· Combining Statement of Revenues, Expenditures and Changes in Fund Balances 113 . Nonmajor Special Revenue Funds . Combining Balance Sheet 114 . Combining Statement of Revenues,

City of Marshall Marshall, Minnesota

For the Year Ended December 31, 2016

Annual Financial Report

CITY OF MARSHALL MARSHALL, MINNESOTA

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED DECEMBER 31, 2016

THIS PAGE IS LEFT BLANK

INTENTIONALLY

CITY OF MARSHALL, MINNESOTA ANNUAL FINANCIAL REPORT

TABLE OF CONTENTS FOR THE YEAR ENDED DECEMBER 31, 2016

Page No. INTRODUCTORY SECTION Principal City Officials 7 FINANCIAL SECTION Independent Auditor's Report 11 Management’s Discussion and Analysis 15 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 28 Statement of Activities 30 Fund Financial Statements Governmental Funds Balance Sheet 34 Reconciliation of the Balance Sheet to the Statement of Net Position 37 Statement of Revenues, Expenditures and Changes in Fund Balances 38 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 41 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General, Tax Increment Financing and Sales/Lodging Tax Funds 42 Proprietary Funds Statements of Net Position 44 Statements of Revenues, Expenses and Changes in Net Position 46 Statements of Cash Flows 48 Fiduciary Funds Statement of Fiduciary Net Position 52 Statement of Changes in Fiduciary Net Position 53 Notes to the Financial Statements 55 Required Supplementary Information Schedule of Employer’s Funding Progress for Retiree Health Plan 106 Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability -

General Employees Retirement Fund 107 Schedule of Employer’s Public Employees Retirement Association Contributions - General Employees Retirement Fund 108 Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability - Public Employees Police and Fire Fund 109 Schedule of Employer’s Public Employees Retirement Association Contributions - Public Employees Police and Fire Fund 109 Schedule Employer’s Fire Relief Association Contributions 109 Schedule of Changes in the Fire Relief Association’s Net Pension Liability (Asset) and Related Ratios 110

Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet 112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 113 Nonmajor Special Revenue Funds Combining Balance Sheet 114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 116 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Small Cities Development Program Fund 118 Community Education Drivers Training Fund 119 Emergency Response and Industrial Training Center Fund 120 ASC Arena Fund 121

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INTENTIONALLY

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CITY OF MARSHALL, MINNESOTA ANNUAL FINANCIAL REPORT

TABLE OF CONTENTS - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2016

Page No. Combining and Individual Fund Financial Statements and Schedules - Continued Nonmajor Capital Projects Funds Combining Balance Sheet 122 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 126 General Fund Comparative Balance Sheets 131 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 133 Debt Service Funds Combining Balance Sheet 140 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances 144 Economic Development Authority Funds Combining Balance Sheet 148 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances/Net Position 149 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Economic Development Authority Fund 150 EDA Parkway Housing Fund 151 Marshall-Lyon County Library Funds Combining Balance Sheet 152 Reconciliation of the Balance Sheet to the Statement of Net Position 153 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances/Net Position 154 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities 155 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 156 Summary Financial Report Revenues and Expenditures for General Operations - Governmental Funds 157 OTHER REQUIRED REPORTS Independent Auditor’s Report on Minnesota Legal Compliance 161 Independent Auditor’s Report in Internal Control Over Financial Reporting and On Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 162 Schedule of Findings and Responses 164

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INTENTIONALLY

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INTRODUCTORY SECTION



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INTENTIONALLY

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CITY OF MARSHALL, MINNESOTA

PRINCIPAL CITY OFFICIALS


Name Title Term Expires

Robert Byrnes Mayor 01/12/21

John DeCramer Council Member, Ward 1 01/07/19

Glenn Bayerkohler Council Member, Ward 1 01/12/21

Steven Meister Council Member, Ward 2 01/12/21

David Sturrock Council Member, Ward 2 01/07/19

Craig Schafer Council Member, Ward 3 01/07/19

James Lozinski Council Member, Ward 3 01/12/21

Nicholas Johnson City Administrator

Glenn Olson City Engineer/Director of Public Works

Brad Roos Utilities General Manager

Thomas Meulebroeck Finance Director (1/1-8/31/16)

Karla Drown Finance Director (9/1-12/31/16)

Jane DeVries City Clerk

David Parsons Assessor

Michelle Leininger Library Director

Rob Yant Director of Public Safety/Civil Defense Director

Dennis Simpson City Attorney

Scott VanDerMillen Community Services Director

Marc Klaith Fire Chief

Dean Coudron Public Works Superintendent

Bob VanMoer Wastewater Treatment Superintendent

Scott VanMoer Liquor Store Manager

Mark Farrell Housing Commission Director

Barbara Lipinski Adult Community Center Coordinator

Alex Peterson Media Communications Specialist

Nicholas Johnson Housing Authority Director

Nicholas Johnson Economic Development Authority Executive Director

Abdo, Eick & Meyers, LLP Auditor

ELECTED

APPOINTED

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INTENTIONALLY

-8-

FINANCIAL SECTION



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INTENTIONALLY

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INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Marshall, Minnesota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the City of Marshall, Minnesota (the City), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the following discretely presented component units: Marshall Municipal Utilities and the Marshall Housing Commission. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the discretely presented component units mentioned above, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the City as of December 31, 2016, and the respective changes in financial position and cash flows, where applicable, thereof and the budgetary comparisons for the General fund and Tax Increment Financing and Sales/Lodging Tax special revenue funds for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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INTENTIONALLY

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Other Matters Report on Summarized Comparative Information We have previously audited the City's 2015 financial statements, and we expressed unmodified opinions on the respective financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information in our report dated June 20, 2016. In our opinion, the summarized comparative information presented herein for the respective proprietary fund financial statements as of and for the year ended December 31, 2015, is consistent, in all material respects, with the audited financial statements from which it has been derived. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis starting on page 15 and the Schedules of Employer’s Share of the Net Pension Liability, the Schedule of Changes in Net Pension Liability (Asset) and Related Ratios, the Schedules of Employer’s Contributions and the Schedule of Funding Progress for Retiree Health Plan starting on page 106 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section and combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 27, 2017, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

ABDO, EICK & MEYERS, LLP Mankato, Minnesota June 27, 2017

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INTENTIONALLY

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Management’s Discussion and Analysis

As management of the City of Marshall, Minnesota, (the City), we offer readers of the City’s financial statements this narrative

overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2016.

Financial Highlights

The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close

of the most recent fiscal year by $110,928,044 (net position). Of this amount, $13,486,533 (unrestricted net position) may be

used to meet the City’s ongoing obligations to citizens and creditors.

The City’s total net position increased by $4,007,105, compared to an increase of $5,142,394 in the previous year. Of this

increase, business-type activities (enterprise funds) had an increase of $968,980 and governmental activities had an increase

of $3,038,125. The major factor in the change in governmental activities was due to an overall decrease in governmental

expenses of $131,189, while revenues continued to exceed expenses. Additionally, capital grants and contributions totaled

$5,824,870 for the year. The major factor in the change in business-type activities was due to an overall increase of $687,603

in revenues while expenses decreased by $183,799.

As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of

$29,267,052, an increase of $207,158 in comparison with the prior year. Approximately 38.5 percent of this total amount,

$11,255,233, is available for spending at the City’s discretion, but has been assigned for specific purposes. A balance of

$3,958,448 exists in unassigned fund balance at year end, which is available for spending at the City’s discretion. The

remainder of fund balance is classified in accordance with GASB Statement No. 54 as follows: 1) nonspendable - $131,276;

2) restricted - $16,620,484; committed - $1,260,059; and 4) assigned - $7,296,785.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial

statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the

financial statements. This report also contains other supplemental information in addition to the basic financial statements themselves.

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The financial statements also include notes that explain some of the information in the financial statements and provide more detailed

data. The statements are followed by a section of combining and individual fund financial statements and schedules that further

explains and supports the information in the financial statements. Figure 1 show how the required parts of this annual report are

arranged and relate to one another. In addition to these required elements, we have included a section with combining and individual

fund financial statements and schedules that provide details about nonmajor governmental funds, which are added together and

presented in single columns in the basic financial statements.

Figure 1

Required Components of the

City’s Annual Financial Report

Management's

Discussion and

Analysis

Basic Financial

Statements

Required

Supplementary

Information

Government-wide

Financial

Statements

Fund

Financial

Statements

Notes to the

Financial

Statements

Summary Detail

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Figure 2 summarizes the major features of the City’s financial statements, including the portion of the City government they cover and

the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the

structure and contents of each of the statements.

Figure 2

Major Features of the Government-wide and Fund Financial Statements

Fund Financial Statements

Government-wide

Statements

Governmental Funds Proprietary Funds

Scope Entire City government

(except fiduciary funds) and

the City’s component units

The activities of the City that

are not proprietary or

fiduciary, such as police, fire

and parks

Activities the City operates

similar to private businesses,

such as the water and sewer

system

Required financial

statements Statement of Net

Position

Statement of Activities

Balance Sheet

Statement of Revenues,

Expenditures, and

Changes in Fund

Balances

Statement of Net Position

Statement of Revenues,

Expenses and Changes in

Net Position

Statement of Cash Flows

Accounting basis and

measurement focus

Accrual accounting and

economic resources focus

Modified accrual accounting

and current financial

resources focus

Accrual accounting and

economic resources focus

Type of asset/liability

information

All assets and liabilities, both

financial and capital, and

short-term and long-term

Only assets expected to be

used up and liabilities that

come due during the year or

soon thereafter; no capital

assets included

All assets and liabilities, both

financial and capital, and

short-term and long-term

Type of deferred

outflows/inflows of

resources information

All deferred

outflows/inflows of

resources, regardless of

when cash is received or

paid.

Only deferred outflows of

resources expected to be

used up and deferred inflows

of resources that come due

during the year or soon

thereafter; no capital assets

included

All deferred

outflows/inflows of

resources, regardless of

when cash is received or paid

Type of inflow/out flow

information

All revenues and expenses

during year, regardless of


Revenues for which cash is

received during or soon after

the end of the year;

expenditures when goods or

services have been received

and payment is due during

the year or soon thereafter

All revenues and expenses

during the year, regardless of


Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad

overview of the City’s finances, in a manner similar to a private-sector business.

The statement of net position presents information on all of the City’s assets and deferred outflows of resources and liabilities and

deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve

as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All

changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of

related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in

future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and

intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of

their costs through user fees and charges (business-type activities). The governmental activities of the City include general

government, public safety, public works, culture and recreation, economic development, airport and interest on long-term debt. The

business-type activities of the City include wastewater treatment, surface water management, and a municipal liquor store operation.

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The government-wide financial statements include not only the City itself (known as the primary government), but also a legally

separate Marshall Housing Commission, Marshall Municipal Utilities, Economic Development Authority and Marshall-Lyon County

Library, all for which the City is financially accountable. Financial information for these component units are reported separately

from the financial information presented for the primary government itself.

The government-wide financial statements can be found starting on page 28 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been

segregated for specific activities or objectives. The City, like other State and local governments, uses fund accounting to ensure and

demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories:

governmental funds, proprietary funds and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities

in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund

financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources

available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing

requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the

information presented for governmental funds with similar information presented for governmental activities in the government-wide

financial statements. By doing so, readers may better understand the long-term impact by the government’s near-term financing

decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in

fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City maintains 60 individual governmental funds, 24 of which are Debt Service funds, which are considered one fund for

reporting purposes. Information is presented separately in the governmental fund balance sheet and in the governmental fund

statement of revenues, expenditures and changes in fund balances for the General fund, the Tax Increment Financing fund, the

Sales/Lodging Tax fund, the Debt Service fund and the 2013 Amateur Sports Center fund, all of which are considered to be major

funds. Data from the other nonmajor governmental funds are combined into a single, aggregated presentation. Individual fund data

for each of these nonmajor governmental funds is provided in the form of combining statements or schedules elsewhere in this report.

The City adopts an annual appropriated budget for its General fund and certain special revenue funds. Budgetary comparison

statements have been provided for the General fund and the Tax Increment Financing and Sales/Lodging Tax special revenue funds to

demonstrate compliance with these budgets.

The basic governmental fund financial statements can be found starting on page 34 of this report.

Proprietary funds. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented

as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its electric,

water, wastewater treatment, surface water and liquor store operations. The electric and water operations are accounted for in the

Public Utilities Commission (PUC).

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The

proprietary fund financial statements provide separate information for each of the enterprise funds which are considered to be major

funds of the City.

The basic proprietary fund financial statements can be found starting on page 44 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds

are not reflected in the government-wide financial statements because the resources of those funds are not available to support the

City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The basic fiduciary fund financial statements can be found starting on page 52 of this report.

Notes to financial statements. The notes provide additional information that is essential to a full understanding of the data provided

in the government-wide and fund financial statements. The notes to the financial statements can be found starting on page 55 of this

report.

Required supplementary information. In addition to the basic financial statements and accompanying notes, this report also presents

certain required supplementary information concerning the City of Marshall’s share of net pension liabilities for defined benefit plans

and schedules of contributions. The required supplementary information can be found on page 106 of this report.

Other information. The combining statements referred to earlier in connection with nonmajor governmental funds are presented

following the notes to financial statements. Combining and individual fund financial statements and schedules can be found starting

on page 112 of this report.

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Government-wide Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City,

assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $110,928,044 at the close of the

most recent fiscal year.

A large portion of the City’s net position (61.9 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and

equipment); less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide

services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital

assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other

sources, since the capital assets themselves cannot be used to liquidate these liabilities.

City of Marshall’s Summary of Net Position

Restated Increase Increase

2016 2015 (Decrease) 2016 2015 (Decrease)

Current and

other assets 41,498,479$ 43,647,668$ (2,149,189)$ 15,908,151$ 10,380,443$ 5,527,708$

Capital assets 86,642,247 79,880,023 6,762,224 35,251,234 36,497,542 (1,246,308)

Total assets 128,140,726 123,527,691 4,613,035 51,159,385 46,877,985 4,281,400

Deferred outflows of resources 5,738,676 1,029,781 4,708,895 437,208 103,786 333,422

Long-term liabilities

outstanding 47,198,394 39,701,382 7,497,012 23,480,144 19,813,841 3,666,303

Other liabilities 1,860,089 3,210,420 (1,350,331) 560,948 545,555 15,393

Total liabilities 49,058,483 42,911,802 6,146,681 24,041,092 20,359,396 3,681,696

Deferred inflows of resources 1,288,788 1,151,664 137,124 159,588 195,442 (35,854)

Net position

Net investment

in capital assets 50,776,283 46,960,876 3,815,407 17,930,020 18,530,949 (600,929)

Restricted 26,557,610 27,530,542 (972,932) 2,177,598 2,143,830 33,768

Unrestricted 6,198,238 6,002,588 195,650 7,288,295 5,752,154 1,536,141

Total net position 83,532,131$ 80,494,006$ 3,038,125$ 27,395,913$ 26,426,933$ 968,980$

Governmental Activities Business-type Activities

An additional portion of the City’s net position (25.9 percent) represents resources that are subject to external restrictions on how they

may be used. The remaining balance of unrestricted net position (12.2 percent) may be used to meet the City’s ongoing obligations to

citizens and creditors.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the City

as a whole, as well as for its separate governmental and business-type activities.

There was an increase of $968,980 in net position reported in connection with the City’s business-type activities. This increase was a

result of the following funds and profits: Municipal Liquor Store ($148,401), Surface Water Management ($88,659) and Wastewater

Treatment ($731,920). The Municipal Liquor fund’s gross profit percentage is currently at 25.3 percent, higher than 22.6 percent in

2015.

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Governmental activities. Governmental activities increased the City’s net position by $3,038,125. Key elements of this increase are

described above and summarized as follows:

City of Marshall’s Changes in Net Position

Increase Increase

2016 2015 (Decrease) 2016 2015 (Decrease)

Revenues

Program revenues

Charges for services 2,819,429$ 2,637,362$ 182,067$ 10,677,805$ 9,930,992$ 746,813$

Operating grants and

contributions 887,293 634,582 252,711 - - -

Capital grants and contributions 5,824,870 8,407,284 (2,582,414) - 51,517 (51,517)

General revenues

Property taxes/tax increments 5,650,238 5,329,389 320,849 (27) 450 (477)

Franchise fees and other taxes 2,582,132 2,632,535 (50,403) - - -

Grants and contributions not

restricted to specific programs 3,301,154 3,302,667 (1,513) - - -

Unrestricted

investment earnings 83,690 316,084 (232,394) 27,469 41,335 (13,866)

Other 32,079 58,862 (26,783) 6,650 - 6,650

Total revenues 21,180,885 23,318,765 (2,137,880) 10,711,897 10,024,294 687,603

Expenses

General government 2,466,128 2,303,296 162,832 - - -

Public safety 4,718,817 4,116,959 601,858 - - -

Public works 5,693,687 5,619,558 74,129 - - -

Culture and recreation 2,441,035 3,514,153 (1,073,118) - - -

Economic development 334,059 199,377 134,682 - - -

Airport 1,708,644 1,792,370 (83,726) - - -

Interest on long-term debt 1,092,452 1,040,298 52,154 - - -

Wastewater treatment - - - 4,389,438 4,883,874 (494,436)

Surface water management - - - 913,354 832,416 80,938

Municipal liquor store - - - 4,128,063 3,898,364 229,699

Total expenses 18,454,822 18,586,011 (131,189) 9,430,855 9,614,654 (183,799)

Change in net position

before transfers 2,726,063 4,732,754 (2,006,691) 1,281,042 409,640 871,402

Transfers 312,062 1,020,632 (708,570) (312,062) (1,020,632) 708,570

Change in net position 3,038,125 5,753,386 (2,715,261) 968,980 (610,992) 1,579,972

Net position, January 1 as restated (Note 10) 80,494,006 74,740,620 5,753,386 26,426,933 27,037,925 (610,992)

Net position - December 31 83,532,131$ 80,494,006$ 3,038,125$ 27,395,913$ 26,426,933$ 968,980$

Business-type ActivitiesGovernmental Activities

Property tax levies increased by $273,237 or (5.1 percent) during the year.

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The following graphs depict various governmental activities and show the revenues and expenses directly related to those activities.

Expenses and Program Revenues - Governmental Activities

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

General

government

Public safety Public works Culture and

recreation

Economic

development

Airport Interest on

long-term debt

Expenses Program Revenues

Revenues by Source - Governmental Activities

Charges for

services

13.2%

Operating grants

and contributions

4.2%

Capital grants

and contributions

27.5%Unrestricted

grants and

contributions

15.6%

Property taxes/tax

increments

26.7%

Other taxes

12.2%

Unrestricted

investment

earnings

0.4%

Other

0.2%

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Business-type activities. Business-type activities increased the City’s net position by $968,980. Key elements of this increase are as follows:

• Overall gross profit for increased by $481,805 in the business-type funds while operating expenses increased by $87,590.

• Transfers out decreased by $1,191,081 in current year.

Expenses and Program Revenues - Business-type Activities

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Wastewater Treatment Surface Water Management Municipal Liquor Store

Expenses Program Revenues

Revenues by Source - Business-type Activities

Charges for services99.6%

Unrestricted investment earnings

0.3%

Other0.1%

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Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The General fund is the chief operating fund of the City. At the end of the current year, the fund balance of the General fund was $6,866,113. As a measure of the General fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 50.5 percent of fund expenditures, while total fund balance also represents 62.3 percent of that same amount. The fund balance of the City’s General fund decreased by $66,359 during the current fiscal year. The key factor in this decrease was a decrease in revenues of $259,321 an increase in expenditures of $417,894, which were offset by other financing sources of $333,607. The Tax Increment Financing fund has a total fund balance of $4,396,400. The net increase in fund balance during the current year in this fund was $31,985. The key factors in this increase relate to a decrease in transfers out. Prior year had a series of transfers totaling $1,259,708 to capital projects funds for capital improvements. Current year only had a total of $354,478 in transfers out. The Sales/Lodging Tax fund has a total fund balance of $1,605,768. The net decrease in fund balance during the current year was $54,808. The decrease was mainly due to transfers out exceeding sales and lodging tax collections for the year. The Debt Service fund has a total fund balance of $5,051,876, all of which is restricted for the payment of debt service. The net decrease in fund balance during the current year in the Debt Service fund was $114,988. Major factors in this decrease were due to a decrease in tax and special assessment revenues. The 2013 Amateur Sports Center fund has a total fund balance of $2,513,127. The net decrease in fund balance during the current year in this fund was $396,069 mainly due to spending down bond proceeds and grants related to the project. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the enterprise funds at the end of the year amounted to $7,288,295. The total increase in net position for the funds was $968,980. Other factors concerning the finances of this fund have already been addressed in the discussion of the City’s business-type activities. General Fund Budgetary Highlights The City’s General fund budget had no amendments during the year. The budget called for a decrease in fund balance of $25,000. Budget expectations exceeded actual revenues by $98,350 and the expenditure budget was overspent by $50,444. Other financing sources (uses) exceeded expectations by $6,547. The net result was a decrease to the General fund balance of $66,359 in 2016.

-23-

Capital Asset and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business type activities as of December 31, 2016 amounts to $121,893,481 (net of accumulated depreciation). This investment in capital assets includes land, structures, improvements, machinery and equipment, park facilities, roads, highways and bridges. The total increase in the City’s investment in capital assets for the current fiscal year was 4.7 percent (a 8.5 percent increase for governmental activities and a 3.4 percent decrease for business-type activities). Some of the major capital asset events during the current fiscal year included the following: Governmental Activities Construction in progress includes the incomplete 2014, 2015 and 2016 Public Improvements and the Amateur Sports Center. The purchase of video boards and a new body for the 361 tanker. Business-type Activities Completion of the 2015 utility improvement project. The purchase of blue storage tanks, mixers, hatchets and controls in the Wastewater Treatment fund. Additional information on the City’s capital assets can be found in Note 3C starting on page 71 of this report.

City of Marshall’s Capital Assets (net of depreciation)

Increase Increase2016 2015 (Decrease) 2016 2015 (Decrease)

Land 7,101,262$ 7,025,765$ 75,497$ 512,872$ 753,240$ (240,368)$ Construction

in progress 32,714,340 26,292,946 6,421,394 876,326 911,760 (35,434) Buildings 5,252,561 5,565,892 (313,331) 2,399,364 2,449,273 (49,909) Improvements

other than buildings 11,041,765 12,026,714 (984,949) 9,969,296 10,812,432 (843,136) Systems and

infrastructure 25,960,982 25,727,799 233,183 20,613,431 20,720,695 (107,264) Equipment and

machinery 4,571,337 3,240,907 1,330,430 879,945 850,142 29,803

Total 86,642,247$ 79,880,023$ 6,762,224$ 35,251,234$ 36,497,542$ (1,246,308)$


-24-

Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $52,240,000. Of this amount, $3,305,000 is general obligation debt, $1,130,000 is tax increment debt, $2,810,000 is tax abatement debt, $26,395,000 is general obligation improvement debt and $18,600,000 is revenue debt. While all of the City’s bonds have revenue streams, they are all backed by the full faith and credit of the City.

City of Marshall’s Outstanding Debt

Increase Increase2016 2015 (Decrease) 2016 2015 (Decrease)

General obligationbonds 3,305,000$ 2,780,000$ 525,000$ -$ -$ -$

G.O. tax incrementbonds 1,130,000 1,220,000 (90,000) - - -

G.O. tax abatementbonds 2,810,000 - 2,810,000 - - -

G.O. specialassessment bonds 26,395,000 27,640,000 (1,245,000) - - -

G.O. revenue bonds - - - 18,600,000 15,265,000 3,335,000 Contract for deed 188,009 277,897 (89,888) - - -

Total 33,828,009$ 31,917,897$ 1,910,112$ 18,600,000$ 15,265,000$ 3,335,000$


The City’s total debt increased $5,245,112, or 11.1 percent during the current fiscal year. Long-term debt of $10,000,000 was issued during the year and $4,754,888 was retired during the year. Minnesota statutes limit the amount of net general obligation debt a City may issue up to 3 percent of the market value of taxable property within the City. Net debt is debt payable solely from ad valorem taxes. The current debt limitation for the City is $25,561,493, which is significantly in excess of the City’s outstanding general obligation debt of $3,305,000. The City of Marshall maintains an AA bond rating on its general obligation bonds from Standard and Poor’s. Marshall Municipal Utilities has also received an A rating from Standard and Poor’s. Additional information on the City’s long-term debt can be found in Note 3E starting on page 78 of this report. Economic Factors and Next Year’s Budgets and Rates

• The unemployment rate for Lyon County is currently 4.0 percent, which is an increase from a rate of 3.7 percent a year ago. This compares favorably to the State’s average unemployment rate of 4.1 percent and the national average rate of 4.5 percent.

• Property valuations within the City remain relatively stable.

• Inflationary trends in the region compare favorably to national indices.

All of these factors were considered in preparing the City’s budget for the 2017 fiscal year. Property taxes will increase by 5.1 percent from 2016 to 2017. Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, City of Marshall, 344 West Main Street, Marshall, Minnesota 56258.

-25-


INTENTIONALLY

-26-

GOVERNMENT-WIDE FINANCIAL STATEMENTS



-27-


STATEMENT OF NET POSITION

DECEMBER 31, 2016

Governmental Business-type

Activities Activities Total

ASSETS

Cash and temporary investments 29,785,925$ 6,887,803$ 36,673,728$

Escrowed funds - 3,735,586 3,735,586

Restricted assets - 3,818,484 3,818,484

Receivables

Interest - - -

Delinquent taxes 75,450 217 75,667

Accounts 188,646 555,202 743,848

Notes/leases 32,317 - 32,317

Special assessments 10,769,664 4,491 10,774,155

Intergovernmental 554,126 - 554,126

Due from component units/primary government 317,073 - 317,073

Internal balances (355,998) 355,998 -

Inventories - 507,935 507,935

Prepaid items 131,276 42,435 173,711

Land held for resale - - -

Capital assets

Nondepreciable 39,815,602 1,389,198 41,204,800

Depreciable, net of accumulated depreciation 46,826,645 33,862,036 80,688,681

TOTAL ASSETS 128,140,726 51,159,385 179,300,111

DEFERRED OUTFLOWS OF RESOURCES

Deferred pension resources 5,738,676 437,208 6,175,884

LIABILITIES

Accounts payable 517,403 267,056 784,459

Contracts payable 656,755 - 656,755

Due to other governments 4 24,484 24,488

Due to component units/primary government - - -

Accrued interest payable 473,776 248,835 722,611

Accrued salaries payable 127,350 20,573 147,923

Deposits payable - - -

Unearned revenue 84,801 - 84,801

Noncurrent liabilities

Due within one year 3,301,726 5,666,085 8,967,811

Due in more than one year 43,896,668 17,814,059 61,710,727

TOTAL LIABILITIES 49,058,483 24,041,092 73,099,575

DEFERRED INFLOWS OF RESOURCES

Deferred pension resources 1,288,788 159,588 1,448,376

NET POSITION

Net investment in capital assets 50,776,283 17,930,020 68,706,303

Restricted for

Debt service 15,006,648 2,177,598 17,184,246

City celebrations 19,064 - 19,064

Economic development 2,019,566 - 2,019,566

Tax increment financing 4,396,400 - 4,396,400

Capital projects 5,115,932 - 5,115,932

Unrestricted 6,198,238 7,288,295 13,486,533

TOTAL NET POSITION 83,532,131$ 27,395,913$ 110,928,044$

Primary Government

The notes to the financial statements are in integral part of this statement.

