3/16/2026 - City Council - Work Session - Agendas
CITY OF SPRING PARK
WORK SESSION AGENDA
MARCH 16, 2026 – 5:00 PM
SPRING PARK CITY HALL
(Work Session discussion times are approximate)
1. 5:00: Audit Presentation – Bonnie Schwieger (Abdo)
2. 5:40: Sunset Drive Update – Moore Engineering
3. 5:55: Miscellaneous
4. 6:00: Adjourn
ANNUAL FINANCIAL REPORT
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
THIS PAGE IS LEFT
BLANK INTENTIONALLY
2
City of Spring Park, Minnesota
Annual Financial Report
Table of Contents
For the Year Ended December 31, 2025
Page No.
Introductory Section
Elected and Appointed Officials 9
Financial Section
Independent Auditor’s Report 13
Management’s Discussion and Analysis 17
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Position 29
Statement of Activities 30
Fund Financial Statements
Governmental Funds
Balance Sheet 34
Reconciliation of the Balance Sheet to the Statement of Net Position 35
Statement of Revenues, Expenditures and Changes in Fund Balances 36
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances to the Statement of Activities 37
Proprietary Funds
Statement of Net Position 38
Statement of Revenues, Expenses and Changes in Net Position 39
Statement of Cash Flows 40
Notes to the Financial Statements 41
Required Supplementary Information
Schedule of Employer’s Share of Public Employees Retirement Association Net Pension Liability -
General Employees Retirement Plan 62
Schedule of Employer’s Public Employees Retirement Association Contributions -
General Employees Retirement Plan 62
Notes to the Required Supplementary Information - General Employees Retirement Plan 63
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget to Actual
General Fund 65
Notes to the Required Supplemental Information 66
Combining and Individual Fund Financial Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet 68
Statement of Revenues, Expenditures and Changes in Fund Balances 69
Nonmajor Special Revenue Funds
Combining Balance Sheet 70
Statement of Revenues, Expenditures and Changes in Fund Balances 71
Nonmajor Debt Service Funds
Combining Balance Sheet 72
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 73
General Fund
Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual 75
3
THIS PAGE IS LEFT
BLANK INTENTIONALLY
4
City of Spring Park, Minnesota
Annual Financial Report
Table of Contents (Continued)
For the Year Ended December 31, 2025
Page No.
Other Reports
Independent Auditor’s Report
on Minnesota Legal Compliance 81
Independent Auditor’s Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on
an Audit of Financial Statements Performed In Accordance
with Government Auditing Standards 82
Schedule of Findings and Responses 84
5
THIS PAGE IS LEFT
BLANK INTENTIONALLY
6
INTRODUCTORY SECTION
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
7
THIS PAGE IS LEFT
BLANK INTENTIONALLY
8
City of Spring Park, Minnesota
Elected and Appointed Officials
For the Year Ended December 31, 2025
Name Title Term Expires
Mark Chase Mayor 12/31/26
Doug Sippel Council Member 12/31/26
Pamela Horton Council Member 12/31/26
Caroline Suttle Council Member 12/31/28
Bill Turner Council Member 12/31/28
Mike Anderson City Administrator
Jamie Hoffman City Clerk
Patria Xiong Finance Clerk
ELECTED
APPOINTED
9
THIS PAGE IS LEFT
BLANK INTENTIONALLY
10
FINANCIAL SECTION
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
11
THIS PAGE IS LEFT
BLANK INTENTIONALLY
12
INDEPENDENT AUDITOR’S REPORT
Honorable Mayor and City Council
City of Spring Park, Minnesota
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each
major fund and the aggregate remaining fund information of the City of Spring Park, Minnesota (the City), as of and for the
year ended December 31, 2025, and the related notes to the financial statements, which collectively comprise the City’s
basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund
information of the City as of December 31, 2025, and the respective changes in financial position and, where applicable,
cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United
States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our
other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve
months beyond the financial statement date, including any currently known information that may raise substantial doubt
shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an
audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always
detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
13
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
City’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise
substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the
audit.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and
analysis starting on page 17 and the schedule of Employer’s Share of the Net Pension Liability, the schedule of Employer’s
Contributions, the respective budgetary comparison schedules and related note disclosures, starting on page 62 be
presented to supplement the basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of management about
the methods of preparing the information and comparing the information for consistency with management’s responses
to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinion s on the financial statements that collectively comprise the
City’s basic financial statements. The accompanying combining and individual fund financial statements and schedules
are presented for purposes of additional analysis and are not a required part o f the basic financial statements. Such
information is the responsibility of management and was derived from and related directly to the underlying accounting
and other records used to prepare the basic financial statements. The information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund
financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements
as a whole.
14
Other Information
Management is responsible for the other information in the annual report. The other information comprises the
introductory section but does not include the basic financial statements and our auditor’s report thereon. Our opinions on
the basic financial statement do not cover the other information, and we do not express an opinion or any form of
assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and
consider whether a material inconsistency exists between the other information and the basic financial statements, or the
other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an
uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 11, 2026 on our
consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is solely to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing
and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the
City’s internal control over financial reporting and compliance.
Abdo
Minneapolis, Minnesota
March 11, 2026
15
THIS PAGE IS LEFT
BLANK INTENTIONALLY
16
Management’s Discussion and Analysis
As management of the City of Spring Park, Minnesota (the City), we offer readers of the City’s financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2025.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s
basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial
statements, and 3) notes to the financial statements. This report also contains other supplemental information in addition
to the basic financial statements themselves.
The financial statements also include notes that explain some of the information in the financial statements and provide
more detailed data. The statements are followed by a section of combining and individual fund financial statements and
schedules that further explains and supports the information in the financial statements. Figure 1 shows how the required
parts of this annual report are arranged and relate to one another. In addition to these required elements, we have
included a section with combining and individual fund financial statements and schedules that provide details about
nonmajor governmental funds, which are added together and presented in single columns in the basic financial
statements.
Figure 1
Required Components of the
City’s Annual Financial Report
17
Figure 2 summarizes the major features of the City’s financial statements, including the portion of the City government
they cover and the types of information they contain. The remainder of this overview section of management’s discussion
and analysis explains the structure and contents of each of the statements.
Figure 2
Major Features of the Government-wide and Fund Financial Statements
Fund Financial Statements
Government-wide
Statements
Governmental Funds Proprietary Funds
Scope Entire City government
(except fiduciary funds)
and the City’s component
units
The activities of the City that
are not proprietary or
fiduciary, such as police, fire
and parks
Activities the City operates
similar to private
businesses, such as the
water and sewer system
Required financial
statements
• Statement of Net
Positions
• Statement of Activities
• Balance Sheet
• Statement of Revenues,
Expenditures, and
Changes in Fund
Balances
• Statements of Net
Positions
• Statements of
Revenues, Expenses and
Changes in Fund Net
Positions
• Statements of Cash
Flows
Accounting basis and
measurement focus
Accrual accounting and
economic resources focus
Modified accrual accounting
and current financial
resources focus
Accrual accounting and
economic resources focus
Type of asset/liability
information
All assets and liabilities,
both financial and capital,
and short-term and long-
term
Only assets expected to be
used up and liabilities that
come due during the year or
soon thereafter; no capital
assets included
All assets and liabilities,
both financial and capital,
and short-term and long-
term
Type of deferred
outflows/inflows of
resources information
All deferred
outflows/inflows of
resources, regardless of
when cash is received or
paid
Only deferred outflows of
resources expected to be
used up and deferred
inflows of resources that
come due during the year or
soon thereafter; no capital
assets included
All deferred
outflows/inflows of
resources, regardless of
when cash is received or
paid
Type of in flow/out flow
information
All revenues and expenses
during year, regardless of
when cash is received or
paid
Revenues for which cash is
received during or soon
after the end of the year;
expenditures when goods or
services have been received
and payment is due during
the year or soon thereafter
All revenues and expenses
during the year, regardless
of when cash is received or
paid
18
Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with
a broad overview of the City’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the City’s assets and deferred outflows of resources, and
liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating.
The statement of activities presents information showing how the City’s net position changed during the most recent
fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs,
regardless of the timing of related cash flows . Thus, revenues and expenses are reported in this statement for some items
that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes
and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a
significant portion of their costs through user fees and charges (business-type activities). The governmental activities of
the City include general government, public safety, public works, culture and recreation, economic development and
interest on long-term debt. The business-type activities of the City include water and sewer.
The government-wide financial statements start on page 29 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that
have been segregated for specific activities or objectives. The City, like other State and local governments, uses fund
accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City
can be divided into the following categories: governmental funds and proprietary funds.
Governmental Funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities in the government-wide financial statements. However, unlike the government-wide financial
statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as
well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in
evaluating a government’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful
to compare the information presented for governmental funds with similar information presented for governmental
activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact
by the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
The City maintains numerous individual governmental funds, three of which are debt service funds. Information is
presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures and changes in fund balances for the General fund and Capital improvements, which are considered to be
major funds. Data from the other governmental funds are combined into a single, aggregated presentation . Individual
fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules
elsewhere in this report.
The basic governmental fund financial statements start on page 34 of this report.
Proprietary Funds. The City maintains two proprietary funds. Enterprise funds are used to report the same functions
presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to
account for its water and sewer operations.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.
The proprietary fund financial statements provide separate information for each of the enterprise funds which are
considered to be major funds of the City.
The basic proprietary fund financial statements start on page 38 of this report.
19
Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of
the data provided in the government-wide and fund financial statements. The notes to the financial statements start on
page 41 of this report.
Required Supplementary Information. In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the City’s share of net pension liabilities (assets) for
defined benefits plans, schedules of contributions and budget schedules. Required supplementary information can be
found starting on page 62 of this report.
Supplementary Information. The combining statements referred to earlier in connection with nonmajor governmental
funds are presented following the notes to the financial statements. Combining and individual fund financial statements
and schedules start on page 68 of this report.
Government-wide Financial Analysis
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case o f
the City, assets and deferred outflows exceeded liabilities and deferred inflows at the close of the most recent fiscal year.
By far, the largest portion of the City’s net position reflects its investment in capital assets (e.g., land, buildings, machinery
and equipment); less any related debt used to acquire those assets that are still outstanding . The City uses these capital
assets to provide services to citizens; consequently, these assets are not available for future spending . Although the City’s
investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
City of Spring Park’s Summary of Net Position
Increase Increase
2025 2024 (Decrease)2025 2024 (Decrease)
Assets
Current and other assets 789,668$ 649,610$ 140,058$ 2,229,423$ 2,117,439$ 111,984$
Capital assets 3,036,701 3,272,038 (235,337) 3,419,737 3,591,531 (171,794)
Total Assets 3,826,369 3,921,648 (95,279) 5,649,160 5,708,970 (59,810)
Deferred Outflows of Resources 12,820 7,232 5,588 23,905 16,330 7,575
Liabilities
Noncurrent liabilities 414,517 534,552 (120,035) 2,110,965 2,343,923 (232,958)
Other liabilities 148,058 219,945 (71,887) 80,435 58,294 22,141
Total Liabilities 562,575 754,497 (191,922) 2,191,400 2,402,217 (210,817)
Deferred Inflows of Resources 22,649 23,617 (968) 419,318 449,735 (30,417)
Net Position
Net investment in capital assets 2,669,669 2,782,255 (112,586) 1,390,103 1,327,612 62,491
Restricted 295,780 276,168 19,612 - - -
Unrestricted 288,516 92,343 196,173 1,672,244 1,545,736 126,508
Total Net Position 3,253,965$ 3,150,766$ 103,199$ 3,062,347$ 2,873,348$ 188,999$
Net Position as a Percent of Total
Net investment in capital assets 82.0 %88.3 %45.4 %46.2 %
Restricted 9.1 8.8 - -
Unrestricted 8.9 2.9 54.6 53.8
100.0 %100.0 %100.0 %100.0 %
Governmental Activities Business-type Activities
20
An additional portion of the City’s net position represents resources that are subject to external restrictions on how they
may be used. The remaining unrestricted balance may be used to meet the City’s ongoing obligations to citizens and
creditors.
At the end of the current fiscal year, the City reported positive balances in all categories of net position, both for the City
as a whole, as well as for its separate governmental and business-type activities.
Governmental Activities. Governmental activities increased the City’s net position during the year. The statement of
activities starts on page 30.
