2021 Annual Comprehensive Financial Report

CITY OF SHAKOPEE

MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2021

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

The TIF District No. 18 Canterbury Common fund had a fund balance decrease of $1,182,407. In 2021, the City invested $1,124,049 in infrastructure including $974,999 on construction for Unbridled Avenue. The Capital Improvement fund had a fund balance increase of $328,113. In 2021, the City invested $3,455,749 in infrastructure including $2,205,628 in pavement overlays and $989,441 in street reconstruction. Additionally, the General Fund had one-time transfers of $4,542,862 to establish the Local Projects Fund and $680,0000 to the Capital Improvements Fund. 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 $17,771,897. 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 52.8 percent of total General Fund expenditures or 50 percent of the 2022 budgeted expenditures. Fund balance of the City’s General Fund increased by $1,638,012 during the current year, primarily as a result of revenues exceeding expectations. Overall General Fund revenues increased $5,404,952 as a result of the Coronavirus Local Fiscal Recovery Funds received as part of the American Rescue Plan Act. The General Fund exceeded expectations in building permit revenue and engineering fees as a result of an influx of developement. Overall General Fund expenditures increased by $1,679,246 due to cost of living increases, new positions added in 2021, and additional staff hours of the fire department. The largest operational increase of $785,293 was in public safety. As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $32,132,424, an increase of $3,191,730 in comparison with the prior year. Approximately 36.3 percent, $11,674,266, of the total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Approximately 31.8 percent, $10,229,194, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. Approximately 4.5 percent, $1,430,000, of the total amount constitutes committed fund balance through formal action of the City Council. The remainder of fund balance, $8,798,964, 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. As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds

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