07-27-21 CCM Workshop (Audit Review)HUTCHINSON CITY COUNCIL
REVIEW OF 2020 FINANCIAL REPORT WORKSHOP
MINUTES
TUESDAY, JULY 27, 2021, AT 4:30 PM
CITY CENTER — COUNCIL CHAMBERS
1. Call to Order
Mayor Forcier called the workshop to order at 4:30 p.m. Members present included Mary
Christensen, Dave Sebesta and Chad Czmowski. Others present were Matt Jaunich, City
Administrator, Andy Reid, Finance Director, and Justin Juergensen, Assistant Finance Director.
REVIEW OF 2020 FINANCIAL REPORT
2. 2020 Financial Report
Justin Juergensen, Assistant Finance Director, introduced Layne Kockelman of Abdo, Eick &
Meyers who presented the City's 2020 audited financial report.
Layne Kockelman presented before the Council. Mr. Kockelman explained that the auditing firm
completes an audit opinion which includes a testing of Minnesota legal compliance, internal
controls over financial reporting and other law provisions, regulations, contracts and grant
agreements. The audit opinion is clean and there were no findings. There were no findings
related to internal controls. With the City having over $750,000 in federal expenditures, a single
audit was required which tests a lot of compliance with federal expenditures. A clean report was
also given on the single audit.
Mr. Kockelman reviewed general fund fund balances. Items reviewed were unrestricted fund
balance, budget and fund balance policy at 40%. The unrestricted fund balance was at 58% for
2020. The general fund has a very healthy cash reserve and all budgets were balanced. He also
reviewed the make-up of the general fund budget to actual, general fund revenues by type and
general fund expenditures by type. Mr. Kockelman also reviewed the capital projects fund
balances, special revenue fund balances, and debt service funds. Most of the funds in the special
revenue fund balances are restricted. Mr. Kockelman then reviewed the enterprise funds and
reviewed the cash flows from operations and cash balances in the water fund, sewer fund, refuse
fund, composting fund, public utilities commission fund, storm water fund, and the liquor fund.
There are significant cash balances in the water and sewer funds and that cash could be used for
capital expenditures if needed instead of bonding for items. Mr. Kockelman reminded the group
that the purpose/main goal of the liquor fund is to transfer out to the general fund, which has been
consistently at $500,000. Mr. Kockelman reviewed cash and investments balances by fund type
which total just over $70,000,000 for 2020. All funds have healthy cash balances. Mr.
Kockelman reviewed comparisons of key ratios with other class three cities and other cities in
McLeod County related to tax rates, taxes per capita, long term debt per capita, debt service
expenditures as a percentage of current expenditures, current expenditures per capita, capital
expenditures per capita, revenues by source per capita, and expenditures by program per capita.
It was noted that with Hutchinson having a local sales tax, it effects the data related to tax rate
comparisons.
Justin Juergensen noted that many of the changes in expenditures and/or revenues were COVID
related. Andy Reid noted that the bond raters really look at cash balances and the financial health
of the funds. Because of this the City has maintained its AA- rating.
3. Adjournment
Motion by Czmowski, second by Christensen, to adjourn the workshop at 5:05 p.m. Motion
carried unanimously.
ATTEST:
Gary T. Forcier
Mayor
Matthew Jaunich
City Administrator