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IV-4CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2019 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 presentetl 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 of Elk River maintains three individual major governmental funds. 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, Active ER Projects, and Pavement Management funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor funds is provided in the form of combining statements elsewhere in this report. The City of Elk River adopts an annual budget for its General Fund and some special revenue funds. A budgetary comparison statement has been provided for those funds to demonstrate compliance with this budget. • The basic governmental fund financial statements can be found starting on page 24 of this report. Proprietary funds. When the City of Elk River charges customers for the services it provides -whether to outside customers or to other departments of the City -these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net position and the statement of revenues, expenses, and changes in net position. The enterprise funds are the same as the business-type activities reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The City of Elk River uses enterprise funds to account for its municipal liquor, garbage, sewer, storm water, water, and electric operations. The basic proprietary fund financial statements can be found starting on page 29 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 37 of this report. CITY OF ELK RIVER MANAGEMENT'S DISCUSSION AND ANALYSIS YEAR ENDED DECEMBER 31, 2019 Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Elk River's share of net pension liabilities (assets) for defined benefits plans, schedules of contributions, and progress in funding its obligation to provide pension and other postemployment benefits to its employees. Required supplementary information can be found starting on page 83 of this report. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found starting on page 95 of this report. 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 of Elk River, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $215,099, 199 at the close of the most recent fiscal year. By far, the largest portion of the City of Elk River's net position (76%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City of Elk River uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Elk River'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. Governmental Activities Business-!XE!! Activities Total 2019 2018 2019 2018 2019 2018 Current and other Assets $ 65.755.084 $ 35,189,365 $ 39.855.455 $ 35,963.873 $ 105,610.539 $ 71,153,238 c_,_ 105,835,140 94.574.550 115,1158,305 117,800,871 220,993,445 212,375,421 TotalAseelB 171,590,224 129,763,915 155,013,760 153,784,744 328,803,964 283.528.659 Deferred Outflowl of Resources 4,757,778 6,294.084 411,293 828,823 5.189,071 7.122.907 Noncurrent Uabllltles Outstanding 59,536.643 27.502.045 33,202.304 37,188,952 92.736.947 64,888,997 Otherliablllties 8.743,380 1,758,155 8,157,881 5,689,316 16.901,281 7447471 Total Liabilities 68,280,023 29,260,200 41,360,185 42.8158,288 109,640,208 72,116,488 Deferred Inflows of Resources 6,214,188 7,764,238 819,482 1,082,545 7,033,646 8,646,784 Net Position: NetlnwunenlinCapllalAseelB 78,286,782 77,092,055 64,327,032 85,104,737 162,815,814 162,196,792 --3,741,388 4,238,046 1,261.359 1,261,369 5,002,727 5,497,407 Unresbicted 19,823,883 17,885,456 27,8158,995 24,308,658 47,460,6158 41,994,114 Total Net Position $ 101,853,813 $ 99,013,559 $ 113,245.388 $110,674.754 $ 215,099,199 $ 209,888,313 An additional portion of the City of Elk River's net position (2.2%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position ($47,686,085) may be used to meet the City of Elk River's ongoing obligations to citizens and creditors. 152
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