HomeMy WebLinkAbout3.b. Presentation and Acceptance of 2018 Comprehensive Annual Financial Report (CAFR)
EXECUTIVE SUMMARY
City Council Meeting Date: June 4, 2019
AGENDA ITEM: Presentation and Acceptance of 2018
Comprehensive Annual Financial Report
(CAFR)
AGENDA SECTION:
Presentations
PREPARED BY: Jeff May, Finance Director AGENDA NO. 3.b.
ATTACHMENTS: Resolution, PowerPoint Presentation,
CAFR, Management Report, Special
Purpose Audit Reports
APPROVED BY: LJM
RECOMMENDED ACTION: Motion to adopt a Resolution Accepting the 2018
Comprehensive Annual Financial Report.
ISSUE
Review and accept the 2018 CAFR.
BACKGROUND
A representative from our audit firm, Malloy, Montague, Karnowski, Radosevich, & Co., P.A. (MMKR),
will be here on June 4th, to review the City of Rosemount’s 2018 Comprehensive Annual Financial Report
(CAFR). The representative will give a brief presentation, highlighting items that may be worthy of your
attention and will also be available to answer any questions that you may have
The CAFR, Management Report, Audits, and a copy of the presentation planned for Tuesday’s meeting is
attached for your review.
RECOMMENDATION
Recommend the above motion to accept the 2018 CAFR.
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
RESOLUTION 2019 - 51
A RESOLUTION ACCEPTING THE 2018 COMPREHENSIVE ANNUAL
FINANCIAL REPORT
WHEREAS, the City of Rosemount has been presented its 2018 Comprehensive
Annual Financial Report, prepared with the assistance of the firm of Baker Tilly Virchow
Krause, LLP and audited by our audit firm of Malloy, Montague, Karnowski, Radosevich,
& Co., P.A.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of
Rosemount, accepts its 2018 Comprehensive Annual Financial Report, audited by our
audit firm of Malloy, Montague, Karnowski, Radosevich, & Co., P.A.
ADOPTED this 4th day of June, 2019.
_____________________________
William H. Droste, Mayor
ATTEST:
__________________________
Erin Fasbender, City Clerk
CITY OF ROSEMOUNT
AUDIT REPORT
YEAR ENDED DECEMBER 31, 2018
Aaron J. Nielsen, CPA
Opinion on Financial Statements
Financial statements are fairly presented
in accordance with accounting principles
generally accepted in the United States of
America
Reports on Internal Controls and
Compliance
Financial Statement Audit
MN Legal Compliance Audit
AUDITOR’S ROLE
Opinion on Financial Statements
Unmodified opinion –statements are fairly
presented
Internal Controls Over Financial Reporting
Significant deficiency - City has a limited
segregation of duties
Legal Compliance Audit Findings
Collateral – Covered deposits, but below the
110% required amount by statute.
AUDIT OPINIONS AND FINDINGS
GOVERNMENTAL FUNDS
Increase
2018 2017 (Decrease)
Fund balances of governmental funds
Total by classification
Nonspendable 34,032$ 444$ 33,588$
Restricted 5,375,931 4,854,162 521,769
Committed 223,619 230,162 (6,543)
Assigned 13,758,394 13,026,932 731,462
Unassigned 7,503,588 7,333,743 169,845
Total – governmental funds 26,895,564$ 25,445,443$ 1,450,121$
Total by fund
General 9,995,409$ 9,556,250$ 439,159$
Debt Service 3,209,605 2,983,348 226,257
Capital Projects 11,300,057 10,804,425 495,632
Port Authority TIF 2,119,361 1,849,055 270,306
Nonmajor funds 271,132 252,365 18,767
Total – governmental funds 26,895,564$ 25,445,443$ 1,450,121$
as of December 31,
Governmental Funds Change in Fund Balance
Fund Balance
GENERAL FUND FINANCIAL POSITION
GENERAL FUND REVENUES
GENERAL FUND EXPENDITURES
ENTERPRISE FUNDS
Increase
2018 2017 (Decrease)
Net position of enterprise funds
Total by classification
Net investment in capital assets 97,977,645$ 97,328,281$ 649,364$
Unrestricted 26,994,489 23,521,090 3,473,399
Total – enterprise funds 124,972,134$ 120,849,371$ 4,122,763$
Total by fund
Water 44,697,610$ 42,351,012$ 2,346,598$
Sewer 34,724,406 34,585,434 138,972
Storm Water 43,852,046 42,133,934 1,718,112
Arena 1,698,072 1,778,991 (80,919)
Total – enterprise funds 124,972,134$ 120,849,371$ 4,122,763$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
WATER FUND
SEWER FUND
STORM WATER FUND
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2014 2015 2016 2017 2018
Storm Water Fund Financial Position
Year Ended December 31,
Cash, Net of Interfund Loans Total Net Position Operating Revenue
ARENA FUND
STATEMENT OF NET POSITION
Increase
2018 2017 (Decrease)
Net position
Governmental activities
Net investment in capital assets 80,094,490$ 74,294,033$ 5,800,457$
Restricted 8,108,470 7,151,722 956,748
Unrestricted 14,596,678 14,090,028 506,650
Total governmental activities 102,799,638 95,535,783 7,263,855
Business-type activities
Net investment in capital assets 97,977,645 97,328,281 649,364
Unrestricted 26,994,489 23,521,090 3,473,399
Total business-type activities 124,972,134 120,849,371 4,122,763
Total net position 227,771,772$ 216,385,154$ 11,386,618$
As of December 31,
COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2018
CITY OF ROSEMOUNT, MINNESOTA
CITY OF ROSEMOUNT, MINNESOTA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2018
PREPARED BY THE DEPARTMENTS OF
ADMINISTRATION AND FINANCE
LOGAN MARTIN, City Administrator
JEFFREY A. MAY, Finance Director
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
As of and for the Year Ended December 31, 2018
TABLE OF CONTENTS
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
GFOA Certificate of Achievement
Organizational Chart 10
City Officials 11
FINANCIAL SECTION
Independent Auditors' Report 12 - 14
Management’s Discussion and Analysis 15 - 24
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 25
Statement of Activities 26
Fund Financial Statements:
Balance Sheet – Governmental Funds 27
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds 28
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 29
Statement of Net Position – Proprietary Funds 30
Statement of Revenues, Expenses, and Changes in Net Position -
Proprietary Funds 31
Statement of Cash Flows – Proprietary Funds 32 - 33
Notes to the Financial Statements 34 - 75
Required Supplementary Information:
Schedule of Revenues and Other Sources Compared to Budget (Budgetary Basis) –
Budget and Actual – General Fund 76
Schedule of Expenditures and Other Uses (Budgetary Basis) – Budget and
Actual – General Fund 77
Schedule of City’s and Nonemployer Proportionate Share of the Net Pension Liability –
Public Employees General Employees Retirement Fund 78
Schedule of Employer Contributions – Public Employees General Employees Retirement Fund 78
Schedule of City’s Proportionate Share of the Net Pension Liability –
Public Employees Police and Fire Fund 79
Schedule of Employer Contributions – Public Employees Police and Fire Fund 79
Schedule of Changes in the Rosemount Fire Department Relief Association’s Net Pension
Asset and Related Ratios 80
Schedule of Employer Contributions – Rosemount Fire Department Relief Association 81
Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 82
Notes to Required Supplementary Information 83 - 87
Supplementary Information:
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet – Nonmajor Governmental Funds 88
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – Nonmajor Governmental Funds 89
Schedules of Revenues, Expenditures and Changes in Fund Balances (Budgetary Basis) –
Budget and Actual:
Building CIP Capital Project Sub-Fund 90
Street CIP Capital Project Sub-Fund 91
Equipment CIP Capital Project Sub-Fund 92
CITY OF ROSEMOUNT
COMPREHENSIVE ANNUAL FINANCIAL REPORT
As of and for the Year Ended December 31, 2018
TABLE OF CONTENTS
Page
STATISTICAL SECTION (Unaudited)
Net Position by Component 93
Changes in Net Position 94 – 95
Fund Balances, Governmental Funds 96
Changes in Fund Balances, Governmental Funds 97
Assessed Value (or Tax Capacity) and Estimated Market Value of
All Taxable Property 98
Property Tax Rates – All Direct and Overlapping Governmental Units 99
Principal Property Tax Payers 100
Property Tax Levies and Collections 101
Ratios of Outstanding Debt by Type 102
Ratios of Net General Bonded Debt Outstanding 103
Direct and Overlapping Governmental Activities Debt 104
Legal Debt Margin Information 105
Pledged-Revenue Coverage 106
Demographic and Economic Statistics 107
Principal Employers 108
Full-Time/Permanent Part-Time City Government Employees by
Function/Program 109
Operating Indicators by Function/Program 110
Capital Asset Statistics by Function/Program 111
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Profile of the Government
The City was established as a municipal corporation in 1858, and became a statutory City in 1974. The
City has a Mayor-Council form of government, with the four Council members being elected to
overlapping four-year terms of office and the Mayor serving a four-year term coinciding with the terms of
two of the Council members. The City Council is responsible, among other things, for passing ordinances,
adopting the budget, appointing committees and hiring the City's chief administrative officer. The City's
chief administrative officer is the City Administrator, who is appointed by and serves at the discretion of
the City Council. The City Administrator is responsible for carrying out the policies and ordinances of the
City Council, for overseeing the day-to-day operations of the City and for appointing the heads of the
City's various departments, with the City Council's final approval.
The City of Rosemount is a growing southern suburb in the Minneapolis/St. Paul metropolitan area,
located in Dakota County. The City encompasses approximately 36 square miles. The City is one of the
fastest growing communities in the seven-county Minneapolis/St. Paul metropolitan area as demonstrated
by the following population trend:
Population
Population
Increase
Percent
Increase
2018 Staff Estimate 24,866 2,992 14%
2010 Census 21,874 7,255 50%
2000 Census 14,619 5,997 70%
1990 Census 8,622 3,539 70%
1980 Census 5,083 1,049 26%
1970 Census 4,034
Rosemount has an extensive system of State and County highways and 114 miles of city streets that
continue to contribute to the community's growth. This extensive highway network and large tracts of
attractive, developable land have made the City an ideal location for residential development and
increasingly commercial/industrial development. There is approximately 720 acres of industrial and
commercially zoned property ready for development. There is also slightly less than 868 acres within the
Municipal Service Area (MUSA) to permit future residential growth. Rail, air, barge and freeway access
provides Rosemount's economic community with an expedient transportation system. Four major
highways link Rosemount to Minneapolis, St. Paul and the rest of the metropolitan area.
The City provides a full range of services, including police and fire protection; the construction and
maintenance of highways, streets, and other infrastructure; water, sewer, and storm water services; and
recreational activities and cultural events. Certain economic development services are provided through
the Rosemount Port Authority. The Port Authority’s financial data has been presented in this financial
report as a blended component unit.
The annual budget serves as the foundation for the City's financial planning and control. All departments
of the City submit requests for appropriation to the City Administrator on or before May 1st of each year.
The City Administrator uses these requests as the starting point for developing a proposed budget. The
City Administrator then presents this proposed budget to the Council for review and adoption of a
preliminary levy by September 30th. The council holds a public hearing on the proposed budget and must
adopt a final budget and levy by no later than December 20th, prior to the close of the City's fiscal year.
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The appropriated budget is prepared by fund, department and function. The City’s department heads
may make transfers of appropriations within a department; transfers of appropriation between
departments require approval of the City Council. Budget-to-actual comparisons are provided in this
report for each individual governmental fund for which an appropriated annual budget has been
adopted. For the general fund, this comparison is presented on pages 76-77 as part of the Required
Supplementary Information.
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered
from the broader perspective of the specific environment within which the City operates.
Local economy Rosemount, while growing, continues to have ample land inventory for all development.
The City has experienced significant residential development over the last several years such that most
new development is now centrally located in the community. That means that most of the western portion
of the City is fully developed with available lands in the south and east. The University of Minnesota
(UMore) controls 3,000 acres in the south-central portion of the City and a developer partner has received
concept plan approval of 435 acres of primarily residential development. The City, in partnership with
Xcel Energy and the University of Minnesota, have been responding to RFI’s for approximately 300 acres
just east of Dakota County Technical College and have garnered some interest from potential users.
OPUS Corporation continues to market the adjoining 160 acres they have reserved for future Business
Park use.
As the state economy continues to be robust, Rosemount has experienced more growth and inquiries
about new development. Communities to the west and northwest have less land available, meaning that
residential expansion will continue to move toward Rosemount where land is available. Likewise, more
retail and services have started to move into the community and more businesses are looking for land
within the community. Currently most residents commute for their jobs and are potential workers for new
companies coming into town. As the labor shortage continues, this may be an attractive incentive for
additional business attraction. Flint Hills Resources continues to be the largest tax payer with
approximately 11% of the City's total local tax capacity.
Labor market data is very impressive for the State, Minneapolis/St. Paul metropolitan area and Dakota
County, in which Rosemount is located. 2018 labor force numbers were 3,082,219; 2,008,037; and
241,555 respectively with unemployment rates of 3.2%; 2.8% and 2.6% to match. These figures compare
quite favorably with national figures.
Community leadership has preserved 540 beautiful acres of land for 30 parks. Residents can enjoy a
round of golf on a 27-hole public course. Bordered by the scenic Mississippi River, Rosemount also
contains 270 acres of the Spring Lake Regional Park Preserve. Rosemount's Community Center, a part
of the Army National Guard's regional headquarters, provides a variety of indoor recreation opportunities
and meeting spaces, including an ice arena, gymnasium, auditorium and banquet facility. In 2015, the
City opened a 10,000 square foot addition to the Steeple Center to house a variety of activities and
events.
Given the underlying strength of the economy in the seven county metropolitan area, the diversification of
tax and employment bases and Rosemount's desirable location, the future outlook is very optimistic.
Long-term financial planning Growth and development in the City is guided by the adopted 2030
Comprehensive Plan. That Plan, while still in place, has been updated and is out for public comment. It is
anticipated that the 2040 Comprehensive Plan will be used as the basis for land use, planning, public
investment, parks and development for the next 10 years. Given the previous recession population
projections were retrenched. The population projection for 2020 is 25,900; 2030 is 31,700; and 2040 is
38,000. The current population is estimated at 24,866.
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Other factors Development within the community continues on a steady path, slightly increasing year
over year. In 2018 there were 256 new residential units built in the community, over 100 units more than
the previous year. The mix of residential units also illustrates a shift from purely single family residential
units. There were 121 multi-family units which were located within two apartment buildings and also
some attached townhomes. The remaining 135 units were all traditional detached single family housing
units. This type of housing has always been the primary units constructed so a shift to more attached
units is consistent with the goals of the current council and a welcome change. The City Council is
interested in providing life cycle housing for existing and future residents and desires the provision of
additional attached housing as well as more rental opportunities within the City. Developers have platted
numerous lots making them available for construction in 2019. By December, 2018, there were slightly
over 600 lots ready for permit within the community.
In 2018, the City’s construction valuation was also greater than 2017 by approximately $12,570,000
totaling $87,287,105. While most of the valuation increase is attributable to the increase in housing there
was also a slight uptick in valuation of commercial uses. The largest commercial project was the Public
Storage expansion. There were also several tenant improvements in existing malls and refurbishment of
several office spaces like those in Proto Labs and the School District offices. On the industrial side, there
were several large projects occurring at Spectro Alloys and another at Flint Hills Refinery.
Mobile Technology In 2018 we continued to implement new features of our Cartegraph Operations
Management System (OMS). This web-based platform provides a user-friendly, map-based interface for
managing all facets of Public Works operations and eliminates the network connectivity issues we
experienced in the past. The administrative functionality allows us to create a secure, customized
environment for each specific user. The OMS interface provides greater access to information using
mobile devices, allowing us to be more efficient and effective with the services we provide.
In 2018, a GIS intern completed an inventory of boulevard ash trees using a mobile GPS device. This
inventory will help us develop a plan for removing ash trees as a preventive measure against the spread
of the Emerald Ash Borer. The GIS Intern also completed a project of digitizing the curb stop locations of
all properties that were previously stored on index cards. With this information now in our GIS database,
the utility crew can access those curb stop locations on a mobile device in the field without having to drive
back to the office and manually searching through the index cards.
Capital Improvement Projects The Public Works Department coordinated and / or completed several
capital improvement projects in 2018:
New carpet and plumbing improvements at Fire Station 1
Tile and grout cleaning at City Hall and Fire Station 2
Replace lobby windows and doors at City Hall
Replace office windows in the Public Works north building
Replace backstop and fencing at Camfield Park
New playground equipment installed at Chippendale Park, Connemara Park and Lions Park
(coordinated through Parks & Recreation)
New playground borders at Connemara Park and Schwarz Park
Grading and drainage improvements at Connemara Park
Basketball court color-coating at Winds Park
Paint the shelter at Birch Park
Built new road leading to City dump site
Built new dumpster enclosure at Erickson Park
Repaired dumpster enclosures at City Hall and both fire stations
Roof inspections and repairs as needed at Well 7, Well 8 and Fire Station 2
A space-needs study began for the Police and Public Works facilities, coordinated by Wold
Architects with contributions from staff members in both departments
5
City Construction Projects
2018 Street Improvements – Pavement mill and overlay to all the streets west of Shannon
Parkway between December Trail and 155th Street West, as well as 158th Court, 159th Court, and
portions of 158th Street West and Dakota Drive.
Well 16 – The well house was completed and the well was brought online in December 2018.
Sealing Wells 1 and 2 – Both wells were properly sealed and capped as directed by the
Minnesota Department of Health in 2018.
Chippendale Tower Painting – Design and prep work in 2018, painting in 2019. KLM Engineering
is the consulting firm that is coordinating this project.
Addison Avenue – This is a collector road that extends south of the Greystone neighborhoods,
built to service the new Dakota County CDA project (Prestwick Townhomes) as well as future
development to the north of Connemara Trail and east of Akron Avenue.
Connemara Trail (east of Akron) – Design for this project began in 2018, with construction
expected in 2019.
Bonaire Path East (Akron Avenue to Anderson Drive) – Design for this project began in 2018,
with construction expected in 2019. The gravel road will be upgraded to an urban paved section
with curb and gutter. This project will also extend the railroad quiet zone to include the crossing
on Bonaire Path East.
Biscayne Avenue (Boulder Trail to CSAH 46) – Design for this project was initiated in 2018, with
construction expected in 2020. The gravel road will be upgraded to an urban paved section with
curb and gutter. This project also extends sanitary sewer to service those properties to the south.
Developer Construction Projects
Prestwick Place 15th and 16th Additions – These neighborhoods include 58 single-family homes in
the Prestwick Place development, located west of Akron Avenue and north of Connemara Trail.
Prestwick LLC is the developer.
Greystone 7th and 8th Additions – These neighborhoods include 102 single-family homes located
east of Akron Avenue and south of Bonaire Path. These additions will complete the Greystone
development. CalAtlantic Group, Inc. is the developer.
Meadow Ridge 1st and 2nd Additions – These neighborhoods include 63 single-family homes
located west of Akron Avenue and north of Bonaire Path. Lennar is the developer.
Harmony Parkview and Villas 2nd Addition – These neighborhoods include 48 townhomes located
on the north side of Connemara Trail, just east of TH 3 in the Harmony development. The
developers are Timbercrest LLC (Harmony Parkview) and Mark Elliot Homes (Harmony Villas 2nd
Addition).
The Police Department is responsible for policing services to the community to ensure safety and
response to service calls. A Community Oriented Policing philosophy is core to all services through
partnerships and relationships with citizens, businesses and community organizations. Staffing levels are
continually evaluated to meet the needs of a growing community. The specific service functions within
the Police Department are described below.
Police Administration – This budget provides for the overall leadership, planning, coordination and
management of personnel and administration of activities within the Police Department. This includes
the collection, preparation and filing of crime data and miscellaneous reports with the State of
Minnesota; preparation and oversight of the operating and capital improvements budgets; and
strategic planning for the future needs of the Department and the community. Police Department
leadership is also involved in many consolidated services governance boards that contribute to
policing services for the city. The Dakota Communications Center (DCC), Dakota County Criminal
Justice Network (CJN), Local Government Information Systems (LOGIS), Dakota County Drug Task
Forces, South Metro SWAT, Dakota County Domestic Preparedness Committee, and the Dakota
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County Electronic Crimes Unit are consolidated services organizations that contribute to Rosemount’s
policing services.
Records Unit – The Police Department’s Records Unit is responsible for the processing of over 2,100
case reports each year. Reports require transcription and compilation for transmittal to the City or
County prosecutor’s office or any other agency (i.e. Social Services, Department of Human Services,
etc.) requiring information for service to the community. Records staff ensure the Police Department
is compliant with all Minnesota Bureau of Criminal Apprehension data management laws, regulations
and reporting requirements. Administrative support is provided to the entire Police Department for
gun permit applications, criminal background checks, city licensing requirements, and data requests
among others.
Patrol Operations – Uniformed patrol is the core function of the Police Department and the most
visible in the community. Through 24-hour daily patrols in marked police vehicles, patrol officers
respond to calls for service, investigate traffic accidents, regulate traffic control, conduct preliminary
criminal investigations, enforce traffic laws, enforce criminal laws, perform foot/bike patrol and provide
general and specific deterrence to crime. In addition, Patrol Officers respond to medical calls as
trained in First Aid and CPR. Through patrol operations the Police Department meets its goal of the
protection of life and property and creating a sense of safety and security in the community. Equally
important, a significant amount of time is spent developing relationships within the community and
partnering with members of community organizations. Patrol Officers perform additional specialty
assignments as Crime Scene Technicians, Use-of-Force Instructors, South Metro SWAT Tactical
Officers, Drug Recognition Experts, Special Operations Team operators (SOT), and as various
committee members (i.e. Uniform Committee, Recognition Committee, etc.).
Criminal Investigations – Patrol Officers and investigators are responsible for the investigation of
criminal incidents through evidence gathering and analysis, witness and suspect interviews, and court
preparation and testimony. Complex investigations or those requiring a multi-jurisdictional or agency
involvement are coordinated by the investigator. This is accomplished by working cooperatively with
other police agencies, the County Attorney’s Office, Dakota County Social Services, victim services
and other local, state and federal law enforcement agencies. One investigator is assigned to the
Dakota County Drug Task Force, a multi-jurisdictional joint powers entity, whose mission is to
investigate drug crimes in the City of Rosemount and throughout Dakota County.
Crime Prevention and Community Education
A significant effort is made by the Police Department to build relationships with the community to build
trust, share perspectives and create partnerships to serve the community together. Moreover, the
Police Department works to inform residents of crime within the community, methods/strategies to
help prevent crimes and keep open channels of communications to receiver input/feedback about
crime that is occurring. While these objectives are part of each officer’s daily responsibilities, there
are specific programs that are more associated with community policing; these programs emphasize
the need for the police and citizens to work together to prevent criminal activity and reduce the
opportunities for criminals to commit crimes.
School Resource Officer (SRO) – Officers serve as a liaison to the Rosemount Middle and
the Rosemount High School. One officer is assigned full-time to the High School and a
second officer spends one-quarter time at the Middle School. The liaison officers investigate
criminal incidents that occur at the schools or that involve students at the schools. In
addition, the liaisons work with the school staff to enhance the safety and security for both
staff and students, specifically providing school safety planning, and hostile event prevention
and response planning. Presentations on a variety of topics are made by the liaison to
classes at all grade levels. The Middle School officer also spends time at each of the
elementary schools, working with staff on any issues and making presentations in classes
when requested.
7
Community Resource Officer (CRO) – In order to work together with the community, the
Police Department must share information concerning criminal activity and crime prevention
with the community. While all officers are available to make presentations to community
groups and organizations on a variety of topics, the Community Resource Officer focuses on
acting as a primary liaison to the community. Several events are also held throughout the
year in an effort to build relationships with the residents and businesses. These include
Night-to-Unite block parties, Neighborhood Watch meetings, Shop with a Cop, Cops for
Kicks, Guns vs. Hoses Hockey Game, Ballin’ in Dakota County Basketball Tournament, Pink
Patch Project, Warrior 196 Run, Public Safety in the Park, and several events throughout the
annual Leprechaun Days events (i.e. Kids Dance, Police Booth, etc.). Finally, the Rosemount
Police Department also utilizes a Facebook page to inform the community on a variety of
issues surrounding the community and public safety.
Reserve Officer Program – Reserve officers are volunteers who supplement the staff of
sworn officers of the Department to serve the mission. The Reserve Officers are utilized to
handle traffic and crowd control duties at accident scenes, city festivals, community
gatherings or other emergencies. In addition, they work a variety of community events, patrol
in squads, handle calls for service such as motorist assists and animal complaints, and they
often help with prisoner transports.
Chaplain Program – The Police Chaplains assist in a variety of situations in which individuals
or families are having difficulties. Chaplains are able to provide support to persons that are
experiencing stress as a result of the death of a loved one, marital or family problems,
financial struggles or any other event. By utilizing the chaplains to console and counsel
persons in crisis, police officers are able to focus on their primary duties, while the chaplains
are able to remain with the persons involved in the crisis.
Explorer Program – Exploring is a community based, co-educational program supervised by
the local police department. The Explorer program is designed for young adults ages 14-21
that want to learn more about law enforcement. The program is part of the Boy Scouts of
America and is open to both young men and young women. Membership in the Rosemount
Police Department Explorer Post is restricted to those young people that live in Rosemount or
attend school in Rosemount. The Rosemount Police Explorer Post was formed in 2014; the
group meets twice a month to conduct post business and train in law enforcement skills. The
Explorers also take part in the statewide Explorer Conference where they compete against
other Explorer Posts in law enforcement scenarios. The Explorer Post is an opportunity for
youth of our community to become exposed to law enforcement and enhance our overall
community relationship.
Adult Citizen Academy Program – The Adult Citizen Academy has been a project of the
Rosemount Police Department for the past 9 years. In 2018, the Rosemount Police
Department partnered with the Apple Valley Police Department to conduct an Adult Citizen
Academy. It is a way to offer those who live or work in Rosemount an inside look at the
operation of their police department. It also allows them an opportunity to meet the officers
who serve them. The academy covers topics such as recruiting, ethics, criminal
investigations, the charging process, drug task force, use of force, traffic enforcement,
forensics, and includes a citizen ride-along with a patrol officer. As such, it helps fulfill the
department’s educational mission.
Teen Citizen Academy Program – In 2018 the Rosemount Police Department partnered with
the Apple Valley Police Department to conduct a Teen Citizen Academy. The academy
covers topics similar to the Adult Citizen Academy, but it is geared towards teens.
Animal Control – The Police Department is responsible for the enforcement of ordinances related to
the control and care of domestic animals. These tasks are mainly handled by Community Service
Officers. Their duties include the licensing of animals and handling any animal-related issues that
arise.
Mayor & City CouncilCity AdministratorAssistant City AdministratorCity ClerkCommunications CoordinatorHR CoordinatorCommunity Development DirectorInspection Secretaries (2)Planning & Personnel SecretarySenior PlannerPlannerGIS AnalystBuilding Official/Fire MarshallBuilding Inspectors (2)Finance DirectorIT CoordinatorIT SpecialistAccounting SupervisorAccountantPayroll ClerkAccounts Payable ClerkUtility Billing Clerks (2)Parks and Recreation DirectorSecretaryCSRRecreation Supervisors (2)Recreation CoordinatorSeasonal WorkersRental CoordinatorParks SupervisorRecreation Facilities ManagerBuilding AttendantsBuilding Maintenance Workers (3)Director of Public Works/City EngineerPW SupervisorPW Mechanics (2)Crew Leads (3)Public Works CoordinatorAssistant City EngineerPW SecretarySr. EngineeringTechnicianChief of PoliceCommanderSergeants (5)Officers (13)Detectives (2)Community Resource OfficerSchool Resource OfficerDrug Task Force AgentCSOs (2 PT)Reserve OfficersRecords SupervisorSecretaries (2 FT)Fire ChiefFire Prevention / EducationSafety CoordinatorAssistant Fire ChiefTraining CoordinatorCaptainsLieutenantsFirefightersSecretaryCity AttorneyCitizen Advisory CommissionsCity of RosemountOrganizational Chart10
CITY OF ROSEMOUNT
CITY OFFICIALS
As of and for the Year Ended December 31, 2018
11
Term of Office Term Expires
ELECTED OFFICIALS:
Mayor Bill Droste Four Years December 31, 2022
Council member Mark DeBettignies Four Years December 31, 2018
Council member Heidi Freske Four Years December 31, 2020
Council member Shaun Nelson Four Years December 31, 2018
Council member Jeff Weisensel Four Years December 31, 2020
APPOINTED OFFICIALS:
City Administrator Logan Martin
Finance Director Jeffrey A. May
Assistant City Administrator Emmy Foster
City Engineer/Public Works Director Brian Erickson
Community Development Director Kim Lindquist
Police Chief Mitchell Scott
Fire Chief Richard Schroeder
Parks and Recreation Director Dan Schultz
CONSULTANTS AND ADVISORS:
Legal Kennedy & Graven
Fluegel Law Firm, P.A.
Auditing Baker Tilly Virchow Krause, LLP
Malloy, Montague, Karnowski, Radosevich & Co., PA
Fiscal Springsted, Inc.
Ehlers & Associates, Inc.
Engineering WSB & Associates
Short, Elliot, Hendrickson, Inc. (SEH)
KLM Engineering
Bolton & Menk, Inc.
ISG
Oertel Architects, Ltd.
Black & Veatch
TKDA
Barr Engineering Co.
Stantec Inc.
Donahue & Associates, Inc.
SRF Consulting Group, Inc.
Houston Engineering, Inc.
Sunde Engineering, PLLC
Advanced Engineering and Environmental Services, Inc. (AE2S)
Emmons & Olivier Resources, Inc.
Evergreen Land Services Company
Braun Intertec Co.
American Engineering Testing, Inc.
Wold Architects and Engineers
12
INDEPENDENT AUDITOR’S REPORT
To the City Council and Management
City of Rosemount, Minnesota
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Rosemount,
Minnesota (the City) as of and for the year ended December 31, 2018, and the related notes to the
financial statements, which collectively comprise the City’s basic financial statements as listed in the
table of contents.
MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express opinions on these financial statements based on our audit . We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error .
In making those risk assessments, the auditor considers internal control relevant to the City’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
(continued)
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1
13
OPINIONS
In our opinion, the financial statements referred to on the previous page present fairly, in all material
respects, the respective financial position of the governmental activities, the business-type activities, each
major fund, and the aggregate remaining fund information of the City as of December 31, 201 8, and the
respective changes in financial position, and, where applicable, cash flows thereof, for the year then
ended, in accordance with accounting principles generally accepted in the United States of America.
EMPHASIS OF MATTER
The City has implemented Governmental Accounting Standards Board (GASB) Statement No. 75,
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, during the year
ended December 31, 2018. Our opinion is not modified with respect to this matter.
OTHER MATTERS
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis and the required supplementary information (RSI), as listed in the table of
contents, be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the GASB, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, econ omic, or
historical context. We have applied certain limited procedures to the RSI in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial state ments that collectively
comprise the City’s basic financial statements. The introductory section, supplementary information, and
statistical section, as listed in the table of contents, are presented for purposes of additional analysis and
are not required parts of the basic financial statements.
The supplementary information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the supplementary
information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the
audit of the basic financial statements and, accordingly, we do not express an opinion or provide any
assurance on them.
(continued)
14
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 7, 2019 on
our consideration of the City’s internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose
of that report is solely to describe the scope of our testing of internal control over f inancial reporting and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the City’s internal control
over financial reporting and compliance.
Minneapolis, Minnesota
May 7, 2019
THIS PAGE INTENTIONALLY LEFT BLANK
Page 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Unaudited)
As management of the City of Rosemount (the City), we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended
December 31, 2018. We encourage readers to consider the information presented here in conjunction
with the letter of transmittal and the City’s financial statements following this section.
Financial Highlights
> The assets and deferred outflows of resources of the City exceeded its liabilities and deferred
inflows of resources at the close of the most recent fiscal year by $227,771,772 (net position). Of
this amount, $41,591,167 (unrestricted net position) may be used to meet the government's
ongoing obligations to citizens and creditors.
> The City's total net position increased by $11,386,618. This increase is partially attributable to an
increase in capital assets funded by grants or developers.
> At year end, unassigned fund balance for the General Fund was $7,503,588, or 55 percent of the
total General Fund expenditures budgeted for the upcoming year. Comparison of this balance to
prior years’ balances is illustrated on the table on page 21.
