VII.2. Fourth Quarter Financial Update; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: April 18, 2023
Subject: Fourth Quarter Financial Update
_____________________________________________________________________
The fourth quarter financial report has been prepared based on preliminary and unaudited
results. Audit field work was completed the first week of April. Financial Statements are
required to be issued by June 30.
General Fund
The City’s General Fund revenues exceeded budget by $834,420 or 5.16%. General
Fund expenditures exceeded budget by $386,738 or 2.39%. The fund balance increased
by $447,682. The main factors for the increase in fund balance are:
• The City exceeded its revenue budget for inspections department charges and
private activity bond fees which was offset by tax settlements.
• The City had higher than anticipated costs for parts, supplies, workers
compensation insurance and contracted services.
The City’s Fund Balance Policy aims for an unassigned fund balance of 42% of annual
expenditures or approximately 5 months. At the end of 2022, the unassigned fund balance
in the general fund was $8,437,081 or 50.95% of 2022 expenditures. City Council
approved transfers and uses of $1,038,214 million in 2023. The remaining $443,517 can
be kept as fund balance or reallocated for any governmental purpose.
Finance
Department
Special Revenue Funds
The Chemical Assessment, Economic Development, Parking, Communications, Depot
Coffee House and Arts Center Funds collectively increased their fund balances by
$238,346.
• Chemical Assessment – decreased fund balance by $25,630. Fund operates on
a reimbursement basis. It has not received reimbursements for 3rd & 4th quarters
of 2022.
• Economic Development – increased fund balance by $14,286.
• Parking Fund – decreased fund balance by $6,495, due to decreased parking
demand at municipal lots and the parking ramp. The decrease was offset by
American Rescue Plan Act (ARPA) grant revenue.
• Communication Fund – decreased fund balance by $65,973, due to a planned
reduction in fund balance and decreased franchise fees collected.
• Depot Coffee House – decreased fund balance by $79,684, primarily due to coffee
operations.
• Arts Center - increased fund balance by $393,142. The increase can be attributed
to cost-effective operations and ARPA grant revenue. The remaining ARPA funds
will be recorded in 2023 and 2024.
The following chart shows additional detail on ending fund balances and ARPA revenue
allocated to special revenue funds.
Enterprise Funds
The Water, Sewer, Refuse, Storm Sewer and Pavilion Funds collectively increased their
working capital by $495,830. Working capital is the difference between current assets
and current liabilities. It represents the amount available to meet current financial needs.
It does not include capital assets and is not affected by depreciation expense. The chart
below shows changes to working capital for enterprise funds.
Chemical
Assessment
Economic
Development Parking Fund
Communication
Fund
Depot Coffee
House Arts Center
Fund Balance on 1/1/2022 (26,055) 4,511,489 (8,700) 281,129 (134,914) (757,211)
Normal Revenue 28,720 513,084 101,237 200,032 224,077 1,188,383
ARPA Revenue - - 65,000 - - 207,172
Total Revenue 28,720 513,084 166,237 200,032 224,077 1,395,555
Expenditures 54,350 498,798 164,032 266,005 303,761 1,002,413
Increase (decrease) in Fund
Balance (25,630) 14,286 2,205 (65,973) (79,684) 393,142
Fund Balance on 12/31/2022 (51,685) 4,525,775 (6,495) 215,156 (214,598) (364,069)
Water Sewer Storm Sewer Refuse Pavilion
Working Capital on 1/1/2022 14,079 1,909,131 2,724,492 1,296,196 (250,377)
Increase (Decrease) to Working Capital
Operating Activities 283,023 287,299 424,260 (56,408) 26,512
Capital and Financing Activities 745,744 (927,159) (537,381) - -
ARPA Revenue - - - - 250,000
Total Increase (Decrease) to Working Capital 1,028,767 (639,860) (113,121) (56,408) 276,512
Working Capital on 12/31/2022 1,042,846 1,269,271 2,611,371 1,239,788 26,135