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5.6. SR 4-15-2002MEMORANDUM Item 5.6. TO: FROM: DATE: SUBJECT: Mayor and Council Pat Klaers, City Administrator April 15, 2002 Consider School District Request for Community Recreation Reimbursement Attached for your information is some material from Director of Community Education Charlie Blesener regarding expenditures incurred by the school district on behalf of community recreation. This material includes a request for repayment of these expenditures by the members of community recreation. The City Council should be aware of this issue as it was briefly discussed at a number of Council meetings towards the end of 2001. Following the information from Charlie, I have another memo attached which offers some of my comments and a recommendation on the situation. C l Ohit¥ Ed:uca ion Zi[elongLOx 1230 NW School Street · Elk River, Minnesota 55330 2506 763 241 3520 11 April 2002 ~/,~.~t..~ · o: Elk River City Counci~~'~rator Pat Klaers From: Charlie Blesener ~4'~' '- Re: Request for resolution of Community Recreation deficit Approximately a year ago, as the Community Recreation program formally began to disband itself, the Community Recreation Board was informed by me of an on-going deficit that the program had accumulated over time. My erroneous assumption at the time was that Board members were aware of the fund balance of the program, but I learned that they were not aware. Historically, each year following the conclusion of the district's fiscal year, a final accounting of the Community Recreation budget was made by the District's manager of accounting, and communicated to me and to the coordinator of the Community Recreation program. Jeff Asfahl and I had numerous conversations and meetings over the years regarding the fund balance of the program, and Jeff had frequent contact with the District's manager of accounting regarding it as well. The financial structure of the joint powers agreement called for member communities to contribute revenues-- based on community populations--sufficient to cover the operating (overhead) costs of the department, and for each member community to be fiscally responsible for whatever programs occurred in its community. The School District was the fiscal agent which received the annual contributions from member communities, and which disbursed expenses for the operation. One problem with the arrangement was that the municipal and township members to the agreement operated their budget years on a calendar basis, while the fiscal agent (lSD 728) has a fiscal year of July 1 through June 30. Over the years, it was felt that some of the variation in fund balances could be attributed to summer program · 'evenues being received in one year (prior to June 30), while a significant amount of the summer program expenses occurred in a different year (after July 1). At any rate, each year as the recreation budget was determined by the Board's budget committee, the current fund balance, or lack thereof, was apparently not a part of the discussion. The Recreation Board has wrestled with this issue for several months, and among the steps taken and information determined are the following: *revenues for the entire program (1992-2000) have been accounted for in the Community Recreation revenue codes of the School District. *an extensive review of the calendar year 2000 was done by Gary Groen, CPA. His finding was that the deficit did not occur because of 2000 activities. * Mr. Groen reconstructed the expenses and revenues for the program into a calendar year basis for review by the Board. That data suggest that the majority of the deficit occurred in the years 1994-1998. *Groen noted that based on his review of the descriptions of the items paid in the District expenditure reports, there does not appear to be any significant expenditure incorrectly charged to the administration or recreation programs *A recap of the administrative expenses for the years 1996-1999 was developed by Groen. In each of those years the administrative expenses exceeded the revenues collected from member's annual dues by significant amounts. *Mr. Groen has put