
$ 2,303,670
$ 2,674,544
$ 3,120,660
$ 2,988,835 $
3,383,999
$ 2,907,113
1,521,719
1,540,043
2,004,037
2,050,084
2,021,225
2,346,511
1,583
463
1,259
540
-
-
1,147,149
1,133,179
1,139,802
1,117,357
1,174,752
1,223,033
2,670,451
2,673,685
3,145,098
3,167,981
3,195,977
3,569,544
$ (366,781)
$ 859
$ (24,438)
$ (179,146) $
188,022
$ (662,431)
(8.43%)
16.10%
16.68%
(4.22%)
13.22%
(14.09%)
2019
2020
2021
2022
2023
2024
778,595,000
872,733,000
977,238,000
886,422,000
1,004,271,000
841,107,000
664,924,000
756,383,000
863,076,000
805,096,000
915,053,000
775,275,000
14.60%
13.33%
11.68%
9.17%
8.89%
7.83%
$ 2.96
$ 3.06
$ 3.19
$ 3.37
$ 3.37
$ 3.46
$ 3.46
$ 3.54
$ 3.62
$ 3.71
$ 3.55
$ 3.75
5,256
5,320
5,430
5,551
5,611
5,708
2019
2020
2021
2022
2023
2024
48,240,500
53,779,500
19,850,600
23,831,500
25,390,750
25,506,250
3,850,801
6,441,523
5,967,131
5,130,934
5,771,470
5,679,945
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
2,021,250
3,003,000
1,886,500
1,550,000
1,550,000
1,550,000
1,550,000
1,550,000
1,550,000
4,000,000
5,000,000
4,000,000
4,000,000
3,000,000
2,000,000
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
7,000,000
$ 74,641,301
$ 83,771,023
$ 48,367,731
$ 48,533,684
$ 50,715,220
$ 48,622,695
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62
125
OTHER REPORT
ELK RIVER MUNICIPAL UTILITIES
ELK RIVER, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2024
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BLANK INTENTIONALLY
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127
Aftlo
M 0
INDEPENDENT AUDITOR'S REPORT
ON MINNESOTA LEGAL COMPLIANCE
Public Utilities Commission
Elk River Municipal Utilities
Elk River, Minnesota
AbdaSolutfamcom
We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial
statements of the Elk River Municipal Utilities (the Utilities) of the City of Elk River, Minnesota (the City) as of and for the
year ended December 31, 2024, and the related notes to the financial statements which collectively comprises the Utilities
basic financial statements, and have issued our report thereon dated April 1, 2025.
In connection with our audit, nothing came to our attention that caused us to believe that the Utilities failed to comply with
the provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims
and disbursements, and miscellaneous provisions sections of the Minnesota Legal Compliance Audit Guide for Cities,
promulgated by the State Auditor pursuant to Minn. Stat. § 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 Utilities' noncompliance with the
above referenced provisions, insofar as they relate to accounting matters.
This report is intended solely for the information and use of those charged with governance and management of the
Public Utilities Commission, and the State Auditor and is not intended to be, and should not be, used by anyone other than
these specified parties.
1W
Abdo
Minneapolis, Minnesota
April 1, 2025
Lighting rtm path forward
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