2003-12-31 Year End Financial Audit

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ervi{fe 'Estafiisfid 1857 1880 !Main Street . Centerville, !M:N 55038 (651)429-3232. PtV((651) 429-8629 Management's Discussion and Analysis As management of the City, we offer readers of the City's fmancial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on page 2 of this report. Financial Highlights . The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $15,719,469. Of this amount, $6,136,859 may be used to meet the City's ongoing obligations to citizens and creditors. . The City's total net assets increased by $3,771,108. Approximately 40 percent of this increase is attributable to a one- time prior-period adjustment in the City's enterprise funds that was necessary to accommodate the new reporting requirements of GASB Statement No. 34. . As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $4,962,387, an increase of$1,150,353 in comparison with the prior year. Approximately 46 percent of this total amount, $2,290,000, is available for spending at the City's discretion (unreservedfund balance.) . At the end of the current fiscal year, unreserved fund balance for the general fund was $1,063,023, or 62 percent of total general fund expenditures. . The City's total debt increased by $292,143, or 8.4 percent during the current fiscal year. The key factor in this increase was the issuance of $740,000 in temporary improvement bonds for the Peltier Preserve Development Project. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the fmancial statements. This report also contains other supplemental 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 assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the fmancial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets 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). Both of the government-wide fmancial 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, highway and streets, sanitation, economic development, and culture and recreation. The business-type activities of the City include water and sewer operations. The government-wide fmancial statements include the City itself (known as the primary government.) The water and sewer operations function as departments of the City, and therefore have been included as an integral part of the primary government. The government-wide fmancial statements can be found on pages 3-4 of this report.