3.0 ERMU MINUTES 05-13-2008 - Laserfiche WebLink

Home Browse Search

Page 3 Regular meeting of the Elk River Municipal Utilities Commission April 17, 2008 It was decided to move to item 6. 1, Review & Receive the 2007 Financial Audit at this time. 6.1 Review & Receive 2007 Financial Audit Steve McDonald of Abdo, Eick & Meyers reviewed the 2007 audit and answered questions. John Dietz asked about the necessity of having separate bank accounts for the payroll and accounts payable functions. Steve McDonald responded that the interface function of the payroll system with the general ledger and having separate check stock and check sequences is adequate. John Dietz also questioned the practice of approving the check register after the checks have been disbursed in contrast to the city council where all checks are approved and then disbursed. Steve McDonald responded that it is a common practice with municipals due to timing issues not coinciding with the frequency of the commission meetings (once a month instead of bi-weekly.) John Dietz also questioned the debt balances and the increases over the past two years. Steve McDonald responded that it becomes a matter of taking on the debt or drawing down the reserves. The utilities have adequate cash flow to be able to make the debt payments and the practice of projecting the cash flows by utilizing the Springstad Study worksheets is a good one to continually monitor the best position to take. John Dietz also asked how the auditors had massaged the numbers to show a decrease in net assets. Steve McDonald responded that it related to the sizable decrease in contributed infrastructure from 2006 to 2007. It was over $800,000 in 2006 and less than $300,000 in 2007. At the March Elk River Municipal Utilities Commission meeting, Commissioner Jerry Gumphrey questioned the check endorsement procedure. This was discussed as part of management's response to audit items in the Management Letter and the changes that were implemented to address the concern. Bryan Adams asked if the auditors felt like the utilities were moving in the right direction and Steve McDonald responded that they did. Jerry Gumphrey moved to receive and file the 2007 audit. John Dietz seconded. Motion carried 3-0. Jerry Olsen from the Country Crossings Homeowners Association was asked if he would like to bring something before the commission. He stated that he was there on behalf of the Association to represent their concerns related to water rates and the high yearly cost for irrigation. He also commented that there seems to be a lot of water meter replacement occurring and in talking with various individuals has found this to be an issue only in Elk River. Jerry Takle responded that the water in this area comes from the Mt. Simon -Hinkley aquifer and it is very good water in terms of taste and the low level of treatment necessary. The DNR monitors the usage of the aquifers and only allows us to take so much out through their permitting process. Part of the permitting process is demonstration of conservation efforts. We try to encourage conservation through education, supplying water monitoring devices such as rain gauges, water meters, and low flow showerheads. We also try to encourage conservation through our rates and having the various tiers structured so that high users pay the most and adjust their usage accordingly. The irrigation meters are charged the highest rate with this same end in mind. He also explained that the aquifer is bowl shaped and the area of Minneapolis and St. Paul sit on top of the deepest part of that bowl; the area of Elk River is on the shallowest part of that bowl. So it is in