MARSHALL MUNICIPAL UTILITIES AUDIT REPORT FOR THE …adopted new accounting guidance by implementing...
Transcript of MARSHALL MUNICIPAL UTILITIES AUDIT REPORT FOR THE …adopted new accounting guidance by implementing...
MARSHALL MUNICIPAL UTILITIES
AUDIT REPORT
FOR THE YEARS ENDED
DECEMBER 31, 2016 AND 2015
C O N T E N T S
PAGE
INTRODUCTORY SECTION
Organizational Data
INDEPENDENT AUDITOR'S REPORT
REQUIRED SUPPLEMENTAL INFORMATION
Management Discussion and Analysis 1 1
FINANCIAL STATEMENTS Statements of Net Position 7
Statements of Revenues, Expenses and Changes in Net Position 9
Statements of Cash Flows 12
Notes to Financial Statements 14
REQUIRED SUPPLEMENTARY INFORMATION
Schedules of MMU’s Share of Net Pension Liability and MMU’s Contributions for
Defined Benefit Pension Plans 34
Schedules of Funding Progress and Employer Contributions for Postemployment
Benefit Plans 35
Notes to the Required Supplementary Information 36
SUPPLEMENTARY FINANCIAL INFORMATION Combining Schedule of Net Position 37
Combining Schedule of Revenues, Expenses and Changes in Net Position 41
Combining Schedule of Cash Flows 47
Schedules of Net Position - Electric Department 51
Schedules of Revenues, Expenses and Changes in Net Position - Electric Department 53
Schedules of Cash Flows – Electric Department 56
Schedule of Revenues, Expenses and Changes in Net Position - Electric Department
Actual to Budget Comparison 58
Schedules of Net Position - Water Department 61
Schedules of Revenues, Expenses and Changes in Net Position - Water Department 63
Schedules of Cash Flows – Water Department 65
Schedule of Revenues, Expenses and Changes in Net Position - Water Department
Actual to Budget Comparison 67 OTHER SUPPLEMENTARY FINANCIAL INFORMATION Operating Statistics - Electric Department 69
Operating Statistics - Water Department 71
Schedule of Investments 72
Schedules of Material and Supply Inventories 73
Schedule of Insurance Coverage 74
Schedule of Investment in Utility Plant 75
Schedule of Property, Plant and Equipment 76
Schedule of Fire Protection Costs 77
Comparative Statistics 78
Electric Department Financial Ratios Compared to 2015 APPA Data 80 REPORTS
Independent Auditor's Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 81
Independent Auditor's Report on Minnesota Legal Compliance 83
INTRODUCTORY SECTION
MARSHALL MUNICIPAL UTILITIES
ORGANIZATIONAL DATA
DECEMBER 31, 2016
ORGANIZATION
Marshall Municipal Utilities has been serving the electric and water needs of the Community of Marshall since
1894. The Marshall Municipal Utilities Commission of the City of Marshall, Minnesota was established in 1934.
The members of the Commission are appointed by the Mayor and such appointment confirmed by the City Council.
Each Commissioner may serve up to two consecutive five-year terms. The Commission manages and controls the
electric and water departments of Marshall Municipal Utilities.
COMMISSION
Term Expires
May 31 st
Chairperson Cindy Verschaetse 2017
Vice Chairperson Scott Saugstad 2018
Commission Member Bill Reilly 2019
Commission Member Bill Ziegenhagen 2020
Commission Member Sonya Kayser 2021
ADMINISTRATION
General Manager Brad Roos
Electric Operations Manager Steve Johnson
Water Operations Manager Jeff Larson
Customer Service Manager Leslie Hisken
Finance Manager Kevin Lee
903 East College Drive P.O. Box 548
Marshall, MN 56258 www.hoffmanbrobst.com
507 532 5735 Fax 537 0696
INDEPENDENT AUDITOR'S REPORT
Members of the Marshall Municipal Utilities Commission
City of Marshall, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of Marshall Municipal Utilities, an autonomous enterprise
fund of the City of Marshall, Minnesota, as of and for the years ended December 31, 2016 and 2015, and the related
notes to the financial statements, as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
Marshall Municipal Utilities, an autonomous enterprise fund of the City of Marshall, Minnesota, as of December 31,
2016 and 2015, and the respective changes in financial position and cash flows thereof for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As described in Note 3 to the financial statements, for the year ended December 31, 2016, Marshall Municipal Utilities
adopted new accounting guidance by implementing the provisions of Governmental Accounting Standards Board
(GASB) Statement No. 72, Fair Value Measurement and Application, which represents a change in accounting
principle. Our opinion is not modified with respect to this matter.