City of Spring Park’s Changes in Net Position
Increase Increase
2025 2024 (Decrease)2025 2024 (Decrease)
Revenues
Program Revenues
Charges for services 98,577$ 138,316$ (39,739)$ 1,378,851$ 1,100,216$ 278,635$
Operating grants and
contributions 19,322 25,808 (6,486) 33,504 41,277 (7,773)
General Revenues
Taxes 1,888,981 1,705,701 183,280 - - -
Grants and contributions not
restricted to specific programs 2,351 197,249 (194,898) - - -
Interest on investments 31,135 43,238 (12,103) 15,012 23,702 (8,690)
Total Revenues 2,040,366 2,110,312 (69,946) 1,427,367 1,165,195 262,172
Expenses
General government 596,574 598,524 (1,950) - - -
Public safety 768,327 831,251 (62,924) - - -
Public works 399,815 419,340 (19,525) - - -
Culture and recreation 22,440 40,155 (17,715) - - -
Economic development 138,382 135,177 3,205 - - -
Interest and fiscal charges 11,629 14,408 (2,779) - - -
Water - - - 542,043 608,640 (66,597)
Sewer - - - 696,325 611,626 84,699
Total Expenses 1,937,167 2,038,855 (101,688) 1,238,368 1,220,266 18,102
Change in Net Position 103,199 71,457 31,742 188,999 (55,071) 244,070
Net Position, January 1 3,150,766 3,079,309 71,457 2,873,348 2,928,419 (55,071)
Net Position, December 31 3,253,965$ 3,150,766$ 103,199$ 3,062,347$ 2,873,348$ 188,999$
Governmental Activities Business-type Activities
Key elements of this increase are as follows:
•An increase in property taxes revenues due to increases in operating and debt service tax levy.
21
The following graph depicts various governmental activities and shows the revenue and expenses directly related to those
activities.
Expenses and Program Revenues - Governmental Activities
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
General
Government
Public Safety Public Works Culture and
Recreation
Economic
Development
Interest and
Fiscal Charges
Expenses Revenues
Revenues by Source - Governmental Activities
Charges for Services
4.9%
Operating Grants and
Contributions
0.9%Grants and
Contributions
Unrestricted
0.1%
Taxes
92.6%
Unrestricted
Investments Earnings
1.5%
22
Business-type Activities. Business-type activities increased the City’s net position during the year. Key elements of this
increase are as follows:
•An increase in charges for services due to an increase in usage and utility rates.
•An increase in sewer expense due to a rate increase.
Expenses and Program Revenues - Business-type Activities
$-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
$1,000,000
Water Sewer
Expenses Revenues
Revenues by Source - Business-type Activities
Charges for Services
96.59%
Operating Grants and
Contributions
2.35%
Unrestricted
Investments
Earnings
1.05%
23
Financial Analysis of the Government’s Funds
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal
requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources
available for spending at the end of the year.
Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows
and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In
particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for
spending at the end of the fiscal year. The table below outlines the governmental fund balances for the year ending
December 31, 2025.
Nonmajor
General Capital Governmental Prior Year Increase/
Fund Improvement Funds Total Total (Decrease)
Fund Balances
Nonspendable 477$ -$ -$ 477$ 250$ 227$
Restricted - - 300,044 300,044 281,537 18,507
Unassigned 749,799 (524,492) - 225,307 44,883 180,424
Total Fund Balance 750,276$ (524,492)$ 300,044$ 525,828$ 326,670$ 199,158$
As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances shown
above. Additional information on the City’s fund balances can be found in Note 1 starting on page 46 of this report.
The General fund is the chief operating fund of the City. At the end of the current year, the fund balance of the General
fund is shown in the table above. As a measure of the General fund’s liquidity, it may be useful to compare unassigned
fund balance to total fund expenditures. The total unassigned fund balance as a percent of total fund expenditures is
shown in the chart below along with total fund balance as a percent of total expenditures.
Current Year Prior Year Increase/
Ending Balance Ending Balance (Decrease)
General Fund Fund Balances
Nonspendable 477$ 250$ 227$
Unassigned 749,799 564,426 185,373
750,276$ 564,676$ 185,600$
General Fund expenditures 1,494,165$ 1,616,537$
Unassigned as a percent of expenditures 50.2 %34.9 %
Total Fund Balance as a percent of expenditures 50.2 34.9
The fund balance of the City’s General fund increased during the current fiscal year. The increase in fund balance was due
to a decrease in police and fire services.
Other major governmental fund analysis is shown below:
December 31, December 31, Increase/
2025 2024 (Decrease)
Capital Improvement (524,492)$ (519,543)$ (4,949)$
The Capital Improvement fund decreased from the prior year. The key factor of this decrease was the result of
expenditures relating to preliminary design costs of the 2026 Sunset Drive Project.
24
Proprietary Funds. The City’s proprietary funds provide the same type of information found in the government -wide
financial statements, but in more detail. Net position of the City’s proprietary funds increased as follows:
Ending Ending
Net Position Net Position Increase/
2025 2024 (Decrease)
Water Utility 2,179,453$ 2,161,036$ 18,417$
Sewer Utility 882,894 712,312 170,582
The Net Position of both Water and Sewer utilities increased from the prior year. The key factor of this increase was the
increase in usage and rates as noted above.
General Fund Budgetary Highlights
Final
Budgeted Actual Variance with
Amounts Amounts Final Budget
Revenues 1,752,068$ 1,729,765$ (22,303)$
Expenditures 1,931,800 1,494,165 437,635
Excess (Deficiency) of Revenues
Over (Under) Expenditures (179,732) 235,600 415,332
Other Financing Sources (Uses)
Transfers out (50,000) (50,000) -
Net Change in Fund Balances (229,732) 185,600 415,332
Fund Balances, January 1 564,676 564,676 -
Fund Balances, December 31 334,944$ 750,276$ 415,332$
Capital Asset and Debt Administration
Capital Assets. The City’s investment in capital assets for its governmental and business type activities as of
December 31, 2025, is shown below in capital asset table (net of accumulated depreciation). This investment in capital
assets includes land, structures, improvements, machinery and equipment, park facilities, and roads and other
infrastructure. The total decrease in the City’s investment in capital assets for the current fiscal year for governmental and
business-type activities is due to the depreciation expense.
Additional information on the City’s capital assets can be found in Note 3C starting on page 50 of this report.
25
City of Spring Park’s Capital Assets
(Net of Depreciation)
Increase Increase Increase
2025 2024 (Decrease)2025 2024 (Decrease)2025 2024 (Decrease)
Land -$ -$ -$ 58,684$ 58,684$ -$ 58,684$ 58,684$ -$
Buildings and land improvements 27,243 38,150 (10,907) - - - 27,243 38,150 (10,907)
Improvements other than buildings 2,999,285 3,221,467 (222,182) 3,142,308 3,300,563 (158,255) 6,141,593 6,522,030 (380,437)
Furniture and equipment 10,173 12,421 (2,248) 218,745 232,284 (13,539) 228,918 244,705 (15,787)
Total 3,036,701$ 3,272,038$ (235,337)$ 3,419,737$ 3,591,531$ (171,794)$ 6,456,438$ 6,863,569$ (407,131)$
Percentage increase (decrease)-7.2%-4.8%-5.9%
TotalGovernmental Activities Business-type Activities
Long-term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding consisting of G.O.
Revenue bonds and G.O. Bonds, as noted in the table below. While all of the City’s bonds have revenue streams, they are
all backed by the full faith and credit of the City.
Additional information on the City’s long-term debt can be found in Note 3D starting on page 52 of this report.
City of Spring Park’s Outstanding Debt
Increase Increase
2025 2024 (Decrease)2025 2024 (Decrease)
G.O. Bonds 363,750$ 486,250$ (122,500)$ -$ -$ -$
G.O. Revenue Bonds - - - 2,006,250 2,238,750 (232,500)
Unamortized Premium 3,282 3,533 (251) 23,384 25,169 (1,785)
Total 367,032$ 489,783$ (122,751)$ 2,029,634$ 2,263,919$ (234,285)$
Percentage increase (decrease)-25.1%-10.3%
Governmental Activities Business-type Activities
The City’s total debt decreased during the current fiscal year. The key factor in this decrease was scheduled bond
payments.
Economic Factors and Next Year’s Budgets and Rates
The 2026 work plan includes;
•Additional updates to reporting tools and quarterly financial reviews.
•Continued updates to the CIP.
•Fine-tuning and updating the Long-Term Financial Plan.
•Utility rates are expected to increase in 2026.
•An increase in the levy of taxable property.
Requests for Information
This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the
City’s finances. Questions concerning any of the information provided in this report or requests for additional financial
information should be addressed to the City Administrator, City of Spring Park, 4349 Warren Ave, Spring Park, MN 55384.
26
GOVERNMENT-WIDE FINANCIAL STATEMENTS
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
27
THIS PAGE IS LEFT
BLANK INTENTIONALLY
28
City of Spring Park, Minnesota
Statement of Net Position
December 31, 2025
Governmental Business-type
Activities Activities Total
Assets
Cash and temporary investments 644,297$ 1,270,200$ 1,914,497$
Receivables
Interest 10,162 - 10,162
Accounts - 349,572 349,572
Special assessments - 177,752 177,752
Delinquent taxes 134,732 - 134,732
Lease receivable - 407,023 407,023
Prepaids 477 24,876 25,353
Capital assets
Nondepreciable - 58,684 58,684
Depreciable assets, net of accumulated depreciation 3,036,701 3,361,053 6,397,754
Total assets 3,826,369 5,649,160 9,475,529
Deferred Outflows of Resources
Deferred pension resources 12,820 23,905 36,725
Liabilities
Accounts and contracts payable 143,794 55,479 199,273
Accrued interest payable 4,264 24,956 29,220
Noncurrent liabilities
Due within one year
Long-term liabilities 80,178 250,346 330,524
Due in more than one year
Long-term liabilities 298,282 1,793,384 2,091,666
Net pension liability 36,057 67,235 103,292
Total Liabilities 562,575 2,191,400 2,753,975
Deferred Inflows of Resources
Deferred lease resources - 377,084 377,084
Deferred pension resources 22,649 42,234 64,883
Total deferred inflows of resources 22,649 419,318 441,967
Net Position
Net investment in capital assets 2,669,669 1,390,103 4,059,772
Restricted for
Debt service 160,658 - 160,658
Tax increment purposes 135,122 - 135,122
Unrestricted 288,516 1,672,244 1,960,760
Total Net Position 3,253,965$ 3,062,347$ 6,316,312$
The notes to the financial statements are an integral part of this statement.
29
City of Spring Park, Minnesota
Statement of Activities
For the Year Ended December 31, 2025
Operating Capital Grants
Charges for Grants and and
Expenses Services Contributions Contributions
Governmental Activities
General government 596,574$ 44,605$ -$-$
Public safety 768,327 51,480 - -
Public works 399,815 1,692 19,322 -
Culture and recreation 22,440 800 - -
Economic development 138,382 - - -
Interest and fiscal charges 11,629 - - -
Total Governmental Activities 1,937,167 98,577 19,322 -
Business-type Activities
Water 542,043 512,232 33,628 -
Sewer 696,325 866,619 (124) -
Total Business-type Activities 1,238,368 1,378,851 33,504 -
Total Governmental and Business-type Activities 3,175,535$ 1,477,428$ 52,826$ -$
General Revenues
Property Taxes
Grants and Contributions not restricted to specific programs
Interest on investments
Total General Revenues
Change in Net Position
Net Position, January 1
Net Position, December 31
Functions/Programs
Program Revenues
The notes to the financial statements are an integral part of this statement.
30
Governmental Business-type
Activities Activities Total
(551,969)$ -$(551,969)$
(716,847) - (716,847)
(378,801) - (378,801)
(21,640) - (21,640)
(138,382) - (138,382)
(11,629) - (11,629)
(1,819,268) - (1,819,268)
- 3,817 3,817
- 170,170 170,170
- 173,987 173,987
(1,819,268) 173,987 (1,645,281)
1,888,981 - 1,888,981
2,351 - 2,351
31,135 15,012 46,147
1,922,467 15,012 1,937,479
103,199 188,999 292,198
3,150,766 2,873,348 6,024,114
3,253,965$ 3,062,347$ 6,316,312$
Net (Expense) Revenue and
Changes in Net Position
The notes to the financial statements are an integral part of this statement.