> The City's total bonded debt decreased by $950,000 (approximately 8%) during the current year.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide financial statements
The government-wide financial statements are designed to provide readers with a broad overview of the
City's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City's assets, liabilities, and deferred
outflows/inflows of resources, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is
improving or deteriorating.
The statement of activities presents information showing how the government's net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned/vested but unused vacation and sick leave).
Page 16
Both the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that
are intended to recover all or a significant portion of their costs through user fees and charges (business-
type activities). The governmental activities of the City include general government; public safety; public
works; culture, education and recreation; and conservation and economic development. The business-
type activities of the City include water, sewer, storm water and an arena.
The government-wide financial statements include not only the City itself, but also a legally separate port
authority, which functions as the economic development arm of the City, and therefore has been blended
in with the primary government.
The government-wide financial statements can be found on pages 25-26 of this report.
Fund financial statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the
funds of the City can be divided into two categories: governmental funds and proprietary funds.
Governmental funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on the near-term inflows and outflows of
spendable resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government's near-term financing
decisions. Both the governmental fund balance sheet and governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between
governmental funds and governmental activities.
Information is presented separately in the governmental fund balance sheet and in the governmental fund
statement of revenues, expenditures, and changes in fund balances for the general fund, debt service
fund, capital projects fund, and the Port Authority TIF fund all of which are considered major funds. Data
from the four other governmental funds are combined into a single, aggregated presentation. Individual
fund data for each of these nonmajor governmental funds is provided in the form of combining statements
elsewhere in this report.
The City adopts an annual appropriated budget for its general fund. A budgetary comparison schedule
has been provided for the general fund to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 27-29 of this report.
Page 17
Proprietary funds
The City maintains two different types of proprietary funds. Enterprise funds are used to report the same
functions presented as business-type activities in the government-wide financial statements. The City
uses enterprise funds to account for its public utilities and ice arena operations. The internal service fund
is an accounting device to accumulate and allocate costs internally among the City's various functions.
The City uses its internal service fund to account for insurance premiums and deductibles and to
accumulate resources for the risk of uninsured loss. Because this service predominantly benefits
governmental rather than business-type functions, it has been included within governmental activities in
the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for each of the
public utilities, which are considered to be major funds of the City, and information on the ice arena fund,
which is considered a non-major fund. The internal service fund is also presented separately in the
proprietary fund financial statements.
The basic proprietary fund financial statements can be found on pages 30-33 of this report.
Notes to the financial statements
The notes provide additional information that is essential to a full understanding of the data provided in
the government-wide and fund financial statements. The notes to the financial statements can be found
on pages 34-75 of this report.
Other information
Required supplementary information is included on pages 76-87. The combining statements referred to
earlier in connection with nonmajor governmental funds are presented following the basic financial
statements. Combining and individual fund statements and schedules can be found on pages 88-92 of
this report. Lastly, the statistical section is included on pages 93-111.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government's financial
position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and
deferred inflows of resources by $227,771,772 at the close of the most recent fiscal year.
The largest portion of the City's net position (78 percent) reflects its investment in capital assets (e.g.,
land, buildings, machinery and equipment, infrastructure) less any related debt used to acquire those
assets that is still outstanding. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City's investment in capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt
must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
Page 18
City’s Statement of Net Position
Governmental Business-Type 2018 Governmental Business-Type 2017
Activities Activities Totals Activities Activities Totals
Current and other assets $ 34,288,550 $ 28,479,652 $ 62,768,202 $ 32,065,803 $ 25,867,407 $ 57,933,210
Capital assets 90,702,459 99,328,731 190,031,190 85,146,896 98,152,008 183,298,904
Total assets 124,991,009 127,808,383 252,799,392 117,212,699 124,019,415 241,232,114
Deferred outflows of resources 3,883,646 224,507 4,108,153 4,895,322 275,410 5,170,732
Long-term liabilities outstanding 17,542,032 2,593,679 20,135,711 17,756,884 2,912,339 20,669,223
Other liabilities 2,295,743 251,542 2,547,285 2,277,996 338,443 2,616,439
Total liabilities 19,837,775 2,845,221 22,682,996 20,034,880 3,250,782 23,285,662
Deferred inflows of resources 6,237,242 215,535 6,452,777 6,537,358 194,672 6,732,030
Net position:
Net investment in capital
assets
80,094,490
97,977,645
178,072,135
74,294,033
97,328,281
171,623,314
Restricted 8,108,470 - 8,108,470 7,151,722 - 7,151,722
Unrestricted 14,596,678 26,994,489 41,591,167 14,090,028 23,521,090 37,611,118
Total net position $ 102,799,638 $ 124,972,134 $ 227,771,772 $ 95,535,783 $ 120,849,371 $ 216,385,154
An additional portion of the City’s net position ($8,108,470 or 4%) represents resources that are subject to
external restrictions on how they may be used. The remaining balance representing unrestricted net
position ($41,591,167) may be used to meet the government’s ongoing obligations to citizens and
creditors.
At the end of the current fiscal year, the City is able to report positive balances in all three categories of
net position, both for the government as a whole, as well as for its separate governmental and business-
type activities.
Governmental activities
Governmental activities increased the City’s net position by $7,263,855, accounting for approximately
64% of the total growth in the government’s net position. This compares to an increase (from
governmental activities) of $5,379,492 in 2017. Net transfers to governmental activities from business-
type activities decreased $2,269,398 from 2017. Revenues increased by nearly $3,430,000 mainly
related to charges for services and capital grants and contributions in 2018. Total expenses decreased
from 2017 and the net effect was the increase in net position of $7,263,855.
Business-type activities
Business-type activities increased the City’s net position by $4,122,763 accounting for approximately
36% of the total growth in the government’s net position. This compares to an increase of $387,627 in
2017. The primary reason for the change in net position compared to the prior year change was due to
increases in net transfers from governmental activities to business-type activities and charges for
services. Net transfers from governmental activities to business-type activities were $2,269,398 more
than the prior year. An increase in capital grants and contributions also contributed to the change in net
position of business-type activities.
Page 19
Elements of these changes are as follows:
City’s Changes in Net Position
Governmental Business-
Type
2018
Governmental Business-
Type
2017
Activities Activities Totals Activities Activities Totals
Revenues:
Program revenues:
Charges for services $ 5,791,082 $ 8,349,018 $ 14,140,100 $ 4,300,745 $ 7,303,317 $ 11,604,062
Operating grants and contributions 460,756 58,411 519,167 436,995 84,042 521,037
Capital grants and contributions 5,087,725 1,345,372 6,433,097 3,578,760 631,370 4,210,130
General revenues:
Property taxes 12,728,778 - 12,728,778 12,317,625 - 12,317,625
Other taxes 400,551 - 400,551 366,745 - 366,745
Interest earnings 391,991 438,095 830,086 307,497 295,867 603,364
Change in fair value of investments (63,299) (33,367) (96,666) (20,104 ) (26,236) (46,340)
Miscellaneous 89,672 - 89,672 171,294 - 171,294
Total revenues 24,887,256 10,157,529 35,044,785 21,459,557 8,288,360 29,747,917
Expenses:
General government 3,605,197 - 3,605,197 3,859,090 - 3,859,090
Public safety 5,235,993 - 5,235,993 5,170,637 - 5,170,637
Public works 5,163,908 - 5,163,908 5,822,738 - 5,822,738
Culture, education and recreation 2,119,418 - 2,119,418 2,042,299 - 2,042,299
Conservation and economic development 61,637 - 61,637 4,315 - 4,315
Interest and fiscal charges 295,431 - 295,431 308,567 - 308,567
Water - 2,156,694 2,156,694 - 2,175,626 2,175,626
Sewer - 3,029,482 3,029,482 - 2,837,550 2,837,550
Storm water - 1,330,580 1,330,580 - 1,275,073 1,275,073
Arena - 659,827 659,827 - 484,903 484,903
Total expenses 16,481,584 7,176,583 23,658,167 17,207,646 6,773,152 23,980,798
Increase in net position
before transfers
8,405,672 2,980,946 11,386,618
4,251,911 1,515,208 5,767,119
Transfers (1,141,817) 1,141,817 - 1,127,581 (1,127,581) -
Increase in net position 7,263,855 4,122,763 11,386,618 5,379,492 387,627 5,767,119
Net position – Beginning of Year 95,535,783 120,849,371 216,385,154 90,156,291 120,461,744 210,618,035
Net position – End of Year $ 102,799,638 $ 124,972,134 $ 227,771,772 $ 95,535,783 $ 120,849,371 $ 216,385,154
Page 20
Expenses and Program Revenues – Governmental Activities
Expenses and Program Revenues – Business-Type Activities
Financial Analysis of the Government’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
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, unassigned fund balance may serve as a useful measure of a government’s
net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $26,895,564, an increase of $1,450,121 in comparison with the prior year. $7,503,588
constitutes unassigned fund balance, which is available for spending at the government’s discretion (this
amount is entirely in the General Fund and is typically available to meet cash flow needs). A small
amount ($34,032) is classified as nonspendable in regards to prepaid items, $5,375,931 is classified as
restricted to meet debt service requirements or relates to donations for capital projects, and the remainder
of the fund balance is considered to be committed or assigned and unavailable for discretionary
spending.
0
1
2
3
4
5
6
General government Public safety Public works Culture, education,
and recreation
Conservation and
economic
development
Interest and fiscal
charges
Millions
Expenses
Revenue
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Water Sewer Storm water Arena
Millions
Expenses
Revenue
Page 21
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned
fund balance of the General Fund was $7,503,588, while total fund balance reached $9,995,409. The
following table shows year-end General Fund balances as compared to the adopted expenditure budget
of the following year:
Fund Balance
Year Budget Amount Percent of Next Budget
2009 $ 10,384,800 $ 5,693,475 55%
2010 10,466,000 5,731,123 55%
2011 10,480,400 5,700,071 54%
2012 10,531,800 5,905,056 55%
2013 10,728,600 6,001,628 54%
2014 11,098,600 6,288,615 55%
2015 11,423,500 6,506,697 55%
2016 11,835,528 6,918,833 56%
2017 12,392,700 7,333,743 56%
2018 13,086,400 7,503,588 55%
2019 13,702,700
During the current fiscal year, unassigned fund balance in the General Fund increased by $169,845. The
increase was intentional as the City has determined, through the adoption of a formal Fund Balance
Policy, it would like to maintain an unassigned fund balance of 55 percent of the next General Fund
operating expenditure budget. Forty to fifty percent normally provides adequate working capital to finance
General Fund operations until property taxes and state aids are received. The desired unassigned fund
balance level also provides a certain amount of comfort that unforeseen emergencies can be addressed
without causing an immediate financial crisis.
As of December 31, 2018, 100 percent of the unassigned fund balance of the General Fund is available
to meet working capital needs.
The debt service fund balance increased by $226,257 due to an increase in special assessments. The
capital projects fund balance increased by $495,632 due to debt issues and transfers in compared to
actual capital expenditures (mostly related to timing of collections and expenditures). The Port Authority
TIF fund balance increased by $270,306 due to decreases in interest and fiscal charges.
Page 22
Revenues by Source – Governmental Funds
Proprietary funds
The City’s proprietary funds provide the same type of information found in the government-wide
statements, but in more detail.
Unrestricted net position of the utility funds at the end of the year amounted to $26,649,388 while the
arena fund had an unrestricted net position amounting to $345,101. The increase in total net position for
the utility funds was $4,203,682 after $2,581,967 from private entities (i.e. developers) as well as net
transfers out of $221,278. The decrease in total net position for the arena fund was $80,919, which
included net transfers in of $126,500.
Revenues by Source – Proprietary Funds
Taxes
53.6%
Intergovernmental
6.5%
Public charges for
services
20.1%
Licenses and
permits
3.7%
Fines and
forfeitures
0.4%
Special
assessments
7.9%
Investment income
and miscellaneous
7.8%
Charges for services
64.1%
Water meters
1.0%
Connection fees
25.7%
Intergovernmental
0.6%
Investment and
miscellaneous
income
4.6%
Surcharges and
penalties
4.0%
Page 23
General Fund Budgetary Highlights
There were a few slight variances between final budgeted revenues and actual amounts. License and
permit revenues exceeded budget by approximately $155,000 because of more activity than expected.
Public charges for services exceeded budget by approximately $221,000 due mostly to higher than
expected collections for highway & street revenues and a one-time payment for landscaping revenues
from SKB. State aid intergovernmental revenues exceeded budget by approximately $66,000 mainly due
to the collection of several small grants and a larger than expected payment for Police State Aid. Interest
revenues were approximately $44,000 higher than budgeted because of improving market conditions. All
other revenue areas experienced either small surpluses or deficits that led to the final surplus amount.
Overall, total expenditures and other financing uses were right at budget after the adjustment to meet the
55% fund balance number with most departments being slightly less than budget and a few being just
slightly over budget. The change between the original and final budget included minor Council approved
adjustments primarily for donations.
Capital Asset and Debt Administration
Capital assets
The City’s investment in capital assets for its governmental and business-type activities as of
December 31, 2018, amounts to $190,031,190 (net of accumulated depreciation). This investment in
capital assets includes land, buildings and structures, machinery and equipment, water, sewer, and storm
water systems, infrastructure and construction in progress.
City of Rosemount’s Capital Assets
(net of depreciation)
Governmental Business-Type
Activities Activities Totals
Land $ 8,079,024 $ 2,728,077 $ 10,807,101
Land improvements (not depreciable) 2,647,412 - 2,647,412
Land improvements (depreciable) 4,117,807 - 4,117,807
Buildings 17,358,045 12,110,980 29,469,025
Machinery and equipment 13,057,128 4,311,000 17,368,128
Infrastructure:
Other 209,037 - 209,037
Roads 62,922,018 - 62,922,018
Bridges 2,034,591 - 2,034,591
Parking lots 1,358,831 - 1,358,831
Mains and lines and other
improvements - 142,190,832 142,190,832
Construction in progress 8,204,992 181,450 8,386,442
Accumulated depreciation (29,286,426) (62,193,608) (91,480,034)
Total capital assets $ 90,702,459 $ 99,328,731 $ 190,031,190
Additional information on the City's capital assets can be found in Note IV.C. on pages 51-52 of this
report.
Page 24
Long-term debt
At the end of the current fiscal year, the City had total bonded debt outstanding of $11,395,000 (including
debt recorded in the Port Authority). Of this amount, $3,430,000 was for general obligation improvement
debt which has financed special assessment construction as part the continuing development within the
City. An additional $5,635,000 was general obligation debt issued by the Port Authority which financed
the City's economic development and redevelopment programs. Another $1,255,000 was general
obligation revenue bond debt issued to add to and improve the water utility system within the City. The
remaining $1,075,000 was general obligation refunding debt (for Fire Station 2).
The City's total debt decreased by $950,000 (approximately 8%) during the current year.
Cities in Minnesota may issue general obligation debt up to a maximum of three percent of the total
estimated market value of property within the City, per state statutes. The current debt limit for the City is
$77,673,046. Of the City's $11,395,000 in outstanding general obligation debt at the current fiscal year
end, $1,075,000 is subject to the restrictions placed by state statute.
The City received a S&P Global Ratings bond rating of AA+ for bonds issued in 2018, maintaining the
2017 S&P rating. This rating amounts to a rating upgrade from our Aa2 Moody’s rating for previously
issued debt. These excellent ratings have had a positive effect on the sale of the City’s bonds.
Additional information on the City's long-term debt can be found in Note IV.E. on pages 54-56 of this
report.
Economic Factors
> Dakota County's unemployment rate ended the year at 2.6 percent, which compares favorably
with the state unemployment rate of 3.2 percent, and the national unemployment rate of 3.7
percent.
> City building permits were up significantly in quantity and in value in 2018, as compared to 2017.
A total of 3,503 permits with a total valuation of $87,287,105 were issued in 2018.
Requests for Information
This financial report is designed to provide a general overview of the City's finances for all those with an
interest in the government's finances. Questions concerning any of the information provided in this report
or requests for additional information should be addressed to the Finance Director, City of Rosemount,
2875 145th Street West, Rosemount, Minnesota 55068-4997.
Business-
Governmental Type
Activities Activities Totals
ASSETS
Cash and investments 28,702,883$ 26,587,009$ 55,289,892$
Receivables
Taxes 651,503 - 651,503
Delinquent taxes 62,117 - 62,117
Accounts 357,604 1,319,329 1,676,933
Special assessments 1,867,778 239,878 2,107,656
Due from other governmental units 721,524 167,376 888,900
Prepaid items 342,006 166,060 508,066
Net pension asset 1,583,135 - 1,583,135
Capital assets
Land 8,079,024 2,728,077 10,807,101
Non-depreciable land improvements 2,647,412 - 2,647,412
Construction in progress 8,204,992 181,450 8,386,442
Other capital assets, net of depreciation/amortization 71,771,031 96,419,204 168,190,235
Total Assets 124,991,009 127,808,383 252,799,392
DEFERRED OUTFLOWS OF RESOURCES
Other postemployment benefit related amounts 39,530 5,208 44,738
Pension related amounts 3,844,116 219,299 4,063,415
Total Deferred Outflows 3,883,646 224,507 4,108,153
LIABILITIES
Accounts payable 1,285,943 159,195 1,445,138
Accrued payroll and payroll taxes 237,140 78,412 315,552
Other accrued liabilities and deposits 772,660 13,935 786,595
Noncurrent liabilities
Due within one year 1,998,314 251,784 2,250,098
Due in more than one year 9,632,257 1,307,737 10,939,994
Net pension liability 5,199,026 940,306 6,139,332
Other postemployment benefits liability 712,435 93,852 806,287
Total Liabilities 19,837,775 2,845,221 22,682,996
DEFERRED INFLOWS OF RESOURCES
Contributions received for subsequent year 950,457 - 950,457
Pension related amounts 5,286,785 215,535 5,502,320
Total Deferred Inflows of Resources 6,237,242 215,535 6,452,777
NET POSITION
Net investment in capital assets 80,094,490 97,977,645 178,072,135
Restricted for debt service 6,478,370 - 6,478,370
Restricted for pensions 1,583,135 - 1,583,135
Restricted PEG fees 46,965 - 46,965
Unrestricted 14,596,678 26,994,489 41,591,167
TOTAL NET POSITION 102,799,638$ 124,972,134$ 227,771,772$
CITY OF ROSEMOUNT
STATEMENT OF NET POSITION
As of December 31, 2018
See accompanying notes to financial statements.
25
Program RevenuesOperating CapitalCharges for Grants and Grants and Governmental Business-TypeFunctions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotalsPrimary Government: Governmental activities: General government 3,605,197$ 4,226,249$ -$ -$ 621,052$ -$ 621,052$ Public safety 5,235,993 136,077 384,207 16,632 (4,699,077) - (4,699,077) Public works 5,163,908 107,057 42,960 4,819,520 (194,371) - (194,371) Culture, education and recreation 2,119,418 1,321,699 3,326 250,973 (543,420) - (543,420) Conservation and economic development 61,637 - 30,263 600 (30,774) - (30,774) Interest and fiscal charges 295,431 - - - (295,431) - (295,431) Total Governmental Activities 16,481,584 5,791,082 460,756 5,087,725 (5,142,021) - (5,142,021) Business-Type activities Water2,156,694 3,567,275 58,411 402,788 - 1,871,780 1,871,780 Sewer3,029,482 2,351,986 - 417,279 - (260,217) (260,217) Storm water 1,330,580 1,981,312 - 525,305 - 1,176,037 1,176,037 Arena659,827 448,445 - - - (211,382) (211,382) Total Business-Type Activities 7,176,583 8,349,018 58,411 1,345,372 - 2,576,218 2,576,218 Total Primary Government 23,658,167$ 14,140,100$ 519,167$ 6,433,097$ (5,142,021) 2,576,218 (2,565,803) General revenues: Taxes Property taxes, levied for general purposes 11,520,992 - 11,520,992 Property taxes, levied for debt service 1,207,786 - 1,207,786 Other taxes 400,551 - 400,551 Interest earnings 391,991 438,095 830,086 Change in fair value of investments (63,299) (33,367) (96,666) Miscellaneous 89,672 - 89,672 Transfers (1,141,817) 1,141,817 - Total general revenues and transfers 12,405,876 1,546,545 13,952,421 Change in net position7,263,855 4,122,763 11,386,618 NET POSITION - Beginning 95,535,783 120,849,371 216,385,154 NET POSITION - ENDING102,799,638$ 124,972,134$ 227,771,772$ Primary GovernmentChanges in Net PositionNet (Expense) Revenue and CITY OF ROSEMOUNTSTATEMENT OF ACTIVITIESFor the Year Ended December 31, 2018See accompanying notes to financial statements.26
Port Nonmajor Total
Authority Governmental Governmental
General Debt Service Capital Projects TIF Funds Funds
ASSETS
Cash and investments 10,656,356$ 3,293,629$ 12,220,171$ 2,118,132$ 270,125$ 28,558,413$
Receivables from:
Taxes 712,391 - - 1,229 - 713,620
Accounts 101,094 - 248,698 - 7,812 357,604
Special assessments 18,187 1,285,618 563,204 - - 1,867,009
Delinquent special assessments - - 769 - - 769
Due from other governmental units 7,457 - 714,067 - - 721,524
Prepaid items 33,484 - - - 548 34,032
TOTAL ASSETS 11,528,969$ 4,579,247$ 13,746,909$ 2,119,361$ 278,485$ 32,252,971$
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
Liabilities
Accounts payable 610,239$ -$ 666,738$ -$ 7,353$ 1,284,330$
Accrued payroll and payroll taxes 237,140 - - - - 237,140
Deposits payable 523,995 - 112,591 - - 636,586
Total Liabilities 1,371,374 - 779,329 - 7,353 2,158,056
Deferred Inflows of Resources
Unavailable revenue 162,186 1,285,478 801,230 - - 2,248,894
Contributions received for subsequent year - 84,164 866,293 - - 950,457
Total Deferred Inflows of Resources 162,186 1,369,642 1,667,523 - - 3,199,351
Fund Balances
Nonspendable 33,484 - - - 548 34,032
Restricted - 3,209,605 - 2,119,361 46,965 5,375,931
Committed - - - - 223,619 223,619
Assigned 2,458,337 - 11,300,057 - - 13,758,394
Unassigned 7,503,588 - - - - 7,503,588
Total Fund Balances 9,995,409 3,209,605 11,300,057 2,119,361 271,132 26,895,564
TOTAL LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES 11,528,969$ 4,579,247$ 13,746,909$ 2,119,361$ 278,485$
Amounts reported for governmental activities in the statement of net position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 90,702,459
Some receivables that are not currently available are reported as deferred inflows of resources in the fund financial
statements but are recognized as revenue when earned in the government-wide statements. 2,248,894
Internal service funds are reported in the statement of net position as governmental activities. 450,831
The net pension asset does not relate to current financial resources and is not reported in the governmental funds. 1,583,135
The net pension liability does not relate to current financial resources and is not reported in the governmental funds. (5,199,026)
Deferred outflows of resources related to pensions do not relate to current financial resources and is not reported
in the governmental funds.3,844,116
Deferred inflows of resources related to pensions do not relate to current financial resources and is not reported
in the governmental funds.(5,286,785)
The other postemployment benefits liability does not relate to current financial resources and is not reported
in the governmental funds.(712,435)
Deferred outflows of resources related to other postemployment benefits do not relate to current financial resources and is not reported
in the governmental funds.39,530
Some liabilities, including long-term debt, are not due and payable in the current period and, therefore, are not
reported in the funds. See Note II.A.(11,766,645)
NET POSITION OF GOVERNMENTAL ACTIVITIES 102,799,638$
CITY OF ROSEMOUNT
BALANCE SHEET - GOVERNMENTAL FUNDS
As of December 31, 2018
See accompanying notes to financial statements.
27
Port Nonmajor Total
Authority Governmental Governmental
General Debt Service Capital Projects TIF Funds Funds
REVENUES
Taxes 10,148,566$ 344,681$ 1,407,900$ 863,105$ 85,076$ 12,849,328$
Intergovernmental 460,756 - 1,110,091 - - 1,570,847
Public charges for services 1,738,573 - 3,043,368 - 29,435 4,811,376
Licenses and permits 884,165 - - - - 884,165
Fines and forfeitures 94,281 - - - - 94,281
Special assessments 137 1,053,239 842,289 - - 1,895,665
Interest earnings 191,618 13,666 169,363 13,605 - 388,252
Change in fair value of investments (26,946) - (36,353) - - (63,299)
Donations/contributions - - 1,992 - - 1,992
Miscellaneous 89,196 - 1,468,329 - 1,535 1,559,060
Total Revenues 13,580,346 1,411,586 8,006,979 876,710 116,046 23,991,667
EXPENDITURES
Current:
General government 2,972,769 - 7,500 161,617 - 3,141,886
Public safety 4,651,700 - - - - 4,651,700
Public works 3,525,071 - - - - 3,525,071
Parks and recreation 1,663,618 - - - - 1,663,618
Conservation and economic development - - - - 73,383 73,383
Capital Outlay 454 - 8,853,031 - 23,896 8,877,381
Debt Service:
Principal retirement - 1,140,000 31,727 255,000 - 1,426,727
Interest and fiscal charges - 112,329 35,291 189,787 - 337,407
Total Expenditures 12,813,612 1,252,329 8,927,549 606,404 97,279 23,697,173
Excess (deficiency) of revenues
over expenditures 766,734 159,257 (920,570) 270,306 18,767 294,494
OTHER FINANCING SOURCES (USES)
Issuance of long-term debt - - 835,000 - - 835,000
Premium on long-term debt - - 83,871 - - 83,871
Lease proceeds - - 276,848 - - 276,848
Sale of capital assets - - 68,130 - - 68,130
Transfers in 5,425 67,000 154,278 - - 226,703
Transfers out (333,000) - (1,925) - - (334,925)
Total Other Financing Sources (Uses)(327,575) 67,000 1,416,202 - - 1,155,627
Net Change in Fund Balances 439,159 226,257 495,632 270,306 18,767 1,450,121
FUND BALANCES - Beginning 9,556,250 2,983,348 10,804,425 1,849,055 252,365 25,445,443
FUND BALANCES - ENDING 9,995,409$ 3,209,605$ 11,300,057$ 2,119,361$ 271,132$ 26,895,564$
CITY OF ROSEMOUNT
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2018
See accompanying notes to financial statements.
28
CITY OF ROSEMOUNT
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended December 31, 2018
Net change in fund balances - total governmental funds 1,450,121$
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of net position the cost of these assets is capitalized and they are
depreciated over their estimated useful lives with depreciation expense reported
in the statement of activities.
Capital outlay is reported as an expenditure in the fund financial statements
but is capitalized in the government-wide financial statements 8,877,381
Some items reported as current expenditures but capitalized 417,331
Capital contributions from external parties 156,726
Depreciation is reported in the government-wide statements (2,558,477)
Utility infrastructure constructed by capital projects funds not reported
as governmental activities (1,236,595)
In the statement of activities, the loss of ($32,673) on the disposal of
capital assets is reported. In the fund financial statements, proceeds from the sale
of capital assets ($68,130) are reported because the proceeds increase
financial resources (100,803)
Internal service funds are reported in the statement of activities. 65,173
Receivables not currently available are reported as unavailable revenue in the fund financial
statements but are recognized as revenue when earned in the government-wide
financial statements.456,315
Issuing debt provides current financial resources to governmental funds, but issuing
debt increases long-term liabilities in the statement of net position. This is the amount of
debt issued during the year.(1,111,848)
Repayment of debt principal is an expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the statement of net position. This is the amount
of principal payments paid.1,426,727
Governmental funds report the effect of premiums and discounts, and similar
items when debt is first issued, whereas these amounts were amortized in the
statement of activities.(69,985)
Some expenses in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in the governmental funds. This is the change in the following liabilities.
Compensated absences (40,939)
Accrued interest on debt (6,064)
Net pension liability 723,332
Net other post employment benefits liability (712,435)
Net pension asset 336,501
Deferred outflows of resources related to pensions (1,051,206)
Deferred inflows of resources related to pensions 203,070
Deferred outflows of resources related to other post employment benefits 39,530
CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 7,263,855$
See accompanying notes to financial statements.
29
Governmental
Activities -
Storm Non-major Internal Service
Water Sewer Water Arena Totals Fund
ASSETS
Current Assets
Cash and investments 10,831,635$ 6,831,894$ 8,388,956$ 534,524$ 26,587,009$ 144,470$
Accounts receivable 486,737 471,928 335,589 25,075 1,319,329 -
Special assessments receivable 110,893 86,859 42,126 - 239,878 -
Due from other governments 58,410 - 108,966 - 167,376 -
Prepaid and other assets 17,712 129,351 10,468 8,529 166,060 307,974
Total Current Assets 11,505,387 7,520,032 8,886,105 568,128 28,479,652 452,444
Noncurrent Assets
Property and equipment:
Land 1,008,628 547,158 1,172,291 - 2,728,077 -
Construction in progress 181,450 - - - 181,450 -
Buildings 7,820,143 401,414 1,489,523 2,399,900 12,110,980 -
Machinery and equipment 2,496,471 762,452 874,729 177,348 4,311,000 -
Mains and lines 23,914,164 20,816,439 30,971,564 - 75,702,167 -
Other improvements 17,026,077 36,927,459 12,535,129 - 66,488,665 -
Less accumulated depreciation (17,314,354) (31,798,484) (11,856,493) (1,224,277) (62,193,608) -
Net Property and Equipment 35,132,579 27,656,438 35,186,743 1,352,971 99,328,731 -
Total Assets 46,637,966 35,176,470 44,072,848 1,921,099 127,808,383 452,444
DEFERRED OUTFLOWS OF RESOURCES
Other postemployment benefit related amounts 1,770 1,759 910 769 5,208
Pension related amounts 74,013 73,938 36,484 34,864 219,299 -
Total Deferred Outflows 75,783 75,697 37,394 35,633 224,507 -
LIABILITIES
Current Liabilities
Accounts payable 102,991 10,198 17,552 28,454 159,195 1,613
Accrued payroll and payroll taxes 45,094 14,894 10,825 7,599 78,412 -
Accrued interest 13,935 - - - 13,935 -
Current portion of long term obligations 187,582 35,771 14,534 13,897 251,784 -
Total Current Liabilities 349,602 60,863 42,911 49,950 503,326 1,613
Noncurrent Liabilities
Net pension liability 323,265 323,254 149,020 144,767 940,306 -
General obligation debt 1,175,834 - - - 1,175,834 -
Lease obligations 23,517 - - - 23,517 -
Other postemployment benefits liability 31,894 31,710 16,396 13,852 93,852 -
Accrued compensated absences 38,834 38,752 15,746 15,054 108,386 -
Total Noncurrent Liabilities 1,593,344 393,716 181,162 173,673 2,341,895 -
Total Liabilities 1,942,946 454,579 224,073 223,623 2,845,221 1,613
DEFERRED INFLOWS OF RESOURCES
Pension related amounts 73,193 73,182 34,123 35,037 215,535 -
NET POSITION
Net investment in capital assets 33,781,493 27,656,438 35,186,743 1,352,971 97,977,645 -
Unrestricted 10,916,117 7,067,968 8,665,303 345,101 26,994,489 450,831
TOTAL NET POSITION 44,697,610$ 34,724,406$ 43,852,046$ 1,698,072$ 124,972,134$ 450,831$
CITY OF ROSEMOUNT
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
As of December 31, 2018
Business-Type Activities - Enterprise Funds
See accompanying notes to financial statements.