Emphasis of Matter
As discussed in Note 1, the financial statements present only the Marshall Municipal Utilities enterprise fund and do
not purport to, and do not present fairly the financial position of the City of Marshall, Minnesota, as of December 31,
2016 and 2015, and the changes in its financial position, or, where applicable, its cash flows for the years then ended, in
accordance with accounting principles generally accepted in the United States of America. Our opinion is not modified
with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion
and Analysis and the Required Supplementary Information as listed in the table of contents be presented to supplement
the basic financial statements. Such information, although not a part of the basic financial statements, is required by
the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for
placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of preparing
the information and comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
Marshall Municipal Utilities’ basic financial statements. The introductory section, supplementary financial information,
and other supplementary financial information listed in the table of contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The supplementary financial information and other supplementary financial information are the responsibility of
management and were derived from and relate directly to the underlying accounting and other records used to prepare
the basic financial statements. The supplementary financial information (excluding the Schedule of Revenues,
Expenses and Changes in Net Position – Electric Department Actual to Budget Comparison and the Schedule of
Revenues, Expenses and Changes in Net Position – Water Department Actual to Budget Comparison), and the
Schedule of Investments, Schedules of Material and Supply Inventories, Schedule of Investment in Utility Plant, and
Schedule of Property, Plant and Equipment, included in other supplementary financial information, has been subjected
to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,
including comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion, the information
is fairly stated in all material respects, in relation to the basic financial statements as a whole.
The introductory section, Schedule of Revenues, Expenses and Changes in Net Position – Electric Department Actual
to Budget Comparison, Schedule of Revenues, Expenses and Changes in Net Position – Water Department Actual to
Budget Comparison, and all other schedules included with the other supplementary financial information have not been
subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not
express an opinion or provide any assurance on them.
Report on Summarized Comparative Information
We have previously audited Marshall Municipal Utilities’ December 31, 2015 financial statements, and our report,
dated April 6, 2016, expressed unmodified opinions on the financial statements. In our opinion, the summarized
comparative information presented herein as of and for the year ended December 31, 2015, is consistent, in all material
respects, with the audited financial statements from which it has been derived.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 5, 2017, on our
consideration of Marshall Municipal Utilities’ internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose
of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering
Marshall Municipal Utilities’ internal control over financial reporting and compliance.
Hoffman & Brobst, PLLP
Certified Public Accountants
Marshall, Minnesota
April 5, 2017
REQUIRED SUPPLEMENTAL INFORMATION
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
1
This section of Marshall Municipal Utilities’ (MMU) annual financial report presents management’s discussion and analysis of
MMU’s financial performance during the year that ended December 31, 2016. Please read it in conjunction with MMU’s financial
statements, which immediately follow this section.
HIGHLIGHTS
On July 1, 2016, MMU’s contract to purchase the bulk of MMU’s power supply through Heartland Consumers Power District ended
and was replaced with purchases from Missouri River Energy Services (MRES). With this change, purchase power costs decreased,
due to the seasonal MRES demand rates and a lower energy rate from MRES.
MMU engaged W. Keith Wilkins to conduct Electric and Water Cost of Service and Rate Design Studies. These studies recommend
the electric rates have a composite decrease of almost 11% and the water rates have a composite increase of 6.0%. On November
16, 2016, the Commission approved the rate changes, to be effective on January 1, 2017.
Standard and Poor’s (S&P) confirmed MMU’s “A” rating with a stable outlook in early 2016. Thereafter, MMU sold $7.310 million
in Utility Refunded Revenue bonds, which refunded bond series 2006A, 2007A, and 2007B and lowered the overall interest expense
of these bonds. On December 9, 2016, Moody’s upgraded their rating on the utility from a A3 to an A2 rating, citing the utility’s
stable financial position, satisfactory debt service coverage and healthy liquidity, among other factors.
GASB 68 requires MMU to recognize a net pension liability for the Public Employees Retirement Association (PERA) defined
benefit plan to which MMU contributes on behalf of MMU employees. As of December 31, 2016, MMU recorded a deferred
outflow of resources, net pension liability, and deferred inflow of resources of $1,594,841, $3,832,406, and $450,781, respectively.
The continued implementation of GASB 68 accounts for a non-cash allocation of the proportionate share of the PERA unfunded
liability. This PERA unfunded liability will have no impact to the electric and water rates. See Note 8 in the Notes to the Financial
Statements for more information.
OVERVIEW OF FINANCIAL STATEMENTS
MMU is a component unit of the City of Marshall, Minnesota and is responsible for the full operation and management of the
electric and water systems of the City. MMU follows the Uniform System of Accounts prescribed by the Federal Energy Regulatory
Commission (FERC). The financial statements are prepared on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America.
The financial statements present functions of MMU that are principally supported by sales of electricity and water and are intended
to recover all or a significant portion of their costs through user fees and charges. The financial statements include the Independent
Auditor’s Report, Management’s Discussion and Analysis and financial statements with accompanying notes. The notes provide
additional information that is essential to a full understanding of the data provided in the financial statements. The notes to the
financial statements can be found beginning on page 14 of this report.
