2023 Annual Comprehensive Financial Report

CITY OF SHAKOPEE MANAGEMENT’S DISCUSSION AND ANALYSIS December 31, 2023

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

The Economic Development Authority fund had a fund balance increase after transfers of $1,106,686. The EDA had transfers totaling $3,592,076 from TIF District No. 18 Canterbury Commons related to the River City Centre repairs. Overall General Fund expenditures increased by $1,670,289 due to cost of living increases and new positions added in 2023 in parks, rental inspections and fire. The largest operational increase of $992,662 was in public safety. 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 $22,024,478. 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 53.6 percent of total General Fund expenditures or 49.8 percent of the 2024 budgeted expenditures. The City’s fund balance policy is to maintain an unassigned fund balance in the General Fund of 35 to 50 percent of budgeted expenditures, as a result a transfer of $3.7 million was approved to the Capital Improvement Fund for future projects to adjust the assigned fund balance accordingly. Fund balance of the City’s General Fund increased by $2,019,182 during the current year, primarily as a result of revenues exceeding budgeted expectations. Overall General Fund revenues increased $5,262,440 in comparison to last year as a result of taxes, charges for services and investment income revenue. The City did a one time transfer of $4,048,650 to the debt serivce and capital improvement funds to help offset future expenses in those funds. As of the end of the current year, the City’s governmental funds reported combined ending fund balances of $44,887,561, an increase of $1,132,180 in comparison with the prior year. Approximately 27 percent, $12,125,693, of the total amount constitutes unassigned fund balance, which is available for spending at the City’s discretion. Approximately 31.6 percent, $14,182,770, of the total amount constitutes assigned fund balance, which is assigned for designated purposes. Approximately 5.9 percent, $2,650,000, of the total amount constitutes committed fund balance through formal action of the City Council. The remainder of fund balance, $516,392, 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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