30
Governmental
Activities -
Storm Non-major Internal Service
Water Sewer Water Arena Totals Funds
OPERATING REVENUES
Charges for services 2,019,076$ 1,899,162$ 1,279,720$ 448,445$ 5,646,403$ -$
Surcharges and penalties 322,318 15,175 11,627 - 349,120 -
Water meters 87,294 - - - 87,294 -
Miscellaneous 117 58 29 - 204 -
Total Operating Revenues 2,428,805 1,914,395 1,291,376 448,445 6,083,021 -
OPERATING EXPENSES
Personnel services 562,407 560,212 289,482 248,528 1,660,629 -
Supplies 208,317 22,820 18,524 23,714 273,375 14,281
Professional services and charges 76,176 15,001 43,984 41,818 176,979 38,371
Other services and charges 438,875 201,623 216,923 285,097 1,142,518 367,729
Metro sewer charges - 1,300,125 - - 1,300,125 -
Depreciation 843,586 929,225 760,990 60,670 2,594,471 -
Total Operating Expenses 2,129,361 3,029,006 1,329,903 659,827 7,148,097 420,381
Operating Income (Loss)299,444 (1,114,611) (38,527) (211,382) (1,065,076) (420,381)
NONOPERATING REVENUES (EXPENSES)
Connection fees 1,138,470 437,591 689,936 - 2,265,997 -
Taxes - - - - - 280,000
Intergovernmental 58,411 - - - 58,411 -
Interest earnings 180,384 108,243 144,549 4,919 438,095 2,554
Change in fair value of investments (15,332) (7,266) (9,813) (956) (33,367) -
Loss from disposal of capital assets (426) - - - (426) -
Interest expense and fiscal agent fees (26,907) (476) (677) - (28,060) -
Total Nonoperating Revenues 1,334,600 538,092 823,995 3,963 2,700,650 282,554
Income (loss) before contributions
and transfers 1,634,044 (576,519) 785,468 (207,419) 1,635,574 (137,827)
Capital contributions, including
special assessments 801,883 790,380 989,704 - 2,581,967 -
Transfers in 3,285 - - 130,000 133,285 203,000
Transfers out (92,614) (74,889) (57,060) (3,500) (228,063) -
Change in Net Position 2,346,598 138,972 1,718,112 (80,919) 4,122,763 65,173
TOTAL NET POSITION - Beginning 42,351,012 34,585,434 42,133,934 1,778,991 120,849,371 385,658
TOTAL NET POSITION - ENDING 44,697,610$ 34,724,406$ 43,852,046$ 1,698,072$ 124,972,134$ 450,831$
Business-Type Activities - Enterprise Funds
CITY OF ROSEMOUNT
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
PROPRIETARY FUNDS
For the Year Ended December 31, 2018
See accompanying notes to financial statements.
31
GovernmentalActivities - StormNon major Internal Water SewerWaterArenaTotalsService FundCASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 3,622,233$ 2,341,688$ 1,969,390$ 449,041$ 8,382,352$ -$ Cash paid to suppliers for goods and services (757,305) (1,502,265) (288,135) (338,818) (2,886,523) (707,908) Cash paid for employees (562,407) (560,212) (289,482) (248,528) (1,660,629) - Net Cash Flows From (Used by) Operating Activities 2,302,521 279,211 1,391,773 (138,305) 3,835,200 (707,908) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property taxes- - - - - 280,000 Repayment of advance to other funds - 32,381 - - 32,381 - Repayment of advance from other funds (9,524) - - - (9,524) - Repayment of advance to other governmental units - - 54,483 - 54,483 - Transfers from other funds 3,285 - - 130,000 133,285 203,000 Transfers to other funds (92,614) (74,889) (57,060) (3,500) (228,063) - Net Cash Flows From (Used by) Noncapital Financing Activities (98,853) (42,508) (2,577) 126,500 (17,438) 483,000 CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities purchased (2,091,332) (1,666,674) (1,889,813) (200,956) (5,848,775) - Marketable securities sold 839,334 1,196,807 1,108,814 120,954 3,265,909 192,000 Interest earnings180,384 108,243 144,549 4,919 438,095 2,554 Net Cash Flows From (Used by) Investing Activities (1,071,614) (361,624) (636,450) (75,083) (2,144,771) 194,554 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Debt retired(285,000) - (105,000) - (390,000) - Interest paid(38,719) (476) (1,815) - (41,010) - Acquisition and construction of capital assets (1,538,774) (22,053) (53,766) 16,540 (1,598,053) - Contribution received for construction 194,527 95,180 128,374 - 418,081 - Net Cash Flows From (Used by) Capital and Related Financing Activities (1,667,966) 72,651 (32,207) 16,540 (1,610,982) - Net Increase (Decrease) in Cash and Cash Equivalents(535,912) (52,270) 720,539 (70,348) 62,009 (30,354) CASH AND CASH EQUIVALENTS - Beginning of Year 2,164,784 657,146 28,709 256,913 3,107,552 174,824 CASH AND CASH EQUIVALENTS - END OF YEAR1,628,872$ 604,876$ 749,248$ 186,565$ 3,169,561$ 144,470$ RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and Investments per Statement of Net Position10,831,635$ 6,831,894$ 8,388,956$ 534,524$ 26,587,009$ 144,470$ Less: Non Cash Equivalents(9,202,763) (6,227,018) (7,639,708) (347,959) (23,417,448) - CASH AND CASH EQUIVALENTS PER STATEMENT OF CASH FLOWS1,628,872$ 604,876$ 749,248$ 186,565$ 3,169,561$ 144,470$ Business-Type Activities - Enterprise FundsCITY OF ROSEMOUNT STATEMENT OF CASH FLOWSPROPRIETARY FUNDSFor the Year Ended December 31, 2018See accompanying notes to financial statements.32
GovernmentalActivities - Water Sewer Storm Non major Internal UtilityUtilityWaterArenaTotalsService FundsRECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES Operating income (loss) 299,444$ (1,114,611)$ (38,527)$ (211,382)$ (1,065,076)$ (420,381) Nonoperating income 1,196,881 437,591 689,936 - 2,324,408 - Adjustments to Reconcile Operating (Loss) to Net Cash Flows From (Used by) Operating Activities Noncash items included in income Depreciation843,586 929,225 760,990 60,670 2,594,471 - Change in assets and liabilities Accounts receivable (3,453) (10,298) (11,922) 135 (25,538) - Other receivables- - - 461 461 - Prepaid items(13,062) (11,888) (9,351) (8,098) (42,399) (215,507) Accounts payable (76,522) 3,555 (21,766) 10,597 (84,136) (72,020) Other current liabilities 8,899 (862) 3,626 263 11,926 - Accrued liabilities5,717 5,559 3,119 2,091 16,486 - Other post employment benefits related deferrals and liabilities 30,124 29,951 15,486 13,083 88,644 - Pension related deferrals and liabilities 10,907 10,989 182 (6,125) 15,953 - NET CASH FLOWS FROM (USED BY) OPERATING ACTIVITIES2,302,521$ 279,211$ 1,391,773$ (138,305)$ 3,835,200$ (707,908)$ NONCASH CAPITAL, INVESTING AND FINANCING ACTIVITIESThe Water Utility received contributed plant of $600,112 during the year. The Sewer Utility received contributed plant of $694,807 during the year. The Storm Water Utility received contributed plant of $858,366 during the year.Construction in progress included in the Water Utility accounts payable was $14,913.The Water Utility acquired capital assets of $30,252 through a capital lease during the year.Unrealized loss on investments were $15,332 for the Water Utility, $7,266 for the Sewer Utility, $9,813 for the Storm Water Utility and $956 for the Arena for the year.Business-Type Activities - Enterprise FundsSee accompanying notes to financial statements.33
CITY OF ROSEMOUNT
INDEX TO NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
34
NOTE Page
I. Summary of Significant Accounting Policies 35
A. Reporting Entity 35
B. Government-Wide and Fund Financial Statements 36
C. Measurement Focus, Basis of Accounting,
and Financial Statement Presentation 38
D. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows
of Resources, and Net Position or Equity 39
1. Deposits and Investments 39
2. Receivables 40
3. Inventories and Prepaid Items 41
4. Capital Assets 42
5. Deferred Outflows of Resources 42
6. Compensated Absences 43
7. Long-Term Obligations/Conduit Debt 43
8. Deferred Inflows of Resources 43
9. Equity Classifications 44
10. Pension 45
II. Reconciliation of Government-Wide and Fund Financial Statements 46
A. Explanation of Certain Differences Between the
Governmental Funds Balance Sheet and the Statement of Net Position 46
III. Stewardship, Compliance, and Accountability 46
A. Budgetary Information 46
B. Excess Expenditures Over Appropriations 47
IV. Detailed Notes on All Activities and Funds 47
A. Deposits and Investments 47
B. Receivables 50
C. Capital Assets 51
D. Interfund Transfers 53
E. Long-Term Obligations 54
F. Lease Disclosures 56
G. Net Position/Fund Balances 57
V. Other Information 59
A. Employees’ Retirement System 59
B. Risk Management 71
C. Commitments and Contingencies 72
D. Postemployment Benefits Other Than Pensions 73
E. Effect of New Accounting Standards on Current-Period Financial Statements 75
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
35
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Rosemount, Minnesota (the “City”) was formed and operates pursuant to applicable
Minnesota laws and statutes. The governing body consists of a five-member City Council elected at large
by voters of the City. City Council members serve four-year staggered terms and the mayor serves a
four-year term coinciding with the terms of two of the Council members. Elections take place every two
years.
The accounting policies of the City conform to accounting principles generally accepted in the United
States of America, as applicable to governmental units. The accepted standard-setting body for
establishing governmental accounting and financial reporting principles is the Governmental
Accounting Standards Board (GASB).
A. REPORTING ENTITY
This report includes all of the funds of the City. The reporting entity for the City consists of the primary
government and its component unit. Component units are legally separate organizations for which the
primary government is financially accountable or other organizations for which the nature and
significance of their relationship with the primary government are such that their exclusion would cause
the reporting entity’s financial statements to be misleading. The primary government is financially
accountable if (1) it appoints a voting majority of the organization’s governing body and it is able to
impose its will on that organization, (2) it appoints a voting majority of the organization’s governing body
and there is a potential for the organization to provide specific financial benefits to, or impose specific
financial burdens on, the primary government, (3) the organization is fiscally dependent on and there is
a potential for the organization to provide specific financial benefits to, or impose specific financial
burdens on, the primary government. Certain legally separate, tax exempt organizations should also be
reported as a component unit if all of the following criteria are met: (1) the economic resources received
or held by the separate organization are entirely or almost entirely for the direct benefit of the primary
government, its component units, or its constituents; (2) the primary government or its component units,
is entitled to, or has the ability to access, a majority of the economic resources received or held by the
separate organization; and (3) the economic resources received or held by an individual organization
that the primary government, or its component units, is entitled to, or has the ability to otherwise access,
are significant to the primary government.
Component units are reported using one of two methods, discrete presentation or blending. Generally,
component units should be discretely presented in a separate column in the financial statements. A
component unit should be reported as part of the primary government using the blending method if it
meets any one of the following criteria: (1) the primary government and the component unit have
substantially the same governing body and a financial benefit or burden relationship exists, (2) the
primary government and the component unit have substantially the same governing body and
management of the primary government has operational responsibility for the component unit, (3) the
component unit serves or benefits, exclusively or almost exclusively, the primary government rather
than its citizens, or (4) the total debt of the component unit will be paid entirely or almost entirely from
resources of the primary government. The financial statements include the Rosemount Port Authority as
a blended component unit. The Port Authority serves all the citizens of the government and is governed
by a board comprised of three of five of the primary government’s elected council and four citizens
appointed at large. The bond issuance authorizations are approved by the primary government’s council
and the legal liability for the general obligation portion of the Port Authority’s debt remains with the
primary government. The Port Authority is reported in a special revenue fund and debt service fund.
The Rosemount Port Authority does not issue separate financial statements.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
36
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
In June 2015, the GASB issued Statement No. 75 – Accounting and Financial Reporting for
Postemployment Benefits Other than Pensions. This statement replaces the requirements of Statements
No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than
Pensions, as amended, and No, 57, OPEB Measurements by Agent Employers and Agent Multiple-
Employer Plans, for OPEB. This standard was implemented January 1, 2018.
In June 2018, the GASB issued Statement No. 89 – Accounting for Interest Cost Incurred before the End
of a Construction Period. This statement replaces the requirements of Statement No. 62, Codification of
Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncements. This standard was implemented for 2018 utilizing the early adoption provision.
Government-Wide Financial Statements
The statement of net position and statement of activities display information about the reporting
government as a whole. They include all funds of the reporting entity. The statements distinguish
between governmental and business-type activities. Governmental activities generally are financed
through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type
activities are financed in whole or in part by fees charged to external parties for goods or services.
The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. The City does not allocate indirect expenses to functions in the statement
of activities. Program revenues include 1) charges to customers or applicants who purchase, use or
directly benefit from goods, services, or privileges provided by a given function or segment, and 2)
grants and contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not included among program revenues are
reported as general revenues. Internally directed resources are reported as general revenues rather
than as program revenues.
Fund Financial Statements
Financial statements of the City are organized into funds, each of which is considered to be a separate
accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts,
which constitute its assets, deferred outflows or resources, liabilities, deferred inflows of resources, net
position/fund equity, revenues, and expenditures/expenses.
Funds are organized as major funds or nonmajor funds within the governmental and proprietary
statements. An emphasis is placed on major funds within the governmental and proprietary categories. A
fund is considered major if it is the primary operating fund of the City or meets the following criteria:
a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources, revenues, or
expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the
corresponding total for all funds of that category or type, and
b. The same element of the individual governmental fund or enterprise fund that met the 10% test is
at least 5% of the corresponding total for all governmental and enterprise funds combined.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
37
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)
Fund Financial Statements (cont.)
c. In addition, any other governmental or enterprise fund that the City believes is particularly
important to financial statement users may be reported as a major fund.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in
the fund financial statements.
The City reports the following major governmental funds:
General Fund – accounts for the City’s primary operating activities. It is used to account for and
report all financial resources except those accounted for and reported in another fund.
Debt Service Fund – used to account for and report financial resources that are restricted,
committed, or assigned to expenditure for the payment of general long-term debt principal,
interest, and related costs, other than enterprise debt.
Capital Projects Fund – used to account for and report financial resources that are restricted,
committed, or assigned to expenditures for capital outlays, including the acquisition or
construction of capital facilities and other capital assets. The capital projects fund consists of
one primary fund and three separate internal funds maintained by the City.
Port Authority TIF Fund – used to account for and report financial resources that are restricted,
committed, or assigned to expenditures related to the activities of the City’s Downtown –
Brockway TIF District.
The City reports the following major enterprise funds:
Water – accounts for operations of the water system.
Sewer – accounts for operations of the sewer system.
Storm Water – accounts for operations of the storm water drainage system.
The City reports the following non-major governmental and enterprise funds:
Special Revenue Funds – used to account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditures for specified purposes (other than debt
service or capital projects).
PEG Fees Fund
Fire Safety Education Fund
GIS Fund
Port Authority General Fund
Enterprise Funds – may be used to report any activity for which a fee is charged to external
users for goods or services, and must be used for activities which meet certain debt or cost
recovery criteria.
Arena Fund – accounts for the activities of the City’s ice arena operations.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
38
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.)
Fund Financial Statements (cont.)
In addition, the City reports the following fund types:
Internal service funds are used to account for the financing of goods and services provided by
one department or agency to other departments or agencies of the City on a cost-
reimbursement basis.
Insurance Fund – accumulates resources to pay deductibles and uninsured claims, and
pays for a majority of the general liability insurance and workers compensation insurance
premiums for the City.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION
Government-Wide Financial Statements
The government-wide statement of net position and statement of activities are reported using the
economic resources measurement focus and the accrual basis of accounting. Under the accrual basis
of accounting, revenues are recognized when earned and expenses are recorded when the liability is
incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting
from exchange and exchange-like transactions are recognized when the exchange takes place.
Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met.
Special assessments are recorded as revenue when levied. Unbilled receivables are recorded as
revenues when services are provided.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule are charges between the City’s water and sewer utility and
various other functions of the government. Elimination of these charges would distort the direct costs and
program revenues reported for the various functions concerned.
Fund Financial Statements
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recorded when they are both
measurable and available. Available means collectible within the current period or soon enough thereafter
to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be
available if they are collected within 60 days of the end of the current fiscal period. Expenditures are
recorded when the related fund liability is incurred, except for unmatured interest on long-term debt,
claims, judgments, compensated absences, pension, and OPEB expenditures, which are recorded as a
fund liability when amounts are due and payable.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
39
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION (cont.)
Fund Financial Statements (cont.)
Property taxes, special assessments, intergovernmental revenues, charges for services and interest
associated with the current fiscal period are all considered to susceptible to accrual and so have been
recognized as revenues of the current fiscal period. Only the portion of special assessments receivable
due within the current fiscal period is considered to be susceptible to accrual as revenue of the current
period. All other revenue items are considered to be measurable and available only when cash is
received by the City.
Proprietary fund financial statements are reported using the economic resources measurement focus and
the accrual basis of accounting, as described previously in this note.
The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of
the water, sewer, storm water, and arena funds are charges to customers for sales and services.
Operating expenses for proprietary funds include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
All Financial Statements
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets,
deferred outflows of resources, liabilities, and deferred inflows of resources and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those estimates.
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY
1. Deposits and Investments
For purposes of the statement of cash flows, the City considers all highly liquid investments with an initial
maturity of three months or less when acquired to be cash equivalents.
Investment of City funds is restricted by state statutes. Available investments are limited to:
a. Direct obligations or obligations guaranteed by the United States or its agencies, commercial
paper, repurchase or reverse repurchase agreements with banks that are members of the Federal
Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S.
Government Securities to the Federal Reserve Bank of New York or certain Minnesota
brokers/dealers.
b. General obligations of the State of Minnesota or any of its municipalities.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
40
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
1. Deposits and Investments (cont.)
c. Bankers acceptances of United States banks eligible for purchase by the Federal Reserve System.
d. Shares of investment companies registered under the Federal Investment Company Act of 1940
and whose only investments are direct obligations guaranteed by the United States or its agencies.
The City has adopted an investment policy. The policy contains the following guidelines:
Credit Risk - The policy follows state statutes for allowable investments except that it does
not permit the purchase of shares of investment companies registered under the Federal
Investment Company Act of 1940 whose only investments are direct obligations guaranteed
by the United States or its agencies.
Concentration of Credit Risk - The policy does not limit the amount the City may invest in
any one issuer.
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from
rising interest rates, the City's investment policy limits the amount of investments with
maturities of more than five years to 35% of the City's total investment portfolio (including
certificates of deposit).
Investments are stated at fair value, which is the amount at which an investment could be exchanged
in a current transaction between willing parties. Fair values are based on quoted market prices. No
investments are reported at amortized cost. Adjustments necessary to record investments at fair value
are recorded in the operating statement as increases or decreases in investment income. The
difference between the bank statement balance and carrying value is due to outstanding checks
and/or deposits in transit.
See Note IV.A. for further information.
2. Receivables
Property tax levies are set by the City Council in the fall of each year, and certified to Dakota County for
collection in the following year. In Minnesota, counties act as collection agents for all property taxes,
spreading the levies over all taxable property. Such taxes become a lien on January 1 and are recorded
as receivables by the City on that date. Tax levies on real property are payable in two equal installments
on May 15 and October 15. Personal property taxes may be paid on February 28 and June 30. The
county provides tax settlements to the City three times a year: in January, July, and December.
Property taxes are accrued and recognized as revenue in the year levied in the government-wide
financial statements and proprietary fund financial statements. In the governmental fund financial
statements, taxes are recognized as revenue when received in cash or within 60 days after year-end.
Taxes which remain unpaid on December 31 are classified as delinquent taxes receivable, and are offset
by a deferred inflow of resources in the governmental fund financial statements.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
41
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
2. Receivables (cont.)
Special assessments are levied against the benefited properties for the assessable costs of special
assessments improvement projects in accordance with state statutes. The City usually adopts the
assessment rolls when the individual projects are complete. The assessments are collectible over a term
of years generally consistent with the term of years of the related bond issue. Collection of annual
installments (including interest) is handled by the County in the same manner as property taxes. Property
owners are allowed to prepay total future installments without interest or prepayment penalties.
Special assessments receivable includes the following components:
Current - amount collected by Dakota County and not remitted to the City.
Delinquent - amounts billed to property owners but not paid.
Unavailable - assessment installments, which will be billed to property owners in future years.
Other - assessments for which payment has been postponed based on council action.
Accounts receivable are considered to be 100% collectible.
During the course of operations, transactions occur between individual funds that may result in amounts
owed between funds. Short-term interfund loans are reported as “due to and from other funds.” Long-term
interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund
receivables and payables between funds within governmental activities are eliminated in the statement of
net position. Any residual balances outstanding between the governmental activities and business-type
activities are reported in the government-wide financial statements as internal balances.
In the governmental fund financial statements, advances to other funds are offset equally by a
nonspendable fund balance account which indicates that they do not constitute expendable available
financial resources and, therefore, are not available for appropriation or by a restricted fund balance
account, if the funds will ultimately be restricted when the advance is repaid.
3. Inventories and Prepaid Items
Governmental fund inventory items are charged to expenditure accounts when purchased. Year-end
inventory was not significant. Proprietary fund inventories are generally used for construction and for
operation and maintenance work. They are not for resale. They are valued at cost based on weighted
average, and charged to construction and/or operation and maintenance expense when used.
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both government-wide and fund financial statements and expensed as the items are
used (consumption method).
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
42
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
4. Capital Assets
Government – Wide Statements
Capital assets, which include property, plant and equipment, are reported in the government-wide
financial statements. Capital assets are defined by the government as assets with an initial cost of more
than $5,000 for general capital assets and infrastructure assets, and an estimated useful life in excess of
one year. All capital assets are valued at historical cost or estimated historical cost if actual amounts are
unavailable. Donated capital assets are recorded at their estimated acquisition value at the date of
donation.
Additions to and replacements of capital assets of business-type activities are recorded at original cost,
which includes material, labor, overhead, and an allowance for the cost of funds used during construction
when significant. The cost of renewals and betterments relating to retirement units is added to plant
accounts. The cost of property replaced retired or otherwise disposed of, is deducted from plant accounts
and, generally, together with removal costs less salvage, is charged to accumulated depreciation.
Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of
activities, with accumulated depreciation reflected in the statement of net position. Depreciation is
provided over the assets’ estimated useful lives using the straight-line method of depreciation. The range
of estimated useful lives by type of asset is as follows:
Buildings 30-65 Years
Machinery and equipment 4-20 Years
Other improvements 60 Years
Utility system 65 Years
Infrastructure 35-50 Years
Land, some land improvements, and construction work in progress are not depreciated.
Fund Financial Statements
In the fund financial statements, capital assets used in governmental fund operations are accounted for
as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in
proprietary fund operations are accounted for the same way as in the government-wide statements.
5. Deferred Outflows of Resources
A deferred outflow of resources represents a consumption of net position/fund balance that applies to a
future period and will not be recognized as an outflow of resources (expense/expenditure) until that future
time.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
43
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
6. Compensated Absences
Under terms of employment, employees are granted vacation, sick and comp time benefits in varying
amounts. These benefits are based upon union contracts and City actions as applicable. Amounts carried
forward for vacation and comp time accruals are governed by these contracts and actions. Sick pay
accruals may be carried forward indefinitely.
All vested vacation, sick leave and comp time pay is accrued when incurred in the government-wide and
proprietary fund financial statements. A liability for these amounts is reported in governmental funds only
if they have matured, for example, as a result of employee resignations and retirements, and are payable
with expendable available resources.
Payments for vacation, sick and comp time leave will be made at rates in effect when the benefits are
used. Accumulated vacation, sick and comp time leave liabilities at year-end are determined on the basis
of current salary rates and include salary related payments.
7. Long-Term Obligations/Conduit Debt
All long-term obligations to be repaid from governmental and business-type resources are reported as
liabilities in the government-wide statements. The long-term obligations consist primarily of notes and
bonds payable, capital lease obligations, other postemployment benefits, accrued compensated
absences, and net pension liability.
Long-term obligations for governmental funds are not reported as liabilities in the fund financial
statements. The face value of debts (plus or minus any premiums or discounts) are reported as another
financing source and payments of principal and interest are reported as expenditures. The accounting in
proprietary funds is the same as it is in the government-wide statements.
The City has approved the issuance of industrial revenue bonds (IRB) for the benefit of private business
enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do
not constitute indebtedness of the City. Accordingly, the bonds are not reported as liabilities in the
accompanying financial statements. At year end, the aggregate principal amount for the three issues
outstanding could not be determined; however, their original issue amounts totaled $8,294,720.
8. Deferred Inflows of Resources
A deferred inflow of resources represents an acquisition of net position that applies to a future period and
therefore will not be recognized as inflow of resources (revenue) until that future time.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
44
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
9. Equity Classifications
Government–Wide Statements
Equity is classified as net position and displayed in three components:
a. Net investment in capital assets - Consists of capital assets including restricted capital
assets, net of accumulated depreciation and reduced by the outstanding balances (excluding
unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are
attributable to the acquisition, construction, or improvement of those assets.
b. Restricted net position - Consists of net position with constraints placed on their use either by
1) external groups such as creditors, grantors, contributors, or laws or regulations of other
governments or, 2) law through constitutional provisions or enabling legislation.
c. Unrestricted net position - All other net positions that do not meet the definitions of
“restricted” or “net investment in capital assets.”
When both restricted and unrestricted resources are available for use, it is the City’s policy to use
restricted resources first, then unrestricted resources as they are needed.
Fund Statements
Governmental fund balances are displayed as follows:
a. Nonspendable - Includes fund balance amounts that cannot be spent either because they are
not in spendable form or because legal or contractual requirements require them to be
maintained intact.
b. Restricted - Consists of fund balances with constraints placed on their use either by 1) external
groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2)
law through constitutional provisions or enabling legislation.
c. Committed - Includes fund balance amounts that are constrained for specific purposes that are
internally imposed by the government through formal action of the highest level of decision
making authority. Fund balance amounts are committed through a formal action (resolution) of
the City Council. This formal action must occur prior to the end of the reporting period, but the
amount of the commitment, which will be subject to the constraints, may be determined in the
subsequent period. Any changes to the constraints imposed require the same formal action of the
City Council that originally created the commitment.
d. Assigned - Includes spendable fund balance amounts that are intended to be used for specific
purposes that do not meet the criteria to be classified as restricted or committed. The City
Council has authorized the Finance Director and/or Administrator to assign amounts for a specific
purpose. Assignments may take place after the end of the reporting period.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
45
NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
D. ASSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND
NET POSITION OR EQUITY (cont.)
9. Equity Classifications (cont.)
Fund Statements (cont.)
e. Unassigned - Includes residual positive fund balance within the general fund which has not been
classified within the other above mentioned categories. Unassigned fund balance may also
include negative balances for any governmental fund if expenditures exceed amounts restricted
or committed for those purposes.
The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance
is available unless there are legal documents / contracts that prohibit doing this, such as in grant
agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then
assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made.
The City has a formal minimum fund balance policy. That policy is to maintain a working capital fund of 45
to 55 percent of the subsequent year’s general fund budgeted expenditures. The balance at year end was
$7,503,588, or 55 percent, and is included in unassigned general fund balance.
Proprietary fund equity is classified the same as in the government-wide statements.
10. Pension
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension
expense, information about the fiduciary net position of the Public Employees Retirement Association
(PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the
same basis as they are reported by PERA except that PERA’s fiscal year end is June 30. For this
purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and
refunds are recognized when due and payable in accordance with the benefit terms. Investments are
reported at fair value.
The PERA has a special funding situation created by a direct aid contribution made by the state of
Minnesota. The direct aid is a result of the merger of the Minneapolis Employees Retirement Fund into
the PERA on January 1, 2015.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
46
NOTE II – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND
THE STATEMENT OF NET POSITION
The governmental fund balance sheet includes a reconciliation between fund balance – total
governmental funds and net position – governmental activities as reported in the government-wide
statement of net position. One element of that reconciliation explains that “Some liabilities, including long-
term debt, are not due and payable in the current period and, therefore, are not reported in the funds”.
The details of this $11,766,645 difference are as follows:
Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current
period, and accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in
governmental funds, but rather is recognized as an expenditure when due. All liabilities - both current and
long-term - are reported in the statement of net position.
Bond and notes payable $ 10,140,000
Capital lease obligations 245,121
Compensated absences 1,022,602
Unamortized premium on bonds payable 222,848
Accrued interest 136,074
Combined Adjustment for Long-Term Liabilities $ 11,766,645
NOTE III – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
Annual budgets have been adopted for the general fund and the capital project fund that is created by the
following sub-funds, Building CIP, Street CIP and Equipment CIP. The remaining capital project sub
funds adopt project-length budgets and therefore are not included in the annual budgeting process.
Formal budgetary integration is not employed for debt service funds because effective budgetary control
is alternatively achieved through general obligation bond indenture provisions.
The budgeted amounts presented include any amendments made. The appropriated budget is prepared
by fund, department and function. The legal level of budgetary control is at the department level. The City
Council may authorize department heads to transfer budgeted appropriations within departments. The
Council approved several supplemental budgetary appropriations during the year, but they were not
considered material.
Appropriations lapse at year end unless specifically carried over. Carryovers to the following year were
$9,344,385.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
47
NOTE III – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
B. EXCESS EXPENDITURES OVER APPROPRIATIONS
Budgeted Actual Excess
Fund Expenditures Expenditures Expenditures
General Fund $ 12,998,202 $ 13,007,920 $ 9,718
Building CIP sub-fund 996,500 2,227,918 1,231,418
Equipment CIP sub-fund 982,347 1,144,739 162,392
Some individual departments experienced expenditures which exceeded appropriations. The detail of
those items can be found in the City's year-end budget to actual reports. These variances were financed
with revenues and other financing sources in excess of budget or available fund balance.
NOTE IV – DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
The City maintains a cash and investment pool that is available for use by all funds. Each fund type’s
portion of this pool is displayed on the statement of net position and balance sheet as cash and
investments. In addition, investments are separately held by several of the City’s funds.
The City’s cash and investments at year end were comprised of the following:
Carrying
Value
Statement
Balances
Associated
Risks
Petty cash and cash on hand $ 2,400 $ 2,400 N/A
Demand deposits 18,938,062 19,902,974 Custodial credit risk
Negotiable CDs 15,991,000 15,991,000
Custodial credit, credit,
concentration of credit,
interest rate risk
US Agencies 20,358,430 20,358,430
Custodial credit, credit,
concentration of credit,
interest rate risk
Total Cash and Investments $ 55,289,892 $ 56,254,804
Reconciliation to the financial statements
Per statement of net position
Cash and investments $ 55,289,892
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
48
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
A. DEPOSITS AND INVESTMENTS (cont.)
Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and
savings accounts (including NOW accounts) and $250,000 for demand deposit accounts (interest-bearing
and noninterest-bearing). In addition, if deposits are held in an institution outside of the state in which the
government is located, insured amounts are further limited to a total of $250,000 for the combined
amount of all deposit accounts.
The Securities Investor Protection Corporation (SIPC), created by the Securities Investor Protection Act
of 1970, is an independent government-sponsored corporation (not an agency of the U.S. government).
SIPC membership provides account protection up to a maximum of $500,000 per customer, of which
$100,000 may be in cash.
The City categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair
value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs
are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
The valuation methods for recurring fair value measurements of the Level 2 investments are as follows:
> Automated method – IDC Institutional Bond Pricing
> Automated method – IDC CD Pricing
> Matrix pricing based upon yields and effective maturity
December 31, 2018
Investment Type Level 1 Level 2 Level 3 Total
US Agencies $ - $ 20,358,430 $ - $ 20,358,430
Negotiable CDs - 15,991,000 - 15,991,000
Totals $ - $ 36,349,430 $ - $ 36,349,430
Custodial Credit Risk
Deposits
Custodial credit risk is the risk that in the event of a financial institution failure, the City’s deposits may not
be returned to the City.
The City maintains collateral agreements with its banks. At December 31, 2018, the banks had pledged
various government securities in the amount of $17,077,571 to secure the City’s deposits.
Investments
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
City will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
49
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
A. DEPOSITS AND INVESTMENTS (cont.)
Credit Risk
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
As of December 31, 2018, the City of Rosemount’s investments in U.S. agency obligations received AA+
and/or AAA ratings from Standard & Poor’s and/or Moody’s Investors Service, respectively.
The City also had investments in negotiable certificates of deposit which were unrated.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the City’s investment in
a single issuer.
As of December 31, 2018, the City of Rosemount’s investment portfolio was concentrated as follows:
Issuer Investment Type Percentage of Total
Federal Home Loan Bank US Agencies 22%
Federal Home Loan Mortgage Corporation US Agencies 14%
Federal Farm Credit Bank US Agencies 6%
Federal National Mortgage Association US Agencies 14%
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the value of an investment.
