5.6. SR 4-15-2002 - Laserfiche WebLink

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C l Ohit¥ Ed:uca ion Zi[elongLOx 1230 NW School Street · Elk River, Minnesota 55330 2506 763 241 3520 11 April 2002 ~/,~.~t..~ · o: Elk River City Counci~~'~rator Pat Klaers From: Charlie Blesener ~4'~' '- Re: Request for resolution of Community Recreation deficit Approximately a year ago, as the Community Recreation program formally began to disband itself, the Community Recreation Board was informed by me of an on-going deficit that the program had accumulated over time. My erroneous assumption at the time was that Board members were aware of the fund balance of the program, but I learned that they were not aware. Historically, each year following the conclusion of the district's fiscal year, a final accounting of the Community Recreation budget was made by the District's manager of accounting, and communicated to me and to the coordinator of the Community Recreation program. Jeff Asfahl and I had numerous conversations and meetings over the years regarding the fund balance of the program, and Jeff had frequent contact with the District's manager of accounting regarding it as well. The financial structure of the joint powers agreement called for member communities to contribute revenues-- based on community populations--sufficient to cover the operating (overhead) costs of the department, and for each member community to be fiscally responsible for whatever programs occurred in its community. The School District was the fiscal agent which received the annual contributions from member communities, and which disbursed expenses for the operation. One problem with the arrangement was that the municipal and township members to the agreement operated their budget years on a calendar basis, while the fiscal agent (lSD 728) has a fiscal year of July 1 through June 30. Over the years, it was felt that some of the variation in fund balances could be attributed to summer program · 'evenues being received in one year (prior to June 30), while a significant amount of the summer program expenses occurred in a different year (after July 1). At any rate, each year as the recreation budget was determined by the Board's budget committee, the current fund balance, or lack thereof, was apparently not a part of the discussion. The Recreation Board has wrestled with this issue for several months, and among the steps taken and information determined are the following: *revenues for the entire program (1992-2000) have been accounted for in the Community Recreation revenue codes of the School District. *an extensive review of the calendar year 2000 was done by Gary Groen, CPA. His finding was that the deficit did not occur because of 2000 activities. * Mr. Groen reconstructed the expenses and revenues for the program into a calendar year basis for review by the Board. That data suggest that the majority of the deficit occurred in the years 1994-1998. *Groen noted that based on his review of the descriptions of the items paid in the District expenditure reports, there does not appear to be any significant expenditure incorrectly charged to the administration or recreation programs *A recap of the administrative expenses for the years 1996-1999 was developed by Groen. In each of those years the administrative expenses exceeded the revenues collected from member's annual dues by significant amounts. *Mr. Groen has put the deficit amount for the nine years of Community Recreation operations at $67,274. (Copies of Mr. Groen's financial summaries and notes are enclosed). The joint powers agreement used population of member communities to determine the annual dues that members would pay. In an attempt to assign costs for the deficit, I constructed a data base (enclosed) using the annual population of the member communities over the life of the agreement, and credited or debited each member community for that year's operating credit or deficit. Using that method, Elk River would have 51%, or $34,311. of the $67,274 deficit. It is regrettable that this deficit occurred, and I am interested in reaching an equitable resolution of the matter. While I was not included in the Recreation Board's annual budget process, I erred in assuming that members were cognizant of the fund balance status of the program. By the same token, at no time during the program's tenure did municipal or township members request more or different financial data from me or from the District. The Finance section of the Joint Powers Agreement (enclosed) calls for the Recreation Board to review funds expended in the previous year at the end of each fiscal year, and to use that data to adjust the next year's dues structure. If that had been done each Serving the communities of: Elk River · Rogers · Zimmerman · Hassan · Livonia · Dayton · Ramsey · Big Lake Township · Burns · Albertville