-28-

Marshall Marshall Economic

Municipal Housing Development Marshall-Lyon

Utilities Commission Authority County Library

26,248,324$ 436,196$ 1,649,073$ 432,930$

- - - -

6,591,213 28,262 - -

153,228 - - -

- - 1,885 9,589

5,043,944 7,726 250 10,000

24,568 - 665,069 -

- - - -

133,712 - 784 4,035

- - - -

- - - -

693,836 1,100 - -

133,724 11,669 - -

- - 1,311,852 -

1,125,602 514,965 - -

67,163,589 2,800,752 7,591 6,400,195

107,311,740 3,800,670 3,636,504 6,856,749

1,594,841 - - 209,966

3,317,974 12,124 43,563 16,172

- - - -

858,786 7,559 - -

- - 317,073 -

586,292 - - 7,724

185,964 6,939 - 9,186

84,091 24,316 - -

- 3,946 - 9,672

3,660,000 22,254 - 79,497

36,788,109 49,388 63,742 1,294,592

45,481,216 126,526 424,378 1,416,843

450,781 - - 76,641

32,859,191 3,315,717 7,591 5,705,823

6,591,213 - - 111,812

- - - -

- - 1,271,214 -

- - - -

- - - -

23,524,180 358,427 1,933,321 (244,404)

62,974,584$ 3,674,144$ 3,212,126$ 5,573,231$

Component Units


-29-


STATEMENT OF ACTIVITIES


Operating Capital

Charges for Grants and Grants and

Expenses Services Contributions Contributions

Primary government

Governmental activities

General government 2,466,128$ 141,861$ -$ -$

Public safety 4,718,817 293,206 689,190 1,015,243

Public works 5,693,687 1,403,708 33,190 470,706

Culture and recreation 2,441,035 787,639 52,151 4,320,400

Economic development 334,059 29,682 - 18,521

Airport 1,708,644 163,333 112,762 -

Interest on long-term debt 1,092,452 - - -

Total governmental activities 18,454,822 2,819,429 887,293 5,824,870

Business-type activities

Wastewater treatment 4,389,438 5,122,659 - -

Surface water management 913,354 1,005,404 - -

Municipal liquor store 4,128,063 4,549,742 - -

Total business-type activities 9,430,855 10,677,805 - -

Total primary government 27,885,677$ 13,497,234$ 887,293$ 5,824,870$

Component units

Marshall Municipal Utilities - Water 5,517,918$ 6,232,115$ -$ 2,265$

Marshall Municipal Utilities - Electric 48,866,841 50,194,273 - -

Marshall Housing Commission 926,487 378,996 288,973 149,251

Economic Development Authority 192,648 16,313 - -

Marshall-Lyon County Library 1,127,696 16,304 277,852 -

Total component units 56,631,590$ 56,838,001$ 566,825$ 151,516$

General revenues

Property taxes, levied for general purposes

Property taxes, levied for special purposes

Property taxes, levied for debt service

Tax increments

Sales tax

Lodging taxes

Franchise taxes

Grants and contributions not restricted to specific programs

Unrestricted investment earnings

Gain on sale of capital assets

Other revenues

Transfers

Total general revenues and transfers

Change in net position

Net position, January 1 as restated (Note 10)

Net position, December 31

Functions/Programs

Program Revenues


-30-

Marshall Marshall Economic

Governmental Business-type Municipal Housing Development Marshall-Lyon

Activities Activities Total Utilities Commission Authority County Library

(2,324,267)$ (2,324,267)$

(2,721,178) (2,721,178)

(3,786,083) (3,786,083)

2,719,155 2,719,155

(285,856) (285,856)

(1,432,549) (1,432,549)

(1,092,452) (1,092,452)

(8,923,230) (8,923,230)

- 733,221$ 733,221

- 92,050 92,050

- 421,679 421,679

- 1,246,950 1,246,950

(8,923,230) 1,246,950 (7,676,280)

716,462$ -$ -$ -$

1,327,432 - - -

- (109,267) - -

- - (176,335) -

- - - (833,540)

2,043,894 (109,267) (176,335) (833,540)

3,988,586 - 3,988,586 - - - -

- - - - - 122,707 581,409

1,022,097 (27) 1,022,070 - - - 47,001

639,555 - 639,555 - - - -

1,921,835 - 1,921,835 - - - -

243,780 - 243,780 - - - -

416,517 - 416,517 - - - -

3,301,154 - 3,301,154 - - - -

83,690 27,469 111,159 298,450 2,973 3,860 37,289

31,585 6,650 38,235 - - 66,414 250

494 - 494 558,431 1,483 - -

312,062 (312,062) - - - - -

11,961,355 (277,970) 11,683,385 856,881 4,456 192,981 665,949

3,038,125 968,980 4,007,105 2,900,775 (104,811) 16,646 (167,591)

80,494,006 26,426,933 106,920,939 60,073,809 3,778,955 3,195,480 5,740,822

83,532,131$ 27,395,913$ 110,928,044$ 62,974,584$ 3,674,144$ 3,212,126$ 5,573,231$

Component Units

Net (Expense) Revenue and Changes in Net Position

Primary Government


-31-


INTENTIONALLY

-32-

FUND FINANCIAL STATEMENTS



-33-


BALANCE SHEET

GOVERNMENTAL FUNDS

DECEMBER 31, 2016

101 230 256

Tax

Increment Sales / Lodging

General Financing Tax

ASSETS


Receivables

Delinquent taxes 55,700 - -

Accounts 116,627 - 4,162

Notes/leases - - -

Special assessments 15,387 - -

Intergovernmental 164,633 6,874 339,030

Due from other funds 529,975 - -

Due from component units - 317,073 -

Prepaid items 107,140 - -

TOTAL ASSETS 7,432,102$ 4,401,150$ 1,605,768$

LIABILITIES

Accounts payable 285,728$ 4,750$ -$

Contracts payable - - -

Due to other funds - - -

Due to other governments 4 - -

Accrued salaries payable 124,369 - -

Unearned revenue 84,801 - -

TOTAL LIABILITIES 494,902 4,750 -


Unavailable revenue - taxes 55,700 - -

Unavailable revenue - special assessments 15,387 - -

TOTAL DEFERRED INFLOWS OF RESOURCES 71,087 - -

FUND BALANCES

Nonspendable

Prepaid items 107,140 - -

Restricted for

Debt service - - -

City celebrations - - -

Economic development - - -

Tax increment financing - 4,396,400 -

Capital projects - - 1,605,768

Committed for


Capital projects - - -

Assigned for

Insurance reserve 69,684 - -

OPEB liability 259,716 - -

Operating expenditure contingency 777,443 - -

Cable franchise tax - PEG 33,563 - -

Forfeiture program - Police department 23,013 - -

Wellness program 9,016 - -

Unallocated health insurance premium 19,661 - -

Capital projects - - -

Drivers education - - -

ASC Arena - - -


Park improvements - - -

Unassigned 5,566,877 - -

TOTAL FUND BALANCES 6,866,113 4,396,400 1,605,768

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND

FUND BALANCES 7,432,102$ 4,401,150$ 1,605,768$


-34-


BALANCE SHEET

GOVERNMENTAL FUNDS

DECEMBER 31, 2016

300s 456

2013 Other

Sales / Lodging Debt Amateur Governmental

Service Sports Center Funds Totals

5,048,742$ 2,786,099$ 10,168,665$ 29,785,925$

15,228 - 4,522 75,450

- - 67,857 188,646

- - 32,317 32,317

10,413,320 - 340,957 10,769,664

13,367 - 30,222 554,126

- - - 529,975

- - - 317,073

- - 24,136 131,276

15,490,657$ 2,786,099$ 10,668,676$ 42,384,452$

10,233$ 2,235$ 214,457$ 517,403$

- 270,737 386,018 656,755

- - 885,973 885,973

- - - 4

- - 2,981 127,350

- - - 84,801

10,233 272,972 1,489,429 2,272,286

15,228 - 4,522 75,450

10,413,320 - 340,957 10,769,664

10,428,548 - 345,479 10,845,114

- 24,136 131,276

5,051,876 - - 5,051,876

- - 19,064 19,064

- - 2,019,566 2,019,566

- - - 4,396,400

- 1,580,476 1,947,334 5,133,578

- - 61,773 61,773

- 897,557 300,729 1,198,286

- - - 69,684

- - - 259,716

- - - 777,443

- - - 33,563

- - - 23,013

- - - 9,016

- - - 19,661

- 35,094 5,884,477 5,919,571

- - 59,231 59,231

- - 11,022 11,022

- - 98,330 98,330

- - 16,535 16,535

- - (1,608,429) 3,958,448

5,051,876 2,513,127 8,833,768 29,267,052

15,490,657$ 2,786,099$ 10,668,676$ 42,384,452$


-35-


INTENTIONALLY

-36-


RECONCILIATION OF THE BALANCE SHEET

TO THE STATEMENT OF NET POSITION

GOVERNMENTAL FUNDS

DECEMBER 31, 2016

Amounts reported for governmental activities in the statement

of net position are different because

Total fund balances - governmental funds 29,267,052$

Capital assets used in governmental activities are not financial

resources and therefore are not reported as assets in the funds. 86,642,247

Long-term liabilities, including bonds payable, are not due and payable in the

current period and therefore are not reported as liabilities in the funds.

Long-term liabilities at year-end consist of

Compensated absences payable (1,059,585)

Other postemployment benefits obligation (208,772)

Pension liability (10,046,427)

Notes payable (188,009)

Bonds payable (33,640,000)

Unamortized bond premiums (2,063,842)

Unamortized bond discounts 8,241

Long-term assets are not available to pay current-period expenditures and, therefore,

are unavailable in the funds.

Delinquent property taxes receivable 75,450

Special assessments receivable 10,769,664

Governmental funds to not report long-term amounts related to pensions.

Deferred outflows of pension resources 5,738,676

Deferred inflows of pension resources (1,288,788)

Governmental funds do not report a liability for accrued interest until

due and payable. (473,776)

Total net position - governmental activities 83,532,131$


-37-


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS


101 230 256

Tax Increment Sales / Lodging

General Financing Tax

REVENUES

Taxes 4,173,354$ 639,555$ 2,003,095$

Special assessments 1,348 - -

Licenses and permits 335,339 - -

Intergovernmental 3,127,653 - -

Charges for services 1,827,557 - -

Fines and forfeits 87,644 - -

Investment earnings 20,388 5,844 452

Miscellaneous 1,043,845 - -

TOTAL REVENUES 10,617,128 645,399 2,003,547

EXPENDITURES

Current

General government 2,430,864 - -

Public safety 3,348,578 - -

Public works 3,031,072 - -

Culture and recreation 1,642,196 - -

Economic development - 210,318 -

Airport 558,772 - -

Capital outlay

General government - - -

Public safety 5,596 - -

Public works 16 - -

Culture and recreation - - -

Economic development - 48,618 -

Airport - - -

Debt service

Principal - - -

Interest and other - - -

Bond issuance costs - - -

TOTAL EXPENDITURES 11,017,094 258,936 -

EXCESS (DEFICIENCY) OF REVENUES OVER

(UNDER) EXPENDITURES (399,966) 386,463 2,003,547

OTHER FINANCING SOURCES (USES)

Sale of capital assets 31,585 - -

Transfers in 302,022 - -

Bonds issued - - -

Premium on bonds issued - - -

Transfers out - (354,478) (2,058,355)

TOTAL OTHER FINANCING SOURCES (USES) 333,607 (354,478) (2,058,355)

NET CHANGE IN FUND BALANCES (66,359) 31,985 (54,808)

FUND BALANCES, JANUARY 1 6,932,472 4,364,415 1,660,576

FUND BALANCES, DECEMBER 31 6,866,113$ 4,396,400$ 1,605,768$


-38-



GOVERNMENTAL FUNDS


300s 456

2013 Other

Debt Amateur Governmental

Service Sports Center Funds Totals

1,010,018$ -$ 371,086$ 8,197,108$

1,192,552 - 10,480 1,204,380

- - - 335,339

- 4,298,000 1,406,190 8,831,843

- - 183,055 2,010,612

- - - 87,644

6,428 2,356 48,222 83,690

- 47,465 653,543 1,744,853

2,208,998 4,347,821 2,672,576 22,495,469

- - - 2,430,864

- - 124,183 3,472,761

- - 799,740 3,830,812

- - 477,949 2,120,145

60,499 - 14,624 285,441

- - - 558,772

- - 78,668 78,668

- - 718,504 724,100

- - 2,630,561 2,630,577

- 4,841,447 2,389,449 7,230,896

- 54,945 103,563

- - 200 200

3,015,000 - 89,888 3,104,888

1,118,333 - 7,668 1,126,001

- - 115,731 115,731

4,193,832 4,841,447 7,502,110 27,813,419

(1,984,834) (493,626) (4,829,534) (5,317,950)

- - - 31,585

1,869,846 97,557 602,305 2,871,730

- - 5,015,000 5,015,000

- - 166,461 166,461

- - (146,835) (2,559,668)

1,869,846 97,557 5,636,931 5,525,108

(114,988) (396,069) 807,397 207,158

5,166,864 2,909,196 8,026,371 29,059,894

5,051,876$ 2,513,127$ 8,833,768$ 29,267,052$


-39-


INTENTIONALLY

-40-


RECONCILIATION OF THE STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

TO THE STATEMENT OF ACTIVITIES

GOVERNMENTAL FUNDS


Amounts reported for governmental activities in the statement

of activities are different because

Net change in fund balances - governmental funds 207,158$

Governmental funds report capital outlay as expenditures. However, in the statement of

activities the cost of those assets is allocated over the estimated useful lives and reported

as depreciation expense.

Capital outlay 10,965,446

Depreciation expense (4,198,962)

The net effect of various miscellaneous transactions involving capital assets (i.e., sales and trade-ins) is

to decrease net position.

Book value of disposed of capital assets (4,260)

The issuance of long-term debt provides current financial resources to governmental funds, while

the repayment of principal of long-term debt consumes the current financial resources of governmental

funds. Neither transaction, however, has any effect on net position. Also, governmental funds report

the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts

are deferred and amortized in the statement of activities.

Bonds issued (5,015,000)

Principal repayments 3,104,888

Bond premiums issued, net of amortization 625

Bond discounts amortization (2,989)

Interest on long-term debt in the statement of activities differs from the amount reported in the

governmental fund because interest is recognized as an expenditure in the funds when it is due,

and thus requires the use of current financial resources. In the statement of activities, however,

interest expense is recognized as the interest accrues, regardless of when it is due. (14,817)

Long-term pension activity is not reported in governmental funds.

Pension expense (1,147,396)

Direct aid contributions 28,801

Certain revenues are recognized as soon as they are earned. Under the modified accrual

basis of accounting certain revenues cannot be recognized until they are available

to liquidate liabilities of the current period.

Property taxes 35,262

Special assessments (1,026,461)

Some expenses reported in the statement of activities do not require the use of current

financial resources and, therefore, are not reported as expenditures in governmental funds.

Compensated absences 127,757

Other postemployment benefits costs (21,927)

Change in net position - governmental activities 3,038,125$


-41-



BUDGET AND ACTUAL

GENERAL, TAX INCREMENT FINANCING AND SALES/LODGING TAX FUNDS


Actual Variance with

Original Final Amounts Final Budget

REVENUES

Taxes 4,240,860$ 4,240,860$ 4,173,354$ (67,506)$

Licenses and permits 309,975 309,975 335,339 25,364

Special assessments - - 1,348 1,348

Intergovernmental 3,000,313 3,000,313 3,127,653 127,340

Charges for services 1,946,637 1,946,637 1,827,557 (119,080)

Fines and forfeits 116,400 116,400 87,644 (28,756)

Investment earnings 15,000 15,000 20,388 5,388

Miscellaneous 1,086,293 1,086,293 1,043,845 (42,448)

TOTAL REVENUES 10,715,478 10,715,478 10,617,128 (98,350)

EXPENDITURES

Current

General government 2,481,799 2,481,799 2,430,864 50,935

Public safety 3,465,050 3,465,050 3,348,578 116,472

Public works 3,022,077 3,022,077 3,031,072 (8,995)

Culture and recreation 1,645,991 1,645,991 1,642,196 3,795

Economic development - - - -

Airport 452,621 452,621 558,772 (106,151)

Capital outlay

Public safety - - 5,596 (5,596)

Public works - - 16 (16)


TOTAL EXPENDITURES 11,067,538 11,067,538 11,017,094 50,444

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES (352,060) (352,060) (399,966) (47,906)


Sale of capital assets 25,000 25,000 31,585 6,585

Transfers in 302,060 302,060 302,022 (38)

Transfers out - - - -

TOTAL OTHER FINANCING SOURCES (USES) 327,060 327,060 333,607 6,547

NET CHANGE IN FUND BALANCES (25,000) (25,000) (66,359) (41,359)

FUND BALANCES, JANUARY 1 6,932,472 6,932,472 6,932,472 -

FUND BALANCES, DECEMBER 31 6,907,472$ 6,907,472$ 6,866,113$ (41,359)$

General

Budgeted Amounts


-42-

Actual Variance with Actual Variance with

Original Final Amounts Final Budget Original Final Amounts Final Budget

632,400$ 632,400$ 639,555$ 7,155$ 2,028,534$ 2,028,534$ 2,003,095$ (25,439)$

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

5,000 5,000 5,844 844 350 350 452 102

- - - - - - - -

637,400 637,400 645,399 7,999 2,028,884 2,028,884 2,003,547 (25,337)

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

20,366 20,366 210,318 (189,952) - - - -

- - - - - - - -

- - - - - - - -

- - - - - - - -

- - 48,618 (48,618) - - - -

20,366 20,366 258,936 (238,570) - - - -

617,034 617,034 386,463 (230,571) 2,028,884 2,028,884 2,003,547 (25,337)

- - - - - - - -

- - - - - - - -

(365,214) (365,214) (354,478) 10,736 (1,758,620) (1,758,620) (2,058,355) (299,735)

(365,214) (365,214) (354,478) 10,736 (1,758,620) (1,758,620) (2,058,355) (299,735)

251,820 251,820 31,985 (219,835) 270,264 270,264 (54,808) (325,072)

4,364,415 4,364,415 4,364,415 - 1,660,576 1,660,576 1,660,576 -

4,616,235$ 4,616,235$ 4,396,400$ (219,835)$ 1,930,840$ 1,930,840$ 1,605,768$ (325,072)$

Tax Increment Financing

Budgeted Amounts

Sales/Lodging Tax

Budgeted Amounts


-43-


STATEMENTS OF NET POSITION

PROPRIETARY FUNDS

DECEMBER 31, 2016 AND 2015

2016 2015 2016 2015

ASSETS

CURRENT ASSETS

Cash and temporary investments 3,749,940$ 3,527,927$ 1,865,418$ 1,829,311$

Escrowed funds 3,735,586 - - -

Restricted assets

Cash and temporary investments 3,642,466 2,644,664 - -

Delinquent taxes - - - -

Receivables

Accounts 466,433 686,777 - 669

Special assessments - - - -

Intergovernmental - - - -

Due from other funds 20,998 20,998 - -

Inventories - - 507,935 404,483

Prepaid items 31,550 31,790 8,313 7,400

TOTAL CURRENT ASSETS 11,646,973 6,912,156 2,381,666 2,241,863

NONCURRENT ASSETS

Capital assets, at cost

Land 199,134 199,134 48,603 288,971

Construction in progress 197,611 911,760 - -

Buildings 168,472 134,952 2,359,862 2,558,892

Improvements other than buildings 28,001,430 28,001,430 115,019 68,227

Systems and infrastructure 20,326,853 19,415,092 - -

Equipment and machinery 2,566,178 2,444,314 167,916 161,531

Less accumulated depreciation (28,778,349) (27,208,840) (101,659) (214,772)

TOTAL NONCURRENT ASSETS 22,681,329 23,897,842 2,589,741 2,862,849

TOTAL ASSETS 34,328,302 30,809,998 4,971,407 5,104,712

DEFERRED OUTFLOWS OF RESOURCES

Deferred pension resources 334,923 79,502 102,285 24,284

LIABILITIES

CURRENT LIABILITIES

Accounts payable 104,250 42,299 160,535 77,463

Contracts payable - - - 135,052

Due to other governments 524 - 23,960 56,071

Accrued interest payable 209,084 186,680 6,489 6,709

Accrued salaries payable 15,340 10,941 5,233 3,871

Compensated absences payable 51,497 49,064 19,588 18,768

Bonds payable - current portion 5,119,500 1,366,500 195,000 195,000

TOTAL CURRENT LIABILITIES 5,500,195 1,655,484 410,805 492,934

LONG-TERM LIABILITIES

Compensated absences payable 169,488 166,130 66,574 63,431

Other postemployment benefit obligation 42,550 38,999 8,394 7,471

Pension liability 929,009 674,302 283,718 205,966

Bonds payable - noncurrent portion 10,756,635 11,793,697 2,760,000 2,955,000

TOTAL NONCURRENT LIABILITIES 11,897,682 12,673,128 3,118,686 3,231,868

TOTAL LIABILITIES 17,397,877 14,328,612 3,529,491 3,724,802


Deferred pension resources 122,252 149,712 37,336 45,730

NET POSITION

Net investment in capital assets 10,435,194 10,737,645 183,342 335,966

Restricted for debt service 1,988,263 1,990,691 - -

Unrestricted 4,719,639 3,682,840 1,323,523 1,022,498

TOTAL NET POSITION 17,143,096$ 16,411,176$ 1,506,865$ 1,358,464$

Business-type Activities - Enterprise Funds

Municipal

Liquor Store

602 609

Wastewater

Treatment


-44-

2016 2015 2016 2015 2016 2015

21,746$ 21,746$ 1,250,699$ 553,894$ 6,887,803$ 5,932,878$

- - - - 3,735,586 -

- - 176,018 140,939 3,818,484 2,785,603

- - 217 244 217 244

- - 88,769 167,947 555,202 855,393

- - 4,491 3,349 4,491 3,349

- - - 38 - 38

- - 335,000 335,000 355,998 355,998

- - - - 507,935 404,483

- - 2,572 3,267 42,435 42,457

21,746 21,746 1,857,766 1,204,678 15,908,151 10,380,443

- - 265,135 265,135 512,872 753,240

- - 678,715 - 876,326 911,760

- - - - 2,528,334 2,693,844

- - - - 28,116,449 28,069,657

- - 14,658,381 14,658,381 34,985,234 34,073,473

- - 247,036 247,036 2,981,130 2,852,881

- - (5,869,103) (5,433,701) (34,749,111) (32,857,313)

- - 9,980,164 9,736,851 35,251,234 36,497,542

21,746 21,746 11,837,930 10,941,529 51,159,385 46,877,985

- - - - 437,208 103,786

- - 2,271 1,781 267,056 121,543

- - - - - 135,052

- - - - 24,484 56,071

- - 33,262 24,688 248,835 218,077

- - - - 20,573 14,812

- - - - 71,085 67,832

- - 280,500 283,500 5,595,000 1,845,000

- - 316,033 309,969 6,227,033 2,458,387

- - - - 236,062 229,561

- - - - 50,944 46,470

- - - - 1,212,727 880,268

- - 2,797,691 1,996,013 16,314,326 16,744,710

- - 2,797,691 1,996,013 17,814,059 17,901,009

- - 3,113,724 2,305,982 24,041,092 20,359,396

- - - - 159,588 195,442

- - 7,311,484 7,457,338 17,930,020 18,530,949

- - 189,335 153,139 2,177,598 2,143,830

21,746 21,746 1,223,387 1,025,070 7,288,295 5,752,154

21,746$ 21,746$ 8,724,206$ 8,635,547$ 27,395,913$ 26,426,933$


Parkway

Townhomes Totals

630620

Surface Water

Management


-45-


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

PROPRIETARY FUNDS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

2016 2015 2016 2015

OPERATING REVENUES

Charges for services 5,086,831$ 4,855,739$ -$ -$

Sales - - 4,548,623 4,027,419

Cost of sales - - (3,398,451) (3,119,194)

TOTAL OPERATING REVENUES/GROSS PROFIT 5,086,831 4,855,739 1,150,172 908,225

OPERATING EXPENSES

Salaries and benefits 1,056,664 1,136,021 323,729 331,627

Supplies 278,649 166,160 11,219 26,309

Repairs and maintenance 161,173 252,942 4,114 2,270

Other services and charges 447,538 409,626 165,132 260,615

Insurance 14,032 30,449 7,657 8,158

Utilities 322,951 309,718 31,090 26,356

Depreciation 1,597,256 1,523,591 91,964 11,739

TOTAL OPERATING EXPENSES 3,878,263 3,828,507 634,905 667,074

OPERATING INCOME (LOSS) 1,208,568 1,027,232 515,267 241,151

NONOPERATING REVENUES (EXPENSES)

Property taxes - - - -

Special assessments - - - -

Other income 3,617 - 1,104 -

Investment earnings (loss) 29,119 37,305 1,714 3,237

Refunds and reimbursements 25,759 43,230 15 1,394

Rents 6,452 6,452 - -

Gain (loss) on disposal of assets 6,650 1,840 (14,424) 408

Bond (discount) premium amortization 4,529 277 - -

Bond issuance costs (68,168) (18,385) - (39,959)

Interest and other expense (447,536) (434,707) (80,283) (72,545)

TOTAL NONOPERATING

REVENUES (EXPENSES) (439,578) (363,988) (91,874) (107,465)

INCOME (LOSS) BEFORE CONTRIBUTIONS

AND TRANSFERS 768,990 663,244 423,393 133,686

CAPITAL CONTRIBUTIONS FROM OTHER FUNDS - 135,525 - -

CAPITAL CONTRIBUTIONS FROM (TO) COMPONENT UNIT - (604,392) - -

TRANSFERS IN - - - -

TRANSFERS OUT (37,070) (653,944) (274,992) (324,996)

CHANGE IN NET POSITION 731,920 (459,567) 148,401 (191,310)

NET POSITION, JANUARY 1 16,411,176 16,870,743 1,358,464 1,549,774

NET POSITION, DECEMBER 31 17,143,096$ 16,411,176$ 1,506,865$ 1,358,464$


602

Treatment

609

Liquor Store

Wastewater Municipal


-46-

2016 2015 2016 2015 2016 2015

-$ -$ 1,001,246$ 992,480$ 6,088,077$ 5,848,219$

- - - - 4,548,623 4,027,419

- - - - (3,398,451) (3,119,194)

- - 1,001,246 992,480 7,238,249 6,756,444

- - - - 1,380,393 1,467,648

- - 17,267 14,402 307,135 206,871

- - 91,142 - 256,429 255,212

- - 304,365 311,206 917,035 981,447

- - - - 21,689 38,607

- - - - 354,041 336,074

- - 435,402 452,565 2,124,622 1,987,895

- - 848,176 778,173 5,361,344 5,273,754

- - 153,070 214,307 1,876,905 1,482,690

- - (27) 450 (27) 450

- - 4,158 - 4,158 -

- - - - 4,721 -

- - (3,364) 793 27,469 41,335

- - - 4,278 25,774 48,902

- - - - 6,452 6,452

- - - - (7,774) 2,248

- - 6,048 7,678 10,577 7,955

- - (4,278) - (72,446) (58,344)

- - (66,948) (61,921) (594,767) (569,173)

- - (64,411) (48,722) (595,863) (520,175)

- - 88,659 165,585 1,281,042 962,515

- - - 26,982 - 162,507

- - - 51,517 - (552,875)

- - - 320,004 - 320,004

- - - (524,203) (312,062) (1,503,143)

- - 88,659 39,885 968,980 (610,992)

21,746 21,746 8,635,547 8,595,662 26,426,933 27,037,925

21,746$ 21,746$ 8,724,206$ 8,635,547$ 27,395,913$ 26,426,933$

620 630


Management TotalsTownhomes

Parkway Surface Water


-47-


STATEMENTS OF CASH FLOWS - CONTINUED ON THE FOLLOWING PAGES

PROPRIETARY FUNDS


2016 2015 2016 2015

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 5,307,175$ 4,835,099$ 4,549,292$ 4,025,802$

Payments to suppliers and vendors (1,161,628) (741,428) (3,671,067) (3,365,034)

Payments to and on behalf of employees (1,071,097) (1,140,084) (326,124) (319,266)

Other receipts 35,828 49,682 1,119 1,802

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 3,110,278 3,003,269 553,220 343,304

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Transfers from other funds - - - -

Transfers to other funds (37,070) (653,944) (274,992) (324,996)

(Increase) decrease in due from other funds - 176 - -

Increase (decrease) in due to other funds - (50) - (176)

NET CASH PROVIDED (USED) BY NONCAPITAL

FINANCING ACTIVITIES (37,070) (653,818) (274,992) (325,172)

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES

Acquisition of capital assets (380,743) (1,571,151) (209,568) (2,219,015)

Proceeds from sales of capital assets 6,650 12,913 241,236 -

Proceeds from bonds issued, net of discounts/premiums issued 4,086,967 930,911 - 3,240,000

