HomeMy WebLinkAbout3.b. 2021 Management and Annual Comprehensive Financial ReportEXECUTIVE SUMMARY
City Council Regular Meeting: June 7, 2022
AG ENDA ITEM: 2021 Management and Annual
Comprehensive Financial Report
AGENDA SECTION:
Presentation
PREPARED BY: Teah Malecha, Finance Director AGENDA NO. 3.b.
ATTACHMENTS: 2021 Annual Comprehensive Financial
Report, Special Purpose Reports,
Management Report
APPROVED BY: LJM
RECOMMENDED ACTION: Motion to accept the 2021 financial reports
BACKGROUND
Each year the City’s financial records are audited by an independent public accounting firm. The goal of an
independent audit is to provide reasonable assurance that the City's financial statements are free of
material misstatement. The audit involves examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; assessing the accounting principles used and significant estimates
made by management; and evaluating the overall financial statement presentation.
Management assumes full responsibility for the completeness, accuracy, and reliability of the information
presented in the Annual Report. To provide a reasonable basis for making these representations,
management has established a comprehensive internal framework that is designed both to protect the
government’s assets from loss, theft or misuse, and to provide sufficient, reliable information for the
preparation of the City’s financial statements in conformity with Generally Accepted Accounting
Principles (GAAP). The cost of internal controls should not outweigh their benefits; therefore, the City of
Rosemount’s comprehensive framework of internal control has been designed to provide reasonable,
rather than absolute assurance, that the financial statements will be free from material misstatement. As
management, we assert that to the best of our knowledge and belief, the financial report is complete and
reliable in all material respects.
The City's financial records have been audited by Malloy, Montague, Karnowski, Radosevich & Co., P.A.
(MMKR). Based upon their audit, they concluded there was a reasonable basis for rendering an
unmodified opinion that the City of Rosemount’s financial statements for the fiscal year ended December
31, 2021 are fairly presented in conformity with GAAP. An unmodified opinion is issued when the
independent auditor believes that the City’s financial statements are sound; that is, the statements are free
from material misstatement. Representatives of the audit firm will be at the City Council meeting to review
this year's audit, provide a financial overview of the City's 2021 results and answer questions. A copy of
this year's Management Report, Special Purpose Reports, and the Annual Report are attached.
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for
Excellence in Financial Reporting to the City of Rosemount for its Annual Report for the year ended
December 31, 2020. This was the 25th year the City received this prestigious national award. In order to be
awarded this Certificate of Achievement, the government needs to publish an easily readable and
efficiently organized Annual Report and has satisfied both GAAP and applicable legal requirements. The
2
Certificate of Achievement is valid for a period of only one year and we believe the current Annual Report
continues to meet the Certificate of Achievement program requirements. We will be submitting the 2021
report to the GFOA to determine eligibility for another certificate.
As stated earlier, the responsibility for both the accuracy and completeness of the financial records rests
with the City. This is not accomplished by one person. It takes everyone working together to make this
possible. The Finance Department has done an excellent job of maintaining the City’s financial records.
The department is undergoing many changes to increase efficiency which results in new processes to learn.
Staff continues to do all work with a high degree of accuracy and should be proud of what they do.
City staff members diligently code and/or review invoices for payment, enter receipts, submit supporting
documentation, answer our many questions and are very conscientious and conservative with their
spending. All of these activities directly contribute to the accuracy and completeness of the City’s financial
records and improved financial strength. Thank you to staff for paying close attention to detail, patience
with complying with our numerous accounting requirements, some of which seem very tedious to those
outside of Finance, and their willingness to learn new ways to process information.
The auditors did an excellent job. They were organized and asked great questions. Although this is not
their first year auditing the City, this is the first year that they have worked with us through the full process
of the audit and financial statement preparation. The process went smoothly, and they continue to expand
their depth of understanding of the City and its processes and policies.
Thank you, Mayor, members of the City Council, and the City Administrator for your willingness to do
what you believe is best for the City long-term. It is not easy as it is a constant balancing act. You work
hard to continue strengthening the City while maintaining the services we provide.
RECOMMENDATION
Staff recommends the Council motion to accept the 2021 financial reports.
ANNUAL
COMPREHENSIVE
FINANCIAL
REPORT
2021
Year Ended December 31, 2021City of Rosemount, Minnesota
CITY OF ROSEMOUNT
DAKOTA COUNTY, MINNESOTA
Annual Comprehensive
Financial Report
Year Ended
December 31, 2021
Prepared by the Departments of
Administration and Finance
Logan Martin, City Administrator
Teah Malecha, Finance Director
THIS PAGE INTENTIONALLY LEFT BLANK
Page
INTRODUCTORY SECTION
Letter of Transmittal i–viii
GFOA Certificate of Achievement ix
Organizational Chart x
City Officials xi
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 1–3
MANAGEMENT’S DISCUSSION AND ANALYSIS 4–15
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 16
Statement of Activities 17–18
Fund Financial Statements
Governmental Funds
Balance Sheet 19–20
Reconciliation of the Balance Sheet to the Statement of Net Position 21
Statement of Revenues, Expenditures, and Changes in Fund Balances 22–23
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities 24
Statement of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual – General Fund 25–26
Proprietary Funds
Statement of Net Position 27–28
Statement of Revenues, Expenses, and Changes in Fund Net Position 29–30
Statement of Cash Flows 31–32
Notes to Basic Financial Statements 33–66
REQUIRED SUPPLEMENTARY INFORMATION
PERA – General Employees Retirement Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 67
Schedule of City Contributions 67
PERA – Public Employees Police and Fire Fund
Schedule of City’s and Nonemployer Proportionate Share of Net Pension Liability 68
Schedule of City Contributions 68
Rosemount Fire Department Relief Association
Schedule of Changes in the Net Pension Liability (Asset) and Related Ratios 69
Schedule of City Contributions 70
Other Post-Employment Benefits Plan
Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 71
Notes to Required Supplementary Information 72–79
CITY OF ROSEMOUNT
Table of Contents
Page
SUPPLEMENTARY INFORMATION
Combining and Individual Fund Statements and Schedules
Nonmajor Special Revenue Funds
Combining Balance Sheet 80–81
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 82–83
Budgetary Comparison Schedules
Building CIP Capital Project Sub-Fund 84
Street CIP Capital Project Sub-Fund 85
Equipment CIP Capital Project Sub-Fund 86
Nonmajor Enterprise Funds
Combining Statement of Net Position 87
Combining Statement of Revenues, Expenses, and Changes in Fund Net Position 88
Combining Statement of Cash Flows 89
STATISTICAL SECTION (UNAUDITED)
STATISTICAL TABLES
Net Position by Component 90–91
Changes in Net Position 92–95
Fund Balances of Governmental Funds 96–97
Changes in Fund Balances of Governmental Funds 98–99
Tax Capacity Value and Estimated Actual Value of Taxable Property 100–101
Property Tax Rates – Direct and Overlapping Governments 102
Principal Property Taxpayers 103
Property Tax Levies and Collections 104
Ratios of Outstanding Debt by Type 105–106
Ratios of Net General Bonded Debt Outstanding 107–108
Direct and Overlapping Governmental Activities Debt 109
Legal Debt Margin Information 110–111
Pledged Revenue Coverage 112
Demographic and Economic Statistics 113
Principal Employers 114
Full-Time Equivalent City Government Employees by Function 115–116
Operating Indicators by Function 117–118
Capital Asset Statistics by Function 119–120
CITY OF ROSEMOUNT
Table of Contents (continued)
INTRODUCTORY SECTION
-i-
May 26, 2022
To the Honorable Mayor, Council Members, and the Citizens of the City of Rosemount:
Minnesota Statutes require that all cities issue an annual financial report on its financial position and
activity prepared in accordance with generally accepted accounting principles (GAAP) and audited in
accordance with generally accepted auditing standards by a firm of licensed certified public accountants
or the Office of the State Auditor. Pursuant to that requirement, we hereby issue the annual comprehensive
financial report (ACFR) of the City of Rosemount (the City) for the fiscal year ended December 31, 2021.
This report consists of management’s representations concerning the finances of the City. Consequently,
management assumes full responsibility for the completeness and reliability of all of the financial
information presented in this report. To provide a reasonable basis for making these representations,
management of the City has established a comprehensive internal control framework that is designed to
protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information
for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal
controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has
been designed to provide reasonable, rather than absolute, assurance that the financial statements will be
free from material misstatement.
As management, we assert that, to the best of our knowledge and belief, this financial report is complete
and reliable in all material respects; that it is presented in a manner designed to fairly set forth the financial
position and results of operations of the City as measured by the financial activity of its various funds, and
that all disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial
affairs have been included.
The City’s financial statements have been audited by Malloy Montague Karnowski Radosevich & Co.,
P.A. (MMKR), a professional firm of licensed certified public accountants. The goal of the independent
audit was to provide reasonable assurance that the financial statements of the City for the year ended
December 31, 2021, are free of material misstatement. The independent audit involved examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating the overall
financial statement presentation. The independent auditor concluded, based upon the audit, that t here was
a reasonable basis for rendering an unmodified opinion that the City’s financial statements for the year
ended December 31, 2021, are fairly presented in conformity with GAAP. The Independent Auditor’s
Report is presented as the first component of the financial section of this report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of management’s discussion and analysis (MD&A). This letter
of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s
MD&A can be found immediately following the report of the independent auditors.
-ii-
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 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 Percent
Population Increase Increase
2020 Census 25,650 3,776 17%
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
The City has an extensive system of state and county highways and 124 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 921 acres of industrial and commercially
designated property ready for development. There is also slightly less than 777 acres within the Municipal
Service Area (MUSA) to permit future residential growth. Rail, air, barge, and freeway access provides the
City’s economic community with an expedient transportation system. Four major highways link the City
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 15th 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 28th, prior to the close of the City’s fiscal year.
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 as part of the basic financial statements.
-iii-
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 – The City is a growing community experiencing rapid growth, compared to the last
decade. 2021 had a record year in new permit valuation with a total exceeding $146 million. In total, there
were 340 new dwelling units in 2021; 226 single-family, 82 townhome units, and 32 apartments. While the
community continues to grow, ample land for residential, commercial, and industrial development are still
available and the community is projected to keep expanding post 2050. The central portion of the City
centered around County Road 42/County Road 73 is the area of new growth and development activity. The
City, partnering with Dakota County, is committed to installation of road and utility infrastructure that
encourages and supports new growth. Additional development opportunities exist in the south, within the
University of Minnesota (UMore) 3,000-acre landholding, and to the east, which is primarily farmed until
future pressures modify the land uses. The first mixed-use development in UMore was approved in 2021.
Amber Fields consists of 435 acres which will build out to approximately 1,900 new housing units.
Consistent with the City Council goals of promoting Rosemount’s historic Downtown, the City approved
a 4-story market rate 124-unit apartment in 2020 called The Morrison. The project was a redevelopment
project, replacing an obsolete mall, and replacing it with the apartment building and a small stand -alone
commercial structure. The first phase of The Morrison was completed in 2021 and is currently leasing units.
On the commercial and industrial side of development, the projects continue at a steady pace. Significant
projects include tenant build outs for the first building within the Biscayne Business Park, construction of
North 20 Brewing, approval for Omni Orchards Farm Winery and Taproom, and construction of a
417,000 square foot distribution center for The Home Depot. 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 the adjoining 160-acre parcel marketed by OPUS Corporation. The
City also granted approvals for Scannell Properties to develop a 500,000–600,000 square foot FedEx
distribution facility on the redeveloping Rich Valley golf course.
Although the national economy has largely been in turmoil due to the COVID-19 pandemic, the City’s local
economy has not experienced a dramatic downturn. Local businesses have remained operational and some
even grew with assistance from local, regional, and state assistance.
Community leadership has preserved 540 beautiful acres of land for 30 parks. Bordered by the scenic
Mississippi River, the City also contains 270 acres of the Spring Lake Regional Park Preserve. The City’s
Community Center, a part of the Army National Guard, 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 the City’s desirable location, the future outlook is very optimistic.
Long-Term Financial Planning – Growth and development in the City are guided by the approved
2040 Comprehensive Plan. That Plan is generally consistent with the goals and objectives of the previous
2030 Plan with the exception that additional land has been brought into the Metropolitan Urban Service
Area (MUSA) to permit further residential development within the community. The City’s population for
the 2020 Census was 25,650, with the projections for 2030 and 2040 at 32,500 and 38,000, respectively.
-iv-
Cartegraph and GIS – In 2021, we continued to expand the use of our Cartegraph Operations Management
and Geographic Information Systems by automating common workflows and eliminating duplicative tasks
all while providing the most up-to-date and vital data to Public Works field staff. A new ‘Report an Issue’
tool was also released to the public, which streamlines communication of common issues between staff and
residents. These map-based approaches continue to improve the quality and timeliness of service that is
provided to residents.
Capital Improvement Projects – The Public Works Department coordinated and/or completed the
following capital improvement projects in 2021:
• Replaced pumps, rails, top slab and control cabinets at sanitary sewer lift stations No. 3 and No. 5.
• Replaced pumps at sanitary sewer lift station No. 4.
• Replaced roof on well No. 15.
• Replaced pump on well No. 7.
• Replaced two pumps and pump hoisting implements at Schwarz Pond storm lift station.
• Replaced SCADA Telemetry Interface Equipment.
• Purchased new mechanic toolbox.
• Purchased a new front-end loader.
• Purchased second anti-ice brine distribution system (partial funding through grant dollars).
• Replaced the irrigation systems at Connemara and JayCee Parks.
• Installed drain tile at Connemara Park.
• Replaced backstop fencing, player benches, and reshaped infield grading at Kidder Park.
• Replaced west property fence at Central Park/City Hall.
• Replaced shelter roofs at Innisfree Park with metal roofing.
• Resurfaced courts at Erickson Park and Family Resource Center.
• Completed the third year of a five-year plan for replacing picnic tables.
• Repaired gutter systems at City Hall.
• Replaced lighting at Fire Station No. 1 with LED fixtures.
City Construction Projects
• 2021 Street Improvements – Pavement mill and overlay and reclamation on Upper 149th Street,
Covington Avenue, Colorado Avenue, Darling Path, 156th Street West, Upper 156th Street West,
156th Court West, 157th Court West, 157th Street West, Dapple Court, Dapple Circle, Cumberland
Avenue, Crocus Avenue, Crocus Court, Crystal Path, Crystal Court, and Danville Avenue.
• Autumn Path (Biscayne Avenue to Almeria Trail) – Construction began in 2020 and will be
completed in 2022. This new urban paved road with curb and gutter provides additional access to
the Bella Vista subdivision. It also provides for the extension of raw and potable water mains as
well as sanitary and storm sewer.
• Connemara Trail (east of Akron) – Design for this project began in 2018, and construction was
ongoing through 2021. This road will eventually extend into the Emerald Isle development
currently being planned to the east of the existing developments. It provides an extension of water
main, sanitary sewer, and storm sewer interceptor. This project was extended into the Emerald Isle
to extend the storm sewer interceptor past Aspen Avenue.
• Bonaire Path East (Akron Avenue to Anderson Drive) – The gravel road was upgraded to an urban
paved section with curb and gutter and the extension of water main. The completion of road within
the Union Pacific Railroad right-of-way remains for 2022 when cross arms and median will be
installed. This project was designed such that the railroad quiet zone can be extended to include the
crossing on Bonaire Path East. It also provides an extension of raw and potable water main, as well
as storm sewer.
• Biscayne Avenue (Boulder Trail to CSAH 46) – Construction began in 2020 and was completed in
2021. The gravel road was upgraded to an urban paved section with curb and gutter. This project
also extends sanitary sewer to service those properties to the south and provided for stormwater
management.
