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