The Free Press, Mankato, MN

Local News

July 2, 2013

North Mankato audit generally positive

Sewer rates likely to increase in '14

NORTH MANKATO — North Mankato added a healthy $650,000, or 31 per­cent, to its general fund bal­ance in 2012 and its utility funds had a good year.

However, the general fund balance — sort of like a city's checking account, used for both regular payments and unforeseen expenses — isn't all usable. That's because the debt service fund owes $1.7 million to the general fund to help pay back old special assessments.

“Once debt service becomes flush and you have this fund balance you’re where you’ll need to be,” said Kyle Meyers, govern­ment partner at Abdo, Eick and Meyers. The accounting firm went over the city’s 2012 annual report Monday evening, and Meyers’ report was generally positive.

“As a whole, they’re prob­ably OK,” Meyers said after the meeting.

Getting the debt service fund “flush,” as Meyers put it, was not a topic of Monday’s meeting. Those unpaid assessments were discussed during a June meeting, which will be fol­lowed up by a work session later this month. Instead, Meyers went on a fund-by­fund account of the city’s financial position.

Having a healthy general fund — which supports services like streets, parks and public safety — is important for several rea­sons. For example, it gives a city flexibility to handle emergency expenses and unexpected reductions in state aid.

Measuring the fund bal­ance as a percentage of annual spending, a common measure, North Mankato’s general fund balance rose to 46.2 percent, up from 33.2 percent in 2008. Though an improvement, similar-size cities had a higher average general fund balance of 76 percent of their annual spending in 2011. 

The utility funds had a good year in that all of their operational revenues exceeded their expenses. However, fund transfers from utility funds to pay for those previously mentioned unpaid special assessments set them back some. 



For example, the drinking water fund had an operational surplus of about $340,000. And even after interest payments and fund transfers, it ended up about $126,000 in the black. However, the fund owes about $1 million to those debt service funds, presenting a long-term problem. 



The utility fund in the worst shape is the sewer fund, which had an operational surplus of about $50,000 but lost about $77,000 after fund transfers, the third year in a row of losses.

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