Quarterly Financial Update Q2 2016

The midway point of 2016 has come and gone. This provides a good opportunity to review the citys
financial position through the second quarter of 2016. As I have mentioned throughout our monthly
and quarterly financial presentations, the citys revenue and expenditure cycles never recur equally from
month-to-month. Therefore, it is important to view the financial position holistically, taking into
consideration historical data, current happenings and future projections.
Cash Balance Comparisons
Below is a cash balance comparison for both year-over-year and year-end for all city fund types.

Quarterly Cash Balance Comparison

30,000,000.00

25,000,000.00

20,000,000.00

15,000,000.00

10,000,000.00

5,000,000.00

0.00
General Fund

Special Revenue
Funds
Jun YTD
2015

Debt Service
Funds
Jun YTD
2016

Capital Project Enterprise Funds Internal Service

Funds
Funds
Dec YTD
2015

Variance Analysis
The General Fund cash balance at June 30, 2106 has increased approximately $1.1 million compared to
this same time last year. This increase is attributable to the increased revenues associated with Licenses
and Permits, which has increased almost $1 million compared to this same time last year.
Special Revenue and Debt Service Funds remain stable.
The Capital Project Funds are reporting increased cash balance at June 30, 2015 and 2016 compared to
the balance at December 31, 2015. This is a result of an annual scheduled transfer from the General
Fund to the Capital Improvement Fund of $1.0 million and $1.2 million in 2015 and 2016 respectively.
This transfer has traditionally been done during the month of June.
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The Enterprise Funds experienced a decrease in cash compared to this same timeframe last year. The
Surface Water Fund saw a very modest decrease in cash over the past year, whereas the Sewer Fund
saw more of a decrease. This decrease is due in part to capital projects payments over the course of last
summer and the transfer of approximately $400,000 in restricted cash for Sewer Access Credits (SAC)
payments to the EDA fund for business subsidies. Both of these funds instituted a rate increases
beginning with the January 2016 billings. Below is a graph of each funds monthly cash balances dating
back to January 31, 2015. The Sewer Fund experienced another decrease in cash in June 2016. This
drop is directly related to the Hilldale Drive Improvements. Almost $400,000 was paid to the contract in
June as this project neared completion.

The Internal Service Funds also experienced a cash decrease compared to the second quarter of 2015.
This decrease is related to equipment purchases including seven police vehicles, three fire SUVs and a
loader for the public works that replaces a 1992 loader. Future rent payments will aid in replenishing
the cash balance.

General Fund Monthly Financial Report

In holding with our monthly General Fund revenue and expenditure budget-to-actual comparisons,
below is a comparison through July. 58 percent of the budget would ideally be accounted for as of July
31.
CITY OF SHAKOPEE
Monthly Financial Report
Di
YTD
June
vis
2016
2016
io
Budget
Actual
n
01000 - GENERAL FUND
REVENUES:
* - TAXES
(17,150,900) (8,863,045)
* - SPECIAL ASSESSMENTS
(11,500)
(23,140)
* - LICENSES AND PERMITS
(1,504,100) (251,009)
* - INTERGOVERNMENTAL
(1,108,500)
(1,500)
* - CHARGES FOR SERVICES
(4,235,775) (410,392)
* - FINES AND FORFEITS
(1,500)
(100)
* - MISCELLANEOUS
(215,748)
(29,746)
TOTAL REVENUES
(24,228,023) (9,578,933)
EXPENDITURES:
11 - MAYOR & COUNCIL
185,260
7,666
12 - ADMINISTRATION
1,555,530
99,641
13 - CITY CLERK
399,170
24,725
15 - FINANCE
1,243,700
336,923
17 - COMMUNITY DEVELOPMENT
674,905
30,931
18 - FACILITIES
408,986
22,189
31 - POLICE DEPARTMENT
7,625,014
584,315
32 - FIRE
2,079,785
140,384
33 - INSPECTION-BLDG-PLMBG-HTG
669,967
48,599
41 - ENGINEERING
739,178
60,342
42 - STREET MAINTENANCE
2,225,116
136,514
44 - FLEET
429,595
33,369
46 - PARK MAINTENANCE
1,644,596
141,397
66 - NATURAL RESOURCES
198,092
14,882
67 - RECREATION
2,529,679
215,461
91 - UNALLOCATED
218,450
772
TOTAL EXPENDITURES
22,827,023 1,898,108
OTHER FINANCING
* - TRANSFERS IN
(250,000) (250,000)
* - TRANSFERS OUT
2,100,000 2,100,000
OTHER FINANCING TOTAL
1,850,000 1,850,000
FUND TOTAL
449,000 (5,830,824)
Key
Varies more than 10% than budget positively
Varies more than 10% than budget negatively
Within 10% of budget