• Connemara Trail Storm Sewer Interceptor – This extended the storm sewer interceptor across the
Emerald Isle development to the eastern property line.
-v-
Developer Construction Projects
• Ardan Place 1st Addition – This subdivision is the first phase of the Ardan Place development south
of Bonaire Path and west of Akron Avenue of single-family and townhomes by developer
Tamarack Land Development.
• Bella Vista 7th Addition – This subdivision is the final phase of the Bella Vista development of
single-family homes by developer Lennar.
• Caramore Crossing 1st and 2nd Additions – These are the first phases of the Caramore Crossing
development north of Bonaire Path and west of Akron Avenue of single-family homes by developer
D.R. Horton.
• Doolin Heights – This is a subdivision south of Bonaire Path and west of Bacardi Avenue of
single-family homes by developer Builder Jones.
• Dunmore 3rd Addition – This subdivision is the final phase of the of the Dunmore development to
the east of MN Highway 3 of single-family homes by developer Copper Creek.
• Emerald Isle 2nd Addition – This subdivision is a single-family neighborhood south of the
Greystone subdivision by developer CNC Development IV.
• Meadow Ridge 4th Addition – This is the final phase of the Meadow Ridge development west of
Akron Avenue and north of Bonaire Path. They are single family neighborhoods by developer
Lennar.
• The Morrison – This is a downtown redevelopment that is constructing a multi -family apartment
building and parking lot. Also included are some minor improvements to the sanitary sewer system.
The developer is the Morrison Partners.
Public Safety
The Rosemount Police Department (the Police Department) is responsible for policing services to the
community to ensure safety and response to service calls. A mission statement guides the actions of the
Police Department: “In partnership with the community, the Police Department assists and educates the
public, resolves problems, prevents crimes and enforces laws. We pursue our mission and serve with honor,
integrity and courage.” 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 Police 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, Dakota County Criminal Justice Network, Local Government Information
Systems, Dakota County Drug Task Force, South Metro SWAT, Dakota County Domestic Preparedness
Committee, the Dakota County Coordinated Response program, and the Dakota County Electronic Crimes
Unit are consolidated services organizations that contribute to the City’s policing services.
Records Unit – The Police Department’s Records Unit is responsible for the processing of over 3,300 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.
-vi-
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), Field Training Officers 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 and
throughout Dakota County.
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 dogs and ferrets, assisting in the handling of stray, lost, or injured
animals and other complaints of animals causing a nuisance by barking, howling, or being allowed to roam
off the owner’s property.
Code Enforcement – The Police Department assists the Community Development Department with code
enforcement of city ordinances related to property maintenance and outside storage. The Department ’s
Community Service Officers primarily handle this effort. Property owners that are observed to be in
violation of an ordinance are notified of the violation and given an explanation of how to remedy the
violation. The enforcement of city ordinances is important to maintain community standards, which help
the City attain its mission of providing a safe, healthy and pleasant community.
Emergency Management – The City has an all-hazards emergency plan and the Chief of Police serves as
the City’s Emergency Manager. The Emergency Manager is responsible for the development of emergency
plans in the event of a chemical, technical or natural disaster in the community (e.g. tornado, flooding,
school shooting, or hazardous materials release). The Chief of Police represents the City on the Dakota
County Domestic Preparedness Committee (DCDPC). The DCDPC is comprised of police, fire, dispatch,
EMS, public health, and medical facility representatives to aid all Dakota County cities and Dakota County
with all-hazards emergency planning and leadership.
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
receive 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.
-vii-
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.
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 to build relationships with the residents and local 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 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 Police 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. The Reserve
Officers work a variety of community events (i.e. Leprechaun Days, Food Truck Festival, high school
football games, etc.), hazardous materials spills or leaks, damage resulting from tornadoes or other sever e
weather and major criminal incidents. Reserve Officers patrol on some evenings, handle calls for service
such as motorist assists and animal complaints, and they often help with prisoner transports. Reserve
Officers regularly provide crime prevention information to citizens at community events or through other
programs.
Chaplain Program – The police chaplains assist in a variety of situations in which individuals or families
are having difficulties. Chaplains 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 can 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 the City or attend school in Rosemount. Residents of other communities that do
not attend school in the City are turned away. The Rosemount Police Explorer Post was formed in 2014.
Explorers meet twice a month under the direction of the two officers that serve as post advisers. During
these meetings they 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, including crime scene processing, domestic disturbance calls, building searches, etc. In the past,
the Explorers attended the national conference every other year. Five years ago, due to budget constraints,
we ended this. Although the Explorers paid their own way to the conference there was a cost associated
with sending the two officers that serve as post advisors. The Explorer Post is an opportunity for youth of
our community to become exposed to law enforcement. Some just want to learn more about the Police
Department. Others are truly “exploring” law enforcement as a potential future career. In either case it
brings teenagers closer to the Police Department in a service capacity. As such it fits with the Police
Department’s mission of improving quality of life in our community.
-viii-
Adult Citizen Academy Program – The Adult Citizen Academy has been a project of the Police
Department for the past nine years. In 2018, the 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 Adult Citizen 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 Police Department’s
educational mission.
Teen Citizen Academy Program – In 2018, the Police Department partnered with the Apple Valley Police
Department to conduct a Teen Citizen Academy. The Teen Citizen Academy covers topics similar to the
Adult Citizen Academy, but it is geared towards teens.
City’s Financial Policies
During the current year, none of the City’s financial polices had a significant impact on the financial
statements.
AWARDS AND ACKNOWLEDGEMENTS
The Government Finance Officers Association (GFOA) of the United States and Canada awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City for its ACFR for the fiscal
year ended December 31, 2020. This was the twenty-fifth consecutive year that the City has achieved this
prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an
easily readable and efficiently organized ACFR. This report must satisfy both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current ACFR
continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the
GFOA of the United States and Canada to determine its eligibility for another certificate.
The preparation of this report would not have been accomplished without the talented and dedicated
services of the entire staff of the Finance Department and other city personnel. We would like to express
our appreciation to all members of city staff who assisted and contributed to the preparation of this report.
We would also like to express our appreciation to the Mayor and the members of the City Council for their
support in planning and conducting the financial operations of the City in a responsible and progressive
manner.
Respectfully submitted,
Teah Malecha
Finance Director
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Rosemount
Minnesota
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2020
Executive Director/CEO
-ix-
CITY COUNCIL
FINANCE
CITY
ADMINISTRATOR
ENGINEERING
UTILITIES
MAINTENANCE
STORMWATER
PARKS & REC COMMUNITY
DEVELOPMENT PUBLIC WORKS
POLICEFIRE
CITY CLERK
HUMAN
RESOURCES
COMMUNICATIONS
ELECTIONS
ADMINISTRATION
ACCOUNTING
PAYROLL
UTILITY BILLING
INFORMATION
TECHNOLOGY
RECREATION
RENTALS
FACILITIES
PARKS & TRAILS
PLANNING &
ZONING
BUILDING PERMITS
& INSPECTIONS
GIS
ECONOMIC
DEVELOPMENT-x-
-xi-
Term Expires
Bill Droste Mayor December 31, 2022
Tammy Block Councilmember December 31, 2022
Paul Essler Councilmember December 31, 2022
Heidi Freske Councilmember December 31, 2024
Jeff Weisensel Councilmember December 31, 2024
Logan Martin City Administrator
Teah Malecha Finance Director
Emmy Foster Assistant City Administrator
Brian Erickson City Engineer
Nick Egger Public Works Director
Adam Kienberger Community Development Director
Mikael Dahlstrom Police Chief
Richard Schroeder Fire Chief
Dan Schultz Parks and Recreation Director
APPOINTED OFFICIALS
ELECTED OFFICIALS
CITY OF ROSEMOUNT
City Officials
December 31, 2021
THIS PAGE INTENTIONALLY LEFT BLANK
FINANCIAL SECTION
-1-
INDEPENDENT AUDITOR’S REPORT
To the City Council and Management
City of Rosemount, Minnesota
OPINIONS
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, 2021, and the related notes to the financial
statements, which collectively comprise the City’s basic financial statements as listed in the table of
contents.
In our opinion, the financial statements referred to above 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, 20 21, and the respective
changes in financial position, and, where applicable, cash flows thereof, and the budgetary comparisons for
the General Fund for the year then ended, in accordance with accounting principles generally accepted in
the United States of America.
BASIS FOR OPINIONS
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. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our
report. We are required to be independent of the City and to meet our other ethical responsibil ities in
accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
RESPONSIBILITIES OF MANAGEMENT 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; and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a
going concern within 12 months beyond the financial statements date, including any currently known
information that may raise substantial doubt shortly thereafter.
(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
Kalen T. Karnowski, 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
-2-
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinions. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is
not a guarantee that an audit conducted in accordance with generally accepted auditing standards and
Government Auditing Standards will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgement made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing
Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
• Obtain an understanding of internal control relevant to the audit 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, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control related matters
that we identified during the audit.
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 is the responsibility of
management and, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, 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.
(continued)
-3-
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The combining and individual fund financial statements and
schedules as listed in the table of contents, are presented for purpose of additional analysis and are not a
required part of the basic financial statements. Such 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. The 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.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the introductory and statistical sections, but does not include the basic financial statements and
our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other
information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and the
basic financial statements, or the other information otherwise appears to be materially misstated. If, based
on the work performed, we conclude that an uncorrected material misstatement of the other informa tion
exists, we are required to describe it in our report.
OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS
In accordance with Government Auditing Standards, we have also issued our report dated May 26, 2022 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 financial 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 26, 2022
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF ROSEMOUNT
Management’s Discussion and Analysis
Year Ended December 31, 2021
-4-
As management of the City of Rosemount, Minnesota (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, 2021. The discussion and analysis is intended to be considered in conjunction with the
additional information that we have furnished in our letter of transmittal located earlier in this report and
the City’s financial statements contained within this report.
FINANCIAL HIGHLIGHTS
• The assets and deferred outflows of resources of the City exceeded liabilities and deferred inflows
of resources by $265,963,506 (net position) at the close of the most recent fiscal year. Of this
amount, $62,031,545 (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 $13,580,393. This increase is partially attributable to an
increase in capital assets funded by grants or developers.
• The City’s outstanding bonded debt decreased by $1,055,000, or 13.1 percent, during the fiscal
year.
• At year-end, unassigned fund balance for the General Fund was $9,129,028, or 59.1 percent, of the
total General Fund expenditures and transfers out, budgeted for the upcoming 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 are comprised of 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.
These financial statements include not only the City itself (known as the primary government), but also the
Rosemount Port Authority. The Rosemount Port Authority has been presented as a blended component unit
on the City’s financial statements in accordance with accounting principles generally accepted in the
United States of America.
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
inflows/outflows, as applicable, 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.
-5-
The Statement of Activities presents information showing how the City’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, but unused personal leave time).
Both of 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, street lighting and arena.
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
funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.
The City maintains several individual governmental funds. Information is presented separately in the
governmental funds Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund
Balances for the City’s individual major governmental funds. They are as follows:
• General Fund
• Debt Service Fund
• Capital Projects Fund
• Port Authority TIF Fund
• American Rescue Plan Act Fund
Data from the 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 and certain capital project sub-funds.
Budgetary comparison statements or schedules have been provided for these funds to demonstrate
compliance with their respective budgets.
-6-
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 the water, sewer
and storm water utilities, which are considered to be major funds of the City, and combined information on
the street lighting utility and arena funds, which are considered nonmajor funds. Individual fund data for
each of these nonmajor proprietary funds is provided in the form of combining statements elsewhere in this
report. The internal service fund is also presented separately in the proprietary fund financial statements.
Notes to Basic Financial Statements – The notes to basic financial statements provide additional
information that is essential to a full understanding of the data provided in the government-wide and fund
financial statements.
Other Information – In addition to the basic financial statements and accompanying notes, the financial
section also presents required supplementary information, following the basic financial statements, and the
combining and individual fund statements and schedules (presented as supplementary information) referred
to earlier in connection with nonmajor governmental funds, which are presented immediately following the
required supplementary information.
Furthermore, a statistical section has been included as part of the Annual Comprehensive Financial
Report (ACFR) to facilitate additional analysis, and is the third and final section of the report.
-7-
GOVERNMENT-WIDE FINANCIAL ANALYSIS
An analysis of the City’s financial position begins with a review of the Statement of Net Position and the
Statement of Activities. These two statements report the City’s net position and changes in net position. It
should be noted that the financial position can also be affected by nonfinancial factors, including economic
conditions, population growth, and new regulations.
As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. As
presented in the following condensed version of the Statement of Net Position, the City’s assets and deferred
outflows of resources exceeded liabilities and deferred inflows of resources by $265,963,506 at
December 31, 2021.
City of Rosemount’s Net Position
2021 2020 2021 2020 2021 2020
Current and other assets 46,628,656$ 43,947,434$ 38,662,032$ 34,218,354$ 85,290,688$ 78,165,788$
Capital assets, net 102,616,953 98,584,304 103,069,531 100,394,932 205,686,484 198,979,236
Total assets 149,245,609$ 142,531,738$ 141,731,563$ 134,613,286$ 290,977,172$ 277,145,024$
Deferred outflows of resources 5,605,333$ 2,055,460$ 633,275$ 164,328$ 6,238,608$ 2,219,788$
Current liabilities 6,677,988$ 3,226,475$ 222,744$ 240,101$ 6,900,732$ 3,466,576$
Long-term liabilities 14,041,230 16,640,240 2,086,657 2,534,792 16,127,887 19,175,032
Total liabilities 20,719,218$ 19,866,715$ 2,309,401$ 2,774,893$ 23,028,619$ 22,641,608$
Deferred inflows of resources 7,470,981$ 4,299,680$ 752,674$ 40,411$ 8,223,655$ 4,340,091$
Net position
Net investment in capital assets 93,890,840$ 89,980,056$ 102,152,720$ 99,300,829$ 196,043,560$ 189,280,885$
Restricted 7,888,401 6,372,033 – – 7,888,401 6,372,033
Unrestricted 24,881,502 24,068,714 37,150,043 32,661,481 62,031,545 56,730,195
Total net position 126,660,743$ 120,420,803$ 139,302,763$ 131,962,310$ 265,963,506$ 252,383,113$
Governmental Activities Business-Type Activities Total
The largest portion of the City’s net position, $196,043,560, or 73.7 percent, reflects its investment in
capital assets (e.g., land, buildings, machinery and equipment, and infrastructure); less any outstanding
related debt used to acquire those assets. 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 its
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.
An additional portion of the City’s net position, $7,888,401, or 3.0 percent, represents resources that are
subject to external restrictions on how they may be used. The remaining balance representing unrestricted
net position ($62,031,545) may be used to meet the government’s ongoing obligations to citizens and
creditors. Certain balances within unrestricted net position may have internally imposed commitments or
limitations, which may further limit the purpose for which such net position may be used.
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.
Increases in development activity in the City and changes in state-wide pension obligations contributed to
the fluctuations in the above table.
-8-
CHANGES IN NET POSITION
The following table provides a condensed version of the Statement of Activities for the year ended
December 31, 2021, with comparative totals for the year ended December 31, 2020. The City’s total
net position increased by $13,580,393, or 5.4 percent, during the current fiscal year.