31
THIS PAGE IS LEFT
BLANK INTENTIONALLY
32
FUND FINANCIAL STATEMENTS
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
33
101 201/203
Nonmajor Total
Capital Governmental Governmental
General Improvement Funds Funds
Assets
Cash and temporary investments 864,487$ (520,234)$ 300,044$ 644,297$
Receivables
Interest 10,162 - - 10,162
Delinquent taxes 134,732 - - 134,732
Prepaid items 477 - - 477
Total Assets 1,009,858$ (520,234)$ 300,044$ 789,668$
Liabilities
Accounts payable 139,536$ 4,258$ -$ 143,794$
Deferred Inflows of Resources
Unavailable revenue - property taxes 120,046 - - 120,046
Fund Balances
Nonspendable 477 - - 477
Restricted
Debt service - - 164,922 164,922
Tax increment - - 135,122 135,122
Unassigned 749,799 (524,492) - 225,307
Total Fund Balances 750,276 (524,492) 300,044 525,828
Total Liabilities, Deferred Inflows
of Resources, and Fund Balances 1,009,858$ (520,234)$ 300,044$ 789,668$
City of Spring Park, Minnesota
Balance Sheet
Governmental Funds
December 31, 2025
The notes to the financial statements are an integral part of this statement.
34
City of Spring Park, Minnesota
Reconciliation of the Balance Sheet
to the Statement of Net Position
Governmental Funds
December 31, 2025
Amounts reported for governmental activities in the Statement of Net Position are different because:
Total Fund Balances - Governmental 525,828$
Capital assets are included in net position, but are excluded from fund balances because
they do not represent financial resources
Cost of capital assets 5,106,687
Less: accumulated depreciation (2,069,986)
Long-term liabilities are included in net position, but are excluded from fund balances until due and payable
current period and therefore are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of
General obligation bonds payable (363,750)
Premiums on debt issued (3,282)
Compensated absences payable (11,428)
Net pension liability (36,057)
Governmental funds do not report a liability for accrued interest until due and payable.(4,264)
Some receivables are not available soon enough to pay for the current period's expenditures,
and therefore are reported as unavailable revenue in the funds.
Taxes receivable 120,046
Governmental funds do not report long-term amounts related to pensions.
Deferred outflows of resources 12,820
Deferred inflows of resources (22,649)
Total Net Position - Governmental Activities 3,253,965$
The notes to the financial statements are an integral part of this statement.
35
101 201/203
Nonmajor Total
Capital Governmental Governmental
General Improvement Funds Funds
Revenues
Property taxes 1,556,783$ -$ 284,450$ 1,841,233$
Licenses and permits 73,082 - -73,082
Intergovernmental 19,322 - -19,322
Charges for services 17,360 - -17,360
Fines and forfeitures 8,135 - -8,135
Interest on investments 16,532 8,104 6,499 31,135
Miscellaneous 38,551 - - 38,551
Total Revenues 1,729,765 8,104 290,949 2,028,818
Expenditures
Current
General government 593,779 - - 593,779
Public safety 768,327 - - 768,327
Public works 111,524 63,053 - 174,577
Culture and recreation 19,110 - - 19,110
Economic development - - 138,382 138,382
Debt service
Principal - - 122,500 122,500
Interest and fiscal charges 1,425 - 11,560 12,985
Total Expenditures 1,494,165 63,053 272,442 1,829,660
Excess (Deficiency) of Revenues
Over (Under) Expenditures 235,600 (54,949) 18,507 199,158
Other Financing Sources (Uses)
Transfers in - 50,000 - 50,000
Transfers out (50,000) - - (50,000)
Total Other Financing
Sources (Uses)(50,000) 50,000 - -
Net Change in Fund Balances 185,600 (4,949) 18,507 199,158
Fund Balances, January 1 564,676 (519,543) 281,537 326,670
Fund Balances, December 31 750,276$ (524,492)$ 300,044$ 525,828$
City of Spring Park, Minnesota
Statement of Revenues, Expenditures
and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2025
The notes to the financial statements are an integral part of this statement.
36
City of Spring Park, Minnesota
Reconciliation of the Statement of
Revenues, Expenditures and Changes in Fund Balances
to the Statement of Activities
Governmental Funds
For the Year Ended December 31, 2025
Net Change in Fund Balances - Governmental Funds 199,158$
Amounts reported for governmental activities in the statement of activities are different because:
Capital outlays are recorded in new position and the cost is allocated over their estimated useful lives
as depreciation expense; however, fund balances are reduced for the full cost of capital outlays at the time
of purchase.
Depreciation expense (235,337)
The issuance of long-term debt provides current financial resources to governmental funds, while
the repayment of long-term debt consumes the current financial resources of governmental funds.
and amortized in the Statement of Activities. The amounts below are the effects of these differences in the
treatment of long-term debt and related items.
Amortization of premium on debt issued 251
Principal payments 122,500
Compensated absences are included in the change in net position, but do not require the use of
current funds, and are not included in the change in fund balances (2,412)
Interest on long-term debt is included in the change in net position as it accrues, regardless of when payment
is due; however, it is included in the change in fund balances when due.1,105
Long-term pension activity is not reported in governmental funds.
Pension expense 6,386
Pension revenue (134)
The recognition of certain revenues and expenses/expenditures differ between the full accrual governmental
activities financial statements and the modified accrual governmental fund financial statements.
Property taxes 11,682
Change in Net Position - Governmental Activities 103,199$
The notes to the financial statements are an integral part of this statement.
37
City of Spring Park, Minnesota
Statement of Net Position
Proprietary Funds
December 31, 2025
Business-type Activities - Enterprise Funds
Water Sewer Total
Assets
Current Assets
Cash and temporary investments 1,332,436$ (62,236)$ 1,270,200$
Accounts receivable 124,666 224,906 349,572
Special assessments 59,971 117,781 177,752
Prepaids 700 24,176 24,876
Total current assets 1,517,773 304,627 1,822,400
Noncurrent Assets
Lease receivable 407,023 - 407,023
Capital assets
Land - 58,684 58,684
Equipment 628,013 228,426 856,439
Collection and distribution system 3,414,272 4,534,924 7,949,196
Total Capital Assets, Cost 4,042,285 4,822,034 8,864,319
Less Accumulated Depreciation (2,361,413) (3,083,169) (5,444,582)
Net Capital Assets 1,680,872 1,738,865 3,419,737
Total Noncurrent Assets 2,087,895 1,738,865 3,826,760
Total Assets 3,605,668 2,043,492 5,649,160
Deferred Outflows of Resources
Deferred pension resources 12,042 11,863 23,905
Liabilities
Current Liabilities
Accounts payable 34,359 21,120 55,479
Accrued interest payable 11,937 13,019 24,956
Compensated absences payable 7,048 7,048 14,096
Bonds payable 115,200 121,050 236,250
Total Current Liabilities 168,544 162,237 330,781
Noncurrent Liabilities
Net pension liability 33,869 33,366 67,235
Bonds payable 837,485 955,899 1,793,384
Total Noncurrent Liabilities 871,354 989,265 1,860,619
Total Liabilities 1,039,898 1,151,502 2,191,400
Deferred Inflows of Resources
Deferred lease resources 377,084 - 377,084
Deferred pension resources 21,275 20,959 42,234
Total Deferred Inflows of Resources 398,359 20,959 419,318
Net position
Net investment in capital assets 728,187 661,916 1,390,103
Unrestricted 1,451,266 220,978 1,672,244
Total Net Position 2,179,453$ 882,894$ 3,062,347$
The notes to the financial statements are an integral part of this statement.
38
City of Spring Park, Minnesota
Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds
For the Year Ended December 31, 2025
Business-type Activities - Enterprise Funds
601 602
Water Sewer Total
Operating Revenues
Service Fees 512,232$ 866,619$ 1,378,851$
Operating Expenses
Personal services 113,584 112,250 225,834
Supplies 26,239 2,955 29,194
Professional Services 17,273 44,735 62,008
Utilities 38,605 18,378 56,983
Repairs and Maintenance 5,740 4,697 10,437
Depreciation 140,288 104,366 244,654
Water/Sewer Charges 172,248 378,337 550,585
Total Operating Expenses 513,977 665,718 1,179,695
Operating Income (Loss)(1,745) 200,901 199,156
Nonoperating Revenues (Expenses)
Interest on investments 14,600 412 15,012
Miscellaneous 33,628 (124) 33,504
Interest and amortization expense (28,066) (30,607) (58,673)
Total Nonoperating Revenues (Expenses)20,162 (30,319) (10,157)
Change in Net Position 18,417 170,582 188,999
Net Position, January 1 2,161,036 712,312 2,873,348
Net Position, December 31 2,179,453$ 882,894$ 3,062,347$
The notes to the financial statements are an integral part of this statement.
39
City of Spring Park, Minnesota
Statement of Cash Flows
Proprietary Funds
For the Year Ended December 31, 2025
Water Sewer Total
Cash Flows from Operating Activities
Cash received from customers 483,725$ 845,911$ 1,329,636$
Cash paid to suppliers (246,748) (553,484) (800,232)
Cash paid to employees (119,027) (118,333) (237,360)
Net cash flows from
operating activities 117,950 174,094 292,044
Cash Flows from Capital Financing Activities
Acquisition of capital assets - (72,860) (72,860)
Principal paid on debt (113,950) (118,550) (232,500)
Interest and fiscal charges paid on debt (30,372) (32,907) (63,279)
Net cash flows from capital and related
financing activities (144,322) (224,317) (368,639)
Cash flows from investing activities
Interest received 14,600 412 15,012
Net Increase (Decrease) in Cash and Cash Equivalents (11,772) (49,811) (61,583)
Cash and Cash Equivalents, January 1 1,344,208 (12,425) 1,331,783
Cash and Cash Equivalents, December 31 1,332,436$ (62,236)$ 1,270,200$
Reconciliation of Operating
Income (Loss) to Net Cash Provided
by Operating Activities
Operating income (loss)(1,745)$ 200,901$ 199,156$
Adjustments to reconcile operating income (loss)
to net cash provided by operating activities
Other income related to operations 33,628 (124) 33,504
Depreciation 140,288 104,366 244,654
(Increase) decrease in assets
Accounts receivable 5,977 (20,584) (14,607)
Special assessments receivable (59,971) (117,781) (177,752)
Lease receivable 16,998 - 16,998
Prepaid items (455) 2,249 1,794
(Increase) decrease in deferred outflows
Increase (decrease) in liabilities
Accounts and contracts payable 13,812 11,150 24,962
Compensated absences payable 1,488 1,488 2,976
Net pension liability (573) (1,076) (1,649)
(Increase) decrease in deferred inflows
Deferred pension resources (2,481) (2,797) (5,278)
Deferred lease resources (25,139) - (25,139)
Net cash flows from operating activities 117,950$ 174,094$ 292,044$
Schedule of Noncash Capital Activities
Amortization of bond premium 869$ 916$ 1,785$
Business-type Activities - Enterprise Funds
The notes to the financial statements are an integral part of this statement.
40
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies
A.Reporting Entity
The City of Spring Park (the City) operates under the "Optional Plan A" form of government as defined in Minnesota
statutes. Under this plan, the government of the City is directed by a City Council composed of an elected Mayor and four
elected City Council members. The City Council exercises legislative authority and determines all matters of policy. The
City Council appoints personnel responsible for the proper administration of all affairs relating to the City .
The City has considered all potential units for which it is financially accountable, and other organizations for which the
nature and significance of their relationship with the City are such that exclusion would cause the City’s financial
statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria
to be considered in determining financial accountability. These criteria include appointing a voting majority of an
organization’s governing body, and (1) the ability of the primary government to impose its will on that organization or (2)
the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary
government. The blended component units, although legally separate entities are, in substance, part of the City’s
operations and so data from these units are combined with data of the City. The City has no component units.
B.Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report
information on all of the nonfiduciary activities of the primary government and its component units. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-
type activities, which rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segments are
offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment.
Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly
benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other
items not properly included among program revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental
funds and major individual enterprise funds are reported as separate columns in the fund financial statements.
C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the accrual
basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses
are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as
revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility
requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.
Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to
pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected wi thin
60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under
accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and
claims and judgments, are recorded only when payment is due.
41
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period . Only the portion of special
assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the
current period. All other revenue items are considered to be measurable and available only when cash is received by the
City.
Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded
on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the year in which
the resources are measurable and become available.
Non-exchange transactions, in which the City receives value without directly giving equal value in return, include property
taxes, grants, entitlement and donations. On an accrual basis, revenue from property taxes is recognized in the year for
which the tax is levied. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility
requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the
resources are required to be used or the year when use is first permitted, matching requirements, in which the City must
provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are
provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions
must also be available before it can be recognized.
Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and
entitlements received before eligibility requirements are met are also recorded as unearned revenue.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
The City reports the following major governmental funds:
The General fund is the City’s primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
The Capital Project fund accounts for the resources accumulated and payments made for purchases of capital
projects.
The City reports the following major proprietary funds:
The Water fund accounts for costs associated with the City’s water system and ensures that user charges are
sufficient to pay for those costs.
The Sewer fund accounts for the costs associated with the City’s sewer system and ensures that user charges are
sufficient to pay for those costs.
As a general rule the effect of interfund activity has been eliminated from government -wide financial statements.
Exceptions to this general rule are charges between the City’s water and sewer function and various other functions of the
City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions
concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a proprietary
fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges to
customers for sales and services. The City also recognizes as operating revenue the portion of tap fees intended to
recover the cost of connecting new customers to the system. All revenues and expenses not meeting this definition are
reported as nonoperating revenues and expenses.
42
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
D.Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources and Net Position/ Fund Balance
Deposits and Investments
The City’s cash investments include demand deposits and short-term investments. The City invests cash balances from
all funds to the extent available, in certificates of deposit and other authorized investments. Earnings from the pooled
investments are allocated to the individual funds based on the average monthly cash and investment balance of the
respective funds.
Investments are generally stated at fair value. Short-term, highly liquid debt instruments (including commercial paper,
bankers’ acceptance, and U.S. treasury and agency obligations) purchased with a remaining maturity of one year or less
may also be reported at amortized cost. Investment income is accrued at the Balance Sheet date.
The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted
accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1
inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level
3 inputs are significant unobservable inputs. The City’s recurring fair value measurements are listed in detail on page 30
and are valued using a matrix pricing model (Level 2 inputs).
The City may also invest idle funds as authorized by Minnesota statutes, as follows:
1. Direct obligations or obligations guaranteed by the United States or its agencies.
2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received the
highest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have a
final maturity of thirteen months or less.
3. General obligations of a state or local government with taxing powers rated “A” or better; revenue obligations rated
“AA” or better.
4. General obligations of the Minnesota Housing Finance Agency rated “A” or better.
5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highest
category by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statute
section 126C.55.
6. Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System.
7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest quality
category by at least two nationally recognized rating agencies, and maturing in 270 days or less.
8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutions
qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System
with capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the Federal
Reserve Bank of New York, or certain Minnesota securities broker-dealers.
9. Guaranteed Investment Contracts (GIC's) issued or guaranteed by a United States commercial bank, a domestic
branch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debt
obligations were rated in one of the top two rating categories by a nationally recognized rating agency.
Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the
pool is the same as the fair value of the shares.
43
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
Property Taxes
The City Council annually adopts a tax levy and certifies it to the County in December for collection the following year. The
County is responsible for collecting all property taxes for the City. The county spreads all levies over taxable property.
Such taxes become a lien on January 1 and are recorded as receivables by the City on that date. Real property taxes may
be paid by taxpayers in two equal installments on May 15 and October 15. Personal p roperty taxes are due in full on May
15. The county provides tax settlements to cities and other taxing districts several times a year.
Delinquent taxes receivable includes the past six years' uncollected taxes. Delinquent taxes have been offset by a
deferred inflow of resources for delinquent taxes not received within 60 days after year end in the fund financial
statements.
Accounts Receivable
Accounts receivable include amounts billed for services provided before year end. The City annually certifies delinquent
water and sewer accounts to the County for collection in the following year. Therefore, there has been no allowance for
doubtful accounts established.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in
both government-wide and fund financial statements.
Leases Receivable
The City’s leases receivable are measured at the present value of lease payments expected to be received during the
lease term.
A deferred inflow of resources is recorded for the lease. The deferred inflow of resources is recorded at the initiation of
the lease in an amount equal to the initial recording of the lease receivable. The deferred inflow of resources is amortized
on a straight-line basis over the term of the lease.
Capital Assets
Capital assets, which include property, buildings, improvements, equipment, and infrastructure assets (streets, sidewalks,
drainage, and collection and distribution systems) are reported in the applicable governmental or business -type activities
columns in the government-wide financial statements. Such assets are capitalized at historical cost or estimated
historical cost for assets where actual historical cost is not available. Donated assets are recorded as capital assets at
their estimated acquisition value at the date of donation. The City defines capital assets as those with an initial, individual
cost of $5,000 or more with an estimated useful life in excess of one year. The cost of normal maintenance and repairs
that do not add to the value of the asset or materially extend asset lives are not capitalized.
Capital assets are recorded in the government-wide and proprietary fund financial statements, but are not reported in the
governmental fund financial statements. Land and construction in progress are not depreciated.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives
are not capitalized.
44
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives:
Useful Lives
Assets in Years
Land improvements and buildings 20 to 30
Furniture and equipment 5 to 20
Streets and infrastructure 20 to 50
Collection and distribution system 20 to 50
Right to use assets are amortized over the remaining life of the asset or the related lease term, whichever is shorter.
Deferred Outflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of
resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net
assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure)
until then. The City has only one item that qualifies for reporting in this category. Accordingly, the item, deferred pensio n
resources, is reported only in the statements of net position. This item results from actuarial calculations and current
year pension contributions made subsequent to the measurement date.
Compensated Absences
Certain city employees earn leave balances at various rates based on longevity. These compensated absences are paid to
an employee leaving in good standing, at their current rate of pay. As benefits accrue to employees, the accumulated
compensated absences are reported as expense and liability in the government-wide and proprietary fund financial
statements. Accrued compensated absences payable to employees upon termination are reported as expenditures in the
governmental fund that will pay them when they become due and payable.
Pensions
Public Employees Retirement Association
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense,
information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions
to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA
except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are recognized as of employer payroll
paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms.
Investments are reported at fair value. The General fund is typically used to liquidate the governmental net pension
liability.
The total pension expense for the General Employee Plan (GERP) is $5,310.
Long-term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial statements, long -term debt
and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type
activities, or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the life of
the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount.
Bond issuance costs are reported as an expense in the period incurred.
45
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
In the fund financial statements, governmental fund types recognized bond premiums and discounts, as well as bond
issuance costs, during the current period. The face amount of debt issued is reported as other financing sources.
Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
Deferred Inflows of Resources
In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of
resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net
assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time.
The government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies
as needing to be reported in this category. Accordingly, the item, unavailable revenues, is reported only in the
governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes. These
amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City
also recognizes a deferred lease receivable, which is reported under both the modified accrual and full accrual basis.
Furthermore, the City has an additional item which qualifies for reporting in this category. The item, deferred pension
resources, is reported only in the statements of net position and results from actuarial calculations.
Fund Balance
In the fund financial statements, fund balance is divided into five classifications based primarily on the extent to which
the City is bound to observe constraints imposed upon the use of resources repor ted in the governmental funds. These
classifications are defined as follows:
Nonspendable - Amounts that cannot be spent because they are not in spendable form, such as prepaid items.
Restricted - Amounts related to externally imposed constraints established by creditors, grantors or contributors; or
constraints imposed by state statutory provisions.
Committed - Amounts constrained for specific purposes that are internally imposed by formal action (resolution) of
the City Council, which is the City’s highest level of decision-making authority. Committed amounts cannot be used
for any other purpose unless the City Council modifies or rescinds the commitment by resolution.
Assigned - Amounts constrained for specific purposes that are internally imposed. In governmental funds other than
the General fund, assigned fund balance represents all remaining amounts that are not classified as nonspendable
and are neither restricted nor committed. In the General fund, assigned amounts represent intended uses established
by the City Council itself or by an official to which the governing body delegates the authority. The City Council has
adopted a fund balance policy which delegates the authority to assign amounts for specific purposes to the City
Administrator.
Unassigned - The residual classification for the General fund and also negative residual amounts in other funds.
The City considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available.
Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund
balance when expenditures are made.
The City has formally adopted a fund balance policy for the General fund. The City’s policy is to maintain a minimum
unassigned fund balance of 60 percent of budgeted operating expenditures for cash -flow timing needs.
46
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 1: Summary of Significant Accounting Policies (Continued)
Net Position
Net position represents the difference between assets and deferred outflows or resources and liabilities and deferred
inflows or resources. Net position is displayed in three components:
a.Net investment in capital assets - Consists of capital assets, net of accumulated depreciation/amortization
reduced by any outstanding debt attributable to acquire capital assets.
b.Restricted net position - Consists of net position restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors, laws or regulations of other governments.
c.Unrestricted net position - All other net position that do not meet the definition of “restricted” or “net investment in
capital assets”.
When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources
first, then unrestricted resources as they are needed.
Note 2: Stewardship, Compliance and Accountability
A.Budgetary Information
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of
America for the General fund. All annual appropriations lapse at fiscal year-end. The City does not use encumbrance
accounting.
On or before July 1 of each year, all departments of the City submit requests for appropriations to the City Administrator
so that a budget may be prepared. Before September 30, the proposed budget is presented to the City Council for review.
The City Council holds public hearings and a final budget is prepared and adopted in December.
The appropriated budget is prepared by fund, function and department. The City’s department heads, with the approval of
the City Administrator, may make transfers of appropriations within a department. Transfers of appropriations between
departments require the approval of the City Council. The legal level of budgetary control is the department level. There
were no budget amendments made during 2025.
B.Deficit Fund Equity
The following fund had a fund balance deficit at December 31, 2025:
Amount
Major Governmental
Capital Improvement 524,492$
Fund
The deficits are expected to be eliminated with future revenues related to future tax collections and transfers from other
funds.
47
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds
A.Deposits and Investments
Deposits
Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the City’s deposits and
investments may not be returned or the City will not be able to recover collateral securities in the possession of an outside
party. In accordance with Minnesota statutes and as authorized by the City Council, the City maintains deposits at those
depository banks, all of which are members of the Federal Reserve System.
Minnesota statutes require that all City deposits be protected by insurance, surety bond or collateral. The fair value of
collateral pledged must equal 110 percent of the deposits not covered by insurance, bonds, or irrevocable standby letters
of credit from Federal Home Loan Banks as this type of collateral only requires collateral pledged equal to 100 percent of
the deposits not covered by insurance or bonds.
Authorized collateral in lieu of a corporate surety bond includes:
•United States government Treasury bills, Treasury notes, Treasury bonds;
•Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotation
service available to the government entity;
•General obligation securities of any state or local government with taxing powers which is rate d “A” or better by a
national bond rating service, or revenue obligation securities of any state or local government with taxing powers
which is rated “AA” or better by a national bond rating service;
•General obligation securities of a local government with taxing powers may be pledged as collateral against
funds deposited by that same local government entity;
•Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied by
written evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc., or Standard
& Poor’s Corporation; and
•Time deposits that are fully insured by any federal agency.
Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a Federal Reserve
Bank, or in an account at a trust department of a commercial bank or other financial institution that is not owned or
controlled by the financial institution furnishing the collateral. The selection should be approved by the City.
At year end, the City’s carrying amount of deposits, bank balance, FDIC coverage and pledged collateral are shown in the
chart below.
Carrying Amount of Deposits 853,614$
Bank balance 1,156,903$
Covered by FDIC (250,000)
Collateralized with securities pledged in City's name 906,903$
48
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
Investments
As of December 31, 2025, the City had the following investments that are insured or registered, or securities held by the
City’s agent in the City’s name:
Credit Segmented
Quality/Time
Ratings Distribution (1) Amount Level 1 Level 2 Level 3
Pooled Investments at Amortized Costs
Money Market N/A Less than 1 year 2,988$ -$ -$ -$
Non-pooled Investments at Fair Value
Municipal Bonds N/A Less than 1 year 445,196 - 445,196 -
Certificates of Deposit N/A Less than 1 year 249,886 - 249,886 -
Certificates of Deposit 1 - 5 years 360,795 - 360,795 -
Total Investments 1,058,866$ -$ 1,055,877$ -$
Types of Investments
Fair Value Measurement Using
(1)Interest rate risk is disclosed using the segmented time distribution method.
N/A Indicated not applicable or available.
The investments of the City are subject to the following risks:
•Credit Risk. Is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Ratings
are provided by various credit rating agencies and where applicable, indicate associated credit risk . Minnesota
statutes limit the City’s investments to the list on page 56 of the notes.
•Custodial Credit Risk. The custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party.
•Concentration of Credit Risk. Is the risk of loss attributed to the magnitude of a government's investment in a
single issuer.
