ERMUSR EDUCATION 09-21-2004 - Laserfiche WebLink

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The Minnesota State Auditor Pat Anderson, gave a presentation on Municipal Enterprise Activity Special Study and related enterprise transfers. The recommendations from this study are: I. Generally, services paid for primarily by user fees should be accounted for in an enterprise fund. When governments list fee-based activity in the general fund, other revenue in that fund may allow for subsidization of the activity that is unseen by the public,rendering it nearly impossible to monitor how much is actually being paid by the user. General and special revenue funds recognize expenditures rather than expenses, making it more difficult to determine the full cost of the activity. Citizens may not realize the true costs of the services they receive. Therefore, the State Auditor's Office recommends that all cities establish activities primarily financed by user fees as enterprise funds. Doing this will give taxpayers,and local policy makers, a better idea of the true costs of the services provided. 2. Enterprises for profit should not lose money. These enterprises are those for which there is generally(or reasonably could be)competition from the private sector. Liquor stores, retail operations, and other for-profit enterprises should always make a profit. If they fail to do so,they should not exist. 3. Necessary enterprises should only break even. Necessary enterprises should only charge enough to cover operating costs and the costs of replacement. The law often prohibits excessive charges for public services. This ensures that the public is not being charged an exorbitant amount for a service that they are essentially forced to purchase from the city. 4. Cities should consider public-private partnerships where feasible. Cities should explore the possible gains in efficiency by contracting with private management companies. Cities would retain control of the service, while benefiting from the expertise of an experienced provider. 5. Cities should set up enterprise transfer policies. Enterprise type activity allows the users of a service to pay for it,without using any property tax revenue. If enterprise activities generate excess profits that are continually transferred to the general fund,then the reverse is occurring, users are being indirectly taxed to subsidize other city services. Cities should create a policy of how much they transfer from year to year during the budget process in order for the subsidy of city functions, by enterprise activities, to be more transparent to the taxpayer. The League of Minnesota Cities gave a presentation on Fair Labor Standards Act and overtime. The criteria in determining exempt and non exempt employee status has been modified. One of our previously non-exempt employees could now possibly be classified as exempt, although the practical implications would be small. A larger issue is how we pay overtime. Included in regular pay shall be wages and wage increases, on-call pay and shift differentials, longevity pay, and educational incentive pay. Elk River Municipal Utilities has typically not included on-call pay in the regular pay to calculate line and one half. Statute of limitations is 2 years so we are going back 2 years to rectify this problem. In the future, on-call pay will be included in the overtime calculation.