2018 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2018

FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, assigned and unassigned fund balance may serve as a useful measure of a City’s net resources available for spending at the end of the year. As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $23,176,637, an increase of $1,368,203 in comparison with the prior year. Approximately 40.7 percent, $9,427,224, of the total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Approximately 30.3 percent, $7,016,733, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. The remainder of fund balance, $6,732,680, is not available for new spending because it has already been restricted or is non-spendable. The General Fund is the chief operating fund of the City. At the end of the current year, fund balance of the General Fund was $12,319,444. As a measure of the General Fund’s liquidity, it may be useful to compare fund balance (unassigned) to total fund expenditures. Unassigned fund balance represents 47.4 percent of total General Fund expenditures or 45.0 percent of the 2019 budgeted expenditures. Fund balance of the City’s General Fund increased by $341,450 during the current year. Key factors in this increase consist of the following:  Before transfers, the fund balance of the General Fund showed a $2,265,924 increase. After the net transfer out of $1,924,474, fund balance increased $341,450. Transfers provided the necessary funding for several significant capital infrastructure programs.  Overall revenues increased approximately $1,750,000 as a result of increased charges for services related to increase operations at the community center and ice arena. Licenses and permit revenue also increase with the increase in private development in 2018. Property taxes increased in the general fund due to an increase in the levy.  Overall expenditures increased approximately $2.1 million due to cost of living increases and new positions added in 2018 as well as increase operational cost for the community center and ice arena with the completion of construction in 2017. Additionally, inclement weather caused an increase in equipment maintenance and supplies such as salt purchases to maintain clear roads. Body cameras were also purchased in 2018 for our police department. Fund balance of the Economic Development Authority fund decreased $1,178,060. During 2018 the City completed the Vierling Drive project adding sewer, storm, water and streets to the area for future use which resulted in a transfer of approximately $800,000 to the Capital Improvement Fund for reimbursement of this project. Additionally, the City started work on some redevelopment areas totaling approximately $370,000 which will continue to be redeveloped in 2019.

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