City of Rosemount’s Change in Net Position
2021 2020 2021 2020 2021 2020
Revenues
Charges for services 6,435,829$ 5,705,396$ 11,740,891$ 10,555,980$ 18,176,720$ 16,261,376$
Operating grants and contributions 918,900 755,114 4,769 10,860 923,669 765,974
Capital grants and contributions 4,886,604 8,197,794 4,250,898 1,445,403 9,137,502 9,643,197
Taxes 14,991,157 14,357,409 – – 14,991,157 14,357,409
Intergovernmental revenues not restricted
to specific programs – 1,833,933 – – – 1,833,933
Interest earnings (charges)(46,924) 495,367 (25,288) 634,556 (72,212) 1,129,923
Gain on sale of capital assets – 25,155 – – – 25,155
Other 161,863 49,133 – – 161,863 49,133
Total revenues 27,347,429 31,419,301 15,971,270 12,646,799 43,318,699 44,066,100
Expenses
General government 4,103,373 4,972,215 – – 4,103,373 4,972,215
Public safety 5,921,296 5,259,828 – – 5,921,296 5,259,828
Public works 8,598,676 7,089,996 – – 8,598,676 7,089,996
Culture, education and recreation 2,282,462 1,982,191 – – 2,282,462 1,982,191
Conservation and economic development 167,994 1,160,449 – – 167,994 1,160,449
Interest and fiscal charges 256,608 241,623 – – 256,608 241,623
Water – – 2,435,714 2,381,646 2,435,714 2,381,646
Sewer – – 3,248,320 3,309,194 3,248,320 3,309,194
Storm water – – 1,977,377 1,935,245 1,977,377 1,935,245
Steet lighting – – 206,117 193,114 206,117 193,114
Ice arena – – 540,369 501,011 540,369 501,011
Total expenses 21,330,409 20,706,302 8,407,897 8,320,210 29,738,306 29,026,512
Change in net position before transfers 6,017,020 10,712,999 7,563,373 4,326,589 13,580,393 15,039,588
Transfers 222,920 (746,530) (222,920) 746,530 – –
Change in net position 6,239,940 9,966,469 7,340,453 5,073,119 13,580,393 15,039,588
Net position – beginning 120,420,803 110,454,334 131,962,310 126,889,191 252,383,113 237,343,525
Net position – ending 126,660,743$ 120,420,803$ 139,302,763$ 131,962,310$ 265,963,506$ 252,383,113$
Governmental Activities Business-Type Activities Total
Governmental Activities – Governmental activities increased the City’s net position by $6,239,940,
accounting for approximately 45.9 percent of the total growth in the government’s net position. This
compares to an increase (from governmental activities) of $9,966,469, in 2020. Net transfers to
governmental activities from business-type activities increased $969,450 from 2020. Revenues decreased
by $4,071,872, mainly related to capital grants and contributions and unrestricted COVID-19-related grants
in 2020. Total expenses increased $624,107, or 3.0 percent, from 2020, with the largest spending increases
in public works and public safety spending.
Business-Type Activities – Business-type activities increased the City’s net position by $7,340,453,
accounting for approximately 54.1 percent of the total growth in the government’s net position. This
compares to an increase of $5,073,119 in 2020. The primary reason for the change in net position, compared
to the prior year change, was due to increases in charges for services and capital grants and contributions.
Charges for services were up, with more utility charges and increased capital contributions from
governmental funds and developers accounted for the change in capital grants and contributions.
-9-
GOVERNMENTAL ACTIVITIES
Revenues – The following chart illustrates the City’s revenues by source for its governmental activities:
Revenues by Source – Governmental Activities
Expenses – The following chart illustrates the City’s governmental expenses and corresponding program
revenues, excluding transfers, for its governmental activities:
Expenses and Program Revenues – Governmental Activities
General
Government Public Safety Public Works
Culture,
Education and
Recreation
Conservation
and Economic
Development
Interest and
Fiscal Charges
Program Revenues $4,645,838 $706,714 $5,416,862 $1,424,610 $47,309 $–
Expenses $4,103,373 $5,921,296 $8,598,676 $2,282,462 $167,994 $256,608
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
$8,000,000
$9,000,000
-10-
BUSINESS-TYPE ACTIVITIES
Revenues – The following chart illustrates the City’s revenues by source for its business-type activities:
Revenues by Source – Business-Type Activities
Expenses – Below is a graph showing the City’s program revenues and expenses, excluding transfers, for
its business-type activities:
Expenses and Program Revenues – Business-Type Activities
Water Fund Sewer Storm Water Street Lighting Ice Arena
Program Revenues $6,458,027 $4,496,807 $4,356,003 $242,114 $443,607
Expenses $2,435,714 $3,248,320 $1,977,377 $206,117 $540,369
$–
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
-11-
FINANCIAL ANALYSIS OF THE CITY’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 currently available 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 $34,188,506, a 3.1 percent decrease of $1,104,240 from 2020. The unassigned fund balance
constitutes $9,129,028, 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 ($2,267)
is classified as nonspendable in regards to prepaid items, $4,666,788 is classified as restricted to meet debt
service requirements, restricted for the Port Authority TIF, or relates to PEG fees and unspent grant sources,
and the remainder of the fund balance is considered to be committed or assigned for specific purposes and
unavailable for discretionary spending.
Financial highlights for the City’s major governmental funds are as follows:
General Fund – 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 $9,129,028, while total fund balance
reached $12,704,069.
During the current fiscal year, unassigned fund balance in the General Fund increased by $985,341.
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 and other financing uses 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.
At year-end, unassigned fund balance for the General Fund was $9,129,028, or 59.1 percent, of the total
General Fund expenditures and transfers out budgeted for the upcoming year, which is available to
meet working capital needs.
Other Major Funds – The debt service fund balance decreased by $392,305, with scheduled debt
service payments in the current year exceeding revenues and transfers from other funds. The capital
projects fund balance decreased by $1,664,061, due to expenditures and other financing uses exceeding
revenues and other financing sources in the current year. The timing of project spending does not
always align with the recognition of the associated financing sources. The Port Authority TIF Fund
balance increased by $471,315, due to an increase in tax revenue and decrease in conservation and
economic development expenditures. The American Rescue Plan Act Fund balance increased by $201
in 2021, due to interest earned on unspent federal grant advances.
-12-
Proprietary Funds – The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
Unrestricted net position in the respective proprietary funds includes: $17,409,880 for water, $8,881,985
for sewer, $10,312,952 for storm water, $93,086 for street lighting, and $452,140 for arena. Water net
position increased $3,751,156, sewer net position increased $1,313,491, storm water net position increased
$2,207,365, street lighting net position increased $36,017, and arena net position increased $32,424 during
the year.
The ongoing development in the City continues to contribute to the increase in net position, with significant
capital contributions in the enterprise operations in the current year.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City adopted a balance budget in the current year with revenues and other financing sources matching
expenditures and other financing uses. The change between the original and final budget included minor
City Council-approved adjustments primarily for donations, increasing both revenues and expenditures by
$39,873.
Actual revenues were $660,056 over budget. Revenue variances from final budget to actual include:
• Taxes were over budget by $102,018, due to conservative budgeting of collections.
• Public charges for services were $325,965 over budget, due to more development activity than
anticipated.
• Licenses and permits were $541,330 over budget, also due to the significant development ongoing
in the City in the current year.
• Investment earnings were $200,174 less than projected due to declining rates of return and current
year market adjustments.
Expenditures were $249,917 more than the budgeted amount. The largest variance was in public works for
park maintenance as the City utilized previously assigned fund balance in the current year for project costs.
-13-
CAPITAL ASSETS AND LONG-TERM DEBT
Capital Assets – The City’s investment in capital assets for its governmental and business-type activities
as of December 31, 2021, amounts to $205,686,484 (net of accumulated depreciation). This investment in
capital assets includes land, buildings and structures, machinery and equipment, water, sewer, and storm
water systems, infrastructure and construction in progress.
City of Rosemount’s Capital Assets
2021 2020 2021 2020 2021 2020
Capital assets, not depreciated
Land 7,910,446$ 7,886,846$ 4,161,879$ 3,501,877$ 12,072,325$ 11,388,723$
Land improvements 4,805,364 4,790,045 – – 4,805,364 4,790,045
Construction in progress 16,619,885 12,075,912 – 755,094 16,619,885 12,831,006
Subtotal 29,335,695 24,752,803 4,161,879 4,256,971 33,497,574 29,009,774
Capital assets, depreciated
Land improvements 5,080,137 5,128,173 – – 5,080,137 5,128,173
Buildings 18,455,360 18,455,360 12,451,756 12,110,980 30,907,116 30,566,340
Machinery and equipment 15,822,393 14,934,239 4,797,795 4,586,228 20,620,188 19,520,467
Infrastructure 69,561,976 68,652,051 151,882,205 146,923,101 221,444,181 215,575,152
Accumulated depreciation (35,638,608) (33,338,322) (70,224,104) (67,482,348) (105,862,712) (100,820,670)
Subtotal 73,281,258 73,831,501 98,907,652 96,137,961 172,188,910 169,969,462
Total (net of depreciation)102,616,953$ 98,584,304$ 103,069,531$ 100,394,932$ 205,686,484$ 198,979,236$
Governmental Activities Business-Type Activities Total
Consistent with the ongoing and active development activities occurring in the City as previously discussed,
capital assets increased largely, with contributions from developers and ongoing projects as approved and
managed by the City.
Additional information on the City’s capital assets can be found in Note 4 of the notes to basic financial
statements.
-14-
Long-Term Debt – At the end of the current fiscal year, the City had total bonded debt outstanding
(excluding unamortized bond premium) of $6,975,000 (including debt recorded in the Port Authority). Of
this amount, $1,320,000 was for general obligation improvement debt, which has financed special
assessment construction as part the continuing development within the City. An additional $4,195,000 was
general obligation debt issued by the Port Authority, which financed the City’s economic development and
redevelopment programs. Another $815,000 was general obligation revenue bond debt issued to add to and
improve the water utility system within the City. The remaining $645,000 was general obligation refunding
debt (for Fire Station 2).
City of Rosemount’s Outstanding Debt
2021 2020 2021 2020 2021 2020
G.O. improvement bonds 1,320,000$ 1,775,000$ –$ –$ 1,320,000$ 1,775,000$
Capital improvement bonds 645,000 795,000 – – 645,000 795,000
Port Authority tax increment bonds 4,195,000 4,495,000 – – 4,195,000 4,495,000
G.O. utility revenue bonds – – 815,000 965,000 815,000 965,000
Unamortized bond premium 139,250 167,116 41,147 49,376 180,397 216,492
Compensated absences 1,371,016 1,304,980 222,012 224,712 1,593,028 1,529,692
Capital lease obligations 1,380,029 1,372,132 60,664 79,727 1,440,693 1,451,859
Net pension liability – PERA 4,265,336 6,060,881 817,875 1,127,664 5,083,211 7,188,545
Total OPEB obligation 725,599 670,131 129,959 88,313 855,558 758,444
Total bonds outstanding 14,041,230$ 16,640,240$ 2,086,657$ 2,534,792$ 16,127,887$ 19,175,032$
Governmental Activities Business-Type Activities Total
The net pension liability decreased from the prior year, due to the change in the City’s allocation of pension
obligations for the Public Employees Retirement Association state-wide pension plans.
The City’s total bonded debt decreased by $1,055,000 (approximately 13.1 percent) 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
$96,905,803. Of the City’s $6,975,000 in outstanding general obligation debt at the current fiscal year-end,
$645,000 is subject to the restrictions placed by state statutes.
The City received an S&P Global Ratings bond rating of AA+ for bonds issued in 2018, and no new bonds
were issued in 2021. This rating amounts to a rating upgrade from our Aa2 Moody’s rating for previously
issued debt. These excellent ratings have had a positive effect on the sale of the City’s bonds.
Additional information on the City’s outstanding debt can be found in Note 5 of the notes to basic financial
statements.
-15-
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
• Dramatic increases in local government aids and other state sources are not anticipated based on
legislation at the time of writing this report.
• Property tax collection rates are expected to remain strong, at or near the 2021 level.
• The City is anticipating the continued trend of significant development.
• The COVID-19 pandemic continues to cause volatility in economic conditions and tremendous
disruption in the way governments, businesses, and individuals function. The ongoing extent of the
negative impact on the economy and city operations is unknown at this time.
REQUESTS FOR INFORMATION
This ACFR is designed to provide a general overview of the City’s finances for all those with an interest in
the government’s finances. Questions concerning any of the information provided in this ACFR or requests
for additional financial information should be directed to the Finance Director, City of Rosemount,
2875 145th Street West, Rosemount, Minnesota 55068-4997.
