Item 5A. 2024 Audited Financial Statement Review and Auditor Presentation

CLOSED: This discussion has concluded.

Superintendent's Recommendation:

MOTION TO ADOPT THE 2024 ANNUAL COMPREHENSIVE FINANCIAL REPORT AND THE AUDITOR'S SPECIAL PURPOSE REPORTS AND AUTHORIZE THE FINANCE DEPARTMENT TO FILE THE REPORTS WITH ALL INTERESTED PARTIES.

Prepared By: Howard Koolick, Chief Financial Officer and Julie Mart, Finance Manager and the entire Finance Department staff

Background:

Each year an independent auditing firm examines the Park District’s financial activities. The purpose of the audit is to ensure that the Park District is following applicable laws and standards with respect to the way it receives, expends, and accounts for its revenues and expenditures.

Copies of the 2024 Annual Comprehensive Financial Report (ACFR) and the two reports from the auditors are attached. The following is a summary of each report:

The ACFR is a detailed analysis of each of the Park District’s funds. While the preparation of the ACFR and all supporting information involves the entire Finance staff, the Park District’s Finance Manager Julie Mart and Chief Financial Officer Howard Koolick are responsible for the completion and accuracy of much of the information.
The two reports from the auditor are required reports communicating the efforts made by the auditors in testing the Park District’s federal grants, internal controls and compliance with state laws and communicating various issues to the Board. There were no findings on noncompliance relating to federal grants or internal controls and no issues during the audit. Each of these reports discussed following the summary of the ACFR. Chris Knopik and Troy Gabler will be at the Board Meeting to discuss these reports with Commissioners.

Annual Comprehensive Financial Report

The ACFR is a complex and difficult document to read. Its format is dictated by accounting standards and is designed to provide a large amount of information to users with varying levels of financial knowledge. The report can be broken into five sections:

The Introductory Section which includes a general discussion of the Park District, its history, policies, achievements, and organization (pages 1 to 9).
The auditor’s opinion which can be found on pages 10 through 13.
Management’s Discussion and Analysis (Pages 14 to 27) includes a detailed discussion of the Park District’s financial activity and condition for 2024 as well as an introduction into the format of the ACFR.
The financial statements and accompanying footnotes are on pages 28 to 104.
The statistical section (pages 105 to 124) includes a variety of annual comparisons and non-financial information.

The following is a summary of the financial results for 2024 that are presented in the ACFR:

Net Position (the amount the Park District is “worth”) increased from $234.4 million to $248.6 million. This is not a balance that can be spent since a large portion of the balance is invested in land, buildings, and equipment or is restricted for specific purposes. Only $4.7 million is unrestricted and spendable. (Pages 28-29).
The General Fund’s fund balance is $20.5 million. This amount increased by $661,613 in 2024. The amended budget had anticipated this amount decreasing by $388,202 due to purchases initiated in 2023 that were completed in 2024. Revenues were $649,621, or 1.3 percent over budget while expenditures were $321,474, or 0.6 percent under budget (page 93).
The Financial Management Plan includes the following commitments and assignments of the General Fund fund balance:

