Most of Tuesday’s Becker City Council meeting focused on a presentation of the 2014 audited financial statements.

 

Mark Ebensteiner of Abdo, Eick & Meyers gave the presentation which included handouts and a slide show. Ebensteiner summarized some of the key points of the audit and fielded questions from council.

 

In the management letter, Ebensteiner identified the unrestricted and total general fund balance, showing the budget at $3.9 million, up nearly $900,000 from 2013. The previous three years saw a steady budget below $3 million in the range of $2.6 to $2.7 million from 2011 to 2013.

 

Ebensteiner said the increase in the budget was due to the capital levy and related transfers out to the revolving capital fund.

 

The city gained more revenue from operations than they expected with an excess of $219,419 in revenues over expenditures. Ebensteiner said it was mainly due to revenues from licenses and permits and special assessments.

 

The general fund revenues and transfers is up to $3,280,252 in 2014 compared to $2.9 million in 2013 largely due to the decrease in utility aid.

 

Expenditures and transfers saw general government, public safety and culture and recreation increase slightly while public works decreased moderately.

 

Special revenue funds — that are a classification of funds to account for revenues and related expenditures segregated by city policy or federal and state statutes for specific purposes — increased $94,278.

 

Ebensteiner identified $2.5 million in bonds outstanding (G.O. fire station refunding bond and G.O. improvement bonds) with maturity dates of 2019 and 2026.

 

Under capital project funds, the balance in 2014 is $7,523,677 — down $715,297 from 2013 due to a combination of items including: capital outlay of approximately $1.4 million, transfers in of approximately $690,000 and a transfer out of approximately $130,000 to the golf fund for operations.

 

Ebensteiner said operating receipts were sufficient to cover operating costs and debt payments in each of the last four years for enterprise funds (water and sewer. However, receipts were not sufficient to cover operating costs associated with the golf course and a transfer of $130,000 was received in 2014 from the revolving capital fund to support operations.

 

Operation revenues came in at $692,961 with operating expenses at $789,518. Non-operating expenses totaled $76,044 with interest expense at $10,646. The total loss to the golf course before transfers totals $384,602.

 

Mayor Lefty Kleis asked Ebensteiner if he were asked on the street how much money the golf course lost this last year, could he say it is the amount of $384,602?

 

Ebensteiner said technically yes since operating costs and debt payments are exceeding operating receipts and taxes, transfers, etc..

 

Golf Pro Troy Malo said that number does not take into consideration the depreciation of $230,950 for the property and equipment. Depreciation is an annual allowance for the wear and tear, deterioration or obsolescence of the property.

Member Lori Keller pointed out that someone who is familiar with how financial statements are comprised would be able to see how depreciation factors in the bottom line.

 

Mayor Kleis said since “99% of the people who see a financial statement don’t understand how the losses are affected by depreciation” and thus would see the loss of $384,602 as the bottom line.

 

Adam Oliver pointed out that since most people don’t understand that process, why tell them a number that is not entirely true.

 

Ebensteiner said it would be wise for the city to continue to monitor rates by completing a cash flow projection on an annual basis. He also said he was aware the city is currently reviewing a variety of funding/operating options for the future of the golf course.

 

Ebensteiner presented a ratio analysis of the city’s financial statements according to a peer group average acquired from the Office of the State Auditor for cities of the fourth class (Pop. 2,500 to 10,000). 

 

He said Becker’s debt to assets is good, its debt service coverage is good, and its debt per capita. He said the city’s current and capital expenditures per capita is slightly higher that its peers, but the number may be skewed because Becker is on the lower range of the peer group.

 

Ron Youngdahl and Carl Bennetsen, the city’s insurance agents, were on hand Tuesday to provide an overview of the city’s renewal premium.

 

They pointed out the property/casualty renewal is actually a decrease mostly attributed to a rate reduction at the League of Minnesota Cities Insurance Trust’s (LMCIT) level and changes the city has made to Property In the Open (PIO) coverage.

 

A municipal and auto liability premium reduction also occurred due to an experience factor from 0.891 to 0.873 and the city’s estimated expenditures up, while LMCIT rates went down.

 

The entire package premium for 2015-16 comes in at $98,017 compared to $111,687 in 2013-14.

 

Council approved.

 

Mayor Kleis read aloud a proclamation declaring May 2 as Arbor Day in Becker and the month of May Arbor month.

Kleis said he encourages all citizens to plant trees to gladden the hearts and promote the well-being of present and future generations.

 

• Council Member Rick Hendrickson said through his EDA meeting last week it was learned the Casey’s General Store and Gas Station will not be coming to Becker at this time due to a covenant issue;

 

• Kleis mentioned the Becker Yellow Ribbon Committee is holding a military appreciation day today (Sat.) from 10 a.m. to 2 p.m. at the Becker Community Center;

 

• Kleis gave his blessing to a new safety incentive program called, “Safety Starts with Me” to raise awareness, make employees more safety conscious, reduce accidents, lost days and workers’ compensation claims, enhancing employee accountability and essentially keeping the city’s insurance experience modifier rates low;

 

• Becker’s annual clean-up day is May 16 from 8 a.m. to 2 p.m. at the public works facility.

 

The next Becker City Council meeting is May 5 at 5 p.m.