•Interest Rate Risk. Is the risk that changes in interest rates will adversely affect the fair value of an investment.
The City does not currently have a formal investment policy that addresses the above mentioned risks.
Cash and Investments Summary
A reconciliation of cash and investments as reported on the statement of net position follows:
Carrying Amount of Deposits 853,614$
Investments 1,058,866
Petty Cash 25
Total 1,914,497$
49
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
B.Lease Receivable
As of December 31, 2025, the City had the following lease receivable:
Issue Discount Balance at
Date Rate Year End
T-Mobile Antenna Lease Agreement 01/01/17 1.30%407,023$
Description
Under the T-Mobile Antenna Lease Agreement, T-Mobile pays the City monthly for 192 remaining months in exchange for
a site upon which to operate communication facilities supporting telecommunications . The total inflows for 2025 was
$25,274
C.Capital Assets
Capital asset activity for the City for the year ended December 31, 2025 was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities
Capital Assets Being Depreciated
Buildings and land improvements 396,557$ -$ -$ 396,557$
Improvements other than buildings 4,572,970 - - 4,572,970
Furniture and equipment 137,160 - - 137,160
Total Capital Assets Being Depreciated 5,106,687 - - 5,106,687
Less Accumulated Depreciation
Buildings and land improvements (358,407) (10,907) - (369,314)
Improvements other than buildings (1,351,503) (222,182) - (1,573,685)
Furniture and equipment (124,739) (2,248) - (126,987)
Total Accumulated Depreciation (1,834,649) (235,337) - (2,069,986)
Total Capital Assets Being Depreciated, Net 3,272,038$ (235,337)$ -$ 3,036,701$
50
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities
Capital Assets not Being Depreciated
Land 58,684$ -$ -$58,684$
Capital Assets Being Depreciated
Improvements other than buildings 7,910,306 38,890 - 7,949,196
Machinery and equipment 822,469 33,970 - 856,439
Total Capital Assets Being Depreciated 8,732,775 72,860 - 8,805,635
Less Accumulated Depreciation for
Improvements other than buildings (4,609,743) (197,145) - (4,806,888)
Machinery and equipment (590,185) (47,509) - (637,694)
Total Accumulated Depreciation (5,199,928) (244,654) - (5,444,582)
Total Capital Assets Being Depreciated, Net 3,532,847 (171,794) - 3,361,053
Business-type Activities Capital Assets, Net 3,591,531$ (171,794)$ -$ 3,419,737$
Depreciation/amortization expense was charged to functions/programs of the City as follows:
Governmental Activities
General government 6,769$
Public works 225,238
Culture and recreation 3,330
Total Depreciation Expense - Governmental Activities 235,337$
Business-type Activities
Water 140,288$
Sewer 104,366
Total Depreciation Expense - Business-type Activities 244,654$
51
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
D.General Long-term Debt
General Obligation Bonds
The City issues general obligation bonds and equipment certificates to provide funds for the acquisition and construction
of major capital facilities. General obligation bonds have been issued for both general government and proprietary
activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund
revenues. In addition, general obligation bonds have been issued to refund both general obligation and revenue bonds.
General obligation bonds are direct obligations and pledge the full faith and credit of the government. General obligation
bonds currently outstanding are as follows:
Authorized Issue Maturity Balance at
Description and Issued Date Date Year End
General Obligation Bonds,
Series 2010A 135,000$ 2.000-3.625 %6/29/10 2/1/26 10,000$
General Obligation Bonds,
Series 2015A 780,000 0.450-2.500 3/12/15 2/1/30 118,750
General Obligation Bonds,
Series 2022A 235,000 3.000-3.250 6/30/22 2/1/38 235,000
Total G.O. Bonds 363,750$
Interest
Rate
The annual service requirements to maturity for the general obligation bonds are as follows:
Year Ending
December 31,Principal Interest Total
2026 68,750$ 9,378$ 78,128$
2027 33,750 8,097 41,847
2028 33,750 7,235 40,985
2029 33,750 6,349 40,099
2030 33,750 5,439 39,189
2031 - 2035 100,000 17,355 117,355
2036 - 2038 60,000 2,925 62,925
Total 363,750$ 56,778$ 420,528$
Governmental Activities
52
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
G.O. Revenue Bonds
The following bonds were issued to finance capital improvements in the enterprise funds. They will be retired from net
revenues of the enterprise funds.
Authorized Issue Maturity Balance at
Description and Issued Date Date Year End
G.O. Obligation Revenue
Bonds of 2010 905,000$ 2.000-3.625 % 6/29/10 2/1/26 75,000$
G.O. Obligation Revenue
Bonds of 2015 780,000 0.450-2.500 3/12/15 2/1/30 281,250
G.O. Obligation Revenue
Bonds of 2022 1,855,000 3.000-3.250 6/30/22 2/1/38 1,650,000
Total G.O. Revenue Bonds 2,006,250$
Rate
Interest
The annual service requirements to maturity for the general obligation revenue bonds are as follows:
Year Ending
December 31,Principal Interest Total
2026 236,250$ 56,382$ 292,632$
2027 166,250 50,617 216,867
2028 166,250 46,079 212,329
2029 171,250 41,126 212,376
2030 176,250 36,493 212,743
2031 - 2035 655,000 121,727 776,727
2036 - 2038 435,000 21,531 456,531
Total 2,006,250$ 373,955$ 2,380,205$
Business-type Activities
53
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 3: Detailed Notes on All Funds (Continued)
Changes in Long-term Liabilities
During the year ended December 31, 2025, the following changes occurred in non-current liabilities reported on the
government-wide statements.
Beginning Ending Due Within
Balance Increases Decreases Balance One Year
Governmental Activities
Bonds payable
G.O. bonds 486,250$ -$ (122,500)$ 363,750$ 68,750$
Unamortized premium on bonds 3,533 - (251) 3,282 -
Total Bonds Payable 489,783 - (122,751) 367,032 68,750
Compensated absences payable 9,016 2,412 - 11,428 11,428
Governmental Activities
Long-term Liabilities 498,799$ 2,412$ (122,751)$ 378,460$ 80,178$
Business-type Activities
Bonds payable
G.O. revenue bonds 2,238,750$ -$ (232,500)$ 2,006,250$ 236,250$
Unamortized premium on bonds 25,169 - (1,785) 23,384 -
Total Bonds Payable 2,263,919 - (234,285) 2,029,634 236,250
Compensated absences payable 11,120 2,976 - 14,096 14,096
Business-type Activities
Long-term Liabilities 2,275,039$ 2,976$ (234,285)$ 2,043,730$ 250,346$
Conduit Debt Obligations
The City has issued multi-family housing, healthcare, and school facility revenue bonds and notes to provide financial
assistance to a private sector entities for the acquisition and renovation of a multi -family housing and school facilities
deemed to be in the public interest. The bonds are secured by the financed property and are payable solely from
payments received on the underlying mortgage loans and notes. The City is not obligated in any manner for repayment of
the bonds and notes. Accordingly, the bonds and notes are not reported as liabilities in the accompanying financial
statements. The balance outstanding on the bonds and notes at December 31, 2025 is $2,725,000.
54
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 4: Defined Benefit Pension Plans - Statewide
A. Plan Description
General Employees Retirement Plan (General Plan)
B. Benefits Provided
General Employee Plan Benefits
The City participates in the following cost-sharing multiple-employer defined benefit pension plans administered by the
Public Employees Retirement Association of Minnesota (PERA). These plan provisions are established and administered
according to Minnesota Statutes chapters 353, 353D, 353E, 353G, and 356. Minnesota Statutes chapter 356 defines
each plan’s financial reporting requirements. PERA’s defined benefit pension plans are tax qualified plans under Section
401(a) of the Internal Revenue Code.
Membership in the General Plan includes employees of counties, cities, townships, schools in non-certified
positions,and other governmental entities whose revenues are derived from taxation, fees, or assessments. Plan
membership is required for any employee who is expected to earn more than $425 in a month, unless the employee
meets exclusion criteria.
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statute and can
only be modified by the state Legislature. Vested, terminated employees who are entitled to benefits, but are not
receiving them yet, are bound by the provisions in effect at the time they last terminated their public service. When a
member is “vested,” they have earned enough service credit to receive a lifetime monthly benefit after leaving public
service and reaching an eligible retirement age. Members who retire at or over their Social Security full retirement age
with at least one year of service qualify for a retirement benefit.
General Employees Plan requires three years of service to vest. Benefits are based on a member’s highest average
salary for any five successive years of allowable service, age, and years of credit at termination of service. Two
methods are used to compute benefits for General Plan members. Members hired prior to July 1, 1989, receive the
higher of the Step or Level formulas. Only the Level formula is used for members hired after June 30, 1989. Under the
Step formula, General Plan members receive 1.2% of the highest average salary for each of the first 10 years of
service and 1.7% for each additional year. Under the Level formula, General Plan members receive 1.7% of highest
average salary for all years of service. For members hired prior to July 1, 1989 a full retirement benefit is available
when age plus years of service equal 90 and normal retirement age is 65. Members can receive a reduced
requirement benefit as early as age 55 if they have three or more years of service. Early retirement benefits are
reduced by .25% for each month under age 65. Members with 30 or more years of service can retire at any age with a
reduction of .25% for each month the member is younger than age 62. The Level formula allows General Plan
members to receive a full retirement benefit at age 65 if they were first hired before July 1, 1989 or at age 66 if they
were hired on or after July 1, 1989. Early retirement begins at age 55 with an actuarial reduction applied to the benefit.
Benefit increases are provided to benefit recipients each January. The postretirement increase is equal to 50% of the
cost-of-living adjustment (COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of
1.5%. The 2025 annual increase was 1.25%. Recipients that have been receiving the annuity or benefit for at least a full
year as of the June 30 before the effective date of the increase will receive the full increase. Recipients receiving the
annuity or benefit for at least one month but less than a full year as of the June 30 before the effective date of the
increase will receive a prorated increase.
55
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
C.Contributions
General Employees Fund Contributions
D. Pension Costs
General Employees Fund Pension Costs
City’s proportionate share of the net pension liability 103,292$
State of Minnesota's proportionate share of the net pension
liability associated with the City 2,492
Total 105,784$
The net pension liability was measured as of June 30, 2025, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability
was based on the City’s contributions received by PERA during the measurement period for employer payroll paid dates
from July 1, 2024 through June 30, 2025, relative to the total employer contributions received from all of PERA’s
participating employers. The City’s proportionate share was 0.0031% at the end of the measurement period and 0.0028%
for the beginning of the period.
For the year ended December 31, 2025, the City recognized pension expense of $15,110 for its proportionate share of the
General Employees Plan’s pension expense. In addition, the City recognized an additional negative $383 as pension
expense (and grant revenue) for its proportionate share of the State of Minnesota’s contribution of $16 million to the
General Employees Fund.
Minnesota Statutes chapters 353, 353E, 353G, and 356 set the rates for employer and employee contributions.
Contribution rates can only be modified by the state Legislature.
General Plan members were required to contribute 6.50% of their annual covered salary in fiscal year 2025 and the City
was required to contribute 7.50% for General Plan members. The City’s contributions to the General Employees Fund for
the year ended December 31, 2025, were $21,363. The City's contributions were equal to the required contributions as
set by state statute.
At December 31, 2025, the City reported a liability of $103,292 for its proportionate share of the General Employees
Fund’s net pension liability. The City’s net pension liability reflected a reduction due to the State of Minnesota’s
contribution of $16 million. The State of Minnesota is considered a non-employer contributing entity and the state’s
contribution meets the definition of a special funding situation. The State of Minnesota’s proportionate share of the net
pension liability associated with the City totaled $2,492.
