Details for Public Notice August 10,


Public Notice August 10, 2016 Special Meeting City Council Minutes 3:00 P.M. A special meeting of the City Council of International Falls, Minnesota was held in the Council Chambers of the Municipal Building on the 10th day of August 2016 at the hour of 3:00 P.M. MEMBERS PRESENT: Councilors Briggs, Droba, Jaksa, Kalar, and Mayor Anderson MEMBERS ABSENT: None. Mayor Anderson introduced Jon Archer to the City Council whom was present via conference call from their office in St. Cloud, MN. The purpose of the meeting was to review the Audit of Financial Statements dated December 31, 2015. Mr. Archer addressed the Council and reviewed the major highlights and findings of the audit report for the year ended December 31, 2015. Mr. Archer stated the opinion of his company was a clear opinion that the financial statements fairly presented the financial position of the City and its component units in all material respects and in accordance "...with accounting principles generally accepted in the United States of America." Councilor Jaksa raised several questions and comments related to the significant number of audit adjustments, some of which were based upon the changes from a cash basis to a modified accrual basis, the change in accounting principle as part of the Government Accounting Standards Board (GASB) Statement No. 68 and 71 requirements, and prior period adjustment. She also raised questions about compensable absences that were accruing. Discussion ensued. Mr. Archer further reviewed the budget to actual General Fund revenues and expenditures, Airport appropriation, intergovernmental revenues for State Fire Aid, the increase in the fund balance, and the General Fund balance of 58% of annual expenditures at year end 2015. He said it is important to maintain a substantial fund balance given the requirement to have an approved referendum to issue debt. He also reviewed the Ambulance Fund, EDA Fund statements as a component unit of the City, Water and Sewer Proprietary Fund, and fiduciary funds including those for the Airport Commission, Recreation Commission, and the North Koochiching Area Sanitary Sewer District. He suggested a separate checking account be established for the Airport Commission to raise awareness of the cash balance for the benefit of both the City Council and County Board. Mayor Anderson noted the Airport Commission has been working closely with the Minnesota Office of Aeronautics to expedite grant re-imbursement requests. Councilor Jaksa stated she would like to see an accounting of the operations expenses separate from the capital project expenses for the Airport. Mr. Archer continued by referencing the new accounting principle being applied to separate Governmental and Business-Type activities as shown on page 15. He also discussed state-wide PERA pension liabilities and the local Fire Department Relief Association as a fully funded, net asset. In summary, Mr. Archer noted the findings on internal control procedures and other comments were the same as in past years and similar for those of other small cities. When asked, he responded the City was in a strong financial position, but he noted that the City Council should be careful to maintain substantial fund balances given the Home Rule Charter debt limitations and the future liability of compensable absence expenses at the time of employee retirements. Mr. Archer briefly reviewed the comments and findings in the Governance Report related to the accounting practices, the adoption of the GASB Statement No. 68 and No. 71, and the audit adjustments recorded at year end. He also discussed the management advice letter that was not required, but provided for added value. In discussion, City Administrator Anderson explained the City was initiating the slow process of separating assets so the Water and Sewer Fund could be split into two, separate funds as recommended and discussed last year. Mr. Archer recommended that the City also consider imposing a more stringent penalty if water and sewer utility payments are delinquent by more than one month. Mayor Anderson thanked Mr. Archer for his presentation of the audit findings prior to ending the phone call. MOTION by Councilor Kalar to approve the City of International Falls Audited Financial Statements for the year ended December 31, 2015 and Report to the Members of Governance as prepared by the auditing firm of Schlenner Wenner & Co. Motion seconded by Councilor Droba and carried unanimously. MOTION by Councilor Droba to authorize submittal of the Annual Financial Reporting Form to the Office of the State Auditor as prepared by Schlenner Wenner & Co. Motion seconded by Councilor Briggs and carried unanimously. MOTION by Councilor Kalar to approve publication of a summary of the financial statements in the official newspaper, The Journal. Motion seconded by Councilor Droba and carried unanimously. City Administrator Anderson indicated the Human Resources Committee had no recommendations, but would be meeting again the afternoon of August 15, 2016 to consider the Finance Officer position. He said no one was selected from the applicants that responded to the advertisement. Mayor Robert W. Anderson adjourned the meeting at 3:58 Robert W. Anderson, Mayor ATTEST: Kenneth R. Anderson, City Administrator The Journal August 20th, 2016