the deficit amount for the nine years of Community Recreation operations at $67,274. (Copies of Mr. Groen's financial summaries and notes are enclosed). The joint powers agreement used population of member communities to determine the annual dues that members would pay. In an attempt to assign costs for the deficit, I constructed a data base (enclosed) using the annual population of the member communities over the life of the agreement, and credited or debited each member community for that year's operating credit or deficit. Using that method, Elk River would have 51%, or $34,311. of the $67,274 deficit. It is regrettable that this deficit occurred, and I am interested in reaching an equitable resolution of the matter. While I was not included in the Recreation Board's annual budget process, I erred in assuming that members were cognizant of the fund balance status of the program. By the same token, at no time during the program's tenure did municipal or township members request more or different financial data from me or from the District. The Finance section of the Joint Powers Agreement (enclosed) calls for the Recreation Board to review funds expended in the previous year at the end of each fiscal year, and to use that data to adjust the next year's dues structure. If that had been done each Serving the communities of: Elk River · Rogers · Zimmerman · Hassan · Livonia · Dayton · Ramsey · Big Lake Township · Burns · Albertville year, we would not have a deficit problem today. In an effort to resolve the matter, and recognizing the above noted contributing events to this deficit, I am requesting the City of Elk River pay $25,000 toward the reduction of the accumulated deficit. I will be in attendance at the ouncil's April 15, 2002 meeting to discuss this unfortunate matter with you personally. ELK RIVER COMMUNITY RECREATION PROGRAM SUMMARY OF REVENUE AND EXPENDITURES FOR THE YEAR 2000 .ADMINISTRATION Revenue Total Receipts per District record Add Portion of non-resident fees added to admin, budget City of Elk River portion Other cities City of Elk River reimbursement $ 96,287.24 6,523.50 767.00 3,565.00 Total Administration revenue $107,142.74 Expenditures Total Cash Disbursements per District record Add 2000 expenditures paid in 2001 by District Less 1999 expenses paid in 2000 Expenses transferred to City of Elk River program Total 2000 administrative expenditures $136,482.99 269.08 26,774.61 2,027.37 $107,950.09 ELK RIVER COMMUNITY r~ECREATION PROGRAM SUMMARY OF REVENUE AND ELXPENDITURES FOR THE YEAR 2000 CITY OF ELK RIVER PROGRAM Revenue Total Receipts per District records for the year Add 2000 registration fees received in 1999 Less City of Elk River reimbursement Portion of non-resider~t fees from program.~-, to ~dmin. $ 183,922.11 21,243.50 3,565.00 6~523.50 Total 2000 program revenue for the City of Elk River $ 195 077.11 ,;penditu res Total Cash Disbursements per District records Add 2000 expenses paid in 1999 2000 expenses reclassified from admin, to program 2001 expenses reimb, for arena program (1/8/01 Check No. 75493) Less 1999 expenses paid in 2000 Total 2000 program expenditures for the City of Elk River $ 175,667.79 484.84 2,027.37 12,424.57 1~278.84 $ 189.,325.73 ELK RIVER COMMUIk'ITY RECREATION PROGRAM SUMMARY OF REVENUE AND EXPENDITURES FOR THE YEAR 2000 NOTES 3 7 8 This was not an audit of the activities of the Community Recreation program. This program is extremely difficult to manage with the District's records on a June 30 fiscal year and the Recreation program on a calendar year. It is extremely difficult to work from the end of a program back toward the beginning. It would be much better to start at the beginning and roll the activity forward. I cannot analyze the affects of accounts receivable, deferred revenue, accounts payable and prepaid expenses. No significant 2000 expenditures were charged, in the District's accounting records, which did not relate to the administration or recreation programs. It is my understanding that the revenues for the entire program (1992-2000) have been accounted for in the Community Recreation revenue codes. The deficit of the Community