Cottage Grove Annual Financial Report finds mostly good financial picture

Posted 6/16/21

Council meeting June 2 also hears from Eleanor Clancy and Carla Inderrieden Meeting Wednesday June 16, the Cottage Grove City Council was scheduled to look at many things. Among them was a Narcan …

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Cottage Grove Annual Financial Report finds mostly good financial picture


Council meeting June 2 also hears from Eleanor Clancy and Carla Inderrieden

Meeting Wednesday June 16, the Cottage Grove City Council was scheduled to look at many things.

Among them was a Narcan Reimbursement agreement with the Metropolitan Emergency Services Board, with Narcan a drug used by responding EMS and law enforcement to bring people back from drug overdoses. Also on the agenda for June 16 were a review of the April 13, 2021 minutes of the Advisory Committee on Historic Preservation, along with a site review for a modular school structure at Pine Harbor Church along Highway 16/10, and a special event permit from All Saints Lutheran Church to hold a Jazz in July concert this July 25.

Back at the June 2 Council meeting, meanwhile, a reappearance by two concerned residents had brought up Mississippi Dunes.

More specifically as of June 2, Eleanor Clancy and Carla Inderrieden related pollution concerns to the Council, which the City then responded via a follow up letter to each had been determined as restricted to the nearby Grey Cloud Dunes Scientific and Natural Area overseen by the Minnesota Department of Natural Resources. A Remedial action Plan submitted in 1995 and a cleanup effort by Marathon Ashland had been followed with a ten-year monitoring period, which had found no significant groundwater impact to the area. No harm, no foul—or so it would seem.

Following the June 2 agenda following Open Forum appearances by Clancy and Inderrieden, meanwhile, had been the annual Cottage Grove City audit presented by CPA Matt Mayer of Bergan, and which found mostly good results.

“Next is six: Presentation,” Mayor Myron Bailey announced from the agenda, stating that the presentation that night was for the audit, introduced by Cottage Grove Finance Director Robin Roland.

“Good evening Mayor and Council,” Roland began. “It’s that time of year again where we are done with our annual audit, and we have produced a financial report which is reflective of last year’s results in all of our funds.” Introducing Certified Public Accountant (CPA) Matt Mayer of Bergan KDV to the Council, Roland said that the CPA had a report that could be “either long or short,” predicting that short was preferred, to unidentified off-camera laughter. “And he will be happy to answer your questions if you have any,” Roland said. CPA Mayer then entered on his presentation.

“Good to be back with you in person after last year’s video presentation,” Mayer greeted the Council. “I’m going to take a little time to give you financial analysis and then comparative data at the end so you can see how Cottage Grove compares with other cities around the state,” he said.

Among the findings of the 2020 audit was that it was the 30th year of the award-winning audit, meaning that Cottage Grove was credited with providing the “most complete, thorough, and transparent document that was possible for local government.

“So your city is going above and beyond the requirements,” Mayer told the Council.

Moving on from this brief plaudit, Mayer reported that an audit of federal funds related to COVID had shown “no findings” of improper use, though Internal Control came up for mention.

“I do want to highlight one,” he said. “Internal Control. That is where we look at how you do business,” he said, going on to say that while “high-level concerns” such as material weaknesses or significant deficiencies had been found in the report, there was a “lack of segregation of accounting duties.” Common to smaller organizations, the term meant that duties weren’t as spread out as they could be and that a smaller number of people were taking care of things, leading in turn to added accounting risk with fewer checks and balances.

“We did notice some symptoms of that,” Mayer said of the Covid-19 era, adding that it was something they would keep an eye on and continue to report on as needed.

Moving into the general fund as put together by the Council and carried out by City Staff, Mayer said that revenues had exceeded expenditures, and that “it was a good year for the general fund.”

“You’re pretty much on budget for the year,” he said, with revenue around $500,000 or three percent higher than expected. “Not significant, but charges in the area of charges for services – development activity it was higher than expected last year,” he said. Then there was the accounts payable side of the general fund ledger balance.

“On the spending side you were over budget about $400,000,” Mayer reported. “That’s about two percent of the general fund.” Public safety was a main factor in added expenditures, along with City contribution to the Fire Relief Pension Fund, not previously in the budget. Transfers out to make future savings were also approved in December.

Skipping ahead to Enterprise utility funds, Mayer noted that the Street Light fund “has had significant losses the past five years,” related as such to franchise fees and streetlight funding activity. With significant funds set aside to cover to cover the losses, the streetlight fund had “kind of plateaued” around $4334,000, or half a year funding in reserve. “Maybe there is an opportunity to start building that back up again,” Mayer told the Council.

Surprisingly for 2020, meanwhile, EMS runs were down and a small loss had occurred, while there was no long-term funding issue, with $857,667 in reserve to handle future costs. The Water Fund was recovering from past use.

“Back in 2017, that was the water emergency,” he said, with over a million dollars in losses and water rationing taking place. The water fund had been in the process of rebuilding since that time, with 2020 a break-even year for the water fund.

“They’re liquid, no pun intended, and not tied up in a loan to yourself,” Mayer said of six million dollars in water funding reserves. Liquid means the funds are available for spending by the City. Then there was sewer operating fund.

“We’re kind of treading water in the sewer fund the last four or five years,” Mayer said, with five or six million dollars in reserves but not as much of it free to use as compared to the City Water Fund.

“While we do have about six million in this fund, three million is tied up in a loan to yourselves,” he told the Council, meaning that the liquidity of the sewer operating fund was only about half of the water fund.

As to comparative numbers, intergovernmental revenue from places like Woodbury had accounted for Cottage Grove’s above average performance last year.

“If not for that activity (in 2020), you’d be right in line with your peer group,” Mayer said of the City financial situation compared to other cities of similar size in the state.