As of December 31, 2018, the City of Rosemount’s investments were as follows:
Investment Maturities (in years)
Investment Type
Total Fair
Value
Less
than 1 1 - 5 6 - 10
US Agencies $ 20,358,430 $ - $ 14,835,887 $ 5,522,543
Negotiable CDs 15,991,000 2,011,000 13,495,000 485,000
Totals $ 36,349,430 $ 2,011,000 $ 28,330,887 $ 6,007,543
At December 31, 2018, the City held $9,299,072 in US Agency Obligations that are callable at increasing
stepped interest rates.
See Note I.D.1 for further information on deposit and investment policies.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
50
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
B. RECEIVABLES
Receivable amounts not expected to be collected within one year are listed below:
Governmental Activities General
Debt
Service
Capital
Projects Totals
Amounts not expected to be collected
within one year $ 5,835 $ 412,735 $ 179,325 $ 597,895
Business-Type Activities
Water
Utility
Sewer
Utility
Storm Water
Utility Totals
Amounts not expected to be collected
within one year $ 35,601 $ 27,885 $ 68,007 $ 131,493
Governmental funds report unavailable or unearned revenue in connection with receivables for revenues
that are not considered to be available to liquidate liabilities of the current period. Governmental funds
also defer revenue recognition in connection with resources that have been received, but not yet earned.
At the end of the current fiscal year, the various components of unavailable revenue and unearned
revenue reported in the governmental funds were as follows:
Unavailable Unearned Totals
Delinquent property taxes receivable $ 62,117 $ - $ 62,117
Delinquent special assessments 628 - 628
Special assessments not yet due 1,854,241 950,457 2,804,698
Donations receivable for future projects 81,908 - 81,908
Due from other governments 250,000 - 250,000
Total Unearned/Unavailable Revenue
for Governmental Funds $ 2,248,894 $ 950,457 $ 3,199,351
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
51
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
C. CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2018 was as follows:
Beginning Ending
Balance Additions Deletions Balance
Governmental Activities
Capital assets not being depreciated
Land $ 7,960,624 $ 118,400 $ - $ 8,079,024
Land improvements 2,647,412 - - 2,647,412
Construction in progress 3,453,157 7,668,183 2,916,348 8,204,992
Total Capital Assets
Not Being Depreciated 14,061,193 7,786,583 2,916,348 18,931,428
Capital assets being depreciated
Land improvements 4,097,024 40,522 19,739 4,117,807
Buildings 17,358,045 - - 17,358,045
Machinery and equipment 12,290,935 1,453,119 686,926 13,057,128
Infrastructure:
Other 209,037 - - 209,037
Roads 61,178,368 1,743,650 - 62,922,018
Bridges 2,034,591 - - 2,034,591
Parking lots 1,298,575 107,317 47,061 1,358,831
Total Capital Assets Being Depreciated 98,466,575 3,344,608 753,726 101,057,457
Less: Accumulated depreciation for
Land improvements (1,609,304) (181,030) 19,739 (1,770,595)
Buildings (5,647,534) (346,418) (5,993,952)
Machinery and equipment (6,817,988) (888,430) 600,611 (7,105,807)
Infrastructure:
Other (19,928) (5,335) - (25,263)
Roads (12,438,221) (1,056,054) - (13,494,275)
Bridges (581,565) (50,865) - (632,430)
Parking lots (266,332) (30,345) 32,573 (264,104)
Total Accumulated Depreciation (27,380,872) (2,558,477) 652,923 (29,286,426)
Net Capital Assets
Being Depreciated 71,085,703 786,131 100,803 71,771,031
Total Governmental Activities
Capital Assets, Net of
Accumulated Depreciation $ 85,146,896 $ 8,572,714 $ 3,017,151 $ 90,702,459
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
52
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
C. CAPITAL ASSETS (cont.)
Depreciation expense was charged to functions as follows:
Governmental Activities
General government $ 322,790
Public safety 355,421
Public works, which includes the depreciation of roads, bridges and parking lots 1,548,796
Culture, education and recreation 331,470
Total Governmental Activities Depreciation Expense $ 2,558,477
Beginning Ending
Balance Additions Deletions Balance
Business-Type Activities
Capital assets not being depreciated
Land $ 2,728,077 $ - $ - $ 2,728,077
Construction in progress 836,114 3,539,152 4,193,816 181,450
Total Capital Assets
Not Being Depreciated 3,564,191 3,539,152 4,193,816 2,909,527
Capital assets being depreciated
Buildings 11,085,341 1,025,639 - 12,110,980
Machinery and equipment 3,625,731 749,983 64,714 4,311,000
Infrastructure - mains and lines and other
improvements 139,540,170
2,650,662
-
142,190,832
Total Capital Assets
Being Depreciated 154,251,242 4,426,284 64,714 158,612,812
Less: Accumulated depreciation for
Buildings (3,892,924) (251,999) (4,144,923)
Machinery and equipment (2,156,831) (200,555) 64,288 (2,293,098)
Infrastructure - mains and lines and other
improvements (53,613,670) (2,141,917) (55,755,587)
Total Accumulated Depreciation (59,663,425) (2,594,471) 64,288 (62,193,608)
Net Capital Assets
Being Depreciated 94,587,817 1,831,813 426 96,419,204
Total Business-Type
Capital Assets, Net of
Accumulated Depreciation $ 98,152,008 $ 5,370,965 $ 4,194,242 $ 99,328,731
Depreciation expense was charged to functions as follows:
Business-Type Activities
Water $ 843,586
Sewer 929,225
Storm water 760,990
Arena 60,670
Total Business-type Activities Depreciation Expense $ 2,594,471
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
53
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
D. INTERFUND TRANSFERS
Transfers
The following is a schedule of interfund transfers:
Fund Transferred To Fund Transferred From Amount Principal Purpose
General Arena $ 3,500 Building and grounds
maintenance
Capital Projects 1,925 Reimbursement of capital
project costs
Debt Service Water 67,000 Water share of debt payment
Internal Service General 203,000 Deductible payments
Capital Projects Water 25,614 Share of capital project costs
Sewer 74,889 Share of capital project costs
Storm Water 53,775 Share of capital project costs
Enterprise
Water Storm Water 3,285 Close out debt service fund
Arena General 130,000 Operating expenses
Subtotal – Fund Financial Statements 562,988
Less: Government-wide transfers (1,236,595)
Less: Fund eliminations (468,210)
Total Transfers – Government-Wide
Statement of Activities
$ (1,141,817
)
Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the
budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the
receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to
finance various programs accounted for in other funds in accordance with budgetary authorizations.
For the statement of activities, interfund transfers within the governmental activities or business-type
activities are netted and eliminated.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
54
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG-TERM OBLIGATIONS
Long-term obligations activity for the year ended December 31, 2018 was as follows:
Amounts
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
GOVERNMENTAL ACTIVITIES
Bonds and Notes Payable
General obligation debt $ 10,700,000 $ 835,000 $ 1,395,000 $ 10,140,000 $ 1,445,000
Add: Premiums 152,863 83,871 13,886 222,848 -
Sub-totals 10,852,863 918,871 1,408,886 10,362,848 1,445,000
Other Liabilities
Vested compensated absences 981,663 512,137 471,198 1,022,602 490,849
Capital lease liabilities - 276,848 31,727 245,121 62,465
Net pension liability 5,922,358 429,199 1,152,531 5,199,026 -
Other postemployment benefits - 749,414 36,979 712,435 -
Total Other Liabilities 6,904,021 1,967,598 1,692,435 7,179,184 553,314
Total Governmental Activities
Long-Term Liabilities $ 17,756,884 $ 2,886,469 $ 3,101,321 $ 17,542,032 $ 1,998,314
BUSINESS-TYPE ACTIVITIES
Bonds and Notes Payable
General obligation debt $ 1,645,000 $ - $ 390,000 $ 1,255,000 $ 145,000
Add: Premiums 74,063 - 8,229 65,834 -
Sub-totals 1,719,063 - 398,229 1,320,834 145,000
Other Liabilities:
Vested compensated absences 191,949 108,622 92,136 208,435 100,049
Capital lease liabilities - 33,674 3,422 30,252 6,735
Net pension liability 1,001,327 96,593 157,614 940,306 -
Other postemployment benefits - 98,723 4,871 93,852 -
Total Other Liabilities 1,193,276 337,612 258,043 1,272,845 106,784
Total Business-type Activities
Long-Term Liabilities $ 2,912,339 $ 337,612 $ 656,272 $ 2,593,679 $ 251,784
General Obligation Debt
All general obligation bonds payable are backed by the full faith and credit of the City. Tax incremental
bonds are paid by segregated property taxes, but are ultimately backed by the full faith and credit of the
City if incremental taxes are inadequate to meet payments. Remaining bonds in the governmental funds
will be retired by future property tax levies accumulated by the debt service fund. Business-type activities
debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future
tax levies.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
55
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG-TERM OBLIGATIONS (cont.)
General Obligation Debt (cont.)
Governmental Activities Date of Final Interest Original Balance
General Obligation Debt Issue Maturity Rates Indebtedness 12-31-18
Port Authority TIF, Series 2008A 2008 2024 5.0% to 5.5% $ 2,765,000 $ 1,725,000
Port Authority TIF, Crossover Refunding
Bonds, Series 2010B
2010
2022
1.2% to 3.7%
1,355,000
585,000
Improvement Bonds, Series 2013A 2013 2019 0.5% to 1.65% 1,500,000 310,000
Improvement Bonds, Series 2014A 2014 2025 0.35% to 2.4% 2,400,000 1,230,000
Fire Station Refunding Bonds, Series
2015B
2015 2025 1.5% to 3.0% 1,345,000 1,075,000
Port Authority TIF Crossover Refunding
Bonds, Series 2015A
2015 2032 3.0% 3,335,000 3,325,000
Improvement Bonds, Series 2017A 2017 2023 3.0% 1,055,000 1,055,000
Improvement Bonds, Series 2018A 2018 2024 5.0% 835,000 835,000
Total Governmental Activities – General Obligation Debt $ 10,140,000
Business-type Activities Date of Final Interest Original Balance
General Obligation Debt Issue Maturity Rates Indebtedness 12-31-18
Water Revenue Bonds, Series 2015A 2015 2026 1.5% to 3.0% $ 1,525,000 $ 1,255,000
Total Business-type Activities - General Obligation Debt $ 1,255,000
Debt service requirements to maturity are as follows:
Governmental Activities Business-Type Activities
General Obligation Debt General Obligation Debt
Year Principal Interest Principal Interest
2019 $ 1,445,000 $ 306,204 $ 145,000 $ 31,993
2020 1,330,000 271,980 145,000 28,730
2021 1,050,000 230,989 150,000 25,043
2022 1,090,000 188,891 155,000 21,036
2023 980,000 147,445 160,000 16,705
2024 – 2028 2,560,000 383,673 500,000 22,155
2029 – 2032 1,685,000 100,762 - -
Totals $ 10,140,000 $ 1,629,944 $ 1,255,000 $ 145,662
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
56
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
E. LONG-TERM OBLIGATIONS (cont.)
Other Debt Information
Estimated payments of compensated absences, other postemployment benefits liability, and the net
pension liability are not included in the debt service requirement schedules. The compensated absences
liability, other postemployment benefits liability, and net pension liability attributable to governmental
activities will be liquidated primarily by the general fund.
There are a number of limitations and restrictions contained in the various bond indentures and loan
agreements. The City believes it is in compliance with all significant limitations and restrictions, including
federal arbitrage regulations.
The water utility has pledged future revenues, net of specified operating expenses, to repay revenue
bonds issued in 2015. Proceeds from the bonds provided financing for utility improvements. The bonds
are payable solely from water revenues and are payable through 2026. Annual principal and interest
payments on the bonds are expected to require 5% of net revenues. The total principal and interest
remaining to be paid on the bonds is $1,400,662. Principal and interest paid on these bonds for the
current year and the gross customer revenues were $174,843 and $3,567,275, respectively.
F. LEASE DISCLOSURES
Lessee – Capital Leases
In 2018, the City acquired capital assets through multiple lease/purchase agreements. The gross amount
of these assets under capital leases is $431,819 and $55,394, which are included in the machinery and
equipment asset category of capital assets, less accumulated depreciation of $59,949 and $7,386 in
governmental activities and business-type activities, respectively. A portion of these capital assets were
not financed through lease arrangements but rather paid by the City upon purchase, these amounts are
$154,971 in governmental activities and $21,720 in business-type activities.
A corresponding liability is recorded in the government-wide statement of net position. The liability of the
capital lease obligations that were capitalized at December 31, 2018 was $245,121 in governmental
activities and $30,252 in the business-type activities (all included in the water utility). Principal and
interest payments in fiscal year 2018 totaled $31,727 in governmental activities and $3,422 in business-
type activities. The capital lease liability attributable to governmental activities will be liquidated by the
capital projects fund.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
57
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
F. LEASE DISCLOSURES
Lessee – Capital Leases
A schedule of future lease payments as of December 31, 2018, are as follows:
Governmental
Activities
Business-Type
Activities
Year Vehicles Vehicles
2019 $ 62,465 $ 6,735
2020 62,465 6,735
2021 63,875 6,735
2022 41,885 6,735
2023 14,431 3,312
Totals $ 245,121 $ 30,252
G. NET POSITION/FUND BALANCES
Net position reported on the government-wide statement of net position at December 31, 2018 includes
the following:
Governmental Activities
Net Investment in Capital Assets
Land $ 8,079,024
Non-depreciable land improvements 2,647,412
Construction in progress 8,204,992
Other capital assets, net of accumulated depreciation 71,771,031
Less: related long-term debt outstanding (excluding unspent
capital related debt proceeds) (10,607,969
)
Total Net Investment in Capital Assets $ 80,094,490
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
58
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
G. NET POSITION/FUND BALANCES (cont.)
Governmental Funds
Governmental fund balances reported on the fund financial statements at December 31, 2018 include
the following:
General Fund
Debt
Service
Capital
Projects
Port
Authority
TIF
Nonmajor
Funds Totals
Fund Balances
Nonspendable:
Prepaid items $ 33,484 $ - $ - $ - $ 548 $ 34,032
Restricted for:
Debt service - 3,209,605 - - - 3,209,605
Port Authority TIF - - - 2,119,361 - 2,119,361
PEG Fees - - - - 46,965 46,965
Sub-total - 3,209,605 - 2,119,361 46,965 5,375,931
Committed for:
Fire safety education - - - - 3,390 3,390
GIS - - - - 61,618 61,618
Port authority – general - - - - 158,611 158,611
Sub-total - - - - 223,619 223,619
Assigned for: Compensated absences 1,022,602 - - - - 1,022,602
Health insurance 150,700 - - - - 150,700
Comp plan 10,000 - - - - 10,000
Building maintenance 139,784 - - - - 139,784
Park maintenance 559,884 - - - - 559,884
Parking lot maintenance 75,000 - - - - 75,000
Street chemicals 57,200 - - - - 57,200
Landscaping projects 68,100 - - - - 68,100
Election equipment 39,934 - - - - 39,934
Various projects/equipment 335,133 - 8,692,843 - - 9,027,976
Building CIP - - 1,935,877 - - 1,935,877
Street CIP - - 203,748 - - 203,748
Equipment CIP - - 467,589 - - 467,589
Sub-total 2,458,337 - 11,300,057 - - 13,758,394
Unassigned: 7,503,588 - - - - 7,503,588
Total Fund Balances $ 9,995,409 $ 3,209,605 $ 11,300,057 $ 2,119,361 $ 271,132 $ 26,895,564
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
59
NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.)
G. NET POSITION/FUND BALANCES (cont.)
Business-Type Activities
Net Investment in Capital Assets
Land $ 2,728,077
Construction in progress 181,450
Other capital assets, net of accumulated depreciation 96,419,204
Less: related long-term debt outstanding (excluding unspent
capital related debt proceeds) (1,351,086)
Total Net Investment in Capital Assets $ 97,977,645
NOTE V – OTHER INFORMATION
A. EMPLOYEES’ RETIREMENT SYSTEM
Employees of the City participate in three defined benefit pension plans. Two of the plans are state-wide
cost-sharing, multiple employer defined benefit pension plans administered by the Public Employees
Retirement Association (PERA) of Minnesota: the General Employees Retirement Fund (GERF) and the
Public Employees Police and Fire Fund (PEPFF). The third is a single-employer defined benefit pension
plan administered through the Rosemount Fire Fighters’ Relief Association (the Association). The details
of the City’s participation in each of these plans are presented later in these notes. The following table
summarizes the impact of these plans on the City’s government-wide financial statements:
State-Wide PERA Pension Plans
Rosemount Fire
Department
Relief Association
Total
All Plans
GERF PEPFF Total
Net pension asset $ - $ - $ - $ 1,583,135 $ 1,583,135
Deferred outflows 817,055 3,194,145 4,011,200 52,215 4,063,415
Net pension liability 3,816,742 2,322,590 6,139,332 - 6,139,332
Deferred inflows 923,469 4,304,241 5,227,710 274,610 5,502,320
Pension expense 409,856 287,928 1,287,190 67,141 1,354,331
Public Employees Retirement Association (PERA)
Plan description. The City participates in the following cost-sharing multiple-employer defined benefit
pension plans administered by the Public Employees Retirement Association of Minnesota (PERA).
PERA’s defined benefit pension plans are established and administered in accordance with Minnesota
Statutes, Chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under
Section 401 (a) of the Internal Revenue Code.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
60
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
1. General Employees Retirement Plan
All full-time and certain part-time employees of the City are covered by the General Employees Plan.
General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members
are covered by Social Security.
2. Public Employees Police and Fire Plan
The Police and Fire Plan, originally established for police officers and firefighters not covered by a local
relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999,
the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association
that elected to merge with and transfer assets and administration to PERA.
Benefits. PERA provides retirement, disability, and death benefits. Benefit provisions are established by
state statute and can only be modified by the state Legislature. Vested, terminated employees who are
entitled to benefits, but are not receiving them yet, are bound by the provisions in effect at the time they
last terminated their public service.
1. General Employees Plan Benefits
General Employees Plan benefits are based on a member’s highest average salary for any five
successive years of allowable service, age, and years of credit at termination of service. Two methods
are used to compute benefits for PERA's Coordinated Plan members. Members hired prior to July 1,
1989, receive the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired
after June 30, 1989. Under Method 1, the accrual rate for Coordinated members is 1.2 percent of average
salary for each of the first 10 years of service and 1.7 percent of average salary for each additional year.
Under Method 2, the accrual rate for Coordinated members is 1.7 percent of average salary for all years
of service. For members hired prior to July 1, 1989, a full annuity is available when age plus years of
service equal 90 and normal retirement age is 65. For members hired on or after July 1, 1989, normal
retirement age is the age for unreduced Social Security benefits capped at 66.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. If the General Employees Plan is at least 90 percent funded for two consecutive years,
benefit recipients are given a 2.5 percent increase. If the plan has not exceeded 90 percent funded, or
have fallen below 80 percent, benefit recipients are given a one percent increase. A benefit recipient who
has been receiving a benefit for at least 12 full months as of June 30, will receive a full increase.
Members receiving benefits for at least one month but less than 12 full months as of June 30, will receive
a pro rata increase.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
61
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
2. Police and Fire Plan Benefits
Benefits for Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014, vest on
a prorated basis from 50 percent after five years up to 100 percent after ten years of credited service.
Benefits for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis from
50 percent after ten years up to 100 percent after twenty years of credited service. The annuity accrual
rate is 3 percent of average salary for each year of service. A full, unreduced pension is earned when
members are age 55 and vested, or for members who were first hired prior to July 1, 1989, when age
plus years of service equal at least 90.
Benefit increases are provided to benefit recipients each January. Police and Fire Plan benefit recipients
receive a future annual 1.0 percent increase. An annual adjustment will equal 2.5 percent any time the
plan exceeds a 90 percent funded ratio for two consecutive years. If the adjustment is increased to 2.5
percent and the funded ratio falls below 80 percent for one year or 85 percent for two consecutive years,
the post-retirement benefit increase will be lowered to one percent. A benefit recipient who has been
receiving a benefit for at least 12 full months as of June 30 will receive a full increase. Members receiving
benefits for at least one month but less than 12 full months as of June 30 will receive a pro rata increase.
For retirements after May 31, 2014, the first increase will be delayed two years.
Contributions. Minnesota Statutes Chapter 353 sets the rates for employer and employee
contributions. Contribution rates can only be modified by the state Legislature.
1. General Employees Plan Contributions
Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary in
fiscal year 2018 and the City was required to contribute 7.50 percent for Coordinated Plan members. The
City’s contributions to the General Employees Plan for the year ended December 31, 2018, were
$356,724. The City’s contributions were equal to the required contributions as set by state statute.
2. Police and Fire Plan Contributions
Plan members were required to contribute 10.8 percent of their annual covered salary in calendar year
2018. The City was required to contribute 16.20 percent of pay for members in calendar year 2018. The
City’s contributions to the Police and Fire Plan for the year ended December 31, 2018, were $384,894.
The City’s contributions were equal to the required contributions as set by state statute.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
62
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Pension Costs
1. General Employees Fund Pension Costs
At December 31, 2018, the City reported a liability of $3,816,742 for its proportionate share of the
General Employees Fund’s net pension liability. The City’s net pension liability reflected a reduction due
to the State of Minnesota’s contribution of $16 million to the fund in 2018. The State of Minnesota is
considered a non-employer contributing entity and the state’s contribution meets the definition of a
special funding situation. The State of Minnesota’s proportionate share of the net pension liability
associated with the City totaled $125,096. The net pension liability was measured as of June 30, 2018
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City’s proportion of the net pension liability was based on the City’s
contributions received by PERA during the measurement period for employer payroll paid dates from July
1, 2017 through June 30, 2018 relative to the total employer contributions received from all of PERA’s
participating employers.
At June 30, 2018, the City’s proportion share was 0.0688 percent, which was an increase of 0.0037
percent from its proportion measured as of June 30, 2017.
City’s proportionate share of the net pension liability $ 3,816,742
State of Minnesota’s proportionate share of the net pension
liability associated with the City 125,096
Total $ 3,941,838
For the year ended December 31, 2018, the City recognized pension expense of $380,684 for its
proportionate share of the General Employees Plan’s pension expense. In addition, the City recognized
an additional $29,172 as pension expense and grant revenue for its proportionate share of the State of
Minnesota’s contribution of $16 million to the General Employees Fund.
At December 31, 2018, the City reported its proportionate share of the General Employees Plan’s
deferred outflows of resources and deferred inflows of resources related to pensions from the following
sources:
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Differences between expected and actual economic experience $ 95,833 $ 105,655
Changes of actuarial assumptions 353,633 423,959
Difference between projected and actual investment earnings - 385,736
Changes in proportion 187,519 8,119
Contributions paid to PERA subsequent to measurement date 180,070 -
Totals $ 817,055 $ 923,469
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
63
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Pension Costs (cont.)
1. General Employees Fund Pension Costs (cont.)
$180,070 reported as deferred outflows related to pension resulting from City contributions subsequent to
the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31, 2019. Other amounts reported as deferred outflows of resources and deferred inflows of
resources related to pension will be recognized in pension expense as follows:
Year Ended
December 31:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension Expense
Amount
2019 $ 462,626 $ 279,141 $ 183,485
2020 106,213 252,595 (146,382)
2021 60,558 301,176 (240,618)
2022 7,588 90,557 (82,969)
2. Police and Fire Fund Pension Costs
At December 31, 2018, the City reported a liability of $2,322,590 for its proportionate share of the Police
and Fire Fund’s net pension liability. The net pension liability was measured as of June 30, 2018, and the
total pension liability used to calculate the net pension liability was determined by an actuarial valuation
as of that date. The City’s proportion of the net pension liability was based on the City’s contributions
received by PERA during the measurement period for employer payroll paid dates from July 1, 2017,
through June 30, 2018, relative to the total employer contributions received from all of PERA’s
participating employers.
At June 30, 2018, the City’s proportion was 0.2179 percent, which was an increase of 0.0129 percent
from its proportion measured as of June 30, 2017.
For the year ended December 31, 2018, the City recognized pension expense of $268,317 for its
proportionate share of the Police and Fire Plan’s pension expense. In addition, the City recognized an
additional $19,611, as pension expense and grant revenue for its proportionate share of the State of
Minnesota’s on-behalf contributions to the Police and Fire Fund. Legislation passed in 2013 required the
State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year, starting in fiscal
year 2014.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
64
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Pension Costs (cont.)
2. Police and Fire Fund Pension Costs (cont.)
At December 31, 2018, the City reported its proportionate share of the Police and Fire Plan’s deferred
outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows of
Resources
Deferred Inflows of
Resources
Differences between expected and actual economic experience $ 90,406 $ 543,832
Changes in actuarial assumptions 2,728,773 3,218,833
Difference between projected and actual investment earnings - 475,054
Changes in proportion 173,938 66,522
Contributions paid to PERA subsequent to measurement date 201,028 -
Totals $ 3,194,145 $ 4,304,241
$201,028 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended
December 31:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension Expense
Amount
2019 $ 974,013 $ 1,003,955 $ (29,942)
2020 974,011 1,109,373 (135,362)
2021 959,610 1,269,818 (310,208)
2022 49,656 908,054 (858,398)
2023 35,827 13,041 22,786
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
65
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Actuarial Assumptions
The total pension liability in the June 30, 2018, actuarial valuation was determined using the following
actuarial assumptions:
Inflation 2.50% per year
Active Member Payroll Growth 3.25% per year
Investment Rate of Return 7.50%
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as
appropriate, with slight adjustments to fit PERA’s experience. Cost of living benefit increases after
retirement for retirees are assumed to be 1.25 percent per year for the General Employees Plan and 1.0
percent per year for the Police and Fire Plan.
Actuarial assumptions used in the June 30, 2018 valuation were based on the results of actuarial
experience studies. The most recent six-year experience study in the General Employees Plan was
completed in 2015. The most recent four-year experience study for Police and Fire Plan was completed
in 2016.
The following changes in actuarial assumptions occurred in 2018:
General Employees Fund
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.00 percent per year through 2044 and
2.50 percent per year thereafter to 1.25 percent per year.
Police and Fire Fund
The mortality projection scale was changed from MP-2016 to MP-2017.
As set by statute, the assumed post-retirement benefit increase was changed from 1.0
percent per year through 2064 and 2.5 percent per year, thereafter, to 1.0 percent for all
years, with no trigger.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
66
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Actuarial Assumptions (cont.)
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness on a regular basis of the long-term expected rate of return using a building-block method
in which best-estimate ranges of expected future rates of return are developed for each major asset
class. These ranges are combined to produce an expected long-term rate of return by weighting the
expected future rates of return by the target asset allocation percentages. The target allocation and best
estimates of geometric real rates of return for each major asset class are summarized in the following
table:
Asset Class
Long-Term Expected
Real Rate of Return Target Allocation
Domestic Stocks 5.10% 36%
International Stocks 5.30 17
Bonds 0.75 20
Alternative Assets 5.90 25
Cash 0.00 2
Discount rate. The discount rate used to measure the total pension liability in 2018 was 7.50%. The
projection of cash flows used to determine the discount rate assumed that contributions from plan
members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions,
the fiduciary net positions of the General Employees Fund and the Police and Fire Fund was projected to
be available to make all projected future benefit payments of current plan members. Therefore, the long-
term expected rate of return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
Pension Liability Sensitivity. The following presents the City’s proportionate share of the net pension
liability for all plans it participates in, calculated using the discount rate disclosed in the preceding
paragraph, as well as what the City’s proportionate share of the net pension liability would be if it were
calculated using a discount rate one percentage point lower or one percentage point higher than the
current discount rate:
1% Decrease to
Discount Rate
Current Discount
Rate
1% Increase to
Discount Rate
City’s proportionate share of the
General Employees Fund net
pension liability $6,202,694 $3,816,742 $1,847,206
City’s proportionate share of the
Police and Fire Fund net pension
liability $4,979,778 $2,322,590 $125,205
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
67
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Public Employees Retirement Association (PERA) (cont.)
Pension Plan Fiduciary Net Position. Detailed information about each pension plan’s fiduciary net
position is available in a separately-issued PERA financial report that includes financial statements and
required supplementary information. That report may be obtained on the Internet at www.mnpera.org.
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan
Plan Description. The City of Rosemount contributes to the Rosemount Fire Department Relief
Association Pension Plan; a single-employer retirement system administered by the Rosemount Fire
Department Relief Association. The Rosemount Fire Department Relief Association provides a lump-sum
benefit to its members upon retirement, total disability or death. These benefit provisions are established
and can be amended by the Rosemount Fire Department Relief Association’s Board of Trustees with
approval by the Rosemount City Council.
Benefits. Individuals with at least 20 years of service who have reached age 50 are entitled to a lump-
sum payment of $7,200 per year of service plus a Supplemental Benefit of 10% of the regular lump sum
distributions, but not more than $1,000. In the event an otherwise qualified member has less than 20
years of service, the member is eligible for a pension payment of 60 percent after 10 years of service,
increasing 4 percent for each year of service after 10 years to a maximum of 100 percent. Members
retiring before 50 do not receive distributions until age 50, but interest at 5% per year is added to their
retirement benefit until paid.
Employees covered by benefit terms. At the December 31, 2016 valuation date, the following
employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits -
Inactive employees entitled to but not yet receiving benefits 7
Active members 52
59
Contributions. The contribution requirements are established and may be amended by the Minnesota
State Legislature. The Rosemount Fire Department Relief Association is comprised of volunteers.
Therefore, there are no covered payroll amounts or member contributions required.
Pension Costs. At December 31, 2018, the City reported a net pension asset of $1,583,135 for the plan.
The net pension asset was measured as of December 31, 2017. The total pension liability used to
calculate the net pension asset in accordance with GASB 68 was determined by applying an actuarial
formula to specific census data certified by the Department as of December 31, 2016.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
68
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.)
The following table presents the changes in net pension asset during the year.
Total
Pension
Liability
(a)
Plan
Fiduciary Net
Position
(b)
Net Pension
Liability
(Asset)
(a-b)
Beginning balance, January 1, 2018 $ 2,634,695 $ 3,881,329 $ (1,246,634)
Changes for the year
Service cost 136,040 - 136,040
Interest on pension liability 167,555 - 167,555
Changes of benefit terms 24,100 - 24,100
Contributions (state and local) - 170,267 (170,267)
Net investment income - 502,429 (502,429)
Benefit payments, including member
contribution refunds (576,871) (576,871) -
Administrative expense - (8,500) 8,500
Total net changes (249,176) 87,325 (336,501)
Ending balance, December 31, 2018 $ 2,385,519 $ 3,968,654 $ (1,583,135)
For the year ended December 31, 2018, the City recognized pension expense of $67,141.
At December 31, 2018, the City reported deferred inflows of resources and deferred outflows of
resources, its contributions subsequent to the measurement date, related to pension from the following
sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Difference between expected and actual experience $ - $ 64,133
Change in actuarial assumptions 22,215 57,505
Net differences between projected and actual
earnings on pension plan investments - 152,972
Employer contributions subsequent to the
measurement date 30,000 -
Totals $ 52,215 $ 274,610
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
69
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.)
Deferred outflows of resources totaling $30,000 related to pensions resulting from the City's contributions
to the plan subsequent to the measurement date will be recognized as a reduction of the net pension
liability (asset) in the year ended December 31, 2019. Other amounts reported as deferred outflows of
resources and deferred inflows of resources related to pension will be recognized in pension expense as
follows:
Year Ended
December 31:
Future
Recognition
2019 $ (26,370)
2020 (25,322)
2021 (74,581)
2022 (60,367)
2023 (8,417)
Thereafter (57,338)
Actuarial assumptions. The total pension liability at December 31, 2017 was determined using the entry
age normal actuarial cost method and the following actuarial assumptions:
Fifty (50) percent of active members will retire when reaching retirement eligibility (later of age 50 and 20
years of service); then fifty (50) percent retire each subsequent year until one hundred (100) percent
retirement at the earlier of age 65 or 30 years of service.
Actuarial Valuation Date: December 31, 2016
Measurement Date of Net Pension Asset: December 31, 2017
Actuarial Cost Method: Entry Age Normal
Index rate for 20-year, tax exempt municipal bonds 3.31%
Long-Term Expected Rate of Return: 6.75%
Discount Rate: 6.75%
Inflation: 2.75%
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
70
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.)
Mortality rates were based on the July 1, 2016 Minnesota Public Employees’ Retirement Association
Police and Fire Plan actuarial valuation as described below:
Healthy Pre-Retirement – RP 2000 non-annuitant generational mortality, white-collar adjustment,
male rates set back two years, female rates set back two years.
