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CITY OF ARDEN HILLS Management’s Discussion and Analysis Year Ended December 31, 2021 -4- As the management of the City of Arden Hills, Minnesota (the City), we offer readers of the City’s Annual Comprehensive Financial Report (ACFR) this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2021. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which is presented in the introductory section of this report. FINANCIAL HIGHLIGHTS • The assets and deferred outflows of resources of the City exceeded liabilities and deferred inflows of resources at the close of the most recent fiscal year by $61,789,568 (net position). Of this amount, $14,720,973 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors. • The City’s total net position increased by $3,450,101 in 2021. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $10,814,728. Of this total amount, $35,030 is nonspendable and $1,220,287 is restricted, leaving an unrestricted (committed, assigned, and unassigned) balance of $9,559,411. • At the end of the current fiscal year, the General Fund has a total fund balance of $3,169,812. At December 31, 2021, the unassigned fund balance of the General Fund was $2,899,564, or 55.3 percent, of the subsequent year’s budgeted expenditures. 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 include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. The Statement of Net Position presents information on all of the City’s assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities presents information showing how the 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 vacation leave).