56
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience 9,841$ -$
Changes in actuarial assumptions 2,489 23,767
Net difference between projected and actual investment earnings - 41,101
Changes in proportion 13,741 15
Employer contributions subsequent to the measurement date 10,654 -
Total 36,725$ 64,883$
2026 (8,162)$
2027 (16,013)
2028 (10,726)
2029 (3,911)
E. Long-term Expected Return on Investment
Domestic Equity 33.5 %5.10 %
International Equity 16.5 5.30
Fixed Income 25.0 0.75
Private Markets 25.0 5.90
Total 100.0 %
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness on a regular basis of the long-term expected rate of return using a building-block method in which best-
estimate ranges of expected future rates of return are developed for each major asset class. These ranges are combined
to produce an expected long-term rate of return by weighting the expected future rates of return by the target asset
allocation percentages. The target allocation and best estimates of geometric real rates of return for each major asset
class are summarized in the following table:
Long-term
At December 31, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
The $10,654 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended
December 31, 2026. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions
will be recognized in pension expense as follows:
Target Expected Return
Asset Class Allocation on Investment
57
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
F. Actuarial Assumptions
The following changes in actuarial assumptions and plan provisions occurred in 2025:
General Employees Fund
Changes in Actuarial Assumptions:
Changes in Plan Provisions:
G. Discount Rate
- The post-retirement benefit increase formula changed to 100% of the Social Security annual increase, between 1%
and 1.75%, beginning January 1, 2026. If the funded ratio (on a market value of assets basis) is less than 85% for
the last two consecutive annual valuations or is less than 80% in the most recent actuarial valuation, the
maximum is reduced to 1.5%. Previously, the benefit increase was 50% of the Social Security annual increase,
between 1% and 1.5%.
- The 1% additional employer contribution is eliminated when the plan reaches 98% funded status (on an actuarial
value of assets basis); this contribution was previously scheduled to stop when the plan reached 100% funded
status.
The discount rate used to measure the total pension liability in 2025 was 7.00%. The projection of cash flows used to
determine the discount rate assumed that contributions from plan members and employers will be made at rates set in
Minnesota Statutes. Based on these assumptions, the fiduciary net position of the General Employees Plan was
projected to be available to make all projected future benefit payments of current plan members. The long-term
expected rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
- Inflation is assumed to be 2.25% for the General Employees Plan.
- Benefit increases after retirement are assumed to be 1.50% for the General Employees Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 11.5% after one year of
service to 3% after 27 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. The tables
are adjusted slightly to fit PERA’s experience.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The General Employees Plan was
last reviewed in 2022. The assumption changes were adopted by the board and became effective with the
July 1, 2023 actuarial valuation.
- The combined service annuity loading factors increased from 15% to 19% for vested, terminated members and
from 3% to 44% for non-vested, terminated members.
- The assumed post-retirement benefit increase changed from 1.25% to 1.5%.
The total pension liability for each of the cost-sharing defined benefit plans was determined by an actuarial valuation as
of June 30, 2025, using the entry age normal actuarial cost method. The long-term rate of return on pension plan
investments used to determine the total liability is 7%. The 7% assumption is based on a review of inflation and
investment return assumptions from a number of national investment consulting firms. The review provided a range
of investment return rates considered reasonable by the actuary. An investment return of 7% is within that range.
58
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 4: Defined Benefit Pension Plans - Statewide (Continued)
H. Pension Liability Sensitivity
1 Percent 1 Percent
Decrease (6.00%)Current (7.00%)Increase (8.00%)
General Employees Fund 250,880$ 103,292$ (16,435)$
I. Pension Plan Fiduciary Net Position
The following presents the City’s proportionate share of the net pension liability for all plans it participates in, calculated
using the discount rate disclosed in the preceding paragraph, as well as what the City’s proportionate share of the net
pension liability would be if it were calculated using a discount rate one percentage point lower or one percentage point
higher than the current discount rate:
Detailed information about each pension plan’s fiduciary net position is available in a separately issued PERA
financial report that includes financial statements and required supplementary information. That report may be obtained
on the Internet at www.mnpera.org.
59
City of Spring Park, Minnesota
Notes to the Financial Statements
December 31, 2025
Note 5: Tax Increment Financing
The City has entered into a Tax Increment Financing (TIF) agreement which meets the criteria for disclosure under
Governmental Accounting Standards Board Statement No. 77 Tax Abatement Disclosures. The City's authority to enter
into these agreements comes from Minnesota Statute 469. The City entered into these agreements for the purpose of
economic development.
Under the agreement, the City and developer agree on an amount of development costs to be reimbursed to the developer
by the City though tax revenues from the additional taxable value of the property generated by the development (tax
increment). A "pay-as-you-go" is established for this amount, on which the City makes payments for a fixed period of time
with available tax increment revenue after deducting for certain administrative costs.
The Presbyterian Homes TIF District was established for the redevelopment of a 12-acre, 370-resident assisted living
campus. During the year ended December 31, 2025, the City generated $142,171 of tax increment and made payments of
$138,382.
Note 6: Other Information
A.Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disasters for which the City carries insurance . The City obtains insurance
through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with
approximately 800 other governmental units. The City pays an annual premium to LMCIT for its workers compensation
and property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims
above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the City’s coverage in any
of the past three fiscal years.
Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The City’s
management is not aware of any incurred but not reported claims.
B.Legal Debt Margin
The City’s statutory debt limit is computed as 3 percent of the taxable market value of property within the City. Long -term
debt issued and financed partially or entirely by special assessments or the net revenues of enterprise fund operations is
excluded from the debt limit computation. The City’s applicable debt does not exceed the limit.
60
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
61
City of Spring Park, Minnesota
Required Supplementary Information
For the Year Ended December 31, 2025
Schedule of Employer’s Share of PERA Net Pension Liability - General Employees Fund
State's
Proportionate
City's Share of
Proportionate the Net Pension
Share of Liability City's
Fiscal the Net Pension Associated with Covered
Year Liability the City Total Payroll
Ending (a)(b)(a+b)(c)
6/30/2025 0.0031 %103,292$ 2,492$ 105,784$ 282,296$ 36.6 %90.8 %
6/30/2024 0.0028 104,637 2,706 107,343 239,551 43.7 89.1
6/30/2023 0.0028 156,573 4,350 160,923 224,955 69.6 83.1
6/30/2022 0.0027 213,841 6,316 220,157 281,676 75.9 76.7
6/30/2021 0.0028 119,573 3,543 123,116 122,511 97.6 87.0
6/30/2020 0.0028 167,873 5,201 173,074 202,904 82.7 79.1
6/30/2019 0.0028 154,806 4,833 159,639 206,999 74.8 80.2
6/30/2018 0.0028 155,333 5,110 160,443 181,515 85.6 79.5
6/30/2017 0.0031 197,902 2,483 200,385 199,277 99.3 75.9
6/30/2016 0.0040 324,780 - 324,780 249,509 130.2 68.9
Schedule of Employer’s PERA Contributions - General Employees Fund
Contributions in
Relation to the Contributions as
Statutorily Statutorily Contribution City's a Percentage of
Required Required Deficiency Covered Covered
Year Contribution Contribution (Excess)Payroll Payroll
Ending (a)(b)(a-b)(c)(b/c)
12/31/2025 21,363$ 21,363$ -$ 284,836$ 7.50 %
12/31/2024 19,711 19,711 - 262,817 7.50
12/31/2023 17,360 17,360 - 231,467 7.50
12/31/2022 14,462 14,462 - 192,820 7.50
12/31/2021 16,690 16,690 - 222,532 7.50
12/31/2020 15,116 15,116 - 201,548 7.50
12/31/2019 14,886 14,886 - 198,483 7.50
12/31/2018 14,778 14,778 - 197,037 7.50
12/31/2017 14,150 14,150 - 188,672 7.50
12/31/2016 17,192 17,192 - 229,227 7.50
the Net Pension Payroll of the Total
Liability (a/c)Pension Liability
City's Percentage of Net Position
Proportion of Covered as a Percentage
Plan Fiduciary
City's
Proportionate
Share of the
Net Pension
Liability as a
62
City of Spring Park, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2025
Notes to the Required Supplementary Information - General Employee Retirement Fund
Changes in Actuarial Assumptions
2025 - The combined service annuity loading factors increased from 15% to 19% for vested terminated members and from 3% to 44% for non-
vested, terminated members. The assumed post-retirement benefit increase changed from 1.25% to 1.5%.
2024 - The following changes in assumptions are effective with the July 1, 2024 valuation, as recommended in the most recent experience
study (dated June 29, 2023): Rates of merit and seniority were adjusted, resulting in slightly higher rates. Assumed rates of retirement were
adjusted as follows: increase the rate of assumed unreduced retirements, slight adjustments to Rule of 90 retirement rates, and slight
adjustments to early retirement rates for Tier 1 and Tier 2 members. Minor increase in assumed withdrawals for males and females. Lower
rates of disability. Continued use of Pub-2010 general mortality table with slight rate adjustments as recommended in the most recent
experience study. Minor changes to form of payment assumptions for male and female retirees. Minor changes to assumptions made with
respect to missing participant data.
2023 - The investment return and single discount rates were changed from 6.5 percent to 7.0 percent.
2022 - The mortality improvement scale was changed from Scale MP-2020 to Scale MP-2021.
2021 - The investment return and single discount rates were changed from 7.50 percent to 6.50 percent, for financial reporting purposes. The
mortality improvement scale was changed from Scale MP-2019 to Scale MP-2020.
2020 - The price inflation assumption was decreased from 2.50% to 2.25%. The payroll growth assumption was decreased from 3.25% to 3.00%.
Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that
average 0.25% less than previous rates. Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study.
The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements. Assumed rates of termination
were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the
previous rates for years 2-5 and slightly higher thereafter. Assumed rates of disability were changed as recommended in the June 30, 2019
experience study. The change results in fewer predicted disability retirements for males and females. The base mortality table for healthy
annuitants and employees was changed from the RP-2014 table to the Pub-2010 General Mortality table, with adjustments. The base mortality
table for disabled annuitants was changed from the RP-2014 disabled annuitant mortality table to the PUB-2010 General/Teacher disabled
annuitant mortality table, with adjustments. The mortality improvement scale was changed from Scale MP-2018 to Scale MP-2019. The
assumed spouse age difference was changed from two years older for females to one year older. The assumed number of married male new
retirees electing the 100% Joint & Survivor option changed from 35% to 45%. The assumed number of married female new retirees electing the
100% Joint & Survivor option changed from 15% to 30%. The corresponding number of married new retirees electing the Life annuity option was
adjusted accordingly.
2019 - The mortality projection scale was changed from MP-2017 to MP-2018.
2018 - The mortality projection scale was changed from MP-2015 to MP-2017. The assumed benefit increase was changed from 1.00 percent
per year through 2044 and 2.50 percent per year thereafter to 1.25 percent per year.
2017 - The Combined Service Annuity (CSA) loads were changed from 0.8 percent for active members and 60 percent for vested and non-vested
deferred members. The revised CSA loads are now 0.0 percent for active member liability, 15.0 percent for vested deferred member liability and
3.0 percent for non-vested deferred member liability. The assumed post-retirement benefit increase rate was changed from 1.0 percent per year
for all years to 1.0 percent per year through 2044 and 2.5 percent per year thereafter.
2016 - The assumed post-retirement benefit increase rate was changed from 1.0 percent per year through 2035 and 2.5 percent per year
thereafter to 1.0 percent per year for all future years. The assumed investment return was changed from 7.9 percent to 7.5 percent. The single
discount rate was changed from 7.9 percent to 7.5 percent. Other assumptions were changed pursuant to the experience study dated June 30,
2015. The assumed future salary increases, payroll growth and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth and
2.50 percent for inflation.
63
City of Spring Park, Minnesota
Required Supplementary Information (Continued)
For the Year Ended December 31, 2025
Notes to the Required Supplementary Information - General Employee Retirement Fund (Continued)
Changes in Plan Provisions
2025 - The post-retirement benefit increase formula changed to 100% of the Social Security annual increase, between 1% and 1.75% , beginning
January 1, 2026. If the funded ratio (on a market value of assets basis) is less than 85% for the last two consecutive annual valuations or is less
than 80% in the most recent actuarial valuation, the maximum is reduced to 1.5%. Previously, the benefit increase was 50% of the Social
Security annual increase, between 1% and 1.5%.The 1% additional employer contribution is eliminated when the plan reaches 98% funded status
(on an actuarial value of assets basis); this contribution was previously scheduled to stop when the plan reached 100% funded status.
2024 - The workers’ compensation offset for disability benefits was eliminated. The actuarial equivalent factors updated to reflect the changes
in assumptions.
2023 - An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023. The vesting
period of those hired after Juen 30, 2010, was changed from five years of allowable service to three years of allowable service. The benefit
increase delay for early retirements on or after January 1, 2024 was eliminated. A one-time non-compounding benefit increase of 2.5 percent
minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024.
2022 - There were no changes in plan provisions since the previous valuation.
2021 - There were no changes in plan provisions since the previous valuation.
2020 - Augmentation for current privatized members was reduced to 2.0% for the period July 1, 2020 through December 31, 2023 and 0.0%
after. Augmentation was eliminated for privatizations occurring after June 30, 2020.
2019 - The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state’s
special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031.