Principal paid on long-term debt (1,366,500) (1,192,500) (195,000) (90,000)

Interest paid on long-term debt (425,132) (441,291) (80,503) (65,836)

Bond issuance costs (68,168) (18,385) - (39,959)

Property taxes received - - - -

Special assessments received - - - -

NET CASH PROVIDED (USED) BY CAPITAL AND

RELATED FINANCING ACTIVITIES 1,853,074 (2,279,503) (243,835) 825,190

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received (paid) on cash and investments 29,119 37,305 1,714 3,237

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS 4,955,401 107,253 36,107 846,559

CASH AND CASH EQUIVALENTS, JANUARY 1 6,172,591 6,065,338 1,829,311 982,752

CASH AND CASH EQUIVALENTS, DECEMBER 31 11,127,992$ 6,172,591$ 1,865,418$ 1,829,311$

RECONCILIATION OF CASH AND

CASH EQUIVALENTS

TO THE STATEMENT OF NET POSITION

Cash and cash equivalents 3,749,940$ 3,527,927$ 1,865,418$ 1,829,311$


Restricted cash and cash equivalents 3,642,466 2,644,664 - -

TOTAL CASH AND CASH EQUIVALENTS 11,127,992$ 6,172,591$ 1,865,418$ 1,829,311$

Treatment Liquor Store


602


609


-48-

2016 2015 2016 2015 2016 2015

-$ -$ 1,079,282$ 990,204$ 10,935,749$ 9,851,105$

- - (411,589) (326,084) (5,244,284) (4,432,546)

- - - - (1,397,221) (1,459,350)

- - - 4,278 36,947 55,762

- - 667,693 668,398 4,331,191 4,014,971

- - - 320,004 - 320,004

- - - (524,203) (312,062) (1,503,143)

- - - - - 176

- - - (10,008) - (10,234)

- - - (214,207) (312,062) (1,193,197)

- - (678,715) (175,183) (1,269,026) (3,965,349)

- - - - 247,886 12,913

- - 1,088,226 - 5,175,193 4,170,911

- - (283,500) (462,500) (1,845,000) (1,745,000)

- - (58,374) (67,220) (564,009) (574,347)

- - (4,278) - (72,446) (58,344)

- - 38 1,160 38 1,160

- - 4,158 - 4,158 -

- - 67,555 (703,743) 1,676,794 (2,158,056)

- - (3,364) 793 27,469 41,335

- - 731,884 (248,759) 5,723,392 705,053

21,746 21,746 694,833 943,592 8,718,481 8,013,428

21,746$ 21,746$ 1,426,717$ 694,833$ 14,441,873$ 8,718,481$

21,746$ 21,746$ 1,250,699$ 553,894$ 6,887,803$ 5,932,878$

- - - - 3,735,586 -

- - 176,018 140,939 3,818,484 2,785,603

21,746$ 21,746$ 1,426,717$ 694,833$ 14,441,873$ 8,718,481$


630

Management Totals Townhomes

Parkway

620

Surface Water


-49-


STATEMENTS OF CASH FLOWS - CONTINUED

PROPRIETARY FUNDS


2016 2015 2016 2015

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES

Operating income (loss) 1,208,568$ 1,027,232$ 515,267$ 241,151$

Adjustments to reconcile operating income (loss) to net cash

provided (used) by operating activities

Other income related to operations 35,828 49,682 1,119 1,802

Depreciation 1,597,256 1,523,591 91,964 11,739

Infrastructure not capitalized - 419,474 - -

(Increase) decrease in assets

Accounts receivable 220,344 (22,631) 669 (1,617)

Special assessments receivable - - - -

Due from other governments - 1,859 - -

Due from component units - 132 - -

Inventories - - (103,452) 44,176

Prepaid items 240 2,491 (913) 12

(Increase) decrease in deferred outflows of resources

Deferred pension resources (255,421) 22,087 (78,001) 5,998

Increase (decrease) in liabilities

Accounts payable 61,951 5,502 83,072 20,679

Due to other governments 524 - (32,111) 13,001

Accrued salaries payable 4,399 (29,238) 1,362 (8,753)

Other postemployment benefit obligation 3,551 4,124 923 1,072

Pension liability 254,707 36,020 77,752 15,706

Compensated absences payable 5,791 (14,305) 3,963 4,016

Increase (decrease) in deferred inflows of resources

Deferred pension resources (27,460) (22,751) (8,394) (5,678)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 3,110,278$ 3,003,269$ 553,220$ 343,304$

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES

Infrastructure not capitalized -$ 419,474$ -$ -$

Book value of disposed/traded of capital assets 12,045 11,073 255,660 -

Capital assets acquired on account - - - 135,052

Capital assets contributed from (to) other funds - 135,525 - -

Capital assets contributed from (to) component unit - (604,392) - -

Amortization of bond (premium) discount (4,529) (277) - -

Treatment Liquor Store

609


602



-50-

2016 2015 2016 2015 2016 2015

-$ -$ 153,070$ 214,307$ 1,876,905$ 1,482,690$

- - - 4,278 36,947 55,762

- - 435,402 452,565 2,124,622 1,987,895

- - - - - 419,474

- - 79,178 (6,619) 300,191 (30,867)

- - (1,142) 4,343 (1,142) 4,343

- - - - - 1,859

- - - - - 132

- - - - (103,452) 44,176

- - 695 (90) 22 2,413

- - - - (333,422) 28,085

- - 490 (386) 145,513 25,795

- - - - (31,587) 13,001

- - - - 5,761 (37,991)

- - - - 4,474 5,196

- - - - 332,459 51,726

- - - - 9,754 (10,289)

- - - - (35,854) (28,429)

-$ -$ 667,693$ 668,398$ 4,331,191$ 4,014,971$

-$ -$ -$ -$ -$ 419,474$

- - - - 267,705 11,073

- - - - - 135,052

- - - 26,982 - 162,507

- - - 51,517 - (552,875)

- - (6,048) (7,678) (10,577) (7,955)

Management Totals

Surface Water


Parkway

630620

Townhomes


-51-


STATEMENT OF FIDUCIARY NET POSITION

FIDUCIARY FUNDS

DECEMBER 31, 2016

Private

Purpose

Trust Fund

ASSETS

Cash and temporary investments 16,024$

NET POSITION

Net position held in trust for future use 16,024$


-52-


STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

FIDUCIARY FUNDS


Private

Purpose

Trust Fund

ADDITIONS

Investment earnings 11$

Miscellaneous

Contributions and donations 2,000

TOTAL ADDITIONS 2,011

SUBTRACTIONS

Scholarships (1,500)

CHANGES IN NET POSITION 511

NET POSITION, JANUARY 1 15,513

NET POSITION, DECEMBER 31 16,024$


-53-


INTENTIONALLY

-54-


NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2016

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting entity

The City of Marshall (the City) was incorporated February 20, 1901 under the provisions of Minnesota Laws of 1870.

The City operates under a Mayor-Council form of government with a full-time City Administrator and provides the

following services as authorized by it charter, which was adopted in 1969 as provided by Minnesota statutes, chapter

410: public safety (police and fire), highways and streets, culture and recreation, public library, public improvements,

planning and zoning and general administrative services. The City also owns a municipal airport and municipal liquor

store. The City also operates public electric, water and wastewater treatment and surface water utilities. The electric and

water utilities are presented as a discretely presented component unit.

The City is governed by an elected mayor and a six-member Council. The Council exercises legislative authority and

determines all matters of policy. The Council appoints personnel responsible for the proper administration of all affairs

relating to the City. The City has considered all potential units for which it is financially accountable, and other

organizations for which the nature and significance of their relationship with the City are such that exclusion would

cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board

(GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing

a voting majority of an organization’s governing body, and (1) the ability of the primary government to impose its will

on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial

burdens on the primary government. Blended component units, although legally separate entities are in substance, part

of the City’s operations and so data from these units are combined with data of the primary government. The blended

component unit has a December 31 year end. Each discretely presented component unit is reported in a separate column

in the combined financial statements to emphasize it is legally separate from the City.

Blended component units. The Housing and Redevelopment Authority (HRA) serves all the citizens of the City and is

governed by City appointed boards. The HRA was created pursuant to Minnesota statutes 469.090 through 469.108 to

carry out housing development and redevelopment within the City in accordance with policies established by the

Council. The HRA may not exercise any of the powers enumerated by the authorizing statutes without prior approval of

the Council. Separate financial statements are not issued.

Discretely presented component units. The Economic Development Authority (EDA) serves all the citizens of the City

and is governed by City appointed boards. The EDA was created pursuant to Minnesota statutes 469.090 through

469.108 to carry out economic and industrial development and redevelopment within the City in accordance with

policies established by the Council. The seven-member board consists of two Council members and four other City

Council approved members along with the City Administrator who is the executive director. The EDA may not exercise

any of the powers enumerated by the authorizing statutes without prior approval of the Council. The EDA is reported as

two discretely presented special revenue funds (Economic Development Authority and EDA Parkway Housing).

Separate financial statements are not issued.

The Marshall Municipal Utilities (the Utilities) meets the criteria to be included as a discrete presentation. The members

of the governing board of the Utilities are appointed by the Mayor and approved by the City Council. The Utilities

makes monthly payments to the City “in lieu of taxes” in accordance with an agreement between itself and the City.

Therefore, there is a financial benefit to the City. Complete financial statements for the Utilities may be obtained from

the Utilities Business Office at 113 South Fourth Street, Marshall, Minnesota.

-55-



DECEMBER 31, 2016

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

The Marshall Housing Commission (the Commission) of the City of Marshall meets the criteria to be included as a

discrete presentation. The members of the governing board of the Commission are appointed by the Mayor and

approved by the City Council. Although the City does not have the authority to approve or modify the Commission’s

operational and capital budgets, the tax rates established by the Commission and bonded debt must be approved by the

City Council. Complete financial statements for the Commission may be obtained from the Marshall Housing

Commission at 202 North First Street, Marshall, Minnesota.

The Marshall-Lyon County Public Library meets the criteria to be included as a discrete presentation. The Library is a

joint venture between the City and Lyon County. The City appoints six members and the County appoints three

members of the governing board of the Library. The City does have the authority to approve or modify the Library’s

operational and capital budgets and any bonded debt must be approved by the City Council. The City provides a

material portion of the Library’s annual operating budget. The Library, whose year-end is December 31, is a discretely

presented component unit (with special revenue, debt service and capital projects funds) of the City. Separate financial

statements have not been prepared.

Related organization. The Marshall Fire Department Relief Association is organized as a non-profit organization,

legally separate from the City, by its members to provide pension and other benefits to such members in accordance

with Minnesota statutes. Its board of directors is appointed by the membership of the Association and not by the City

Council and the Association issues its own set of financial statements. All funding is conducted in accordance with

applicable Minnesota statutes, whereby state aids flow to the Association, tax levies are determined by the Association,

and are only reviewed by the City and the Association pays benefits directly to its members. The Association may

certify tax levies to Lyon County directly if the City does not carry out this function. Because the Association is

fiscally independent of the City, the financial statements of the Association have not been included within the City’s

reporting entity. The City’s portion of the costs of the Association’s pension benefits is included in the General fund

under public safety.

B. Government-wide and fund financial statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report

information on all of the nonfiduciary activities of the primary government and its component units. Governmental

activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from

business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary

government is reported separately from certain legally separate component units for which the primary government is

financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset

by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.

Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly

benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that

are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other

items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though

the latter are excluded from the government-wide financial statements. Major individual governmental funds and major

individual enterprise funds are reported as separate columns in the fund financial statements.

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DECEMBER 31, 2016


C. Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements are reported using the economic resources measurement focus and the

accrual basis of accounting, as are the proprietary and fiduciary fund financial statements. Revenues are recorded

when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized

as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the

modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to

pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected

within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred,

as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated

absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be

susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special

assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the

current period. All other revenue items are considered to be measurable and available only when cash is received by

the City.

Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is

recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the

year in which the resources are measurable and become available.

Non-exchange transactions, in which the City receives value without directly giving equal value in return, include

property taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the

year for which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all

eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the

year when the resources are required to be used or the year when use is first permitted, matching requirements, in which

the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the

resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange

transactions must also be available before it can be recognized.

Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and

entitlements received before eligibility requirements are met are also recorded as unearned revenue.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States

of America requires management to make estimates and assumptions that affect certain reported amounts and

disclosures. Accordingly, actual results could differ from those estimates.

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DECEMBER 31, 2016


The City reports the following major governmental funds:

The General fund is the City’s primary operating fund. It accounts for all financial resources of the general

government, except those required to be accounted for in another fund.

The Tax Increment Financing fund is used to account for the collection of tax increment and payment of related

expenditures for all of the City tax increment financing districts.

The Sales / Lodging Tax fund is used to account for sales and lodging tax received by the City to be used for future

capital projects.

The Debt Service fund accounts for the resources accumulated and payments made for principal and interest on

long-term general obligation debt of governmental funds.

The 2013 Amateur Sports Center fund is used to account for construction of the amateur sports complex.

The City reports the following major proprietary funds:

The Wastewater Treatment fund is used to account for the operation, maintenance, and capital improvements of the

City’s wastewater treatment activities.

The Municipal Liquor fund is used to account for the operation of the City’s off-sale municipal liquor store.

The Parkway Townhomes fund was used to account for rental activities before the townhomes were sold.

The Surface Water Management fund is used to account for the operation, maintenance, and capital improvements

of the City’s storm water collection activities.

Additionally, the City reports the following fund type:

The Private-Purpose Trust fund is used to account for resources legally held in trust. All resources of the fund,

including any earnings on invested resources, may be used to support activities of the Trust. There is no

requirement that any portion of these resources is preserved as capital.

Enterprise funds are used to account for those operations that are financed and operated in a manner similar to private

business or where the Council has decided that the determination of revenues earned, costs incurred and/or net income

is necessary for management accountability.

As a general rule the effect of interfund activity has been eliminated from government-wide financial statements.

Exceptions to this general rule are payments in lieu of taxes and charges between the City’s water and electric functions

and various other functions of the City. Elimination of these charges would distort the direct costs and program

revenues reported for the various functions concerned.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and

expenses generally result from providing services and producing and delivering goods in connection with a proprietary

fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and of the City’s

internal service funds are charges to customers for sales and services. The City also recognizes as operating revenue the

portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for

enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and

depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating

revenues and expenses.

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CITY OF MARSHALL, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2016

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.

Component units The Marshall Economic Development Authority and the Marshall-Lyon County Public Library have adopted the modified accrual basis of accounting and the Marshall Housing Commission, and the Marshall Public Utilities have adopted the accrual basis of accounting. The Marshall Housing Commission has a fiscal year end of September 30. Therefore, the data included for this component unit is as of that date in the statement of net position and for the year then ended in the statement of activities.

D. Assets, deferred outflows of resources, liabilities, deferred inflows of resources and net position/fund balance Deposits and investments

The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Certain restricted assets are included in cash and cash equivalents. The proprietary funds’ portion in the government-wide cash and temporary investments pool is considered to be cash and cash equivalents for purposes of the statements of cash flows.

Cash balances from all funds are pooled and invested, to the extent available, in certificates of deposit and other

authorized investments.

The City may invest idle funds as authorized by Minnesota statutes, as follows:

1. Direct obligations or obligations guaranteed by the United States or its agencies.

2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a final maturity of thirteen months or less.

3. General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations

rated “AA” or better.

4. General obligations of the Minnesota Housing Finance Agency rated “A” or better.

5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute section 126C.55.

6. Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System.

7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality

category by at least two nationally recognized rating agencies, and maturing in 270 days or less.

8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York, or certain Minnesota securities broker-dealers.

9. Guaranteed investment contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt obligations were rated in one of the top two rating categories by a nationally recognized rating agency.

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DECEMBER 31, 2016


Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of

the pool is the same as the fair value of the shares.

The City and its component units categorizes its fair value measurements within the fair value hierarchy established by

generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value

of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other

observable inputs; Level 3 inputs are significant unobservable inputs.

The City has the following recurring fair value measurements as of December 31, 2016:

US Government Securities of $3,694,436 are valued using quoted market prices (Level 1 inputs)

US Treasury Notes of $1,498,349 are valued using quoted market prices (Level 1 inputs)

Mortgage backed securities of $2,308,750 are valued using a matrix pricing model (Level 2 inputs)

Municipal bonds of $3,107,760 are valued using a matrix pricing model (Level 2 inputs)

The Municipal Utilities discretely presented component unit has the following recurring fair value measurements as

of December 31, 2016:

US Treasury Notes of $9,954,108 are valued using quoted market prices (Level 2 inputs)

Federal Agency Bonds and Notes of $8,265,560 are valued using a matrix pricing model (Level 2 inputs)

Federal Mortgage Pools of $1,246,048 are valued using a matrix pricing model (Level 2 inputs)

Mortgage Backed Securities of $126,004 are valued using a matrix pricing model (Level 2 inputs)

Municipal Bonds of $8,565,720 are valued using a matrix pricing model (Level 2 inputs)

Property taxes

The City Council annually adopts a tax levy and certifies it to the County in December for collection the following year.

The County is responsible for collecting all property taxes for the City. These taxes attach an enforceable lien on

taxable property within the City on January 1 and are payable by the property owners in two installments in May and

October. The taxes are collected by the County Treasurer and tax settlements are made to the City during January, June

and November each year.

Delinquent taxes receivable include the past six years' uncollected taxes. Delinquent taxes have been offset by a

deferred inflow of resources for delinquent taxes not received within 60 days after year end in the governmental fund

financial statements.

Accounts receivable

Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund

receivables are also included for services provided in 2016. All trade receivables are shown net of an allowance for

uncollectible accounts. No substantial losses are anticipated from present receivable balances. The other utility funds

do not record an allowance because uncollected bills may be certified to the County for collection.

Component units

The Marshall Public Utilities grants credit to its customers, which is mainly unsecured in the course of its operations. A

portion of customer receivables is secured by deposits based on prior payment history of individual accounts. Monthly

sewer rental charges are included in the customer’s billings and transferred to the City when collected. No allowance

for doubtful accounts has been recorded as management deems all receivables to be collectible.

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DECEMBER 31, 2016


Special assessments

Special assessments represent the financing for public improvements paid for by benefiting property owners. These

assessments are recorded as receivables when assessment rolls are provided to the County. Special assessments are

recognized as revenue when they are received in cash or within 60 days after year end. All governmental special

assessments receivable are offset by a deferred inflow of resources in the fund financial statements.

Interfund receivables and payables

Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the

fiscal year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or

“advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances

between funds are reported as “due to/from other funds” in the fun financial statements. Any residual balances

outstanding between the governmental activities and business-type activities are reported in the government-wide

financial statements as “internal balances.”

Advances between funds and component unit, as reported in the fund financial statements, are offset by a fund balance

nonspendable account in applicable governmental funds to indicate that they are not available for appropriation and are

not expendable available financial resources.

Inventories and prepaid items

The inventories of the Municipal Liquor Store fund are stated at the lower of cost or market on the first-in, first-out

(FIFO) method. The cost of inventory is recorded as expenditure at the time inventory is purchased in the

governmental funds and as an expense when consumed in the proprietary fund types.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items or

unearned charges in both government-wide and fund financial statements.

Component units

The material and supply inventory of the Marshall Municipal Utilities is stated at average cost which approximates

actual cost.

Land held for resale

Land held for resale is valued at the lower of cost or market.

Restricted assets

The Wastewater Treatment fund, Surface Water Management fund and the Marshall Municipal Utilities fund

(component unit) have classified resources consisting of cash and investments and delinquent taxes receivable as

restricted assets on the balance sheet. These amounts have been set aside for debt service payments and capital

improvements.

Capital assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and

similar items), are reported in the applicable governmental or business-type activities columns in the government-wide

financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000

(amount not rounded) and an estimated useful life in excess of one year. The City reports infrastructure assets on a

network and subsystem basis. Accordingly, the amounts spent for the construction or acquisition of infrastructure

assets are capitalized and reported in the government-wide financial statements.

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DECEMBER 31, 2016


In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental activities) the

City chose to include items dating back prior to June 30, 1980. The City had already accounted for its prior

infrastructure at historical cost for the initial reporting of these assets. As the City constructs or acquires capital assets

each period, including infrastructure assets, they are capitalized and reported at historical cost. The reported value

excludes normal maintenance and repairs which are essentially amounts spent in relation to capital assets that do not

increase the capacity or efficiency of the item or extend its useful life beyond the original estimate. In the case of

donations the City values these capital assets at the estimated acquisition value of the item at the date of its donation.

Interest incurred during the construction phase of capital assets of business-type activities is included as part of the

capitalized value of the assets constructed.

Property, plant and equipment of the primary government, as well as the component units, are depreciated using the

straight-line method over the following estimated useful lives:

Assets Years

Land improvements 5 - 25

Buildings and improvements 20 - 50

Infrastructure 10 - 50

Machinery and equipment 3 - 20

Vehicles 3 - 30

Component units

The Marshall Municipal Utilities uses the straight-line composite group method for depreciation based on estimated

useful lives of the various classes of property. The provision is 3.56 percent of the average balance of depreciable

property in service at December 31, 2016.

The Marshall Economic Development Authority provides depreciation based on the estimated useful lives of individual

assets. The straight-line method of depreciation is used.

The Marshall-Lyon County Library provides depreciation based on historical cost or estimated historical cost. The

straight-line method of depreciation is used over the estimated useful lives of individual assets. Library books are

depreciated using group depreciation by collections. The Library uses a capitalization threshold of $15,000 for library

book collections and $1,000 for all other capital assets.

Deferred outflows of resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of

resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net

position that applies to a future period(s) and so will not be recognized as an outflow of resources

(expense/expenditure) until then. The City has only one item that qualifies for reporting in this category. Accordingly,

the item, deferred pension resources, is reported only in the statements of net position. This item results from actuarial

calculations and current year pension contributions made subsequent to the measurement date.

Compensated absences

It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation

and sick pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for

these amounts is reported in governmental funds only if they have matured, for example, as a result of employee

resignations and retirements. For the most part, the General fund is typically used to liquidate governmental

compensated absences payable.

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DECEMBER 31, 2016


Postemployment benefits other than pensions

Under Minnesota statute 471.61, subdivision 2b., public employers must allow retirees and their dependents to continue

coverage indefinitely in an employer-sponsored health care plan, under the following conditions: 1) Retirees must be

receiving (or eligible to receive) an annuity from a Minnesota public pension plan, 2) Coverage must continue in group

plan until age 65, and retirees must pay no more than the group premium, and 3) Retirees may obtain dependent

coverage immediately before retirement. All premiums are funded on a pay-as-you-go basis. The liability was

actuarially determined, in accordance with GASB Statement 45, at January 1, 2014.

Severance plan

Employees with at least 20 years of service are eligible for retirement payments based upon their years of service. An

eligible individual will receive an amount equal to one month’s salary plus an additional 3 percent annual salary each

year in excess of twenty years to a maximum of 150 percent of the monthly salary. As of December 31, 2016, the City

has recorded estimated future costs under this plan of $302,908.

Accrued vacation and sick leave - City of Marshall

Vacation is earned and credited to an employee’s record after each bi-weekly pay period according to years of service at

the following rates:

Hours per

Years of Service Years of Service Maximum Accrual

0 to 5 years 80 hours (10 days) 160 hours




20+ years 200 hours (25 days) 400 hours

Sick leave is an authorized absence from work with pay, granted to eligible full-time and ¾-time employees. Sick leave

is a privilege, not a right. Employees are to use this paid leave only when they are unable to work for medical reasons

and/or under the conditions explained below. Employees are required to exhaust their sick leave balance prior to

approval of an unpaid medical leave of absence. Sick leave does not accrue during an unpaid leave of absence.

Full-time employees will earn sick leave at the rate of one (1) day or 8 hours for each month of service and can

accumulate up to 120 days or 960 hours at this rate. Beyond 120 days or 960 hours, sick leave will continue to

accumulate at a rate of ½ day or 4 hours for each month of service.

If at any time the accumulation drops below 120 days or 960 hours the employee will then accumulate one (1) day or 8

hours for each month of service up to 120 days or 960 hour and then continue accumulating ½ day or 4 hours for each

month of service.

When an employee reaches 120 days or 960 hours or more of accumulated sick leave and the employee utilizes sick

leave time, it shall first be withdrawn from the 960 hour portion and not from the accumulated sick leave.

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DECEMBER 31, 2016


Accrued vacation and sick leave - Marshall Municipal Utilities

All full time employees accrue vacation time between 10 to 25 days per year based on years of service to 25 years when

an additional 1 day may accrue for each 5 years of service thereafter. Employees may accumulate up to 20 days (160

hours) by December 31st of each year to be used in the following year. Up to 10 days of accrued vacation pay in excess

of the 20 day maximum accrual will be deposited in the Health Care Savings Plan on an annual basis. Upon

termination 100 percent of the accrued vacation pay will be deposited into the Health Care Savings Plan.

Under the employee sick leave plan each employee is allowed to accumulate sick leave up to a minimum of 140 days.

Thereafter, when the maximum hours have been reached, any unused sick leave will be deposited into the employee’s

Health Care Savings Plan on an annual basis. The accumulated leave is remitted to the employee or placed in the

Health Care Savings Plan at the Commission’s discretion upon retirement or death at a rate of 50 percent after 5 years

of service, 75 percent after 10 years and 100 percent after 15 years or more of service.

Sick leave benefits are recorded as a liability in the period earned by the employee.

Pensions

For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense,

information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions

to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by

PERA except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of

employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with

the benefit terms. Investments are reported at fair value.

For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of

resources related to pensions, and pension expense, information about the fiduciary net position of the defined benefit

plan administered by Marshall Fire Relief Association and additions to and deductions from the plan’s fiduciary net

position have been determined on the same basis as they are reported by the plan. Investments are reported at fair

value.

Long-term obligations

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt

and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type

activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized

over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond

premium or discount. Bond issuance costs are reported as an expense in the period incurred.

In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond

issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.

Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are

reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are

reported as debt service expenditures.

Deferred inflows of resources

In addition to liabilities, the statement of net position and fund financial statements will sometimes report a separate

section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources,

represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of

resources (revenue) until that time. The government has only one type of item, which arises only under a modified

accrual basis of accounting, which qualifies as needing to be reported in this category. Accordingly, the item,

unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report

unavailable revenues from two sources: taxes and special assessments. These amounts are deferred and recognized as

an inflow of resources in the period that the amounts become available.

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DECEMBER 31, 2016


The City has an additional item which qualifies for reporting in this category. The item, deferred pension resources, is

reported only in the statements of net position and results from actuarial calculations.

Fund balance

In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which

the City is bound to observe constraints imposed upon the use of resources reported in the governmental funds. These

classifications are defined as follows:

Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items.

Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or

constraints imposed by state statutory provisions.

Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of

the City Council (the Council), which is the City’s highest level of decision-making authority. Committed amounts

cannot be used for any other purpose unless the Council modifies or rescinds the commitment by resolution.

Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other

than the General fund, assigned fund balance represents all remaining amounts that are not classified as

nonspendable and are neither restricted nor committed. In the General fund, assigned amounts represent intended

uses established by the Council itself or by an official to which the governing body delegates the authority. The

Council has adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to

the Finance Director.

Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.

The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available.

Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund

balance when expenditures are made.

The City has formally adopted a fund balance policy for the General fund. The City’s policy is to maintain a minimum

unrestricted fund balance of 50 percent of budgeted operating expenditures for cash-flow timing needs.

Net position

Net position represents the difference between assets and deferred outflows of resources and liabilities and deferred

inflows of resources. Net position is displayed in three components:

a. Net investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by any

outstanding debt attributable to acquire capital assets.

b. Restricted net position - Consists of net position restricted when there are limitations imposed on their use

through external restrictions imposed by creditors, grantors, laws or regulations of other governments.

c. Unrestricted net position - All other net position that does not meet the definition of “restricted” or “net

investment in capital assets”.

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DECEMBER 31, 2016 Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary information Prior to September 1, the City Administrator submits to the City Council a proposed operating budget for the fiscal year

commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them. The City Council adopts the proposed budget as amended and adjusted by the Council and certifies the proposed property tax levy to the County Auditor according to Minnesota statutes.

