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4.0 POLICY&COMPLIANCE <br /> 4.1 2024 Financial Audit <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 /> 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 /> Moved by Commissioner Stewart and seconded by Commissioner Bell to receive and file <br /> the 2024 Annual Financial Report. Motion carried 5-0. <br /> 4.2 2024 Year End Reserve Balance <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 /> 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 /> 4.3 Utilities Performance Incentive Compensation Distribution <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 /> 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 /> Elk River Municipal Utilities Commission Meeting Minutes <br /> April 8, 2025 <br /> Page 3 <br />