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 21, 2026
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 second week of April. Financial Statements
are required to be issued by June 30.
General Fund
The City’s General Fund revenue exceeded budget by $375,893 or 1.93%. General Fund
expenditures exceeded budget by $430,794 or 2.15%. The fund balance decreased by
$542,811, which is $54,811 more than projected. Ending fund balance is 38.04% of
budgeted expenditures. The City’s policy is to maintain a fund balance percentage of
42%. The Minnesota Office of the State Auditor recommends a fund balance percentage
of 35% - 50%.
The main factor for the decrease in fund balance is the approved budget. The original
budget was adopted on December 2, 2024 with a $400,000 decrease to fund balance.
The budget was amended on June 3, 2025 to increase budgeted expenditures by $88,000
and authorize the hiring of two additional full-time firefighters on July 1st.
Projected Actual
Fund Balance on 1/1/2025 8,154,294 8,154,294
2025 Revenues 19,520,490 19,896,473
2025 Expenditures 20,008,490 20,439,284
Decrease (488,000) (542,811)
Fund Balance on 12/31/2025 7,666,294 7,611,483
Fund Balance as a Percent of Budgeted Expenditures 38.32%38.04%
Finance
Department
Special Revenue Funds
The Chemical Assessment, Economic Development, Parking, Communications, Depot
and Arts Center and Sustainability Funds collectively decreased their fund balances by
$37,082
• Chemical Assessment – decreased fund balance by $52,783, due to timing of
reimbursements received.
• Economic Development – decreased fund balance by $177,433 primarily due to a
transfer of $150,000 to the City’s Affordable Housing Trust Fund approved on
March 4, 2025.
• Parking Fund – decreased fund balance by $13,707, due to decreased parking
demand at muncipal lots and the parking ramp. The decrease was offset by a
$75,000 tax levy in 2025.
• Communication Fund – increased fund balance by $24,508, due to collecting more
Public, Educational and Government (PEG) franchise fees than related PEG
expenditures.
• Depot Fund – increased fund balance by $13,707, as the facility continues to build
upon its successful reopening and continues to increase revenue.
• Arts Center - increased fund balance by $80,895. The increase can be attributed
to cost-effective operations and is the second year since 1997 without a fund
balance deficit.
Enterprise Funds
The Water, Sewer, Refuse, Storm Sewer and Pavilion Funds collectively increased their
working capital by $1,102,234. 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
Comm.
Fund
Depot
Fund
Arts
Center
Sustainability
Fund
Fund Balance on 1/1/2025 (43,110) 4,847,662 (225,299) 28,651 (143,069) 38,457 32,663
2025 Revenues 24,521 983,099 139,195 55,331 232,277 1,291,685 500,941
2025 Expenditures 77,304 1,160,532 180,456 30,824 245,984 1,210,790 358,243
Increase/(Decrease)(52,783) (177,433) (41,261) 24,508 (13,707) 80,895 142,699
Fund Balance on 12/31/2025 (95,893) 4,670,229 (266,560) 53,159 (156,776) 119,352 175,362
Water Sewer Refuse
Storm
Sewer Pavilion
Working Capital on 1/1/2025 1,588,131 1,946,446 1,126,096 3,088,853 -
Increase (Decrease) to Working Capital
Operating Activities 1,049,206 662,841 250,634 586,335 358,219
Capital & Financing Activities (806,269) (492,105) - (301,625) (205,000)
Increase/(Decrease)242,936 170,736 250,634 284,710 153,219
Working Capital on 12/31/2025 1,831,067 2,117,182 1,376,730 3,373,563 153,219