Recreation program is not a result of the 2000 activities. As the fiscal host of any program, I do not believe the fiscal host should be held responsible for a program deficit in a program for which it has no financial responsibilities. I believe all participants in the Community Recreation program have a moral obligation to work with the District to resolve this deficit. I suggest a liaison committee work with the District to resolve this deficit. Gary A. Groen Certified Public Accountant 7101 York Avenue Souhh, Suite 346 Minneapolis, MN 55435 (952) 921-3325 Office · (952) 921-3331 FAX February 25, 2002 To the Members of the Community Recreation Board Elk River, Minnesota I have summarized the financial activities of the Community Recreation Board by calendar year for the years 1992 through 2000. This information has previously been presented by fiscal year from the information provided by the District. The calendar year information is reconcilable to the fiscal year information previously reported to you. The accumulated deficit for the Community Recreation program for the period 1992 to 2000 is $67,274. The deficit occurs in the years 1995 through 1998. Attached is a schedule of revenues and expenditures with less detail than that provided with your meeting agenda. Also attached is a schedule of expenditures coded to administration for the period 1996 through 1999. I hope this information also will be helpful in your discussion and resolution of the deficit the District has incurred as your fiscal host. Sincerely, Certit ed Public Accountant Administration Revenues Expenditures Excess Revenue (Expenditures) City of Elk River Revenues Expenditures Excess Revenue (Expenditures) City of Otsego Revenues Expenditures Excess Revenue (Expenditures) City of Rogers Revenues Expenditures Excess Revenue (Expenditures) City of Zimmerman Revenues Expenditures Excess Revenue (Expenditures) City of Dayton Revenues Expenditures Excess Revenue (Expenditures) Totals Revenues Expenditures Excess Revenue (Expenditures) ELK RIVER COMMUNITY - -CREATION PROGRAM REVENUE AND EXPL ~ITURE SUMMARY YEARS ENDED DECEMBER 31, 1992 THRU 2000 2000 1999 1998 1997 1996 1995 1994 1993 1992 Total $107,143 $107,206 $101,871 $ 96,528 $ 80,277 $ 58,929 $ 17,870 $93,119 $ 22,786 $ 685,728 109,879 142,258 141,864 122,281 103,685 69,983 55,498 83,506 17,884 846,837 (2,736) (35,052) (39,993) (25,753) (23,408) (11,054) (37,628) 9,614 4,902 (161,109) 195,369 157,077 109,627 105,331 44,389 23,074 62,730 697,597 189,128 130,427 88,562 91,988 64,974 28,665 33,286 627,031 6,241 26,650 21,065 13,343 (20,586) (5,592) 29,444 70,566 6,425 4,432 4,831 675 5,783 (4,363) 100 - 17,882 5,941 1,654 3,814 3,229 2,826 215 1,003 - 18,681 484 2,778 1,017 (2,554) 2,956 (4,578) (903) - (799) 21,102 15,475 11,198 10,353 6,722 2,495 1,184 68,528 13,885 7,946 7,866 6,777 8,115 388 2,671 47,647 7,216 7,530 3,332 3,576 (1,393) 2,107 (1,487) - 20,881 - 623 2,581 1,144 1,643 5,991 - 444 1,969 1,347 1,159 4,919 179 612 (204) 484 - 1,072 3,407 205 25 65 - - 3,702 1,584 5 - 1,589 1,824 200 25 65 2,114 330,038 287,598 227,731 213,535 139,816 81,278 83,527 93,119 22,786 1,479,428 318,834 283,867 242,111 224,718 181,569 100,598 93,616 83,506 17,884 1,546,703 $ 11,205 $ 3,730 $(14,379) $ (11,183) $(41,753) $ (19,320) $(10,089) $ 9,614 $ 4,902 $ (67,274) Elk River Community Rocreatlon Program Administrative Expense Summary Expense Category Payroll & Benefits Brochure Postage Transfers Mileage Shared Help Wanted Ads Warming House Ad Mens Baske~allNolleyball Ads Office Supplies Copier Charges Pager Se~ce Equipment Phone Computer Fax Machine O~er Emponum Remodeling Shelves & Tools For Empodum Elk River Salades Reimbursement Otsego Salanss Reimbursement lSD 11 Anoka-Hennepin Curriculum Program Photos/Shirts Basketballs/Foam Balls Start Smart Kits Rec Sweatshirt, Shirts, Caps Harmony Clowns for Regis~afion Performance Raptor Center Rockhurst College HaJloween Scarecrow Website For Rec Women in Leisure Fees Clock 2001 Registration Fee Voicemail Service District Imprest Fund Computer Class Natl Alliance Membership Fee Credit Card Michele, Rearm, Anna Misc Meetings Seminar Workshop & Membership