June 29, 2026, Special City Council Meeting Minutes

Schmidt reported that the City received an Unmodified Opinion on the 2025 audit, commonly referred to as a clean audit opinion. Schmidt explained that this is the opinion a city hopes to receive, as it indicates the financial statements are presented fairly, in all material respects, in accordance with applicable accounting standards.  Schmidt stated that the audit went smoothly, there were no difficulties in obtaining the information needed, and nothing unusual was noted with respect to recorded transactions or accounting policies and treatments.

Schmidt reviewed the audit process, including sampling and detailed testing of transactions, review of supporting documentation, internal control related matters, and review of Minnesota legal compliance. Schmidt reported that there were no findings related to Minnesota legal compliance.

Schmidt reviewed the General Fund, Ambulance Fund, Airport Commission related activity, capital project funds, EDA Fund, Sales Tax Fund, Water Fund, Sewer Fund, overall assets and liabilities, and future debt payments.

Schmidt noted that the General Fund increased fund balance by approximately $225,000 for the year and that the City’s unrestricted General Fund balance was approximately 52% of annual budgeted expenditures, which is above the City’s minimum policy level of 50%.

Schmidt also discussed amounts cashflowed by the City to the Airport Commission. He noted that the amount borrowed to the Airport Commission increased significantly in 2025 due to ongoing airport projects and related funding needs. Schmidt explained that, in prior years, funding provided to the Airport Commission more clearly distinguished between temporary cashflowing for grant-reimbursable project costs and permanent local share contributions. Schmidt expressed concern that, in more recent years, those amounts have become less clearly separated, resulting in amounts owed back to the City and County exceeding the grant receivables recorded by the Airport Commission. Schmidt noted that this creates concern regarding which amounts are expected to be repaid versus which amounts represent permanent local funding obligations.

Schmidt discussed the Ambulance Fund deficit and noted that, although expenses were down by approximately $55,000 compared to the prior year, the fund’s cash deficit still grew by approximately $585,000 from 2024 to 2025. Schmidt explained that the deficit is being borrowed from other City funds and that a formal repayment plan is important to support the collectability of the interfund balance.