On or before December 28, the final budget is legally enacted by Council resolution and the final property tax levy

certified to the County Auditor. Management is authorized to transfer budgeted amounts between departments within any fund; however, any revisions

that alter the total expenditures of any fund must be approved by the City Council. Reported budget amounts are as originally adopted or amended by the City Council.

The City has legally adopted budgets for the General fund and certain special revenue funds. Expenditures may not

legally exceed budgeted appropriations at the total fund level. Monitoring of budgets is maintained at the expenditure category level (i.e., personal services, supplies, charges for services, and capital outlay) within each program. All amounts over budget have been approved by the City Council through the disbursement process. The City is not legally required to adopt an annual budget for the Capital Projects and Debt Service funds. Project-length financial plans are adopted for the Capital Projects funds. Formal budgetary integration is not employed for Debt Service funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions.

Budgets for the General and certain special revenue funds are adopted on a basis consistent with generally accepted

accounting principles (GAAP). Budgeted amounts are as originally adopted, or as amended by the City Council. There were no amendments to the 2016 budget.

B. Excess of expenditures over appropriations For the year ended December 31, 2016 expenditures exceeded appropriations in the following funds:

Excess ofExpenditures

OverBudget Actual Appropriations

Special revenueTax Increment Financing 20,366$ 258,936$ 238,570$ Endowment Avera / WMMC - 36,835 36,835 Small Cities Development Program - 351 351 Community Education Drivers Training 57,000 74,885 17,885

Fund

The excess of expenditures over appropriations were funded by actual revenues in excess of budget and available fund balance.

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DECEMBER 31, 2016

Note 2: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY - CONTINUED

C. Deficit fund equity

The following funds had fund equity deficits at December 31, 2016:

Amount

Capital Projects

Trunk Highway 23 Pedestrian Bridge 47,685$

2007 Public Improvements 94,017






SMSAC Ball Parks 627,654

Fund

The City intends to fund these deficits through future tax levies, grants, transfers from other funds and various other

sources.

Note 3: DETAILED NOTES ON ALL FUNDS

A. Deposits and investments

Deposits

Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City’s deposits and

investments may not be returned or the City will not be able to recover collateral securities in the possession of an

outside party. In accordance with Minnesota statutes and as authorized by the Council, the City maintains deposits at

those depository banks, all of which are members of the Federal Reserve System.

Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The market value

of collateral pledged must equal 110 percent of the deposits not covered by insurance, bonds, or irrevocable standby

letters of credit from Federal Home Loan Banks.

Authorized collateral in lieu of a corporate surety bond includes:

United States government Treasury bills, Treasury notes, Treasury bonds;

Issues of United States government agencies and instrumentalities as quoted by a recognized industry

quotation service available to the government entity;

General obligation securities of any state or local government with taxing powers which is rated “A” or better

by a national bond rating service, or revenue obligation securities of any state or local government with taxing

powers which is rated “AA” or better by a national bond rating service;

General obligation securities of a local government with taxing powers may be pledged as collateral against

funds deposited by that same local government entity;

Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by

written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc., or

Standard & Poor’s Corporation; and

Time deposits that are fully insured by any federal agency.

-67-



DECEMBER 31, 2016

Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED

Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve

Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or

controlled by the financial institution furnishing the collateral. The selection should be approved by the City.

At year end, the City’s carrying amount of deposits was $35,365,898 (including fiduciary deposits of $16,024) and the

bank balance was $36,168,492. The bank balance was covered by federal depository insurance of $769,525 and

securities pledge by the financial institution’s trust department in the City’s name in the amount of $35,398,967. The

above balances include the primary government and the Economic Development Authority and Marshall-Lyon County

Library discreetly presented component unties deposits.

At year end, the Municipal Utilities discretely presented component unit’s carrying amount of deposits was $667,784

and the bank balance was $667,784. The bank balance was covered by federal depository insurance of $250,000 and

securities held by the pledging financial institution’s trust department of $417,784.

At year end, the Housing Commission discretely presented component unit’s carrying amount of deposits was $464,458

and the bank balance was $477,199. The bank balance was covered by federal depository insurance of $250,000 and

securities held by the pledging financial institution’s trust department of $227,199.

Investments

As of December 31, 2016, the City had the following investments that are insured or registered, or securities held by the

City or it’s agent in the City’s name:

Credit Segmented

Quality/ Time

Ratings (1) Distribution (2) Amount Level 1 Level 2

Pooled investments at ammortized costs

Broker Money Market Funds N/A less than 6 months 347,327$

Non-pooled investments at fair value

Governmental Agency Security N/A less than 6 months 3,694,436 3,694,436$ -$

U. S. Treasury Notes N/A less than 6 months 250,285 250,285 -

U. S. Treasury Notes N/A 1 to 3 years 726,290 726,290 -

U. S. Treasury Notes N/A more than 3 years 521,774 521,774 -

Mortgage Backed Securities N/A 6 months to 1 year 425,360 - 425,360

Mortgage Backed Securities N/A 1 to 3 years 1,170,675 - 1,170,675

Mortgage Backed Securities N/A more than 3 years 712,715 - 712,715

Muncipal Bonds N/A less than 6 months 250,050 - 250,050

Muncipal Bonds N/A 6 months to 1 year 458,153 - 458,153

Muncipal Bonds N/A 1 to 3 years 1,274,521 - 1,274,521

Muncipal Bonds N/A more than 3 years 1,125,036 - 1,125,036

Total investments 10,956,622$ 5,192,785$ 5,416,510$

Primary Government

Types of Investments

Fair Value

Measurement Using

(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk. (2) Interest rate risk is disclosed using the segmented time distribution method.

N/A Indicates not applicable or available.

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DECEMBER 31, 2016


The Municipal Utilities discretely presented component unit has the following investments at December 31, 2016:

Credit Segmented

Quality/ Time

Ratings (1) Distribution (2) Amount Level 1 Level 2

Pooled investments at ammortized costs

Broker Money Market Funds N/A less than 1 year 4,013,213$

Non-pooled investments at fair value

U. S. Treasury Notes N/A less than 1 year 734,758 -$ 734,758$

U. S. Treasury Notes N/A 1 to 5 years 7,302,087 - 7,302,087

U. S. Treasury Notes N/A more than 5 years 1,917,263 - 1,917,263

Federal Agency Bonds and Notes N/A less than 1 year 200,294 - 200,294

Federal Agency Bonds and Notes N/A 1 to 5 years 6,040,322 - 6,040,322

Federal Agency Bonds and Notes N/A more than 5 years 2,024,944 - 2,024,944

Federal Agency Mortgage Pools N/A 1 to 5 years 24,468 - 24,468

Federal Agency Mortgage Pools N/A more than 5 years 1,221,580 - 1,221,580

Mortgage Backed Securities N/A more than 5 years 126,004 - 126,004

Municipal Bonds A- to AAA less than 1 year 1,222,174 - 1,222,174

Municipal Bonds A- to AAA 1 to 5 years 6,659,646 - 6,659,646

Municipal Bonds A- to AAA more than 5 years 683,900 - 683,900

Total investments 32,170,653$ -$ 28,157,440$

Fair Value

Measurement Using

Types of Investments

Component Unit: Municipal Utilities

(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.

(2) Interest rate risk is disclosed using the segmented time distribution method.

N/A Indicates not applicable or available.

The investments of the City are subject to the following risks:

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its

obligations. Ratings are provided by various credit rating agencies and where applicable, indicate associated

credit risk. Minnesota statutes limit the City’s investments.

Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of

the counterparty to a transaction, a government will not be able to recover the value of investment or collateral

securities that are in the possession of an outside party. The City typically limits its exposure by purchasing

insured or registered investments.

Concentration of Credit Risk. The concentration of credit risk is the risk of loss attributed to the magnitude of

a government's investment in a single issuer. The City places no limit on the amount that may be invested in

any one issuer.

Interest Rate Risk. The interest rate risk is the risk that changes in interest rates will adversely affect the fair

value of an investment. The City manages its exposure to declines in fair values by limiting the maturity of its

investment portfolio.

Cash on hand

Cash in the possession of the City, consisting of petty cash and change funds totals $2,700 for the primary government

and $1,705 for component units.

-69-



DECEMBER 31, 2016


Cash and investments summary

Cash and investments as shown on the statement of net position for the City, including component units, follows:

Primary Municipal Housing Economic

Government Utilities Commission Development

Deposits 33,268,476$ 667,784$ 464,458$ 1,649,073$

Cash on hand 2,700 1,100 - -

Investments 10,956,622 32,170,653 - -

Total 44,227,798$ 32,839,537$ 464,458$ 1,649,073$

Cash and temporary investments 36,673,728$ 26,248,324$ 436,196$ 1,649,073$


Restricted assets 3,818,484 6,591,213 28,262 -

Total 44,227,798$ 32,839,537$ 464,458$ 1,649,073$

Component Units

Component

Units

Marshall-Lyon Fiduciary

County Library Funds Total

Deposits 432,325$ 16,024$ 36,498,140$

Cash on hand 605 - 4,405

Investments - - 43,127,275

Total 432,930$ 16,024$ 79,629,820$

Cash and temporary investments 432,930$ 16,024$ 65,456,275$

Escrowed funds - - 3,735,586

Restricted assets - - 10,437,959

Total 432,930$ 16,024$ 79,629,820$

Investment in joint ventures - component units

PrairieNet WAN provides shared costs, infrastructure and expertise in the field of technology and telecommunications

for MMU, the City of Marshall and Marshall Public Schools. MMU acts as a fiscal agent for this organization whose

activities to date include certain computer network equipment, computer consulting and organizational costs. These

joint costs have been passed on to the respective members and are included in the member’s financial statements.

MMU’s ongoing financial responsibility for this organization is limited to those activities in which it chooses to

participate. MMU has no equity interest in this joint venture.

B. Notes/leases receivable

The EDA has made various loans to local businesses which are payable to the City with variable payments and interest

rates. The balance on these notes as of December 31, 2016 is $431,356. Loans were also made by the EDA Parkway

Housing fund, the balance of which is $233,713 as of December 31, 2016. The portion of the Small Cities

Development Program which is required to be repaid only if the borrower sells the property within 7 years of the date of

the loan is $32,317 as of December 31, 2016, net of an allowance of $283,193. MMU has issued a loan for Energy

Efficiency that has a balance of $24,568 as of December 31, 2016.

-70-



DECEMBER 31, 2016


C. Capital assets

Primary government

Capital asset activity for the year ended December 31, 2016 was as follows:

Beginning Ending

Balance Increases Decreases Balance


Capital assets not being depreciated

Land 7,025,765$ 75,497$ -$ 7,101,262$

Construction in progress 26,292,946 8,703,511 (2,282,117) 32,714,340

Total capital assets

being depreciated 33,318,711 8,779,008 (2,282,117) 39,815,602

Capital assets being depreciated

Buildings 13,993,613 85,587 - 14,079,200

Improvements other than buildings 24,479,974 105,414 - 24,585,388

Infrastructure 50,722,624 2,282,117 - 53,004,741

Equipment and machinery 8,294,371 1,995,437 (287,205) 10,002,603


being depreciated 97,490,582 4,468,555 (287,205) 101,671,932

Less accumulated depreciation for

Buildings (8,427,721) (398,918) - (8,826,639)

Improvements other than buildings (12,453,260) (1,090,363) - (13,543,623)

Infrastructure (24,994,825) (2,048,934) - (27,043,759)

Equipment and machinery (5,053,464) (660,747) 282,945 (5,431,266)

Total accumulated depreciation (50,929,270) (4,198,962) 282,945 (54,845,287)


being depreciated, net 46,561,312 269,593 (4,260) 46,826,645


capital assets, net 79,880,023$ 9,048,601$ (2,286,377)$ 86,642,247$

-71-



DECEMBER 31, 2016


Beginning Ending




Land 753,240$ -$ (240,368)$ 512,872$

Construction in progress 911,760 876,327 (911,761) 876,326

Total capital assets not

being depreciated 1,665,000 876,327 (1,152,129) 1,389,198


Buildings 2,693,844 33,520 (199,030) 2,528,334

Improvements other than buildings 28,069,657 54,378 (7,586) 28,116,449

Infrastructure 34,073,473 911,761 - 34,985,234

Equipment and machinery 2,852,881 181,794 (53,545) 2,981,130


being depreciated 67,689,855 1,181,453 (260,161) 68,611,147


Buildings (244,571) (68,137) 183,738 (128,970)

Improvements other than buildings (17,257,225) (897,514) 7,586 (18,147,153)

Infrastructure (13,352,778) (1,019,025) - (14,371,803)

Equipment and machinery (2,002,739) (139,946) 41,500 (2,101,185)



being depreciated, net 34,832,542 (943,169) (27,337) 33,862,036


capital assets, net 36,497,542$ (66,842)$ (1,179,466)$ 35,251,234$


General government 35,011$

Public safety 406,913

Public works 2,285,372

Culture and recreation 324,787

Airport 1,146,879

Total depreciation expense - governmental activities 4,198,962$


Wastewater treatment 1,597,256$

Surface water management 435,402

Municipal liquor store 91,964

Total depreciation expense - business-type activities 2,124,622$

-72-



DECEMBER 31, 2016


Construction commitments

The City has active projects as of December 31, 2016. At year end the City’s commitments with contractors are as

follows:

Remaining

Spent-to-Date Commitment

Saratoga / Hwy 23 Pedestrian Overpass 4,661,395$ 268,755$

North "A" Street / East Redwood Street 2,309,629 255,065

Independent Park Sediment Removal / East Lyon / East Main Sidewalk 1,840,169 291,678

Ballpark Pump Station 2,906,214 269,681

Amateur Sports Center 14,122,549 190,013

Total 25,839,956$ 1,275,192$

Project

The special assessment portion of the commitment for residential street construction is being financed by special

assessment bonds that will be repaid by the benefiting property owners.

Discretely Presented Component Units

Capital asset activity for the Marshall Municipal Utilities for the year ended December 31, 2016 was as follows:

Beginning Ending



Construction in progress 1,352,029$ 2,034,880$ (2,261,307)$ 1,125,602$


Electric production plant 2,820,515 3,158 - 2,823,673

Electric transmission line 16,404,370 - - 16,404,370

Electric distribution system 52,756,664 1,811,302 (150,084) 54,417,882

Transportation and general 8,437,282 251,897 (71,703) 8,617,476

Water utility 53,381,173 624,922 (67,842) 53,938,253

Total capital assets being depreciated 133,800,004 2,691,279 (289,629) 136,201,654


Electric production plant (2,482,345) (52,555) - (2,534,900)

Electric transmission line (8,447,466) (521,665) - (8,969,131)

Electric distribution system (20,417,240) (2,153,265) 150,084 (22,420,421)

Transportation and general (6,190,396) (448,158) 71,703 (6,566,851)

Water utility (26,956,175) (1,658,429) 67,842 (28,546,762)



being depreciated, net 69,306,382 (2,142,793) - 67,163,589

Capital assets, net 70,658,411$ (107,913)$ (2,261,307)$ 68,289,191$

-73-



DECEMBER 31, 2016


Depreciation expense was charged to functions/programs of the Marshall Municipal Utilities as follows:


Marshall Municipal Utilities - Water 1,750,369$

Marshall Municipal Utilities - Electric 3,083,703

Total 4,834,072$

Capital asset activity for the Marshall Housing Commission for the year ended September 30, 2016 was as follows:

Beginning Ending



Land 514,965$ -$ -$ 514,965$

Construction in progress 144,849 - (144,849) -


not being depreciated 659,814 - (144,849) 514,965


Buildings 7,682,946 302,724 - 7,985,670

Equipment and machinery 169,447 11,849 (4,272) 177,024

Total capital assets being depreciated 7,852,393 314,573 (4,272) 8,162,694

Less accumulated depreciation (5,107,900) (257,523) 3,481 (5,361,942)


being depreciated, net 2,744,493 57,050 (791) 2,800,752

Capital assets, net 3,404,307$ 57,050$ (145,640)$ 3,315,717$

Depreciation expense was charged to functions/programs of the Marshall Housing Commission as follows:


Marshall Housing Commission 257,523$

-74-



DECEMBER 31, 2016


Capital asset activity for the Economic Development Authority for the year ended December 31, 2016 was as follows:

Beginning Ending



Land improvements 12,920$ -$ -$ 12,920$


Land improvements (4,683) (646) - (5,329)

Capital assets, net 8,237$ (646)$ -$ 7,591$

Depreciation expense was charged to functions/programs of the EDA as follows:


Economic Development Authority 646$

Capital asset activity for the Marshall-Lyon County Library for the year ended December 31, 2016 was as follows:

Beginning Ending



Buildings and improvements 6,409,339$ -$ -$ 6,409,339$

Equipment and machinery 564,598 23,303 - 587,901

Library books 1,094,627 67,933 - 1,162,560

Total capital assets being depreciated 8,068,564 91,236 - 8,159,800


Buildings and improvements (355,376) (160,234) - (515,610)

Equipment and machinery (196,680) (45,136) - (241,816)

Library books (935,843) (66,336) - (1,002,179)

Total accumulated depreciation (1,487,899) (271,706) - (1,759,605)

Capital assets, net 6,580,665$ (180,470)$ -$ 6,400,195$

Depreciation expense was charged to functions/programs of the Library as follows:


Marshall-Lyon County Library 271,706$

-75-



DECEMBER 31, 2016


D. Interfund receivables, payables and transfers

Due from/to other funds:

Individual fund interfund receivables and payables balances at year end were as follows:

Amount

General 2014 Public Improvement 2,488$

Nonmajor governmental 527,487

Enterprise

Wastewater Treatment Nonmajor governmental 20,998

Surface Water Management Nonmajor governmental 335,000

Total 885,973$

Receivable Fund Payable Fund

The outstanding balances between funds result mainly from the time lag between the dates that (1) interfund goods and

services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and

(3) payments between funds are made. The majority of the interfund balances represent temporary funding for various

projects. The remaining balance represents monthly and year-end charges to other funds.

Amounts due from/to component unit/primary government representing capital improvements and monthly and year-

end charges to other funds are as follows:

Amount

Primary government Component unit

Tax Increment Financing Economic Development Authority 317,073$

Receivable Entity/Fund Payable Entity/Fund

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DECEMBER 31, 2016


Interfund transfers:

Interfund transfers for the year ended December 31, 2016 were as follows:

2013

Amateur Nonmajor

General Debt Service Sports Center Governmental Total

Transfers out

Tax Increment Financing -$ 354,478$ -$ -$ 354,478$

Sales/Lodging Tax - 1,478,298 - 580,057 2,058,355

Nonmajor governmental 27,030 - 97,557 22,248 146,835

Wastewater Treatment enterprise - 37,070 - - 37,070

Municipal Liquor Store enterprise 274,992 - - - 274,992

Total transfers out 302,022$ 1,869,846$ 97,557$ 602,305$ 2,871,730$

Fund

Transfers in

During the year, transfers are used to 1) move revenues from the fund with collection authorization to the Debt Service

fund as debt service principal and interest payments become due, 2) move restricted amounts from borrowings to the

Debt Service fund to establish mandatory reserve accounts, 3) move unrestricted revenues to finance various programs

that the government must account for in other funds in accordance with budgetary authorizations, including amounts

provided as subsidies or matching funds for various grant programs. For the year ended December 31, 2016, the City

made the following one-time transfers:

Transfer from the Tax Increment Financing fund ($354,478) to the Debt Services fund for the TIF collected for

debt services account.

Transfer from a nonmajor capital project fund to a nonmajor special revenues fund ($22,173) to transfer local

share.

Transfer from a nonmajor special revenues fund to a nonmajor capital project fund ($75) to close the fund.

-77-



DECEMBER 31, 2016


E. Long-term debt

Governmental activity debt

General obligation bonds

The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities.

General obligation bonds have been issued for both general government and proprietary activities. These bonds are

reported in the proprietary funds if they are expected to be repaid from proprietary fund revenues. In addition, general

obligation bonds have been issued to refund both general obligation and revenue bonds.

General obligation bonds are direct obligations and pledge the full faith and credit of the government. General

obligation bonds currently outstanding are as follows:

These bonds were issued for capital equipment purchases. The debt is a general obligation of the City and will be

retired through ad valorem tax levies.

Balance

Authorized Issue Maturity at

and Issued Date Date Year End

G.O. Equipment

Certificates of 2008C 645,000$ 2.40 - 4.10 % 12/01/08 02/01/18 165,000$

G.O. Equipment

Certificates of 2012A 85,000 2.00 06/01/12 02/01/18 40,000

G.O. Equipment

Certificates of 2013A 860,000 2.00 - 3.00 08/01/13 02/01/23 685,000

G.O. Bonds of 2015A 1,710,000 2.00 - 3.00 01/01/15 02/01/31 1,710,000

G.O. Bonds of 2016B 705,000 2.00 06/23/16 02/01/25 705,000

Total General Obligation Bonds 3,305,000$

Interest

Description Rate

The annual debt service requirements to maturity for general obligation bonds are as follows:

Year Ending

December 31, Principal Interest Total

2017 295,000$ 79,000$ 374,000$

2018 435,000 68,480 503,480

2019 340,000 59,838 399,838

2020 340,000 52,919 392,919

2021 350,000 45,650 395,650

2022 - 2026 910,000 141,400 1,051,400

2027 - 2031 635,000 48,675 683,675

Total 3,305,000$ 495,962$ 3,800,962$

General Obligation Bonds

Governmental Activities

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DECEMBER 31, 2016


General obligation tax increment bonds

These bonds were issued for development and redevelopment projects. The additional tax revenue resulting from

increased tax capacity of the redeveloped properties is used to retire the related debt.

Balance



G.O. Tax Increment

Revenues Bonds of 2011A 1,265,000$ 0.70 - 2.70 % 09/15/11 02/01/23 1,130,000$

Interest

Description Rate

The annual debt service requirements to maturity for general obligation tax increment bonds are as follows:

Year Ending


2017 145,000$ 22,833$ 167,833$

2018 155,000 20,650 175,650

2019 160,000 17,810 177,810

2020 160,000 14,490 174,490

2021 165,000 10,873 175,873

2022 - 2023 345,000 9,212 354,212

Total 1,130,000$ 95,868$ 1,225,868$


G.O. Tax Increment Bonds

General obligation tax abatement bonds

These bonds were issued to finance public infrastructure improvements. They will be retired from tax abatement

revenues and tax levies.

Balance



G.O. Tax Abatement

Bonds of 2016C 2,810,000$ 2.00 - 3.00 % 06/23/16 02/01/37 2,810,000$

Interest

Description Rate

The annual debt service requirements to maturity for general obligation tax abatement bonds are as follows:

Year Ending


2017 -$ 76,283$ 76,283$

2018 115,000 67,850 182,850

2019 115,000 65,550 180,550

2020 120,000 63,200 183,200

2021 120,000 60,800 180,800

2022 - 2026 645,000 266,250 911,250

2027 - 2031 710,000 195,775 905,775

2032 - 2036 810,000 88,050 898,050

2037 175,000 2,625 177,625

Total 2,810,000$ 886,383$ 3,696,383$


G.O. Tax Abatement Bonds

-79-


DECEMBER 31, 2016


General obligation special assessment bonds

These bonds were issued to finance various improvements and will be repaid primarily from special assessments levied on the properties benefiting from the improvements. Some issues, however, are partly financed by ad valorem tax levies.

BalanceAuthorized Issue Maturity atand Issued Date Date Year End

G.O. Utility Revenue andImprovement Bonds of 2007C - Improvement 4,390,000$ 4.00 - 4.10 % 07/01/07 02/01/18 305,000$

G.O. Utility Revenue andImprovement Bonds of 2008B - Improvement 1,950,000 3.50 - 4.20 12/01/08 02/01/19 535,000

G.O. Utility Revenue andImprovement Bonds of 2009A - Improvement 1,860,000 2.00 - 4.00 11/15/09 02/01/20 725,000

G.O. Utility Revenue andImprovement Bonds of 2010B - Improvement 3,295,000 1.50 - 2.75 09/15/10 02/01/21 1,555,000

G.O. Improvement Bonds of 2011B 1,510,000 0.50 - 4.00 10/01/11 02/01/27 1,065,000

G.O. Improvement Bonds of 2012A 2,550,000 2.00 - 2.55 06/01/12 02/01/28 1,735,000

G.O. Improvement Bonds of 2013A 2,785,000 2.00 - 3.00 08/01/13 02/01/25 2,395,000

G.O. Improvement Bonds of 2014B 15,735,000 3.13 - 5.00 07/23/14 02/01/28 13,810,000

G.O. Improvement Bonds of 2014C 1,955,000 2.00 - 3.00 07/23/14 02/01/26 1,875,000

G.O. Improvement Bonds of 2015B 895,000 3.00 - 4.00 07/22/15 02/01/24 895,000

G.O. Improvement Bonds of 2016B 1,500,000 2.00 06/23/16 02/01/25 1,500,000

Total General Obligation Improvement Bonds 26,395,000$

InterestDescription Rate

The annual debt service requirements to maturity for general obligation special assessment bonds are as follows:

Year EndingDecember 31, Principal Interest Total

2017 2,710,000$ 891,507$ 3,601,507$ 2018 2,915,000 794,720 3,709,720 2019 2,775,000 699,717 3,474,717 2020 2,665,000 607,593 3,272,593 2021 2,490,000 518,651 3,008,651

2022 - 2026 9,765,000 1,350,484 11,115,484 2027 - 2028 3,075,000 93,931 3,168,931

Total 26,395,000$ 4,956,603$ 31,351,603$

Governmental ActivitiesG.O. Special Assessment Bonds

-80-


DECEMBER 31, 2016

Note 3: DETAILED NOTES ON AND ALL FUNDS - CONTINUED

Contract for deed payable

The contract for deed was issued to purchase land for the SMASC Ball Parks and will be repaid primarily from property tax levies.


Contract for deed 448,696$ 3.00 % 07/01/13 08/01/18 188,009$


The annual debt service requirements to maturity for contract for deed payable are as follows:

Year EndingDecember 31, Principal Interest Total

2017 92,605$ 4,951$ 97,556$ 2018 95,404 2,152 97,556

Total 188,009$ 7,103$ 195,112$

Contract for DeedGovernmental Activities

-81-



DECEMBER 31, 2016

Note 3: DETAILED NOTES ON AND ALL FUNDS - CONTINUED

Business-type activity debt

General obligation revenue bonds

These bonds were issued to finance capital improvements to the storm water system and wastewater treatment facility.

These bonds will be retired from net revenue of these enterprise funds.

Balance



G.O. Utility and Improvement

Bonds of 2006B 5,920,000$ 4.00 - 4.375 % 08/01/06 02/01/17 3,945,000$

G.O. Storm Refunding

Bonds of 2006C 885,000 4.00 12/15/06 02/01/15 1,820,000


Bonds of 2007C - Sewer 2,692,000 4.00 - 4.10 07/01/07 02/01/18 543,000


Bonds of 2007C - Storm 258,000 4.00 - 4.10 07/01/07 02/01/18 52,000


Bonds of 2009A - Sewer 265,000 2.00 - 4.00 11/15/09 02/01/20 115,000


Bonds of 2009A - Storm 425,000 2.00 - 4.00 11/15/09 02/01/20 185,000

G.O. Utility Revenue and

Improvement Bonds

of 2010B - Wastewater 1,400,000 1.50 - 2.75 09/15/10 02/01/21 735,000

G.O. Utility Revenue and

Improvement Bonds

of 2010B - Storm 1,365,000 1.50 - 2.75 09/15/10 02/01/21 730,000


Bonds of 2011A - Storm 925,000 0.50 - 4.00 09/15/11 02/01/27 715,000


Bonds of 2011A - Wastewater 960,000 0.50 - 4.00 09/15/11 02/01/27 745,000


Bonds of 2011B - Storm 335,000 0.50 - 4.00 10/01/11 02/01/27 260,000


Bonds of 2011B - Wastewater 205,000 0.50 - 4.00 10/01/11 02/01/27 165,000


Bonds of 2012A - Wastewater 1,775,000 2.00 - 2.55 06/01/12 02/01/28 1,455,000


Bonds of 2014C - Wastewater 1,420,000 2.00 - 3.00 07/23/14 02/01/25 1,290,000


Bonds of 2015B - Wastewater 860,000 3.00 - 4.00 07/22/15 02/01/24 860,000


Bonds of 2016B - Wastewater 305,553 2.00 06/23/16 02/01/25 305,553


Bonds of 2016B - Storm 1,049,447 2.00 06/23/16 02/01/25 1,049,447

G.O. Utility refunding

Bonds of 2016D - Wastewater 3,630,000 2.00 06/23/16 02/01/27 3,630,000

Total G.O. Revenue Bonds 18,600,000$

Interest

Description Rate

-82-



DECEMBER 31, 2016


The annual debt service requirements to maturity for general obligation revenue bonds are as follows:

Year Ending


2017 5,400,000$ 465,401$ 5,865,401$

2018 1,995,000 321,483 2,316,483

2019 1,720,000 271,359 1,991,359

2020 1,790,000 224,292 2,014,292

2021 1,755,000 176,577 1,931,577

2022 - 2026 5,060,000 421,080 5,481,080

2027 - 2028 880,000 15,059 895,059

Total 18,600,000$ 1,895,251$ 20,495,251$

G.O. Revenue Bonds

Business-type Activities

Revenue bonds

These bonds were issued to finance capital improvements to the municipal liquor store. These bonds will be retired

from net revenue of this enterprise fund.