BASIC FINANCIAL STATEMENTS
THIS PAGE INTENTIONALLY LEFT BLANK
Governmental Business-Type
Activities Activities Total
Assets
Cash and investments 39,817,456$ 36,591,806$ 76,409,262$
Receivables
Accounts 259,688 1,557,168 1,816,856
Interest 44,582 35,554 80,136
Taxes 793,986 – 793,986
Special assessments 1,424,711 301,279 1,725,990
Due from other governments 1,693,524 – 1,693,524
Prepaid items 248,309 176,225 424,534
Net pension asset – fire relief 2,346,400 – 2,346,400
Capital assets
Not depreciated 29,335,695 4,161,879 33,497,574
Depreciated, net of accumulated depreciation 73,281,258 98,907,652 172,188,910
Total capital assets, net of accumulated depreciation 102,616,953 103,069,531 205,686,484
Total assets 149,245,609 141,731,563 290,977,172
Deferred outflows of resources
Pension plan deferments – PERA 5,445,834 624,386 6,070,220
Pension plan deferments – fire relief 109,868 – 109,868
OPEB plan deferments 49,631 8,889 58,520
Total deferred outflows of resources 5,605,333 633,275 6,238,608
Total assets and deferred outflows of resources 154,850,942$ 142,364,838$ 297,215,780$
Liabilities
Accounts and contracts payable 1,621,807$ 146,073$ 1,767,880$
Accrued salaries and employee benefits payable 146,082 67,102 213,184
Accrued interest payable 84,635 9,569 94,204
Deposits payable 2,168,665 – 2,168,665
Unearned revenue 2,656,799 – 2,656,799
Long-term liabilities
Due within one year 1,910,799 281,440 2,192,239
Due in more than one year 7,139,496 857,383 7,996,879
Net pension liability – due in more than one year 4,265,336 817,875 5,083,211
Total OPEB liability – due in more than one year 725,599 129,959 855,558
Total long-term liabilities 14,041,230 2,086,657 16,127,887
Total liabilities 20,719,218 2,309,401 23,028,619
Deferred inflows of resources
Pension plan deferments – PERA 6,692,916 752,674 7,445,590
Pension plan deferments – fire relief 778,065 – 778,065
Total deferred inflows of resources 7,470,981 752,674 8,223,655
Net position
Net investment in capital assets 93,890,840 102,152,720 196,043,560
Restricted for
Debt service 1,845,347 – 1,845,347
Port Authority TIF 2,647,011 – 2,647,011
PEG fees 111,344 – 111,344
ARPA projects 201 – 201
State-funded street projects 1,606,295 – 1,606,295
Fire relief pensions 1,678,203 – 1,678,203
Unrestricted 24,881,502 37,150,043 62,031,545
Total net position 126,660,743 139,302,763 265,963,506
Total liabilities, deferred inflows of resources, and net position 154,850,942$ 142,364,838$ 297,215,780$
CITY OF ROSEMOUNT
Statement of Net Position
as of December 31, 2021
See notes to basic financial statements -16-
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary government
Governmental activities
General government 4,103,373$ 4,643,537$ 2,301$ –$
Public safety 5,921,296 155,462 551,252 –
Public works 8,598,676 215,879 315,579 4,885,404
Culture, education and recreation 2,282,462 1,420,951 3,659 –
Conservation and economic development 167,994 – 46,109 1,200
Interest and fiscal charges 256,608 – – –
Total governmental activities 21,330,409 6,435,829 918,900 4,886,604
Business-type activities
Water 2,435,714 5,093,320 3,348 1,361,359
Sewer 3,248,320 3,217,751 593 1,278,463
Storm water 1,977,377 2,750,826 574 1,604,603
Street lighting 206,117 235,641 – 6,473
Arena 540,369 443,353 254 –
Total business-type activities 8,407,897 11,740,891 4,769 4,250,898
Total primary government 29,738,306$ 18,176,720$ 923,669$ 9,137,502$
General revenues
Taxes
Investment earnings (charges)
Other
Transfers
Total general revenues and transfers
Change in net position
Net position – beginning
Net position – ending
CITY OF ROSEMOUNT
Statement of Activities
Year Ended December 31, 2021
Program Revenues
See notes to basic financial statements -17-
Governmental Business-Type
Activities Activities Total
542,465$ –$ 542,465$
(5,214,582) – (5,214,582)
(3,181,814) – (3,181,814)
(857,852) – (857,852)
(120,685) – (120,685)
(256,608) – (256,608)
(9,089,076) – (9,089,076)
– 4,022,313 4,022,313
– 1,248,487 1,248,487
– 2,378,626 2,378,626
– 35,997 35,997
– (96,762) (96,762)
– 7,588,661 7,588,661
(9,089,076) 7,588,661 (1,500,415)
14,991,157 – 14,991,157
(46,924) (25,288) (72,212)
161,863 – 161,863
222,920 (222,920) –
15,329,016 (248,208) 15,080,808
6,239,940 7,340,453 13,580,393
120,420,803 131,962,310 252,383,113
126,660,743$ 139,302,763$ 265,963,506$
Changes in Net Position
Net (Expense) Revenue and
-18-
Capital
General Debt Service Projects
Assets
Cash and investments 13,624,178$ 1,905,451$ 19,283,647$
Receivables
Accounts 35,837 – 216,981
Interest 24,167 2,781 16,514
Taxes 792,448 – –
Special assessments 29,254 21,750 1,373,707
Due from other governments 87,229 – 1,606,295
Prepaid items – – –
Total assets 14,593,113$ 1,929,982$ 22,497,144$
Liabilities
Accounts and contracts payable 531,632$ –$ 1,046,834$
Accrued salaries and employee benefits payable 144,819 – –
Deposits payable 1,024,905 – 1,143,760
Unearned revenue 91,207 – 1,188,253
Total liabilities 1,792,563 – 3,378,847
Deferred inflows of resources
Unavailable revenue – property taxes 67,451 – –
Unavailable revenue – special assessments 29,030 21,750 1,331,147
Unavailable revenue – long-term receivables – – 1,606,295
Total deferred inflows of resources 96,481 21,750 2,937,442
Fund balances
Nonspendable – – –
Restricted – 1,908,232 –
Committed – – –
Assigned 3,575,041 – 16,180,855
Unassigned 9,129,028 – –
Total fund balances 12,704,069 1,908,232 16,180,855
Total liabilities, deferred inflows
of resources, and fund balances 14,593,113$ 1,929,982$ 22,497,144$
CITY OF ROSEMOUNT
Balance Sheet
Governmental Funds
as of December 31, 2021
See notes to basic financial statements -19-
Port American
Authority Rescue
TIF Plan Act Nonmajor Total
2,646,203$ 1,377,540$ 747,817$ 39,584,836$
– – 6,870 259,688
1,120 – – 44,582
1,538 – – 793,986
– – – 1,424,711
– – – 1,693,524
– – 2,267 2,267
2,648,861$ 1,377,540$ 756,954$ 43,803,594$
1,850$ –$ 7,553$ 1,587,869$
– – 1,263 146,082
– – – 2,168,665
– 1,377,339 – 2,656,799
1,850 1,377,339 8,816 6,559,415
– – – 67,451
– – – 1,381,927
– – – 1,606,295
– – – 3,055,673
– – 2,267 2,267
2,647,011 201 111,344 4,666,788
– – 634,527 634,527
– – – 19,755,896
– – – 9,129,028
2,647,011 201 748,138 34,188,506
2,648,861$ 1,377,540$ 756,954$ 43,803,594$
-20-
THIS PAGE INTENTIONALLY LEFT BLANK
34,188,506$
Capital assets used in governmental activities are not financial resources and,therefore,are not
reported in governmental funds.
Cost of capital assets 138,255,561
Less accumulated depreciation (35,638,608)
Net pension assets are only recorded in the government-wide financial statements as they are not
current financial resources to governmental funds.2,346,400
Long-term liabilities are not payable with current financial resources and,therefore,are not reported
in governmental funds.
Bonds payable (6,160,000)
Unamortized bond premium (139,250)
Compensated absences (1,371,016)
Capital lease obligations (1,380,029)
Net pension liability (4,265,336)
Total OPEB liability (725,599)
Interest on long-term debt is included in the change in net position as it accrues,regardless of when
payment is due. However, it is included in the change in fund balances when due.(84,635)
The internal service fund is used by management to charge certain costs to individual funds.The
assets and liabilities of the internal service fund are included in governmental activities in the
Statement of Net Position.444,724
Due to availability,certain revenues are not recognized under the governmental fund statements until
received;however,under full accrual in the government-wide Statement of Activities,revenues are
recorded when earned regardless of when received.
Property taxes receivable 67,451
Special assessments receivable 1,381,927
Long-term receivables 1,606,295
Governmental funds do not report certain long-term amounts related to pensions that are included in
net position.
Deferred outflows of resources – pension plan deferments 5,555,702
Deferred outflows of resources – OPEB plan deferments 49,631
Deferred inflows of resources – pension plan deferments (7,470,981)
Total net position – governmental activities 126,660,743$
Amounts reported for governmental activities in the Statement of Net Position are different because:
as of December 31, 2021
CITY OF ROSEMOUNT
Reconciliation of the Balance Sheet to the
Statement of Net Position
Governmental Funds
Total fund balances – governmental funds
See notes to basic financial statements -21-
Capital
General Debt Service Projects
Revenues
Taxes 11,415,418$ 177,004$ 1,717,434$
Intergovernmental 759,832 – –
Public charges for services 1,662,665 – 3,216,186
Licenses and permits 1,374,330 – –
Fines and forfeits 86,802 – –
Special assessments 672 21,335 1,305,317
Investment earnings (charges)(48,174)22,176 (27,131)
Other 29,011 – 1,229,807
Donations/contributions 39,873 – 50,201
Total revenues 15,320,429 220,515 7,491,814
Expenditures
Current
General government 3,440,661 – 7,500
Public safety 5,642,463 – –
Public works 3,957,642 – –
Culture, education and recreation 1,743,024 – –
Conservation and economic development – – –
Capital outlay – – 10,849,802
Debt service
Principal – 605,000 292,325
Interest and fiscal charges – 77,820 74,419
Total expenditures 14,783,790 682,820 11,224,046
Excess (deficiency) of revenues over expenditures 536,639 (462,305) (3,732,232)
Other financing sources (uses)
Issuance of debt – – 300,222
Sale of capital assets – – 92,443
Transfers in 3,500 70,000 1,675,506
Transfers out (130,000)– –
Total other financing sources (uses)(126,500) 70,000 2,068,171
Net change in fund balances 410,139 (392,305) (1,664,061)
Fund balances
Beginning of year 12,293,930 2,300,537 17,844,916
End of year 12,704,069$ 1,908,232$ 16,180,855$
CITY OF ROSEMOUNT
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Year Ended December 31, 2021
See notes to basic financial statements -22-
Port American
Authority Rescue
TIF Plan Act Nonmajor Total
1,076,647$ –$ 195,885$ 14,582,388$
– – 183,273 943,105
– – 40,160 4,919,011
– – – 1,374,330
– – – 86,802
– – – 1,327,324
5,286 201 660 (46,982)
– – – 1,258,818
– – – 90,074
1,081,933 201 419,978 24,534,870
162,705 – – 3,610,866
– – 183,273 5,825,736
– – – 3,957,642
– – 3,774 1,746,798
– – 162,460 162,460
– – – 10,849,802
300,000 – – 1,197,325
147,913 – – 300,152
610,618 – 349,507 27,650,781
471,315 201 70,471 (3,115,911)
– – – 300,222
– – – 92,443
– – – 1,749,006
– – – (130,000)
– – – 2,011,671
471,315 201 70,471 (1,104,240)
2,175,696 – 677,667 35,292,746
2,647,011$ 201$ 748,138$ 34,188,506$
-23-
THIS PAGE INTENTIONALLY LEFT BLANK
(1,104,240)$
Governmental funds report capital outlays as expenditures.However,in the Statement of Activities,the cost of those
assets is allocated over their estimated useful lives and reported as depreciation expense.
Capital outlay and improvements 8,762,400
Depreciation expense (2,981,472)
Capital assets constructed by governmental activities contributed to business-type activities (1,396,086)
A gain or loss on the disposal of capital assets,including the difference between the carrying value and any related
sale proceeds,is included in the change in net position.However,only the sale proceeds are included in the change
in fund balance.
Net book value of capital assets disposed (352,193)
Net pension assets are included in net position,but are excluded from fund balances because they do not represent
financial resources. 482,255
The issuance of long-term debt provides current financial resources to governmental funds,while the repayment of
long-term debt consumes the current financial resources of governmental funds.Neither transaction,however,has
any effect on net position.Other long-term adjustments are also made between the governmental funds and the
Statement of Activities for debt premiums, compensated absences, pension liabilities, and OPEB obligations.
Issuance of debt (300,222)
Principal payments for debt 1,197,325
Debt premiums 27,866
Compensated absences (66,036)
Net pension liability 1,795,545
Total OPEB liability (55,468)
Interest on long-term debt in the Statement of Activities differs from the amount reported in the governmental funds
because interest is recognized as an expenditure in the funds when it is due,and thus requires the use of current
financial resources.In the Statement of Activities,however,interest expense is recognized as the interest accrues,
regardless of when it is due.15,678
The internal service fund is used by management to charge certain costs to individual funds.The net change of the
internal service fund is reported with governmental activities in the government-wide financial statements.41,209
Certain revenues included in net position as soon as they are earned are not included in the change in fund balances
until available to liquidate liabilities of the current period.
Property taxes receivable (41,231)
Special assessments receivable 95,706
Long-term receivables 1,501,389
Governmental funds do not report additions or deletions to certain long-term amounts related to pensions that are
included in the change in net position.
Deferred outflows of resources – pension plan deferments 3,540,569
Deferred outflows of resources – OPEB plan deferments 9,304
Deferred inflows of resources – pension plan deferments (4,932,358)
Change in net position – governmental activities 6,239,940$
Amounts reported for governmental activities in the Statement of Activities are different because:
Net change in fund balances – total governmental funds
Revenues, Expenditures, and Changes in Fund Balances
Reconciliation of the Statement of
CITY OF ROSEMOUNT
Year Ended December 31, 2021
Governmental Funds
to the Statement of Activities
See notes to basic financial statements -24-
Over (Under)
Original Final Actual Final Budget
Revenues
Taxes
General property tax 9,451,272$ 9,451,272$ 9,550,110$ 98,838$
Fiscal disparities 1,461,128 1,461,128 1,443,778 (17,350)
Other 401,000 401,000 421,530 20,530
Total taxes 11,313,400 11,313,400 11,415,418 102,018
Intergovernmental
Federal grants – – 33,736 33,736
State aid, police 250,000 250,000 259,404 9,404
State aid, general government 80,000 80,000 58,204 (21,796)
State aid, highway 300,000 300,000 313,415 13,415
Other 104,400 104,400 95,073 (9,327)
Total intergovernmental 734,400 734,400 759,832 25,432
Public charges for services
General government 918,700 918,700 1,123,885 205,185
Public safety 41,100 41,100 68,659 27,559
Highways and streets 72,000 72,000 112,043 40,043
Culture, education and recreation 299,400 299,400 349,927 50,527
SAC 5,500 5,500 8,151 2,651
Total public charges for services 1,336,700 1,336,700 1,662,665 325,965
Licenses and permits
Business 61,200 61,200 47,076 (14,124)
Nonbusiness 771,800 771,800 1,327,254 555,454
Total licenses and permits 833,000 833,000 1,374,330 541,330
Fines and forfeitures
County 95,000 95,000 86,802 (8,198)
Special assessments – – 672 672
Investment earnings (charges)152,000 152,000 (48,174)(200,174)
Other 156,000 156,000 29,011 (126,989)
Donations/contribution – 39,873 39,873 –
Total revenues 14,620,500 14,660,373 15,320,429 660,056
Budgeted Amounts
CITY OF ROSEMOUNT
Year Ended December 31, 2021
General Fund
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual
See notes to basic financial statements -25-(continued)
Over (Under)
Original Final Actual Final Budget
Expenditures
Current
General government
Mayor and council 332,000 332,000 314,406 (17,594)
Executive 763,600 763,600 749,077 (14,523)
Elections 20,000 20,000 1,907 (18,093)
Finance 705,000 705,000 741,546 36,546
Community development 1,231,900 1,231,900 1,206,455 (25,445)
Other general government 355,300 355,300 427,270 71,970
Total general government 3,407,800 3,407,800 3,440,661 32,861
Public safety
Police department 5,002,800 5,022,910 5,050,013 27,103
Fire department 525,700 537,356 592,450 55,094
Total public safety 5,528,500 5,560,266 5,642,463 82,197
Public works
Government building maintenance 587,200 587,200 590,237 3,037
Fleet maintenance 676,800 676,800 658,795 (18,005)
Street maintenance 1,418,700 1,418,700 1,460,441 41,741
Park maintenance 1,075,300 1,075,300 1,248,169 172,869
Total public works 3,758,000 3,758,000 3,957,642 199,642
Culture, education and recreation 1,799,700 1,807,807 1,743,024 (64,783)
Total expenditures 14,494,000 14,533,873 14,783,790 249,917
Excess of revenues over expenditures 126,500 126,500 536,639 410,139
Other financing sources (uses)
Transfers in 3,500 3,500 3,500 –
Transfers out (130,000)(130,000)(130,000)–
Total other financing sources (uses)(126,500)(126,500)(126,500)–
Net change in fund balances –$ –$ 410,139 410,139$
Fund balances
Beginning of year 12,293,930
End of year 12,704,069$
Budgeted Amounts
CITY OF ROSEMOUNT
Statement of Revenues, Expenditures, and Changes in Fund Balances
Budget and Actual (continued)
General Fund
Year Ended December 31, 2021
See notes to basic financial statements -26-
Storm Nonmajor
Water Sewer Water Funds
Assets
Current assets
Cash and investments 17,211,431$ 8,464,632$ 10,318,010$ 597,733$
Receivables
Accounts 559,975 577,694 296,379 123,120
Interest 21,072 6,283 8,199 –
Special assessments 117,889 86,725 90,139 6,526
Prepaid items 13,728 142,640 13,366 6,491
Total current assets 17,924,095 9,277,974 10,726,093 733,870
Noncurrent assets
Capital assets
Land 1,008,629 547,159 2,606,091 –
Buildings 7,830,238 401,414 1,766,904 2,453,200
Machinery and equipment 2,519,229 839,709 1,237,278 201,579
Mains and lines 26,689,698 23,776,090 34,927,752 –
Other improvements 17,026,077 36,927,459 12,535,129 –
Less accumulated depreciation (19,975,981) (34,582,316) (14,254,608) (1,411,199)