Fees Marketing Plan Notary MN Rec Co~ference Fee Treats Positive People Winter, Spdng, Fall Regis~'ation Fees Community Rec Nat'l You~ Sports Quest Community Ed Muni Pay Misc Subscription Family Sleigh Ride Deb Sheppard Rich EnksorVGlenn Quist Frames for Awards/contest/Plaques Show Slides & Roll a Banner City of Rochester, Shared Exp 1999 31,510.05 5,259.71 154.79 906.15 778.86 2,414.36 1,470.86 30987 203.43 12,601.20 162.67 10,000.00 142.89 71,071.77 359.76 298.74 48.00 31.79 68.O0 2,328.43 126.41 43.67 849.75 17.20 20.00 1,062.67 16 64 1998 66,203.02 6,075.86 420.60 1,002.02 1,462.33 2,936.26 590 216.33 61,303.28 3500 66.29 15.00 1,091.70 15.95 401.44 26.90 343.44 43.00 166.67 14.97 1800 1997 64,955.08 5,434.55 184.50 1,67Q76 1,823.17 40O0 165.70 2,15160 1,252.29 299.30 110.38 40,601.15 49.95 4,375.90 33.33 15.00 38.00 15.00 210.00 108.00 295.89 72.00 25.00 904.80 (1,219.46) 15.00 (1,346 14) 1996 59,286.78 4,513.77 1,104.20 1,403.34 206.74 4,243.84 953.36 865 47 118.38 22,198 70 803.86 398.00 4,795.92 63.33 2000 25.00 205.26 99.00 40.00 676.32 687.56 1500 42.95 166.67 251.76 422.50 7763 142,257.67 141863.96 122,280.75 103,685.34 7 ELK RIVER COMMUNITY RECREATION PROGRAM NOTES TO SUMMARY OF REVENUES AND EXPENDITURES FOR THE YEARS 1992 - 2000 This was not an audit of the activities of the Community Recreation program. These schedules report the fiscal year financial information together by calendar year. 1991 revenues and expenditures have been deleted because they are related to activities before the Community Recreation program was started. The revenues and expenditures information summarized by calendar year was reconciled with the fiscal year information previously reported. The program is extremely difficult to manage with the District's records on a fiscal year and the Recreation program on a calendar. I have spent a substantial amount of time summarizing this financial information by calendar year. The Community Recreation staff would have coded nearly all revenues and expenditures. There does not appear to be any significant expenditure incorrectly charged to the administration or recreation programs. My conclusion is based on my review of the descriptions of the items paid in the District expenditure reports. It is my understanding that the revenues for the entire program (1992'- 2000) have been accounted for in the appropriate program revenue codes. That is, whether coded to administration or one of the cities, it is in the Community Recreation program. The deficit in the Community Recreation program appears to have occurred between 1995 and 1998. As the fiscal host, I do not believe the District should be held responsible for a program deficit in a program for which it has no financial responsibilities. If the Community Recreation Board did not receive the financial information to properly manage the program, the Board also has a responsibility to demand that information from its Director or fiscal host. I believe all participants in the Community Recreation program have an obligation to work for an equitable resolution of this issue. All information from which both the fiscal and calendar year schedules have been derived is available to anyone who would like to review it in greater detail. CITY FY 1992 Populatign _O/o Se_n.,ed _ Net Inco?_e/Loss . _Per Cap)ta?rof_i_t/Loss Elk River 1 !, 149 . 5_0% ...... $4;_9(~1:58_ .... $2,449.69 Otsego 4,313 19°,/o $4,901.58 Hassan 1,682. _. 8% ...... _S 4,9_0_] .: _5._8- .... S369.57 2200 10% $4,901.58 $483.39 Livos!a_ Zimmerman 1578 7% $4,901.58 $346.72 TOTALS = 2_2;3_08 ........ 1_ 0__0% $4,901.58 $4,901.58 FY 1993 ' '~' Population . % Served Net Income/Loss Per Capita Profit/Loss Elk River 11,149 i 50% , $9,613.75 $4,804.72 Otsego ..... 4,313 ~ 19% $9,613.75 $1,858.71 Hassan , 1,682 8% $9,613.75 $724.87 Rogers 650 , 3% $9,613.75 S280.12 Dayton 736 3% $9,613.75 $317.18 Livonia --: 2200 i 10% , $9,613.75 $948.10 Zimmerman ~ 1578 7% $9,613.75 $680.05 ~_OTALS = 22,308 100% $9,613.75 $9,613.75 % Served ~ Net Income/Loss Per Capita Profit/Loss ................ Population _ Elk_ Ri_ver 11,992 51% -$10,089.40 -$5,150.35 4,321 18% -$10,089.40 -$1,855.79 Otsego Hassan 1,804 8% -$10,089.40 -$774.79 R_o~q_ers 677 I 3% -$10,089.40 -$290.76 _D_a_yt on 740 3% -$10,089.40 -$317.82 _Liy_o.n!a- ........... 2,380 10% ~ -$10,089.40 -$1,022.17 Zimmerman 1,578 ~ 7% -$10,089.40 -$677.72 TOTALS = 23,492 ~ 100% i -$10,089.40 -$10,089.40 FY 1995 · Population % Served I Net Income/Loss Per Capita Profit/Loss -Eik-~v~r 12,060 50% , -$19,320.01 -$9,568.37 Otsego ' 4,497 . 18% i -$19,320.01 -$3,567.91 Hassan 1,906 ; 8% : -$19,320.01 _Rogers ; 862 4% I -$19,320.01 Dayton ~ 704 i 3% I -$19,320.01 -$558.55 Livonia i 2,535 I 10% I -$19,320.01 , -$2,011.26 Zimmerman i 1,787 I 7% I -$19,320.01 TOTALS = 24,351 i 100% i -$19,320.01 -$19,320.01 Population % Served ! Net Income/Loss Per Capita Profit/Loss Elk River 12,811 49% -$41,753.24 -$20,656.53 Otsego_ 4,766 18% -$41,753.24 -$7,684.72 Hassan ............ 2,020 ' 8% -$41,753.24 -$3,257.06 Rogers .__ 978 4% -$41,753.24 -$1,576.93 Oayto_n-___ 746 3% -$41,753.24 -$1,202.85 Livonia 2,687 10% -$41,753.24 -$4,332.53 Zimmerman 1,887 ~ 7% , -$41,753.24 -$3,042.61 TOTALS = 25,895 100% -$41,753.24 -$41,753.24 FY 1997 . Popul_a!io_n ...... % Served Net Income/Loss Per Capita Profit/Loss Elk River 13,323 . _ __610/% . . -$1_1 ,.! 82__97 Otsego 4,766 22% -~;11 182 97 -$2,424.62 2,100 10% -$11,182.97 -$1,068.34 H _a..~san ................................. _Ro_g_ers_ ......... _1_02.7_ ........ _5°,/0 ....... -$1_1 ,_182.97 -$517.38 ~ton ..... 776 4% ........ -$1_1_ .,_1_82_._9_ 7 ..... -$394.78 Livonia 0% $0.00 $0.00 Zimmerman 0% $0.00 $0.00 TOTALS= 21,982 100% -$11,182.97 -$11,182.97 FY 1998 .p_o_ p_u Lati_o n . _% Served ~ik River 1_4,0_1_9 ..... 59% Otsego . _5 ;.2_ 7_1 ..... 22% Hassan 2_,_100_ 9% 1 700 7% R~gers _._ 814 3% Dayton ......... O% Netlncome/Loss Per Capita ProfWLoss -$14,379.29 -$8,433.03 -$14,379.29 -$3,170.73 -$14,379.29 -$1,263.24 -$14,379.29 -$1,022.62 -$14,379.29 -$489.66 $0.00 $0.00 Zimmerman TOTALS = 0% $0.00 $0.00 2-3,'9-O4 ..... 100% -$14,379 29 -$14.379.29 Elk River Otsego FY 1999 '- Population % Se~ed , Net Income/Loss Per Capita ProfWLoss ~,~01 59% $3,730.34 $2,209.07 5,600 22% $3,730.34 $808.50 Hassan .... 4,042 16% $3,730.34 $583.56 Dayton Livonia Zimmerman 895 3% $3,730.34 $129.21 0% $0.00 $0.00 0% $0.00 $0.00 ~-~A~ 25,838 100% $3,730.34 $3,730.34 River Otsego Hassan Population % Served I Net Income/Loss Per Capita Profit/Loss , 16,888 I 61% I $11,204.84 . $6,811.39 5,600 20% ' $11,204.84 $2 258.63 _Rogers 4,398 16% ! $11,204.84 $1,773.83 Dayton 895 3% ! $11 204.84 $360.98 Livonia 0% I $0.00 $0.00 Zimmerman 0% $0.00 $0.00 -rr-,-r~.~ 27 781 I 100% i $11,204.84 $11,204.84 E~'RI~ER'To~'', '*:$~4,31i.26 ~ -$67,274.40 ! 51% OSTEGO TOTAL HASSANTOTAL -$12,830.28 I -$67,274.40 ~ 19% -$5,602.50 i -$67,274.40 ~ 8% ROGER_S.. TO_ T__A~__.- -$2,489.96 I -$67,274.40 ~ 4% DAYTONTOTAL : -$1,994.56 ; -$67,274.40 i 3% _LIVONIATOT_AL ..... -$5,934.47 i -$67,274.40 I 9% ZIMMERMANTOTA -$4 111.36 i -$67,274.40 I 6% -$67,274.39 , -$67~274.40 I 100% JOINT POWERS AGREEMENT FOR COMMUNITY RECREATION COORDINATOR /0 THIS AGREEMENT, made this ___day of ,1991, between Independent School District No. 728 ("District"), and the undersigned municipalities and townships ("Local Governments"); WHEREAS, pursuant to the authority granted by the Minnesota Joint Powers Act, Section 471.59, and all other applicable statutes and power, the District and several local governments with the district agree to cooperate in providing for a joint community recreation coordinator; NOW THEREFORE, it is agreed by and between the parties as follows: 1) JOINT POWERS RECREATION BOARD: The membership of the Joint Powers Recreation Board (hereafter referred to as "Recreation Board") shall consist of the following: One member shall be appointed by the governing body of each participating local government. One member shall be appointed from the School Board of District 728. The Recreation Board shall perform an advisory function. Its major responsibility shall be to: a. Provide input into the decision making process. b. Recommend policy as it relates to Community Recreation Coordinator. c. Give direction to the overall development of Community Recreation. The term of the members and officers shall be for the calendar year. Members shall ,.,e eligible for reappointment. The Recreation Board shall elect its own officers, in addition, shall adopt its own rules and procedures not inconsistent with the terms of the agreement. 