Balance


Description and Issued Date Date Year End

Lease Revenue Bond of 2015 3,240,000$ 1.05 - 3.10 % 02/10/15 12/01/29 2,955,000$

Interest

Rate

The annual debt service requirements to maturity for revenue bonds are as follows:

Year Ending


2017 195,000$ 77,870$ 272,870$

2018 200,000 74,653 274,653

2019 205,000 70,853 275,853

2020 210,000 66,547 276,547

2021 215,000 61,822 276,822

2022 - 2026 1,155,000 222,200 1,377,200

2027 - 2029 775,000 48,515 823,515

Total 2,955,000$ 622,460$ 3,577,460$

Revenue Bonds

Business-type Activities

Annual revenues from charges for services, principal and interest payments, and percentage of revenue required to

cover principal and interest payments are as follows:

Wastewater Surface Water

Revenue 5,086,831$ 1,001,246$

Principal and interest 1,791,632 341,874

Percent of revenue 35.22% 34.14%

-83-



DECEMBER 31, 2016


Changes in long-term liabilities

Long-term liability activity for the year ended December 31, 2016 was as follows:

Beginning Ending Due Within

Balance Increases Decreases Balance One Year


Bonds payable

General obligation bonds 2,780,000$ 705,000$ (180,000)$ 3,305,000$ 295,000$

General obligation

tax increment bonds 1,220,000 - (90,000) 1,130,000 145,000

General obligation

tax abatement bonds - 2,810,000 - 2,810,000 -

General obligation

improvement bonds 27,640,000 1,500,000 (2,745,000) 26,395,000 2,710,000

Unamortized bond premium 2,064,467 166,461 (167,086) 2,063,842 -

Unamortized bond discount (11,230) - 2,989 (8,241) -

Total bonds payable 33,693,237 5,181,461 (3,179,097) 35,695,601 3,150,000

Contract for deed 277,897 - (89,888) 188,009 92,605

Pension liability

GERF 2,509,817 1,662,527 (218,865) 3,953,479 -

PEPFF 1,749,800 4,475,775 (245,946) 5,979,629 -

FRA 96,444 16,875 - 113,319 -

Other postemployment

benefits obligation 186,845 39,902 (17,975) 208,772 -


payable 1,187,342 352,379 (480,136) 1,059,585 59,121

Governmental activity

long-term liabilities 39,701,382$ 11,728,919$ (4,231,907)$ 47,198,394$ 3,301,726$


Bonds payable

General obligation

revenue bonds 15,265,000$ 4,985,000$ (1,650,000)$ 18,600,000$ 5,400,000$

Revenue bonds 3,150,000 - (195,000) 2,955,000 195,000

Unamortized bond premium 227,072 190,193 (17,740) 399,525 -

Unamortized bond discount (52,362) - 7,163 (45,199) -

Total bonds payable 18,589,710 5,175,193 (1,855,577) 21,909,326 5,595,000

Pension liability

GERF 880,268 534,057 (201,598) 1,212,727 -

Other postemployment

benefits obligation 46,470 8,944 (4,470) 50,944 -


payable 297,393 107,372 (97,618) 307,147 71,085

Business-type activity

long-term liabilities 19,813,841$ 5,825,566$ (2,159,263)$ 23,480,144$ 5,666,085$

-84-


DECEMBER 31, 2016

Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED Conduit debt obligations

The City has issued conduit debt to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage or lease. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City or the State, nor any political subdivisions thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements.

At December 31, 2016 the following conduit debt existed:

• $5,600,000 Student Housing Revenue note, Series 2005, with an outstanding balance of $3,773,633.

Crossover refunding

On June 23, 2016 the City issued $3,630,000 of General Obligation Utility Revenue Crossover Refunding Bonds, Series 2016D. The bonds issued will crossover refund the 2006B General Obligation Utility and Improvement Bonds, Series 2006B. The proceeds of the bonds were deposited in an escrow account and will be used to pay issuance costs and to purchase government obligations. The government obligations will bear interest rates that will provide sufficient funds to refund the old bonds. The 2006B bond will be refunded on February 1, 2017. The escrow account will also provide debt service payments on the new bond until the crossover dates. The old bonds are not considered defeased until the crossover dates, and therefore will not be removed as liabilities. As a result of the crossover refunding issue, the City will save $522,630 in debt service payments and achieve an economic gain (the present value of the difference between the old and the new debt service) of $487,605.

Component unit debt activity

Revenue bonds

These bonds were issued to finance capital improvements to the Marshall Municipal Utilities. These bonds will be

retired from net revenue of this enterprise fund.


Utility Revenue Bonds,Series 2008 7,000,000$ 3.92 % 04/17/08 07/01/23 3,775,000$ Series 2009 5,000,000 3.69 04/28/09 07/01/24 2,995,000 Series 2010 6,635,000 2.80 11/18/10 07/01/25 4,290,000 Series 2011 4,290,000 2.79 11/10/11 07/01/22 3,030,000 Series 2012 Refunding 2,320,000 1.28 06/01/12 07/01/19 1,055,000 Series 2012 5,500,000 2.31 06/01/12 07/01/27 4,180,000 Series 2013 6,355,000 3.14 12/18/13 07/01/28 5,200,000 Series 2014 4,025,000 3.04 04/24/14 07/01/29 3,595,000 Series 2016 7,310,000 1.51 04/21/16 07/01/23 7,310,000

Total Revenue Bonds 35,430,000$


-85-



DECEMBER 31, 2016


The annual debt service requirements to maturity for revenue bonds are as follows:

Year Ending


2017 3,660,000$ 1,142,433$ 4,802,433$

2018 3,795,000 1,008,257 4,803,257

2019 3,890,000 904,894 4,794,894

2020 4,070,000 796,962 4,866,962

2021 4,205,000 676,497 4,881,497

2022 - 2026 13,390,000 1,627,795 15,017,795

2027 - 2029 2,420,000 137,304 2,557,304

Total 35,430,000$ 6,294,142$ 41,724,142$

Revenue Bonds

Marshall Municipal Utilities

Component Unit Activities

Notes payable

Various obligations were issued by the EDA for purchase of land held for resale and infrastructure improvements

thereon. These contracts are general obligations of the City and will be retired through sales of land in the EDA -

Parkway Housing special revenue fund.

Balance



Bremer Bank 63,742$ - % 01/29/07 01/29/29 63,742$

Interest

RateDescription

The annual debt service requirements to maturity for notes payable are as follows:

Year Ending


2029 63,742$ -$ 63,742$

Notes Payable

Economic Development Authority


General obligation bonds

These bonds were issued for capital improvements of the library. The debt is a general obligation of the City and will

be retired through ad valorem tax levies and pledges and cash contributions.

Balance



G.O. Capital

Improvement of 2010A 1,150,000$ 2.00 - 3.30 % 9/15/2010 02/01/26 685,000$

Interest

Description Rate

-86-


DECEMBER 31, 2016

Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED The annual debt service requirements to maturity for general obligation bonds are as follows:

Year EndingJune 30, Principal Interest Total

2017 60,000$ 17,938$ 77,938$ 2018 60,000 16,738 76,738 2019 65,000 15,406 80,406 2020 65,000 13,895 78,895 2021 65,000 12,270 77,270

2021 - 2026 370,000 30,223 400,223

Total 685,000$ 106,470$ 791,470$

General Obligation BondsMarshall-Lyon County Library


Changes in long-term liabilities Long-term liability activity for the component units for the year ended December 31, 2016 was as follows:

Beginning Ending Due WithinComponent unit activities Balance Increases Decreases Balance One YearMarshall Municipal Utilities

Revenue bonds 39,790,000$ 7,310,000$ (11,670,000)$ 35,430,000$ 3,660,000$ Accrued transmission reserve 28,291 552,462 - 580,753 - Compensated absences

payable 599,540 41,880 - 641,420 - Other postemployment

benefits obligation 101,527 33,803 (21,514) 113,816 - Pension liability

GERF 2,477,244 1,915,144 (559,982) 3,832,406 - Unamortized bond discount (275,751) - 125,465 (150,286) -

Component unitlong-term liabilities 42,720,851$ 9,853,289$ (12,126,031)$ 40,448,109$ 3,660,000$

Economic Development Authority

Notes payable 63,742$ -$ -$ 63,742$ -$

Marshall-Lyon County LibraryBonds payable

General obligation bonds 780,000$ -$ (95,000)$ 685,000$ 60,000$ Unamortized bond premium 10,309 - (937) 9,372 -

Total bonds payable 790,309 - (95,937) 694,372 60,000 Pension liability

GERF 393,154 238,525 (49,276) 582,403 - Compensated absences

payable 92,318 36,353 (56,460) 72,211 19,497 Other postemployment

benefits obligation 23,212 3,499 (1,608) 25,103 - Component unit

long-term liabilities 1,298,993$ 278,377$ (203,281)$ 1,374,089$ 79,497$

Marshall Housing CommissionCompensated absences

payable 61,946$ 9,696$ -$ 71,642$ 22,254$

-87-



DECEMBER 31, 2016

Note 4: DEFINED BENEFIT PENSION PLAN - STATEWIDE

A. Plan description

The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the

Public Employees Retirement Association of Minnesota (PERA). PERA’s defined benefit pension plans are established

and administered in accordance with Minnesota statutes, chapters 353 and 356. PERA’s defined benefit pension plans

are tax qualified plans under Section 401(a) of the Internal Revenue Code.

General Employees Retirement Fund (GERF)

All full-time and certain part-time employees of the City, are covered by the General Employees Retirement Fund

(GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are

covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All

new members must participate in the Coordinated Plan.

Public Employees Police and Fire Fund (PEPFF)

The PEPFF, originally established for police officers and firefighters not covered by a local relief association, now

covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the PEPFF also covers police

officers and firefighters belonging to a local relief association that elected to merge with and transfer assets and

administration to PERA.

B. Benefits provided

PERA provides retirement, disability and death benefits. Benefit provisions are established by Minnesota statute and

can only be modified by the state legislature.

Benefit increases are provided to benefit recipients each January. Increases are related to the funding ratio of the plan.

Members in plans that are at least 90 percent funded for two consecutive years are given 2.5 percent increases.

Members in plans that have not exceeded 90 percent funded, or have fallen below 80 percent, are given 1 percent

increases.

The benefit provisions stated in the following paragraphs of this section are current provisions and apply to active plan

participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the

provisions in effect at the time they last terminated their public service.

GERF benefits

Benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and

years of credit at termination of service. Two methods are used to compute benefits for PERA's Coordinated and Basic

Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level

accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of

average salary for each of the first ten years of service and 2.7 percent for each remaining year. The annuity accrual rate

for a Coordinated Plan member is 1.2 percent of average salary for each of the first ten years and 1.7 percent for each

remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and

1.7 percent for Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full

annuity is available when age plus years of service equal 90 and normal retirement age is 65. For members hired on or

after July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66.

-88-



DECEMBER 31, 2016

Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED

PEPFF benefits

Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a prorated basis from

50 percent after five years up to 100 percent after ten years of credited service. Benefits for PEPFF members first hired

after June 30, 2014 vest on a prorated basis from 50 percent after ten years up to 100 percent after twenty years of

credited service. The annuity accrual rate is 3 percent of average salary for each year of service.

For PEPFF members who were first hired prior to July 1, 1989, a full annuity is available when age plus years of

service equal at least 90.

C. Contributions

Minnesota statutes chapter 353 sets the rates for employer and employee contributions. Contribution rates can only be

modified by the state legislature.

GERF contributions

Basic Plan members and Coordinated Plan members were required to contribute 9.10 percent and 6.50 percent,

respectively, of their annual covered salary in calendar year 2016. The City was required to contribute 11.78 percent of

pay for Basic Plan members and 7.50 percent for Coordinated Plan members in calendar year 2016. The City’s

contributions to the GERF for the years ending December 31, 2016, 2015 and 2014 were $303,513, $304,612 and

$308,035, respectively. The Marshall Municipal Utilities contributions to the GERF for the years ending December 31,

2016, 2015 and 2014 were $223,004, $223,792, and $199,740, respectively. The Marshall-Lyon County Library’s

contributions to the GERF for the years ending December 31, 2016, 2015 and 2014 were $35,525, $32,851, and

$33,155, respectively. The City’s and discretely presented component units’ contributions were equal to the

contractually required contributions for each year as set by Minnesota statute.

PEPFF contributions

Plan members were required to contribute 10.8 percent of their annual covered salary in calendar year 2016. The City

was required to contribute 16.20 percent of pay for PEPFF members in calendar year 2016. The City’s contributions to

the PEPFF for the years ending December 31, 2016, 2015 and 2014 were $229,508, $240,560 and $210,126,

respectively. The City’s contributions were equal to the contractually required contributions for each year as set by

Minnesota statute.

D. Pension costs

GERF pension costs - Primary Government and Marshall - Lyon County Library

At December 31, 2016, the City reported a liability of $5,166,206 for its proportionate share of the GERF’s net pension

liability of which the Marshall-Lyon County Library’s portion was calculated at $582,403. The net pension liability was

measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined

by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s

contributions received by PERA during the measurement period for employer payroll paid dates from July 1, 2015

through June 30, 2016 relative to the total employer contributions received from all of PERA’s participating employers.

At June 30, 2016, the City’s proportionate share was 0.071 percent which was a decrease of 0.0002 percent from its

proportion measured as of June 30, 2015. The Marshal-Lyon County Library’s proportionate share was calculated at

.0072 percent at June 30, 2016 which was a decrease of .0003 percent from its proportion measured as of June 30, 2015.

For the year ended December 31, 2016, the City recognized pension expense of $606,113 for its proportionate share of

GERF’s pension expense.

-89-



DECEMBER 31, 2016


At December 31, 2016 the City reported its proportionate share of GERF’s deferred outflows of resources and deferred

inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Deferred Deferred Deferred Deferred

Outflows Inflows Outflows Inflows

of Resources of Resources of Resources of Resources

Differences between expected and

actual experience 16,794$ 410,580$ 1,893$ 46,280$

Changes in actuarial assumptions 1,111,515 - 125,288 -

Net difference between projected and

actual earnings on plan investments 568,080 - 64,061 -

Changes in proportion - 269,263 - 30,361

Contributions to GERF subsequent

to the measurement date 166,113 - 18,724 -

Total 1,862,502$ 679,843$ 209,966$ 76,641$

Primary Government Component Unit - Library

Deferred outflows of resources totaling $184,837 related to pensions resulting from the City’s contributions to GERF

subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended

December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions

will be recognized in pension expense as follows:

Primary Component Unit -

Government Library

2017 239,378$ 26,982$

2018 117,744 13,272

2019 472,828 53,296

2020 186,596 21,051

GERF pension costs - Marshall Municipal Utilities

At December 31, 2016, MMU reported a liability of $3,832,406 for its proportionate share of the GERF’s net pension

liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the

net pension liability was determined by an actuarial valuation as of that date. MMU’s proportion of the net pension

liability was based on MMU’s contributions received by PERA during the measurement period for employer payroll

paid dates from July 1, 2015 through June 30, 2016 relative to the total employer contributions received from all of

PERA’s participating employers. At June 30, 2016, MMU’s proportionate share was 0.0472 percent which was a 1.30

percent decrease from its proportion measured as of June 30, 2015.

For the year ended December 31, 2016, MMU recognized pension expense of $263,327 for its proportionate share of

GERF’s pension expense.

-90-



DECEMBER 31, 2016


At December 31, 2016, MMU reported its proportionate share of GERF’s deferred outflows of resources and deferred

inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Deferred Deferred

Outflows Inflows

of Resources of Resources

Differences between expected and

actual experience -$ 312,371$

Changes in actuarial assumptions 750,389 -

Net difference between projected and

actual earnings on plan investments 729,615 -

Changes in proportion - 138,410

Contributions to GERF subsequent

to the measurement date 114,837 -

Total 1,594,841$ 450,781$

Component Unit - Municipal Utilities

Deferred outflows of resources totaling $114,837 related to pensions resulting from MMU’s contributions to GERF

subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended

December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to GERF pensions

will be recognized in pension expense as follows:

Component Unit -

Municipal Utilities

2017 263,870$

2018 263,870

2019 363,050

2020 138,433

PEPFF pension costs

At December 31, 2016, the City reported a liability of $5,979,629 for its proportionate share of the PEPFF’s net pension

liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the

net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension

liability was based on the City’s contributions received by PERA during the measurement period for employer payroll

paid dates from July 1, 2015 through June 30, 2016 relative to the total employer contributions received from all of

PERA’s participating employers. At June 30, 2016, the City’s proportionate share was 0.149 percent which was a

0.005 percent decrease from its proportion measured as of June 30, 2015.

For the year ended December 31, 2016, the City recognized pension expense of $911,905 for its proportionate share of

PEPFF’s pension expense. The City also recognized $13,410 for the year ended December 31, 2016 as pension expense

(and an offsetting reduction of net pension liability) for its proportionate share of the State of Minnesota’s on-behalf

contributions to the plan. Legislation passed in 2013 required the State of Minnesota to begin contributing $9 million to

the PEPFF each year, starting in fiscal year 2014.

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DECEMBER 31, 2016 Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED

At December 31, 2016 the City reported its proportionate share of PEPFF’s deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the measurement date, from the following sources:

Deferred DeferredOutflows Inflows

of Resources of ResourcesDifferences between expected and

actual experience 1,322$ 677,359$ Changes in actuarial assumptions 3,531,678 - Net difference between projected and

actual earnings on plan investments 509,089 - Changes in proportion 26,829 54,378 Contributions to PEPFF subsequent

to the measurement date 122,804 -

Total 4,191,722$ 731,737$

Deferred outflows of resources totaling $122,804 related to pensions resulting from the City’s contributions to PEPFF subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and inflows of resources related to PEPFF pensions will be recognized in pension expense as follows:

633,113$ 633,113 838,291 678,633 554,031

20172018201920202021

E. Actuarial assumptions The total pension liability in the June 30, 2016 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per yearActive member payroll growth 3.25% per yearInvestment rate of return 7.50%

Salary increases were based on a service-related table. Mortality rates for active members, retirees, survivors and disabilitants were based on RP-2014 tables for the GERF and RP-2000 tables for the PEPFF for males or females, as appropriate, with slight adjustments. Cost of living benefit increases for retirees are assumed to be: 1 percent per year for all future years for the GERF and PEPFF. Actuarial assumptions used in the June 30, 2016 valuation were based on the results of actuarial experience studies. The most recent four-year experience study in the GERF was completed in 2015. The experience study for PEPFF was for the period July 1, 2004 through June 30, 2009.

-92-



DECEMBER 31, 2016


The following changes in actuarial assumptions occurred in 2016:

GERF

The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5

percent per year thereafter to 1.0 percent per year for all future years.

The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was

changed from 7.9 percent to 7.5 percent.

Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed future

salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll

growth and 2.50 percent for inflation.

PEPFF

The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2037 and 2.5

percent per year thereafter to 1.0 percent per year for all future years.

The assumed investment return was changed from 7.9 percent to 7.5 percent. The single discount rate was

changed from 7.9 percent to 5.6 percent.

The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent

for payroll growth and 2.50 percent for inflation.

The State Board of Investment, which manages the investments of PERA, prepares an analysis of the reasonableness on

a regular basis of the long-term expected rate of return using a building-block method in which best-estimate ranges of

expected future rates of return are developed for each major asset class. These ranges are combined to produce an

expected long-term rate of return by weighting the expected future rates of return by the target asset allocation

percentages. The target allocation and best estimates of geometric real rates of return for each major asset class are

summarized in the following table:

Asset Class

Domestic stocks 45.00 % 5.50 %

International stocks 15.00 6.00

Bonds 18.00 1.45

Alternative assets 20.00 6.40

Cash 2.00 0.50

Total 100.00 %

Target Expected Real

Allocation Rate of Return

Long-term

F. Discount rate

The discount rate used to measure the total pension liability was 7.50 percent, a reduction from the 7.90 percent used in

2015. The projection of cash flows used to determine the discount rate assumed that contributions from plan members

and employers will be made at rates set in Minnesota statutes. Based on these assumptions, the fiduciary net position of

the GERF was projected to be available to make all projected future benefit payments of current plan member.

Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected

benefit payments to determine the total pension liability.

-93-



DECEMBER 31, 2016


In the PEPFF, the fiduciary net position was projected to be available to make all projected future benefit payments of

current plan members through June 30, 2056. Beginning in fiscal year ended June 30, 2057 for the PEPFF, when

projected benefit payments exceed the funds’ projected fiduciary net position, benefit payments were discounted at the

municipal bond rate of 2.85 percent based on an index of 20-year general obligation bonds with an average AA credit

rating at the measurement date. An equivalent single discount rate of 5.60 percent for the PEPFF was determined that

produced approximately the same present value of projected benefits when applied to all years of projected benefits as

the present value of projected benefits using 7.50 percent applied to all years of projected benefits through the point of

asset depletion and 2.85 percent after.

G. Pension liability sensitivity

The following presents the City’s proportionate share of the net pension liability for all plans it participates in,

calculated using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of

the net pension liability would be if it were calculated using a discount rate 1 percentage point lower or 1 percentage

point higher than the current discount rate:

1 Percent 1 Percent

Decrease (6.50%) Current (7.50%) Increase (8.50%)

GERF

Primary Government 7,337,641$ 5,166,206$ 3,377,660$

Component Unit - Library 827,087 582,403 380,724

Component Unit - Municipal Utilities 5,443,152 3,832,406 2,505,589

1 Percent 1 Percent


PEPFF

Primary Government 8,370,687$ 5,979,629$ 4,025,953$

City/Component Unit Proportionate Share of NPL

City Proportionate Share of NPL

H. Pension plan fiduciary net position

Detailed information about each pension plan’s fiduciary net position is available in a separately-issued PERA financial

report that includes financial statements and required supplementary information. That report may be obtained on the

Internet at www.mnpera.org.

-94-



DECEMBER 31, 2016

Note 5: DEFINED CONTRIBUTION PLAN

There are 5 City Council members covered by the Public Employees Defined Contribution Plan (PEDCP), a multiple-

employer deferred compensation plan administered by PERA. The PEDCP is a tax qualified plan under Section 401(a) of

the Internal Revenue Code and all contributions by or on behalf of employees are tax deferred until time of withdrawal.

Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses.

Minnesota statutes, chapter 353d.03, specifies plan provisions, including the employee and employer contribution rates for

those qualified personnel who elect to participate. An eligible elected official who decides to participate contributes 5

percent of salary which is matched by the elected official's employer. Employer and employee contributions are combined

and used to purchase shares in one or more of the seven accounts of the Minnesota Supplemental Investment Fund. For

administering the plan, PERA receives 2 percent of employer contributions and twenty-five hundredths of 1 percent (.0025)

of the assets in each member's account annually.

The City’s contributions to the PEDCP for the years ended December 31, 2016, 2015 and 2014 were $1,599, $1,552 and

$1,695, respectively. The City’s contributions were equal to the contractually required contributions for each year as set by

Minnesota statute.

Employee Employer Employee Employer Required Rate

1,599$ 1,599$ 5.00% 5.00% 5.00%

Contribution Amount

Percentage of

Covered Payroll

Note 6: DEFINED BENEFIT PENSION PLAN - FIRE RELIEF ASSOCIATION

A. Plan description

All members of the Marshall Fire Department (the Department) are covered by a defined benefit plan administered by

the Marshall Volunteer Firefighters Relief Association (the Association). As of December 31, 2016, the plan covered 48

active firefighters and 11 vested terminated fire fighters whose pension benefits are deferred. The plan is a single

employer retirement plan and is established and administered in accordance with Minnesota statute, chapter 69.

The Association maintains a separate Special fund to accumulate assets to fund the retirement benefits earned by the

Department’s membership. Funding for the Association is derived from an insurance premium tax in accordance with

the Volunteer Firefighter’s Relief Association Financing Guidelines Act of 1971 (chapter 261 as amended by chapter

509 of Minnesota statutes 1980). Funds are also derived from investment income.

B. Benefits provided

A fire fighter who completes at least 20 years as an active member of the Department is entitled, after age 50, to a full

service pension upon retirement.

The bylaws of the Association also provide for an early vested service pension for a retiring member who has

completed fewer than 20 years of service. The reduced pension, available to members with 10 years of service, shall be

equal to 60 percent of the pension as prescribed by the bylaws. This percentage increases 4 percent per year so that at

20 years of service, the full amount prescribed is paid. Members who retire at or after age 50 with 10 years of credited

service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to the applicable

vesting percentage times $5,500 per year of service.

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DECEMBER 31, 2016

Note 6: DEFINED BENEFIT PENSION PLAN - FIRE RELIEF ASSOCIATION - CONTINUED C. Contributions

Minnesota statutes, chapters 424 and 424A authorize pension benefits for volunteer fire relief associations. The plan is funded by fire state aid, investment earnings and, if necessary, employer contributions as specified in Minnesota statutes and voluntary City contributions (if applicable). The State of Minnesota contributed $102,664 in fire state aid to the plan on behalf of the City Fire Department for the year ended December 31, 2015, which was recorded as a revenue. Required employer contributions are calculated annually based on statutory provisions. The City’s statutorily-required contributions to the plan for the year ended December 31, 2016 were $102,664. The City’s contributions were equal to the required contributions as set by state statute. In addition, the City made voluntary contributions of $21,502 to the plan. The firefighter has no obligation to contribute to the plan.

D. Pension costs

At December 31, 2016, the City reported a net pension liability (asset) of $113,319 for the plan. The net pension

liability (asset) was measured as of December 31, 2016. The total pension liability used to calculate the net pension liability (asset) in accordance with GASB 68 was determined by Van Iwaarden Associates applying an actuarial formula to specific census data certified by the Department as of December 31, 2016. For the year ended December 31, 2016, the City recognized pension expense of $172,315.

At December 31, 2016, the City reported deferred outflows of resources and its contributions subsequent to the

measurement date, related to pension from the following sources:

Deferred DeferredOutflows Inflows

of Resources of Resources

Changes in actuarial assumptions 25,501$ 36,796$ Net difference between projected and

actual earnings on plan investments 96,159 -

Total 121,660$ 36,796$

There were no deferred outflows of resources related to State aid received subsequent to the measurement date will be recognized for its impact on the net pension liability in the year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources related to the plan will be recognized in pension expense as follows: 2017 33,789$ 2018 33,789 2019 33,789 2020 (18,760) 2021 (189) Thereafter 2,446

E. Actuarial assumptions The total pension liability at December 31, 2016 was determined using the entry age normal actuarial cost method and the following actuarial assumptions:

Discount rate 6.75%Expected long-term rate of return on assets 6.75%Investment rate of return 8.40%20 year municipal bond yield 3.78%Inflation rate 2.75%

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DECEMBER 31, 2016

Note 6: DEFINED BENEFIT PENSION PLAN - FIRE RELIEF ASSOCIATION - CONTINUED

There were no changes in actuarial assumptions in 2016.

Retirement eligibility at the later of age 50 or after completion of 20 years of service, if a member is both age 50 and

has completed 10 years of service, but not 20 years of service, the lump sum pension will be reduced by 4 percent for

each year of service less than 20 years.