Total capital assets (net of accumulated depreciation)35,097,890 27,909,515 38,818,546 1,243,580
Total assets 53,021,985 37,187,489 49,544,639 1,977,450
Deferred outflows of resources
Pension plan deferments – PERA 183,790 183,790 178,039 78,767
OPEB plan deferments 2,598 2,598 2,511 1,182
Total deferred outflows of resources 186,388 186,388 180,550 79,949
Total assets and deferred outflows of resources 53,208,373$ 37,373,877$ 49,725,189$ 2,057,399$
Liabilities
Current liabilities
Accounts and contracts payable 80,015$ 9,216$ 39,482$ 17,360$
Accrued salaries and employee benefits payable 46,311 8,453 8,117 4,221
Accrued interest payable 9,569 – – –
Compensated absences payable – current 30,924 30,924 29,548 15,169
Lease obligations – current 10,386 4,744 4,744 –
Bonds payable – current 155,000 – – –
Total current liabilities 332,205 53,337 81,891 36,750
Noncurrent liabilities
Compensated absences payable 33,501 33,501 32,011 16,434
Lease obligations 14,850 12,970 12,970 –
Bonds payable (net of unamortized premiums)701,147 – – –
Net pension liability – PERA 240,744 240,744 233,211 103,176
Total OPEB liability 37,987 37,987 36,703 17,282
Total noncurrent liabilities 1,028,229 325,202 314,895 136,892
Total liabilities 1,360,434 378,539 396,786 173,642
Deferred inflows of resources
Pension plan deferments – PERA 221,552 221,552 214,619 94,951
Net position
Net investment in capital assets 34,216,507 27,891,801 38,800,832 1,243,580
Unrestricted 17,409,880 8,881,985 10,312,952 545,226
Total net position 51,626,387 36,773,786 49,113,784 1,788,806
Total liabilities, deferred inflows of resources,
and net position 53,208,373$ 37,373,877$ 49,725,189$ 2,057,399$
Business-Type Activities – Enterprise Funds
CITY OF ROSEMOUNT
Statement of Net Position
Proprietary Funds
as of December 31, 2021
See notes to basic financial statements -27-
Governmental
Activities –
Internal
Total Service Fund
36,591,806$ 232,620$
1,557,168 –
35,554 –
301,279 –
176,225 246,042
38,662,032 478,662
4,161,879 –
12,451,756 –
4,797,795 –
85,393,540 –
66,488,665 –
(70,224,104) –
103,069,531 –
141,731,563 478,662
624,386 –
8,889 –
633,275 –
142,364,838$ 478,662$
146,073$ 33,938$
67,102 –
9,569 –
106,566 –
19,874 –
155,000 –
504,184 33,938
115,446 –
40,790 –
701,147 –
817,875 –
129,959 –
1,805,217 –
2,309,401 33,938
752,674 –
102,152,720 –
37,150,043 444,724
139,302,763 444,724
142,364,838$ 478,662$
Business-Type Activities – Enterprise Funds
-28-
Storm
Water Sewer Water
Operating revenue
Charges for services 2,884,735$ 2,573,946$ 1,474,068$
Surcharges and penalties 346,412 19,506 9,639
Water meters 140,157 – –
Miscellaneous 1,368 – 3,938
Total operating revenue 3,372,672 2,593,452 1,487,645
Operating expenses
Personal services 499,653 503,042 553,558
Supplies 219,985 11,488 9,024
Professional services and charges 131,124 27,755 94,364
Other services and charges 657,039 380,146 480,439
Metro sewer charges – 1,311,672 –
Depreciation 911,017 970,292 839,555
Total operating expenses 2,418,818 3,204,395 1,976,940
Operating income (loss)953,854 (610,943) (489,295)
Nonoperating revenues (expenses)
Connection fees 1,720,648 624,299 1,263,181
Taxes – – –
Intergovernmental 3,348 593 574
Investment earnings (charges)(47,879)12,378 7,507
Gain (loss) on sale of capital assets – (43,488)–
Interest and fiscal charges (16,896)(437)(437)
Total nonoperating revenues (expenses)1,659,221 593,345 1,270,825
Income (loss) before contributions and transfers 2,613,075 (17,598) 781,530
Capital contributions, including special assessments 1,554,321 1,474,665 2,611,525
Transfers in – 5,756 25,548
Transfers out (416,240)(149,332)(1,211,238)
Change in net position 3,751,156 1,313,491 2,207,365
Net position
Beginning of year 47,875,231 35,460,295 46,906,419
End of year 51,626,387$ 36,773,786$ 49,113,784$
Business-Type Activities – Enterprise Funds
CITY OF ROSEMOUNT
Statement of Revenues, Expenses, and Changes in Fund Net Position
Proprietary Funds
Year Ended December 31, 2021
See notes to basic financial statements -29-
Governmental
Activities –
Nonmajor Internal
Funds Total Service Fund
677,190$ 7,609,939$ –$
1,804 377,361 –
– 140,157 –
– 5,306 –
678,994 8,132,763 –
230,189 1,786,442 –
20,099 260,596 2,500
38,510 291,753 20,301
394,328 1,911,952 386,048
– 1,311,672 –
63,360 2,784,224 –
746,486 8,346,639 408,849
(67,492) (213,876) (408,849)
– 3,608,128 –
– – 450,000
254 4,769 –
2,706 (25,288) 58
– (43,488) –
– (17,770) –
2,960 3,526,351 450,058
(64,532) 3,312,475 41,209
6,473 5,646,984 –
130,000 161,304 –
(3,500) (1,780,310) –
68,441 7,340,453 41,209
1,720,365 131,962,310 403,515
1,788,806$ 139,302,763$ 444,724$
-30-
Storm
Water Sewer Water
Cash flows from operating activities
Cash received from customers 3,299,676$ 2,554,369$ 1,558,958$
Cash payments to suppliers (821,027) (1,758,109) (602,120)
Cash payments to employees for services (521,715) (527,024) (508,483)
Net cash flows from operating activities 1,956,934 269,236 448,355
Cash flows from noncapital financing activities
Taxes – – –
Intergovernmental revenue 3,348 593 574
Transfers in – 5,756 25,548
Transfers out (416,240) (149,332) (1,211,238)
Net cash flows from noncapital financing activities (412,892) (142,983) (1,185,116)
Cash flows from capital and related financing activities
Acquisition and construction of capital assets (58,584) (18,741) (166,898)
Capital contributions 91,914 78,537 47,719
Capital contributions – connection fees received 1,720,648 624,299 1,263,181
Principal payment on bonds (150,000) – –
Principal payment on leases (10,115) (4,474) (4,474)
Interest and fiscal charges paid (27,073) (437) (437)
Net cash flows from capital and related financing activities 1,566,790 679,184 1,139,091
Cash flows from investing activities
Interest and changes in fair value on investments (68,951) 6,095 (692)
Net increase in cash and cash equivalents 3,041,881 811,532 401,638
Cash and cash equivalents
Beginning of year 14,169,550 7,653,100 9,916,372
End of year 17,211,431$ 8,464,632$ 10,318,010$
Reconciliation of operating income (loss) to net cash flows
from operating activities
Operating income (loss)953,854$ (610,943)$ (489,295)$
Adjustments to reconcile operating income (loss) to net
cash flows from operating activities
Depreciation 911,017 970,292 839,555
Change in assets, deferred outflows of resources,
liabilities, and deferred inflows of resources
Accounts and special assessments receivable (72,996) (39,083) 71,313
Prepaid items (7,324) (25,171) (11,933)
Accounts and contracts payable 194,445 (1,877) (6,360)
Accrued salaries and employee benefits payable 7,826 2,627 2,313
Compensated absences payable (2,162) (2,162) 282
Pension-related deferrals and liabilities (34,728) (31,606) 22,159
OPEB-related deferrals and liabilities 7,002 7,159 20,321
Total adjustments 1,003,080 880,179 937,650
Net cash flows from operating activities 1,956,934$ 269,236$ 448,355$
Schedule of noncash capital and related financing activities
Amortization of bond premium 8,229$ –$ –$
Capital assets purchased on account (217,553)$ –$ –$
Capital assets contributed by other funds 192,962$ 196,202$ 1,006,922$
Capital assets contributed by developers 1,269,445$ 1,199,926$ 1,556,884$
Business-Type Activities – Enterprise Funds
CITY OF ROSEMOUNT
Statement of Cash Flows
Proprietary Funds
Year Ended December 31, 2021
See notes to basic financial statements -31-
Governmental
Activities –
Nonmajor Internal
Funds Total Service Fund
666,383$ 8,079,386$ –$
(454,662) (3,635,918) (542,823)
(241,985) (1,799,207) –
(30,264) 2,644,261 (542,823)
– – 450,000
254 4,769 –
130,000 161,304 –
(3,500) (1,780,310) –
126,754 (1,614,237) 450,000
(53,300) (297,523) –
6,473 224,643 –
– 3,608,128 –
– (150,000) –
– (19,063) –
– (27,947) –
(46,827) 3,338,238 –
2,706 (60,842) 58
52,369 4,307,420 (92,765)
545,364 32,284,386 325,385
597,733$ 36,591,806$ 232,620$
(67,492)$ (213,876)$ (408,849)$
63,360 2,784,224 –
(12,611) (53,377) –
(2,899) (47,327) (135,902)
1,174 187,382 1,928
1,996 14,762 –
1,342 (2,700) –
(18,728) (62,903) –
3,594 38,076 –
37,228 2,858,137 (133,974)
(30,264)$ 2,644,261$ (542,823)$
–$ 8,229$ –$
–$ (217,553)$ –$
–$ 1,396,086$ –$
–$ 4,026,255$ –$
-32-
THIS PAGE INTENTIONALLY LEFT BLANK
CITY OF ROSEMOUNT
Notes to Basic Financial Statements
December 31, 2021
-33-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization
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 Governmental Accounting Standards Board (GASB)
is the accepted standard-setting body for establishing governmental accounting and financial reporting
principles. The City’s more significant accounting policies are described below:
B. 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 three methods, discrete presentation, blending or fiduciary.
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 (the 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
Port Authority does not issue separate financial statements.
-34-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. Government-Wide Financial Statement Presentation
The government-wide financial statements (Statement of Net Position and Statement of Activities) display
information about the reporting government as a whole. These statements include all of the financial
activities of the City. Governmental activities, which are normally supported by taxes and
intergovernmental revenues, are reported separately from business-type activities, which significantly rely
upon sales, fees, and charges for support.
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. 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, 2) operating grants and contributions, and 3) capital grants and contributions, including special
assessments that are restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other internally directed revenues are reported as general revenues.
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when
a liability is incurred, regardless of the timing of related cash flows. Property taxes and special assessments
are recognized as revenues in the fiscal year for which they are certified for levy. Grants and similar items
are recognized when all eligibility requirements imposed by the provider have been met.
As a general rule, the effect of interfund activity has been eliminated from the government -wide financial
statements. However, charges between the City’s enterprise funds and other functions are not eliminated,
as that would distort the direct costs and program revenues reported in those functions. Depreciation
expense is included in the direct expenses of each function. Interest on long-term debt is considered an
indirect expense and is reported separately on the Statement of Activities.
D. Fund Financial Statement Presentation
Separate fund financial statements are provided for governmental and proprietary funds. Major individual
governmental and enterprise funds are reported as separate columns in the fund financial statements.
Aggregated information for the remaining nonmajor funds is reported in a single column in the respective
fund financial statements.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded
in the following manner:
1. Revenue Recognition – Revenue is recognized when it becomes measurable and available.
“Measurable” means the amount of the transaction can be determined and “available” means
collectible within the current period or soon enough thereafter to be used to pay liab ilities of the
current period. For this purpose, the City considers revenues to be available if they are collected
within 60 days after year-end. 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.
Grants and similar items are recognized when all eligibility requirements imposed by the provider
have been met. Proceeds of long-term debt are reported as other financing sources.
Major revenues susceptible to accrual include property taxes, special assessments,
intergovernmental revenue, charges for services, and interest earned on investments. Major revenue
that is not susceptible to accrual includes licenses and permits, fees, and miscellaneous revenue.
Such revenues are recorded only when received because they are not measurable until collected.
-35-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. Recording of Expenditures – Expenditures are generally recorded when a liability is incurred,
except for principal and interest on long-term debt and other long-term liabilities, which are
recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported
as capital outlay expenditures in the governmental funds.
Proprietary fund financial statements are reported using the economic resources measurement focus and
accrual basis of accounting, similar to the government-wide financial statements. 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 City’s enterprise
funds and internal service fund are charges to customers for sales and services. The operating expenses for
the enterprise funds and internal service fund include the cost of sales and services, administrative expenses,
and depreciation on capital assets. All revenues and expenses that do not meet this definition are reported
as nonoperating revenues and expenses.
Aggregated information for the internal service fund is reported in a single column in the proprietary fund
financial statements. Because the principal user of the internal services is the City’s governmental activities,
the financial statements of the internal service funds are consolidated into the governmental column when
presented in the government-wide financial statements. The cost of these services is reported in the
appropriate functional activity.
Description of Funds
The City reports the following major governmental funds:
General Fund – This is the City’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
Debt Service Fund – This fund accounts for the financial resources accumulated and payments made
for principal and interest on long-term debt of the City, other than enterprise fund debt.
Capital Projects Fund – The Capital Projects Fund is 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 sub-funds maintained by the City.
Port Authority TIF Fund – The Port Authority TIF Fund is a debt service fund type 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.
American Rescue Plan Act Fund – The American Rescue Plan Act Fund is a special revenue fund
type used to account for the City’s Coronavirus State and Local Fiscal Recovery Funds awarded from
the U.S. Department of Treasury.
-36-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The City reports the following major enterprise funds:
Water Fund – The Water Fund accounts for operations of the water system.
Sewer Fund – The Sewer Fund accounts for operations of the sewer system.
Storm Water Fund – The Storm Water Fund accounts for operations of the storm water drainage
system.
Additionally, the City reports the following fund type:
Internal Service Fund – Internal service funds account for the financing of goods and services
provided to other departments or agencies of the City on a cost-reimbursement basis. The City’s internal
service 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.
E. Budgets and Budgetary Accounting
Annual budgets have been adopted for the General Fund and the capital projects sub-funds 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.
Appropriations lapse at year-end unless specifically carried over.
For the year ended December 31, 2021, expenditures exceeded budget for the following departments/funds:
Final Budgeted Actual Over
Expenditures Expenditures Budget
Fund
General Fund
General government 3,407,800$ 3,440,661$ 32,861$
Public safety 5,560,266 5,642,463 82,197
Public works 3,758,000 3,957,642 199,642
Capital Projects Fund
Equipment CIP Sub-Fund 1,439,268 1,580,776 141,508
Expenditures in excess of budget were funded by available fund balance and revenues and other financing
sources in excess of budget.
-37-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
F. Cash and Investments
Cash and investments include balances from all funds that are combined and invested to the extent available
in various securities as authorized by state law. Earnings from the pooled investments are allocated to the
respective funds based on month-end outstanding balances for each fund.
For purposes of the Statement of Cash Flows, the City considers all highly liquid instruments with an
original maturity from the time of purchase by the City of three months or less to be cash equivalents. The
proprietary funds’ portion in the government-wide cash and investment management pool is considered
cash equivalent.
It is the City’s policy to invest in a manner that seeks to ensure preservation of capital in the overall
portfolio. Safety of principal is the foremost objective, but liquidity and yield are also important
considerations. The objective will be to mitigate credit risk by purchasing only highly rated securities or
with adequate collateral and interest rate risk by matching maturities to cash flow needs and holding
securities to maturity.
The City reports all investments at fair value. The City categorizes its fair value measurements within the
fair value hierarchy established by accounting principles generally accepted in the United States of
America. 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; and Level 3 inputs are significant unobservable inputs.
Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique.
Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices.
See Note 2 for the City’s recurring fair value measurements as of the current year-end.