2) FINANCE: Each year in concert with the budget process the Director of Community Education shall recommend a budget to the Recreation Board. This recommended budget shall be prepared in consultation with the appropriate administrative officials of each of the governmental units which are a party to this agreement. The budget shall set forth the proposed program of activities to be provided on a school district-wide basis, and within each of the participating municipalities and shall be reviewed annually. Upon the appropriate approval of the budget, each participating municipality will transmit 1/12 of the approved amount to the School District each month. At the end of each fiscal year the Recreation Board shall review the funds expended in the previous year. Actual expenditures in a previous year shall be the basis for adjusting a current year's monthly payments based on an over or under expenditure of actual expenditures compared to the budget in the prior year. At the end of each year the Director of Community Education shall prepare a report of activities which were conducted in the previous year and submit this report to the Recreation Board and to the parties of this Agreement. Tl~e annual report shall be in a form such that it can be 3mpared to the proposed program or: which the annual budget has been prepared, realizing that flexibility in the program is necessary as long as it is within the budget. The Recreation Board shall have no taxing power. The Recreation Board shall review and recommend the appropriate use of State and Federal grants in accordance with the State Guidelines and in concert with the growth and development of Community Recreation in District No. 728. 3) E'UNDING: School District responsibility: In order to encourage and facilitate the ¢th and development of a coordinated recreation program the School District will provide: - office space and supervision. Local Government Responsibility: In an effort to maintain a cooperative fund the Local Governments will provide: - 100% of a full time Community Recreation Coordinator's salary. - 100% of clerical salaries as authorized. - Supplementary Benefits. - Administrative and operating costs. 4) SCHOOL AND PARK FACILITIES: Use of school facilities shall be in accordance with the administrative handbook of the School District. Use of local government facilities shall conform to policies established by each governmental body. Each governing body shall be responsible for the maintenance and repair of their facilities. The Community Recreation Coordinator shall bring to the attention of the appropriate local government or school official items in need of repair or maintenance and a suggested time when the maintenance might be performed so as not to disrupt programmed activities. The construction 'of any new facilities shall be the prerogative and responsibility of each governmental body. In order to minimize duplication and thereby reduce costs, the parties are encouraged to enter into supplementary maintenance agreements for each project or facilities jointly used, taking into consideration sharing of staff and equipment, rental of equipment, joint powers of equipment, etc., for part development and maintenance purposes. 5) ,~: The Community Recreation Coordinator and any clerical staff shall be considered to be an employee of District 728. The Coordinator shall not be a certified teacher and shall not be eligible for tenure. Future employment of any Community Recreation Coordinator shall be done in consultation with an individual designated by the local governments within which the schools are located. Retention or dismissal of said Community Recreation Coordinator will be dealt with in a similar manner. 6) J,J~: Each party shall assume sole responsibility for injuries to users of its facilities while the facilities are being used for community recreation programs. Each party shall secure proper liability insurance to provide for any such claim. 