REQUIRED FINANCIAL STATEMENTS
The financial statements of MMU report information about MMU using accounting methods similar to those used by private sector
companies. These statements offer short-term and long-term financial information about its activities.
Statements of Net Position Presents information on all MMU’s assets and liabilities, with the difference between the two reported as net position for the years
ended December 31, 2016 and 2015. They also provide information about the nature and amounts of investments in resources
(assets), deferred outflows of resources, the obligations to MMU’s creditors (liabilities), deferred inflows of resources, the basis for
computing rates of return, and the information to assess the liquidity and financial flexibility of MMU.
Statements of Revenues, Expenses and Changes in Net Position Presents information, showing changes in MMU’s net position for the years ended December 31, 2016 and 2015. All changes in
net position are reported when the underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
This statement reflects the results of MMU’s operations over the 2016 and 2015 years and can be used to determine MMU’s credit
worthiness and its ability to successfully recover all its costs through service fees and other charges.
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
2
REQUIRED FINANCIAL STATEMENTS (Cont’d)
Statements of Cash Flows Presents information about MMU’s cash receipts and cash payments during the years ended December 31, 2016 and 2015. This
statement reports cash receipts, cash payments and net changes in cash resulting from operations, investing, and financing activities;
and provides answers to questions of where cash came from, what cash was used for and what the changes in cash were for the
reporting periods covered.
FINANCIAL ANALYSIS
Net position may serve over time as a useful indicator of a government’s financial position. In the case of MMU, assets and deferred
outflows of resources exceeded liabilities and deferred inflows of resources by $62,974,584.
MARSHALL MUNICIPAL UTILITIES NET POSITION
2016 2015
Current and Other Assets $ 39,120,252 $ 37,709,610
Capital Assets 68,289,191 70,658,411
Total Assets 107,409,443 108,368,021
Deferred Outflows of Resources 1,594,841 349,752
Current Liabilities 8,693,107 9,049,350
Long Term Liabilities 36,885,812 39,297,086
Total Liabilities 45,578,919 48,346,436
Deferred Inflows of Resources 450,781 297,528
Net Investment in Capital Assets 32,859,191 30,868,411
Net Restricted For Debt Service and Construction 6,591,213 7,361,430
Unrestricted 23,524,180 21,843,968
Total Net Position $ 62,974,584 $ 60,073,809
Net position captioned as Net Investment in Capital Assets reflects MMU’s investment in capital assets, less any related debt
which is still outstanding. MMU uses these assets to provide services to citizens and consequently, these assets are not available for
future spending. This category represents 52 percent of MMU’s net position. The outstanding debt of MMU must be repaid from
sources other than capital assets, since the assets themselves cannot be used to liquidate these liabilities.
A portion of MMU’s net position (10 percent) represents resources that are subject to external restrictions on how they may be used. A portion of MMU’s net position (38 percent) reflects unrestricted net position. This balance is available for future debt service
payments, capital asset purchases, or payment of operational expenses. The MMU Commission has designated the entirety of the
2016 unrestricted net position for future capital projects and operating reserves. The details of these designations are reflected in
Note 6 in the Notes to the Financial Statements.
Additionally, MMU implemented GASB Statement No. 68 in 2015. With the reporting change, MMU has allocated its proportionate
share of the Public Employees Retirement Association (PERA) net pension liability, deferred outflows of resources, deferred inflows
of resources, and pension expense. The allocation is based on an actuarial valuation commissioned by the administrators of the
pension plan, not by MMU management. The details of this change are reflected in Note 8 in the Notes to the Financial Statements.
