#5 Financial statement for December 2010ACCOUNTING DIVISION MEMORANDUM
February 22, 2011
TO: City Council
FROM: Patty Lynch, Comptroller
SUBJECT: Financial Statement for the Month of December 2010
The City prepares its Financial Statements in accordance with generally accepted
accounting principals using the modified accrual method of accounting and is audited
annually by Baker Tilly Virchow, Krause & Company, LLP. As the auditors will begin their
fieldwork at the end of March, the information presented in the December report will be
subject to auditor adjusting entries.
Key operating funds include the General Fund, Water and Wastewater Utilities, and
Sanitation. A summary of their performance to budget, as compared a three-year average,
is presented in the following graphs.
EXPENDITURE SUMMARY
The graph below indicates expenditures are being made according to budget. Sanitation
prior year expenditures trend exceeds budget due to DNR license fee expense
corresponding to tonnage above budgeted amounts.
Year-To-Date December ExpendituresCompared to Three-Year Average
Current YTD
3 Yr. Avg.
140%
120%
Percent of Total Budget
100%
80%
60%
40%
20%
0%
General FundWater -Wastewater -
OperatingOperatingSanitation
December 2010 Financial Statement
February 22, 2011 Page 2
REVENUE SUMMARY
The graph below indicates General Fund revenue has been earned as anticipated. Water
Utility sales were 13.7% less than budgeted in 2010. The Sanitary Lanfill tonnage
collected was at the 2010 budget, but the prior year trend shows tonnage 26% above
budget amounts.
Year-To-Date December RevenuesCompared to Three-Year Average
Current YTD
3 Yr. Avg.
140%
120%
Percent of Total Budget
100%
80%
60%
40%
20%
0%
General FundWaterWastewaterSanitation
Other items of interest in the Financial Statement are as follows:
Proprietary Funds (pages 4)
Water Utility—The Utility was able to generate net operating income of $219,109,
compared to $125,232 from the year before. The Utility’s 2010 rate of return on
investment was 2.20%. The low rate of return is due to the 13.7% water sales shortfall.
Wastewater Utility—In 2010, the Utility had net operating income of $3,294,117
compared to $1,085,566 in 2009. A 30.30% rate increase was implemented on
1/1/2010 in order to maintain the financial integrity of the utility and fund the
Wastewater Treatment plant renovations. In order to qualify for the Clean Water Fund
loan, rates to cover the debt service had to be in place with the application. Interest
payments on the Treatment Plant loan begin in 2011, and principal payments will start
in 2012.
Stormwater Utility—The Stormwater Utility was able to generate net operating income
of $784,116 compared to $241,170 in 2009. The net operating income is used to pay
debt service requirements. The unrestricted cash has a deficit of $108,186 at 12/31/10.
This deficit is due primarily because revenue is billed on a quarterly basis after
expenditures have been made.
December 2010 Financial Statement
February 22, 2011 Page 3
Transit System— Transit required an operating subsidy from the General Fund of
$681,618 which is $16,382 less than the 2010 budget. The Transit Federal Operating
Grant was $62,981 higher than budgeted. This was offset by under realized revenue in
the Beloit-Janesville Express consortium ($9,452) and the State Operating Grant
($11,875), and an overage in charges for Para Transit services ($24,150). Transit
reports a negative cash balance of $349,069 due to the timing of grant
reimbursements. State and Federal Grants Receivable are $386,240 at 12/31/10.
The Vehicle Operations and Maintenance Fund operating expenditures budget is over
expended by $263,285 primarily due to vehicle maintenance parts ($85,691), tires
($56,054) and contracted repairs ($75,496) exceeding the budgeted amounts. A
transfer was made to the Capital Projects fund in the amount of $1,013,300 for the
purchase of VOM capital assets.
The Insurance Fund has net operating income, before the incurred but not reported
claims liability (IBNR) adjustment, of $85,559. The City incurred favorable liability and
property claims experience in 2010. The budgeted transfer of $300,000 was made from
health insurance surplus to contributing funds.
Special Revenue Fund Balance (page 5)
The Uncompleted Projects special revenue fund has been closed and the balance of
the fund ($79,820) was transferred to the General Fund. This fund was closed to
comply with the Governmental Accounting Standard Board (GASB) Statement No. 54
on Fund Balance Reporting and Governmental Fund Type Definitions. The fund
balance in the Allan Building Special Account ($210,634) was also closed and
transferred to the General Fund to be meet GASB 54 requirements.
The Hedberg Public Library budget indicates unrealized revenue of $65,793, 1.6% less
than the 2010 budget. The actual expenditures were $104,446, or 2.7%, less than
budget. The Library’s 2010 budget included the usage of $50,000 of applied funds. The
actual fund balance decline was $11,347 because of favorable expenditure budget
variances. Hedberg Public Library has an ending fund balance at 12/31/10 of
$425,144.
JATV 12 over realized the operating revenue budget by $16,499 in 2010. Operating
expenditures were $44,695 under the 2010 budget level. At year-end JATV has an
ending equity of $327,729, of which $243,626 is designated for the purchase of capital
items.
The Sanitation Fund under realized the operating revenue budget by $788,053, or
10.2%, due to a not pursuing a disposal contract with Pelletier Waste and not
implementing a bag trash collection fee. Operating expenses were under budget by
$425,753 primarily related to lower DNR environmental and recycling fees related to
landfill tonnage. Transfers were made from surcharge reserve to the Landfill –
RFIS/RDRA ($49,339), to the Long-term Care of Site 3023 ($226,000), to pay
Sanitation debt service ($266,894), and to the General Fund ($450,000). The fund
balance decreased by $664,998, for an ending undesignated balance of $1,416,540.