The 6 percent long-term expected rate of return on pension plan investments was determined using a building-block

method in which best estimates for expected future real rates of return (expected returns, net of inflation) were

developed for each asset class using the plan’s target investment allocation along with long-term return expectations by

asset class. Inflation expectations were applied to derive the nominal rate of return for the portfolio.

The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in

the following table:

Asset Class

Equities 60.00 % 5.58 %

Fixed income 25.00 2.27

Real estate and alternatives 5.00 4.44

Cash and equivalents 10.00 0.84

Total 100.00 %

Long-term

Target Expected Real

Allocation Rate of Return

F. Discount rate

The discount rate used to measure the total pension liability was 6.75 percent. The projection of cash flows used to

determine the discount rate assumed that contributions to the plan will be made as specified in statute. Based on that

assumption and considering the funding ratio of the plan, the fiduciary net position was projected to be available to

make all projected future benefit payments of current active and inactive members. Therefore, the long-term expected

rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the

total pension liability.

G. Pension liability sensitivity

The following presents the City’s net pension liability (asset) for the plan, calculated using the discount rate disclosed in

the preceding paragraph, as well as what the City’s net pension liability (asset) would be if it were calculated using a

discount rate 1 percent lower or 1 percent higher than the current discount rate:

1 Percent 1 Percent


Defined benefit plan 168,619$ 113,319$ 60,092$

H. Pension plan fiduciary net position

For financial reporting purposes, the Association’s financial statements are not included with the City’s financial

statements because the Association is not a component unit of the City. The financial statements of the Association may

be obtained at the City’s offices.

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DECEMBER 31, 2016

Note 7: RETIREMENT PLAN - HOUSING COMMISSION (Component Unit)

Component unit pension information

Qualified employees of the Marshall Housing Commission (the Commission), a discrete component unit of the City,

belong to the Housing Renewal and Local Agency Retirement Plan, which is a defined contribution retirement plan.

The retirement plan is a national plan with local or regional housing authorities and commissions, urban renewal

agencies and other organizations eligible to participate. Required contributions were made by the Commission to the

Housing Renewal and Local Agency Retirement Plan. The Commission’s pension contributions for the years ending

December 31, 2016, 2015 and 2014 were $15,346, $16,131 and $14,876, respectively.

Detailed information concerning the Commission’s pension plan is presented in its publicly available annual report for

the year ended September 30, 2016. That report may be obtained by contacting the Commission.

Note 8: OTHER INFORMATION

A. Risk management

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and

omissions; injuries to employees; and natural disasters for which the City carries insurance. The City obtains insurance

through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with

approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers

compensation, property and casualty insurance. The LMCIT is self-sustaining through member premiums and will

reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the

City’s coverage in any of the past three fiscal years.

Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably

estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The

City’s management is not aware of any incurred but not reported claims.

B. Commitments and contingencies

Grants

Amounts received or receivable from Federal and State agencies are subject to agency audit and adjustment. Any

disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount,

if any, of funds which may be disallowed by the agencies cannot be determined at this time although the City expects

such amounts, if any, to be immaterial. The financial assistance received is subject to an audit pursuant to the Uniform

Guidance or audits by the grantor agency.

Claims and litigation

In connection with the normal conduct of its affairs, the City is involved in various claims, litigations and judgments. It

is expected that the final settlement of these matters will not materially affect the financial statements of the City. No

liability or provision for loss has been recorded in the December 31, 2016 financial statements in relation to any of

these matters.

Tax increment districts

The City’s tax increment districts are subject to review by the State of Minnesota Office of the State Auditor (OSA).

Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. Management has

indicated that they are not aware of any instances of noncompliance which would have a material effect on the financial

statements.

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DECEMBER 31, 2016

Note 8: OTHER INFORMATION - CONTINUED

Component units

MMU has contracted for the delivery of a fixed amount of power with the Western Area Power Administration

(WAPA), which is a part of the US Department of Energy, through December 31, 2050.

MMU has contracted with Missouri River Energy Services (MRES) for the purchase of any power required by MMU,

not supplied by WAPA or HCPD, through January 1, 2046.

MMU has contracted to sell the capacity of its generation plant to MRES through May 31, 2029.

MMU has entered an agreement with the City of Marshall in support of industrial land development. This agreement

calls for MMU to pay one half of the acquisition and development costs of approved projects through a payment in lieu

of taxes capped at $500,000 per year. Proceeds from subsequent sales of development projects will be divided equally

between MMU and the City of Marshall with MMU’s portion deducted from the payment in lieu of taxes.

MMU has contracted with Missouri Basin Municipal Power Agency dba Missouri River Energy Services (MRES) for

Transmission Service (the TSA). The agreement dated February 1, 2011 runs through December 31, 2019, with

continuation provisions. Among other things, the TSA provides for MRES to pay the Xcel Energy monthly

transmission costs and then bill MMU for the cost of transmission on the MRES monthly power invoice.

C. Major customers

MMU has two major customers who individually account for more than 10 percent revenue in 2016 and 2015.

Revenue generated from these customers was $31,484,026 and $33,020,978 for 2016 and 2015, respectively. These

amounts represent 61 percent and 60 percent of total revenue for 2016 and 2015, respectively.

D. Joint venture

PrairieNet WAN provides shared costs, infrastructure and expertise in the field of technology and telecommunications

for MMU, the City of Marshall, Lyon County, and Marshall Public Schools. MMU acts as a fiscal agent for this

organization whose activities to date include certain computer network equipment, computer consulting, and

organizational costs. These joint costs have been passed on to the respective members and are included in the

member’s financial statements. MMU’s ongoing financial responsibility for this organization is limited to those

activities in which it chooses to participate. Since PrairieNet WAN owns no resources and has no equity the participants

to the PrairieNet WAN has no equity interest in joint venture.

E. Dark fiber agreement

Members of PrairieNet WAN are able to use dark fiber owned by MMU through negotiation of dark fiber agreements

or through a month to month dark fiber fee as established by the MMU Commission. Dark Fiber made available to

participating PrairieNet WAN members shall be “lit up” by the member so acquiring the use of the dark fiber, is at their

cost. With prior approval of MMU, a member using dark fiber may work with another public body through which the

member does joint work. Example of this would include Southwest Minnesota State University working through

Marshall Public Schools (MPS) fiber capacity or the State of Minnesota working through the Lyon County fiber

capacity. MMU has one dark fiber agreement with MPS that runs through June 1, 2024 in which MPS pays MMU

$1,500 per month.

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DECEMBER 31, 2016


F. Legal debt margin

The City’s statutory debt limit is 3 percent of the estimated taxable market value of real and personal property located

in the City. The taxable market value was $852,049,763 at December 31, 2016 for a limit of $25,561,493. The City

currently has $3,305,000 general obligation debt subject to the limit, leaving $22,256,493 as a debt margin. Debt

financed partially or entirely by special assessments, tax increment or operations of enterprise funds are excluded from

this computation by statute.

G. Postemployment benefits other than pensions

Plan description. The City, including the discretely presented component units, administers a single-employer defined

benefit healthcare plan (“the Retiree Health Plan”). The plan provides lifetime healthcare insurance for eligible retirees

and their spouses through the City’s group health insurance plan, which covers both active and retired members. Benefit

provisions are established through negotiations between the City and the union representing employees and are

renegotiated each three-year bargaining period. The Retiree Health Plan does not issue a publicly available financial

report.

Funding policy. Contribution requirements also are negotiated between the City and union representatives. The City

does not contribute to the cost of current-year premiums for eligible retired plan members and their spouses. For fiscal

year 2016, the City contributed $45,567 to the plan.

Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost

(expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially

determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if

paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities

(or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s

annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB

obligation to the Retiree Health Plan.

Marshall Marshall- Lyon

Primary Municipal County

Government Utilities Library Total

Annual required contribution 53,115$ 35,613$ 3,804$ 92,532$

Interest on net OPEB obligation 9,575 4,061 686 14,322

Adjustment to annual

required contribution (13,844) (5,871) (991) (20,706)

Annual OPEB cost (expense) 48,846 33,803 3,499 86,148

Contributions made (22,445) (21,514) (1,608) (45,567)

Increase in net OPEB obligation 26,401 12,289 1,891 40,581

Net OPEB obligation -

beginning of year 233,315 101,527 23,212 358,054

NET OPEB obligation -

end of year 259,716$ 113,816$ 25,103$ 398,635$

Component

Units

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DECEMBER 31, 2016


The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation

for fiscal year 2016 and the preceding two fiscal years were as follows:

Primary Government

Year Annual Net OPEB

Ending OPEB Cost Obligation

12/31/16 48,846$ 46.0 % 259,716$

12/31/15 47,655 35.7 233,315

12/31/14 46,682 32.6 202,651

Component Unit - Marshall Municipal Utilities



12/31/16 33,803$ 63.6 % 113,816$

12/31/15 33,709 68.2 101,527

12/31/14 33,948 91.8 90,795

Component Unit - Marshall - Lyon County Library



12/31/16 3,499$ 46.0 % 25,103$

12/31/15 3,667 33.2 23,212

12/31/14 3,587 30.4 20,762

Total - Reporting Entity



12/31/16 86,148$ 52.9 % 398,635$

12/31/15 85,031 48.4 358,054

12/31/14 84,217 56.4 314,208

Annual OPEB

Contributed

Three Year Trend Information

Percentage

Annual OPEB

Contributed


Percentage


Percentage

Annual OPEB

Contributed


Percentage

Annual OPEB

Contributed

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DECEMBER 31, 2016

Note 8: OTHER INFORMATION - CONTINUED Funded Status and Funding Progress. As of December 31, 2014, the City’s share of the actuarial accrued liability for benefits was $466,104, which was not funded. The City’s share of covered payroll (annual payroll of active employees covered by the plan) was $6,216,558, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 7.5 percent. As of December 31, 2014, the MMU’s share of the actuarial accrued liability for benefits was $393,546, which was not funded. The MMU’s share of covered payroll (annual payroll of active employees covered by the plan) was $2,651,177, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 14.8 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. For the City, in the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4 percent investment rate of return and an annual healthcare cost trend rate of 7.5 percent initially, reduced incrementally to an ultimate rate of 5 percent after 5 years. The actuarial value of assets was not determined as the City has not advance-funded its obligation. The plan’s unfunded actuarial accrued liability was amortized as a level dollar amount over an open basis of thirty years. The following simplifying assumptions were made:

Retirement age for active employees - Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 65, or at the first subsequent year in which the member would qualify for benefits. Marital status - Marital status of members at the calculation date was assumed to continue throughout retirement. Mortality - Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2000 United States Life Tables for Males and for Females were used. Turnover - Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate - The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. The annual increase in health benefits is 7.5 percent for 2014 which reflects actual 2014 premium renewal experience. The medical trend rates beginning in 2014 are 7.5 percent decreasing 0.5 percent annually to an ultimate level of 5.0 percent. Health insurance premiums - 2014 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid.

-102-


DECEMBER 31, 2016

Note 8: OTHER INFORMATION - CONTINUED Inflation rate - The expected long-term inflation assumption of 4.0 percent was used based on an intermediate growth scenario. Actuarial method - Projected unit credit with 30-year amortization of the unfunded liability. Payroll growth rate - The expected long-term payroll growth rate was assumed to be 4.0 percent. Based on the historical and expected returns of the City’s short-term investment portfolio, a discount rate of 4.0 percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on the projected unit credit basis. The remaining amortization period at December 31, 2016 was 30 years.

H. Concentrations The City receives a significant amount of its annual General fund revenues from the State of Minnesota from the Local Government Aid (LGA) program. The amount received in 2016 was $2,427,970 for LGA. This accounted for 23 percent of General fund revenues.

I. Transactions between the primary government and its component unit MMU remits an annually negotiated payment to the City of Marshall General fund in lieu of taxes. This fee is calculated on a formula based on preceding years KWH sales increased by an amount in support of industrial land development ($30,839 in the year ended December 31, 2016). Payments under this agreement are $840,349 for the year ended December 31, 2016.

Note 9: SUBSEQUENT EVENT

The City issued a General Obligation bond on June 5, 2017 for $1,290,000. This bond was issued for the construction of the culture and recreation and street improvements.

Note 10: PRIOR PERIOD RESTATEMENT

The City restated its governmental activities construction in progress account as of January 1, 2016 which was understated by $1,237,422.

The Marshall-Lyon County Library discretely presented component unit restated its equipment and machinery capital asset account as of January 1, 2016 which was understated by $57,867.

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INTENTIONALLY

-104-

REQUIRED SUPPLEMENTARY INFORMATION

CITY OF MARSHALL

MARSHALL, MINNESOTA


-105-


REQUIRED SUPPLEMENTARY INFORMATION


Schedule of funding progress for the retiree health plan

Primary Government

Unfunded

Actuarial UAAL as a

Actuarial Actuarial Actuarial Accrued Percentage

Valuation Value of Accrued Liability Covered of Covered

Date Assets (a) Liability (UAAL) (b-a) Payroll (c) Payroll ((b-a)/c)

1/1/14 -$ 466,104$ 466,104$ - % 6,216,558$ 7.5 %

1/1/11 - 424,248 424,248 - 4,453,566 9.5

1/1/08 - 341,026 341,026 - 3,649,109 9.3

Component Unit - Marshall Municipal Utilities

Unfunded

Actuarial UAAL as a




1/1/14 -$ 393,546$ 393,546$ - % 2,651,177$ 14.8 %

1/1/11 - 349,191 349,191 - 2,407,762 14.5

1/1/08 - 156,507 156,507 - 2,399,285 6.5

Component Unit - Marshall Housing Commission

Unfunded

Actuarial UAAL as a




1/1/14 -$ -$ -$ - % -$ - %

1/1/11 - - - - - -

1/1/08 - 13,454 13,454 - 154,598 8.7

Required Supplementary Information

Funded

Ratio (a/b)

Ratio (a/b)


Funded

Ratio (a/b)


Funded

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CITY OF MARSHALL, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED


Schedule of funding progress for the retiree health plan Component Unit - Marshall - Lyon County Library

UnfundedActuarial UAAL as a

Actuarial Actuarial Actuarial Accrued PercentageValuation Value of Accrued Liability Covered of Covered


1/1/14 -$ 31,151$ 31,151$ - % 477,107$ 6.5 %1/1/11 - 32,370 32,370 - 428,735 7.6 1/1/08 - 45,134 45,134 - 433,042 10.4

Total - Reporting Entity

UnfundedActuarial UAAL as a

Actuarial Actuarial Actuarial Accrued PercentageValuation Value of Accrued Liability Covered of Covered


1/1/14 -$ 890,801$ 890,801$ - % 9,344,842$ 9.5 %1/1/11 - 805,809 805,809 - 7,290,063 11.1 1/1/08 - 556,121 556,121 - 6,636,034 8.4


FundedRatio (a/b)


FundedRatio (a/b)

Schedule of City’s share of PERA net pension liability - General Employees Retirement Fund

State'sProportionate

City's Share ofProportionate the Net Pension

Share of Liability City'sFiscal the Net Pension Associated with CoveredYear Liability the City Total Payroll

Ending (a) (b) (a+b) (c)

06/30/16 0.0708 % 5,748,609$ 75,053$ 5,823,662$ 4,394,194$ 130.8 % 68.9 %06/30/15 0.0730 3,783,239 - 3,783,239 4,221,213 89.6 78.2

Required Supplementary InformationCity's

ProportionateShare of theNet Pension

Plan FiduciaryCity's

Liability as aNet Position

Proportion ofPercentage of

as a PercentageCoveredthe Net Pension Payroll of the Total

Liability (a/c) Pension Liability

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available.

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CITY OF MARSHALL, MINNESOTA REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED

FOR THE YEAR ENDED DECEMBER 31, 2016 Schedule of City’s PERA contributions - General Employees Retirement Fund

Contributions inRelation to the

Statutorily Statutorily Contribution City'sRequired Required Deficiency Covered

Year Contribution Contribution (Excess) PayrollEnding (a) (b) (a-b) (c)

12/31/16 339,038$ 339,038$ -$ 4,520,504$ 7.5 %12/31/15 337,463 337,463 - 4,499,507 7.5

(b/c)


Contributions asa Percentage ofCovered Payroll

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Municipal Utilities’ share of PERA net pension liability - General Employees Retirement Fund

State'sProportionate

Share ofthe Net Pension

Proportionate LiabilityShare of Associated with

Fiscal the Net Pension the Component CoveredYear Liability Unit Total Payroll


06/30/16 0.0472 % 3,832,406$ 14,919$ 3,847,325$ 2,973,391$ 128.9 % 68.9 %06/30/15 0.0478 2,477,244 - 2,477,244 2,809,961 88.2 78.2

the Net Pension Payroll of the TotalLiability (a/c) Pension Liability

Component Unit's Percentage of Net PositionProportion of Covered as a Percentage

Component Unit'sLiability as a Plan Fiduciary

Component Unit's

Required Supplementary InformationComponent Unit's

ProportionateShare of theNet Pension

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available. Schedule of Municipal Utilities’ PERA contributions - General Employees Retirement Fund

Contributions inRelation to the Component

Statutorily Statutorily Contribution Unit'sRequired Required Deficiency Covered

Year Contribution Contribution (Excess) PayrollEnding (a) (b) (a-b) (c)

12/31/16 223,004$ 223,004$ -$ 2,973,391$ 7.5 %12/31/15 207,341 207,341 - 2,809,961 7.5

(b/c)


Contributions asa Percentage ofCovered Payroll


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REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED


Schedule of employer’s share of PERA net pension liability - Public Employees Police and Fire Fund

State's

Proportionate

City's Share of

Proportionate the Net Pension

Share of Liability City's

Fiscal the Net Pension Associated with Covered

Year Liability the City Total Payroll


06/30/16 0.1490 % 5,979,629$ -$ 5,979,629$ 1,433,849$ 417.0 % 63.9 %

06/30/15 0.1540 1,749,800 - 1,749,800 1,367,414 128.0 86.6

Liability ((a+b)/c) Pension Liability

Proportion of Covered as a Percentage

the Net Pension Payroll of the Total

Liability as a Plan Fiduciary

City's Percentage of Net Position


City's

Proportionate

Share of the

Net Pension


Schedule of employer’s PERA contributions - Public Employees Police and Fire Fund

Contributions in

Relation to the

Statutorily Statutorily Contribution City's

Required Required Deficiency Covered

Year Contribution Contribution (Excess) Payroll

Ending (a) (b) (a-b) (c)

12/31/16 229,508$ 229,508$ -$ 1,416,719$ 16.2 %

12/31/15 240,460 240,460 - 1,484,321 16.2

(b/c)


Contributions as

a Percentage of

Covered Payroll


Schedule Employer’s Fire Relief Association Contributions

Actuarial Actual Contribution

Determined Contributions Deficiency

Year Contribution Paid (Excess)

Ending (a) (b) (a-b)

12/31/16 124,166$ 124,166$ -$

12/31/15 103,127 103,127 -

12/31/14 173,399 173,399 -


-109-


REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED


Schedule of changes in the Fire Relief Association’s net pension liability (asset) and related ratios

2016 2015

(Fire Relief Report (Fire Relief Report

Date 2015) Date 2014)

Total pension liability

Service cost 151,873$ 128,480$

Interest 206,225 203,955

Changes of benefit terms 88,384 59,012

Differences between expected and actual experience - -

Changes of assumptions (44,795) 34,723

Benefit payments, including refunds of employee contributions (45,890) (254,609)

Net change in total pension liability 355,797 171,561

Total pension liability - January 1 3,308,148 3,136,587

Total pension liability - December 31 (a) 3,663,945$ 3,308,148$

Plan fiduciary net position

Contributions - employer 124,166 103,127

Contributions - state - -

Net investment income 269,176 (45,718)

Benefit payments, including refunds of employee contributions (45,890) (254,609)

Administrative expense (8,530) (11,275)

Other - -

Net change in plan fiduciary net position 338,922 (208,475)

Plan fiduciary net position - January 1 3,211,704 3,420,179

Plan fiduciary net position - December 31 (b) 3,550,626$ 3,211,704$

Fire Relief's net pension liability (asset) - December 31 (a-b) 113,319$ 96,444$

Plan fiduciary net position as a percentage

of the total pension liability (b/a) 96.91% 97.08%

Covered-employee payroll N/A N/A

Fire Relief's net pension liability (asset) as a percentage

of covered-employee payroll N/A N/A

Notes to Schedule:

Benefit changes. There were no benefit changes during 2016.

Changes of assumptions. There were no changes in assumptions in 2016.

Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become

available.

-110-

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

CITY OF MARSHALL

MARSHALL, MINNESOTA


-111-


NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEET

DECEMBER 31, 2016

Nonmajor Nonmajor

Special Capital

Revenue Projects Total

ASSETS


Receivables

Delinquent taxes - 4,522 4,522

Accounts 23,377 44,480 67,857

Notes/leases 32,317 - 32,317

Special assessments - 340,957 340,957

Intergovernmental 22,022 8,200 30,222

Prepaid items 24,136 - 24,136

TOTAL ASSETS 2,370,247$ 8,298,429$ 10,668,676$

LIABILITIES

Accounts payable 59,286$ 155,171$ 214,457$

Contracts payable - 386,018 386,018

Due to other funds - 885,973 885,973

Accrued salaries payable 2,981 - 2,981

TOTAL LIABILITIES 62,267 1,427,162 1,489,429


Unavailable revenue - taxes - 4,522 4,522

Unavailable revenue - special assessments - 340,957 340,957

TOTAL DEFERRED INFLOWS OF RESOURCES - 345,479 345,479

FUND BALANCES

Nonspendable for

Prepaid items 24,136 - 24,136

Restricted for

City celebrations 19,064 - 19,064

Economic development 2,019,566 - 2,019,566

Capital projects - 1,947,334 1,947,334

Committed for

Economic development 61,773 - 61,773

Capital projects - 300,729 300,729

Assigned for

Economic development 98,330 - 98,330

Capital projects - 5,884,477 5,884,477

Drivers education 59,231 - 59,231

ASC Arena 11,022 - 11,022

Park improvements 16,535 - 16,535

Unassigned (1,677) (1,606,752) (1,608,429)

TOTAL FUND BALANCES 2,307,980 6,525,788 8,833,768

TOTAL LIABILITIES, DEFERRED INFLOWS OF

RESOURCES AND FUND BALANCES 2,370,247$ 8,298,429$ 10,668,676$

-112-


NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES


Nonmajor Nonmajor

Special Capital

Revenue Projects Total

REVENUES

Taxes -$ 371,086$ 371,086$

Intergovernmental 300,000 1,106,190 1,406,190

Charges for services 183,055 - 183,055

Special assessments - 10,480 10,480

Investment earnings 41,722 6,500 48,222

Miscellaneous 48,635 604,908 653,543

TOTAL REVENUES 573,412 2,099,164 2,672,576

EXPENDITURES

Current

Public safety 102,975 21,208 124,183

Public works - 799,740 799,740

Culture and recreation 456,566 21,383 477,949

Economic development 374 14,250 14,624

Capital outlay

General government - 78,668 78,668

Public safety 9,301 709,203 718,504

Public works - 2,630,561 2,630,561

Culture and recreation 44,070 2,345,379 2,389,449

Economic development - 54,945 54,945

Airport - 200 200

Debt service

Principal - 89,888 89,888

Interest and other - 7,668 7,668

Bond issuance costs - 115,731 115,731

TOTAL EXPENDITURES 613,286 6,888,824 7,502,110


OVER (UNDER) EXPENDITURES (39,874) (4,789,660) (4,829,534)


Transfers in 602,305 - 602,305

Bonds issued - 5,015,000 5,015,000

Premium on bonds issued - 166,461 166,461

Transfers out (22,173) (124,662) (146,835)

TOTAL OTHER FINANCING SOURCES (USES) 580,132 5,056,799 5,636,931

NET CHANGE IN FUND BALANCES 540,258 267,139 807,397

FUND BALANCES, JANUARY 1 1,767,722 6,258,649 8,026,371

FUND BALANCES, DECEMBER 31 2,307,980$ 6,525,788$ 8,833,768$

-113-


NONMAJOR SPECIAL REVENUE FUNDS


DECEMBER 31, 2016

215 220 223 240

Small Program Community

Cities Income Education

Marshall Development SCDP - Drivers

Celebrations Program Local Training

ASSETS

Cash and temporary investments 19,064$ 2,123$ 78,574$ 83,428$

Receivables

Accounts - - - 630

Notes/leases - 32,317 - -

Intergovernmental - - - -

Prepaid items - - - -

TOTAL ASSETS 19,064$ 34,440$ 78,574$ 84,058$

LIABILITIES

Accounts payable -$ -$ -$ 24,827$

Accrued salaries payable - - - -

TOTAL LIABILITIES - - - 24,827

FUND BALANCES

Nonspendable for

Prepaid items - - - -

Restricted for

City celebrations 19,064 - - -

Economic development - - 56,401 -

Committed for


Assigned for

Economic development - 34,440 22,173 -

Driver education - - - 59,231

ASC Arena - - - -

Park improvements - - - -

Unassigned - - - -

TOTAL FUND BALANCES 19,064 34,440 78,574 59,231

TOTAL LIABILITIES AND FUND BALANCES 19,064$ 34,440$ 78,574$ 84,058$

-114-

257 258 270 280 801

Emergency

Response and Endowment Park and

ASC Ball Industrial Avera / Recreation

Park ASC Arena Training Center WMMC Donations Total

-$ 2,016$ -$ 2,066,655$ 16,535$ 2,268,395$

- 21,772 975 - - 23,377

- - - - - 32,317

- 22,022 - - - 22,022

- 17,736 6,400 - - 24,136

-$ 63,546$ 7,375$ 2,066,655$ 16,535$ 2,370,247$

-$ 31,807$ 2,652$ -$ -$ 59,286$

- 2,981 - - - 2,981

- 34,788 2,652 - - 62,267

- 17,736 6,400 - - 24,136

- - - - - 19,064

- - - 1,963,165 - 2,019,566

- - - 61,773 - 61,773

- - - 41,717 - 98,330

- - - - - 59,231

- 11,022 - - - 11,022

- - - - 16,535 16,535

- - (1,677) - - (1,677)

- 28,758 4,723 2,066,655 16,535 2,307,980

-$ 63,546$ 7,375$ 2,066,655$ 16,535$ 2,370,247$

-115-





215 220 223 240

Small Program Community

Cities Income Education

Marshall Development SCDP - Drivers

Celebrations Program Local Training

REVENUES

Intergovernmental

State grants -$ -$ -$ -$

Charges for services - - - 73,601

Investment earnings - - - -

Miscellaneous

Rents - - - -

Contributions and donations - - - - Refunds and reimbursements - - - -

Loan payments received - 367 - -

TOTAL REVENUES - 367 - 73,601

EXPENDITURES

Current

Public safety - - - -

Culture and recreation - - - 74,885

Economic development - 351 23 -

Capital outlay

Public safety - - - -

Culture and recreation - - - -

TOTAL EXPENDITURES - 351 23 74,885


OVER (UNDER) EXPENDITURES - 16 (23) (1,284)


Transfers in - - 22,173 -

Transfers out - (22,173) - -

TOTAL OTHER FINANCING SOURCES (USES) - (22,173) 22,173 -

NET CHANGE IN FUND BALANCES - (22,157) 22,150 (1,284)

FUND BALANCES, JANUARY 1 19,064 56,597 56,424 60,515

FUND BALANCES, DECEMBER 31 19,064$ 34,440$ 78,574$ 59,231$

-116-





257 258 270 280 801

Emergency

Response and Endowment Park and

ASC Ball Industrial Avera / Recreation

Park ASC Arena Training Center WMMC Donations Total

-$ -$ 300,000$ -$ -$ 300,000$

- 109,454 - - - 183,055

- - - 41,717 5 41,722

- - 18,700 - - 18,700

- 6,895 - - - 6,895 - 22,673 - - - 22,673

- - - - - 367

- 139,022 318,700 41,717 5 573,412

- - 102,975 - - 102,975

- 344,846 - 36,835 - 456,566

- - - - - 374

- - 9,301 - - 9,301

- 44,070 - - - 44,070

- 388,916 112,276 36,835 - 613,286

- (249,894) 206,424 4,882 5 (39,874)