0
20,000,000
40,000,000
60,000,000
80,000,000
Marshall Municipal Utilities Net Position
2016 2015
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
3
MARSHALL MUNICIPAL UTILITIES’ ACTIVITIES The change in net position occurs as a result of MMU’s revenues being greater than expenses for the year ended December 31,
2016. A summary of MMU’s revenues and expenses is as follows:
MARSHALL MUNICIPAL UTILITIES CHANGES IN NET POSITION
2016 2015 Revenues:
Operating Revenues
Sales of Electricity $ 49,803,828 $ 51,401,242
Sales of Water 6,210,316 5,936,660
Net Revenue from Leased Electric Plant 333,448 320,993
General Revenues
Investment Income (Loss) 232,183 314,315
Build America Bonds Federal Credit 66,267 70,008
Lease Income 32,442 32,442
Penalties 78,796 80,501
Nonoperating Pension Grant Revenue 14,919 -
Other Various Revenues 513,335 560,444
Total Revenues 57,285,534 58,716,605
Expenses:
Cost of Purchased Power Used 33,695,042 36,374,069
Cost of Purchased Water Used 279,707 350,377
Production Costs 1,385,877 1,297,453
Distribution Costs 2,154,611 2,411,053
Transmission Costs 6,848,885 5,714,819
Customer Service and Information Costs 848,631 853,121
Administrative and General 1,370,954 1,273,943
Depreciation and Amortization (Excluding Leased Plant) 4,805,553 5,113,042
Interest Expense 1,281,804 1,471,580
Demand Side Management Costs 531,180 377,265
Uncollectible Accounts 39,523 54,026
Nonoperating Pension Expense 278,246 48,229
Total Expenses 53,520,013 55,338,977
Increase in Net Position
Before Transfers 3,765,521 3,377,628
Capital Contributions Received (Disbursed) - 158,005
Transfers to the City of Marshall (864,746) (835,930)
Change in Net Position 2,900,775 2,699,703
Net Position, Beginning of Year,
As Originally Stated 60,073,809 59,750,897
Prior Period Adjustment (GASB 68) - (2,376,791)
Net Position, Beginning of Year,
As Restated 60,073,809 57,374,106
Net Position, Ending $ 62,974,584 $ 60,073,809
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
4
Marshall Municipal Utilities Revenues
Sales of Electricity Electric Transmission Credit Sales of Water Investment Income Other Various Revenues
Marshall Municipal Utilities Expenses
Purchased Power Production Costs Depreciation and Amoritization Non-Operating Pension Expense
Purchased Water Distribution Costs Customer Service and Information Other Expenses
Interest Expense Transmission Costs Administration and General Transfers to the City of Marshall
Sales of Electricity
84%
Electric Transmission
Credit 4%
Sales of Water 11%
Investment Income 0%
Other Various Revenues 1%
Revenues 2016
Sales of Electricity 85%
Electric Transmission
Credit 3%
Sales of Water10%
Investment Income 1%
Other Various Revenues 1%
Revenues 2015
Purchased Power62%
Purchased Water1%Production
Costs 2%
Distribution Costs4%
Transmission13%
Customer Service & Information
2%
Administration & General
2%
Depreciation and Amortization
9%
Interest Expense2%
Other Expenses1%
Transfers to the City of Marshall
2%
Non-Operating Pension Expense
0%
Expenses 2016
Purchased Power65%Purchased Water
1%Production Costs
2%
Distribution Costs4%
Transmission10%
Customer Service and Information
2%
Administration and General
2%
Depreciation and Amortization
9%
Interest Expense3%
Other Expenses1% Transfers to the
City of Marshall1%
Non-Operating Pension Expense
0%
Expenses 2015
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
5
FINANCIAL ANALYSIS OF MARSHALL MUNICIPAL UTILITIES As of the end of 2016, the total net investment in capital assets of MMU is $32.9 million, which is an increase of $1,990,780, or
a 6.4 percent increase. MMU’s unrestricted net position increased $1,680,212, or 7.7 percent, due to an operational increase of
$1,943,539 offset by a decrease of $263,327 related to the continued implementation of GASB 68.
During the 2016 year, MMU’s total revenue decreased $1.43 million to $57.29 million. The electric consumption for 2016
decreased, while the water consumption increased, which accounts for a portion of the lower revenue, but much of the decrease
in revenue is due to the correlation of the electric wholesale power supply expense to the electric revenue. MMU’s contract with
Heartland Consumers Power District (HCPD) concluded on June 30, 2016 and much of power supply is now being supplied by
Missouri River Energy Services (MRES), which has lower demand and energy rates. With these lower rates for the last six
months of 2016, the monthly Power Supply Cost Adjustment (PSCA) had more impact on fluctuations in revenue this year.
Effective January 2005, electric rates include a Power Supply Cost Adjustment (PSCA) which is applied each month to the
customer’s bill, either as an additional charge or a credit. The purpose of the Power Supply Cost Adjustment is to recover
monthly the actual power supply and transmission costs incurred by MMU to serve its firm electric service customers. The PSCA
calculations reflected the lower demand and energy rates for half of 2016.
During the 2016 year, MMU’s total expenses, including transfers, decreased $1.79 million to $54.38 million. Total expense
decreases were primarily due to decrease of $2.68 million in power supply, an increase of approximately $1.1 million in
transmission costs, a decrease in the depreciation costs, and a decrease in the interest expense on outstanding debt.
CAPITAL ASSET AND DEBT ADMINISTRATION
CAPITAL ASSETS MMU’s investment in capital assets for the year ended December 31, 2016 amounts to $68,289,191 (net of accumulated
depreciation). The decrease in MMU’s investment in capital assets for the current year is 3.35 percent, which is mainly
attributable to the combination of investment costs and depreciated value of MMU’s infrastructure in both electric and water.
More detailed information about MMU’s capital assets is presented in Note 2 in the Notes to the Financial Statements.