Healthy Post-Retirement – RP 2000 non-annuitant generational mortality, white-collar adjustment,
without age adjustment.
The actuarial assumptions used in the December 31, 2016 valuation were based on the results of an
actuarial experience study for the period January 1, 2016–December 31, 2016.
The benefit lump-sum payment per year of service increased from $7,100 to $7,200.
The long-term expected rate of return on pension plan investments was determined using a building-
block method in which best estimates for expected future real rates of return (expected returns, net of
pension plan investment expense and inflation) were developed for each major asset class. The asset
class estimates were combined to produce the portfolio long-term expected rate of return by weighting
the expected future real rates of return by the current asset allocation percentage and by adding
expected inflation (2.75%). All results are then rounded to the nearest quarter percentage point.
The best estimates of geometric real and nominal rates of return for each major asset class are
summarized in the following table:
Asset Class
Allocation at
Measurement Date
Long-Term
Expected Real
Rate of Return
Long-term
Expected Nominal
Rate of Return
Domestic equity 67.92% 5.39% 8.14%
International equity 2.47 5.20 7.95
Fixed income 11.93 1.98 4.73
Real estate and alternatives 0.74 4.25 7.00
Cash and cash equivalents 16.94 0.79 3.54
Total 100.00% 7.20%
Reduced for assumed
investment expense
(0.40%)
Net assumed investment return
(weighted avg, rounded to ¼%)
6.75%
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
71
NOTE V – OTHER INFORMATION (cont.)
A. EMPLOYEES’ RETIREMENT SYSTEM (cont.)
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.)
Discount rate. The discount rate used to measure the total pension liability was 6.75 percent. The
discount rate was developed using the alternative method. Considering the plan’s current overfunded
status, combined with statutory funding requirements, it is assumed the projected plan assets will be
adequate to pay future retiree benefits. Therefore, the long-term expected rate of return on pension plan
investments was applied to all periods of projected benefit payments to determine the total pension
liability.
Net pension asset sensitivity. The following presents the City’s net pension asset for the plan,
calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s net
pension asset would be if it were calculated using a discount rate 1 percent lower or 1 percent higher
than the current discount rate:
1 Percent
Decrease
Current
1 Percent
Increase
Net pension asset $ 1,514,117 $ 1,583,135 $ 1,649,388
Pension plan fiduciary net position. The Rosemount Fire Department Relief Association issues a
publicly available financial report that includes financial statements and required supplementary
information for the Rosemount Fire Department Relief Association Pension Plan. That report may be
obtained by writing to City of Rosemount, 2875 145th Street West, Rosemount, Minnesota 55068-4997, or
by calling 651 423 4411.
B. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets;
errors and omissions; workers’ compensation; and health care of its employees. The City purchases
commercial insurance and participates in a public entity risk pool called the Minnesota League of Cities
Insurance Trust to provide coverage for these various risks of loss. Settled claims have not exceeded
coverage in any of the past three years. There were no significant reductions in coverage compared to
the prior year.
The City has established an internal service fund (Insurance Fund) to account for and finance uninsured
risks of loss related to torts, theft of, damage to and destruction of assets, including deductibles. The
majority of the City’s general liability and workers’ compensation insurance premiums are paid for by this
fund. At December 31, 2018, there are no claims liabilities in the Insurance Fund based on the
requirements of Governmental Accounting Standards Board Statement Number 10, which requires that a
liability for claims be reported if information prior to the issuance of the financial statements indicates that
it is probable a liability has been incurred at the date of the financial statements and the amount of loss
can be reasonably estimated.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
72
NOTE V – OTHER INFORMATION (cont.)
C. COMMITMENTS AND CONTINGENCIES
Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting
Standards Board pronouncements are met. The liability and expenditure for claims and judgments are
only reported in governmental funds if it has matured. Claims and judgments are recorded in the
government-wide statements and proprietary funds as expenses when the related liabilities are incurred.
From time to time, the City is party to various pending claims and legal proceedings. Although the
outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the
City attorney that the likelihood is remote that any such claims or proceedings will have a material
adverse effect on the City's financial position or results of operations.
The City has received federal and state grants for specific purposes that are subject to review and audit
by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for
expenditures disallowed under terms of the grants. Management believes such disallowances, if any,
would be immaterial.
The City has active construction projects as of December 31, 2018. Work that has been completed on
these projects but not yet paid for (including contract retainages) is reflected as accounts payable and
expenditures. $834,967 remains on commitments on signed contracts that were not yet complete as of
year-end.
In 2007, the City, through the Port Authority TIF (Authority) which was established under Minnesota
Statutes Chapter 469.0813, entered into an agreement with 146th Street Partners, Limited Partnership
(Developer) in the form of a tax incremental revenue note to stimulate economic development. The
amount of the obligation is $1,500,000, and is payable to the developer solely from available tax
increments collected from a specific portion of the development. Payments are scheduled through the
year 2032, and carry an interest rate of 4.96%. The agreement is authorized through the Contract for
Private Redevelopment between the Authority and Developer. The Developer pays property taxes as
they become due, and since meeting the criteria established in the development agreement, is entitled to
incentive payments that directly correlate to the taxes paid. The incentive is based on the repayment
schedule in the tax incremental revenue note but only to the extent of available tax increment, defined as
90% of the tax increment that is received by the Authority in the six-month period immediate before each
payment date. The obligation does not constitute a charge upon any funds of the City. In the event that
future tax increments are not sufficient to pay off the obligation, the obligation terminates with no further
liability to the City. Since the amount of future payments is contingent on the collection of future TIF
increments, the obligation is not reported as a liability in the accompanying financial statements. Incentive
payments for the year ended December 31, 2018 were $145,776.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
73
NOTE V – OTHER INFORMATION (cont.)
D. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
General Information About the Plan
Plan description. The City's other postemployment benefit ("OPEB") plan provides insurance benefits for
eligible retirees through the City’s OPEB plan, a single-employer defined benefit plan administered by the
City. All post-employment benefits are based on contractual agreements with employee groups. These
contractual agreements do not include any specific contribution or funding requirements. The plan does
not issue a publically available financial report.
Benefits provided. All retirees of the City have the option under state law to continue their medical
insurance coverage through the City from the time of retirement until the employee reaches the age of
eligibility for Medicare. For members of all employee groups, the retiree must pay the full premium to
continue coverage for medical and dental insurance.
The City is legally required to include any retirees for whom it provides health insurance coverage in the
same insurance pool as its active employees, whether the premiums are paid by the City or the retiree.
Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit
rate subsidy.” This benefit relates to the assumption that the retiree is receiving a more favorable
premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to
being included in the same pool with the City’s younger and statistically healthier active employees.
Employees covered by benefit terms. At December 31, 2018, the following employees were covered
by the benefit terms:
Active employees electing coverage 67
Active employees waiving coverage 17
Retirees electing coverage 5
89
Total OPEB Liability
The City's total OPEB liability of $806,287 was measured as of December 31, 2017, and was determined
in accordance with the Alternative Measurement Method (AMM), prescribed by GASB 75 for employers
with under 100 plan participants, as of that date, in place of an actuarial valuation.
Valuation assumptions and other inputs. The total OPEB liability in the December 31, 2017 valuation
was determined using the following valuation assumptions and other inputs, applied to all periods
included in the measurement, unless otherwise specified:
Discount Rate 3.31%, based on Index rate for 20-year, tax exempt municipal bonds
Inflation 2.50%
Healthcare cost
trend rates
6.9% initially, decreased annually to a minimum of 5.2% in 2021, gradually
decreasing over several decades to an ultimate rate of 4.1% in 2075 and later years.
In addition, the medical trend rates above were increased to reflect the projected
effect of the Affordable Care Act's Excise Tax on high cost health insurance plans.
The additional trend rate adjustments vary by year, but average 0.37% beginning
calendar year 2022 for plans other than Medicare plans.
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
74
NOTE V – OTHER INFORMATION (cont.)
D. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (cont.)
Total OPEB Liability (cont.)
Salary increases were based on a service-related table. Mortality rates were based on the RP 2014
tables (with adjustments) as the base table and project future improvements with MP-2018 generational
improvement scale, as adopted by the Council in connection with the 2015 six-year Experience Study for
the General Employees Plan and the 2016 four-year Experience Study for the Police and Fire Plan and
performed by the actuary for the Public Employees Retirement Association of Minnesota.
The valuation assumptions used in the December 31, 2017 valuation were based on the results of the
Public Employees Retirement Association of Minnesota actuarial valuation as of June 30, 2017.
Changes in the Total OPEB Liability
Balance at December 31, 2017 $ -
Changes for the year:
Change in December 31, 2017 liability due to implementation
of GASB 75 727,226
Service cost 59,324
Interest 29,170
Changes in assumptions or other inputs 32,417
Benefit payments (41,850)
Net changes 79,061
Balance at December 31, 2018 $ 806,287
Changes of assumptions or other inputs reflect an update of demographic assumptions based upon the
most recent PERA experience studies, a change in the annual claim costs to reflect current medical
provisions and premiums, and an update to the medical trend rates to be consistent with the most recent
Getzen model application.
Sensitivity of the total OPEB liability to changes in the discount rate. The following presents the total
OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using
a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount
rate:
1% Decrease Discount Rate 1% Increase
(2.31%) (3.31%) (4.31%)
Total OPEB Liability $ 876,029 $ 806,287 $ 743,006
CITY OF ROSEMOUNT
NOTES TO FINANCIAL STATEMENTS
As of and for the Year Ended December 31, 2018
75
NOTE V – OTHER INFORMATION (cont.)
D. POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (cont.)
Changes in the Total OPEB Liability (cont.)
Sensitivity of the total OPEB liability to changes in the healthcare cost trend rates. The following
presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it
were calculated using healthcare cost trend rates that are 1-percentage-point lower or
1-percentage-point higher than the current healthcare cost trend rates:
Current Trend
1% Decrease Rate 1% Increase
Total OPEB Liability $ 722,871 $ 806,287 $ 905,035
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to OPEB
For the year ended December 31, 2018, the City recognized OPEB expense of $120,911. At December
31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to
OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Employer contributions subsequent to the
measurement date $ 44,738 -
The AMM method only allows amortization of investment gains and losses, of which the City’s plan had
none. All other gains and losses due to experience and assumption changes are recognized immediately
in the annual OPEB expense. $44,738 reported as deferred outflows related to OPEB resulting from the
employer contributions subsequent to the measurement date will be recognized as a reduction of the net
OPEB liability in the year ended December 31, 2019.
E. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS
The Governmental Accounting Standards Board (GASB) has approved the following:
Statement No. 83, Certain Asset Retirement Obligations
Statement No. 84, Fiduciary Activities
Statement No. 87, Leases
Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct
Placements
Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No.14 and
No.61
When they become effective, application of these standards may restate portions of these financial
statements.
R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N
Variance with
REVENUES Original Final Actual Final Budget
TAXES
General property tax 8,545,985$ 8,545,985$ 8,525,849$ (20,136)$
Fiscal disparities 1,236,215 1,236,215 1,236,215 -
Other 353,000 353,000 386,502 33,502
Total Taxes 10,135,200 10,135,200 10,148,566 13,366
INTERGOVERNMENTAL REVENUES
Federal grants - - 4,484 4,484
State aid - police 195,500 195,500 216,545 21,045
State aid - general government 61,000 61,000 95,785 34,785
State aid - highway 41,300 41,300 42,960 1,660
Other 97,000 97,000 100,982 3,982
Total Intergovernmental Revenues 394,800 394,800 460,756 65,956
PUBLIC CHARGES FOR SERVICES
General government 1,212,700 1,212,700 1,325,663 112,963
Public safety 36,400 36,400 41,796 5,396
Highways and streets 55,500 55,500 100,248 44,748
Parks and recreation 208,000 208,000 264,057 56,057
SAC 4,500 4,500 6,809 2,309
Total Charges for Services 1,517,100 1,517,100 1,738,573 221,473
LICENSES AND PERMITS
Business 57,100 57,100 61,155 4,055
Non-business 672,100 672,100 823,010 150,910
Total Licenses and Permits 729,200 729,200 884,165 154,965
FINES AND FORFEITURES
County 115,000 115,000 94,281 (20,719)
SPECIAL ASSESSMENTS - - 137 137
INVESTMENT INCOME AND MISCELLANEOUS
Interest earnings 121,000 121,000 191,618 70,618
Change in fair value of investments - - (26,946) (26,946)
Miscellaneous general revenues 12,300 12,300 17,675 5,375
Donations - 41,800 30,861 (10,939)
Rents 33,000 33,000 40,660 7,660
Total Investment Income and Miscellaneous 166,300 208,100 253,868 45,768
Total Revenues 13,057,600 13,099,400 13,580,346 480,946
OTHER FINANCING SOURCES
Transfers in 3,500 3,500 5,425 1,925
TOTAL REVENUES AND OTHER
FINANCING SOURCES 13,061,100$ 13,102,900$ 13,585,771$ 482,871$
Budgeted Amounts
For the Year Ended December 31, 2018
CITY OF ROSEMOUNT
GENERAL FUND
SCHEDULE OF REVENUES AND OTHER SOURCES COMPARED TO BUDGET (BUDGETARY BASIS)
REQUIRED SUPPLEMENTARY INFORMATION
BUDGET AND ACTUAL
See auditors' report and accompanying notes to required supplementary information.
76
Variance with
CURRENT EXPENDITURES Original Final Actual Final Budget
GENERAL GOVERNMENT
Mayor and council 288,000$ 288,000$ 376,297$ (88,297)$
Executive 676,700 676,700 637,369 39,331
Elections 45,300 45,300 40,909 4,391
Finance 568,300 568,300 562,630 5,670
Community development 1,125,200 1,125,200 1,090,590 34,610
General government 334,600 334,600 320,623 13,977
TOTAL GENERAL GOVERNMENT 3,038,100 3,038,100 3,028,418 9,682
PUBLIC SAFETY
Police department 4,164,500 4,177,291 4,256,863 (79,572)
Fire department 438,700 461,108 394,056 67,052
TOTAL PUBLIC SAFETY 4,603,200 4,638,399 4,650,919 (12,520)
PUBLIC WORKS
Government building maintenance 605,200 605,200 605,264 (64)
Fleet maintenance 656,500 656,500 574,147 82,353
Street maintenance 1,520,700 1,520,700 1,505,948 14,752
Park maintenance 1,001,100 1,001,100 979,152 21,948
TOTAL PUBLIC WORKS 3,783,500 3,783,500 3,664,511 118,989
PARKS AND RECREATION 1,531,600 1,538,203 1,663,618 (125,415)
CAPITAL OUTLAY - - 454 (454)
OTHER FINANCING USES
Transfers out 130,000 130,000 333,000 (203,000)
TOTAL EXPENDITURES AND
OTHER FINANCING USES 13,086,400$ 13,128,202$ 13,340,920 (212,718)$
Beginning of year budget basis encumbrances 1,188,524
End of year budget basis encumbrances (1,382,832)
GAAP basis expenditures and other financing uses 13,146,612$
Budgeted Amounts
For the Year Ended December 31, 2018
CITY OF ROSEMOUNT
GENERAL FUND
SCHEDULE OF EXPENDITURES AND OTHER USES (BUDGETARY BASIS) - BUDGET AND ACTUAL
REQUIRED SUPPLEMENTARY INFORMATION
See auditors' report and accompanying notes to required supplementary information.
77
State's City's and State's City's City's Proportionate Proportionate City's Proportionate Plan FiduciaryProportion Proportionate Share of the Net Share of the Net Share of the Net Net PositionCity Fiscal PERA Fiscal of the Net Share of the Pension Liability Pension Liability City's Pension Liability as a as a PercentageYear End Year End Date Pension Net Pension Associated Associated Covered Percentage of Covered of the totalDate(Measurement Date)LiabilityLiability (a)with City (b)with City (a+b)Payroll ** (c)Payroll ((a+b)/c)Pension Liability12/31/15 6/30/15 0.0645% 3,342,725$ n/a 3,342,725$ 3,896,543$ 85.79% 78.20%12/31/16 6/30/16 0.0653% 5,302,014 69,191 5,371,205 4,004,601 134.13% 68.90%12/31/17 6/30/17 0.0651% 4,155,941 52,248 4,208,189 4,192,648 100.37% 75.90%12/31/18 6/30/18 0.0688% 3,816,742 125,096 3,941,838 4,622,170 85.28% 79.50%* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.**For purposes of this schedule, covered payroll is defined as "pensionable wages."Contributions inRelation to the ContributionsCity Fiscal PERA Fiscal Statutorily Statutorily Contribution as a PercentageYear End Year End Date Required Required Deficiency Covered of CoveredDate(Measurement Date)Contributions (a)Contributions (b)(Excess) (a-b)Payroll ** (d)Payroll (b/d)12/31/15 6/30/15 292,241$ 292,241$ -$ 3,896,543$ 7.50%12/31/16 6/30/16 308,184 308,184 - 4,109,750 7.50%12/31/17 6/30/17 331,224 331,224 - 4,417,884 7.50%12/31/18 6/30/18 356,724 356,724 - 4,756,318 7.50%* This schedule is presented prospectively beginning with the fiscal year ended December 31, 2015.**For purposes of this schedule, covered payroll is defined as "pensionable wages."CITY OF ROSEMOUNTSCHEDULE OF CITY'S AND NONEMPLOYER PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUNDFor the Year Ended December 31, 2018For the Year Ended December 31, 2018 PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUNDSCHEDULE OF EMPLOYER CONTRIBUTIONS -REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)See auditors' report and accompanying notes to required supplementary information.78
City's City's City's Proportionate Plan FiduciaryProportion Proportionate Share of the Net PositionCity Fiscal PERA Fiscal of the Net Share of the City's Net Pension Liability as a PercentageYear End Year End Date Pension Net Pension ** Covered as a Percentage of of the totalDate(Measurement Date)LiabilityLiability (a)Payroll (b)Covered Payroll (a/b)Pension Liability12/31/15 6/30/15 0.2130% 2,420,178$ 1,984,803$ 121.94% 86.60%12/31/16 6/30/16 0.2060% 8,267,138 1,895,019 436.26% 63.90%12/31/17 6/30/17 0.2050% 2,767,744 2,107,072 131.35% 85.40%12/31/18 6/30/18 0.2179% 2,322,590 2,297,620 101.09% 88.80%* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.**For purposes of this schedule, covered payroll is defined as "pensionable wages."Contributions inRelation to the ContributionsCity Fiscal PERA Fiscal Statutorily Statutorily Contribution as a PercentageYear End Year End Date Required Required Deficiency Covered of CoveredDate(Measurement Date)Contributions (a)Contributions (b)(Excess) (a-b)Payroll ** (d)Payroll (b/d)12/31/15 6/30/15 321,538$ 321,538$ -$ 1,984,803$ 16.20%12/31/16 6/30/16 326,037 326,037 - 2,012,572 16.20%12/31/17 6/30/17 356,264 356,264 - 2,199,164 16.20%12/31/18 6/30/18 384,894 384,894 - 2,375,890 16.20%* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.**For purposes of this schedule, covered payroll is defined as "pensionable wages."For the Year Ended December 31, 2018PUBLIC EMPLOYEES POLICE AND FIRE FUNDREQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)CITY OF ROSEMOUNTSCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - PUBLIC EMPLOYEES POLICE AND FIRE FUNDFor the Year Ended December 31, 2018SCHEDULE OF EMPLOYER CONTRIBUTIONS - See auditors' report and accompanying notes to required supplementary information.79
City's year end 2015 City's year end 2016 City's year end 2017 City's year end 2018Measurement date 2014Measurement date 2015Measurement date 2016Measurement date 2017Total Pension Liability Service cost113,354$ 116,471$ 133,433$ 136,040$ Interest 125,956 137,850 148,293 167,555 Changes of assumptions - 32,190 (68,607) - Differences between expected and actual experience - - (76,515) - Changes of benefit terms - 22,230 52,512 24,100 Benefit payments, including member contribution refunds- (88,394) - (576,871) Net change in total pension liability 239,310 220,347 189,116 (249,176) Total pension liability - beginning1,985,922 2,225,232 2,445,579 2,634,695 Total pension liability - ending2,225,232$ 2,445,579$ 2,634,695$ 2,385,519$ Plan Fiduciary Net Position Contributions - State and local296,595$ 244,269$ 170,901$ 170,267$ Contributions - donations and other - - 277 - Net investment income 186,351 (44,297) 271,652 502,429 Benefit payments, including member contribution refunds - (88,394) - (576,871) Administrative costs(8,300) (13,285) (8,570) (8,500) Net change in plan fiduciary net position 474,646 98,293 434,260 87,325 Plan fiduciary net position - beginning2,874,130 3,348,776 3,447,069 3,881,329 Plan fiduciary net position - ending3,348,776$ 3,447,069$ 3,881,329$ 3,968,654$ Net pension liability/(asset) - ending(1,123,544)$ (1,001,490)$ (1,246,634)$ (1,583,135)$ Plan fiduciary net position as a percentage of the total pension liability 150.49% 140.95% 147.32% 166.36%* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.CITY OF ROSEMOUNTSCHEDULE OF CHANGES IN THE ROSEMOUNT FIRE DEPARTMENT RELIEF ASSOCIATION'SNET PENSION ASSET AND RELATED RATIOS REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)For the Year Ended December 31, 2018See auditors' report and accompanying notes to required supplementary information.80
Non-Employer
Statutorily Contribution
Year End Determined Actual Contribution State 2%
Date Contribution Contribution Excess Fire Aid
12/31/15 -$ 109,100$ 109,100$ 135,169$
12/31/16 - 30,000 30,000 140,901
12/31/17 - 30,000 30,000 140,267
12/31/18 - 30,000 30,000 144,579
* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2015.
City Contributions
ROSEMOUNT FIRE DEPARTMENT RELIEF ASSOCIATION
REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)
For the Year Ended December 31, 2018
CITY OF ROSEMOUNT
SCHEDULE OF EMPLOYER CONTRIBUTIONS -
See auditors' report and accompanying notes to required supplementary information.
81
City's year end 2018
Measurement date 2017
Total OPEB Liability
Service cost 59,324$
Interest 29,170
Changes of assumptions 32,417
Benefit payments (41,850)
Net change in total OPEB liability 79,061
Total OPEB liability - beginning 727,226
Total OPEB liability - ending 806,287$
Plan Fiduciary Net Position
Contributions - Employer 41,850$
Benefit payments (41,850)
Net change in plan fiduciary net position -
Plan fiduciary net position - beginning -
Plan fiduciary net position - ending -$
Net OPEB liability - ending 806,287$
Plan fiduciary net position as a
percentage of the total OPEB liability 0.00%
OPEB-eligible payroll for the measurement period 6,514,100$
Net OPEB Liability as a % of eligible payroll 12.4%
* This schedule is provided prospectively beginning with the fiscal year ended December 31, 2018.
For the Year Ended December 31, 2018
CITY OF ROSEMOUNT
SCHEDULE OF CHANGES IN THE CITY'S
TOTAL OPEB LIABILITY AND RELATED RATIOS
REQUIRED SUPPLEMENTARY INFORMATION (Last Ten Years*)
See auditors' report and accompanying notes to required supplementary information.
82
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2018
83
Budgetary Information
Budgetary information is derived from the annual operating budget and is presented using generally
accepted accounting principles and the modified accrual basis of accounting with departures from
generally accepted accounting principles for encumbrances.
Public Employees Retirement Association (PERA)
The amounts determined for each fiscal year were determined as of the calendar year-end and occurred
within the fiscal year.
The City is required to present the last ten years of data; however, accounting standards allow the
presentation of as many years as are available until ten fiscal years are presented.
Changes in benefit terms: There were no changes of benefit terms for any participating employer in the
Public Employees Retirement Association.
2018 General Employees Fund Changes:
Changes in Actuarial Assumptions:
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.00 percent per year through 2044 and 2.50
percent per year thereafter to 1.25 percent per year.
2017 General Employees Fund Changes:
Changes in Plan Provisions:
The State’s special funding contribution increased from $6 million to $16 million.
Changes in Actuarial Assumptions:
The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members
and 60 percent for vested and nonvested deferred members. The revised CSA loads are now
zero percent for active member liability, 15.0 percent for vested deferred member liability, and 3.0
percent for nonvested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year for all
years to 1.0 percent per year through 2044, and 2.5 percent per year thereafter.
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2018
84
Public Employees Retirement Association (PERA) (cont.)
2016 General Employees Fund Changes:
Changes in Actuarial Assumptions:
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year
through 2035, and 2.5 percent per year thereafter, to 1.0 percent per year for all years.
The assumed investment return was changed from 7.9 percent to 7.5 percent. The single
discount rate was changed from 7.9 percent to 7.5 percent.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to
3.25 percent for payroll growth, and 2.50 percent for inflation.
2015 General Employees Fund Changes:
Changes in Plan Provisions:
On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General
Employees Retirement Fund, which increased the total pension liability by $1.1 billion and
increased the fiduciary plan net position by $892 million. Upon consolidation, state and employer
contributions were revised.
Changes in Actuarial Assumptions:
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year
through 2030, and 2.5 percent per year thereafter, to 1.0 percent per year through 2035, and 2.5
percent per year thereafter.
2018 Police and Fire Fund Changes:
Changes in Actuarial Assumptions:
The mortality projection scale was changed from MP-2016 to MP-2017.
As set by statute, the assumed post-retirement benefit increase was changed from 1.0 percent
per year through 2064 and 2.5 percent per year, thereafter, to 1.0 percent for all years, with no
trigger.
2017 Police and Fire Fund Changes:
Changes in Actuarial Assumptions:
Assumed salary increases were changed as recommended in the June 30, 2016 experience
study. The net effect is proposed rates that average 0.34 percent lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2018
85
Public Employees Retirement Association (PERA) (cont.)
2017 Police and Fire Fund Changes (cont.):
Changes in Actuarial Assumptions (cont.):
The Combined Service Annuity (CSA) load was 30 percent for vested and nonvested deferred
members. The CSA has been changed to 33 percent for vested members and 2 percent for
nonvested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully generational
table to the RP-2014 Fully Generational Table (with a base year of 2006), with male rates
adjusted by a factor of 0.96. The mortality improvement scale was changed from Scale AA to
Scale MP-2016. The base mortality table for disabled annuitants was changed from the RP-2000
Disabled Mortality Table to the mortality tables assumed for healthy retirees.
Assumed termination rates were decreased to 3.0 percent for the first three years of service.
Rates beyond the select period of three years were adjusted, resulting in more expected
terminations overall.
Assumed percentage of married female members was decreased from 65 percent to 60 percent.
Assumed age difference was changed from separate assumptions for male members (wives
assumed to be three years younger) and female members (husbands assumed to be four years
older) to the assumption that males are two years older than females.
The assumed percentage of female members electing joint and survivor annuities was increased.
The assumed post-retirement benefit increase rate was changed from 1.00 percent for all years
to 1.00 percent per year through 2064, and 2.50 percent thereafter.
The single discount rate changed from 5.60 percent to 7.50 percent.
2016 Police and Fire Fund Changes:
Changes in Actuarial Assumptions:
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year
through 2037, and 2.5 percent thereafter, to 1.0 percent per year for all future years.
The assumed investment return was changed from 7.9 percent to 7.5 percent. The single
discount rate changed from 7.9 percent to 5.6 percent.
The assumed future salary increases, payroll growth, and inflation were decreased by 0.25
percent to 3.25 percent for payroll growth, and 2.50 percent for inflation.
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2018
86
Public Employees Retirement Association (PERA) (cont.)
2015 Police and Fire Fund Changes:
Changes in Plan Provisions:
The post-retirement benefit increase to be paid after attainment of the 90 percent funding
threshold was changed, from inflation up to 2.5 percent, to a fixed rate of 2.5 percent
Changes in Actuarial Assumptions:
The assumed post-retirement benefit increase rate was changed from 1.0 percent per year
through 2030, and 2.5 percent per year thereafter, to 1.0 percent per year through 2037, and 2.5
percent per year thereafter.
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan
The City is required to present the last ten years of data; however, accounting standards allow the
presentation of as many years as are available until ten fiscal years are presented.
2018 Changes:
Changes in Plan Provisions:
The lump sum benefit increased from $7,100 to $7,200 per year.
Changes in Actuarial Assumptions:
None.
2017 Changes:
Changes in Plan Provisions:
The lump sum benefit increased from $7,000 to $7,100 per year.
Changes in Actuarial Assumptions:
The expected investment return and discount rate increased from 5.75% to 6.75% to reflect
updated capital market assumptions.
CITY OF ROSEMOUNT
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
As of and for the Year Ended December 31, 2018
87
Rosemount Fire Department Relief Association-Defined Benefit Pension Plan (cont.)
2016 Changes:
Changes in Plan Provisions:
The lump sum benefit increased from $6,900 to $7,000 per year.
Changes in Actuarial Assumptions:
The discount rate was updated from 6.00% to 5.75%.
Other Post Employment Benefit (OPEB) Plan
The City implemented GASB Statement No. 75 in fiscal year 2018. Information prior to fiscal year 2018 is
not available.
The City is required to present the last ten fiscal years of data; however, accounting standards allow the
presentation of as many years as are available until ten fiscal years are presented.
Accumulation of assets:
No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement No. 75.
Changes in benefit terms: There were no changes of benefit terms.
2018 Changes:
Changes in Valuation Assumptions:
The discount rate changed from 3.78% in 2017 to 3.31% in 2018.