2018 - The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial
equivalence after June 30, 2024. Interest credited on member contributions decreased from 4.0 percent to 3.0 percent, beginning July 1, 2018.
Deferred augmentation was changed to 0.0 percent, effective January 1, 2019. Augmentation that has already accrued for deferred members
will still apply. Contribution stabilizer provisions were repealed. Postretirement benefit increases were changed from 1.0 percent per year with a
provision to increase to 2.5 percent upon attainment of 90.0 percent funding ratio to 50.0 percent of the Social Security Cost of Living
Adjustment, not less than 1.0 percent and not more than 1.5 percent, beginning January 1, 2019. For retirements on or after January 1, 2024, the
first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients,
or survivors. Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
2017 - The State’s contribution for the Minneapolis Employees Retirement Fund equals $16,000,000 in 2017 and 2018, and $6,000,000
thereafter. The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21,000,000 to $31,000,000
in calendar years 2019 to 2031. The state’s contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031.
2016 - There were no changes in plan provisions since the previous valuation.
64
City of Spring Park, Minnesota
Required Supplementary Information
Schedule of Revenues, Expenditures
and Changes in Fund Balances - Budget and Actual
General Fund
For the Year Ended December 31, 2025
Actual Variance with
Original and Final Amounts Final Budget
Revenues
Property taxes 1,567,568$ 1,556,783$ (10,785)$
Licenses and permits 64,500 73,082 8,582
Intergovernmental 6,500 19,322 12,822
Charges for services 28,000 17,360 (10,640)
Fines and forfeits 8,500 8,135 (365)
Interest on investments 4,500 16,532 12,032
Miscellaneous 72,500 38,551 (33,949)
Total Revenues 1,752,068 1,729,765 (22,303)
Expenditures
Current
General government 639,700 593,779 45,921
Public safety 798,000 768,327 29,673
Public works 194,000 111,524 82,476
Culture and recreation 38,100 19,110 18,990
Debt Service
Principal 210,000 - 210,000
Interest and fiscal charges 52,000 1,425 50,575
Total Expenditures 1,931,800 1,494,165 437,635
Excess (deficiency) of revenues over expenditures (179,732) 235,600 415,332
Other Financing Sources (Uses)
Transfers out (50,000) (50,000) -
Net Change in Fund Balances (229,732) 185,600 415,332
Fund Balances, January 1 564,676 564,676 -
Fund Balances, December 31 334,944$ 750,276$ 415,332$
Budgeted Amounts
General
The notes to the financial statements are an integral part of this statement.
65
City of Spring Park, Minnesota
Notes to the Required Supplementary Information
For the Year Ended December 31, 2025
Notes to the Required Supplemental Information
Budgetary Reporting
A. Budgetary Comparison Schedule
The budgetary comparison schedule presents the comparison of the original and legally amended budget with actual
amounts on a departmental level for the General fund. The departmental level budgets are adopted on a basis consistent
with generally accepted accounting principles. The fund balance reports revenue in the period in which they become
measurable and available.
B. Summary of Significant Budget Variances
The General fund revenues and expenditures varied significantly from final budget amounts as noted below:
Revenues
• Other revenue was less than budget due to timing of reimbursement revenue.
• Interest earnings exceeded final budgeted amounts due to conservative budgeting based on market uncertainty.
Expenditures
• General government expenditures were over the final budgeted amounts due to more then expected planning and
zoning costs.
• Public works expenditures were under budget due to less then expected snow removal costs and repair and
maintenance costs.
C. Budgetary Compliance
There were no budgetary compliance violations for the fiscal year ending December 31, 2025.
66
COMBINING AND INDIVIDUAL FUND
FINANCIAL STATEMENTS AND SCHEDULES
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
67
City of Spring Park, Minnesota
Nonmajor Governmental Funds
Combining Balance Sheet
December 31, 2025
Total
Nonmajor
Special Debt Governmental
Revenue Service Funds
Assets
Cash and temporary investments 135,122$ 164,922$ 300,044$
Fund Balances
Restricted
Debt service -$ 164,922$ 164,922$
Tax increment 135,122 - 135,122
Total Fund Balances 135,122$ 164,922$ 300,044$
68
City of Spring Park, Minnesota
Nonmajor Governmental Funds
Statement of Revenues, Expenditures
and Changes in Fund Balances
For the Year Ended December 31, 2025
Total
Nonmajor
Special Debt Governmental
Revenue Service Funds
Revenues
Taxes -$ 142,279$ 142,279$
Tax increment 142,171 - 142,171
Interest on investments 3,004 3,495 6,499
Total Revenues 145,175 145,774 290,949
Expenditures
Current
Economic development 138,382 - 138,382
Debt service
Principal - 122,500 122,500
Interest and other - 11,560 11,560
Total Expenditures 138,382 134,060 272,442
Net Change in Fund Balances 6,793 11,714 18,507
Fund Balances, January 1 128,329 153,208 281,537
Fund Balances, December 31 135,122$ 164,922$ 300,044$
69
City of Spring Park, Minnesota
Nonmajor Special Revenue Funds
Combining Balance Sheet
December 31, 2025
204 205
TIF Lakeview TIF Presbyterian
Lofts Homes Total
Assets
Cash and temporary investments 90,840$ 44,282$ 135,122$
Fund Balances
Restricted 90,840$ 44,282$ 135,122$
70
City of Spring Park, Minnesota
Nonmajor Special Revenue Funds
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
For the Year Ended December 31, 2025
204 205
TIF Lakeview TIF Presbyterian
Lofts Homes Total
Revenues
Tax increment -$ 142,171$ 142,171$
Interest on investments 2,073 931 3,004
Total Revenues 2,073 143,102 145,175
Expenditures
Current
Economic development - 138,382 138,382
Net Change in Fund Balances 2,073 4,720 6,793
Fund Balances, January 1 88,767 39,562 128,329
Fund Balances, December 31 90,840$ 44,282$ 135,122$
71
302 303 304
2010A G.O.2015 G.O.2022A G.O.
Bonds Bonds Bonds Total
Assets
Cash and temporary investments 33,340$ 115,262$ 16,320$ 164,922$
Fund Balances
Restricted for debt service 33,340$ 115,262$ 16,320$ 164,922$
City of Spring Park, Minnesota
Debt Service Funds
Combining Balance Sheet
December 31, 2025
72
302 303 304
2010A G.O.2015 G.O.2022A G.O.
Bonds Bonds Bonds Total
Revenues
Property taxes 11,248$ 107,453$ 23,578$ 142,279$
Interest on investments 718 2,413 364 3,495
Total Revenues 11,966 109,866 23,942 145,774
Expenditures
Debt service
Principal 10,000 97,500 15,000 122,500
Interest and other 538 3,567 7,455 11,560
Total Expenditures 10,538 101,067 22,455 134,060
Net Change in Fund Balances 1,428 8,799 1,487 11,714
Fund Balances, January 1 31,912 106,463 14,833 153,208
Fund Balances, December 31 33,340$ 115,262$ 16,320$ 164,922$
City of Spring Park, Minnesota
Debt Service Funds
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances
For the Year Ended December 31, 2025
73
THIS PAGE IS LEFT
BLANK INTENTIONALLY
74
Actual Variance with
Original and Final Amounts Final Budget
Revenues
Taxes
General property 1,567,568$ 1,556,783$ (10,785)$
Licenses and permits
Business 16,000 28,771 12,771
Nonbusiness 48,500 44,311 (4,189)
Total licenses and permits 64,500 73,082 8,582
Intergovernmental
State
Other state grants 5,000 19,322 14,322
County
Other county grants 1,500 - (1,500)
Total intergovernmental 6,500 19,322 12,822
Charges for services
General government 26,000 15,668 (10,332)
Public safety 2,000 - (2,000)
Public works - 1,692 1,692
Total charges for services 28,000 17,360 (10,640)
Fines and forfeitures 8,500 8,135 (365)
Interest on investments 4,500 16,532 12,032
Miscellaneous
Other 52,500 2,485 (50,015)
Payments in lieu of taxes 20,000 36,066 16,066
Total miscellaneous 72,500 38,551 (33,949)
Total Revenues 1,752,068 1,729,765 (22,303)
Expenditures
Current
General government
Mayor and council
Personal services 23,700 20,095 3,605
Other services and charges 1,000 122 878
Total mayor and council 24,700 20,217 4,483
Administration
Personal services 175,952 168,913 7,039
Supplies 12,160 6,029 6,131
Other services and charges 81,388 58,306 23,082
Total financial administration 269,500 233,248 36,252
2025
Budgeted Amounts
City of Spring Park, Minnesota
General Fund
Schedules of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual (Continued on the Following Pages)
For the Year Ended December 31, 2025
75
City of Spring Park, Minnesota
General Fund
Schedules of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual (Continued)
For the Year Ended December 31, 2025
Actual Variance with
Original and Final Amounts Final Budget
Expenditures (Continued)
Current (Continued)
General government (Continued)
Elections
Supplies 500$ -$ 500$
Other services and charges - 1,104 (1,104)
Total Elections 500 1,104 (604)
Assessing
Other services and charges 150,000 155,147 (5,147)
Legal
Other services and charges 22,000 6,788 15,212
Buildings and grounds
Other services and charges 46,000 40,401 5,599
Planning and zoning
Other services and charges 50,000 98,624 (48,624)
Buildings and grounds
Other services and charges 77,000 38,250 38,750
Total general government 639,700 593,779 45,921
Public safety
Police
Other services and charges 562,000 544,609 17,391
Fire
Other services and charges 186,000 184,122 1,878
Building inspection
Other services and charges 50,000 39,596 10,404
Total public safety 798,000 768,327 29,673
Public works
Highways, streets and roads
Other services and charges 130,000 56,019 73,981
Recycling - Spring/Fall cleanup
Other services and charges 25,000 20,900 4,100
Budgeted Amounts
2025
76
City of Spring Park, Minnesota
General Fund
Schedules of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual (Continued)
For the Year Ended December 31, 2025
Actual Variance with
Original and Final Amounts Final Budget
Budgeted Amounts
2025
Expenditures (Continued)
Current (Continued)
Public works (Continued)
Recycling
Other services and charges 22,000$ 20,148$ 1,852$
Lake Minnetonka Conservation District
Other services and charges 7,000 4,045 2,955
Surface water management
Other services and charges 10,000 10,412 (412)
Total public works 194,000 111,524 82,476
Culture and recreation
Parks
Other services and charges 37,500 18,612 18,888
Suburban Rate Authority
Other services and charges 600 498 102
Total culture and recreation 38,100 19,110 18,990
Total current 1,669,800 1,492,740 177,060
Debt service
Principal 210,000 - 210,000
Interest and other 52,000 1,425 50,575
Total debt service 262,000 1,425 260,575
Total Expenditures 1,931,800 1,494,165 437,635
Excess (Deficiency) of Revenues
Over (Under) Expenditures (179,732) 235,600 415,332
Other Financing Sources (Uses)
Transfers out (50,000) (50,000) -
Net Change in Fund Balances (229,732) 185,600 415,332
Fund Balances, January 1 564,676 564,676 -
Fund Balances, December 31 334,944$ 750,276$ 415,332$
77
THIS PAGE IS LEFT
BLANK INTENTIONALLY
78
OTHER REQUIRED REPORTS
CITY OF SPRING PARK
SPRING PARK, MINNESOTA
FOR THE YEAR ENDED
DECEMBER 31, 2025
79
THIS PAGE IS LEFT
BLANK INTENTIONALLY
80
INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
Honorable Mayor and City Council
City of Spring Park, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of
the United States, the financial statements the governmental activities, the business-type activities, each major fund and
the aggregate remaining fund information of the City of Spring Park, Minnesota (the City), as of and for the year ended
December 31, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements, and have issued our report thereon dated March 11, 2026.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed to comply with the
provisions of the contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and
disbursements, miscellaneous provisions, and tax increment financing sections of the Minnesota Legal Compliance Audit
Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. § 6.65 insofar as they relate to accounting
matters. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly,
had we performed additional procedures, other matters may have come to our attention regarding the City’s
noncompliance with the above referenced provisions, insofar as they relate to accounting matters.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and
not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose.