MARSHALL MUNICIPAL UTILITIES CAPITAL ASSETS
(Net of Accumulated Depreciation)
2016 2015 Electric Production Plant $ 288,773 $ 338,170
Electric Transmission System 7,435,239 7,956,904
Electric Distribution System 31,997,461 32,339,424
Water Utility 25,391,491 26,424,998
Transportation and General 2,050,625 2,246,886
Construction in Progress 1,125,602 1,352,029
Total $ 68,289,191 $ 70,658,411
2016 Capital Improvement Activities
The Electric and Water Departments have numerous projects which are reflected in the Construction in Progress category. The
projects completed in 2016 are as follows:
Electric Department
The Electric Department completed the following projects in 2016: Power Factor Improvements Project, West Industrial Park
and Wastewater Treatment Feeder Conversion of overhead to underground, Fiber Additions, numerous street light projects
throughout the Marshall community, and numerous installations of new construction, or replacements of underground, cable
throughout the City of Marshall.
Water Department
The Water Department completed the following projects in 2016: water main replacement at South Bruce Street, Kossuth, and
SCADA hardware and software upgrades.
MARSHALL MUNICIPAL UTILITIES
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE YEAR ENDED DECEMBER 31, 2016
6
CAPITAL ASSET AND DEBT ADMINISTRATION (Cont’d)
CAPITAL ASSETS (Cont’d)
Future Capital Improvement Projects
MMU anticipates the following capital improvement projects in 2017:
Electric Department
Several new electric underground distribution projects are anticipated along with several cable replacement projects.
MMU workforce will be used instead of outside contractors.
Water Department
The East Redwood to North A Street and the South 2nd Street water main replacement projects will be finalized in
2017. As of December 31, 2016, total CIP on these two projects amounted to $346,000 and $450,000, respectively.
The Highway 59/North 7th Street and Sherman Road water main replacement projects will begin in 2017. Additionally,
the new water main in the Commerce Park development with the City of Marshall is slated to begin in 2017.
OUTSTANDING DEBT At the end of 2016, MMU had total bonded debt outstanding of $35,430,000.
MARSHALL MUNICIPAL UTILITIES OUTSTANDING DEBT
2016 2015
Revenue Bonds $35,430,000 $39,790,000
Additional information on MMU’s long-term debt can be found in Note 4 in the Notes to the Financial Statements.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of MMU’s finances for all those interested. Questions concerning
any of the information provided in this report or requests for additional information should be addressed to Marshall Municipal
Utilities, 113 South Fourth Street, Marshall, MN 56258.
FINANCIAL STATEMENTS
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF NET POSITION
DECEMBER 31, 2016 AND 2015
2016 2015
ASSETS
CAPITAL ASSETS
Electric Production Plant $ 2,823,673 $ 2,820,515
Electric Transmission System 16,404,370 16,404,370
Electric Distribution System 54,417,882 52,756,664
Water Utility 53,938,253 53,381,173
Transportation and General 8,617,476 8,437,282
Construction in Progress 1,125,602 1,352,029
137,327,256 135,152,033
Less: Accumulated Depreciation (69,038,065) (64,493,622)
NET CAPITAL ASSETS 68,289,191 70,658,411
CURRENT ASSETS
Cash and Cash Equivalents 668,884 565,582
Investments 25,579,440 23,332,358
Accrued Interest Receivable 153,228 133,540
Accounts Receivable 5,043,944 5,112,838
Due From City of Marshall 133,712 136,098
Energy Efficiency Loans Receivable 24,568 34,380
Material and Supply Inventories 693,836 664,607
Prepaid Expenses 133,724 147,542
TOTAL CURRENT ASSETS 32,431,336 30,126,945
NONCURRENT ASSETS
RESTRICTED ASSETS
Debt Service Reserve 4,182,070 4,841,700
Bond Sinking Fund 2,409,143 2,519,730
TOTAL RESTRICTED ASSETS 6,591,213 7,361,430
OTHER NONCURRENT ASSETS
Bond Discount 299,484 456,694
Less: Accumulated Amortization (201,781) (235,459)
TOTAL OTHER NONCURRENT ASSETS 97,703 221,235
NET DEFERRED CHARGES AND OTHER ASSETSTOTAL NONCURRENT ASSETS 6,688,916 7,582,665
TOTAL ASSETS 107,409,443 108,368,021
DEFERRED OUTFLOWS OF RESOURCES
Related to Pensions 1,594,841 349,752
The accompanying notes are an integral part of these statements.
