With a new fiscal year in view, the St. Paul Park Council heard an audit presentation from Smith Schafer, with Certified Public Accountant (CPA) Jason Miller giving the presentation. Presented via PowerPoint, the audit from Smith Schaefer found no issues with St. Paul Park city finances.
"We did issue our opinion, an unmodified opinion, that means we did not find any issues with anything that was not in compliance with generally accepted accounting principles in the United States of America," Miller said after greeting the council. "That's the highest level of attestation we can provide on financial statements."
That wasn't all.
"We're also required to test for financial compliance when we do an audit statement and we did not note any legal exceptions in our procedures," he said.
Miller then covered different types of funds, with property tax revenues increasing roughly seven percent in 2024 and eight percent the year prior, largely due to an increase in the city tax levy. Local government aid had increased by 16 percent in 2024 to over $797,000, representing roughly 15 percent of city revenues outside transfers and bond proceeds.
Also in view was a slide on government fund revenues, putting city revenues side by side to compare.
From there it was into expenses, starting with the general government.
"This represents about 18 percent of total revenues when you exclude capital projects and debt service," Miller said of the $737,294 total, a five percent or $37,525 increase from 2023.
Next up was public safety expenditures, comprising 47 percent of city expenditures outside capital projects or debt service, coming in at approximately $1.9 million. The figure represents an eight percent increase from 2023, due in part to increased salary and related employee costs.
Also included were highways and streets at $1.084 million or 27 percent of city expenditures in 2024. The figure represents a 14 percent increase from 2023, largely due to engineering services on the Third Street improvement project. The final expenditure category excluding capital projects and debt service was Parks and Recreation.
"Parks and rec is the final department," Miller said. "It totaled about $304,000 in 2024, a nine percent increase due primarily to repairs and maintenance expenditure increases in the current year."
Using bar and pie charts to summarize the information given, it was into the general fund reserve.
"A very healthy general fund balance for the city," he said of the general fund reserve of $2,789,540. "It was 80 percent of current year expenditures."
The state auditor recommends a general fund reserve balance totaling at least 35 to 50 percent of expenditures. Among the reasons are cash flow timing differences affecting when funds are delivered as well as unanticipated expenses. Among the benefits are help to the city's bond rating and investment earnings to the city, the reserve serving as a rainy day fund for the city.
Covering debt service next, Miller said that, "all payments being made by the city are being made timely," with total bonds and notes payable as of Dec. 31, 2024 standing at $4.534 million.
Major capital projects in 2024 meanwhile included the street sweeper and SCBA (Self Contained Breathing Apparatus) purchases, as well as street expenses.
Covering enterprise funds next, the audit shared information on the water utility, operating at a net loss before revenue transfers and capital contributions.
“So just something to keep an eye on,” he said. "As you go on you might need to consider raising utility fund rates if you continue to have operating losses. But you do have significant balances so there's nothing to be concerned about presently."
The sewer utility fund was similar, a small net loss for the year before transfers and capital contributions. Water and sewer service is supported primarily by rate payers, with other incomes sources including cell tower rental income, intergovernmental revenue (payments received from other government units), investment earnings, and special assessments.
"Over the years there's been large increases in operating expenses," he said. "And that's mainly due to maintenance types of expenses and engineering fees. And the net position balances are all positive, so again, healthy balances but just something to keep in mind if you continue to have operating losses in the funds." Miller said that city staff had been "very helpful" in ensuring the audit was done in a timely fashion. "With that I will open it up for questions."
Council member Jeff Swenson had a comment and a question.
“He answered actually did a very nice job,” Swenson said. “No deficiencies, no weaknesses?” he asked.
“No, we didn’t note any this year,” Miller said. “In the past we’ve discussed segregation of duties. It’s very difficult for any of our clients, regardless of size to segregate duties. Every single control standpoint duty.” Segregation of duties divides tasks among staff to give a clear line of accountability, should things be amiss. “We feel like the city has done enough in that area to try to segregate as much as possible…you’re not going to be perfect, but you do have compensating controls in place to prevent things from happening. Frankly, I know you would prefer to have full internal staff to help out, but having that outside staff with ABDO helping out was a benefit as well in that regard. No concerns as noted in our audit.”
Swenson had a followup question.
“It was two years ago or last year tracking of capital assets was an issue. Is that no longer?” He asked.
Miller replied that part of the firm’s testing was looking for assets that should have been capitalized but hadn’t been. No such unrecorded assets had been found.
“Based on the information we received we didn’t find anything additional to record,” he said of the present.
Also in items from the July 21 St. Paul Park Council, council members approved a grading permit for Geneva Meadows, allowing for site grading at the planned new neighborhood of single-family homes to be located off 18th Avenue and Geneva. Presented by city planner Nate Sparks, the agreement allows Lennar to move forward with grading, a letter of credit allowing the city to step in and clean the site up if the development doesn’t go through. The city of St. Paul Park previously approved a preliminary plat at its June 16 Council meeting, with more review before final plat approval is made.
Finally in news from St. Paul Park, the city has a new finance director. Approved at a special meeting June 30 Dawn Monahan will replace Melody Santana-Marty, who resigned earlier this year. The city has also extended an offer of employment to Hugo McPhee for the open city administrator position, following the interview of four candidates and a special council meeting July 14.