By Jordan Gerard
Editor, The Caledonia Argus
Spring Grove received a clean audit for its 2021 financial statements, and liquor store numbers were mostly steady.
At its regular meeting on Tuesday, April 19, the Spring Grove City Council listened to Layne Kockelman from Abdo, Eick and Meyers, who summarized 2021 from a financial standpoint. Overall, the general fund operation is above the auditors’ recommendation for balances and the city has healthy reserves. He encouraged the city to adjust its budgeting process and decrease the amount of transfers that happen in a year.
“Overall, I think you’re sitting in a good spot on where things are at,” Kockelman said.
On the topic of liquor store balances, the fund operates at a cash deficit, but part of that is due to transferring funds to other city departments such as parks and rec and the fire department, he noted. That results in benefits like new firefighter equipment and an improved city baseball field, without putting that burden on taxpayers, the council has said in the past. Kockelman said no transfers were made from the liquor store in 2021. In 2020, $26,800 in transfers were made.
The Corner Store operated at losses of $20,611 in 2020 and $36,117 in 2021 before transfers. In 2019, the liquor store operated at a gain and did not transfer any money out, Kockelman clarified. Actual cash for 2021 was $63,772; in 2020, actual cash was $84,919, and in 2019 it was $138,063. The gross profit is usually 25%, but that dropped in 2020. In 2021, it was at 33%. The statewide average is about 40%, but Eick accounts for the drop of on-sale due to covid-19 and along with that, drop in operating expenses.
The council did not comment or question the liquor store funds.
Otherwise, the city received a clean/unmodified audit, with two non-compliance findings. The first was segregation of duties needed to be clear for each department. Kockelman said this was typical for cities of Spring Grove’s size.
The second finding was two outstanding checks that needed to be remitted to the state, and a piece of equipment that was traded in. Eick also advised the city to use the state bid website to ensure they were getting the “best possible price.”
Eick said the city should use capital improvement funds for bigger projects, instead of the general fund, as that would decrease the amount of fluctuation the general fund sees. The general fund had a big increase in 2021 due to a planned street construction project on 5th Avenue and 1st St. SW, but that was pushed back another year.
The city has about eight or nine special revenue funds with dollars that are specifically dedicated to projects such as the small city grant program, community building, EDA revolving loan fund, library fund and economic development.
Capital projects include firefighter equipment, street fund, Swim Center, vehicle replacement, along with a few others. This fund has about $440,000 in it, and Kockelman said the city could do a capital improvement levy in order to avoid mixing it with the general fund.
The city can expect a debt drop off of about $50,000 in 2023, as a 2015A bond matures.
As for utility funds, the water fund generates a positive cash flow of about $300,000; the sewer fund generates about $158,000 positive cash flow; and the electric fund has about $867,000 available in positive cash flow. The electric fund is slightly decreased from four years ago, where its total was $1.3 million, however the city has transferred several amounts out of that account in order to internally fund city projects.
Compared to other cities in Minnesota of the same size, Spring Grove’s tax rate has been trending downward. It was 90% in 2021, compared to 113% a few years ago. Eick explained Spring Grove has a healthy market because the value of housing has increased. City administrator-clerk Julie Amundson clarified further that when Houston County re-assessed the city and as a result, property taxes increased, so the city will get more from the tax base. The city will receive more from the tax levy, but the city did not initiate it, she explained.
Amundson noted Spring Grove has a little higher per capita because it has more to offer. This means the city can take on larger projects without a large tax increase. She added the city would be looking at some major street projects coming up.
Eick noted the audit was not final, as they were awaiting fire relief information from PERA, but he did not anticipate any changes to what he presented at the council meeting.
Fest building kitchen update
Amundson reported the kitchen at the Fest Building was in need of updates, as a cupboard and floor were deteriorating. She met with several people to discuss the needs of the space. It was decided the floor will be replaced, the center island will be replaced, and a shelf installed in the corner, instead of a cupboard.
The council had several quotes: $15,000 from Keith Myrah, Floor Guys of Eitzen for $8,000 to $10,000 just on the floor, and $19,000 from TNT Painting and Construction for the whole works. The council approved TNT Painting and Construction for the project. She also noted that city maintenance employee Greg Ardinger had cleaned up the ovens.
TNT was also approved to power wash City Hall and paint the exterior of the building for $4,300. Amundson said $10,000 was budgeted for that project last year, but city workers did not complete the work.
Pool plaster quote
“Ouch” was the feeling after the council approved a quote from Diamond Brite/Thatcher Pools and Spas for $217,500 to re-plaster the pool, fix chipping around tiles and remove the lane lines. The council budgeted $140,000, but prices increased, Amundson said.
The pool floor is slippery, but re-plastering the pool will help address that issue. Swimmers will be advised to wear aqua socks because the newly re-plastered surface will be rough, but eventually it will be more smooth.
The city is also at the company’s mercy of when the re-plastering will be done. The work takes about a week to complete. They’re hoping for early June to avoid moving back the opening date, or to avoid filling the pool, draining it and re-filling it in the middle of summer.
In other Swim Center news, the council hired Kailee Olerud, Amelia Solum, Paige Jahnke, Addyson McHugh and Ella Wennes for the front desk; Isaac Nerstad, Olivia Wennes, Kohl Betcher, Carson Anderson, Siri Konkel, Ellie Berns, Addison Halverson, Carlie Halverson, Hailey Normann, Gabe Klug, Reagan Storlie, Karson Betcher, Carlie Lewis, Madison Lile, Grace Torgerson, Kylie Hammell and Marcus Toumi on concessions.
They also hired Jonah Udstuen, Julia Halverson, Haley Ellingson, Jaxon Stinmoen, Kylie Reynolds and Dane Edgington as lifeguards. Other guards hired who are seeking their certification are Ellie Halverson, Joelle Halverson, Kendall Vanminsel, Hailey Borreson, Katie Klug and Jensen Krosch.
Water safety instructors and lifeguards are Ava Olerud, Brianna Johnson, McKenzie Fisch, Kelsey Bratland and Maggie Lile. Council member Travis Torgerson abstained from that vote.
The council approved the purchase of two dog waste receptacles that will be placed near the Swim Center and at Trollskogen Park. They received a complaint from Jan Solie, who said many people let their dogs run on the open land by the Swim Center, but do not pick up their dog’s poop.
The council approved the purchase of a “slither slide” to replace the tube slide at the Fest Building playground. The tube slide was reported to have a significant crack near the top of the slide. The cost was $5,860, and the new slide was not expected to arrive until late summer. The broken slide is closed off.
The council approved the closure of 1st Ave. NE by Trinity Lutheran Church for Syttende Mai events. Last month, they approved the closure of Maple Drive. Committee member Alisha Solum said both manor entrances will also be closed.
The council accepted the resignation of police officer Nicholas Bruns, and accepted Amundson’s resignation, effective February 2023.
The next meeting of the Spring Grove City Council will be May 17, at 6 p.m. at 168 W. Main St.
Editor's note: This story has been updated from its original print version.