2020 Comprehensive Annual Financial Report

CITY OF SHAKOPEE

MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2020

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

Additionally, the General Fund had one-time transfers of $1,700,000 to the Capital Improvements Fund and $835,810 to debt service to pay off the General Obligation Refunding Bond, Series 2012A on February 1, 2021. The Capital Improvement fund had a fund balance decrease of $407,922. In 2020, the City invested $5,945,331 in infrastructure including $3,557,604 in street reconstruction and pavement overlays and $929,021 on CSAH 42 reconstruction. The TIF District No. 18 Canterbury Common fund had a fund balance increase of $1,597,025. In 2020, the City invested $7,025,721 in infrastructure including $6,705,335 on construction for Unbridled Avenue and $223,627 on 12th Avenue West. Bond proceeds of $8,165,000 were issued to fund the projects and a premium of $832,845 was received upon issuance. 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 $16,133,885. 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 49.9 percent of the 2021 budgeted expenditures. Fund balance of the City’s General Fund increased by $254,542 during the current year, primarily as a result of revenues exceeding expectations. Overall General Fund revenues increased $706,925 as a result of Federal Coronavirus Relief Funding. The General Fund did see a decrease in charges for services related to park and recreational programming. Overall General Fund expenditures increased by $1,486,478 due to cost of living increases, new positions added in 2020, and additional staff hours of the fire department. The largest operational increase of $807,180 was in public safety. As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $28,940,694, an increase of $1,369,917 in comparison with the prior year. Approximately 35.3 percent, $10,226,097, of the total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Approximately 21.5 percent, $6,230,507, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. Approximately 3.8 percent, $1,104,000, of the total amount constitutes committed fund balance through formal action of the City Council. The remainder of fund balance, $11,380,090, 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.

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