S U P P L E M E N T A R Y I N F O R M A T I O N
Total
Fire Nonmajor
Safety Port Authority Governmental
PEG Fees Education GIS General Funds
ASSETS
Cash and investments 39,153$ 3,390$ 61,618$ 165,964$ 270,125$
Receivables from:
Accounts 7,812 - - - 7,812
Prepaid items - - - 548 548
TOTAL ASSETS 46,965$ 3,390$ 61,618$ 166,512$ 278,485$
LIABILITIES
Accounts payable -$ -$ -$ 7,353$ 7,353$
FUND BALANCES
Nonspendable - - - 548 548
Restricted 46,965 - - - 46,965
Committed - 3,390 61,618 158,611 223,619
Total Fund Balances 46,965 3,390 61,618 159,159 271,132
TOTAL LIABILITIES AND
FUND BALANCES 46,965$ 3,390$ 61,618$ 166,512$ 278,485$
CITY OF ROSEMOUNT
COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS
As of December 31, 2018
Special Revenue Funds
88
Total
Fire Nonmajor
Safety Port Authority Governmental
PEG Fees Education GIS General Funds
REVENUES
Taxes 25,076$ -$ -$ 60,000$ 85,076$
Public charges for services - - 18,660 10,775 29,435
Miscellaneous 130 360 226 819 1,535
Total Revenues 25,206 360 18,886 71,594 116,046
EXPENDITURES
Current
Economic Development - - - 73,383 73,383
Capital Outlay - - - 23,896 23,896
Total Expenditures - - - 97,279 97,279
Net change in fund balance 25,206 360 18,886 (25,685) 18,767
FUND BALANCES - Beginning of Year 21,759 3,030 42,732 184,844 252,365
FUND BALANCES - END OF YEAR 46,965$ 3,390$ 61,618$ 159,159$ 271,132$
For the Year Ended December 31, 2018
Special Revenue Funds
CITY OF ROSEMOUNT
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS
89
Original and
Final Budgeted Variance with
Amounts Actual Final Budget
REVENUES
Taxes 24,000$ 24,000$ -$
Public charges for services 1,000,000 1,862,588 862,588
Interest earnings 16,000 39,975 23,975
Total Revenues 1,040,000 1,926,563 886,563
EXPENDITURES
Current
General government 3,600 3,643 (43)
Capital Outlay 992,900 2,224,275 (1,231,375)
Total Expenditures 996,500 2,227,918 (1,231,418)
Net Change in Fund Balance 43,500 (301,355) (344,855)
FUND BALANCE - Beginning 113,121 113,121 -
FUND BALANCE - ENDING 156,621$ (188,234)$ (344,855)$
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
CITY OF ROSEMOUNT
For the Year Ended December 31, 2018
IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL
BUILDING CIP CAPITAL PROJECT SUB-FUND
90
Original and
Final Budgeted Variance with
Amounts Actual Final Budget
REVENUES
Taxes 783,900$ 783,900$ -$
Intergovernmental 1,288,800 - (1,288,800)
Public charges for services 125,000 125,000 -
Special assessments - 842,289 842,289
Interest earnings 2,500 60,467 57,967
Total Revenues 2,200,200 1,811,656 (388,544)
EXPENDITURES
Current
General government 2,500 2,500 -
Capital Outlay 2,197,700 131,277 2,066,423
Total Expenditures 2,200,200 133,777 2,066,423
Excess (deficiency) of revenues over expenditures - 1,677,879 1,677,879
OTHER FINANCING SOURCES (USES)
Transfers in - 116,865 116,865
Transfers out - (1,692,805) (1,692,805)
Total Other Financing Sources (Uses) - (1,575,940) (1,575,940)
Net Change in Fund Balance - 101,939 101,939
FUND BALANCE - Beginning 3,483,959 3,483,959 -
FUND BALANCE - ENDING 3,483,959$ 3,585,898$ 101,939$
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
CITY OF ROSEMOUNT
For the Year Ended December 31, 2018
IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL
STREET CIP CAPITAL PROJECT SUB-FUND
91
Original and
Final Budgeted Variance with
Amounts Actual Final Budget
REVENUES
Taxes 600,000$ 600,000$ -$
Intergovernmental - 2,000 2,000
Interest earnings 10,500 9,963 (537)
Miscellaneous - 5,201 5,201
Total Revenues 610,500 617,164 6,664
EXPENDITURES
Current
General government 2,500 34,227 (31,727)
Capital Outlay 979,847 1,110,512 (130,665)
Total Expenditures 982,347 1,144,739 (162,392)
Excess (deficiency) of revenues over expenditures (371,847) (527,575) (155,728)
OTHER FINANCING SOURCES
Lease proceeds - 276,848 276,848
Sale of capital assets 92,500 68,130 (24,370)
Total Other Financing Sources 92,500 344,978 252,478
Net Change in Fund Balance (279,347) (182,597) 96,750
FUND BALANCE - Beginning 815,107 815,107 -
FUND BALANCE - ENDING 535,760$ 632,510$ 96,750$
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
CITY OF ROSEMOUNT
For the Year Ended December 31, 2018
IN FUND BALANCE (BUDGETARY BASIS) - BUDGET AND ACTUAL
EQUIPMENT CIP CAPITAL PROJECT SUB-FUND
92
Schedule 1City of RosemountNet Position by ComponentLast Ten Fiscal Years(Accrual Basis of Accounting)2009201020112012201320142015201620172018Governmental activities Net investment in capital assets 41,347,888$ 49,563,765$ 53,419,036$ 54,828,890$ 57,746,938$ 58,438,402$ 64,684,403$ 69,942,544$ 74,294,033$ 80,094,490$ Restricted (1) 4,637,711 5,361,675 5,764,792 6,608,554 7,148,774 - - - - - Restricted for debt service - - - - - 7,709,903 6,925,597 6,111,575 5,883,329 6,478,370 Restricted donations for future construction - - - - - 1,988,610 1,589,000 - - - Restricted for pension - - - - - - 1,123,544 1,001,490 1,246,634 1,583,135 Restricted for PEG fees - - - - - - - - 21,759 46,965 Unrestricted 14,979,767 14,089,305 16,772,383 15,970,416 15,883,105 17,913,535 13,031,913 13,100,682 14,090,028 14,596,678 Total governmental activities net position 60,965,366 69,014,745 75,956,211 77,407,860 80,778,817 86,050,450 87,354,457 90,156,291 95,535,783 102,799,638 Business-type activities Net investment in capital assets 91,948,323$ 89,025,234$ 90,695,202$ 93,501,405$ 95,770,585$ 98,194,408$ 96,808,557$ 98,722,624$ $97,328,281 97,977,645$ Unrestricted 18,517,148 20,059,049 17,772,742 19,247,600 18,591,663 19,348,437 20,376,753 21,739,120 23,521,090 26,994,489 Total business-type activities net position 110,465,471 109,084,283 108,467,944 112,749,005 114,362,248 117,542,845 117,185,310 120,461,744 120,849,371 124,972,134 Primary government Net investment in capital assets 133,296,211$ 138,588,999$ 144,114,238$ 148,330,295$ 153,517,523$ 156,632,810$ 161,492,960$ 168,665,168$ 171,622,314$ 178,072,135$ Restricted (1) 4,637,711 5,361,675 5,764,792 6,608,554 7,148,774 - - - - - Restricted for debt service - - - - - 7,709,903 6,925,597 6,111,575 5,883,329 6,478,370 Restricted donations for future construction - - - - - 1,988,610 1,589,000 - - - Restricted for pension - - - - - - 1,123,544 1,001,490 1,246,634 1,583,135 Restricted for PEG fees - - - - - - - - 21,759 46,965 Unrestricted 33,496,915 34,148,354 34,545,125 35,218,016 34,474,768 37,261,972 33,408,666 34,839,802 37,611,118 41,591,167 Total primary government net position 171,430,837$ 178,099,028$ 184,424,155$ 190,156,865$ 195,141,065$ 203,593,295$ 204,539,767$ 210,618,035$ 216,385,154$ 227,771,772$ (1) Prior to 2014 "Restricted" was included in one summary line.Source: City of Rosemount Comprehensive Annual Financial Reports Fiscal YearsPage 93
Schedule 2City of RosemountChanges in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)2009201020112012201320142015201620172018ExpensesGovernmental activities General government 2,754,573$ 2,671,886$ 2,612,911$ 2,701,234$ 2,583,271$ 2,961,500$ 2,878,070$ 4,426,817$ 3,859,090$ 3,605,197$ Public safety 3,688,658 3,819,520 3,763,742 3,872,633 4,051,642 4,233,610 4,378,347 5,629,866 5,170,637 5,235,993 Public works 4,260,284 4,326,903 4,336,345 4,341,203 5,448,047 5,764,176 4,468,049 4,765,115 5,822,738 5,163,908 Culture, education and recreation 1,378,619 1,477,525 1,496,068 2,405,676 1,586,449 1,613,600 1,643,886 1,959,224 2,042,299 2,119,418 Conservation and economic development 648,476 149,701 9,069 - 3,267 1,032,304 53,040 3,968 4,315 61,637 Interest and fiscal charges 750,226 690,896 637,609 541,386 517,067 501,682 569,722 476,121 308,567 295,431 Total governmental activities expenses 13,480,836 13,136,431 12,855,744 13,862,132 14,189,743 16,106,872 13,991,114 17,261,111 17,207,646 16,481,584 Business-Type activities Water Utility 1,878,310 1,861,467 1,792,613 1,827,543 1,903,275 1,962,833 2,219,781 2,075,460 2,175,626 2,156,694 Sewer Utility 2,313,576 2,305,503 2,386,660 2,317,324 2,425,486 2,522,913 2,575,330 2,742,402 2,837,550 3,029,482 Storm Water Utility 989,808 1,010,678 950,114 968,935 989,574 1,122,839 1,117,526 1,228,697 1,275,073 1,330,580 Arena 456,706 484,278 479,707 498,118 578,345 493,943 497,838 510,968 484,903 659,827 Total Business-Type activities expenses 5,638,400 5,661,926 5,609,094 5,611,920 5,896,680 6,102,528 6,410,475 6,557,527 6,773,152 7,176,583 Total primary government expenses 19,119,236$ 18,798,357$ 18,464,838$ 19,474,052$ 20,086,423$ 22,209,400$ 20,401,589$ 23,818,638$ 23,980,798$ 23,658,167$ Program RevenuesGovernmental activities Charges for services General government 1,501,756$ 1,672,014$ 1,881,337$ 2,286,892$ 2,465,695$ 3,202,744$ 3,182,769$ 3,128,969$ 3,286,273$ 4,226,249$ Public safety 169,112 151,802 169,718 184,011 139,432 146,973 151,168 150,571 134,893 136,077 Public works 15,050 20,912 68,166 45,564 53,813 59,417 99,060 54,893 100,038 107,057 Culture, education and recreation 244,374 263,238 272,958 365,486 342,100 571,222 728,567 392,102 779,541 1,321,699 Operating grants and contributions General government - - - 46,326 - - - 20,631 1,509 - Public safety 254,175 246,346 249,515 275,114 263,805 283,095 406,657 547,505 366,654 384,207 Public works 380,737 311,630 108,640 53,198 32,790 53,515 41,235 41,235 42,495 42,960 Culture, education and recreation 659 26,484 33,499 1,275 6,241 3,736 7,347 2,617 1,337 3,326 Conservation and economic development 60,100 20,100 67,400 - 20,635 22,536 23,000 24,000 25,000 30,263 Capital grants and contributions General government 7,118 - - - - 1,988,610 - - - - Public safety 3,971 697 - - - 18,131 - 3,918 6,358 16,632 Public works 1,206,361 5,320,892 4,214,641 3,628,190 3,967,849 4,318,692 1,650,864 3,170,374 3,538,480 4,819,520 Culture, education and recreation 4,203 9,218 - - - - - 419 293 250,973 Conservation and economic development 256,357 19,425 - 39,352 322,808 740,660 287,090 7,000 33,629 600 Total governmental activities program revenues 4,103,973 8,062,758 7,065,874 6,925,408 7,615,168 11,409,331 6,577,757 7,544,234 8,316,500 11,339,563 Fiscal YearsPage 94
Schedule 2 (continued)City of RosemountChanges in Net PositionLast Ten Fiscal Years(Accrual Basis of Accounting)2009201020112012201320142015201620172018Business-Type activities Charges for services Water Utility 1,764,784 1,952,359 1,983,264 2,406,557 2,167,709 2,379,147 2,552,123 2,692,740 3,041,642 3,567,275 Sewer Utility 1,482,651 1,470,801 1,470,626 1,707,730 1,716,022 1,733,646 1,873,687 1,996,130 2,126,771 2,351,986 Storm Water Utility 852,704 888,995 927,429 1,135,067 1,061,632 1,350,259 1,544,158 1,387,817 1,693,845 1,981,312 Arena 370,964 406,797 378,046 352,930 376,058 392,631 408,874 430,103 441,059 448,445 Operating grants and contributions Water Utility - - - - - 9,901 - 24,248 84,042 58,411 Storm Water Utility - - - - - 19,680 - - - - Capital grants and contributions Water Utility 70,279 72,960 243,835 168,573 371,582 180,568 75,622 1,041,806 216,454 402,788 Sewer Utility 416,493 71,656 110,538 207,422 83,484 98,863 85,848 1,153,536 204,114 417,279 Storm Water Utility 1,075,041 85,242 190,022 487,082 648,297 193,402 42,708 989,073 210,802 525,305 Total Business-Type activities program revenues 6,032,916 4,948,810 5,303,760 6,465,361 6,424,784 6,358,097 6,583,020 9,715,453 8,018,729 9,752,801 Total primary government program revenues 10,136,889 13,011,568 12,369,634 13,390,769 14,039,952 17,767,428 13,160,777 17,259,687 16,335,229 21,092,364 Net (Expense) RevenueGovernmental activities (9,376,863) (5,073,673) (5,789,870) (6,936,724) (6,574,575) (4,697,541) (7,413,357) (9,716,877) (8,891,146) (5,142,021) Business-Type activities 394,516 (713,116) (305,334) 853,441 528,104 255,569 172,545 3,157,926 1,245,577 2,576,218 Total primary government net expense (8,982,347)$ (5,786,789)$ (6,095,204)$ (6,083,283)$ (6,046,471)$ (4,441,972)$ (7,240,812)$ (6,558,951)$ (7,645,569)$ (2,565,803)$ General Revenues and Other Changes in Net PositionGovernmental activities Property taxes, levied for general purposes 9,768,391$ 10,023,255$ 10,266,170$ 10,001,071$ 10,123,158$ 10,328,709$ 10,479,883$ 10,709,952$ 11,139,036$ 11,520,992$ Property taxes, levied for debt service 1,711,452 1,257,365 936,054 1,038,404 1,037,524 1,022,258 1,094,210 1,142,142 1,178,589 1,207,786 Other taxes 224,276 264,808 262,783 242,491 259,064 288,425 332,290 354,571 366,745 400,551 Investment income 297,536 164,474 243,193 136,310 121,886 221,243 181,754 270,676 307,497 391,991 Change in fair value of investments n/a n/a n/a n/a (458,073) 319,644 (1,788) (147,945) (20,104) (63,299) Gain (loss) on the sale of assets (851,439) - 130,114 13,248 12,883 - 7,328 - - - Miscellaneous 340,763 429,150 204,149 127,617 116,123 103,615 104,237 103,394 171,294 89,672 Transfers 239,241 984,000 688,873 (3,170,768) (1,267,033) (2,314,720) (31,534) 85,921 1,127,581 (1,141,817) Total governmental activities 11,730,220 13,123,052 12,731,336 8,388,373 9,945,532 9,969,174 12,166,380 12,518,711 14,270,638 12,405,876 Business-Type activities Investment income 464,289 315,928 377,868 256,852 209,227 333,929 272,336 339,012 295,867 438,095 Change in fair value of investments n/a n/a n/a n/a (391,121) 276,379 (24,638) (134,583) (26,236) (33,367) Transfers (239,241) (984,000) (688,873) 3,170,768 1,267,033 2,314,720 31,534 (85,921) (1,127,581) 1,141,817 Total Business-Type activities 225,048 (668,072) (311,005) 3,427,620 1,085,139 2,925,028 279,232 118,508 (857,950) 1,546,545 Total primary government 11,955,268 12,454,980 12,420,331 11,815,993 11,030,671 12,894,202 12,445,612 12,637,219 13,412,688 13,952,421 Change in Net PositionGovernmental activities 2,353,357 8,049,379 6,941,466 1,451,649 3,370,957 5,271,633 4,753,023 2,801,834 5,379,492 7,263,855 Business-Type activities 619,564 (1,381,188) (616,339) 4,281,061 1,613,243 3,180,597 451,777 3,276,434 387,627 4,122,763 Total primary government 2,972,921$ 6,668,191$ 6,325,127$ 5,732,710$ 4,984,200$ 8,452,230$ 5,204,800$ 6,078,268$ 5,767,119$ 11,386,618$ Source: City of Rosemount Comprehensive Annual Financial Reportsn/a - Not Available Fiscal YearsPage 95
Schedule 3City of RosemountFund Balances, Governmental FundsLast Ten Fiscal Years(Modified Accrual Basis of Accounting)2009201020112012201320142015201620172018General Fund Reserved for Prepaid items 78,379$ 33,280$ -$ -$ -$ -$ -$ -$ -$ -$ Encumbrances 638,254 465,544 - - - - - - - - Unreserved Designated 6,536,929 6,653,352 - - - - - - - - Undesignated 15,549 32,941 - - - - - - - - Nonspendable - - 85,067 80,623 67,266 66,238 69,348 - - 33,484 Assigned - - 1,894,348 2,319,433 2,292,257 2,808,794 2,981,632 2,969,701 2,222,507 2,458,337 Unassigned- - 5,700,071 5,905,056 6,001,628 6,288,615 6,506,697 6,918,833 7,333,743 7,503,588 Total General Fund7,269,111 7,185,117 7,679,486 8,305,112 8,361,151 9,163,647 9,557,677 9,888,534 9,556,250 9,995,409 All Other Governmental Funds Reserved for Debt service 3,854,760 6,173,964 - - - - - - - - Special revenue funds - prepaid items - - - - - - - - - - Capital projects funds - encumbrances 1,118,650 1,061,526 - - - - - - - - Unreserved Designated Capital projects funds 4,984,835 3,510,512 - - - - - - - - Special revenue funds 9,374 6,900 - - - - - - - - Undesignated Port Authority TIF fund 262,577 429,284 - - - - - - - - Special revenue funds 125,132 134,919 Nonspendable for Capital projects funds - - - 10,000 10,000 10,000 10,000 10,000 - - Nonmajor governmental funds - - - - - 549 606 113 444 548 Restricted for Debt service - - 4,782,476 4,193,284 4,554,980 4,976,137 5,256,841 4,307,191 2,983,348 3,209,605 Capital Projects - - - - - 1,988,610 1,589,000 - - - Port Authority TIF fund - - 677,057 887,616 1,046,218 1,021,730 4,534,417 4,994,060 1,849,055 2,119,361 Nonmajor governmental funds - - - - - - - - 21,759 46,965 Committed for Nonmajor governmental funds - - 159,048 191,307 214,031 290,834 190,941 181,276 230,162 223,619 Assigned for Capital projects funds - - 8,515,086 6,229,951 6,243,406 7,330,501 6,923,755 8,397,771 10,804,425 11,300,057 Total All Other Governmental Funds10,355,328 11,317,105 14,133,667 11,512,158 12,068,635 15,618,361 18,505,560 17,890,411 15,889,193 16,900,155 Total All Funds17,624,439$ 18,502,222$ 21,813,153$ 19,817,270$ 20,429,786$ 24,782,008$ 28,063,237$ 27,778,945$ 25,445,443$ 26,895,564$ Source: City of Rosemount Comprehensive Annual Financial ReportsNote: Beginning in 2011, the categories of fund balance changed with the implementation of GASB statement No. 54 Fiscal YearsPage 96
Schedule 4City of RosemountChanges in Fund Balances, Governmental FundsLast Ten Fiscal Years(Modified Accrual Basis of Accounting)2009201020112012201320142015201620172018Revenues Taxes 11,049,769$ 10,822,174$ 10,643,333$ 10,376,939$ 10,514,617$ 10,747,756$ 10,940,420$ 11,167,397$ 11,591,837$ 11,986,223$ Tax increments 379,351 448,253 576,675 660,056 660,130 646,636 720,963 794,268 832,533 863,105 Intergovernmental 947,554 4,051,643 2,394,400 584,381 2,288,281 2,509,924 882,930 674,220 1,216,200 1,570,847 Public charges for services1,382,597 1,540,191 2,226,976 2,277,051 2,370,562 3,132,556 3,352,219 2,826,231 3,457,253 4,811,376 Licenses and permits 430,551 453,900 388,615 484,644 522,131 730,765 694,765 792,557 741,243 884,165 Fines and forfeitures124,068 122,394 124,324 129,343 106,617 116,384 114,580 108,561 101,327 94,281 Special assessments 757,223 832,686 496,386 2,155,618 1,539,059 2,123,199 2,368,403 1,035,044 718,051 1,895,665 Investment income and miscellaneous1,268,846 1,224,178 1,552,188 1,773,249 650,402 3,135,395 1,240,234 508,130 1,546,665 1,886,005 Total revenues16,339,959 19,495,419 18,402,897 18,441,281 18,651,799 23,142,615 20,314,514 17,906,408 20,205,109 23,991,667 Expenditures General government 2,522,244 2,368,489 2,382,663 2,569,649 2,506,529 2,752,153 2,841,775 2,977,518 3,253,808 3,141,886 Public safety 3,297,520 3,366,500 3,436,225 3,510,222 3,632,212 3,762,826 4,014,411 4,072,189 4,306,808 4,651,700 Public works 2,687,294 2,805,767 3,078,059 3,032,940 3,285,257 3,192,487 2,957,952 3,005,419 4,395,373 3,125,886 Parks and recreation 1,153,777 1,239,742 1,239,857 1,271,513 1,321,946 1,304,867 1,298,271 1,516,720 1,546,723 1,663,618 Conservation and development 160,445 139,965 - - - 376,496 - - - 73,383 Capital Outlay 3,835,826 7,808,264 6,185,959 8,096,866 7,628,944 9,470,432 6,831,658 5,087,107 5,422,617 9,276,566 Debt Service Principal retirement 3,645,000 1,840,000 2,225,000 2,405,000 1,545,000 1,580,000 3,470,000 2,165,000 2,240,000 1,426,727 Interest and fiscal charges826,350 726,878 677,469 582,377 511,526 508,605 573,607 495,638 384,544 337,407 Total expenditures18,128,456 20,295,605 19,225,232 21,468,567 20,431,414 22,947,866 21,987,674 19,319,591 21,549,873 23,697,173 Excess (deficiency) of revenues over (under) expenditures(1,788,497) (800,186) (822,335) (3,027,286) (1,779,615) 194,749 (1,673,160) (1,413,183) (1,344,764) 294,494 Other financing sources (uses) Issuance of long-term debt - 1,355,000 2,080,000 810,000 1,500,000 2,400,000 4,680,000 - 1,055,000 835,000 Payment to escrow agent - - - - - - - - (3,275,000) - Premium on long-term debt - - - - - - 180,637 - 61,287 83,871 Lease proceeds - - - - - - - - - 276,848 Sale of capital assets 3,000 12,505 10,121 12,740 3,627 348,335 69,578 407,581 42,394 68,130 Transfers in 1,639,211 3,089,286 2,847,900 348,663 1,330,491 1,908,755 1,008,983 851,403 1,743,745 226,703 Transfers out(797,053) (2,778,822) (804,755) (140,000) (441,987) (499,617) (984,809) (130,093) (616,164) (334,925) Total other financing sources (uses)845,158 1,677,969 4,133,266 1,031,403 2,392,131 4,157,473 4,954,389 1,128,891 (988,738) 1,155,627 Net change in fund balances(943,339)$ 877,783$ 3,310,931$ (1,995,883)$ 612,516$ 4,352,222$ 3,281,229$ (284,292)$ (2,333,502)$ 1,450,121$ Fund balances - Beginning18,567,778 17,624,439 18,502,222 21,813,153 19,817,270 20,429,786 24,782,008 28,063,237 27,778,945 25,445,443 Fund balances - Ending17,624,439$ 18,502,222$ 21,813,153$ 19,817,270$ 20,429,786$ 24,782,008$ 28,063,237$ 27,778,945$ 25,445,443$ 26,895,564$ Debt service as a percentage of noncapital expenditures 31.3% 20.1% 22.0% 22.3% 16.1% 15.5% 26.7% 18.7% 16.3% 12.2%Source: City of Rosemount Comprehensive Annual Financial Reports Fiscal YearsPage 97
Schedule 5City of RosemountAssessed Value (or Tax Capacity) and Estimated Market Value of All Taxable PropertyLast Ten Fiscal YearsTotalTaxCapacityas % ofLocal Tax Estimated Local Tax Estimated Local Tax Estimated City Estimated State TaxNet Tax Market Net Tax Market Net Tax Market Tax Market Net TaxPay-YearCapacity (1)ValueCapacity (1)ValueCapacity (1)ValueRate (2)ValueCapacity (1)200926,303,216$ 2,338,770,100$ 539,678$ 28,233,700$ 26,842,894$ 2,367,003,800$ 42.323 1.13% 6,048,039$ 2010 25,067,278 2,209,334,700 566,090 29,516,800 25,633,368 2,238,851,500 43.358 1.14% 6,321,515 2011 23,635,880 2,078,373,200 685,721 35,284,800 24,321,601 2,113,658,000 44.661 1.15% 6,248,792 2012 21,590,701 1,878,822,866 689,398 35,353,750 22,280,099 1,914,176,616 46.994 1.16% 6,203,052 2013 21,076,941 1,829,557,955 728,110 37,319,224 21,805,051 1,866,877,179 48.862 1.17% 6,237,507 2014 21,898,381 1,908,586,387 788,742 40,027,970 22,687,123 1,948,614,357 47.676 1.16% 6,371,221 2015 23,706,444 2,087,149,995 797,258 40,447,970 24,503,702 2,127,597,965 45.152 1.15% 6,429,613 2016 25,325,479 2,241,801,959 893,756 45,278,045 26,219,235 2,287,080,004 43.149 1.15% 6,649,004 2017 26,876,375 2,384,213,461 998,770 50,550,481 27,875,145 2,434,763,942 41.832 1.14% 6,949,051 2018 28,461,255 2,533,539,603 1,098,545 55,561,924 29,559,800 2,589,101,527 40.961 1.14% 6,995,647 Source: Dakota County Assessor's Office, Usage Classification Report - Real Estate and Personal PropertiesNote: Property values shown are established at January 1 of the year preceding the "Pay-Year" listed. They are the basis of the taxes collected and applied to the "Pay-Year".(1) Beginning with 2011, the State made changes in the valuations by adding a "Market Value Exclusion" for properties valued at less than $414,000 that resulted in large reductions in the Estimated Market Values and the Net Tax Capacity Values.(2) Rates taken from Schedule 6Real PropertyPersonal PropertyTotal1.11%1.12%1.13%1.14%1.15%1.16%1.17%1.18%2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Total Tax Capacity as % ofEstimated Market ValueTotal %Page 98
Schedule 6ISD 196 ISD 199 ISD 200 Dakota TotalsCity Market School Market School Market School Market County School School SchoolYear Referendum District Referendum District Referendum District Referendum Dakota Referendum Special District District DistrictCollectible City Rates (1) No. 196 Rates (1) No. 199 Rates (1) No. 200 Rates (1) County Rates (1) Districts No. 196 No. 199 No. 2002009 42.323 0.00631 21.109 0.21032 19.303 0.13392 16.735 0.22372 25.821 0.00471 4.916 94.169 92.363 89.7952010 43.358 0.00652 25.391 0.22268 21.795 0.15183 20.206 0.25903 27.269 0.00501 4.987 101.005 97.409 95.8202011 44.661 0.00697 26.959 0.22601 24.679 0.15606 22.140 0.26626 29.149 0.00537 5.199 105.968 103.688 101.1492012 46.994 n/a 28.440 0.22131 28.363 0.16428 25.435 0.28618 31.426 0.00551 5.562 112.422 112.345 109.4172013 48.862 n/a 27.956 0.23542 27.556 0.18354 23.932 0.29483 33.421 n/a 5.884 116.123 115.723 112.0992014 47.676 n/a 27.606 0.25809 33.418 0.15657 23.052 0.26005 31.827 n/a 5.538 112.647 118.459 108.0932015 45.152 n/a 23.271 0.25484 34.864 0.16151 20.965 0.25310 29.633 n/a 5.033 103.089 114.682 100.7832016 43.149 n/a 24.317 0.26999 30.272 0.13929 20.938 0.25990 28.570 n/a 5.063 101.099 107.054 97.7202017 41.832 n/a 23.336 0.27380 28.572 0.14151 20.305 0.24713 28.004 n/a 4.907 98.079 103.315 95.0482018 40.961 n/a 21.352 0.26715 26.680 0.17143 20.545 0.27360 26.580 n/a 4.307 93.200 98.528 92.393Source: Dakota County Treasurer-AuditorNote: All rates are overlapping rates except for the "City" and the "City Market Referendum Rates" (these two are the City's direct rates). Overlapping rates consist of the "School Districts", "Dakota County" and the "Special Districts".(1) Levies for voter approved referendums are based on market value. Therefore, a separate ratevalue. Therefore, a separate rate for these market valued leviesis included for the applicable entity for thelife of the levies. Since these rates are calculated separately, they are not included in the total tax rates.n/a - Not Applicable(Rate per 1% of Market Value)City of RosemountProperty Tax Rates - All Direct and Overlapping Governmental UnitsLast Ten Fiscal YearsPage 99
2018 2009
Percentage Percentage
Local of Total Local of Total
Tax Local Tax Tax Local Tax
Taxpayer Capacity (1) Rank Capacity Capacity (1) Rank Capacity
Flint Hills Resources Pine Bend LLC (Merged w/below) 3,155,981$ 1 10.68% 1,126,465$ 2 4.20%
Great Northern Oil Company (2009 - Koch Refining) - 1,619,224 1 6.03%
Northern States Power Co. 383,592 2 1.30% 303,913 3 1.13%
Northern Natural Gas Co. 191,798 3 0.65% 106,068 6 0.40%
146th Street Partners LP (Waterford Commons) 185,466 4 0.63% -
Clarel Corporation (Cub Foods) 184,898 5 0.63% 228,442 4 0.85%
Dakota Aggregates 184,742 6 0.62% -
Rosemount Senior Living Associates 136,188 7 0.46% -
CF Industries Sales LLC (Cenex) 129,086 8 0.44% 86,950 11 0.32%
Minnesota Pipeline Co. 117,699 9 0.40% -
Limerick Way LLC 113,158 10 0.38% 85,001 12 0.32%
Hawkins Inc. 106,000 11 0.36% -
Minnesota Energy Resources Corp. 100,610 12 0.34% -
Francis & Patricia Dolejs (Celtic Crossing) 90,936 13 0.31% 103,116 7 0.38%
PWRE2 Rosemount LLC 90,906 14 0.31% -
SKB Environmental Inc. 88,676 15 0.30% -
Rosemount Crossing LLC (Aldi's) - 115,904 5 0.43%
Continental Nitrogen & Resources (CNR) - 97,792 8 0.36%
Proto Labs Inc. (2009 - Webb Properties LLC) - 96,912 9 0.36%
Bigos - Rosemount LLC (Cannon Equipment) - 91,518 10 0.34%
Hidden Valley SPE LLC (Rosemount Woods) - 79,310 13 0.30%
Progress Land Company - 62,383 14 0.23%
Koch Exploration Properties LLC - 47,125 15 0.18%
Principal Taxpayers Total 5,259,736$ 17.79% 4,250,123$ 15.83%
Total City Tax Capacity 29,559,800$ 26,842,894$
Source: Dakota County Treasurer-Auditor
(1) These figures do not include the dollars collected but the tax capacity for each entity.
Schedule 7
City of Rosemount
Principal Property Tax Payers
Current Year and Nine Years Ago
Page 100
Ratio ofPercent ofDelinquent Total Outstanding Total TaxTotal Tax Current Tax Current Taxes Tax Tax Delinquent Collections toYearLevy (1) Collections Collected Collections (2) Collections Taxes Total Tax Levy2009 11,411,690$ 11,279,747$ 98.84% 144,999$ 11,424,746$ -$ 100.00%2010 11,160,169 11,059,249 99.10% 161,848 11,221,097 - 100.00%2011 10,985,813 10,898,846 99.21% 123,066 11,021,912 4,399 99.96%2012 10,490,554 10,418,211 99.31% 99,300 10,517,511 362 100.00%2013 10,750,485 10,667,447 99.23% 84,910 10,752,357 399 100.00%2014 11,031,983 10,986,828 99.59% 110,510 11,097,338 843 99.99%2015 11,313,577 11,279,075 99.70% 43,833 11,322,908 5,036 99.96%2016 11,465,695 11,417,277 99.58% 53,354 11,470,631 10,243 99.91%2017 11,833,975 11,802,700 99.74% 73,494 11,876,194 22,837 99.81%2018 12,311,425 12,253,448 99.53% 41,449 12,294,897 17,998 99.85%Source: Dakota County Treasurer-Auditor(1) The total tax levy differs from actual levy certified to the County by the City because of fiscal disparity calculations done by the County after certification.(2) Delinquent tax collections are all delinquent collections during that tax year - not just for the delinquent collections of that calendar year.Schedule 8City of RosemountProperty Tax Levies and CollectionsLast Ten Fiscal YearsPage 101
Schedule 9G.O. and G.O. and G.O. Property G.O. Tax Revenue Special Capital G.O. Capital Total PercentagePersonal Tax Increment Equipment Supported Assessment Lease Revenue Lease Primary of Personal PerYear Population(1) Income(1) Supported(2) Supported(2) Certificates(2) (Port Auth.)(2) Supported(2) Liabilities (3) Bonds(2) Liabilities (3) Government Income Capita2009 23,750 1,053,882,500$ 3,475,000$ 6,040,000$ 1,310,000$ 1,555,000$ 5,185,000$ -$ 6,160,000$ -$ 23,725,000$ 2.25% 999$ 2010 21,874 988,529,808 3,185,000 6,040,000 760,000 2,820,000 4,275,000 - 6,965,000 - 24,045,000 2.43% 1,099 2011 22,239 1,033,557,525 2,885,000 6,040,000 520,000 2,725,000 4,765,000 - 4,585,000 - 21,520,000 2.08% 968 2012 22,432 1,118,167,904 2,575,000 6,005,000 265,000 1,355,000 5,140,000 - 3,785,000 - 19,125,000 1.71% 853 2013 22,711 1,151,152,457 2,255,000 5,930,000 85,000 1,230,000 5,795,000 - 1,935,000 - 17,230,000 1.50% 759 2014 23,044 1,202,366,788 2,010,000 5,820,000 - 1,105,000 7,180,000 - 1,400,000 - 17,515,000 1.46% 760 2015 23,244 1,248,435,240 3,100,000 9,005,000 - 980,000 5,865,000 - 2,515,000 - 21,465,000 1.72% 923 2016 23,574 1,295,980,650 1,416,281 8,905,469 - 855,000 4,150,000 - 2,172,292 - 17,499,042 1.35% 742 2017 24,295 1,335,617,625 1,278,361 5,394,502 - 720,000 3,460,000 - 1,719,063 - 12,571,926 0.94% 517 2018 24,866 1,367,008,350 1,214,313 5,133,535 - 585,000 3,430,000 245,121 1,320,834 30,252 11,959,055 0.87% 481 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.(1) Population and personal income figures are taken from Schedule 14.(2) Figures taken from City of Rosemount bond documents.(3) Figures taken from City of Rosemount lease documents.Governmental ActivitiesCity of RosemountRatios of Outstanding Debt by TypeLast Ten Fiscal YearsBusiness - TypeActivitiesPage 102
Schedule 10 Percentage ofEstimated Less Restricted Total EstimatedMarket G.O. Debt Service General Market PerYear Population(1)Value(2) Debt (3) Funds Bonded DebtValue Capita2009 23,750 2,367,003,800$ 23,725,000$ 2,038,321$ 21,686,679$ 0.92% 913$ 2010 21,874 2,238,851,500 21,245,000 1,936,318 19,308,682 0.86% 883$ 2011 22,239 2,113,658,000 21,520,000 1,605,726 19,914,274 0.94% 895$ 2012 22,432 1,914,176,616 19,125,000 1,129,632 17,995,368 0.94% 802$ 2013 22,711 1,866,877,179 17,230,000 737,907 16,492,093 0.88% 726$ 2014 23,044 1,948,614,357 17,515,000 528,504 16,986,496 0.87% 737$ 2015 23,244 2,127,597,965 21,465,000 5,151,437 16,313,563 0.77% 702$ 2016 23,574 2,287,080,004 17,499,042 3,469,959 14,029,083 0.61% 595$ 2017 24,295 2,434,763,942 12,571,926 177,759 12,394,167 0.51% 510$ 2018 24,866 2,589,101,527 11,683,682 184,655 11,499,027 0.44% 462$ Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.(1) Population figures are taken from Schedule 14.(2) Estimated Market Value figures are taken from Schedule 5.(3) Figures are taken from Schedule 9.General Bonded Debt OutstandingCity of RosemountRatios of Net General Bonded Debt OutstandingLast Ten Fiscal YearsPage 103
City of Rosemount
Governmental Estimated Estimated
Activities Percentage Amount
Debt Applicable Applicable
Governmental Units (1) Outstanding (2)(5) to City (4) to City
Direct Debt:
City of Rosemount 10,607,969$ 100.00% 10,607,969$
Overlapping Debt:
School Districts:
I.S.D. 196 - Rosemount 157,230,000 13.70% 21,540,510
I.S.D. 199 - Inver Grove Heights 57,565,000 5.10% 2,935,815
I.S.D. 200 - Hastings 81,067,524 0.10% 81,068
Regional:
Metropolitan Council 8,360,000 (3) 0.70% 58,520
Total Overlapping Debt 304,222,524$ 24,615,913$
Total Direct & Overlapping Debt 314,830,493$ 35,223,882$
(1) Only those units with outstanding general obligation debt are shown here.