7
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF NET POSITION
DECEMBER 31, 2016 AND 2015
2016 2015
LIABILITIES
LONG TERM DEBT
Series 2016A Revenue Bonds $ 7,310,000 $ -
Series 2014A Revenue Bonds 3,595,000 3,825,000
Series 2013B Revenue Bonds 5,200,000 5,560,000
Series 2012C Revenue Bonds 1,055,000 1,385,000
Series 2012B Revenue Bonds 4,180,000 4,515,000
Series 2011C Revenue Bonds 3,030,000 3,280,000
Series 2010C Revenue Bonds 4,290,000 4,690,000
Series 2009A Revenue Bonds 2,995,000 3,310,000
Series 2008A Revenue Bonds 3,775,000 4,240,000
Series 2007A Revenue Bonds - 2,435,000
Series 2007B Revenue Bonds - 3,520,000
Series 2006A Revenue Bonds - 3,030,000
TOTAL BONDS OUTSTANDING 35,430,000 39,790,000
LESS CURRENT PORTION (3,660,000) (3,645,000)
LESS UNAMORTIZED REFUNDED BOND DISCOUNTS (52,583) (54,516)
TOTAL LONG-TERM DEBT 31,717,417 36,090,484
CURRENT LIABILITIES
Current Portion of Long-Term Debt 3,660,000 3,645,000
Accounts Payable 3,317,974 3,692,199
Due To City of Marshall 858,786 732,630
Accrued Interest Payable 586,292 693,827
Accrued Salaries Payable 185,964 185,242
Customer and Lease Deposits 84,091 100,452
TOTAL CURRENT LIABILITIES 8,693,107 9,049,350
OTHER NONCURRENT LIABILITIES
Accrued Transmission Reserve 580,753 28,291
Accrued Sick Leave 641,420 599,540
Post Employment Benefit Obligation 113,816 101,527
Net Pension Liability 3,832,406 2,477,244
TOTAL OTHER NONCURRENT LIABILITIES 5,168,395 3,206,602
TOTAL LIABILITIES 45,578,919 48,346,436
DEFERRED INFLOWS OF RESOURCES
Related to Pensions 450,781 297,528
NET POSITION
Net Investment in Capital Assets 32,859,191 30,868,411
Net Restricted for Debt Service and Construction 6,591,213 7,361,430
Unrestricted 23,524,180 21,843,968
TOTAL NET POSITION $ 62,974,584 $ 60,073,809
The accompanying notes are an integral part of these statements.
8
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
OPERATING REVENUES
Electric Department $ 49,803,828 $ 51,401,242
Water Department 6,210,316 5,936,660
TOTAL 56,014,144 57,337,902
LEASED PLANT REVENUES
Revenues from Electric Plant Leased to Others 411,202 398,358
Expenses of Electric Plant Leased to Others (77,754) (77,365)
NET LEASED PLANT REVENUES 333,448 320,993
TOTAL OPERATING REVENUES 56,347,592 57,658,895
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 57,546 58,061
Station Labor 177,917 174,784
Water Treatment 255,316 239,796
Operating Supplies 16,823 9,328
Maintenance 289,222 227,397
Lime Sludge Disposal 84,242 73,189
Power for Pumping 289,262 270,212
Conservation Rebates 14,765 15,959
Outside Services 25,133 49,513
Insurance 10,628 15,346
Employees' Welfare 122,295 120,568
Other General Expense 42,728 43,300
TOTAL PRODUCTION COST 1,385,877 1,297,453
PURCHASED POWER 33,695,042 36,374,069
PURCHASED WATER 279,707 350,377
TRANSMISSION COST
Operations Supervision 10,530 11,539
Maintenance Supervision 17,132 17,475
Transmission by Others 6,443,652 5,319,893
Load Dispatching 19,846 19,969
Operating Supervision 127,208 124,105
Maintenance of Lines 46,349 42,313
Station Expense 68,523 56,390
Equipment Maintenance 12,552 11,835
Outside Services 23,900 31,095
Travel 1,982 1,235
Insurance 13,452 22,452
Employees' Welfare 60,953 56,393
Other General Expense 2,806 125
TOTAL TRANSMISSION COST 6,848,885 5,714,819
The accompanying notes are an integral part of these statements.
9
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN POSITION
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
OPERATING EXPENSE (Cont'd)
DISTRIBUTION COST
Operating Supervision $ 73,501 $ 58,821
Maintenance Supervision 105,347 106,753
Load Dispatching 59,689 64,038
Maintenance of Lines and Mains 1,122,023 1,239,072
Station Expense 113,137 117,365
Equipment Maintenance 153,903 199,660
Outside Services 18,166 43,909
Travel 14,382 17,546
Insurance 73,850 121,087
Employees' Welfare 382,538 407,196
Other General Expense 38,075 35,606
TOTAL DISTRIBUTION COST 2,154,611 2,411,053
DEMAND SIDE MANAGEMENT
Customer Installation Expense 4,123 2,657
Energy Efficiency Rebates 482,007 335,735
Advertising 9,783 13,337
Outside Services 25,762 20,784
Travel 4,530 501
Insurance 74 291
Employees' Welfare 1,901 2,765
Other General Expense 3,000 1,195
TOTAL DEMAND SIDE MANAGEMENT 531,180 377,265
CUSTOMER SERVICE AND
INFORMATION
Customer Records and Collection Salaries 277,791 283,520
Meter Reading Salaries 69,866 58,436
Customer Installation Expense Salaries 86,037 82,615
General Office Expense 209,423 223,310
Employees' Welfare 168,825 169,990
Outside Services 36,689 35,250
TOTAL CUSTOMER SERVICE AND INFORMATION 848,631 853,121
ADMINISTRATIVE AND GENERAL
Salaries of Executives 379,801 359,571
General Office Salaries 208,977 204,855
General Office Expense 78,239 63,736
Insurance 15,975 20,358
Employees' Welfare 241,831 226,416
Outside Services 89,866 106,834
Travel 30,924 19,195
Other General Expense 325,341 272,978
TOTAL ADMINISTRATIVE AND GENERAL 1,370,954 1,273,943
DEPRECIATION 4,787,427 5,075,015
TOTAL OPERATING EXPENSE 51,902,314 53,727,115
OPERATING INCOME 4,445,278 3,931,780
The accompanying notes are an integral part of these statements.