The Park District has met all four required balances and has an unassigned balance of $1,380,152. This balance can be used at the Board’s discretion for purposes outlined in the Financial Management Plan or held to finance future budget variances.
Scott County partnership revenues for 2024 were $264,321 (7.8%) greater than budgeted due primarily to golf related revenues at Cleary Lake Regional Park. Expenditures were $261,883 (7.0%) under budget due savings in wages and benefits ($133,000) and supplies and services ($75,000). The net result for 2024 is the fund balance increased from $1,261,357 to $1,460,534 (page 94). The Board has approved spending up to $663,000 from the fund balance to help Scott County acquire property in 2025.
Baker National Golf Course shows net income of $595,900 in the ACFR (page 35) due to a very good year which saw revenue exceed $3.45 million. On a budgetary basis (the budget excludes depreciation and shows the cost of equipment when purchased and funds set aside for future development as expenses), Baker National ended the year with a net income of $603,776 due to golf revenues exceeding budget by $684,043 with all revenue streams exceeding budget while expenses exceeded budget by $118,005 due primarily to higher than expected seasonal staffing costs and preliminary construction of improvements to the clubhouse grill area.
Eagle Lake Golf Course shows a net loss of $26,153 in the ACFR (page 35). On a budgetary basis, Eagle Lake shows a net income of $76,706 with revenues exceeding budget by $202,526 with most revenues exceeding budget. Expenses were $125,820 over budget due to a variety of staffing costs.
The Hyland Hills Ski Area reported a net income of $96,431 in the ACFR (page 35). On a budgetary basis, the ski area’s net loss was $494,819 with revenues, exceeding budget by $772,161 while expenses were $1,266,980 more than budgeted primarily due to costs associated with seasonal staff, the cost of food for concessions, increasing unused vacation balances and the purchase of a new Pisten Bully groomer.
Two of the nine funds with minimum fund balance requirements in the Financial Management Plan have not met their requirements. The Debt Service Fund, which is slightly below its requirement, and the Risk Management fund, has been underfunded for a number of years are both under their minimum requirements by approximately $150,000. The Debt Service Fund should reach its requirement by the end of 2025 while the Risk Management Fund, which will receive an additional $325,000 in funding in 2025, will be below its minimum, but functional, for several years.
Hyland Greens, which became an enterprise fund in 2025, has a deficit fund balance and will need some time to reach a positive fund balance.
The Park District’s outstanding general obligation bonded debt (pages 59-61) increased by $180,000 to $59,900 million due to principal paid during the year being less than bonds issued.
The Park District’s limit for debt outstanding without voter approval as of January 1, 2025, is $178.5 million (based on 2024 valuation data). The Park District’s net debt (bonded debt less funds on hand to pay debt) totaled $53.3 million as of December 31, 2024.

Upon approval by the Board, the Chief Financial Officer and Finance Manager will submit the ACFR to a variety of interested parties. The State Auditor and bond markets will receive ACFRs as required by state law and bond resolutions. In addition, the ACFR will be forwarded to the Governmental Finance Officers’ Association for review under its Certificate of Excellence in Financial Reporting program. The Park District has received this prestigious award for the past 35 years. Finance staff believes the 2024 ACFR meets the requirements of this program. Finally, the ACFR will be sent to various businesses and others who have requested copies.

Auditor Reports and Presentation

Chris Knopik and Troy Gabler from CliftonLarsonAllen LLP will be present at the meeting to make a presentation and answer any questions from Commissioners. This year was CliftonLarsonAllen’s (CLA) third audit of the Park District.

Schedule of Expenditures of Federal Awards and Other Required Reports - This report highlights the work performed by CLA in testing the Park District's compliance with federal grants, testing the Park District’s controls over its assets and financial reporting and compliance with state of Minnesota laws. The format of the report is different than in past years since the Park District received more than $750,000 in federal grants and therefore was required to have a single audit. There were no findings in any of the areas tested.
The Report to the Board of Commissioners is a required report containing various issues to be reported by the auditor to the Board. The contents of the report are mandated by governmental accounting and auditing principles. The report cites a change in accounting policies as required by Governmental Accounting Standards Board Statement #101 as well as description of an estimate used. Both of these issues are informational and findings of noncompliance. The remainder of the report outlines various items from the auditors.

Relationship to the System Plan:

The Request for Action supports the following goal(s) of the System Plan:

Goal 2: Parks Matter

Goal 3: Lead by Example

by ensuring the Park District handles its financial resources as required by other agencies and generally accepted accounting principles.

Attachments:

Signed 2024 ACFR - Final.pdf

Signed Single Audit and other Reports.pdf

Signed Governance Communication.pdf