Abdo
Minneapolis, Minnesota
March 11, 2026
81
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON
AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
Honorable Mayor and City Council
City of Spring Park, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of
the United States, the financial statements of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the City of Spring Park, Minnesota (the City), as of and for the year
ended December 31, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic
financial statements, and have issued our report thereon dated March 11, 2026.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's internal control over financial
reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely
basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies
and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations,
during our audit we identified 2025-003 as a deficiency in internal control that we consider to be a material weakness. We
identified certain deficiencies in internal control, described in the accompanying schedule of findings and responses as
items 2025-001 and 2025-002 that we consider to be significant deficiencies.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the financial statement s. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests d isclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
82
The City’s Responses to Findings
The City’s responses to the findings identified in our audit are described in the accompanying Sched ule of Findings and
Responses. The City’s responses were not subjected to the auditing procedures applied in the audit of the financial
statements and, accordingly, we express no opinion on them.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results
of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This
report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s
internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Abdo
Minneapolis, Minnesota
March 11, 2026
83
City of Spring Park, Minnesota
Schedule of Findings and Responses
For the Year Ended December 31, 2025
Finding Description
2025-001 Limited Segregation of Duties
Condition: During our audit, we reviewed procedures over cash disbursements, cash receipts and utility
billing and found the City to have limited segregation of duties related to these procedures.
Criteria: There are four general categories of duties: authorization, custody, record keeping and
reconciliation. In an ideal system, different employees perform each of these four major
functions. In other words, no one person has control of two or more of these responsibilities.
Cause: As a result of the limited number of staff, in the disbursement cycle, the Finance Clerk has access
to the check stock, prepares the checks, enters transactions into the accounting system, and is
an authorized check signor. In the receipts cycle, the Finance Clerk maintains accounts
receivable invoices, posts to the general ledger, prepares deposits and brings to the bank, and
reconciles the bank statement. In the utility billing cycle, the Finance Clerk prepares and mails
customer billing statements, receives, and endorses checks/currency, prepares and takes the
deposit slip to the bank, and maintains the utility billing register.
Effect: The existence of this limited segregation of duties increases the risk of fraud.
Recommendation: While we recognize the number of staff is not large enough to eliminate this deficiency, we
recommend that the City evaluate the current procedures and segregate duties where possible
and implement any compensating controls. We are aware some compensating controls are in
place; however, it is important that the City Council is aware of this condition and monitor all
financial information.
Management Response:
There is no disagreement with the audit finding.
84
City of Spring Park, Minnesota
Schedule of Findings and Responses (Continued)
For the Year Ended December 31, 2025
Finding Description
2025-002 Preparation of Financial Statements
Condition: Other than the management’s discussion and analysis, the City had our firm prepare the
accompanying annual financial statements. Like many similarly sized organizations, the City
requested assistance from us with the drafting of the annual financial statements and related
notes. Although this is common practice and may be the most practical and cost-effective
method to complete this task, the fact that the City does not have the internal resources available
to prepare the annual financial statements is considered a deficiency.
Criteria: Internal controls should be in place to provide reasonable assurance over financial reporting.
Cause: From a practical standpoint, we do both for you at the same time in connection with our audit.
This is not unusual for us to do with organization of your size.
Effect: The effectiveness of the internal control system relies on enforcement by management. The
effect of deficiencies in internal controls can result in undetected errors in financial reporting.
Recommendation: It is your responsibility to make the ultimate decision to accept this degree of risk associated
with this condition because of cost or other considerations. As in prior years, we have instructed
management to review a draft of the auditor prepared financials in detail for their accuracy; we
have answered any questions they might have, and have encouraged research of any accounting
guidance in connection with the adequacy and appropriateness of classification of disclosure in
your statements. We are satisfied that the appropriate steps have been taken to provide you with
the completed financial statements. While the City is reviewing the financial statements, we
recommend a disclosure checklist is utilized to ensure all required disclosures are presented and
the City should agree its financial software to the numbers reported in the financial statements.
Management Response:
There is no disagreement with the audit finding.
Finding Description
2025-003 Material Audit Adjustments
Condition: During our audit, adjustments were needed to correct the cash and investments balances and the
related general ledger accounts.
Criteria: Such adjustments were deemed material corrections in relation to the financial statements.
Cause: The City staff procedures over the bank and investments reconciliation process were incomplete
which resulted in a difference between the reconciled bank balance and the general ledger.
Effect: This indicates that it would be likely that a misstatement may occur and not be detected by the
City’s systems of internal control. The audit firm cannot serve as a compensating control over
this deficiency.
Recommendation: We recommend management review the current bank and investment reconciliation process and
modify current procedure to ensure that future corrections are not needed.
Management Response:
There is no disagreement with the audit finding.
85
Executive Governance
Summary
City of Spring Park
Spring Park, Minnesota
For the year ended December 31, 2025
March 11, 2026
Management, Honorable Mayor and City Council
City of Spring Park, Minnesota
We have audited the financial statements of the governmental activities, the business-type activities, each major fund and
the aggregate remaining fund information of the City of Spring Park, Minnesota (the City), for the year ended
December 31, 2025. Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards and Government Auditing Standards, as well as certain information related to the
planned scope and timing of our audit. We have communicated such information in our letter to you dated
January 27, 2026. Professional standards also require that we provide you with the following information related to our
audit.
Significant Audit Findings
In planning and performing our audit of the financial statements, we considered the City's internal control over financial
reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the
purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees,
in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely
basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected
and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal
control that is less severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies
and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations,
during our audit we identified 2025-003 as a deficiency in internal control that we consider to be a material weakness. We
identified certain deficiencies in internal control, described in the accompanying schedule of findings and responses as
items 2025-001 and 2025-002 that we consider to be significant deficiencies.
2
Finding Description
2025-001 Limited Segregation of Duties
Condition: During our audit, we reviewed procedures over cash disbursements, cash receipts, payroll and
utility billing and found the City to have limited segregation of duties related to these procedures.
Criteria: There are four general categories of duties: authorization, custody, record keeping and
reconciliation. In an ideal system, different employees perform each of these four major
functions. In other words, no one person has control of two or more of these responsibilities.
Cause: As a result of the limited number of staff, in the disbursement cycle, the Assistant to the City
Administrator has access to the check stock, prepares the checks, enters transactions into the
accounting system, and has access to the City’s automated check signing machine. In the
receipts cycle, the Assistant to the City Administrator maintains accounts receivable invoices,
posts to the general ledger, prepares deposits and brings to the bank, and reconciles the bank
statement. In the payroll cycle, the Assistant to the City Administrator has control over the
checks, sets up employee records, posts to the general ledger. In the utility billing cycle, the
Assistant to the City Administrator prepares and mails customer billing statements, receives, and
endorses checks/currency, prepares and takes the deposit slip to the bank, and maintains the
utility billing register.
Effect: The existence of this limited segregation of duties increases the risk of fraud.
Recommendation: While we recognize the number of staff is not large enough to eliminate this deficiency, we
recommend that the City evaluate the current procedures and segregate duties where possible
and implement any compensating controls. We are aware some compensating controls are in
place; however, it is important that the City Council is aware of this condition and monitor all
financial information.
Management Response:
There is no disagreement with the audit finding.
3
Finding Description
2025-002 Preparation of Financial Statements
Condition: Other than the management’s discussion and analysis, the City had our firm prepare the
accompanying annual financial statements. Like many similarly sized organizations, the City
requested assistance from us with the drafting of the annual financial statements and related
notes. Although this is common practice and may be the most practical and cost-effective
method to complete this task, the fact that the City does not have the internal resources available
to prepare the annual financial statements is considered a deficiency.
Criteria: Internal controls should be in place to provide reasonable assurance over financial reporting.
Cause: From a practical standpoint, we do both for you at the same time in connection with our audit.
This is not unusual for us to do with organization of your size.
Effect: The effectiveness of the internal control system relies on enforcement by management. The
effect of deficiencies in internal controls can result in undetected errors in financial reporting.
Recommendation: It is your responsibility to make the ultimate decision to accept this degree of risk associated
with this condition because of cost or other considerations. As in prior years, we have instructed
management to review a draft of the auditor prepared financials in detail for their accuracy; we
have answered any questions they might have, and have encouraged research of any accounting
guidance in connection with the adequacy and appropriateness of classification of disclosure in
your statements. We are satisfied that the appropriate steps have been taken to provide you with
the completed financial statements. While the City is reviewing the financial statements, we
recommend a disclosure checklist is utilized to ensure all required disclosures are presented and
the City should agree its financial software to the numbers reported in the financial statements.
Management Response:
There is no disagreement with the audit finding.
Finding Description
2025-003 Material Audit Adjustments
Condition: During our audit, adjustments were needed to correct the cash and investments balances and the
related general ledger accounts.
Criteria: Such adjustments were deemed material corrections in relation to the financial statements.
Cause: The City staff procedures over the bank and investments reconciliation process were incomplete
which resulted in a difference between the reconciled bank balance and the general ledger.
Effect: This indicates that it would be likely that a misstatement may occur and not be detected by the
City’s systems of internal control. The audit firm cannot serve as a compensating control over
this deficiency.
Recommendation: We recommend management review the current bank and investment reconciliation process and
modify current procedure to ensure that future corrections are not needed.
Management Response:
There is no disagreement with the audit finding.
4
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements, noncompliance with which could have a direct and material effect on the financial statements. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests d isclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting
policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted
and the application of existing policies were not changed during the year ended December 31, 2025 . All significant
transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are based on
management’s knowledge and experience about past and current events and assumptions about future events. Certain
accounting estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ significantly from those expected. The most sensitive
estimates affecting the financial statements are included below:
• Management’s estimate of depreciation is based on estimated useful lives of the assets. Depreciation is
calculated using the straight-line method.
• Allocations of gross wages and payroll benefits are approved by the City Council within the City’s budget and are
derived from each employee’s estimated time to be spent servicing the respective function of the City. These
allocations are also used in allocating accrued compensated absences payable.
• Management’s estimate of its pension liability is based on several factors including, but not limited to, anticipated
investment return rate, retirement age for active employees, life expectancy, salary increases and form of annuity
payment upon retirement.
• Management’s estimate of its lease receivable is based on several factors including, but not limited to, estimated
incremental borrowing rate.
We evaluated the key factors and assumptions used to develop these accounting estimates in determining that it is
reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements are
neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their
significance to financial statement users.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than
those that are trivial, and communicate them to the appropriate level of management. Management has corrected all
such misstatements. The following material misstatements detected as a result of audit procedures were corrected by
management.
We assisted in preparing a number of year end accounting entries. These were necessary to adjust the City’s records at
year end to correct ending balances. The City should establish more detailed processes and procedures to reduce the
total number of entries in each category. The City will receive better and timelier information if the preparation of year end
entries is completed internally.
5
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a financial accounting,
reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our
audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter
dated March 11, 2026.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters,
similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting
principle to the governmental unit’s financial statements or a determination of the type of auditor’s opinion that may be
expressed on those statements, our professional standards require the consulting accountant to check with us to
determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other
accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with
management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal
course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the required supplementary information (RSI) (Management’s Discussion and
Analysis, the Schedule of Employer’s Share of the Net Pension Liability, the Schedules of Employer’s Contributions and the
Schedule of Changes in the Net Pension Liability (Asset), Related Ratios and the respective budgetary comparison
schedules and related note disclosures), which is information that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the
information for consistency with management’s responses to our i nquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do no t express an
opinion or provide any assurance on the RSI.
We were engaged to report on the supplementary information (combining and individual fund financial statements and
schedules), which accompany the financial statements but are not RSI. With respect to this supplementary information,
we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United States of America,
the method of preparing it has not changed from the prior period, and the information is appropriate and complete in
relation to our audit of the financial statements. We compared and reconciled the supplementary information to the
underlying accounting records used to prepare the financial stateme nts or to the financial statements themselves.
We were not engaged to report on the introductory section which accompany the financial statements but is not RSI. We
did not audit or perform other procedures on this other information and we do not express an opinion or provide any
assurance on it.
6
Future Accounting Standard Changes
The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact
on future City financial statements: (1)
GASB Statement No. 103 – Financial Reporting Model Improvements Effective: 12/31/2026
GASB Statement No. 104 – Disclosure of Certain Capital Assets Effective: 12/31/2026
Further information on upcoming GASB pronouncements.
* * * * *
Restriction on Use
The purpose of this communication is solely for the information and use of the City Council and management of the City
and is not intended to be, and should not be used by anyone other than those specified parties.
Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the
accounting records and related data. The comments and recommendations in the report are purely constructive in nature,
and should be read in this context.
If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at you r
convenience. We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation
extended to us by your staff.
Abdo
Minneapolis, Minnesota
March 11, 2026
7