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Elk River Municipal Utilities Commission Meeting Minutes <br />April 8, 2025 <br />Page 3 <br /> <br />4.0 POLICY & COMPLIANCE <br /> <br />4.1 2024 Financial Audit <br /> <br />Mr. Nilson from ABDO Solutions presented ERMU’s 2024 audit results, which issued a <br />clean, unmodified audit opinion and compliance with Minnesota state statutes. He also <br />showcased charts comparing expenditures, receipts, cash balances, and debt obligations <br />over the past four years. He detailed a key expenditure in the Electric fund which is <br />purchased power. Within the water fund depreciation and operating costs were discussed <br />as well as a modest drop in usage. There was discussion. <br /> <br />Commissioner Zerwas provided context from his experience with the state legislature, <br />explaining how commonly small rural utilities rely on state funding for major projects. He <br />stated his perspective that ERMU is in good position relative to others by having some <br />funds available for projects. Mr. Hanson added that resilience and reliability are major <br />contributor to a utility’s financial stability, referring to the previously discussed reliability <br />award. <br /> <br />Moved by Commissioner Stewart and seconded by Commissioner Bell to receive and file <br />the 2024 Annual Financial Report. Motion carried 5-0. <br /> <br />4.2 2024 Year End Reserve Balance <br /> <br />Ms. Karpinski presented her memo which recommends that unrestricted reserve balances <br />above target levels for the Electric Utility fund, calculated at $3,026,233, be designated for <br />electric service territory transfer costs, and capital infrastructure costs; and that <br />unrestricted reserve balances for the Water Utility fund, calculated at $8,538,018 be <br />designated for current and future capital infrastructure costs. <br /> <br />Moved by Commissioner Westgaard and seconded by Commissioner Zerwas to <br />designate unrestricted reserve balances above target levels for Electric and Water <br />funds. Motion carried 5-0 <br /> <br />4.3 Utilities Performance Incentive Compensation Distribution <br /> <br />Ms. Karpinski presented the memo which called for a 3% distribution to qualifying <br />employees per the terms of the policy and based upon staff achieving all stated goals. <br /> <br />Staff explained that this was a $140,000 budget item and that next year the maximum <br />distribution will be reduced to 2% as part of the approved Wage & Benefit Committee <br />recommendations in 2024. <br /> <br /> <br />46