(2) Excludes general obligation tax and aid anticipation certificates and revenue-supported debt.
(3) Excludes general obligation debt supported by wastewater revenues and housing rental payments.
Includes certificates of participation.
(4) Percent of governmental unit within the City of Rosemount's boundaries calculated
by the city's Financial Advisors, Springsted Inc.
(5) The percentage of overlapping debt applicable is estimated using tax capacity. Applicable percentages
were estimated by determining the portion of the governmental unit’s tax capacity that is within the
City’s boundaries and dividing it by the governmental unit’s total tax capacity.
Schedule 11
Direct and Overlapping Governmental Activities Debt
As of December 31, 2018
Page 104
City of Rosemount Legal Debt Margin Calculation for Fiscal Year 2018Estimated Market Value2,589,101,527$ Debt Limitation - 3% of Estimated Market Value 77,673,046 Debt Applicable to Limitation: Total Bonded Debt 11,395,000$ Less: Special Assessment Bonds 3,430,000$ Tax Increment Bonds 5,050,000 Revenue Bonds 1,255,000 Port Authority Bonds 585,000 Amount Available for Repayment of G.O. Bonds 184,655 10,504,655 Total Debt Applicable to Limitation 890,345 Legal Debt Margin76,782,701$ 2009201020112012201320142015201620172018Estimated Market Value 2,367,003,800$ 2,238,851,500$ 2,113,658,000$ 1,914,176,616$ 1,866,877,179$ 1,948,614,357$ 2,127,597,965$ 2,287,080,004$ 2,434,763,942$ 2,589,101,527$ Debt Limit - 3% of Estimated Market Value - 71,010,114 67,165,545 63,409,740 57,425,298 56,006,315 58,458,431 63,827,939 68,612,400 73,042,918 77,673,046 Limit was 2% prior to 2008Total Net Debt Applicable to Debt Limit 2,746,679 2,008,682 1,799,274 1,710,368 1,602,093 1,481,496 1,298,857 1,184,483 1,037,241 890,345 Legal Debt Margin 68,263,435$ 65,156,863$ 61,610,466$ 55,714,930$ 54,404,222$ 56,976,935$ 62,529,082$ 67,427,917$ 72,005,677$ 76,782,701$ Legal debt margin as a percentage of the debt limit 96.13% 97.01% 97.16% 97.02% 97.14% 97.47% 97.97% 98.27% 98.58% 98.85%Note: Under State law, the City's outstanding general debt cannot exceed 3% of the total estimated market value of the City. The legal debt margin is the City's available borrowing authority under State law and is calculated by subtracting the net debt applicable to the legal debt limit from the legal debt limit.Fiscal YearSchedule 12Legal Debt Margin InformationLast Ten Fiscal YearsPage 105
Net RevenueAvailableSpecialGross For Debt AssessmentYear Revenue Expenses (1) Service Principal (2) Interest Total Coverage Collections Principal (3) Interest Total Coverage2009 3,379,397$ 2,744,735$ 634,662$ 690,000$ 256,788$ 946,788$ 67.03% 757,223$ 1,100,000$ 224,448$ 1,324,448$ 57.17%2010 3,543,743 2,771,544 772,199 740,000 230,836 970,836 79.54% 832,686 910,000 184,068 1,094,068 76.11%2011 3,744,722 2,737,918 1,006,804 2,380,000 218,295 2,598,295 38.75% 496,386 1,590,000 147,850 1,737,850 28.56%2012 4,175,312 2,767,111 1,408,201 800,000 133,478 933,478 150.86% 2,155,618 435,000 112,512 547,512 393.71%2013 4,419,729 2,958,568 1,461,161 1,850,000 110,313 1,960,313 74.54% 1,539,059 845,000 103,835 948,835 162.21%2014 4,195,215 3,262,938 932,277 535,000 53,940 588,940 158.30% 2,123,199 1,015,000 97,241 1,112,241 190.89%2015 4,428,925 3,514,975 913,950 410,000 39,921 449,921 203.14% 2,368,403 1,315,000 97,562 1,412,562 167.67%2016 4,778,063 3,587,124 1,190,939 425,000 52,360 477,360 249.48% 1,035,044 1,715,000 77,163 1,792,163 57.75%2017 5,528,083 3,740,785 1,787,298 445,000 50,560 495,560 360.66% 718,051 1,745,000 48,140 1,793,140 40.04%2018 5,634,576 3,954,469 1,680,107 390,000 39,108 429,108 391.53% 1,895,665 865,000 58,506 923,506 205.27%Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.(1) Figure does not include depreciation expense.(2) 2011 includes call payments on 2001B, 2002B & 2003B bonds and 2013 includes call payment on 2005C bonds.(3) 2011 includes calls for 2002A & 2003A bonds.Debt Service RequirementsCity of RosemountG.O. Revenue BondsDebt Service RequirementsSchedule 13Pledged-Revenue CoverageLast Ten Fiscal YearsG.O. Special Assessment BondsPage 106
Schedule 14
City of Rosemount
Demographic and Economic Statistics
Last Ten Calendar Years
Calendar Per Capita Personal School Unemployment Median
Year Population (1) Income (2) Income (3) Enrollment (4) Rate (5) Age (6)
2009 23,750 44,374$ 1,053,882,500$ 5,266 7.0% 36.2
2010 21,874 45,192 988,529,808 5,179 6.3% 36.7
2011 22,239 46,475 1,033,557,525 4,745 5.2% 37.2
2012 22,432 49,847 1,118,167,904 4,860 4.8% 37.5
2013 22,711 50,687 1,151,152,457 4,889 4.1% 37.4
2014 23,044 52,177 1,202,366,788 4,910 3.2% 36.8
2015 23,244 53,710 1,248,435,240 5,074 3.0% 37.3
2016 23,574 54,975 1,295,980,650 5,181 3.4% 37.6
2017 24,295 54,975 1,335,617,625 5,066 2.7% 37.6
2018 24,866 54,975 1,367,008,350 5,279 2.6% 37.6
(1) 2010 is a regular decennial census figure. All years from 2009 and on (except for 2010) are the City staff's best estimates
as of 12/31 of each year to give a more indicative estimate of the actual population.
(2) These figures are provided by and are for Dakota County. These figures usually have a 2 to 3-year lag time
so that is why the two most current years use the 2016 figure for computing the "Personal Income" figure.
(3) These figures are derived by multiplying the City's population figure times Dakota County's per capita income figures.
(4) School enrollment is the total number of students who reside within the Rosemount High School boundaries and go to
Independent School District No. 196 schools located in Rosemount. The total school enrollment includes
the total number of students with homes in the City of Rosemount.
(5) Unemployment rates were compiled by the Minnesota Local Area Unemployment Statistics (LAUS) - for Dakota County.
(6) These figures are provided by Dakota County.
2016's median age is the most current information available so 2017 & 2018 shown as the same age.
Page 107
2018 2009
Percentage Percentage
of Total of Total
City City
Employer Employees Rank Employment Employees Rank Employment
Note: The City of Rosemount does not track this information and there are no sources at the County or State level to provide this information.
Current Year and Nine Years Ago
Schedule 15
City of Rosemount
Principal Employers
Page 108
2009201020112012201320142015201620172018Function/ProgramGeneral Government Administration 4.50 4.50 4.50 3.50 3.50 3.50 3.50 4.50 4.50 4.50 Finance 4.30 4.30 4.30 4.30 4.30 4.55 4.55 4.55 4.55 5.05 Community Development 10.50 9.75 9.75 9.50 9.50 9.50 9.50 9.50 9.50 9.50 Police Sworn Officers 22.00 22.00 22.00 22.00 22.00 23.00 23.00 23.00 24.00 25.00 Non-Sworn Employees 3.25 3.25 3.25 3.25 3.25 3.25 3.00 3.00 3.00 3.00 Fire Firefighters and Officers 44.00 43.00 43.00 41.00 43.00 42.00 45.00 52.00 47.00 42.00 Public Works Building Maintenance - - - 0.80 0.80 0.80 0.85 0.85 1.25 1.25 Fleet Maintenance 2.10 2.10 2.10 2.20 2.20 2.20 2.30 2.30 2.30 2.30 Street Maintenance 6.60 6.40 6.40 5.80 5.80 5.80 6.00 6.00 6.00 6.30 Parks Maintenance 5.60 5.60 5.60 4.60 4.60 4.60 4.65 4.65 5.00 5.05 Parks and Recreation Parks & Rec 9.50 9.50 9.50 9.50 9.50 9.50 9.50 10.25 10.25 10.25 Arena 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.85 1.88 Utilities Water 5.13 5.13 4.83 4.68 4.68 4.68 4.88 4.88 4.88 5.11 Sewer 5.13 5.13 4.83 4.68 4.68 4.68 4.88 4.88 4.88 5.06 Storm Water 2.30 2.30 2.10 2.10 2.10 2.10 2.30 2.30 2.55 2.88 126.76 124.81 124.01 119.75 121.75 122.00 125.75 134.50 131.50 129.12 Sources: Finance DepartmentNote: Employees listed are full-time and permanent part-time employees. Seasonal and temporary positions are not included.Schedule 16City of RosemountFull-Time/Permanent Part-Time City Government Employees by Function/ProgramLast Ten Fiscal YearsFiscal YearPage 109
2009201020112012201320142015201620172018Function/ProgramGeneral Government Total Permits Issued by the Building Department 2,366 2,400 2,359 2,251 2,471 2,879 2,677 3,033 3,136 3,503 Total Number of Inspections Conducted 4,572 4,311 4,048 3,553 4,296 4,618 5,467 5,927 5,425 6,317 Police Number of Calls for Service 16,354 14,432 14,554 14,346 13,730 15,538 16,894 16,691 16,194 15,166 Number of Patrol Miles 206,619 211,460 152,097 194,764 186,490 195,393 204,226 185,101 186,155 227,530 Adult Arrests 424 340 432 369 312 230 465 326 406 375 Juvenile Arrests 206 182 146 107 102 101 88 105 85 87 Traffic Violations 1,548 1,605 2,232 2,610 2,147 2,452 1,872 1,939 1,372 1,187 Parking Violations 307 284 296 378 436 197 207 271 88 178 Fire Number of Calls Answered 632 630 690 724 637 715 710 720 744 820 Fires Extinguished 59 34 34 52 35 38 33 38 60 46 Public Works Street Resurfacing (Miles) 0.64 10.50 1.30 2.30 1.60 1.20 - 1.20 1.95 3.15 Park Acres Mowed 127 134 134 154 154 154 154 160 160 167 Parks and Recreation Overall Program Participation 14,200 14,500 14,500 14,500 15,000 15,000 15,200 15,200 15,200 15,500 Hours of Ice Time Used 2,466 2,577 2,515 2,577 2,479 2,378 2,670 2,678 2,805 2,704 Water Connections 6,273 6,381 6,431 7,464 7,576 7,701 7,827 7,938 8,107 8,281 Water Main Breaks - - - - 1 1 2 1 1 1 Average Daily Consumption (In Gallons) 2,569,474 2,261,972 2,344,546 2,665,979 2,412,638 2,233,593 2,227,616 2,520,915 2,530,849 2,250,066 Sewer Connections 6,255 6,363 6,414 6,505 6,614 6,734 6,734 6,968 7,050 7,198 Sources: Various City departments.Schedule 17City of RosemountOperating Indicators by Function/ProgramLast Ten Fiscal YearsFiscal YearPage 110
2009201020112012201320142015201620172018Function/ProgramGeneral Government City Halls/Other Buildings 1 1 1 1 1 1 1 1 1 1 Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol Units (Marked/Unmarked) 9/4 9/4 9/4 9/4 9/4 8/6 9/6 9/6 10/6 10/6Fire Stations 2 2 2 2 2 2 2 2 2 2 Fire Units (Vehicles & Trailer) 14 14 14 14 15 15 15 16 16 16 Public Works Buildings 3 3 3 3 3 3 3 3 3 3 City Maintained Streets (Miles) 103 103 103 105 106 108 110 110 113 114 Street Lights 1,488 1,500 1,500 1,510 1,520 1,539 1,561 1,568 1,599 1,601 Parks and Recreation Community Centers 1 1 1 1 1 1 1 2 2 2 Shelters/Other Buildings 3 3 3 3 3 3 3 3 3 3 Acreage 440 440 467 467 534 533 533 540 540 540 Parks 27 27 28 28 27 29 29 30 30 30 Playgrounds 20 20 20 20 20 21 21 21 21 21 Baseball/Softball Diamonds 20 20 20 22 23 23 23 24 24 24 Soccer/Football Fields 16 16 16 16 19 19 19 20 20 24 Tennis Courts 8 8 8 8 8 12 12 12 12 12 Water Water Mains (Miles) 122 122 125 127 129 130 130 134 135 135 Wells (Municipal/Rural) 8 8 8 8 8 8 8 8 8 9 Water Towers 4 4 4 4 4 4 4 4 4 4 Fire Hydrants 1,281 1,330 1,342 1,342 1,366 1,412 1,420 1,445 1,450 1,452 Storage Capacity 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 Maximum Pumping Capacity 12,096,000 12,096,000 12,096,000 12,096,000 12,096,000 12,096,000 12,384,000 12,384,000 12,384,000 14,976,000 Sewer Sanitary Sewer Mains (Miles) 91 91 95 97 98 98 98 100 103 103 Storm Sewer Mains (Miles) 82 84 84 86 86 88 89 91 105 105 Public Education Facilities: Number of Elementary Schools 2 2 2 2 2 2 2 2 2 2 Number of Secondary Schools 2 2 2 2 2 2 2 2 2 2 Number of Special Education Schools 2 2 2 2 2 2 2 2 2 2 (Dakota County Technical College)Sources: Various City departments.Schedule 18City of RosemountCapital Asset Statistics by Function/ProgramLast Ten Fiscal YearsFiscal YearPage 111
Management Report
for
City of Rosemount, Minnesota
December 31, 2018
THIS PAGE INTENTIONALLY LEFT BLANK
To the City Council and Management
City of Rosemount, Minnesota
We have prepared this management report in conjunction with our audit of the City of Rosemount,
Minnesota’s (the City) financial statements for the year ended December 31, 2018. We have organized
this report into the following sections:
•Audit Summary
•Governmental Funds Overview
•Enterprise Funds Overview
•Government-Wide Financial Statements
•Legislative Updates
•Accounting and Auditing Updates
We would be pleased to further discuss any of the information contained in this report or any other
concerns that you would like us to address. We would also like to express our thanks for the courtesy and
assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of the City, management,
and those who have responsibility for oversight of the financial reporting process comments resulting
from our audit process and information relevant to city finances in Minnesota. Accordingly, this report is
not suitable for any other purpose.
Minneapolis, Minnesota
May 7, 2019
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
Standard Letterhead-r2.qxp_167639 Letterhead-RV1 9/7/18 6:34 PM Page 1
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AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider
important or that is required to be communicated to the City Council, administration, or those charged
with governance of the City.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED
STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2018. Professional standards require that we provide you with information about our
responsibilities under auditing standards generally accepted in the United States of America and
Government Auditing Standards, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information to you verbally and in our audit engagement letter .
Professional standards also require that we communicate the following information related to our audit.
PLANNED SCOPE AND TIMING OF THE AUDIT
We performed the audit according to the planned scope and timing previously discussed and coordinated
in order to obtain sufficient audit evidence and complete an effective audit.
AUDIT OPINION AND FINDINGS
Based on our audit of the City’s financial statements for the year ended December 31, 2018:
• We have issued an unmodified opinion on the City’s basic financial statements. Our report
included a paragraph emphasizing the City’s implementation of Governmental Accounting
Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for
Postemployment Benefits Other Than Pensions during the year ended December 31, 2018. Our
opinion was not modified with respect to this matter.
• We reported one matter involving the City’s internal control over financial reporting that we
consider to be a significant deficiency. Due to the limited size of the City’s office staff, the City
has limited segregation of duties in certain areas.
• The results of our testing disclosed no instances of noncompliance that are required to be reported
under Government Auditing Standards.
• We reported one finding based on our testing of the City’s compliance with Minnesota laws and
regulations. The City had cash in excess of federal depository insurance with on e bank as of
December 31, 2018, which was not adequately covered by pledged collateral with a mar ket value
of 110 percent of the excess, as required by state statutes. The City had sufficient collateral
pledged to cover deposit balances; however, the amount pledged was below the 110 percent
statutory requirement by $38,836. Subsequent to year-end, the City has requested that the bank
pledge more collateral to cover deposits.
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FOLLOW-UP ON PRIOR YEAR FINDINGS AND RECOMMENDATIONS
As a part of our audit of the City’s financial statements for the year ended December 31, 2018, we
performed procedures to follow-up on the findings and recommendations that resulted from our prior year
audit. We reported the following finding that was corrected by the City in the current year:
• In the prior year audit, we reported that for one bid tested, the City did not obtain the proper
Form IC134 withholding affidavit prior to making final payment, as required by state statutes.
Based on testing performed, this was not a finding in the current year.
SIGNIFICANT ACCOUNTING POLICIES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 of the notes to the basic financial statements.
No new accounting policies were adopted and the application of existing policies was not changed during
the year ended December 31, 2018; however, the City implemented the following governmental
accounting standards during the fiscal year:
• GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions, which established new accounting and financial reporting requirements for
governments whose employees are provided with other post-employment benefits (OPEB).
• GASB Statement No. 85, Omnibus 2017, which addresses issues that have been identified during
implementation and application of certain GASB statements.
• GASB Statement No. 86, Certain Debt Extinguishment Issues, which improves the consistency
in accounting and financial reporting for in-substance defeasances of debt.
• GASB Statement No 89, Accounting for Interest Cost Incurred Before the End of a Construction
Period, which enhances comparability of information about capital assets and to simplify
accounting for interest cost incurred before the end of a construction period.
We noted no transactions entered into by the City during the year for which there is a lack of authoritative
guidance or consensus. All significant transactions have been recognized in the financial statements in the
proper period.
ACCOUNTING ESTIMATES AND MANAGEMENT JUDGMENTS
Accounting estimates are an integral part of the financial statement s prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
• Depreciation – Management’s estimates of depreciation expense are based on the estimated
useful lives of the assets.
• Compensated Absences – Management’s estimate is based on current rates of pay and balances
for compensated absences.
• Pension/OPEB Benefits – The City has recorded liabilities and activity for pension benefits and
OPEB. These obligations include calculations using actuarial methodologies described in
GASB Statement Nos. 68 and 75. These actuarial calculations include significant assumptions,
including projected changes, healthcare insurance costs, investment returns, retirement ages,
proportionate share, and employee turnover.
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We evaluated the key factors and assumptions used by management to develop these estimates in
determining that they are reasonable in relation to the basic financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Where applicable, management has corrected all such misstatements. In addition, none of
the misstatements detected as a result of audit procedures and corrected by management, when applicable,
were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as
a whole.
The City has passed on reporting the change in accounting principle as an audit adjustment to opening
equity of the financial statements for the total OPEB liability in governmental activities and business-type
activities totaling $727,226, along with the related deferred outflows of resources of $41,850 in the
current year. The City instead recorded this change through operations in 2018 to report appropriate
balances as of year-end. Management has determined that the effects of these items were immaterial, both
individually and taken together, to each opinion unit’s financial statements taken as a whole.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this report, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We have requested certain representations from management that are included in the management
representation letter dated May 7, 2019.
MANAGEMENT CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations . If a consultation involves
application of an accounting principle to the City’s financial statements or a determination of the type of
auditor’s opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts . To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City’s auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
-4-
OTHER MATTERS
We applied certain limited procedures to the management’s discussion and analysis (MD&A) and the
remaining required supplementary information (RSI) that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual fund statements and schedules, reported as
supplementary information accompanying the financial statements, which are not RSI. With respect to
this supplementary information, we made certain inquiries of management and evaluated the form,
content, and methods of preparing the information to determine that the information complies with
accounting principles generally accepted in the United States of America, the method of preparing it has
not changed from the prior period, and the information is appropriate and complete in relation to our audit
of the financial statements. We compared and reconciled the supplementary information to the underlying
accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the introductory section and the statistical section, which accompany
the financial statements, but are not RSI. Such information has not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on it.
-5-
GOVERNMENTAL FUNDS OVERVIEW
This section of the report provides you with an overview of the financial trends and activities of the City’s
governmental funds, which includes the General, special revenue, debt service, and capital project funds .
These funds are used to account for the basic services the City provides to all of its citizens, which are
financed primarily with property taxes. The governmental fund information in the City’s financial
statements focuses on budgetary compliance and the sufficiency of each governmental fund’s current
assets to finance its current liabilities.
PROPERTY TAXES
Minnesota cities rely heavily on local property tax levies to support their governmental fund activities.
For the 2017 fiscal year, local ad valorem property tax levies provided 41.1 percent of the total
governmental fund revenues for cities over 2,500 in population, and 37.4 percent for cities under 2,500 in
population. Total property taxes levied by all Minnesota cities for taxes payable in 2018 increased
6.2 percent from the prior year, and total certified levies payable in 2019 are projected to increase by
5.6 percent.
The total market value of property in Minnesota cities increased about 5.6 percent for the 2017 levy year
(state-wide market value information for the 2018 levy year was not available at the time this report was
issued). The market values used for levying property taxes are based on the previous fiscal year
(e.g., market values for taxes levied in 2018 were based on assessed values as of January 1, 2017), so the
trend of change in these market values lags somewhat behind the housing market and economy in general.
The City’s estimated market value increased 6.5 percent for taxes payable in 2017 and increased
6.3 percent for taxes payable in 2018. The following graph shows the City’s changes in estimated market
value over the past 10 years:
$–
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$3,000,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Estimated Market Value
-6-
Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s
property classification system to each property’s market value. Each property classification, such as
commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total
tax capacity will change at a different rate than its total market value, as tax c apacity is affected by the
proportion of its tax base that is in each property classification from year -to-year, as well as legislative
changes to tax rates. The City’s tax capacity increased 6.3 percent for 2017 and 6.0 percent for 2018.
The following graph shows the City’s change in tax capacities over the past 10 years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Taxable Tax Capacity
The following table presents the average tax rates applied to city residents for each of the last three levy
years:
Rates expressed as a percentage of net tax capacity
2016 2017 2018
Average tax rate
City 43.1 41.8 41.0
County 28.6 28.0 26.6
School 24.7 23.3 21.4
Special taxing 5.1 4.9 4.3
Total 101.5 98.0 93.3
City of
Rosemount
The improvement in tax capacity values previously discussed, contributed to the decrease in the City’s
average tax rate presented in the table above.
-7-
GOVERNMENTAL FUND BALANCES
The following table summarizes the changes in the fund balances of the City’s governmental funds during
the year ended December 31, 2018, presented both by fund balance classification and by fund:
Increase
2018 2017 (Decrease)
Fund balances of governmental funds
Total by classification
Nonspendable 34,032$ 444$ 33,588$
Restricted 5,375,931 4,854,162 521,769
Committed 223,619 230,162 (6,543)
Assigned 13,758,394 13,026,932 731,462
Unassigned 7,503,588 7,333,743 169,845
Total – governmental funds 26,895,564$ 25,445,443$ 1,450,121$
Total by fund
General 9,995,409$ 9,556,250$ 439,159$
Debt Service 3,209,605 2,983,348 226,257
Capital Projects 11,300,057 10,804,425 495,632
Port Authority TIF 2,119,361 1,849,055 270,306
Nonmajor funds 271,132 252,365 18,767
Total – governmental funds 26,895,564$ 25,445,443$ 1,450,121$
as of December 31,
Governmental Funds Change in Fund Balance
Fund Balance
In total, the fund balances of the City’s governmental funds increased by $1,450,121 during the year
ended December 31, 2018.
The largest changes were in restricted and assigned fund balances as noted in the table above. Fund
balances restricted for the Debt Service and Port Authority TIF Funds accounted for a majority of the
increase in restricted fund balance. An increase in the amount assigned for variou s projects/equipment
contributed to the change in assigned fund balance.
-8-
GOVERNMENTAL FUNDS REVENUES AND EXPENDITURES
The following table presents the per capita revenue of the City’s governmental funds for the past
three years, along with state-wide averages.
We have included the most recent comparative state-wide averages available from the Office of the State
Auditor to provide a benchmark for interpreting the City’s data. The amounts received from the typical
major sources of governmental fund revenue will naturally vary between cities based on factors such as a
city’s stage of development, location, size and density of its population, property values, services it
provides, and other attributes. It will also differ from year -to-year due to the effect of inflation and
changes in its operation. Also, certain data in these tables may be classified differently than how they
appear in the City’s financial statements in order to be more comparable to the state-wide information,
particularly in separating capital expenditures from current expenditures.
We have designed this section of our management report using per capita data in order to better identify
unique or unusual trends and activities of the City. We intend for this type of comparative and trend
information to complement, rather than duplicate, information in the MD&A. An inherent difficulty in
presenting per capita information is the accuracy of the population count, which for most years is based
on estimates.
Year 2016 2017 2018
Population 2,500–10,000 10,000–20,000 20,000–100,000 23,574 24,295 24,866
Property taxes 474$ 451$ 475$ 463$ 466$ 471$
Tax increments 26 27 38 34 34 35
Franchise and other taxes 38 43 48 11 11 11
Special assessments 57 48 59 44 30 76
Licenses and permits 39 34 49 34 31 36
Intergovernmental revenues 322 276 147 29 50 63
Charges for services 108 103 103 120 142 193
Other 68 53 48 26 68 80
Total revenue 1,132$ 1,035$ 967$ 761$ 832$ 965$
December 31, 2017
City of RosemountState-Wide
Governmental Funds Revenue per Capita
With State-Wide Averages by Population Class
The City’s governmental fund revenues for 2018 were $23,991,667, an increase of $3,786,558
(18.7 percent) from the prior year. On a per capita basis, the City received $965 in governmental fund
revenue for 2018, an increase of $133 from the prior year.
A city’s stage of development, along with the way a city finances various capital projects, will impact the
mix of revenue sources it receives. The largest change in the table above occurred in the charges for
services revenue, which increased $51 per capita from the prior year, with an increase in development
projects and related charges in the current year. Special assessment revenue increased $46 per capita from
the prior year, with an increase in prepayments on assessed projects in 2018.
-9-
The expenditures of governmental funds will also vary from state-wide averages and from year-to-year,
based on the City’s circumstances. Expenditures are classified into three types as follows:
• Current – These are typically the general operating type expenditures occurring on an annual
basis, and are primarily funded by general sources, such as taxes and intergovernmental revenues.
• Capital Outlay and Construction – These expenditures do not occur on a consistent basis, more
typically fluctuating significantly from year-to-year. Many of these expenditures are
project-oriented, and are often funded by specific sources that have benefited from the
expenditure, such as special assessment improvement projects.
• Debt Service – Although the expenditures for debt service may be relatively consistent over the
term of the respective debt, the funding source is the important factor . Some debt may be repaid
through specific sources, such as special assessments or redevelopment funding, while other debt
may be repaid with general property taxes.
The City’s expenditures per capita of its governmental funds for the past three years, together with
state-wide averages, are presented in the following table:
Year 2016 2017 2018
Population 2,500–10,000 10,000–20,000 20,000–100,000 23,574 24,295 24,866
Current
General government 147$ 120$ 101$ 126$ 134$ 126$
Public safety 270 259 287 173 177 187
Streets and highways 128 127 101 127 170 142
Parks and recreation 96 112 99 64 64 67
All other 76 64 77 – – 3
Total current 717 682 665 490 545 525
Capital outlay
and construction 403 319 263 216 234 357
Debt service
Principal 228 147 121 92 92 57
Interest and fiscal 44 35 32 21 16 14
Total debt service 272 182 153 113 108 71
Total expenditures 1,392$ 1,183$ 1,081$ 819$ 887$ 953$
December 31, 2017
State-Wide
Governmental Funds Expenditures per Capita
With State-Wide Averages by Population Class
City of Rosemount
Total expenditures in the City’s governmental funds for 2018 were $23,697,173, an increase of
$2,147,300 (10.0 percent) from the prior year. On a per capita basis, the City expended a total of $953 in
2018, an increase of $66 from the previous year.
As the above table reflects, the City’s expenditures per capita have historically been below the state-wide
average. The largest change occurred in capital outlay and construction spending, which increased
$123 per capita. Other notable changes were in debt service principal spending and streets and highways
spending. Debt service principal spending compared to the prior year decreased in the amount of $35 per
capita. Streets and highways spending decreased in the amount of $28 per capita. Capital outlay and
construction increased, primarily due to the timing of projects that fluctuate from year-to-year.
-10-
GENERAL FUND
The City’s General Fund accounts for the financial activity of the basic services provided to the
community. The primary services included within this fund are the administration of the municipal
operation, police and fire protection, building inspection, streets and highway maintenance, and culture
and recreation. The graph below illustrates the change in the General Fund financial position over the last
five years. We have also included a line representing annual revenues to reflect the change in the size of
the General Fund operation over the same period.
2014 2015 2016 2017 2018
Fund Balance $9,163,647 $9,557,677 $9,888,534 $9,556,250 $9,995,409
Cash (Net)$9,145,098 $9,694,642 $10,397,380 $10,130,901 $10,656,356
Revenue $12,016,858 $11,997,352 $12,409,954 $12,669,945 $13,580,346
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
General Fund Financial Position
Year Ended December 31,
The City’s General Fund cash and investments balance at December 31, 2018 was $10,656,356, an
increase of $525,455 from the previous year. Total fund balance at year-end was $9,995,409, an increase
of $439,159 from the prior year.
