2023 Annual Comprehensive Financial Report

CITY OF SHAKOPEE NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2023

NOTE 3 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (CONTINUED) B. Deficit Net Position and Fund Balance (Continued) The Refuse enterprise fund had a negative net position of $122,457 on December 31, 2023 as a result of an agreement with the refuse hauler to purchase garbage carts from the city. The city will receive an annual cart fee payment which is used to pay off the advance to the sewer fund and is anticipated to eliminate this deficit. The Employee Benefits internal service fund had a negative net position of $1,370,516 on December 31, 2023. 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. C. Excess of Expenditures Over Appropriations For the year ended December 31, 2023 expenditures exceeded appropriations in the following fund:

Excess of Expenditures Over Appropriations

Budget

Actual

M ajor Fund

Economic Development Authority

$

752,750

$

4,285,807

$

3,533,057

The EDA board approved major improvements to the building at River City Centre. The excess expenditures were funded from a transfer from TIF District No. 18 Canterbury Commons Capital Project Fund.

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, 2023, the City and Commission’s bank balances were not exposed to custodial credit risk because they were insured through Federal Deposit Insurance Corporation (FDIC), National Credit Union Association (NCUA) and properly collateralized with securities held by the pledging financial institutions’ trust departments or agents in the City’s name.

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