10
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
NONOPERATING REVENUES
Allowance for Funds Used During Construction $ 34,716 $ 208,055
Investment Income 530,598 572,396
Build America Bonds Federal Credit 66,267 70,008
Change in Fair Market Value of Investments (298,415) (258,081)
Penalties Collected 78,796 80,501
Lease and Rental Income 32,442 32,442
Connection Fees 2,265 2,725
Miscellaneous Income 476,354 349,664
Nonoperating Pension Grant Revenue 14,919 -
TOTAL NONOPERATING REVENUES 937,942 1,057,710
NONOPERATING EXPENSE
Interest Expense 1,281,804 1,471,580
Amortization of Deferred Charges 18,126 38,027
Uncollectible Accounts 39,523 54,026
Nonoperating Pension Expense 278,246 48,229
TOTAL NONOPERATING EXPENSE 1,617,699 1,611,862
INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 3,765,521 3,377,628
Capital Contributions Received (Disbursed) - 158,005
Transfers to the General Fund, City of Marshall (864,746) (835,930)
CHANGE IN NET POSITION 2,900,775 2,699,703
NET POSITION, BEGINNING OF YEAR,
AS ORIGINALLY STATED 60,073,809 59,750,897
PRIOR PERIOD ADJUSTMENT (GASB 68)
- (2,376,791)
NET POSITION, BEGINNING OF YEAR,
AS RESTATED 60,073,809 57,374,106
NET POSITION, ENDING $ 62,974,584 $ 60,073,809
The accompanying notes are an integral part of these statements.
11
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers $ 54,484,360 $ 55,722,347
Cash Received from Leased Plant and Property 443,644 430,800
Cash Paid to Suppliers (41,715,213) (44,010,199)
Cash Paid to Employees for Operating Activities (2,975,272) (3,035,646)
NET CASH PROVIDED BY OPERATING ACTIVITIES 10,237,519 9,107,302
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers to the City of Marshall (864,746) (835,930)
NET CASH PROVIDED BY (USED IN) NONCAPITAL
FINANCING ACTIVITIES (864,746) (835,930)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments for Property and Equipment (1,978,882) (2,469,851)
Payments to Employees Capitalized (450,485) (459,736)
Principal Payments on Long-Term Debt (11,670,000) (4,605,000)
Proceeds from the Issuance of Long-Term Debt 7,310,000 -
Build America Bonds Federal Credit 66,267 70,008
Bond Premiums (Discounts) 94,688 -
Interest Paid (1,376,689) (1,556,644)
NET CASH PROVIDED BY (USED IN) CAPITAL AND RELATED
FINANCING ACTIVITIES (8,005,101) (9,021,223)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Investments (25,253,556) (21,989,236)
Proceeds From Sale of Investments 22,766,703 21,650,747
Net Decrease (Increase) in Restricted Cash 711,573 509,091
Investment Income 510,910 595,840
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,264,370) 766,442
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 103,302 16,591
CASH AND CASH EQUIVALENTS, BEGINNING 565,582 548,991
CASH AND CASH EQUIVALENTS, ENDING $ 668,884 $ 565,582
The accompanying notes are an integral part of these statements.