75 301,288 278,769 - - 602,305

- - - - - (22,173)

75 301,288 278,769 - - 580,132

75 51,394 485,193 4,882 5 540,258

(75) (22,636) (480,470) 2,061,773 16,530 1,767,722

-$ 28,758$ 4,723$ 2,066,655$ 16,535$ 2,307,980$

-117-


SMALL CITIES DEVELOPMENT PROGRAM FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES

BUDGET AND ACTUAL


With Comparative Actual Amounts for the Year Ended December 31, 2015

2015

Actual Variance with Actual

Original Final Amounts Final Budget Amounts

REVENUES

Investment earnings -$ -$ -$ -$ 581$

Miscellaneous

Refunds and reimbursements - - - - 12,865

Loan payments received 10,000 10,000 367 (9,633) -

TOTAL REVENUES 10,000 10,000 367 (9,633) 13,446

EXPENDITURES

Current

Economic development

Other services and charges - - 351 (351) 539


OVER (UNDER) EXPENDITURES 10,000 10,000 16 (9,984) 12,907

OTHER FINANCING USES

Transfers out (10,000) (10,000) (22,173) (12,173) (11,541)

NET CHANGE IN FUND BALANCES - - (22,157) (22,157) 1,366

FUND BALANCES, JANUARY 1 56,597 56,597 56,597 - 55,231

FUND BALANCES, DECEMBER 31 56,597$ 56,597$ 34,440$ (22,157)$ 56,597$

2016

Budgeted Amounts

-118-


COMMUNITY EDUCATION DRIVERS TRAINING FUND


BUDGET AND ACTUAL



2015



REVENUES

Charges for services 68,000$ 68,000$ 73,601$ 5,601$ 59,073$

EXPENDITURES

Current

Culture and recreation

Supplies - - 13,097 (13,097) 93

Other services and charges 57,000 57,000 61,788 (4,788) 51,741

TOTAL EXPENDITURES 57,000 57,000 74,885 (17,885) 51,834

NET CHANGE IN FUND BALANCES 11,000 11,000 (1,284) (12,284) 7,239



2016

Budgeted Amounts

-119-


EMERGENCY RESPONSE AND INDUSTRIAL TRAINING CENTER FUND


BUDGET AND ACTUAL



2015



REVENUES

Intergovernmental

State aids -$ -$ 300,000$ 300,000$ -$

Miscellaneous

Rents 20,500 20,500 18,700 (1,800) 16,460

TOTAL REVENUES 20,500 20,500 318,700 298,200 16,460

EXPENDITURES

Current

Public safety

Supplies 8,500 8,500 10,820 (2,320) 14,637


Total current 92,750 92,750 102,975 (10,225) 87,249

Capital outlay

Public safety 54,900 54,900 9,301 45,599 82,284

TOTAL EXPENDITURES 147,650 147,650 112,276 35,374 169,533

DEFICIENCY OF REVENUES

UNDER EXPENDITURES (127,150) (127,150) 206,424 333,574 (153,073)

OTHER FINANCING SOURCES

Transfers in 127,150 127,150 278,769 151,619 76,200

NET CHANGE IN FUND BALANCES - - 485,193 485,193 (76,873)

FUND BALANCES,

JANUARY 1 (480,470) (480,470) (480,470) - (403,597)

FUND BALANCES,

DECEMBER 31 (480,470)$ (480,470)$ 4,723$ 485,193$ (480,470)$

2016

Budgeted Amounts

-120-


ASC ARENA FUND


BUDGET AND ACTUAL



2015



REVENUES

Charges for services 192,561$ 192,561$ 109,454$ (83,107)$ -$

Miscellaneous

Contributions and donations - - 6,895 6,895 -

Refunds and reimbursements - - 22,673 22,673 -

TOTAL REVENUES 192,561 192,561 139,022 (53,539) -

EXPENDITURES

Current


Personal services 160,733 160,733 101,992 58,741 -

Supplies 48,749 48,749 106,422 (57,673) -

Other services and charges 271,775 271,775 136,432 135,343 124,636

Total current 481,257 481,257 344,846 136,411 124,636

Capital outlay

Culture and recreation 9,924 9,924 44,070 (34,146) -

TOTAL EXPENDITURES 491,181 491,181 388,916 102,265 124,636

EXCESS OF REVENUES

OVER EXPENDITURES (298,620) (298,620) (249,894) 48,726 (124,636)


Transfers in 298,620 298,620 301,288 2,668 102,000

NET CHANGE IN FUND BALANCES - - 51,394 51,394 (22,636)

FUND BALANCES, JANUARY 1 (22,636) (22,636) (22,636) - -

FUND BALANCES, DECEMBER 31 275,984$ 275,984$ 28,758$ (247,226)$ (22,636)$

2016

Budgeted Amounts

-121-

CITY OF MARSHALL, MINNESOTA CITY OF MARSHALL, MINNESOTA

NONMAJOR CAPITAL PROJECTS FUNDS NONMAJOR CAPITAL PROJECTS FUNDS

COMBINING BALANCE SHEET - CONTINUED ON THE FOLLOWING PAGES COMBINING BALANCE SHEET - CONTINUED

DECEMBER 31, 2016 DECEMBER 31, 2016

103 260 275 401 413 423 428

Marshall Industrial SMASC Liberty

Municipal Industrial Park Capital Ball Park Saratoga/

State Aid Park Development Equipment Parks Improvements Highway 23

ASSETS

Cash and temporary investments 507,237$ 2,159,799$ 85,879$ 1,100,738$ (528,352)$ 23,836$ 801,548$

Receivables

Delinquent taxes - - - 4,496 - - -

Accounts - 30,839 - 12,923 678 40 -

Special assessments

Noncurrent 5,759 - 2,370 - - - -

Intergovernmental 5,947 - - 2,253 - - -

TOTAL ASSETS 518,943$ 2,190,638$ 88,249$ 1,120,410$ (527,674)$ 23,876$ 801,548$

LIABILITIES

Accounts payable -$ 125$ -$ -$ 74,730$ -$ 620$

Contracts payable - - - - 25,250 - 95,131

Due to other funds - - - - - - 4,762

TOTAL LIABILITIES - 125 - - 99,980 - 100,513


Unavailable revenue - taxes - - - 4,496 - - -

Unavailable revenue - special assessments 5,759 - 2,370 - - - -

TOTAL DEFERRED INFLOWS OF RESOURCES 5,759 - 2,370 4,496 - - -

FUND BALANCES

Restricted for

Capital projects - - - - - - 701,035

Committed for

Capital projects - - - 165,729 - - -

Assigned for

Capital projects 513,184 2,190,513 85,879 950,185 - 23,876 -

Unassigned - - - - (627,654) - -

TOTAL FUND BALANCES 513,184 2,190,513 85,879 1,115,914 (627,654) 23,876 701,035


RESOURCES AND FUND BALANCES 518,943$ 2,190,638$ 88,249$ 1,120,410$ (527,674)$ 23,876$ 801,548$

-122-


NONMAJOR CAPITAL PROJECTS FUNDS

COMBINING BALANCE SHEET - CONTINUED

DECEMBER 31, 2016

450 452 453 454 455 457 458 459 460 461

Trunk

Highway 23 2013 2013 2014 2015 East Wind 2016

Pedestrian 2011 Public 2011 2012 Public Merit Public Public Public Star Street Public

Bridge Improvements Improvements Improvements Center Improvements Improvements Improvements Project Improvements

-$ 201,181$ 402,791$ 222,184$ 987,928$ (96,258)$ (404,125)$ 199,098$ 18,786$ 487,444$

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

-$ 201,181$ 402,791$ 222,184$ 987,928$ (96,258)$ (404,125)$ 199,098$ 18,786$ 487,444$

47,685$ -$ -$ -$ -$ -$ -$ 1,160$ -$ 30,278$

- - - - - - - 140,557 - 125,080

- - 335,000 - - 334 2,488 207,951 - 314,440

47,685 - 335,000 - - 334 2,488 349,668 - 469,798

- - - - - - - - - -

- - - - - - - - - -

- - - - - - - - - -

- - - 168,291 832,558 - - - - 17,646

- - - - 135,000 - - - - -

- 201,181 67,791 53,893 20,370 - - - 18,786 -

(47,685) - - - - (96,592) (406,613) (150,570) - -

(47,685) 201,181 67,791 222,184 987,928 (96,592) (406,613) (150,570) 18,786 17,646

-$ 201,181$ 402,791$ 222,184$ 987,928$ (96,258)$ (404,125)$ 199,098$ 18,786$ 487,444$

-123-


INTENTIONALLY

-124-



COMBINING BALANCE SHEET - CONTINUED

DECEMBER 31, 2016

462 495 496 497 498 499

2017 Public 2008 2009

Public Improvement 2007 Public Public Public 2010 Public

Improvements Revolving Improvements Improvements Improvements Improvements Total

ASSETS

Cash and temporary investments (93,133)$ 815,530$ (94,017)$ (90,488)$ 88,306$ 1,104,358$ 7,900,270$

Receivables

Delinquent taxes - 26 - - - - 4,522

Accounts - - - - - - 44,480

Special assessments

Noncurrent - 332,828 - - - - 340,957

Intergovernmental - - - - - - 8,200

TOTAL ASSETS (93,133)$ 1,148,384$ (94,017)$ (90,488)$ 88,306$ 1,104,358$ 8,298,429$

LIABILITIES

Accounts payable -$ 573$ -$ -$ -$ -$ 155,171$

Contracts payable - - - - - - 386,018

Due to other funds - 20,998 - - - - 885,973

TOTAL LIABILITIES - 21,571 - - - - 1,427,162


Unavailable revenue - taxes - 26 - - - - 4,522

Unavailable revenue - special assessments - 332,828 - - - - 340,957

TOTAL DEFERRED INFLOWS OF RESOURCES - 332,854 - - - - 345,479

FUND BALANCES

Restricted for

Capital projects - - - - 30,926 196,878 1,947,334

Committed for

Capital projects - - - - - - 300,729

Assigned for

Capital projects - 793,959 - - 57,380 907,480 5,884,477

Unassigned (93,133) - (94,017) (90,488) - - (1,606,752)

TOTAL FUND BALANCES (93,133) 793,959 (94,017) (90,488) 88,306 1,104,358 6,525,788


RESOURCES AND FUND BALANCES (93,133)$ 1,148,384$ (94,017)$ (90,488)$ 88,306$ 1,104,358$ 8,298,429$

-125-

CITY OF MARSHALL, MINNESOTA CITY OF MARSHALL, MINNESOTA

NONMAJOR CAPITAL PROJECTS FUNDS NONMAJOR CAPITAL PROJECTS FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - CONTINUED ON FOLLOWING PAGES COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - CONTINUED

FOR THE YEAR ENDED DECEMBER 31, 2016 FOR THE YEAR ENDED DECEMBER 31, 2016

103 260 275 401 413 423 428

Marshall Industrial SMASC Liberty

Municipal Industrial Park Capital Ball Park Saratoga/

State Aid Park Development Equipment Parks Improvements Highway 23

REVENUES

Property taxes -$ -$ -$ 344,577$ -$ -$ -$

Franchise taxes - - - 20,901 - - -

Intergovernmental

State grants 14,760 - - - - - 91,430

Special assessments - - - - - - -

Investment earnings 654 1,830 - 270 996 - -

Miscellaneous

Rents - 29,315 - - - - -

Contributions and donations - 18,521 - 15,243 - 22,400 -

Refunds and reimbursements - - - - 44,468 - -

TOTAL REVENUES 15,414 49,666 - 380,991 45,464 22,400 91,430

EXPENDITURES

Current

Economic development - 14,250 - - - - -

Public safety - - - - - - -

Public works 1,125 - - - - - 65,230

Culture and recreation - - - - 10,540 34 -

Capital outlay

General government - - - 78,668 - - -

Economic development - 54,945 - - - - -

Public safety - - - 434,769 - - -

Public works 4,937 - - 231,494 - - 179,442

Culture and recreation - - - 101,447 2,040,763 - -

Airport - - - 200 - - -

Debt service

Principal - - - - 89,888 -

Interest and other - - - - 7,668 - -

Bond issuance costs - - - 2,891 72,887 - -

TOTAL EXPENDITURES 6,062 69,195 - 849,469 2,221,746 34 244,672


OVER (UNDER) EXPENDITURES 9,352 (19,529) - (468,478) (2,176,282) 22,366 (153,242)


Bonds issued - - - 705,000 2,810,000 - -

Premium on bonds issued - - - 23,791 87,328 - -

Transfers out (27,030) - - - (97,632) - -

TOTAL OTHER FINANCING SOURCES (USES) (27,030) - - 728,791 2,799,696 - -

NET CHANGE IN FUND BALANCES (17,678) (19,529) - 260,313 623,414 22,366 (153,242)

FUND BALANCES, JANUARY 1 530,862 2,210,042 85,879 855,601 (1,251,068) 1,510 854,277

FUND BALANCES, DECEMBER 31 513,184$ 2,190,513$ 85,879$ 1,115,914$ (627,654)$ 23,876$ 701,035$

-126-



COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - CONTINUED


450 452 453 454 455 457 458 459 460 461

Trunk

Highway 23 2013 2013 2014 2015 East Wind 2016

Pedestrian 2011 Public 2011 2012 Public Merit Public Public Public Star Street Public

Bridge Improvements Improvements Improvements Center Improvements Improvements Improvements Project Improvements

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$

- - - - - - - - - -

- - - - 1,000,000 - - - - -

- - - - - - - - - -

- - - 3 251 - - 272 - -

- - - - - - - - - -

- - - - - - - 383,771 - 76,961

- - - - - - - - - -

- - - 3 1,000,251 - - 384,043 - 76,961

- - - - - - - - -

- - - - 21,208 - - - -

- - - - - 1,517 4,082 210,599 209 383,241

- - - - - - - - - 10,809

- - - - - - - - - -

- - - - - - - - - -

- - - - 274,434 - - - - -

47,685 - 599 - - 2,269 15,675 1,322,262 (17,730) 826,730

- - - - - - - - - 203,169

- - - - - - - - - -

- - - - - - - - -

- - - - - - - - - -

- - - - - - - - - 39,953

47,685 - 599 - 295,642 3,786 19,757 1,532,861 (17,521) 1,463,902

(47,685) - (599) 3 704,609 (3,786) (19,757) (1,148,818) 17,521 (1,386,941)

- - - - - - - 150,755 - 1,349,245

- - - - - - - - - 55,342

- - - - - - - - - -

- - - - - - - 150,755 - 1,404,587

(47,685) - (599) 3 704,609 (3,786) (19,757) (998,063) 17,521 17,646

- 201,181 68,390 222,181 283,319 (92,806) (386,856) 847,493 1,265 -

(47,685)$ 201,181$ 67,791$ 222,184$ 987,928$ (96,592)$ (406,613)$ (150,570)$ 18,786$ 17,646$

-127-


INTENTIONALLY

-128-



COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - CONTINUED


462 495 496 497 498 499

2017 Public 2008 2009

Public Improvement 2007 Public Public Public 2010 Public

Improvements Improvements Revolving Improvements Improvements Improvements Improvements Total

REVENUES

Property taxes -$ 5,608$ -$ -$ -$ -$ 350,185$

Franchise taxes - - - - - - 20,901

Intergovernmental

State grants - - - - - - 1,106,190

Special assessments - 10,480 - - - - 10,480

Investment earnings - 1,244 - - - 980 6,500

Miscellaneous

Rents - - - - - - 29,315

Contributions and donations - - - - - - 516,896

Refunds and reimbursements - 14,229 - - - - 58,697

TOTAL REVENUES - 31,561 - - - 980 2,099,164

EXPENDITURES

Current

Economic development - - - - - - 14,250

Public safety - - - - - - 21,208

Public works 93,133 40,604 - - - - 799,740

Culture and recreation - - - - - - 21,383

Capital outlay

General government - - - - - - 78,668


Public safety - - - - - - 709,203

Public works - 17,004 194 - - - 2,630,561

Culture and recreation - - - - - - 2,345,379

Airport - - - - - - 200

Debt service

Principal - - - - - - 89,888

Interest and other - - - - - - 7,668

Bond issuance costs - - - - - - 115,731

TOTAL EXPENDITURES 93,133 57,608 194 - - - 6,888,824


OVER (UNDER) EXPENDITURES (93,133) (26,047) (194) - - 980 (4,789,660)


Bonds issued - - - - - - 5,015,000

Premium on bonds issued - - - - - - 166,461

Transfers out - - - - - - (124,662)

TOTAL OTHER FINANCING SOURCES (USES) - - - - - - 5,056,799

NET CHANGE IN FUND BALANCES (93,133) (26,047) (194) - - 980 267,139

FUND BALANCES, JANUARY 1 - 820,006 (93,823) (90,488) 88,306 1,103,378 6,258,649

FUND BALANCES, DECEMBER 31 (93,133)$ 793,959$ (94,017)$ (90,488)$ 88,306$ 1,104,358$ 6,525,788$

-129-


INTENTIONALLY

-130-


GENERAL FUND

COMPARATIVE BALANCE SHEETS

DECEMBER 31, 2016 AND 2015

2016 2015

ASSETS

Cash and temporary investments 6,442,640$ 6,129,569$

Receivables

Delinquent taxes 55,700 31,340

Accounts 116,627 173,237

Special assessments 15,387 9,982

Intergovernmental 164,633 323,812

Due from other funds 529,975 570,489

Due from component unit - 149,696

Inventories - 996

Prepaid items 107,140 -

TOTAL ASSETS 7,432,102$ 7,389,121$

LIABILITIES

Accounts payable 285,728$ 238,942$

Accrued salaries payable 124,369 94,908

Due to other governments 4 35

Due to other funds - 15,768

Unearned revenue 84,801 65,674

TOTAL LIABILITIES 494,902 415,327


Unavailable revenue - taxes 55,700 31,340

Unavailable revenue - special assessments 15,387 9,982

TOTAL DEFERRED INFLOWS OF RESOURCES 71,087 41,322

FUND BALANCES

Nonspendable for

Inventories - 996

Due from component unit - 149,696

Prepaid items 107,140 -

Assigned for

Insurance reserve 69,684 118,145

Parkland development - 16,914

OPEB liability 259,716 233,315

Operating expenditure contingency 777,443 892,142

Cable franchise tax - PEG 33,563 -

Forfeiture program - Police department 23,013 -

Wellness program 9,016 -

Unallocated health insurance premium 19,661 -

Unassigned 5,566,877 5,521,264

TOTAL FUND BALANCES 6,866,113 6,932,472


RESOURCES AND FUND BALANCES 7,432,102$ 7,389,121$

-131-


INTENTIONALLY

-132-


GENERAL FUND


BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES



2015



REVENUES

Taxes

Property taxes 3,575,860$ 3,575,860$ 3,615,218$ 39,358$ 3,727,517$

Lodging tax 180,000 180,000 162,520 (17,480) 176,194

Franchise fees 485,000 485,000 395,616 (89,384) 448,415

Total taxes 4,240,860 4,240,860 4,173,354 (67,506) 4,352,126

Special assessments - - 1,348 1,348 -

Licenses and permits

Business 62,100 62,100 70,742 8,642 76,636

Nonbusiness 247,875 247,875 264,597 16,722 308,819

Total licenses and permits 309,975 309,975 335,339 25,364 385,455

Intergovernmental

Federal

Other Federal aid 4,080 4,080 136,666 132,586 90,770

State

Local government aid 2,427,970 2,427,970 2,427,970 - 2,421,872

Property tax credits and aids - - 149 149 161

Airport grants 76,256 76,256 112,762 36,506 104,470

Other State aids 415,879 415,879 416,479 600 429,959

Total State 2,920,105 2,920,105 2,957,360 37,255 2,956,462

Local

Other local grants 76,128 76,128 33,627 (42,501) 82,714

Total intergovernmental 3,000,313 3,000,313 3,127,653 127,340 3,129,946

Charges for services

General government 79,307 79,307 80,485 1,178 77,029

Public safety 68,665 68,665 73,493 4,828 61,153

Streets and highways 1,262,415 1,262,415 1,084,048 (178,367) 1,010,962

Culture and recreation 417,750 417,750 466,059 48,309 455,696

Miscellaneous 118,500 118,500 123,472 4,972 121,135

Total charges for services 1,946,637 1,946,637 1,827,557 (119,080) 1,725,975

Fines and forfeits 116,400 116,400 87,644 (28,756) 125,900

Investment earnings 15,000 15,000 20,388 5,388 12,324

Miscellaneous

Contributions and donations 848,225 848,225 857,020 8,795 874,043

Refunds and reimbursements 238,068 238,068 186,825 (51,243) 270,680

Total miscellaneous 1,086,293 1,086,293 1,043,845 (42,448) 1,144,723

TOTAL REVENUES 10,715,478 10,715,478 10,617,128 (98,350) 10,876,449

2016

Budgeted Amounts

-133-


GENERAL FUND



2015



EXPENDITURES

Current

General government

Other general government

Personal services 48,892$ 48,892$ 48,613$ 279$ 47,283$

Supplies 19,500 19,500 35,521 (16,021) 19,977


Total other general government 173,075 173,075 179,465 (6,390) 161,820

Cable commission

Personal services 88,101 88,101 86,845 1,256 51,897

Supplies 17,300 17,300 16,451 849 13,940


Total cable commission 118,789 118,789 115,386 3,403 89,386

Administration


Supplies 1,400 1,400 2,917 (1,517) 1,482


Total administration 367,228 367,228 373,163 (5,935) 353,022

Finance Director/Clerk/Treasurer

Personal services 489,572 489,572 530,024 (40,452) 371,360

Supplies 6,000 6,000 6,617 (617) 3,678


Total Finance Director/

Clerk/Treasurer 519,609 519,609 556,800 (37,191) 400,645

Appraising and assessing


Supplies 5,350 5,350 1,255 4,095 3,973


Total appraising and assessing 313,874 313,874 301,809 12,065 295,513

Legal

Supplies 2,500 2,500 429 2,071 571

Other services and charges 119,372 119,372 118,572 800 114,454

Total legal 121,872 121,872 119,001 2,871 115,025

2016

BUDGET AND ACTUAL - CONTINUED ON THE FOLLOWING PAGES


Budgeted Amounts

-134-


GENERAL FUND


BUDGET AND ACTUAL - CONTINUED



2015



EXPENDITURES - CONTINUED

Current - Continued

Community development

Supplies -$ -$ 360$ (360)$ -$


Total community development 171,204 171,204 177,200 (5,996) 163,970

Municipal building


Supplies 21,750 21,750 19,490 2,260 17,107


Total municipal building 280,988 280,988 274,929 6,059 263,586

Safety committee

Supplies 1,200 1,200 1,031 169 263


Total safety committee 14,422 14,422 21,327 (6,905) 3,614

Data processing

Supplies 29,625 29,625 5,582 24,043 8,449


Total data processing 189,825 189,825 114,583 75,242 202,276

Duplication

Supplies 3,500 3,500 6,224 (2,724) 1,738

Other services and supplies 13,027 13,027 12,343 684 10,061

Total duplication 16,527 16,527 18,567 (2,040) 11,799

Motor pool

Supplies 4,750 4,750 3,026 1,724 3,999

Other services and supplies 1,035 1,035 4,979 (3,944) 869

Total motor pool 5,785 5,785 8,005 (2,220) 4,868

Transit operation


Adult community center


Supplies 18,921 18,921 15,866 3,055 17,225


Total adult community center 159,001 159,001 148,389 10,612 153,674

Total general government 2,481,799 2,481,799 2,430,864 50,935 2,233,598

2016

Budgeted Amounts

-135-


GENERAL FUND





2015




Current - Continued

Public safety

Police

Personal services 2,334,447$ 2,334,447$ 2,300,492$ 33,955$ 2,271,179$

Supplies 133,950 133,950 93,121 40,829 126,576


Total police 2,750,533 2,750,533 2,642,760 107,773 2,604,434

Chemical assessment


Supplies 13,947 13,947 6,652 7,295 14,643


Total chemical assessment 54,981 54,981 51,087 3,894 58,012

Fire


Supplies 96,481 96,481 94,020 2,461 110,323


Total fire 626,155 626,155 617,160 8,995 597,840

Emergency management

Supplies 3,000 3,000 21 2,979 6,102


Total emergency management 10,321 10,321 6,231 4,090 12,777

Animal control


Supplies 1,850 1,850 1,955 (105) 2,285


Total animal control 23,060 23,060 31,340 (8,280) 36,028

Total public safety 3,465,050 3,465,050 3,348,578 116,472 3,309,091

Public works

Street maintenance


Supplies 20,420 20,420 23,012 (2,592) 14,572


Total street maintenance 382,529 382,529 374,298 8,231 377,347

2016

Budgeted Amounts

-136-


GENERAL FUND





2015




Current - Continued

Public works

Engineering

Personal services 743,826$ 743,826$ 706,641$ 37,185$ 698,372$

Supplies 20,550 20,550 12,060 8,490 16,796


Total engineering 799,451 799,451 756,021 43,430 764,062

Building inspection and zoning


Supplies 8,300 8,300 7,318 982 6,842


Total building inspection and zoning 410,991 410,991 410,464 527 408,016

Street administration


Supplies 623,550 623,550 660,739 (37,189) 703,893


Total street administration 1,429,106 1,429,106 1,490,289 (61,183) 1,441,606

Total public works 3,022,077 3,022,077 3,031,072 (8,995) 2,991,031


Park maintenance and development


Supplies 157,700 157,700 134,650 23,050 132,425

Other services 83,988 83,988 66,485 17,503 68,661

Total parks and recreation 560,181 560,181 529,373 30,808 494,014

Aquatic center


Supplies 65,200 65,200 60,198 5,002 64,529


Total aquatic center 236,241 236,241 209,599 26,642 219,076

Municipal band


Supplies 800 800 147 653 3,224

Other services and charges 194 194 88 106 130

Total municipal band 11,573 11,573 9,745 1,828 11,501

2016

Budgeted Amounts

-137-


GENERAL FUND





2015




Current - Continued

Culture and recreation - continued

Ice arena

Supplies -$ -$ -$ -$ 10$


Total ice arena 25,053 25,053 25,020 33 50,252

Community services administration


Supplies 4,429 4,429 7,967 (3,538) 1,732


Total community services

administration 353,082 353,082 426,279 (73,197) 329,664

Youth development


Supplies 2,000 2,000 980 1,020 1,272


Total youth development 40,500 40,500 24,405 16,095 21,904

Community services - general

Personal services 1,118 1,118 990 128 826

Supplies 14,750 14,750 14,843 (93) 11,502

Total community services - general 15,868 15,868 15,833 35 12,328

Summer education


Supplies 2,400 2,400 3,100 (700) 2,473


Total summer education 64,680 64,680 70,190 (5,510) 55,242

Fall education


Supplies 10,750 10,750 5,179 5,571 8,699


Total fall education 63,427 63,427 56,001 7,426 60,654

Winter education


Supplies 3,300 3,300 1,331 1,969 2,261


Total winter education 62,999 62,999 55,109 7,890 63,677

Summer recreation


Supplies 25,000 25,000 22,644 2,356 20,619


Total summer recreation 95,182 95,182 97,192 (2,010) 85,965

Budgeted Amounts

2016

-138-


GENERAL FUND





2015




Current - Continued

Fall recreation

Personal services 44,297$ 44,297$ 46,953$ (2,656)$ 44,051$

Supplies 6,000 6,000 7,941 (1,941) 6,451

Other services and charges 570 570 675 (105) 1,231

Total fall recreation 50,867 50,867 55,569 (4,702) 51,733

Winter recreation


Supplies 5,000 5,000 7,250 (2,250) 6,455


Total winter recreation 66,338 66,338 67,881 (1,543) 69,784

Total culture and recreation 1,645,991 1,645,991 1,642,196 3,795 1,525,794

Airport


Supplies 72,850 72,850 73,690 (840) 81,603


Total airport 452,621 452,621 558,772 (106,151) 539,686

Total current 11,067,538 11,067,538 11,011,482 56,056 10,599,200

Capital outlay

Public safety - - 5,596 (5,596) -

Public works - - 16 (16) -

Total capital outlay - - 5,612 (5,612) -

TOTAL EXPENDITURES 11,067,538 11,067,538 11,017,094 50,444 10,599,200


OVER (UNDER) EXPENDITURES (352,060) (352,060) (399,966) (47,906) 277,249


Sale of capital assets 25,000 25,000 31,585 6,585 34,574

Transfers in 302,060 302,060 302,022 (38) 355,027

Transfers out - - - - (379,084)

TOTAL OTHER FINANCING

SOURCES (USES) 327,060 327,060 333,607 6,547 10,517

NET CHANGE IN FUND BALANCES (25,000) (25,000) (66,359) (41,359) 287,766

FUND BALANCES, JANUARY 1 6,932,472 6,932,472 6,932,472 - 6,644,706

FUND BALANCES, DECEMBER 31 6,907,472$ 6,907,472$ 6,866,113$ (41,359)$ 6,932,472$

Budgeted Amounts

2016

-139-

317 322 323 324 325 326 359

2015

2008 G.O. 2014B Public

Equipment MERIT / TIF 1-12 TIF 2-4 2015A TIF 4-1 Improvement

Certificates SMASC Bend Rite Schwan's Bond Heritage Point Bonds

ASSETS

Cash and temporary investments 84,124$ 32,265$ -$ -$ 48,602$ -$ 115,242$

Receivables

Taxes 1,371 - - - 667 - 271

Special assessments

Delinquent - - - - - - 508

Noncurrent - - - - - - 142,342

Intergovernmental 588 - - - 334 - 1,431

TOTAL ASSETS 86,083$ 32,265$ -$ -$ 49,603$ -$ 259,794$

LIABILITIES

Accounts payable 200$ 200$ -$ -$ 502$ -$ 102$


Unavailable revenue - taxes 1,371 - - - 667 - 271

Unavailable revenue - special assessments - - - - - - 142,850

TOTAL DEFERRED INFLOWS OF RESOURCES 1,371 - - - 667 - 143,121

FUND BALANCES

Restricted for

Debt service 84,512 32,065 - - 48,434 - 116,571


RESOURCES AND FUND BALANCES 86,083$ 32,265$ -$ -$ 49,603$ -$ 259,794$


DEBT SERVICE FUNDS

COMBINING BALANCE SHEET - CONTINUED ON THE FOLLOWING PAGES

DECEMBER 31, 2016

-140-


DEBT SERVICE FUNDS

COMBINING BALANCE SHEET- CONTINUED

DECEMBER 31, 2016

360 361 363 364 365 366 367 368 369 370 371

2006B G.O. 2007 2008 2009 2010 2011

2016B G.O. 2002A 2005A G.O. Utility and Public Public Public Public Public 2011A G.O. 2012A G.O.