YTD
2016
Actual

Budget
Balance Percent
Remaining Used

(8,999,882) (8,151,018)
6,025
(17,525)
(1,703,596)
199,496
(521,333)
(587,167)
(2,706,161) (1,529,614)
(2,418)
918
(106,414)
(109,335)
(14,033,779) (10,194,244)
105,440
708,566
158,222
737,528
223,404
185,839
4,150,971
1,018,483
383,839
354,129
988,552
225,157
751,790
106,133
1,281,321
2,797
11,382,171

79,820
846,964
240,948
506,172
451,501
223,148
3,474,043
1,061,302
286,128
385,049
1,236,564
204,438
892,806
91,959
1,248,358
215,653
11,444,852

(250,000)
2,100,000
1,850,000
(801,608)

0
0
0
1,250,608

Cumulative 6
2015
Actual

52%
(52)%
113%
47%
64%
161%
49%
58%

(8,426,208)
8,717
(707,492)
(312,700)
(2,048,972)
(4,838)
(94,292)
(11,585,786)

57%
46%
40%
59%
33%
45%
54%
49%
57%
48%
44%
52%
46%
54%
51%
1%
50%

92,362
480,539
147,727
619,018
351,986
167,028
3,542,650
916,066
294,776
277,893
697,019
170,206
637,117
62,909
997,479
3,144
9,457,919
#

100% #
100% #
100% #
#

(250,000)
1,900,000
1,650,000
(477,867)

Variances worth noting on the revenue side of the budget include Taxes and Licenses & Permits. As
mentioned previously, revenues and expenditures can vary on the frequency of collection and payment.
Large infrequent payments or collections such as tax payments that happen twice a year can skew
budget-to-actual comparisons significantly. Understanding these unique variances is important in
gaining a complete financial picture.
License & Permit collections are continuing to come in at higher than anticipated rates. Below is a
report for the second quarter comparing year-over-year building related permits. The quantity of
permits is down slightly from 1,193 to 1,113, but the valuation of the second quarter 2016 permits is
over double for the same time frame in 2015.

Expenditures are all within or significantly below anticipated budget allotments as of July 31, 2016.

Investment Analysis
The city contracts with Advantus Capital Management to manage the citys investment portfolio. Below
is a summary of the citys investment return through June 30, 2016. The chart compares gross return,
net return (after the deduction of investment manager fees) and a benchmark return. The income
return column was just added to the graph over the past year. This column is beneficial in comparing
actual interest income to the gross and net return, which includes book-to-market value adjustments.
Governmental accounting standards require the city to book market value fluctuations from year-toyear even though the citys investment policy requires investments to be held to maturity with a few
exceptions.

Investment Policy Tidbits

The citys investment portfolio adheres to both its investment policy and State Statutes. Cities are
limited legally on investment types to minimize the risk of principal loss. In addition, all investments are
held in a safekeeping account with U.S. Banks custody department. Below is additional information on
the citys investment portfolio.

Investment Summary
Given the citys limited investment markets and historically low interest rates, the city is achieving a very
respectable rate of return while first assuring safety and liquidity.
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