G. Receivables
Utility and miscellaneous accounts receivable are reported at gross. Since the City is generally able to
certify delinquent amounts to the county for collection as special assessments; no allowance for
uncollectible accounts has been provided on current receivables. All receivables other than property taxes
and deferred special assessments are expected to be collected within one year.
-38-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. Interfund Receivables and Payables
In the fund financial statements, activity between funds that is representative of lending or borrowing
arrangements is reported as either “due to/from other funds” (current portion) or “advances to/from other
funds.” All other outstanding balances between funds are reported as “due to/from other funds.” Any
residual balances outstanding between the governmental activities and business-type activities are reported
in the government-wide financial statements as “internal balances.”
I. Property Taxes
Property tax levies are set by the City Council in December 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 are due in full on May 15. The county provides tax
settlements to cities and other taxing districts four times a year: in June, July, December, and January.
Property taxes are 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.
J. Special Assessments
Special assessments represent the financing for public improvements paid for by benefiting property
owners. Special assessments are recorded as receivables upon certification to the county. Special
assessments are recognized as revenue in the year levied in the government-wide financial statements and
proprietary fund financial statements. In the governmental fund financial statements, special assessments
are recognized as revenue when received in cash or within 60 days after year -end. Governmental fund
special assessments receivable, which remain unpaid on December 31, are offset by a deferred inflow of
resources in the governmental fund financial statements. At year-end, the City recorded $3,914 of
delinquent special assessments receivable.
K. Prepaid Items
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. Prepaid items are reported using the
consumption method and recorded as expenditures/expenses at the time of consumption.
L. Capital Assets
Capital assets, which include property, plant and equipment, are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. Such assets are capitalized
at historical cost, or estimated historical cost for assets where actual historical cost is not available. Donated
assets are recorded as capital assets at their estimated acquisition value on the date of donation. T he City
defines capital assets as those with an initial, individual cost of $5,000 or more with an estimated useful
life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the
asset or materially extend asset lives are not capitalized.
Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not
reported in the governmental fund financial statements.
-39-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Land, land improvements, and construction in progress are not depreciated. The other classes of capital
assets are depreciated using the straight-line method over the following estimated useful lives:
Buildings 30–65 years
Machinery and equipment 4–20 years
Other improvements 60 years
Utility system 65 years
Infrastructure 35–50 years
M. Deferred Outflows/Inflows of Resources
In addition to assets and liabilities, statements of financial position or balance sheets may report separate
financial statement elements called deferred outflows or inflows of resources. These separate financial
statement elements represent a consumption or acquisition of net position that applies to a future period and
so will not be recognized as an outflow of resources (expense/expenditure) or an inflow of financial
resources (revenue) until then.
Deferred outflows and inflows of resources related to pension and other post-employment benefits (OPEB)
plans are reported in the government-wide and enterprise funds Statement of Net Position. These deferred
outflows and inflows result from differences between expected and actual experience, changes in
proportion, changes of assumptions, net collective difference between projected and actual earnings on plan
investments, and from contributions to the plans subsequent to the measurement date and before the end of
the reporting period. These amounts are deferred and amortized as required under applicable pension or
OPEB standards.
Unavailable revenue arises only under a modified accrual basis of accounting and, therefore, is only
reported in the governmental funds Balance Sheet. The governmental funds report unavailable revenue
from the following sources: property taxes, special assessments, and long-term receivables. These amounts
are deferred and recognized as inflows of resources in the period that the amounts become available.
N. Long-Term Obligations
In the government-wide and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities. Bond premiums and discounts, if material, are deferred and amortized
over the life of the bonds using the straight-line method.
In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well
as bond issuance costs, during the current period. The face amount of debt issued is reported as other
financing sources. Premiums received on debt issuances are reported as other financing sources , while
discounts on debt issuances are reported as other financing uses.
-40-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
O. 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. Amounts included in the accrual for sick pay is the portion estimated
to be paid as a termination benefit.
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.
P. State-Wide Pension Plans
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 the PERA’s fiduciary net position have been determined on the
same basis as they are reported by the PERA. 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.
Q. Risk Management
The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets;
errors and omissions; injuries to employees; and natural disasters. The City continues to carry commercial
insurance for risks of loss, including workers’ compensation, property and general liability, and employee
health and accident insurance. The City retains risk for the deductible portions of the insurance policies.
The amount of these deductibles is considered immaterial to the financial statements . There were no
significant reductions in insurance from the previous year or settlements in excess of insurance coverage
for any of the past three fiscal years.
The City has established an internal service fund (Insurance Fund) to account for and finance uni nsured
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, 2021, there are no claims liabilities in the Insurance Fund based on the requirements
of GASB Statement No. 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 liabil ity has been incurred at the date of
the financial statements and the amount of loss can be reasonably estimated.
-41-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
R. Net Position and Flow Assumptions
In the government-wide and proprietary fund financial statements, net position represents the difference
between assets, deferred outflows of resources, liabilities, and deferred inflows of resources. Net position
is displayed in three components:
• Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation,
reduced by any outstanding debt attributable to acquire capital assets.
• Restricted Net Position – Consists of net position restricted when there are limitations imposed
on their use through external restrictions imposed by creditors, grantors, or laws or regulations of
other governments.
• Unrestricted Net Position – All other elements of net position that do not meet the definition of
“restricted” or “net investment in capital assets.”
The City applies restricted resources first when an expense is incurred for which both restricted and
unrestricted resources are available.
S. Fund Balance Classifications and Flow Assumptions
In the fund financial statements, governmental funds report fund balance in classifications that disclose
constraints for which amounts in those funds can be spent. These classifications are as follows:
• Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items,
inventory, and other long-term assets.
• Restricted – Consists of amounts related to externally imposed constraints established by creditors,
grantors, or contributors; or constraints imposed by state statutory provisions.
• Committed – Consists of internally imposed constraints that are established by resolution of the
City Council. Those committed amounts cannot be used for any other purpose unless the City
Council removes or changes the specified use by taking the same type of action it employed to
previously commit those amounts.
• Assigned – Consists of internally imposed constraints for amounts intended to be used by the City
for specific purposes, but do not meet the criteria to be classified as restricted or committed. These
constraints are established by the City Council and/or management. The City Council has adopted
a fund balance policy, which delegates the authority to assign amounts for specific purposes to the
city administrator and/or finance director.
• Unassigned – The residual classification for the General Fund, which also reflects negative residual
amounts in other funds.
When both restricted and unrestricted resources are available for use, the City first uses restricted resources,
then unrestricted resources as needed.
When committed, assigned, or unassigned resources are available for use, the City uses resources in the
following order: 1) committed, 2) assigned, and 3) unassigned.
-42-
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 and transfers out. The balance
at year-end was $9,129,028, or 59.1 percent, and is included in unassigned general fund balance.
T. Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the
United States of America, requires management to make estimates and assumptions that affect the amounts
reported in the financial statements during the reporting period. Actual results could differ from those
estimates.
NOTE 2 – DEPOSITS AND INVESTMENTS
A. Components of Cash and Investments
Cash and investments at year-end consist of the following:
Deposits 32,095,113$
Investments 44,312,149
Petty cash 2,000
Total 76,409,262$
B. Deposits
In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks
authorized by the City Council, including checking and savings accounts.
The following is considered the most significant risk associated with deposits:
Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, the
City’s deposits may be lost.
Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety
bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not
covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury
bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better;
revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal
Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as
collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at
a trust department of a commercial bank or other financial institution that is not owned or controlled
by the financial institution furnishing the collateral. The City has no additional deposi t policies
addressing custodial credit risk.
At year-end, the carrying amount of the City’s deposits was $32,095,113, while the balance on the bank
records was $32,434,424. At December 31, 2021, all deposits were fully covered by federal deposit
insurance, surety bonds, or by collateral held by the City’s agent in the City’s name.
-43-
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
C. Investments
The City has the following investments at year-end:
Fair Value
Measurement
Deposits/Investments Rating Agency Using Less Than 1 1 to 5 6 to 10 Greater Than 10 Total
U.S. agency securities AA S&P Level 2 480,055$ 3,393,668$ 8,951,936$ 947,340$ 13,772,999$
Negotiable certificates of deposits N/R N/A Level 2 3,723,551 5,317,602 479,891 – 9,521,044
State and local bonds (G.O. bonds)AAA S&P Level 2 – – 318,897 – 318,897
State and local bonds (G.O. bonds)Aaa Moody’s Level 2 – 399,796 403,004 – 802,800
State and local bonds (G.O. bonds)Aa Moody’s Level 2 – 965,584 1,228,555 – 2,194,139
State and local bonds (revenue bonds)Aa Moody’s Level 2 179,591 714,151 208,490 – 1,102,232
4,383,197$ 10,790,801$ 11,590,773$ 947,340$ 27,712,111
Investment pools/mutual funds
Western Asset Institutional
Government Reserves AAA Fitch Level 1 16,600,038
Total investments 44,312,149
Deposits 32,095,113
Petty cash 2,000
Total deposits and investments 76,409,262$
N/A – Not Applicable
N/R – Not Rated
Credit Risk Interest Risk – Maturity Duration in Years
Investments are subject to various risks, the following of which are considered the most significant:
Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty
to an investment transaction (typically a broker-dealer) the City would not be able to recover the value
of its investments or collateral securities that are in the possession of an outside party. The City’s
investment 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 Risk – This is the risk associated with investing a significant portion of the City’s
investments (considered 5.0 percent or more) in the securities of a single issuer, excluding
U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. The City’s
investment policy places no limit on the amount the City may invest in any one issuer. However, it
discusses the need to diversify investments to minimize risk.
As of December 31, 2021, the City's investment portfolio was concentrated as follows:
Percentage
Issuer Investment Type of Total
Federal Home Loan Bank U.S. agency securities 7%
Federal Home Loan Mortgage Corporation U.S. agency securities 8%
Federal Farm Credit Bank U.S. agency securities 9%
-44-
NOTE 2 – DEPOSITS AND INVESTMENTS (CONTINUED)
Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. Minnesota Statutes limit the City’s investments to direct obligations or obligations
guaranteed by the United States or its agencies; shares of investment companies registered under the
Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the
two highest rating categories by a statistical rating agency, and all of the investments have a final
maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA”
or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’
acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial
paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality
category by at least two nationally recognized rating agenci es, and maturing in 270 days or less;
Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of
a foreign bank, or a United States insurance company, and with a credit quality in one of the top
two highest categories; repurchase or reverse purchase agreements and securities lending agreements
with financial institutions qualified as a “depository” by the government entity, with banks that are
members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary
reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain
Minnesota securities broker-dealers. The City’s investment policies do not further address credit risk.
Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments
resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the
greater the risk). The City’s investment policy states the investment portfolio should be structured to
meet cash requirements for ongoing operations. The policy limits investment maturities as a means of
managing exposure to fair value losses arising from increasing interest rates, stating that no more than
35 percent of total investments should extend beyond 5 years.
NOTE 3 – INTERFUND TRANSFERS
The following transfers were made during the year in accordance with budget appropriations or as approved
by City Council resolution to fund administrative overhead costs, fund debt service payments, or close
funds:
Debt Capital
Transfers Out General Service Projects Sewer Storm Water Nonmajor Total
Governmental funds
General –$ –$ –$ –$ –$ 130,000$ 130,000$
Enterprise funds
Water – 70,000 314,936 5,756 25,548 – 416,240
Sewer – – 149,332 – – – 149,332
Storm Water – – 1,211,238 – – – 1,211,238
Nonmajor 3,500 – – – – – 3,500
Total 3,500$ 70,000$ 1,675,506$ 5,756$ 25,548$ 130,000$ 1,910,310$
Transfers In
Governmental Funds Enterprise Funds
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 to the extent possible.
