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� � R � i <br />1 � � ( � � <br />Memo <br />To: Mayor and Council, <br />Neal Beets, City Manager <br />From: Chris Miller, Finance Di�eCtO G <br />Date: May 2, 2402 <br />Re: Overview of the City's MSA Financial Activities <br />Background <br />The following information provides an overview of the Municipal State Aid (MSA), also <br />referred to as Minnesota State Aid, financial activity of the City of Roseville. The information <br />covers the period 19852000, and is based largely on annual financial reports that have been <br />independently audited and produced and published by the City. <br />It should be noted that reporting and record-keeping requirements and practices vary over time. <br />As a result detailed, transaction-level information is not available, except for the most recent <br />years. <br />Summary of Findings <br />Leading up to 1987, it is believed that the City accounted for the costs related to MSA- <br />designated roads in the `Special Assessment Fund'. This fund is designed to account for <br />activities related to the construction of streets that are financed in whole or in part by special <br />assessments against benefiting properties. This included the construction of MSA-designated <br />roads (and authorized uses of MSA funds). As a result, the City recorded the receipt of MSA <br />monies in the MSA Fund, and then subsequently transferred the funds to the Special Assessment <br />Fund to "repay" the proportionate share of costs associated with the MSA streets that were <br />improved. The balance in the MSA fund at the end of 1986 was $0.00. <br />Beginning in 1987, a change in policy and/or accounting practice was implemented. Both the <br />receipt of MSA monies, and the costs related to the construction of MSA-designated roads were <br />accounted for in the MSA Fund. As a result of the change, the timing of construction costs in <br />relation to the receipt of MSA monies became much more of an isolated event, and therefore <br />more evident. It appears that the City exercised some discretion in obtaining MSA funds in <br />advance of the construction project. This is a fairly common practice that provides construction <br />financing, and is allowed under MSA guidelines. By utilizing this financing method, the City <br />was able to maintain a reserve in the MSA Fund that earned interest. <br />Attachment A <br />-1- <br />