To you and the team, thank you. Great job on the budget and the process over the last year, and managing the pennies, nickels, and dimes, as we always do in this community. The community is proud of the work that you do. ”

Mayor

At the June 21 Cottage Grove City Council meeting, Finance Director Brenda Malinowski introduced Matt Mayer, CPA and Auditor with BerganKDV, to present the city’s annual Comprehensive Financial Report for the 2022 fiscal year.

BerganKDV has been the city’s audit partner since 2013. Mayer laid out an analysis of recent-year trends and various current fund balances, ultimately giving Cottage Grove a strong bill of health for its handling of city finances.

Mayer began by explaining his role as an independent third-party auditor, reviewing the results of practices laid out by city management and the council. Noting that this financial review has been labeled an award-winning document, he said, “The city goes above and beyond the base level of generally accepted accounting principles to prepare what’s called an ACFR, an Annual Comprehensive Financial Report, that has pretty much any possible piece of information that you would want to know about the city’s finances or its operations each fiscal year. That particular document is submitted to a national organization to be reviewed and awarded, and this is the 32nd consecutive year that the city has received that award.”

He pointed out the report showed no findings of lack of compliance with any received federal funds, state and local fiscal funds, nor any internal inconsistencies.

“We had no issues that rose to a material weakness or serious deficiency level there, so this report is about as good as it can get,” Mayer said. “And again, a credit to the finance team, under the leadership of Finance Director Malinowski.”

Mayer showed a layout of the General Fund, explaining that it’s a metric of how the city has complied with its stated budget. For 2022, it was essentially a “break-even,” with a small deficit in spending of $121,405 in comparison to the approximately $21 million budget, leaving a $331,129 net positive in variance from the original budget. While revenue from licenses and permits were up, investment earnings were down due to interest rate increases, manifesting as a temporary decrease in earnings value.

“Along with those interest rates and some of the challenges of staying right within that, about a 1.5% variance, I think the budget was executed very well for the 2022 fiscal year,” he said.

He cited the city’s policy of aiming to keep 55% of the next year’s budget in the General Fund at the end of each year. This allows the city to start each year with approximately half of what it needs to operate in the fund, as well as have a little extra for contingencies.

The city’s Street Light Fund has come down in balance over the last five years, but is staying within levels to maintain services as needed. The EMS Fund, which covers fees for emergency services in the city, has seen a significant drop. Mayer explained this is due to the city’s recent change of vendor that services fee collection. This also reflects the fact that Cottage Grove EMS also services surrounding communities and isn’t always able to recoup exactly what is billed. The Water Operating Fund had higher expenses in 2022, which Mayer attributed to a flat revenue stream pitted against inflationary pressures.

Per capita revenue for Cottage Grove is about $1,300, in comparison to peer cities who average $1,100. On the flipside, capital project spending by Cottage Grove invests about $550 per capita, compared to the state average of $317 per capita.

Cottage Grove’s population has grown a notable 7% over the last three years, from 38,000 to 41,000. License and permit revenue has doubled to 20%, up from 10% a few years ago. Commercial development and residential expansion are also bolstering property tax revenue.

Mayer recently announced his upcoming retirement from BerganKDV, and Mayor Myron Bailey took a moment to thank him and wish him well.

“Have a great time in your retirement. We’ll miss you and thank for your years of service that you’ve provided to the city of Cottage Grove,” Bailey said.

He also thanked Malinowski, saying, “To you and the team, thank you. Great job on the budget and the process over the last year, and managing the pennies, nickels, and dimes, as we always do in this community. The community is proud of the work that you do.