-45-
NOTE 4 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2021 was as follows:
A. Changes in Capital Assets Used in Governmental Activities
Completed
Beginning Construction/Ending
Balance Additions Deletions Adjustments Balance
Capital assets, not depreciated
Land 7,886,846$ 23,600$ –$ –$ 7,910,446
Land improvements 4,790,045 15,319 – – 4,805,364
Construction in progress 12,075,912 7,385,314 – (2,841,341) 16,619,885
Total capital assets, not depreciated 24,752,803 7,424,233 – (2,841,341) 29,335,695
Capital assets, depreciated
Land improvements 5,128,173 9,695 (57,731) – 5,080,137
Buildings 18,455,360 – – – 18,455,360
Machinery and equipment 14,934,239 1,328,472 (549,455) 109,137 15,822,393
Infrastructure
Other 209,037 – – – 209,037
Roads 65,049,592 – (426,193) 1,336,118 65,959,517
Bridges 2,034,591 – – – 2,034,591
Parking lots 1,358,831 – – – 1,358,831
Total capital assets, depreciated 107,169,823 1,338,167 (1,033,379) 1,445,255 108,919,866
Less accumulated depreciation on
Land improvements 2,162,605 227,906 (57,731) – 2,332,780
Buildings 6,698,680 368,364 – – 7,067,044
Machinery and equipment 7,797,393 1,184,335 (450,939) – 8,530,789
Infrastructure
Other 35,935 5,336 – – 41,271
Roads 15,584,753 1,114,320 (172,516) – 16,526,557
Bridges 734,160 50,865 – – 785,025
Parking lots 324,796 30,346 – – 355,142
Total accumulated depreciation 33,338,322 2,981,472 (681,186) – 35,638,608
Total capital assets, depreciated 73,831,501 (1,643,305) (352,193) 1,445,255 73,281,258
Net capital assets 98,584,304$ 5,780,928$ (352,193)$ (1,396,086)$ 102,616,953$
-46-
NOTE 4 – CAPITAL ASSETS (CONTINUED)
B. Changes in Capital Assets Used in Business-Type Activities
Completed
Beginning Construction/Ending
Balance Additions Deletions Adjustments Balance
Capital assets, not depreciated
Land 3,501,877$ 660,002$ –$ –$ 4,161,879$
Construction in progress 755,094 2,792,610 – (3,547,704) –
Total capital assets, not depreciated 4,256,971 3,452,612 – (3,547,704) 4,161,879
Capital assets, depreciated
Buildings 12,110,980 340,776 – – 12,451,756
Machinery and equipment 4,586,228 297,523 (85,956) – 4,797,795
Infrastructure, mains and lines, and
other improvements 146,923,101 15,314 – 4,943,790 151,882,205
Total capital assets, depreciated 163,620,309 653,613 (85,956) 4,943,790 169,131,756
Less accumulated depreciation on
Buildings 4,684,727 277,323 – – 4,962,050
Machinery and equipment 2,652,193 250,154 (42,468) – 2,859,879
Infrastructure, mains and lines, and
other improvements 60,145,428 2,256,747 – – 62,402,175
Total accumulated depreciation 67,482,348 2,784,224 (42,468) – 70,224,104
Total capital assets, depreciated 96,137,961 (2,130,611) (43,488) 4,943,790 98,907,652
Net capital assets 100,394,932$ 1,322,001$ (43,488)$ 1,396,086$ 103,069,531$
C. Depreciation Expense by Function
Depreciation expense was charged to the following functions:
Governmental activities
General government 327,457$
Public safety 505,358
Public works, which includes the depreciation of roads, bridges,
and parking lots 1,666,773
Culture, education and recreation 481,884
Total depreciation expense – governmental activities 2,981,472$
Business-type activities
Water 911,017$
Sewer 970,292
Storm water 839,555
Arena (nonmajor fund)63,360
Total depreciation expense – business-type activities 2,784,224$
-47-
NOTE 5 – LONG-TERM DEBT
A. Components of Long-Term Debt
Final
Original Interest Issue Maturity Balance –
Issue Rate Date Date End of Year
Governmental activities
General obligation bonds
Port Authority TIF, Series 2008A 2,765,000$ 5.00–5.50%2008 2024 910,000$
Improvement Bonds, Series 2014A 2,400,000$ 0.35–2.40%2014 2025 340,000
Fire Station Refunding Bonds, Series 2015B 1,345,000$ 1.50–3.00%2015 2025 645,000
Port Authority TIF Refunding Bonds, Series 2015A 3,335,000$ 3.00%2015 2032 3,285,000
Improvement Bonds, Series 2017A 1,055,000$ 3.00%2017 2023 445,000
Improvement Bonds, Series 2018A 835,000$ 5.00%2018 2024 535,000
Total general obligation bonds 6,160,000
Unamortized bond premium 139,250
Compensated absences 1,371,016
Capital lease obligations 1,380,029
Net pension liability – PERA 4,265,336
Total OPEB obligation 725,599
Total governmental activities 14,041,230$
Business-type activities
General obligation bonds
Water Revenue Bonds, Series 2015A 1,525,000$ 1.50–3.00%2015 2026 815,000$
Unamortized bond premium 41,147
Compensated absences 222,012
Capital lease obligations 60,664
Net pension liability – PERA 817,875
Total OPEB obligation 129,959
Total business-type activities 2,086,657$
B. Changes in Long-Term Debt
Beginning Ending Due Within
Balance Additions Deletions Balance One Year
Governmental activities
G.O. improvement bonds 1,775,000$ –$ 455,000$ 1,320,000$ 470,000$
Capital improvement bonds 795,000 – 150,000 645,000 150,000
Port Authority tax increment bonds 4,495,000 – 300,000 4,195,000 315,000
Subtotal bonds payable 7,065,000 – 905,000 6,160,000 935,000
Unamortized bond premium 167,116 – 27,866 139,250 –
Compensated absences 1,304,980 692,426 626,390 1,371,016 658,088
Capital lease obligations 1,372,132 300,222 292,325 1,380,029 317,711
Net pension liability – PERA 6,060,881 6,725,408 8,520,953 4,265,336 –
Total OPEB obligation 670,131 94,180 38,712 725,599 –
Total governmental activities 16,640,240 7,812,236 10,411,246 14,041,230 1,910,799
Business-type activities
G.O. utility revenue bonds 965,000 – 150,000 815,000 155,000
Unamortized bond premium 49,376 – 8,229 41,147 –
Compensated absences 224,712 105,162 107,862 222,012 106,566
Capital lease obligations 79,727 – 19,063 60,664 19,874
Net pension liability – PERA 1,127,664 789,246 1,099,035 817,875 –
Total OPEB obligation 88,313 48,580 6,934 129,959 –
Total business-type activities 2,534,792 942,988 1,391,123 2,086,657 281,440
Total government-wide 19,175,032$ 8,755,224$ 11,802,369$ 16,127,887$ 2,192,239$
-48-
NOTE 5 – LONG-TERM DEBT (CONTINUED)
C. Minimum Bonded Debt Payments
Debt service requirements to maturity are as follows:
Year Ending
December 31,Principal Interest Principal Interest
2022 935,000$ 186,063$ 155,000$ 21,036$
2023 980,000 147,445 160,000 16,705
2024 780,000 110,693 165,000 12,154
2025 625,000 84,605 165,000 7,451
2026 375,000 71,750 170,000 2,550
2027–2031 2,025,000 210,788 – –
2032 440,000 6,600 – –
Total 6,160,000$ 817,944$ 815,000$ 59,896$
Governmental Activities Business-Type Activities
General Obligation Debt
D. Capital Lease Obligations
Since 2018, the City has been acquiring capital assets through multiple lease/purchase agreements. Lease
payments are due through November 2027, with interest rates ranging from zero to 3.13 percent. The gross
amount of these assets under capital leases is $2,526,503 and $139,215, which are included in the machinery
and equipment asset category of capital assets, less accumulated depreciation of $749,607 and $60,620 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
$645,401 in governmental activities and $40,703 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, 2021 was $1,380,029 in governmental
activities and $60,664 in the business-type activities (split between Water, Sewer, and Storm Water Funds).
Principal and interest payments in fiscal year 2021 totaled $366,744 in governmental activities and $19,063
in business-type activities. The capital lease liability attributable to governmental activities will be
liquidated by the Capital Projects Fund. The lease agreement contains certain provisions that in the event
of default the lessor may demand and receive immediate position of the leased property , or recover all
amounts owed by the City.
A schedule of future lease payments as of December 31, 2021, is as follows:
Year Ending
December 31,Principal Interest Principal Interest
2022 317,711$ 41,526$ 19,874$ 1,411$
2023 287,379 30,972 16,114 682
2024 267,947 22,897 14,233 317
2025 203,292 15,524 10,443 232
2026 155,261 9,724 – –
2027 148,439 4,741 – –
Total 1,380,029$ 125,384$ 60,664$ 2,642$
Capital Lease Obligations
Governmental Activities Business-Type Activities
-49-
NOTE 5 – LONG-TERM DEBT (CONTINUED)
E. Other Debt Information
The City provides its employees with various benefits, including compensated absences, pension benefits,
and OPEB as further described elsewhere in these notes. The General, Water, Sewer, Storm Water, and
Arena Funds will be used to liquidate these liabilities.
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, i ncluding
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 6 percent of net revenues. The total principal and interest remaining to
be paid on the bonds is $874,896. Principal and interest paid on these bonds for the current year and the
gross customer charges for services were $175,043 and $2,884,735, respectively.
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 $8,294,720.
NOTE 6 – NET POSITION/FUND BALANCES
A. Net Investment in Capital Assets
The government-wide statement of net position at December 31, 2021 includes the City’s net investment
in capital assets calculated as follows:
Governmental Business-Type
Activities Activities Total
Net investment in capital assets
Capital assets
Nondepreciable 29,335,695$ 4,161,879$ 33,497,574$
Depreciable, net of accumulated depreciation 73,281,258 98,907,652 172,188,910
Less capital-related long-term debt outstanding (7,679,279) (916,811) (8,596,090)
Less capital-related accounts, contracts, and
retainage payables (1,046,834) – (1,046,834)
Total net investment in capital assets 93,890,840$ 102,152,720$ 196,043,560$
-50-
NOTE 6 – NET POSITION/FUND BALANCES (CONTINUED)
B. Governmental Fund Balance Classifications
Governmental fund balances reported on the fund financial statements at December 31, 2021 include the
following:
Port American
Debt Capital Authority Rescue
General Service Projects TIF Plan Act Nonmajor Total
Nonspendable
Prepaid items –$ –$ –$ –$ –$ 2,267$ 2,267$
Restricted
Debt service – 1,908,232 – – – – 1,908,232
Port Authority TIF – – – 2,647,011 – – 2,647,011
PEG fees – – – – – 111,344 111,344
ARPA projects – – – – 201 – 201
Total restricted – 1,908,232 – 2,647,011 201 111,344 4,666,788
Committed
Fire safety education – – – – – 3,729 3,729
GIS – – – – – 114,140 114,140
Port Authority, general – – – – – 516,658 516,658
Total committed – – – – – 634,527 634,527
Assigned
Compensated absences 1,365,853 – – – – – 1,365,853
Comp plan 1,312 – – – – – 1,312
Building maintenance 509,907 – – – – – 509,907
Park maintenance 753,396 – – – – – 753,396
Parking lot maintenance 459,000 – – – – – 459,000
Street chemicals 39,021 – – – – – 39,021
Landscaping projects 6,398 – – – – – 6,398
Election equipment 39,934 – – – – – 39,934
Economic development 50,000 – – – – – 50,000
Various projects/equipment 350,220 – 13,196,192 – – – 13,546,412
Building CIP – – 2,268,925 – – – 2,268,925
Street CIP – – 428,741 – – – 428,741
Equipment CIP – – 286,997 – – – 286,997
Total assigned 3,575,041 – 16,180,855 – – – 19,755,896
Unassigned 9,129,028 – – – – – 9,129,028
Total 12,704,069$ 1,908,232$ 16,180,855$ 2,647,011$ 201$ 748,138$ 34,188,506$
-51-
NOTE 7 – DEFINED BENEFIT PENSION PLANS
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 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
Department 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:
Rosemount
Fire Department
Relief Total
GERF PEPFF Total Association All Plans
Net pension asset –$ –$ –$ 2,346,400$ 2,346,400$
Deferred outflows of resources 2,500,543$ 3,569,677$ 6,070,220$ 109,868$ 6,180,088$
Net pension liability 3,275,434$ 1,807,777$ 5,083,211$ –$ 5,083,211$
Deferred inflows of resources 3,014,312$ 4,431,278$ 7,445,590$ 778,065$ 8,223,655$
Pension expense 236,542$ (37,714)$ 198,828$ 14,219$ 213,047$
State-Wide PERA Pension Plans
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE
A. Plan Descriptions
The City participates in the following cost-sharing, multiple-employer defined benefit pension plans
administered by the PERA of Minnesota. The PERA’s defined benefit pension plans are established and
administered in accordance with Minnesota Statutes, Chapters 353 and 356. The PERA’s defined benefit
pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code.
1. General Employees Retirement Fund (GERF)
All full-time and certain part-time employees of the City are covered by the GERF. The GERF
members belong to the Coordinated Plan. Coordinated Plan members are covered by Social
Security.
2. Public Employees Police and Fire Fund (PEPFF)
The PEPFF, 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 PEPFF also covers police officers and firefighters belonging to local relief associations that
elected to merge with and transfer assets and administration to the PERA.
-52-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
B. Benefits Provided
The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statutes 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. GERF Benefits
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 the 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 Plan members is 1.2 percent for
each of the first 10 years of service, and 1.7 percent for each additional year. Under Method 2, the
accrual rate for Coordinated Plan members is 1.7 percent 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 age 66.
Benefit increases are provided to benefit recipients each January. The post-retirement increase is
equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security
Administration, with a minimum increase of at least 1.0 percent and a maximum of 1.5 percent.
Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30
before the effective date of the increase, will receive the full increase. Recipients receiving the
annuity or benefit for at least one month, but less than a full year as of the June 30 before the
effective date of the increase, will receive a reduced prorated increase. For members retiring on
January 1, 2024 or later, the increase will be delayed until normal retirement age (age 65 if hired
prior to July 1, 1989, or age 66 for individuals hired on or after Jul y 1, 1989). Members retiring
under Rule of 90 are exempt from the delay to normal retirement.
2. PEPFF Benefits
Benefits for the PEPFF members first hired after June 30, 2010 but before July 1, 2014, vest on a
prorated basis from 50.0 percent after five years, up to 100.0 percent after 10 years of credited
service. Benefits for the PEPFF members first hired after June 30, 2014 vest on a prorated basis
from 50.0 percent after 10 years, up to 100.0 percent after 20 years of credited service. The annuity
accrual rate is 3.0 percent of average salary for each year of service. For Police and Fire Plan
members who were first hired prior to July 1, 1989, a full annuity is available when age plus years
of service equal at least 90.
Benefit increases are provided to benefit recipients each January. The post-retirement increase is
fixed at 1.0 percent. Recipients that have been receiving the annuity or benefit for at least 36 months
as of the June 30 before the effective date of the increase, will receive the full increase. Recipients
receiving the annuity or benefit for at least 25 months, but less than 36 months as of the June 30
before the effective date of the increase, will receive a reduced prorated increase.
-53-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
C. Contributions
Minnesota Statutes, Chapter 353 sets the rates for employer and employee contributions. Contribution rates
can only be modified by the State Legislature.
1. GERF Contributions
Coordinated Plan members were required to contribute 6.50 percent of their annual covered salary
in fiscal year 2021, and the City was required to contribute 7.50 percent for Coordinated Plan
members. The City’s contributions to the GERF for the year ended December 31, 2021, were
$410,766. The City’s contributions were equal to the required contributions as set by state statutes.
2. PEPFF Contributions
Police and Fire Plan members were required to contribute 11.80 percent of their annual covered
salary in fiscal year 2021, and the City was required to contribute 17.70 percent for Police and Fire
Plan members. The City’s contributions to the PEPFF for the year ended December 31, 2021, were
$509,584. The City’s contributions were equal to the required contributions as set by state statutes.
D. Pension Costs
1. GERF Pension Costs
At December 31, 2021, the City reported a liability of $3,275,434 for its proportionate share of the
GERF’s net pension liability. The City’s net pension liability reflected a reduction, due to the state
of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer
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 $100,098. The net pension liability was measured as of June 30, 2021, and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of
that date. The City’s proportion of the net pension liability was based on the City’s contributions
received by the PERA during the measurement period for employer payroll paid dates from July 1,
2020 through June 30, 2021, relative to the total employer contributions received from all of the
PERA’s participating employers. The City’s proportionate share was 0.0767 percent at the end of
the measurement period and 0.0725 percent for the beginning of the period.
The amount recognized by the City as its proportionate share of the net pension liability, the direct
aid, and total portion of the net pension liability that was associated with the City were as follows:
City’s proportionate share of the net pension liability 3,275,434$
State’s proportionate share of the net pension liability
associated with the City 100,098$
For the year ended December 31, 2021, the City recognized pension expense of $228,476 for its
proportionate share of the GERF’s pension expense. In addition, the City recognized an additional
$8,066 as pension expense (and grant revenue) for its proportionate share of the state of
Minnesota’s contribution of $16.0 million to the GERF.
-54-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
At December 31, 2021, the City reported its proportionate share of the GERF’s deferred outflows
of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 18,392$ 99,602$
Changes in actuarial assumptions 1,999,912 67,766
Net collective difference between projected and actual
investment earnings – 2,846,944
Changes in proportion 273,231 –
Contributions paid to the PERA subsequent to the
measurement date 209,008 –
Total 2,500,543$ 3,014,312$
A total of $209,008 reported as deferred outflows of resources related to pensions resulting from
city contributions subsequent to the measurement date will be recognized as a reduction of the net
pension liability in the year ending December 31, 2022. Other amounts reported as deferred
outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Pension
Year Ending Expense
December 31,Amount
2022 (22,362)$
2023 41,937$
2024 31,355$
2025 (773,707)$
2. PEPFF Pension Costs
At December 31, 2021, the City reported a liability of $1,807,777 for its proportionate share of the
PEPFF’s net pension liability. The net pension liability was measured as of June 30, 2021, 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 the PERA during the measurement period for employer payroll paid dates
from July 1, 2020 through June 30, 2021, relative to the total employer contributions received from
all of the PERA’s participating employers. The City’s proportionate share was 0.2342 percent at
the end of the measurement period and 0.2156 percent for the beginning of the period.
The state of Minnesota contributed $18.0 million to the PEPFF in the plan fiscal year ended
June 30, 2021. The contribution consisted of $9.0 million in direct state aid that does meet the
definition of a special funding situation and $9.0 million in supplemental state aid that does not
meet the definition of a special funding situation. The $9.0 million direct state aid was paid on
October 1, 2020. Thereafter, by October 1 of each year, the state will pay $9.0 million to the PEPFF
until full funding is reached or July 1, 2048, whichever is earlier. The $9.0 million in supplemental
state aid will continue until the fund is 90.0 percent funded, or until the State Patrol Plan
(administered by the Minnesota State Retirement System) is 90.0 percent funded, whichever occurs
later. Strong asset returns for the fiscal year ended 2021 will accelerate the phasing out of these
state contributions, although we do not anticipate them to be phased out during the fiscal year
ending 2022.
