2019 City of Shakopee Comprehensive Annual Financial Report

CITY OF SHAKOPEE

MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2019

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

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 $15,879,343. 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 51.6 percent of total General Fund expenditures or 48.5 percent of the 2020 budgeted expenditures. Fund balance of the City’s General Fund increased by $3,559,899 during the current year, primarily as a result of revenues exceeding expectations. Overall General Fund revenues increased $2,599,157 as a result of increased charges for services related to increase operations at the community center and ice arena. Licenses and permit revenue increased with the increase in private development in 2019. Additionally, the City had an increase in investment income in comparison to the prior year. Overall General Fund expenditures increased by $1,555,760 due to cost of living increases and new positions added in 2019, and an increase operational cost for the community center and ice arena. The largest operational increase of $1,104,640 was in Public Safety. As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $27,570,777, an increase of $4,394,140 in comparison with the prior year. Approximately 43.5 percent, $11,984,556, of the total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Approximately 24.0 percent, $6,601,140, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. Approximately 6.0 percent, $1,588,000, of the total amount constitutes committed fund balance through formal action of the City Council. The remainder of fund balance, $7,397,081, is not available for new spending because it has already been restricted or is non-spendable. Following is a discussion of the major 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. The Economic Development Authority fund had a fund balance increase of $566,375. The EDA had transfer’s totaling $510,294 from tax increment districts to reimburse TIF eligible expenses. The Capital Improvements fund had a fund balance decrease of $652,601. In 2019, the City invested $3,860,113 in infrastructure through the Capital Improvements fund including $2,637,207 in street reconstruction and pavement overlays and $387,891 on CSAH 16 school pedestrian crossings. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The TIF District No. 17 Amazon fund had a fund balance increase of $374,348. The fund received $911,859 in tax increment, with a portion of the increment being used to pay down internal funding that was utilized to fund the Shenandoah Drive development project.

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