December 2010 Financial Statement
February 22, 2011 Page 4
At December 31, 2010, the TIF districts have a combined deficit fund balance of
$512,855, compared to the combined deficit fund balance of $1,768,793 at 12/31/2009.
TIF projections indicate the districts will reach a positive fund balance before they
expire.
Landfill long-term care of site #3023 ($206,237) will be reimbursed by an insurance
policy we have in place for post closure care.
Funds are on deposit for the long-term care of the new landfill with the Wisconsin
Department of Natural Resources. The balance is $1,665,375 at December 31, 2010.
Capital Projects Fund (page 6)
The Reuther Way Project has a deficit balance of $254,248 at 12/31/10. Funding will
be provided by receipt of $215,805 deferred revenue from the State of Wisconsin and
the balance by General Obligation note issue.
The City incurred expenditures in conjunction with road projects on Highway 11 from
Wright Road to Highway 14 ($186,800). These costs will be funded with future special
assessments or General Obligation note issue.
General Fund Unreserved Balance (pages 7-10)
The Statement of General Fund Budget Receipts (page 7) indicates that the City received
$604,345, or 1.5%, more than the amount budgeted for 2010. This net over-realization of
revenue was primarily generated from the following revenue accounts:
Water Utility Taxes $95,924
Cable TV Licenses $72,561
Community Development Permits $159,595
Interest on General Investments -$150,389
Advertising on City Property -$100,000
Fire Department Service Charges $174,373
Operating Transfer In $388,420
The Water Utility Tax exceeded the budget by $95,924, or 9.2%, due to an increase in the
net effective tax rate where none was projected.
Cable TV Licenses increased 11.3% from 2009. The revenue collected was $72,561 more
than the 2010 budget.
Interest on General Investments of $374,611 was $150,389 less than the budget of
$525,000. The interest earned on investments was at a rate of .85% in 2010.
The City did not receive revenue related to Advertising on City Property and was $100,000
under the 2010 budget.
December 2010 Financial Statement
February 22, 2011 Page 5
Community Development Permits over realized the budget by $159,595, or 55%. While the
permits for new residential homes were at a low of 49 permits, the addition/remodel
permits were higher than past years with approximately $35 million dollars of
improvements. The largest single factor for exceeding the budgeted revenue is the
commercial permits related to the new Dean St Mary’s Hospital and Clinic ($74,084).
We experienced a positive variance of total Fire Department Service Charges in the
amount of $174,373, or 12.1%.
Transfers In is comprised of TIF #3’s repayment of funds previously advanced by the
General Fund ($236,236), a budgeted transfer from the Sanitation Fund ($450,000), a
budgeted transfer from the Health Insurance Fund ($211,730), and transfers from closed
Allan Building and Uncompleted Projects special revenue accounts ($290,454). The TIF #3
transfer is the seventh in a series of eight annual payments. The remaining transfer
anticipated from TIF #3 is approximately $150,000.
Council Policy Statement #68—Investment of City Funds requires that the Administration
submit an annual investment report. Please find attached the report that recaps our
investment program results for 2010 (Exhibit 1).
Council Policy Statement #73—Accounts Receivable requires that the Administration
submit an annual report on the progress of delinquent account collections. Please find
attached the 2010 annual report for accounts receivable write-offs (Exhibit 2).
After applying a Supplemental Appropriation of $50,000 as approved in Resolution #2011-
772, the Statement of 2010 Budget Appropriation Expenditures indicates that actual
expenditures were $560,331, or 1.35%, less than the amount appropriated. After the
supplemental appropriation to fund Leisure Services, the resulting program budgets are in
accordance with the General Fund’s appropriation resolution. The table below shows the
unexpended balances at December 31, 2010.
Amount Percentage
Unexpended Unexpended
General Government
$223,956 6.57%
Public Safety
(including Police and Fire) 279,100 1.25%
Public Works
(including Public Works
Administration, Engineering, Street Maintenance
1,244 0.02%
& Repairs, Public Buildings and Parking Facilities,
Traffic Management, Transit Operating Subsidy
and Sanitation Fund Subsidy)
Leisure Services
(including Leisure Services
Administration, Senior Citizens Center, Aquatics,
4,656 0.16%
Youth and Adult Recreation, Parks and Ice
Skating Center)
Community Development
(including Economic
17,989 1.25%
Development, Community Development and
December 2010 Financial Statement
February 22, 2011 Page 6
Property Maintenance)
Other
(including Economic Adjustments,
Employee Fringe Benefits and Insurance,
29,191 3.10%
Contingency Account and Special Assessments
Transfer)
General City Debt Service
4,195 0.08%
TOTAL
$560,331 1.35%
Please find attached a General Fund Equity Analysis, which provides information
concerning the status of our Fund Balance for the years 2006-2010 (Exhibit 3). The
General Fund Balance has increased by $264,676 for a total fund balance of $7,494,947
at December 31, 2010, of which $6,981,178 is Unreserved Fund Balance.
A representative of the Administrative Services Department will be available at the Council
th
Meeting on February 28 to respond to any questions Council may have relative to these
reports. Once Council is satisfied, acceptance of the Financial Statement by consent and
placing them on file would be in order.
/Attachments
cc: Jacob J, Winzenz, Director of Administrative Services/Assistant City Manager
Eric J. Levitt, City Manager