-55-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The state of Minnesota is included as a nonemployer contributing entity in the Police and Fire
Retirement Plan Schedule of Employer Allocations and Schedule of Pension Amounts by
Employer, Current Reporting Period Only (pension allocation schedules) for the $9.0 million in
direct state aid. Police and Fire Plan employers need to recognize their proportionate share of the
state of Minnesota’s pension expense (and grant revenue) under GASB 68 special funding situation
accounting and financial reporting requirements. For the year ended December 31, 2021, the City
recognized negative pension expense of ($52,519) for its proportionate share of the Police and Fire
Plan’s pension expense. The City recognized $14,805 as grant revenue for its proportionate share
of the state of Minnesota’s pension expense for the contribution of $9.0 million to the PEPFF.
The amount recognized by the City as its proportionate share of the net pension liability, the direct
aid, and total portion of the net pension liability that was associated with the City were as follows:
City’s proportionate share of the net pension liability 1,807,777$
State’s proportionate share of the net pension liability
associated with the City 81,296$
The state of Minnesota is not included as a nonemployer contributing entity in the Police and Fire
Pension Plan pension allocation schedules for the $9.0 million in fire state aid. The City also
recognized $21,078 for the year ended December 31, 2021 as revenue and an offsetting reduction
of net pension liability for its proportionate share of the state of Minnesota’s on -behalf
contributions to the PEPFF.
At December 31, 2021, the City reported its proportionate share of the PEPFF’s deferred outflows
of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 339,816$ –$
Changes in actuarial assumptions 2,656,957 875,053
Net collective difference between projected and actual
investment earnings – 3,479,187
Changes in proportion 302,865 77,038
Contributions paid to the PERA subsequent to the
measurement date 270,039 –
Total 3,569,677$ 4,431,278$
A total of $270,039 reported as deferred outflows of resources related to pensions resulting from
city contributions subsequent to the measurement date that will be recognized as a reduction of the
net pension liability in the year ending December 31, 2022. Other amounts reported as deferred
outflows and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Pension
Year Ending Expense
December 31,Amount
2022 (1,050,087)$
2023 (170,321)$
2024 (199,611)$
2025 (334,141)$
2026 622,520$
-56-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
E. Long-Term Expected Return on Investments
The Minnesota State Board of Investment, which manages the investments of the 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
Domestic equity 35.50 %5.10 %
International equity 16.50 5.30 %
Fixed income 25.00 0.75 %
Private markets 25.00 5.90 %
Total 100.00 %
Long-Term Expected
Allocation
Target
Real Rate of Return
F. Actuarial Assumptions
The total pension liability in the June 30, 2021, actuarial valuation was determined using an individual
entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in
the determination of the total liability is 6.50 percent. This assumption is based on a review of inflation and
investments return assumptions from a number of national investment consulting firms. The review
provided a range of return investment return rates deemed to be reasonable by the actuary. An investment
return of 6.50 percent was deemed to be within that range of reasonableness for financial reporting purposes.
Inflation is assumed to be 2.25 percent for the General Employees Plan and 2.25 percent for the Police and
Fire Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan.
The Police and Fire Plan benefit increase is fixed at 1.00 percent per year and that increase was used in the
valuation.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent
after one year of service to 3.00 percent after 29 years of service, and 6.00 percent per year thereafter. In
the Police and Fire Plan, salary growth assumptions range from 11.75 percent after one year of service to
3.00 percent after 24 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality
Table. Mortality rates for the Police and Fire Plan are based on the Pub-2010 Public Safety Employee
Mortality tables. The tables are adjusted slightly to fit the PERA’s experience.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The most recent
four-year experience study for the General Employees Plan was completed in 2019. The assumption
changes were adopted by the Board and became effective with the July 1, 2020 actuarial valuation. The
most recent four-year experience study for the Police and Fire Plan was completed in 2020, adopted by the
Board, and became effective with the July 1, 2021 actuarial valuation.
-57-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
The following changes in actuarial assumptions occurred in 2021:
1. GERF
CHANGES IN ACTUARIAL ASSUMPTIONS
• The investment return and single discount rates were changed from 7.50 percent to
6.50 percent, for financial reporting purposes.
• The mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
2. PEPFF
CHANGES IN ACTUARIAL ASSUMPTIONS
• The investment return and single discount rates were changed from 7.50 percent to
6.50 percent, for financial reporting purposes.
• The inflation assumption was changed from 2.50 percent to 2.25 percent.
• The payroll growth assumption was changed from 3.25 percent to 3.00 percent.
• The base mortality table for healthy annuitants and employees was changed from the
RP-2014 table to the Pub-2010 Public Safety Mortality table. The mortality improvement scale
was changed from MP-2019 to MP-2020.
• The base mortality table for disabled annuitants was changed from the RP-2014 healthy
annuitant mortality table (with future mortality improvement according to Scale MP -2019) to
the Pub-2010 Public Safety disabled annuitant mortality table (with future mortality
improvement according to Scale MP-2020).
• Assumed rates of salary increase were modified as recommended in the July 14, 2020
experience study. The overall impact is a decrease in gross salary increase rates.
• Assumed rates of retirement were changed as recommended in the July 14, 2020 experience
study. The changes result in slightly more unreduced retirements and fewer assumed early
retirements.
• Assumed rates of withdrawal were changed from select and ultimate rates to service -based
rates. The changes result in more assumed terminations.
• Assumed rates of disability were increased for ages 25–44 and decreased for ages over 49.
Overall, proposed rates result in more projected disabilities.
• Assumed percent married for active female members was changed from 60.00 percent to
70.00 percent. Minor changes to form of payment assumptions were applied.
G. Discount Rate
The discount rate used to measure the total pension liability in 2021 was 6.50 percent. 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 GERF and the PEPFF were 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.
-58-
NOTE 8 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE (CONTINUED)
H. Pension Liability Sensitivity
The following table 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
1 percentage point lower or 1 percentage point higher than the current discount rate:
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
5.50%6.50%7.50%
City’s proportionate share of
the GERF net pension liability 6,680,213$ 3,275,434$ 481,605$
City’s proportionate share of
the PEPFF net pension liability 5,739,382$ 1,807,777$ (1,415,168)$
I. 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.
NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION
A. Plan Description
All members of the Rosemount Fire Department (the Department) are covered by a defined benefit plan
administered by the Association. As of December 31, 2020, the plan covered 42 active firefighters and
3 vested terminated firefighters whose pension benefits are deferred. The plan is a single-employer
retirement plan and is established and administered in accordance with Minnesota Statutes, Chapter 69.
The Association maintains a separate Special Fund to accumulate assets to fund the retirement benefits
earned by the Department’s membership. Funding for the Association is derived from an insurance
premium tax in accordance with the Volunteer Firefighter’s Relief Association Financing Guidelines Act
of 1971 (Chapter 261 as amended by Chapter 509 of Minnesota Statutes 1980). Funds are also derived from
investment income and city contributions.
B. Benefits Provided
Individuals with at least 20 years of service who have reached age 50 are entitled to a lump sum payment
of $7,800 per year of service plus a supplemental benefit of 10 percent 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 percent per year is added to their retirement benefit until paid.
-59-
NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION
(CONTINUED)
C. Contributions
Minnesota Statutes, Chapters 424 and 424A authorize pension benefits for volunteer fire relief associations.
The plan is funded by fire state aid, investment earnings, and, if necessary, employer contributions as
specified in Minnesota Statutes and voluntary city contributions (if applicable). The firefighters have no
obligation to contribute to the plan. Nonemployer pension contributions include state aid from the state of
Minnesota and municipal contributions from the City. On-behalf of state aid payments from the state of
Minnesota are received initially by the City and subsequently remitted to the Association. These on-behalf
of state aid payments, in addition to the City’s municipal contribution payments to the Association plan,
are recognized as revenues and expenditures in the City’s General Fund during the period received.
The state of Minnesota contributed $172,246 in fire state aid to the plan on behalf of the Department for
the year ended December 31, 2021, which was recorded as revenue. Required employer contributions are
calculated annually based on statutory provisions. The City’s statutorily-required contributions to the plan
for the year ended December 31, 2021 were $0; however, the City made a voluntary contribution of $30,000
to the plan.
D. Pension Costs
At December 31, 2021, the City reported a net pension liability (asset) of ($2,346,400) for the plan. The net
pension liability (asset) was measured as of December 31, 2020. The total pension liability used to calculate
the net pension liability (asset) in accordance with GASB Statement No. 68 was determined by applying
an actuarial formula to specific census data certified by the Department as of December 31, 2020.
The following table presents the changes in net pension liability (asset) during the year:
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability (Asset)
(a)(b)(a-b)
Beginning balance 2,836,541$ 4,700,686$ (1,864,145)$
Changes for the year
Service cost 145,421 – 145,421
Interest 161,410 – 161,410
Differences between expected and
actual experience (155,156) – (155,156)
Changes of assumptions 15,242 – 15,242
Changes of benefit terms 134,027 – 134,027
Contributions (state and local)– 194,799 (194,799)
Net investment income – 597,195 (597,195)
Benefit payments (349,664) (349,664) –
Administrative costs – (8,795) 8,795
Total net changes (48,720) 433,535 (482,255)
Ending balance 2,787,821$ 5,134,221$ (2,346,400)$
For the year ended December 31, 2021, the City recognized pension expense of $14,219.
-60-
NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION
(CONTINUED)
At December 31, 2021, the City reported deferred inflows of resources and deferred outflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience –$ 279,819$
Changes in actuarial assumptions 79,868 40,852
Net collective difference between projected and actual
investment earnings – 457,394
Contributions paid subsequent to the measurement date 30,000 –
Total 109,868$ 778,065$
Deferred outflows of resources totaling $30,000 related to pensions resulting from city contributions to the
plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in
the year ending December 31, 2022. Other amounts reported as deferred outflows and inflows of resources
related to the plan will be recognized in pension expense as follows:
Pension
Year Ending Expense
December 31,Amount
2022 (164,740)$
2023 (112,792)$
2024 (195,102)$
2025 (97,432)$
2026 (31,228)$
Thereafter (96,903)$
E. Actuarial Assumptions
The total pension liability at December 31, 2020 was determined using the entry-age normal actuarial cost
method and the following actuarial assumptions:
20-year municipal bond yield 2.00%
Long-term expected rate of return 5.75%
Discount rate 5.75%
Inflation rate 2.25%
Mortality rates were based on the July 1, 2020 PERA Police and Fire Plan actuarial valuation as described
below:
• Healthy Pre-Retirement – RP-2014 Employee Generational Mortality Table projected with
Mortality Improvement Scale MP-2019 from a base year of 2006.
• Healthy Post-Retirement – RP-2014 Annuitant Generational Mortality Table projected with
Mortality Improvement Scale MP-2019 from a base year of 2006. Male rates are adjusted by a
factor of 0.96.
• Disabled – RP-2014 Annuitant Generational Mortality Table projected with Mortality
Improvement Scale MP-2019 from a base year of 2006. Male rates are adjusted by a factor of
0.96.
-61-
NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION
(CONTINUED)
Assumption changes since the prior valuation included the following:
• The mortality assumptions were updated from the rates used in the July 1, 2018 Minnesota
PERA Police and Fire Plan actuarial valuation to the rates used in the July 1, 2020 Minnesota
PERA Police and Fire Plan actuarial valuation.
• The inflation assumption decreased from 2.50 percent to 2.25 percent.
Plan changes since the prior valuation included a benefit increase from $7,400 to $7,800 per year.
The 5.75 percent 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 inflation) were developed for each asset class using the plan’s target investment allocation, along
with long-term return expectations by asset class. Inflation expectations were applied to derive the nominal
rate of return for the portfolio.
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
Domestic equity 63.90 %4.90 %7.15 %
International equity 1.59 5.32 %7.57 %
Fixed income 18.68 1.40 %3.65 %
Cash and equivalents 15.83 0.90 %3.15 %
Total 100.00 %5.75 %
Long-Term
Expected Nominal
Rate of Return
Long-Term
Date Expected Real
Allocation Rate of Return
Measurement
F. Discount Rate
The discount rate used to measure the total pension liability was 5.75 percent. The projection of cash flows
used to determine the discount rate assumed that contributions to the plan will be made as specified in state
statutes. Based on that assumption and considering the funding ratio of the plan, the fiduciary net position
was projected to be available to make all projected future benefit payments of current active and inactive
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.
G. Pension Liability (Asset) Sensitivity
The following presents the City’s net pension liability (asset) for the plan, calculated using the discount rate
disclosed in the preceding paragraph, as well as what the City’s net pension liability (asset) would be if it
were calculated using a discount rate 1 percent lower or 1 percent higher than the current discount rate:
1% Decrease in Current 1% Increase in
Discount Rate Discount Rate Discount Rate
(4.75%)(5.75%)(6.75%)
Net pension liability (asset)(2,265,426)$ (2,346,400)$ (2,424,754)$
-62-
NOTE 9 – DEFINED BENEFIT PENSION PLAN – FIRE RELIEF ASSOCIATION
(CONTINUED)
H. Pension Plan Fiduciary Net Position
The Association issues a publicly available financial report that includes financial statements and
required supplementary information. The report may be obtained by writing to the City of Rosemount,
2875 145th Street West, Rosemount, Minnesota 55068-4997, or by calling 651 423 4411.
NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN
A. Plan Description
The City provides post-employment insurance benefits to certain eligible employees through its
OPEB Plan, a single-employer defined benefit plan administered by the City. All post-employment benefits
are based on contractual agreements with employee groups. Eligibility for these benefits is based on years
of service and/or minimum age requirements. These contractual agreements do not include any specific
contribution or funding requirements. The Plan does not issue a publicly available financial report. No plan
assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75.
B. 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 until the retiree reaches Medicare eligibility, 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.
For police officers or firefighters disabled in the line-of-duty, Minnesota Statutes require the City to
continue payment of the employer’s contribution toward health coverage for the police officer or firefighter
and their spouse, if the spouse was covered at the time of disability, until age 65.
C. Contributions
The required contribution is based on projected pay-as-you-go financing requirements, with additional
amounts to prefund benefits as determined periodically by the City. The City’s current year required
pay-as-you-go contributions to finance the benefits described in the previous section totaled $58,520.
-63-
NOTE 10 – OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN (CONTINUED)
D. Membership
Membership in the plan consisted of the following as of the latest actuarial valuation:
Active employees electing coverage 65
Active employees waiving coverage 22
Retirees electing coverage 2
Total 89
E. Total OPEB Liability of the City
The City's total OPEB liability of $855,558 was measured as of December 31, 2020, and was determined
in accordance with the Alternative Measurement Method, prescribed by GASB 75 for employers with under
100 plan participants, as of that date, in place of an actuarial valuation.
F. Actuarial Methods and Assumptions
The total OPEB liability in the December 31, 2019 valuation was determined using the following valuation
assumptions and other inputs, applied to all periods included in the measurement, unless otherwise
specified:
Discount rate 2.00%
20-year municipal bond yield 2.00%
Inflation rate 2.50%
Healthcare trend rate 6.20% initially, gradually decreasing over several decades
to an ultimate rate of 4.00% in 2075 and later years
Since the plan is not funded by an irrevocable trust, the discount rate is equal to the 20-year municipal bond
yield rate of 2.00 percent, which was set by considering published rate information for 20-year high quality,
tax-exempt, general obligation municipal bonds as of the measurement date. The City discount rate used in
the prior measurement date was 2.75 percent.
Mortality rates were based on the RP-2014 Mortality Table, with projected mortality improvements using
projection Scale MP-2018 and other adjustments.
G. Changes in the Total OPEB Liability
Total OPEB
Liability
Beginning balance 758,444$
Changes for the year
Service cost 67,181
Interest 22,077
Changes in assumptions 53,502
Benefit payments (45,646)
Total net changes 97,114
Ending balance 855,558$