As the graph illustrates, the City has generally been able to maintain healthy cash and fund balance levels
as the volume of financial activity has fluctuated. This is an important factor because a government, like
any organization, requires a certain amount of equity to operate. A healthy financial position allows the
City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in det ermining
the City’s bond rating and resulting interest costs. Maintaining an adequate fund balance has become
increasingly important given the fluctuations in state funding for cities in recent years.
A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are
made fairly evenly during the year other than the impact of seasonal services, such as snowplowing, street
maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Taxes
comprise about 75 percent of the fund’s total annual revenue. Approximately half of these revenues are
received by the City in July and the rest in December. Consequently, the City needs to have adequate cash
reserves to finance its everyday operations between these payments.
The City’s unassigned General Fund balance at the end of the 2018 fiscal year represents approximately
55 percent of annual expenditures based on projected 2019 levels.
-11-
The following graph reflects the City’s General Fund revenue sources for 2018 compared to budget:
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
Taxes Licenses and
Permits
Intergovernmental Charges
for
Services
Other
General Fund Revenue –Budget and Actual (Budgetary Basis)
Actual Budget
General Fund revenue for 2018 was $13,580,346, which was $480,946 (3.7 percent) more than budget.
Favorable variances in every category, due in part to conservative budgeting, contributed to the overall
revenue variance. Licenses and permits were over budget with more building permit activity than
expected. Intergovernmental revenue exceeded budget with the recognition of various local government
grants that were not anticipated in the final budget. The City had more charges for services revenue than
expected, with an increase in revenue related to the volume of development activity. Other revenue also
ended the year with actual sources coming in over budget, as presented in the graph above, which was
primarily in interest earnings.
The following graph presents the City’s General Fund revenues by source for the last five years . The
graph reflects the City’s reliance on property and other taxes, which represented 75 percent of General
Fund revenues in 2018:
Taxes Intergovernmental All Other
2014 $9,060,134 $342,158 $2,614,566
2015 $9,185,173 $459,069 $2,353,110
2016 $9,397,523 $596,817 $2,415,614
2017 $9,750,637 $417,036 $2,502,272
2018 $10,148,566 $460,756 $2,971,024
$–
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
General Fund Revenue by Source
Year Ended December 31,
Total General Fund revenue for 2018 was $910,401 (7.2 percent) more than last year. Taxes increased by
$397,929, due to an increase in the approved tax levy. Intergovernmental revenue was $43,720 more than
last year. Remaining revenue sources of the General Fund were $468,752 more than 2017, due to
increasing charges for services, and licenses and permits.
-12-
The following graph illustrates the components of General Fund spending for 2018 compared to budget:
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
General
Government
Public Safety Public Works Parks and
Recreation
Capital Outlay
General Fund Expenditures –Budget and Actual (Budgetary Basis)
Actual Budget
General Fund expenditures for 2018 on a budgetary basis were $13,007,920, which was $9,718
(0.1 percent) more than budget. Spending for parks and recreation was over budget by $125,415, which
was partially offset by $118,989 in savings in public works.
The following graph presents the City’s General Fund expenditures by function for the last five years:
General
Government Public Safety Public Works Parks and
Recreation Capital Outlay
2014 $2,509,554 $3,762,826 $3,165,615 $1,304,867 $–
2015 $2,589,416 $4,014,411 $2,940,423 $1,298,271 $146,924
2016 $2,769,172 $4,072,189 $3,002,678 $1,516,720 $591,931
2017 $3,035,701 $4,306,808 $3,900,699 $1,546,723 $68,105
2018 $2,972,769 $4,651,700 $3,525,071 $1,663,618 $454
$–
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
General Fund Expenditures by Function
Year Ended December 31,
Total General Fund expenditures for 2018 on an accounting principles generally accepted in the United
States of America-basis were $44,424 (0.3 percent) less than the previous year. Public works decreased,
due to parking lot improvements completed in 2017. Public safety spending recognized an increase of
$344,892 over the prior year as planned in budget.
-13-
ENTERPRISE FUNDS OVERVIEW
The City maintains several enterprise funds to account for services the City provides that are financed
primarily through fees charged to those utilizing the service. This section of the report provides you with
an overview of the financial trends and activities of the City’s enterprise funds, which include the Water,
Sewer, Storm Water, and Arena Funds.
The utility funds comprise a considerable portion of the City’s activities . These funds help to defray
overhead and administrative costs and provide additional support to general government operations by
way of annual transfers. We understand that the City is proactive in reviewing these activities on an
ongoing basis and we want to reiterate the importance of continually monitoring these operations. Over
the years, we have emphasized to our city clients the importance of these utility operations being
self-sustaining, preventing additional burdens on general government funds . This would include the
accumulation of net position for future capital improvements and to provide a cushion in the event of a
negative trend in operations.
ENTERPRISE FUNDS FINANCIAL POSITION
The following table summarizes the changes in the financial position of the City’s enterprise funds during
the year ended December 31, 2018, presented both by classification and by fund:
Increase
2018 2017 (Decrease)
Net position of enterprise funds
Total by classification
Net investment in capital assets 97,977,645$ 97,328,281$ 649,364$
Unrestricted 26,994,489 23,521,090 3,473,399
Total – enterprise funds 124,972,134$ 120,849,371$ 4,122,763$
Total by fund
Water 44,697,610$ 42,351,012$ 2,346,598$
Sewer 34,724,406 34,585,434 138,972
Storm Water 43,852,046 42,133,934 1,718,112
Arena 1,698,072 1,778,991 (80,919)
Total – enterprise funds 124,972,134$ 120,849,371$ 4,122,763$
Enterprise Funds Change in Financial Position
Net Position
as of December 31,
In total, the net position of the City’s enterprise funds increased by $4,122,763 during the year ended
December 31, 2018. The increase in net position is primarily for connection fees and capital contributions
recognized in the current year.
-14-
WATER FUND
At December 31, 2018, the Water Fund had a cash balance of $10,831,635 and total net position of
$44,697,610. Of this net position total, $33,781,493 is the investment in capital assets, while unrestricted
has a balance of $10,916,117. The following graph shows the financial position of the Water Fund over
the past five years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
2014 2015 2016 2017 2018
Water Fund Financial Position
Year Ended December 31,
Cash, Net of Interfund Loans Total Net Position Operating Revenue
The following graph shows the operating results of the Water Fund over the last five years:
$–
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
2014 2015 2016 2017 2018
Water Fund Operating Results
Year Ended December 31,
Operating Expenses Operating Revenue
The Water Fund maintains a healthy financial position. During fiscal 2018, the Water Fund recognized
operating income of $299,444, compared to an operating income of $231,084 in fiscal 2017. The increase
in operating revenue was due to a combination of higher rates and usage change in the current year.
Consumption will fluctuate from year-to-year based on many factors, including weather patterns and the
number of utility customers. The City should continue to review utility rates during its annual budget
process to make sure an adequate, yet fair rate is charged for the services provided.
-15-
SEWER FUND
At December 31, 2018, the Sewer Fund had a cash balance of $6,831,894 and total net position of
$34,724,406. Of this net position total, $27,656,438 is the investment in capital assets, while $7,067,968
is unrestricted. The following graph shows the financial position of the Sewer Fund over the past
five years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
2014 2015 2016 2017 2018
Sewer Fund Financial Position
Year Ended December 31,
Cash, Net of Interfund Loans Total Net Position Operating Revenue
The following graph shows the operating results of the Sewer Fund for the last five years:
$–
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
$1,750,000
$2,000,000
$2,250,000
$2,500,000
$2,750,000
$3,000,000
$3,250,000
2014 2015 2016 2017 2018
Sewer Fund Operating Results
Year Ended December 31,
MCES Costs Other Operating Expenses Operating Revenue
The major expense of the sanitary sewer operation is the charge from the Metropolitan Council
Environmental Services (MCES). The main cause of the expense fluctuations from year-to-year, shown
on the graph above, are generally changes made to the charges from the MCES, reflecting the results of
its sewer treatment operations.
During fiscal 2018, the Sewer Fund reported an operating loss of $1,114,611, compared to an operating
loss of $970,774 in fiscal 2017. An increase in rates and users contributed to the growth in operating
revenue in the current year. The City should continue to review utility rates during its annual budget
process to make sure an adequate, yet fair rate is charged for the services provided.
-16-
STORM WATER FUND
At December 31, 2018, the Storm Water Fund had a cash balance of $8,388,956 and total net position of
$43,852,046. Of this net position total, $35,186,743 is the investment in capital assets, while $8,665,303
is unrestricted. The following graph shows the financial position of the Storm Water Fund over the past
five years:
$–
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
2014 2015 2016 2017 2018
Storm Water Fund Financial Position
Year Ended December 31,
Cash, Net of Interfund Loans Total Net Position Operating Revenue
The following graph shows the operating results of the Storm Water Fund for the last five years:
$–
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
2014 2015 2016 2017 2018
Storm Water Fund Operating Results
Year Ended December 31,
Operating Expenses Operating Revenue
The Storm Water Fund has been near break-even operating results most of the past five years, as
presented in the table above. The Storm Water Fund maintains a healthy financial position. During
fiscal 2018, the Storm Water Fund reported an operating loss of $38,527, compared to operating income
of $33,356 in fiscal 2017. Increased personnel services costs contributed to the change in operations
compared to the prior year.
-17-
ARENA FUND
At December 31, 2018, the Arena Fund had a cash balance of $534,524 and total net position of
$1,698,072. Of this net position total, $1,352,971 is the investment in capital assets, while $345,101 is
unrestricted. The following graph shows the financial position of the Arena Fund over the past five years:
$–
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
2014 2015 2016 2017 2018
Arena Fund Financial Position
Year Ended December 31,
Cash, Net of Interfund Loans Total Net Position Operating Revenue
The following graph shows the operating results of the Arena Fund for the last five years:
$–
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
2014 2015 2016 2017 2018
Arena Fund Operating Results
Year Ended December 31,
Operating Expenses Operating Revenue
During fiscal 2018, the Arena Fund reported an operating loss of $211,382, compared to an operating loss
of $43,844 in fiscal 2017. After investment earnings of $4,919 and net transfers in of $126,500, net
position decreased by $80,919. The increase in expenses was in personnel services and in repairs and
maintenance compared to the prior year.
THIS PAGE INTENTIONALLY LEFT BLANK
-18-
GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires
the inclusion of two government -wide financial statements designed to present a clear picture of the City
as a single, unified entity. These government-wide financial statements provide information on the total
cost of delivering services, including capital assets and long-term liabilities.
STATEMENT OF NET POSITION
The Statement of Net Position essentially tells you what the City owns and owes at a given point in time,
the last day of the fiscal year. Theoretically, net position represents the resources the City has leftover to
use for providing services after its debts are settled. However, those resources are n ot always in spendable
form, or there may be restrictions on how some of those resources can be used. Therefore, net position is
divided into three components: net investment in capital assets, restricted, and unrestricted.
• Net Investment in Capital Assets – The portion of net position reflecting equity in capital assets
(i.e., capital assets minus related debt).
• Restricted Net Position – The portion of net position equal to resources whose use is l egally
restricted minus any noncapital-related liabilities payable from those same resources.
• Unrestricted Net Position – The residual balance of net position after the elimination of net
investment in capital assets and restricted net position.
The following table presents the components of the City’s net position as of December 31, 2018 and
2017, for governmental activities and business-type activities:
Increase
2018 2017 (Decrease)
Net position
Governmental activities
Net investment in capital assets 80,094,490$ 74,294,033$ 5,800,457$
Restricted 8,108,470 7,151,722 956,748
Unrestricted 14,596,678 14,090,028 506,650
Total governmental activities 102,799,638 95,535,783 7,263,855
Business-type activities
Net investment in capital assets 97,977,645 97,328,281 649,364
Unrestricted 26,994,489 23,521,090 3,473,399
Total business-type activities 124,972,134 120,849,371 4,122,763
Total net position 227,771,772$ 216,385,154$ 11,386,618$
As of December 31,
The City’s total net position at December 31, 2018 was $11,386,618 more than the previous year.
Governmental activities increased $7,263,855 and business-type activities increased $4,122,763.
The change in components of governmental activity net position reflects the City’s continued investment
in street infrastructure in the current year. Capital contributions from developers also increased the net
investment in capital assets of governmental activities. The increase in business-type activities net
position reflects the enterprise funds activity previously discussed.
At the end of the current fiscal year, the City is able to present positive balances in all categories of net
position, both for the government as a whole, as well as for its separate governmental and business-type
activities. The same situation held true for the prior fiscal year.
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STATEMENT OF ACTIVITIES
The Statement of Activities tracks the City’s yearly revenues and expenses, as well as any other
transactions that increase or reduce total net positions. These amounts represent the full cost of providing
services. The Statement of Activities provides a more comprehensive measure than just the amount of
cash that changed hands, as reflected in the fund-based financial statements. This statement includes the
cost of supplies used, depreciation of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in the net position of the City for the years ended December 31,
2018 and 2017:
2017
Program
Expenses Revenues Net Change Net Change
Net (expense) revenue
Governmental activities
General government 3,605,197$ 4,226,249$ 621,052$ (571,308)$
Public safety 5,235,993 536,916 (4,699,077) (4,662,732)
Public works 5,163,908 4,969,537 (194,371) (2,141,725)
Culture, education, and recreation 2,119,418 1,575,998 (543,420) (1,261,128)
Conservation and economic development 61,637 30,863 (30,774) 54,314
Interest and fiscal changes 295,431 – (295,431) (308,567)
Business-type activities
Water 2,156,694 4,028,474 1,871,780 1,166,512
Sewer 3,029,482 2,769,265 (260,217) (506,665)
Storm water 1,330,580 2,506,617 1,176,037 629,574
Arena 659,827 448,445 (211,382) (43,844)
Total net (expense) revenue 23,658,167$ 21,092,364$ (2,565,803) (7,645,569)
General revenues
Taxes 13,129,329 12,684,370
Unrestricted investment earnings 733,420 557,024
Other 89,672 171,294
Total general revenues 13,952,421 13,412,688
Change in net position 11,386,618 5,767,119
Net position – beginning 216,385,154 210,618,035
Net position – ending 227,771,772$ 216,385,154$
2018
One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the
way the City’s governmental and business-type operations are financed. The table clearly illustrates the
dependence of the City’s governmental operations on general revenues, such a s property taxes and
unrestricted investment earnings. In contrast, the City’s business-type activities tend to rely more heavily
on program revenues like charges for services (sales) and program-specific grants to cover expenses. This
is critical given the current downward pressures on the general revenue sources.
The change in net (expense) revenue, presented in the table above, when compared to the prior year is
primarily due to the amount of developer contributions recognized from year-to-year. These contributions
fluctuate with the size and number of completed development projects.
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LEGISLATIVE UPDATES
The 2018 legislative session, falling in the second half of the state’s fiscal biennium, was a short session
in which only two major finance-related bills were passed, omnibus bonding bills related to bonding, and
pensions. The following is a brief summary of specific legislative changes from the 2018 session or
previous legislative sessions potentially impacting Minnesota cities.
Omnibus Bonding Bill – The omnibus bonding bill authorized financing for over $1.5 billion in capital
improvements. Included in the approved funding was $542 million for various transportation
infrastructure, $99 million for local city-related economic development projects, and appropriations for a
number of different utility (water, sewer, wastewater, etc.) infrastructure improvement programs.
Wastewater Investment Protection – Effective retroactively back to August 1, 2017, when a city builds
a new wastewater treatment facility or upgrades one to meet current standards that exceed its previous
performance, the investment in that facility would be considered adequate for a period of 16 years before
a city could be required to upgrade the facility again to meet updated state wastewater facility standards.
Competitive Bidding Threshold – Effective for contracts awarded on or after August 1, 2018, the dollar
threshold at which Minnesota Statutes require the use of a sealed bidding process was raised from
$100,000 to $175,000. This extends the dollar range for which contracts may be awarded using direct
negotiation (obtaining two quotations) to contracts between $25,000 and $175,000. By reference, this
change also increased the dollar threshold at which public contractors’ performance and payment bonds
are required for contracts over $175,000.
Water Tank Maintenance Contracts – Effective for contracts awarded on or after September 1, 2018,
multi-year service contracts for water tank maintenance work that were previously allowed to be awarded
through direct negotiation, are required to be awarded through a sealed bid or best value bid procurement
process when the total cost of the contract for the services and supplies is expected to exceed the
competitive bid threshold of $175,000.
Minnesota Licensing and Registration System (MNLARS) – The Legislature established the
MNLARS steering committee, and a one-time appropriation of $9.65 million was approved for fiscal
year 2018 to fund costs related to the continued development, improvement, operation, and deployment of
the MNLARS. However, a bill to provide an additional proposed appropriation of $9 million to parti ally
compensate deputy registrars throughout the state for financial losses related to the flawed rollout of the
MNLARS was vetoed by the Governor.
Pension Benefit Reforms – The 2018 pension bill included a number of reforms to the various defined
benefit pension plans across the state, including the plans administered by the Public Employees
Retirement Association (PERA).
• Reforms impacting the PERA General Employees Retirement Fund (GERF) plan included:
o Post-retirement cost of living adjustments (COLAs) will be equal to 50.0 percent of the
annual increase for Social Security, but not less than 0.5 percent , and not more than
1.5 percent.
o For early retirees that retire on or after January 1, 2024, COLAs are deferred until the retiree
reaches the normal retirement age.
o Phases in actuarial reduction factors over five year on early retirement benefits payable
beginning July 1, 2019.
o The rate of interest paid on refunds of employee contributions to former public employees
was reduced from an annual rate of 4.0 percent to 3.0 percent.
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• Reforms impacting the PERA Public Employees Police and Fire Fund (PEPFF) plan included:
o Post-retirement COLAs were permanently set at 1.00 percent.
o Employer contribution rates increase from the current 16.20 percent of covered salaries to
16.95 percent beginning January 1, 2019, and 17.70 percent beginning January 1, 2020.
o Employee contribution rates increase from the current 10.80 percent of covered salaries to
11.30 percent beginning January 1, 2019, and 11.80 percent beginning January 1, 2020.
o To reduce the need for additional contribution increases, the state will contribute an
additional $4.5 million to the plan annually for fiscal years 2019 and 2020, increasing to
$9.0 million annually thereafter through fiscal 2048, or until the plan is fully funded.
o The rate of interest paid on refunds of employee contributions to former public employees
was reduced from an annual rate of 4.00 percent to 3.00 percent.
• Reforms impacting the volunteer firefighter relief associations plan included:
o Added a requirement that the fire chief annually certify each firefighter’s service credit to the
relief association and the related municipality effective January 1, 2019.
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ACCOUNTING AND AUDITING UPDATES
GASB STATEMENT NO. 83, CERTAIN ASSET RETIREMENT OBLIGATIONS
This statement addresses accounting and financial reporting for certain asset retirement obligations
(ARO), which are legally enforceable liabilities associated with the retirement of a tangible capital asset.
This statement establishes criteria for determining the timing and pattern of recognition of a liability and a
corresponding deferred outflow of resources for ARO. A government that has legal obligations to perform
future asset retirement activities related to its tangible capital assets should recognize a liability when it is
both incurred and reasonably estimable. The measurement of an ARO is required to be based on the best
estimate of the current value of outlays expected to be incurred, and a deferred outflow of resources
associated with an ARO is required to be measured at the amount of the corresponding liability upon
initial measurement.
This statement requires the current value of a government’s AROs to be adjusted for the effects of general
inflation or deflation at least annually, and a government to evaluate all relevant factors at least annually
to determine whether the effects of one or more of the factors are expected to significantly change the
estimated asset retirement outlays. A government should remeasure an ARO only when the resul t of the
evaluation indicates there is a significant change in the estimated outlays. Deferred outflows of resources
should be reduced and recognized as outflows of resources in a systematic and rational manner over the
estimated useful life of the tangible capital asset.
If a government owns a minority interest in a jointly owned tangible asset where a nongovernmental
entity is the majority owner or has operational responsibility for the jointly owned asset, the government’s
minority share of an ARO should be reported using the measurement produced by the nongovernmental
majority owner or the nongovernmental minority owner that has operational responsibility, without
adjustment to conform to the liability measurement and recognition requirements of this statement.
The statement also requires disclosures of any funding or financial assurance requirements a government
has related to the performance of asset retirement activities, along with any assets restricted for the
payment of the government’s AROs. This statement also requires disclosure of information about the
nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and
the estimated remaining useful life of the associated tangible capital assets. If an ARO (or portions
thereof) has been incurred by a government but is not yet recognized because it is not reasonably
estimable, the government is required to disclose that fact and the reasons therefor. This statement
requires similar disclosures for a government’s minority shares of AROs.
The requirements of this statement are effective for reporting periods beginning after June 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 84, FIDUCIARY ACTIVITIES
This statement establishes criteria for identifying fiduciary activities of all state and local governments.
The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary
activity, and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included
to identify fiduciary component units and post-employment benefit arrangements that are fiduciary
activities.
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An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements,
which should present a statement of fiduciary net position and a statement of changes in fiduciary net
position. This statement describes four fiduciary funds that should be reported, if applicable: (1) pension
(and other employee benefit) trust funds, (2) investment trust funds, (3) private -purpose trust funds, and
(4) custodial funds. Custodial funds generally should report fiduciary activities that are not held in a trust
or equivalent arrangement that meets specific criteria.
A fiduciary component unit, when reported in the fiduciary fund financial statements of a primary
government, should combine its information with its component units that are fiduciary component units
and aggregate that combined information with the primary government’s fiduciary funds.
This statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when an
event has occurred that compels the government to disburse fiduciary resources, defined as when a
demand for the resources has been made or when no further action, approval, or condition is required to
be taken or met by the beneficiary to release the assets.
The requirements of this statement are effective for reporting periods beginning after December 15, 2018.
Earlier application is encouraged.
GASB STATEMENT NO. 87, LEASES
A lease is a contract that transfers control of the right to use another entity’s nonfinancial asset as
specified in the contract for a period of time in an exchange or exchange -like transaction. Examples of
nonfinancial assets include buildings, land, vehicles, and equipment. Any contract that meets this
definition should be accounted for under the leases guidance, unless specifically excluded in this
statement.
Governments enter into leases for many types of assets. Under the previous guidance, leases were
classified as either capital or operating depending on whether the lease met any of the four tests. In many
cases, the previous guidance resulted in reporting lease transactions differently than similar nonlease
financing transactions.
The goal of this statement is to better meet the information needs of users by improving accounting and
financial reporting for leases by governments. It establishes a single model for lease accounting based on
the principle that leases are financings of the right-to-use an underlying asset. This statement increases the
usefulness of financial statements by requiring recognition of certain lease assets and liabilities for leases
that previously were classified as operating leases and recognized as inflows of resources or outflows of
resources based on the payment provisions of the contract.
Under this statement, a lessee is required to recognize a lease liability and an intangible right -to-use lease
asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby
enhancing the relevance and consistency of information about governments’ leasing activities.
To reduce the cost of implementation, this statement includes an exception for short-term leases, defined
as a lease that, at the commencement of the lease term, has a maximum possible term under the lease
contract of 12 months (or less), including any options to extend, regardless of their probability of being
exercised. Lessees and lessors should recognize short-term lease payments as outflows of resources or
inflows of resources, respectively, based on the payment provisions of the lease contract. The
requirements of this statement are effective for reporting periods beginning after December 15, 2019.
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GASB STATEMENT NO. 88, CERTAIN DISCLOSURES RELATED TO DEBT, INCLUDING DIRECT
BORROWINGS AND DIRECT PLACEMENTS
The primary objective of this statement is to improve the information that is disclosed in notes to
government financial statements related to debt, including direct borrowings and direct placements. It also
clarifies which liabilities governments should include when disclosing information related to debt.
The requirements of this statement will improve financial reporting by providing users of financial
statements with essential information that currently is not consistently provided. In addition, information
about resources to liquidate debt and the risks associated with changes in terms associated with debt will
be disclosed. As a result, users will have better information to understand the effects of debt on a
government’s future resource flows.
This statement defines debt for purposes of disclosure in notes to financial statements as a liability that
arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or
more payments to settle an amount that is fixed at the date the contractual obligation is established . The
statement requires that additional essential information related to debt be disclosed in notes to financial
statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified
in debt agreements related to significant events of default with finance-related consequences, significant
termination events with finance-related consequences, and significant subjective acceleration clauses. It
also requires that existing and additional information be provided for direct borrowings and direct
placements of debt separately from other debt. The requirements of this statement are effective for
reporting periods beginning after June 15, 2018.
GASB STATEMENT NO. 90, MAJORITY EQUITY INTEREST—AN AMENDMENT OF GASB STATEMENTS
NO. 14 AND NO. 61
The primary objectives of this statement are to improve the consistency and comparability of reporting a
government’s majority equity interest in a legally separate organization and to improve the relevance of
financial statement information for certain component units.
It specifies that a majority equity interest in a legally separate organization should be reported as an
investment if a government’s holding of the equity interest meets the definition of an investment. It
further specifies that such investments should generally be measured using the equity method, unless it is
held by a special-purpose government engaged only in fiduciary activities, a fiduciary fund, or an
endowment (including permanent and term endowments) or permanent fund, in which case the majority
equity interest should be measured at fair value.
All other holdings of a majority equity interest in a legally separate organization that do not meet the
definition of an investment result in the government being financially accountable for the legally separate
organization and, therefore, the government should report that organization as a component unit, and
should report an asset related to the majority equity interest using the equity method.
This statement also requires that a component unit in which a government has a 100 percent equity
interest account for its assets, deferred outflows of resources, liabilities, and deferred inflows of resources
at acquisition value at the date the government acquired a 100 percent equity interest in the component
unit. Transactions presented in flows statements of the component unit in that circumstance should
include only transactions that occurred subsequent to the acquisition.
The requirements of this statement are effective for reporting periods beginning after December 15, 2018.
Earlier application is encouraged. The requirements should be applied retroactively, except for the
provisions related to reporting a majority equity interest in a component unit and reporting a component
unit if the government acquires a 100 percent equity interest, which should be applied prospectively.
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UNIFORM GUIDANCE, MICRO-PURCHASE THRESHOLD
Under the Uniform Guidance for federal programs, a micro-purchase is one for goods or services that, due
to its relatively low value, does not require the government to abide by many of its ordinary competitive
procedures, including small business set-asides. Because the contract is theoretically such a low amount,
the contracting officer can pick virtually whatever company and product he or she wants to satisfy the
procurement, so long as the price is reasonable. The standard micro-purchase threshold has been amended
to increase the threshold to $10,000, effective June 20, 2018. Entities are not required to increase the
micro-purchase and simplified acquisition thresholds but, if they wish to do so, they must update their
procurement policies and procedures to reflect the change in thresholds. They cannot retroactively make
these changes effective prior to June 20, 2018.
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
Special Purpose Audit Reports
Year Ended
December 31, 2018
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Page
Independent Auditor’s Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance With Government Auditing Standards 1–2
Independent Auditor’s Report on Minnesota Legal Compliance 3
Schedule of Findings and Responses 4–5
Table of Contents
CITY OF ROSEMOUNT
Special Purpose Audit Reports
Year Ended December 31, 2018
DAKOTA COUNTY, MINNESOTA
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-1-
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the City Council and Management
City of Rosemount, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Rosemount, Minnesota (the City) as of and for the year ended December 31, 2018, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated May 7, 2019.
INTERNAL CONTROL OVER FINANCIAL REPORTING
In planning and performing our audit of the financial statements, we considered the City’s internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement
of the City’s financial statements will not be prevented, or detected and corrected, on a timely ba sis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may
exist that were not identified. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. We did identify one deficiency
in internal control, described in the accompanying Schedule of Findings and Responses as item 2018-001,
that we consider to be a significant deficiency.
(continued)
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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COMPLIANCE AND OTHER MATTERS
As part of obtaining reasonable assurance about whether the City’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
CITY’S RESPONSE TO THE FINDING
The City’s response to the finding identified in our audit is described in the accompanying Schedule of
Findings and Responses. The City’s response was not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on it.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the City’s internal control and compliance. Accordingly,
this report is not suitable for any other purpose.
Minneapolis, Minnesota
May 7, 2019
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INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the City Council and Management
City of Rosemount, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
the City of Rosemount, Minnesota (the City) as of and for the year ended December 31, 2018, and the
related notes to the financial statements, which collectively comprise the City’s basic financial statements,
and have issued our report thereon dated May 7, 2019.
MINNESOTA LEGAL COMPLIANCE
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to
Minnesota Statutes § 6.65, contains seven categories of compliance to be tested: contracting and bidding,
deposits and investments, conflicts of interest, public indebtedness, claims and disbursements,
miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to
comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities, except as
described in the Schedule of Findings and Responses as item 2018-002. However, our audit was not
directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed
additional procedures, other matters may have come to our attention regarding the City’s noncompliance
with the above referenced provisions.
CITY’S RESPONSE TO THE FINDING
The City’s response to the finding identified in our audit is described in the accompanying Schedule of
Findings and Responses. The City’s response was not subjected to the auditing procedures applied in the
audit of the financial statements and, accordingly, we express no opinion on it.
PURPOSE OF THIS REPORT
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this report is not suitable for any
other purpose.
Minneapolis, Minnesota
May 7, 2019
C E R T I F I E D
A C C O U N T A N T S
P UBLIC
PRINCIPALS
Thomas A. Karnowski, CPA
Paul A. Radosevich, CPA
William J. Lauer, CPA
James H. Eichten, CPA
Aaron J. Nielsen, CPA
Victoria L. Holinka, CPA/CMA
Jaclyn M. Huegel, CPA
Malloy, Montague, Karnowski, Radosevich & Co., P.A.
5353 Wayzata Boulevard • Suite 410 • Minneapolis, MN 55416 • Phone: 952-545-0424 • Fax: 952-545-0569 • www.mmkr.com
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CITY OF ROSEMOUNT
Schedule of Findings and Responses
Year Ended December 31, 2018
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A. FINDINGS – SIGNIFICANT DEFICIENCY IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
2018-001 INADEQUATE SEGREGATION OF DUTIES
Criteria – Internal control over financial reporting.
Condition – The City of Rosemount, Minnesota (the City) has limited segregation of duties
in a number of areas.
Context – This is a current year and prior year finding.
Cause – The limited segregation of duties is primarily caused by the limited size of the City’s
business office staff.
Effect – One important element of internal accounting controls is an adequate segregation of
duties such that no one individual should have responsibility to execute a transaction, have
physical access to the related assets, and have responsibility or authority to record the
transaction. A lack of segregation of duties subjects the City to a higher risk that errors or
fraud could occur and not be detected in a timely manner in the normal course of business.
Recommendation – We recommend that the City continue to review its accounting
procedures and internal controls and make improvements on an ongoing basis within the
limits of the staff available.
Management Response – There is no disagreement with the audit finding. The City reviews
and makes improvements to its internal control structure on an ongoing basis and attempts to
maximize the segregation of duties in all areas within the limits of the st aff available.
However, the City does not consider it cost-beneficial at this time to increase the size of its
staff in order to further segregate accounting functions.
CITY OF ROSEMOUNT
Schedule of Findings and Responses (continued)
Year Ended December 31, 2018
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B. FINDINGS – MINNESOTA LEGAL COMPLIANCE AUDIT
2018-002 COLLATERAL
Criteria – Minnesota Statutes § 118A.03 Subd. 3.
Condition– Minnesota Statutes require that if a city’s deposits exceed federal depository
insurance coverage, excess deposits must be covered by corporate surety bonds or collateral
that has a market value of at least 110 percent of such excess. This requirement was not met
for all of the City’s deposit accounts at December 31, 2018.
Context – The City had sufficient collateral pledged to cover deposit balances; however, the
amount pledged was below the 110 percent requirement by $38,836. This is a current year
finding.
Cause – This was an oversight by city personnel, due to account balance fluctuations at the
end of the year.
Effect – City deposits not covered by federal depository insurance or pledged collateral were
subject to custodial credit risk, the risk they may be lost if the depository bank fails.
Recommendation – We recommend that the City obtain corporate surety bonds or collateral
that has a market value of at least 110 percent of the City’s deposits that exceed federal
depository insurance coverage.
Management Response – There is no disagreement with the audit finding. This was an
oversight recognized by city staff and rectified in March 2019. The City’s staff reviews
collateral coverage regularly and will assure that adequate coverage is obtained in the future.
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