07-24-2018 CCM Workshop (2017 Audit Review)HUTCHINSON CITY COUNCIL
REVIEW OF 2017 FINANCIAL REPORT WORKSHOP
MINUTES
TUESDAY, JULY 24, 2018, 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, Steve Cook, John Lofdahl and Chad Czmowski. Others present were Matt Jaunich,
City Administrator, and Andy Reid, Finance Director.
REVIEW OF 2017 FINANCIAL REPORT
2. 2017 Financial Report
Andy Reid, Finance Director, introduced Kyle Meyers and Lane Kockelman of Abdo, Eick &
Meyers who presented the City's 2017 audited financial report.
Kyle Meyers presented before the Council. Mr. Meyers 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. The City has received the
GFOA certificate of achievement award for the 21s` year in a row. Mr. Meyers reviewed specific
financial results from the completed audit. The City has approximately $53,107 or 0.3%
available for spending at the City's discretion (unassigned fund balance). Standard & Poor's
bond rating of the City is "AA-". Mr. Meyers also noted that no new GASB standards were
implemented in 2017. Mr. Kockelman noted that the City has retained a general fund balance
between 50-60% for the last several years and is at 52.3% for 2017. The City's policy is 40%.
The State Auditor and League of Minnesota Cities recommend that an unrestricted fund balance
reserve be between 35-50% for cash flow purposes. Mr. Kockelman detailed general fund
operations data as well as general fund revenues by source and other facets of the general fund.
Mr. Kockelman also reviewed general fund expenditures by program as well as the make-up of
the special revenue funds, debt service funds and capital projects funds. Mr. Meyers then
reviewed cash flows and cash balances for the various enterprise funds as well as the internal
service funds (Central Garage and Self -Insurance) and the public utilities commission fund. Mr.
Meyers suggested that the enterprise funds rates be reviewed on an annual basis. All funds
presently have adequate reserves. The City will address any deficits through increased charges in
future years. Like enterprise funds, internal service fund rates should be analyzed annually to
determine adequacy of rates covering costs.
Mr. Meyers also provided a peer group comparison with other third class cities. Lastly, Mr.
Meyers spoke about future accounting standards. The City is very financially healthy.
Council Member Cook asked specific questions and sought clarification on items included in the
report. A correction will be made on page 36 related to expenditures and revenues. Cook made a
suggestion for next year's report acknowledging the 0% debt levy increase. Discussion was also
held regarding delinquent property taxes and the collection of them.
3. Adjournment
Motion by Czmowski, second by Cook, to adjourn the workshop at 5:20 p.m. Motion carried
unanimously.
ATTEST:
Gary T. Forcier
Mayor
Matthew Jaunich
City Administrator