This year we’ve issued a ‘clean, unmodified’ opinion on the statements.”

Rebecca Peterson of Redpath and Company

Want the read the full 2024 Cottage Grove Annual Comprehensive Financial Report? Follow the link trail on the city website at www.cottagegrovemn.gov: Home; Your Government; Departments; Finance; Annual Comprehensive Financial Report.

The current fiscal year fast approaching its end the 2024 Annual Comprehensive Financial Report is posted on the city website for public review.
Prepared by Redpath and Company and covered in summary by Rebecca Petersen at the June 4 Council meeting, the full 2024 Annual Comprehensive Financial Report is a full 184 pages long, divided into introduction, financial, and statistical information. So what are some highlights?
“The first thing we issue in an audit is an opinion on the city’s financial statements,” Petersen said after being introduced to the council by City Finance Director Brenda Malinowski. “This is really the primary purpose of our audit, to look at the city’s financial information, the financial statements, and do some analytics and analysis of the details.”
While not looking at every financial transaction the city enters into, the audit process allows the auditor to determine if things are as they should be.”
“This year we’ve issued a ‘clean, unmodified’ opinion on the statements,” Petersen said of the city’s finances. Nonetheless, certain things stood out to be aware of.
The first thing I have bulleted in the Net Pension Liability,” Petersen said for the report. With city employees participating in the state pension program, pending future liabilities for promises made are currently at $10.8 million.
“Based on the actuarial’s calculation, the city of Cottage Grove at the end of 2024 had a $10.8 million pension liability. This is something that’s fulfilled through your regular payroll cycle and contributions,” she said of the state pension program. PERA (Public Employees Retirement Association) isn’t going to come knocking on your door and ask for a $10.8 million check next week.” Values could fluctuate based on employment and market conditions, but pension liability wasn’t the only highlight from the report.
“The next estimate that’s included in the financial statements is an allowance for your ambulance or EMS receivables, Petersen said. “As you know when an ambulance call goes out and a bill is generated it’s not always 100 percent collected. You’re restricted by Medicare and Medicaid rates and other factors. City staff need to look at the outstanding bills and estimate the portion of that they believe to be truly collectible.”
Third was a present value of lease receivables and liabilities.
“And finally the third estimate I have here is lease receivables and lease liabilities ,” Petersen said. “Anytime the city has a contract that qualifies as a lease or similar item that has payments that continue out over time, you’re required to present value that and report it in your financial statements.”
One example of receivables would be leasing water tower space to cell phone companies. Petersen said that there were no difficulties in performing the audit or disagreements with management.
Shifting next to high level financial information, Petersen said the current property tax collection rate was 99.42 percent for 2024, representing that 99.42 of residents were up to date on property taxes.
“99.42 percent for 2024, that’s a great collection rate,” she said. “I’ve audited a lot of cities around the metro area this year and this is one of the higher rates I’ve seen, so good news for the city.”
The next highlight was the unassigned fund balance at $13,719,569, representing 48.2 percent of the subsequent year’s expenditure budget.
“As you may recall, it’s important for the city to hold some reserves, because one of the main sources of funding you have is property taxes, and your receive those payments twice a year. The funds at the end of one year need to get you through half the year until the next property tax payment comes in, and then again to have enough on hand to get to the end of that year.”
City policy is to have 45 to 55 percent of next year’s budget held in reserve at the end of the year.
“So right within that range,” Petersen said of the unassigned fund balance for Cottage Grove.
Next up was the planned budget versus actual revenue numbers, with the final budget revenue of $25,345,415 contrasted with an actual budget revenue $25,909,510, or $584,095 above the actual.
Petersen highlighted an apparent under budgeting in intergovernmental revenue, stating that this was related to when funds had been received versus when they were budgeted.
Expenditures for 2024 meanwhile were $879,568 under budget, a figure attributed to great fiscal responsibility.
“Ultimately the message that I heard across departments was just great fiscal responsibility,” Petersen said of the reason for the budgeted but unspent funds.
“So at the end fo the day the city had an increase in fund balance of $150,000,” she said for summary.
Dominating the budget for several years has been public safety, amounting to just under 50 percent of the total.
“Public safety is very important but also very expensive,” Petersen said of the budget percentage.
Peterson closed by going over several graphs, highlighting an expanding tax base, dip in EMS revenue in 2022, and the fact that the water and sewer funds covered current operating expenses but not their depreciation, with temporary water treatment plants in the city being depreciated fast and contributing to this number as the city works to replace them with permanent treatment plants.
Want the read the full 2024 Cottage Grove Annual Comprehensive Financial Report? Follow the link trail on the city website at www.cottagegrovemn.gov: Home; Your Government; Departments; Finance; Annual Comprehensive Financial Report.
For those seeking a more direct if somewhat arduous route, head on over to https://www.cottagegrovemn.gov/DocumentCenter/View/5924/2024-Annual-Comprehensive-Financial-Report-ACFR