Various Revenue Tax Various Improvement Improvement Improvement Improvement Improvement Improvement Tax Increment Tax Increment

Purpose Bonds Increment Bonds Purpose Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds

71,069$ 118,021$ 518,737$ 32,071$ 621,101$ 403,751$ 925,417$ 256,397$ 107,921$ 191,759$ 451,702$

502 151 114 58 195 514 638 578 1,334 57 2,030

- - 492 - 1,629 249 405 4,558 878 - 4,683

177,655 - 696 55,814 41,436 495,156 375,584 1,065,630 134,828 5,269,556 1,420,513

251 - 65 - 190 185 1,591 200 886 2 2,891

249,477$ 118,172$ 520,104$ 87,943$ 664,551$ 899,855$ 1,303,635$ 1,327,363$ 245,847$ 5,461,374$ 1,881,819$

124$ -$ -$ 23$ 66$ 650$ 146$ 559$ 3,697$ 3,180$ 120$

502 151 114 58 195 514 638 578 1,334 57 2,030

177,655 - 1,188 55,814 43,065 495,405 375,989 1,070,188 135,706 5,269,556 1,425,196

178,157 151 1,302 55,872 43,260 495,919 376,627 1,070,766 137,040 5,269,613 1,427,226

71,196 118,021 518,802 32,048 621,225 403,286 926,862 256,038 105,110 188,581 454,473

249,477$ 118,172$ 520,104$ 87,943$ 664,551$ 899,855$ 1,303,635$ 1,327,363$ 245,847$ 5,461,374$ 1,881,819$

-141-


INTENTIONALLY

-142-


DEBT SERVICE FUNDS

COMBINING BALANCE SHEET- CONTINUED

DECEMBER 31, 2016

372 373 374 376 378 396

2013 2014 2004C G.O.

Public Public 2016 2000B Tax Increment

Improvement Improvement 23 Pedestrian Tax Abatement Improvement Refunding

Bonds Bonds Bridge Bonds Bonds Bonds Totals

ASSETS

Cash and temporary investments 601,130$ 380,267$ 69,372$ -$ 834$ 18,960$ 5,048,742$

Receivables

Taxes 3,073 2,337 1,289 - 49 - 15,228

Special assessments

Delinquent 1,621 449 - - - - 15,472

Noncurrent 824,099 389,057 - - 5,482 - 10,397,848

Intergovernmental 1,879 2,249 625 - - - 13,367

TOTAL ASSETS 1,431,802$ 774,359$ 71,286$ -$ 6,365$ 18,960$ 15,490,657$

LIABILITIES

Accounts payable 200$ 116$ 148$ 200$ -$ -$ 10,233$


Unavailable revenue - taxes 3,073 2,337 1,289 - 49 - 15,228

Unavailable revenue - special assessments 825,720 389,506 - - 5,482 - 10,413,320

TOTAL DEFERRED INFLOWS OF RESOURCES 828,793 391,843 1,289 - 5,531 - 10,428,548

FUND BALANCES

Restricted for

Debt service 602,809 382,400 69,849 (200) 834 18,960 5,051,876


RESOURCES AND FUND BALANCES 1,431,802$ 774,359$ 71,286$ -$ 6,365$ 18,960$ 15,490,657$

-143-

317 322 323 324 325 326 359 360

2015

2008 G.O. 2014B Public 2016B G.O.

Equipment MERIT / TIF 1-12 TIF 2-4 2015A TIF 4-1 Improvement Various

Certificates SMASC Bend Rite Schwan's Bond Heritage Point Bonds Purpose Bonds

REVENUES

Taxes

Property taxes 92,168$ -$ -$ -$ 52,922$ -$ 16,450$ 39,776$

Special assessments - - - - - - 29,977 31,545

Investment earnings 9 12 - - - - 70 -

TOTAL REVENUES 92,177 12 - - 52,922 - 46,497 71,321

EXPENDITURES

Current

Economic development - - - - - 60,499 - -

Debt service

Principal 75,000 830,000 - - - - - -

Interest and other 8,996 631,334 7,760 16,044 10,779 - 30,220 125

TOTAL EXPENDITURES 83,996 1,461,334 7,760 16,044 10,779 60,499 30,220 125


OVER (UNDER) EXPENDITURES 8,181 (1,461,322) (7,760) (16,044) 42,143 (60,499) 16,277 71,196


Transfers in - 1,478,298 7,760 16,044 - 60,499 - -

NET CHANGE IN FUND BALANCES 8,181 16,976 - - 42,143 - 16,277 71,196

FUND BALANCES, JANUARY 1 76,331 15,089 - - 6,291 - 100,294 -

FUND BALANCES, DECEMBER 31 84,512$ 32,065$ -$ -$ 48,434$ -$ 116,571$ 71,196$


DEBT SERVICE FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - CONTINUED ON THE FOLLOWING PAGES


-144-


DEBT SERVICE FUNDS


CHANGES IN FUND BALANCES - CONTINUED


361 363 364 365 366 367 368 369 370 371

2006B G.O. 2007 2008 2009 2010 2011

2002A 2005A G.O. Utility and Public Public Public Public Public 2011A G.O. 2012A G.O.

Revenue Tax Various Improvement Improvement Improvement Improvement Improvement Improvement Tax Increment Tax Increment

Purpose Bonds Increment Bonds Purpose Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds Bonds

21$ 68$ 36$ 116$ 29,102$ 41,213$ 31,527$ 92,601$ 183$ 142,211$

- 2,459 - 33,962 161,567 111,419 204,529 38,331 6,729 345,788

188 789 53 951 346 1,187 108 23 1,919 28

209 3,316 89 35,029 191,015 153,819 236,164 130,955 8,831 488,027

- - - - - - - - - -

- 335,000 - 150,000 185,000 190,000 330,000 110,000 90,000 275,000

- 10,165 3,666 16,249 26,998 29,532 41,671 32,236 27,950 40,820

- 345,165 3,666 166,249 211,998 219,532 371,671 142,236 117,950 315,820

209 (341,849) (3,577) (131,220) (20,983) (65,713) (135,507) (11,281) (109,119) 172,207

- - - - 37,070 - - - 270,175 -

209 (341,849) (3,577) (131,220) 16,087 (65,713) (135,507) (11,281) 161,056 172,207

117,812 860,651 35,625 752,445 387,199 992,575 391,545 116,391 27,525 282,266

118,021$ 518,802$ 32,048$ 621,225$ 403,286$ 926,862$ 256,038$ 105,110$ 188,581$ 454,473$

-145-


INTENTIONALLY

-146-


DEBT SERVICE FUNDS


CHANGES IN FUND BALANCES - CONTINUED


372 373 374 376 378 396

2013 2014 2004C G.O.

Public Public 2016 2000B Tax Increment

Improvement Improvement 23 Pedestrian Tax Abatement Improvement Refunding

Bonds Bonds Bridge Bonds Bonds Bonds Totals

REVENUES

Taxes

Property taxes 197,248$ 175,736$ 98,591$ -$ 49$ -$ 1,010,018$

Special assessments 144,849 81,397 - - - - 1,192,552

Investment earnings 489 223 - - - 33 6,428

TOTAL REVENUES 342,586 257,356 98,591 - 49 33 2,208,998

EXPENDITURES

Current


Debt service

Principal 365,000 80,000 - - - - 3,015,000

Interest and other 80,387 45,775 33,854 200 23,236 336 1,118,333

TOTAL EXPENDITURES 445,387 125,775 33,854 200 23,236 336 4,193,832


OVER (UNDER) EXPENDITURES (102,801) 131,581 64,737 (200) (23,187) (303) (1,984,834)


Transfers in - - - - - - 1,869,846

NET CHANGE IN FUND BALANCES (102,801) 131,581 64,737 (200) (23,187) (303) (114,988)

FUND BALANCES, JANUARY 1 705,610 250,819 5,112 - 24,021 19,263 5,166,864

FUND BALANCES, DECEMBER 31 602,809$ 382,400$ 69,849$ (200)$ 834$ 18,960$ 5,051,876$

-147-


ECONOMIC DEVELOPMENT AUTHORITY FUNDS


DECEMBER 31, 2016

204/208 205/206/207/209 212 213

Economic EDA Parkway

Development Housing State EDA Federal EDA

Authority Fund CRIF CRIF Total

ASSETS

Cash and temporary investments 695,751$ 113,464$ 315,946$ 523,912$ 1,649,073$

Receivables

Delinquent taxes 1,885 - - - 1,885

Accounts 250 - 250

Notes/leases - 233,713 - 431,356 665,069

Intergovernmental 784 - - - 784

Land held for resale - 1,311,852 - - 1,311,852

TOTAL ASSETS 698,670$ 1,659,029$ 315,946$ 955,268$ 3,628,913$

LIABILITIES

Accounts payable 565$ 42,998$ -$ -$ 43,563$

Due to primary government - 317,073 - - 317,073

TOTAL LIABILITIES 565 360,071 - - 360,636


Unavailable revenue - taxes 1,885 - - - 1,885

FUND BALANCES

Nonspendable

Land held for resale - 1,311,852 - - 1,311,852

Restricted for

Economic development - - 315,946 955,268 1,271,214

Assigned for

Economic development 696,220 - - - 696,220

Unassigned - (12,894) - - (12,894)

TOTAL FUND BALANCES 696,220 1,298,958 315,946 955,268 3,266,392

TOTAL LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCES 698,670$ 1,659,029$ 315,946$ 955,268$ 3,628,913$

Amounts reported for EDA activities in the statement

of net position are different because

Total fund balances - EDA funds 3,266,392$

Capital assets used in EDA activities are not financial

resources and therefore are not reported as assets in the funds. 7,591

Long-term liabilities, including bonds payable, are not due and payable in the

current period and therefore are not reported as liabilities in the funds.


Notes payable (63,742)

Long-term assets are not available to pay current-period expenditures and, therefore,

are unavailable in the funds.


Total net position - EDA activities 3,212,126$

-148-


ECONOMIC DEVELOPMENT AUTHORITY FUNDS

COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES/NET POSITION


204/208 205/206/207/209 212 213

Economic

Development EDA Parkway State EDA Federal EDA

Authority Housing CRIF CRIF Total

REVENUES

Taxes

Property taxes 121,059$ -$ -$ -$ 121,059$

Investment earnings 661 556 - 2,643 3,860

Miscellaneous

Rents - 12,563 - - 12,563 Refunds and reimbursements 3,750 - - - 3,750

TOTAL REVENUES 125,470 13,119 - 2,643 141,232

EXPENDITURES

Current

Economic development 141,901 1,030 25,764 71 168,766


OVER (UNDER) EXPENDITURES (16,431) 12,089 (25,764) 2,572 (27,534)


Sale of capital assets - 66,414 - - 66,414

NET CHANGE IN FUND BALANCES (16,431) 78,503 (25,764) 2,572 38,880

FUND BALANCES, JANUARY 1 712,651 1,220,455 341,710 952,696 3,227,512

FUND BALANCES, DECEMBER 31 696,220$ 1,298,958$ 315,946$ 955,268$ 3,266,392$

Amounts reported for EDA activities in the statement

of activities are different because

Net change in fund balances - EDA funds 38,880$

EDA funds report capital outlay as expenditures. However, in the statement of



Depreciation expense (646)

Delinquent property taxes receivable will be collected this year, but are not available soon

enough to pay for the current period's expenditures, and therefore are unavailable in the funds.



financial resources and, therefore, are not reported as expenditures in EDA funds.

Write-off of housing loans (23,236)

Change in net position - EDA activities 16,646$

-149-


ECONOMIC DEVELOPMENT AUTHORITY FUND


BUDGET AND ACTUAL



2015



REVENUES

Taxes

Property taxes 119,677$ 119,677$ 121,059$ 1,382$ 120,220$

Investment earnings - - 661 661 763

Miscellaneous

Refunds and reimbursements 3,500 3,500 3,750 250 3,750

TOTAL REVENUES 123,177 123,177 125,470 2,293 124,733

EXPENDITURES

Current


Supplies 1,500 1,500 4,237 (2,737) 8,536



NET CHANGE IN FUND BALANCES (6,624) (6,624) (16,431) (9,807) (11,024)



2016

Budgeted Amounts

-150-


EDA PARKWAY HOUSING FUND


BUDGET AND ACTUAL



2015



REVENUES

Investment earnings -$ -$ 556$ 556$ 562$

Miscellaneous

Rents - - 12,563 12,563 12,563

TOTAL REVENUES - - 13,119 13,119 13,125

EXPENDITURES

Current


Other services and charges 256 256 1,030 (774) 5,790


OVER (UNDER) EXPENDITURES (256) (256) 12,089 12,345 7,335


Sale of capital assets - - 66,414 66,414 87,500

NET CHANGE IN FUND BALANCES (256) (256) 78,503 78,759 94,835

FUND BALANCES, JANUARY 1 1,220,455 1,220,455 1,220,455 - 1,125,620

FUND BALANCES, DECEMBER 31 1,220,199$ 1,220,199$ 1,298,958$ 78,759$ 1,220,455$

2016

Budgeted Amounts

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MARSHALL-LYON COUNTY LIBRARY FUNDS


DECEMBER 31, 2016

211 321

Marshall - Lyon

Marshall - Lyon County Library

County Library Debt Totals

ASSETS

Cash and temporary investments 314,213$ 118,717$ 432,930$

Receivables

Delinquent taxes 8,869 720 9,589

Accounts 10,000 - 10,000

Intergovernmental 3,736 299 4,035

TOTAL ASSETS 336,818$ 119,736$ 456,554$

LIABILITIES

Accounts payable 15,972$ 200$ 16,172$

Accrued salaries payable 9,186 - 9,186


TOTAL LIABILITIES 34,830 200 35,030


Unavailable revenue - taxes 8,869 720 9,589

FUND BALANCES

Restricted for

Debt service - 118,816 118,816

Assigned for


Compensated absences 72,211 - 72,211

OPEB liability 19,035 - 19,035

Emergency/unanticipated 50,000 - 50,000

Unassigned 128,206 - 128,206

TOTAL FUND BALANCES 293,119 118,816 411,935


RESOURCES AND FUND BALANCES 336,818$ 119,736$ 456,554$

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DECEMBER 31, 2016

Amounts reported for governmental activities in the

statement of net position are different because

Total fund balances from above 411,935$

Capital assets used in governmental activities are

not financial resources and therefore are not

reported as assets in the funds. 6,400,195

Long-term liabilities, including bonds payable, are

not due and payable in the current period and

therefore are not reported as liabilities in the funds.


Other postemployment benefits obligation (25,103)

Bonds payable (685,000)

Unamortized bond premiums (9,372)

Compensated absences payable (72,211)

Pension liability (582,403)

Long-term assets are not available to pay current-period expenditures and,

therefore, are unavailable in the funds.


Governmental funds to not report long-term amounts related to pensions.

Deferred outflows of pension resources 209,966

Deferred inflows of pension resources (76,641)

Governmental funds to not report a liability for

accrued interest until due and payable. (7,724)

Total net position 5,573,231$

RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION

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211 321

Marshall - Lyon

Marshall - Lyon County Library

County Library Debt Totals

REVENUES

Taxes

Property taxes 576,949$ 47,001$ 623,950$

Intergovernmental

City of Marshall - 36,835 36,835

Lyon County 251,102 - 251,102

Fines and fees 13,584 - 13,584

Investment earnings 361 93 454

Miscellaneous

Contributions and donations 26,774 - 26,774

TOTAL REVENUES 868,770 83,929 952,699

EXPENDITURES

Current

Culture and recreation 887,863 - 887,863

Capital outlay

Culture and recreation 41,714 - 41,714

Debt service

Principal - 95,000 95,000

Interest and other - 20,339 20,339

TOTAL EXPENDITURES 929,577 115,339 1,044,916


OVER (UNDER) EXPENDITURES (60,807) (31,410) (92,217)


Sale of capital assets 679 - 679

NET CHANGE IN FUND BALANCES (60,128) (31,410) (91,538)

FUND BALANCES, JANUARY 1 353,247 150,226 503,473

FUND BALANCES, DECEMBER 31 293,119$ 118,816$ 411,935$





CHANGES IN FUND BALANCES/NET POSITION

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MARSHALL - LYON COUNTY LIBRARY FUNDS


Amounts reported for governmental activities in the

statement of activities are different because

Net change in fund balances from previous page (91,538)$

Governmental funds report capital outlay as expenditures. However, in the statement of



Capital outlay 91,236

Depreciation (271,706)

The issuance of long-term debt provides current financial resources to governmental funds, while

the repayment of principal of long-term debt consumes the current financial resources of governmental

funds. Neither transaction, however, has any effect on net position. Also, governmental funds report

the effect of premiums, discounts and similar items when debt is first issued, whereas these amounts

are deferred and amortized in the statement of activities.

Principal repayments 95,000

Premium amortization 937

Interest on long-term debt in the statement of activities differs from the amount reported in the

governmental fund because interest is recognized as an expenditure in the funds when it is due,

and thus requires the use of current financial resources. In the statement of activities, however,

interest expense is recognized as the interest accrues, regardless of when it is due. 792

Long-term pension activity is not reported in governmental funds.

Pension expense (17,255)

Direct aid contributions 2,267

Certain revenues are recognized as soon as they are earned. Under the modified accrual

basis of accounting certain revenues cannot be recognized until they are available

to liquidate liabilities of the current period.



financial resources and, therefore, are not reported as expenditures in governmental funds.

Other postemployment benefits cost (1,891)

Compensated absences 20,107

Change in net position - governmental activities (167,591)$

AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

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MARSHALL - LYON COUNTY LIBRARY FUND


BUDGET AND ACTUAL



2015



REVENUES

Taxes

Property taxes 570,655$ 570,655$ 576,949$ 6,294$ 555,748$

Intergovernmental

Lyon County 251,125 251,125 251,102 (23) 245,000

Fines and fees 20,300 20,300 13,584 (6,716) 14,899

Investment earnings 100 100 361 261 362

Miscellaneous

Contributions and donations 3,900 3,900 26,774 22,874 10,893

TOTAL REVENUES 846,080 846,080 868,770 22,690 826,902

EXPENDITURES

Current


Salaries 489,513 489,513 492,764 (3,251) 470,039

Insurance and pension 167,873 167,873 146,386 21,487 142,704

Supplies 10,746 10,746 26,369 (15,623) 9,336

Telephone 2,000 2,000 1,793 207 1,544

Postage 500 500 690 (190) 601

Travel, conferences, and workshops 1,500 1,500 5,679 (4,179) 3,782

Professional services 4,335 4,335 17,175 (12,840) 11,389

Repairs and maintenance 35,000 35,000 33,961 1,039 25,587

Books and periodicals 58,174 58,174 60,449 (2,275) 45,377

AV materials and circulation supplies 6,850 6,850 7,695 (845) 3,546

Utilities and refuse hauling 53,198 53,198 42,783 10,415 44,832

Vehicle maintenance 750 750 316 434 388

Insurance and bonds 8,073 8,073 3,012 5,061 3,704


Expenditures of donations - - 11,834 (11,834) 10,491

Total current 845,412 845,412 887,863 (42,451) 795,677

Capital outlay

Library 21,380 21,380 41,714 (20,334) -



OVER (UNDER) EXPENDITURES (20,712) (20,712) (60,807) (40,095) 31,225


Sale of capital assets - - 679 679 -

Transfers in - - - - 8,000

TOTAL OTHER FINANCING

SOURCES - - 679 679 8,000

NET CHANGE IN FUND BALANCES (20,712) (20,712) (60,128) (39,416) 39,225



2016

Budgeted Amounts

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SUMMARY FINANCIAL REPORT

REVENUES AND EXPENDITURES FOR GENERAL OPERATIONS

GOVERNMENTAL FUNDS


2016 2015

REVENUES

Taxes 8,197,108$ 7,953,897$ 3.06 %

Special assessments 1,204,380 905,751 32.97

Licenses and permits 335,339 385,455 (13.00)

Intergovernmental 8,831,843 8,742,823 1.02

Charges for services 2,010,612 1,785,048 12.64

Fines and forfeits 87,644 125,900 (30.39)

Investment earnings 83,690 316,084 (73.52)

Miscellaneous 1,744,853 4,048,491 (56.90)

TOTAL REVENUES 22,495,469$ 24,263,449$ (7.29) %

Per Capita 1,631$ 1,769$ (7.78) %

EXPENDITURES

Current

General government 2,430,864$ 2,233,598$ 8.83 %

Public safety 3,472,761 3,469,035 0.11

Public works 3,830,812 2,992,477 28.01

Culture and recreation 2,120,145 2,599,815 (18.45)

Economic development 285,441 199,377 43.17

Airport 558,772 539,686 3.54

Capital outlay

General government 78,668 12,235 542.98

Public safety 724,100 4,626,108 (84.35)

Public works 2,630,577 8,791,594 (70.08)

Culture and recreation 7,230,896 12,931,521 (44.08)

Economic development 103,563 - 100.00

Airport 200 - 100.00

Debt service

Principal 3,104,888 3,692,251 (15.91)

Interest and other charges 1,126,001 1,177,068 (4.34)

Bond issuance costs 115,731 61,194 89.12

TOTAL EXPENDITURES 27,813,419$ 43,325,959$ (35.80) %

Per Capita 2,016$ 3,158$ (36.15) %

Total Long-term Indebtedness 33,828,009$ 31,917,897$ 5.98 %

Per Capita 2,453 2,327 5.42

General Fund Balance - December 31 6,866,113$ 6,932,472$ (0.96)

Per Capita 498 505 (1.49)

The purpose of this report is to provide a summary of financial information concerning the City of Marshall to interested

citizens. The complete financial statements may be examined at City Hall, 344 West Main Street. Questions

about this report should be directed to Karla Drown, Finance Director at (507)537-6763.

(Decrease)

Increase

Percent

Total

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INTENTIONALLY

-158-

OTHER REQUIRED REPORTS



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INTENTIONALLY

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INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE

Honorable Mayor and City Council City of Marshall, Minnesota We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the City of Marshall, Minnesota (the City) as of and for the year ended December 31, 2016, and the related notes to the financial statements, and have issued our report thereon dated June 27, 2017. The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minnesota Statute §6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our audit considered all of the listed categories. In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters may have come to our attention regarding the City’s noncompliance with the above referenced provisions. The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose.


-161-

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON

COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council City of Marshall, Minnesota We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the City of Marshall, Minnesota (the City), as of and for the year ended December 31, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 27, 2017. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified However, as described in the accompanying Schedule of Findings and Responses, we identified a certain deficiency in internal control that we consider to be a material weakness and a deficiency that we consider to be a significant deficiency. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Responses as item 2016-002 to be a material weakness. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings and Responses as item 2016-001 to be a significant deficiency.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The City’s Responses to Findings The City’s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Responses. The City’s responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them. Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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SCHEDULE OF FINDINGS AND RESPONSES


Finding Description

2016-001 Financial report preparation

Condition: As in prior years, the auditor was requested to draft the audited financial statements and related

footnote disclosures as part of our regular audit services. Auditing standards require auditors to

communicate this situation to the Council as an internal control deficiency. Ultimately, it is

management’s responsibility to provide for the preparation of your statements and footnotes,

and the responsibility of the auditor to determine the fairness of presentation of those

statements. From a practical standpoint we do both for you at the same time in connection with

our audit. This is not unusual for us to do with organizations of your size. However, based on

auditing standards, it is our responsibility to inform you that this deficiency could result in a

material misstatement to the financial statements that could have been prevented or detected by

your management. Essentially, the auditors cannot be part of your internal control process.

Criteria: Internal controls should be in place to provide reasonable assurance over financial reporting.

Cause: From a practical standpoint we do both for you at the same time in connection with our audit.

This is not unusual for us to do with organization of your size.

Effect: The effectiveness of the internal control system relies on enforcement by management. The

effect of deficiencies in internal controls can result in undetected errors in financial reporting.

Recommendation: It is your responsibility to make the ultimate decision to accept this degree of risk associated

with this condition because of cost or other considerations. As in prior years, the auditor has

instructed management to review a draft of the auditor prepared financials in detail for their

accuracy; we have answered any questions they might have, and have encouraged research of

any accounting guidance in connection with the adequacy and appropriateness of classification

of disclosure in your statements. We are satisfied that the appropriate steps have been taken to

provide you with the completed financial statements. While the City is reviewing the financial

statements we recommend a disclosure checklist is utilized to ensure all required disclosures are

presented and the City should agree its financial software to the numbers reported in the

financial statements.

Management response:

For now, the City’s management accepts the degree of risk associated with this condition and thoroughly reviews a

draft of the financial statements.

Updated progress from prior year:

There is no change in this finding.

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SCHEDULE OF FINDINGS AND RESPONSES - CONTINUED


Finding Description

2016-002 Material audit and accounting adjustments

Condition: During our audit, adjustments were needed to record numerous accounting and audit

adjustments, including some material. The material adjustments were to adjust cash, special

assessments, inventory, prepaids, capital assets and debt activity.

Criteria: The financial statements are the responsibility of the City's management.

Cause: City staff has prepared a year-end trial balance that does not reflect all necessary accounting

entries.

Effect: This indicates that it would be likely that a misstatement may occur and not be detected by the

City’s system of internal control. The audit firm cannot serve as a compensating control over

this deficiency.

Recommendation: We recommend that management review each journal entry, obtain an understanding of why the

entry was necessary and modify current procedures to ensure that future corrections are not

needed.

Management response:

Management will review and gain an understanding of the audit adjustments in order to reduce the number of entries

necessary for future audits.

Updated progress from prior year:

The City will continue trying to improve in preparing a year-end trial balance in the upcoming years.

-165-

Documents

· Combining Statement of Revenues, Expenditures and Changes in Fund Balances 113 . Nonmajor Special Revenue Funds . Combining Balance Sheet 114 . Combining Statement of Revenues,