7) LENGTH OF AGREEMENT AND TERMINATION: This Agreement shall take effect upon approval by the Distdct and the participating local governments. It may be terminated as it -ortains to any of the parties by providing at least one hundred eighty (180) days written notice to the ,~ecreation Board. Local governments shall review the program annually. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective the day year first above written. INDEPENDENT SCHOOL DISTRICT #728 TOWNSHIP OF HASSAN By: By: Chairperson Chairperson By: By: Clerk Clerk CITY OF DAYTON CITY OF OTSEGO By: By: Mayor Mayor By: By: Clerk Clerk L4TY OF ELK RIVER CITY OF RAMSEY By: By: Mayor Mayor By: By: Clerk Clerk CITY OF ROGERS By: Mayor By: Clerk Ikiver MEMORANDUM TO: Mayor and Council FROM: DATE: Pat Klaers, City Admi~r~.~ April 15, 2002 SUBJECT: Consider School District Request for Community Recreation Reimbursement As everyone knows, the school district believes it is due funds for community recreation activities over the last nine years or so. Since the organization is/has dissolved, it is now appropriate for the school district reimbursement to be considered. Most everyone involved in the organization is reasonably comfortable with the revenue figures over the past nine years. However, there has been a fair amount of discussion over the accuracy of the expenditures. Issues complicating the situation include the fact that the cities and school districts are on two different fiscal years and that there is a gap between when revenues are received and expenditures occurred for recreation programs. The school auditor spent some time to restate the previous years expenditures and put them into a calendar year format so that we could identify when the shortages were incurred. A great deal of time has been spent by the school auditor and by community recreation employees to analyze 2000 expenditures and revenues. In the end, it was deemed that the figures for revenues and expenditures for 2000 were accurate. It would take a significant amount of additional school auditor and city time to analyze expenditures for each year to see if everything is true and accurate; and in the end we may never reach a consensus on the exact amount due to the school district. If it is assumed that the accounting is correct, then the school (community education) is coming up short financially. It is my belief that the money paid by municipalities for the administration of the community recreation organization came pretty close to coveting expenses. Accordingly, I also believe the shortage that occurred over the past nine years relates mostly to recreation programs. Elk River (and most municipalities) subsidize some recreation programs to make sure they were affordable. If there is a shortage in the recreation programming aspect of the community recreation operation, it means that the subsidy required is more than what was paid. Elk River did a significant amount of programming over the last nine years and, if money is due to the school district, then Elk River has an obligation to repay these funds. With that being said, it should also be noted that the school (community education) has some responsibility in this situation. As the fiscal agent, the school should have reported to the recreation board any shortages that occurred and the ongoing status of the fund balance. This never happened. On the other hand, the community recreation board also never asked for a fund balance status report. According to the financial figures presented, the city owes about $34,000. Based on the school having a role and responsibility in notifying the board about this shortage on an ongoing basis, I think we should pay less than the total amount prorated to the city and also, that it should be repaid over a few years. I agree with Charlie's recommendation and something on the order of seventy five percent of the total or $25,000 seems appropriate. Recommendation It is recommended that the city repay the school district $25,000 over three years beginning in 2003 for repayment of community recreation expenditures.