2021 Annual Comprehensive Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2021

The Employee Benefits internal service fund had a negative net position of $1,393,902 on December 31, 2021. This deficit has been in place for many years and is not expected to be resolved. Management’s position is that the cash balance should be sufficient enough to cover the current compensated absences and not necessarily the noncurrent portion of compensated absences. The TIF District No. 20 Enclave capital project fund had a negative fund balance of $2,560,306 on December 31, 2021 as a result of lot improvements at the old city hall site. Future tax increment revenue is anticipated to eliminate this deficit. The TIF District No. 19 Riverfront capital project fund had a negative fund balance of $1,267,572 on December 31, 2021 as a result of property acquisition costs. Future tax increment revenue is anticipated to eliminate this deficit. The TIF District No. 17 Amazon capital project fund had a negative fund balance of $642,189 on December 31, 2021 as a result of street improvements costs. Future tax increment revenue is anticipated to eliminate this deficit. B. Deficit Net Position and Fund Balance NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED)

C. Excess of Expenditures Over Appropriations For the year ended December 31, 2021 expenditures exceeded appropriations in the following fund:

Excess of Expenditures Over Appropriations

Budget

Actual

Nonmajor

Economic Development Authority

$

570,308

$

987,716

$

417,408

The excess expenditures were funded by revenues in excess of expectations.

NOTE 4 – DEPOSITS AND INVESTMENTS

A. Deposits In accordance with applicable Minnesota Statutes, the City and the Component Unit maintains deposits at depository banks authorized by the City Council and the Commissioners. Custodial Credit Risk: This is the risk that an issuer or other counterparty to an investment will not fulfill its obligation to the holder of the investment. Minnesota Statutes 118A.04 and 188A.05 limit investments that are in the top two ratings issued by nationally recognized statistical rating organizations. The City’s investment policy references Minnesota Statutes and further limits the types of investments that the City is allowed to invest in. The Commission has a deposit policy that requires the Commission’s deposits to be collateralized as required by Minnesota Statues 118.03 for an amount exceeding FDIC, SAIF, BIF, FCUA, or other federal deposit coverage. As of December 31, 2021, the City and Commission’s bank balances were not exposed to custodial credit risk because they were insured through Federal Deposit Insurance Corporation (FDIC) and properly collateralized with securities held by the pledging financial institutions’ trust departments or agents in the City’s name.

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