Blue Earth County, Minnesota Effectively and Efficiently Delivering Essential Services County Road 12 Project The project features 1.8 miles of new roadway and roundabouts at MN Highway 83 and Hoffman Road. This project is being funded by local option transportation sales tax dollars. The tax helps to address the growing need for transportation funding. Comprehensive Annual Financial Report For the Year Ended December 31, 2018 Comprehensive Annual Financial Report Of Blue Earth County Minnesota For the Year Ended December 31, 2018 Prepared by the Finance Department Issued June 2019 Blue Earth County 204 South Fifth Street Mankato, MN 56002 JAMESTOWN LIME CAMBRIA MADISON LAKE MANKATO NORTH MANKATO EAGLE LAKE SKYLINE JUDSON BUTTERNUT MANKATO VALLEY SOUTH BEND LE RAY LAKE PEMBERTON CRYSTAL LINCOLN GARDEN CITY RAPIDAN DECORIA MC PHERSON ST. CLAIR GOOD THUNDER VERNON CENTER VERNON CERESCO CENTER LYRA BEAUFORD MEDO DANVILLE AMBOY MAPLETON MINNESOTA PLEASANT SHELBY STERLING MAPLETON LAKE MOUND ESTABLISHED: 1853 FORM OF GOVERNMENT: Board of Commissioners – Administrator AREA: 764 Square Miles COUNTY SEAT: Mankato POPULATION: 64,013 (2010 Census) NUMBER OF TOWNSHIPS: 23 NUMBER OF CITIES: 13 BLUE EARTH COUNTY TABLE OF CONTENTS Reference Page INTRODUCTORY SECTION Letter of Transmittal 1 GFOA Certificate of Achievement 8 Organizational Chart 9 List of Principal Officials 10 FINANCIAL SECTION Independent Auditor's Report 11 Management's Discussion and Analysis (Required Supplementary Information) 15 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position Exhibit 1 25 Statement of Activities Exhibit 2 26 Fund Financial Statements: Balance Sheet-Governmental Funds Exhibit 3 27 Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds Exhibit 4 28 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Exhibit 5 29 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: General Fund Exhibit 6 30 Public Works Special Revenue Fund Exhibit 7 32 Human Services Special Revenue Fund Exhibit 8 33 County Ditch Special Revenue Fund Exhibit 9 34 Statement of Net Position-Enterprise Proprietary Funds Exhibit 10 36 Statement of Revenues, Expenses, and Changes in Fund Net Position-Enterprise Proprietary Funds Exhibit 11 37 Statement of Cash Flows-Enterprise Proprietary Funds Exhibit 12 38 Statement of Fiduciary Assets and Liabilities-Fiduciary Funds Exhibit 13 40 Notes to the Financial Statements 41 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Changes in Total OPEB Liability and Related Ratios 74 Schedule of Proportionate Share of Net Pension Liability 75 Schedule of Contributions 76 Notes to the Required Supplementary Information 77 SUPPLEMENTARY INFORMATION: Combining Schedule of Changes in Assets and Liabilities- All Agency Funds Schedule 1 79 Capital Assets Used in the Operation of Governmental Funds: Comparative Schedule by Source Schedule 2 80 Schedule by Function Schedule 3 81 Schedule of Changes by Function Schedule 4 82 Schedule of Intergovernmental Revenue Schedule 5 83 BLUE EARTH COUNTY TABLE OF CONTENTS Reference Page FINANCIAL SECTION (Continued) SUPPLEMENTARY INFORMATION (Continued): Schedule of Expenditures of Federal Awards Schedule 6 84 Notes to the Schedule of Expenditures of Federal Awards 86 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual Building and Capital Purchases Fund Schedule 7 87 STATISTICAL SECTION Government-Wide Information: Net Position Table 1 89 Changes in Net Position Table 2 90 Fund Information: Fund Balances of Governmental Funds Table 3 92 Changes in Fund Balances of Governmental Funds Table 4 93 Net Tax Capacity and Estimated Actual Value of Taxable Property Table 5 94 Tax Rates as a Percentage of Net Tax Capacity Table 6 95 Principal Property Taxpayers Table 7 96 Property Tax Levies and Collection Table 8 97 Ratios of Outstanding Debt by Type Table 9 98 Ratios of General Bonded Debt Outstanding Table 10 99 Computation of Direct, Overlapping, and Underlying Bonded Debt-General Obligation Bonds Table 11 100 Legal Debt Margin Information Table 12 101 Demographic and Economic Statistics Table 13 102 Principal Employers Table 14 103 Full Time Equivalent County Government Employees by Function Table 15 104 Operating Indicators by Function Table 16 105 Capital Assets Statistics by Function Table 17 106 INTRODUCTORY SECTION - 1 - but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgment by management. Generally accepted accounting principles (GAAP) require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. Blue Earth County’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government Blue Earth County was organized in 1853 as a county in the State of Minnesota. It has an area of 764 square miles (488,960 acres) including 23 townships and 13 full and fractional incorporated municipalities. The 2018 population is estimated at 67,892. The County seat, Mankato, is located on the Minnesota River. Blue Earth County operates under an elected five-member County Board, each member representing a district of the County. The County Board is responsible, among other things, for passing ordinances, adopting the budget, and the hiring of the County’s administrator. The County’s administrator is responsible for carrying out the policies and ordinances of the County Board, for overseeing the day-to-day operations of the government, and for appointing the heads of the various divisions and departments. The County Board is elected on a non-partisan basis. County Board members serve four-year staggered terms. The County provides a full range of services including public safety and law enforcement; tax assessment and collection; vital statistics and public records; health and human services; highways, parks, public works and planning; environmental management; and recreation and cultural services. The County operates primarily out of five buildings; the Historic Courthouse, Government Center, Justice Center, Public Works Shop, and the Library. Blue Earth County has one blended component unit, the Blue Earth County Economic Development Authority. It is included in the County’s reporting entity because of the significance of its operational or financial relationship with the County. The EDA’s governing body is substantially the same as the governing body of Blue Earth County and there is a financial benefit or burden relationship between the County and the EDA. Blue Earth County’s Strategic Plan and financial policies guide the budget process by identifying priorities to be used to help provide a focus for allocating future resources and where appropriate, reallocating existing resources. Blue Earth County’s strategies focus on the following areas: 1) Building the Community – Protecting the Health, Safety and Well-Being of Individuals and Families. 2) Environmental Stewardship – Promoting and Modeling Sustainable Use of Natural Resources. 3) Leadership – Commissioners and Employees Demonstrating Leadership Behavior through Innovation, Communication and Collaboration. 4) Management of Resources and Measurement of Results – Utilizing Best Practices to Effectively and Efficiently Provide Valuable Services and Achieve Expected Results. 5) Run the Business – Investing in Technology and Business Processes to Foster Productivity, Responsiveness and Accessibility to the Community. 6) Develop Employees – Attract, Train, Recognize and Retain Key Talent. An annual budget is approved by the County Commissioners for all governmental funds. The legal level of budgetary control is at the fund level. In the General, Special Revenue, and Capital Projects Funds, the total Fund appropriation cannot be exceeded without approval by the County Commissioners. Monthly reports are required for these funds which compare budgeted amounts to actual expenditures. The approval of the budget does not mean that funds will or must be spent. Needs are assessed throughout the year and expenditures are approved within the framework of existing budgets and fund availability. The County maintains a budget for the Enterprise Fund for administrative purposes. This is not a legally mandated budget. Therefore, budgetary comparisons have been omitted from this report. - 2 - Local Economy Healthcare, education, the retail/hospitality industry, and agriculture are major players in the local economy and continue to contribute to its stability and diversity. Blue Earth County partners with Regional Economic Development Alliance and Greater Mankato Growth, with the objective of retaining and growing the primary economic base of the Greater Mankato Regional Marketplace through business retention, new enterprise, emerging business development and new business development. According to the Bureau of Economic Analysis, in 2017 the Mankato-North Mankato Metropolitan Statistical Area (MSA) had a population of 100,939, ranked 353rd in the United States. Per Capita Personal Income (PCPI) was $44,767, ranked