12
MARSHALL MUNICIPAL UTILITIES
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 4,445,278 $ 3,931,780
Adjustments to Reconcile Operating Income to
Net Cash Provided by Operating Activities:
Depreciation 4,834,072 5,121,660
Capital Asset Activity Included in Payables and Accruals (769) 76,906
(Increase) Decrease in Accounts Receivable 68,894 (44,997)
(Increase) Decrease in Due From City of Marshall 2,386 88,913
(Increase) Decrease in Energy Efficiency Loans Receivable 9,812 9,427
(Increase) Decrease in Inventories (29,229) 129,388
(Increase) Decrease in Prepaid Expenses 13,818 15,085
Increase (Decrease) in Accounts Payable (374,225) (271,760)
Increase (Decrease) in Due To City of Marshall 126,156 (305,674)
Increase (Decrease) in Accrued Salaries Payable 722 (94,113)
Increase (Decrease) in Customer and Lease Deposits (16,361) (1,500)
Increase (Decrease) in Accrued Sick Leave 41,880 1,858
Increase (Decrease) in Post Retirement Benefit Obligation 12,289 10,732
Increase (Decrease) in Accrued Transmission Reserve 552,462 28,291
Other Nonoperating Revenue (Expense) 550,334 411,306
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 10,237,519 $ 9,107,302
SCHEDULE OF NONCASH ACTIVITIES
FINANCING
Developers Contributions of Water Mains $ - $ 158,005
Bond Issue Costs Deducted from Bond Proceeds $ 43,420 $ -
The accompanying notes are an integral part of these statements.
13
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
14
FINANCIAL REPORTING ENTITY The Marshall Municipal Utilities (MMU) is an autonomous proprietary fund of the City of Marshall, Minnesota.
MMU is self-governed by a board of commissioners appointed by the City Council. MMU is supported by service
revenue and investment income produced by its financial reserves. These financial statements present the financial
position and results of operations of MMU only and not the City of Marshall as a whole.
1. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of MMU have been prepared in conformity with accounting principles generally accepted
in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting
Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and
financial reporting principles. The GASB pronouncements are recognized as U.S. generally accepted accounting
principles for state and local governments.
The financial activities of MMU are accounted for and reported as an Enterprise Fund of the City. The
measurement focus is upon determination of net income, financial position and changes in cash flows.
Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to
private business enterprises where the intent of the governing body is that the costs (expenses, including
depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges; or (b) where the governing body has decided that periodic determination of
revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy,
management control, accountability or other purposes.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in the financial statements to the extent that those standards do not conflict with or contradict guidance of
Governmental Accounting Standards Board (GASB).
Operating income includes revenues and expenses related to the primary, continuing operations of MMU.
Principal operating revenues are charges to customers for sales or services. Principal operating expenses are the
costs of providing goods or services and include administrative expenses and depreciation of capital assets. Other
revenues and expenses are classified as nonoperating in the financial statements.
BASIS OF ACCOUNTING
MMU uses the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recorded when incurred.
SYSTEM OF ACCOUNTS The accounting records of MMU are maintained in accordance with the uniform system of accounts prescribed by
the Federal Energy Regulatory Commission.
CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash, deposit accounts, and certificates of deposit with original maturities of
three months or less that are not specifically reserved.
INVESTMENTS The investments of MMU are carried at fair value based on quoted market prices. Investments include balances
from both funds that are invested to the extent available in various securities as authorized by state law. State
statutes authorize MMU to invest in obligations of the U.S. Treasury, commercial paper, corporate bonds,
repurchase agreements and the State Treasurer’s Investment Pool.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
15
1. SUMMARY OF ACCOUNTING POLICIES (Cont'd)
ACCOUNTS RECEIVABLE In the course of its operations, MMU grants credit to its customers, which is mainly unsecured. A portion of
customer receivables is secured by deposits based on prior payment history of individual accounts. Receivables
that are more than 30 days old are considered late and are subject to MMU’s shutoff and collection procedures.
Amounts greater than 30 days old are $149,317 and $130,525 at December 31, 2016 and 2015, respectively.
ALLOWANCE FOR DOUBTFUL ACCOUNTS No allowance for doubtful accounts has been recorded as management deems all receivables to be collectible.
MATERIAL AND SUPPLY INVENTORIES Inventories are stated at average cost which approximates actual cost.
RESTRICTED ASSETS MMU’s bond issues require the maintenance of a sinking fund and debt service reserve, along with a construction
fund for any unexpended bond proceeds. These funds are classified as restricted assets since their use is limited by
the bond agreements.
Generally, when both restricted and unrestricted resources are available for use, it is the policy of MMU to use
restricted resources first, and then unrestricted resources, as they are needed.
UTILITY PLANT Utility plant is stated at original cost if purchased or constructed, or at estimated fair market value if received as a
donation. The cost of additions to utility plant includes contracted work, direct labor and materials, allocable
overheads and allowance for funds used during construction. The rates for allowance for funds used during
construction in 2016 and 2015 were 1.51 and 3.04 percent, respectively. Construction period interest capitalized
during the years ended December 31, 2016 and 2015 was $34,716 and $208,055, respectively. Major renewals and
improvements are charged to the property accounts. Maintenance, repair costs, replacement, and renewals of items
determined to be less than units of property are charged to operations.
The cost (actual or estimated) of units of property retired, sold, or otherwise disposed of are relieved from the fixed
assets and related accumulated depreciation accounts. Property units retained for future use are charged to
materials inventories and gain or loss from other dispositions is credited or charged to operations.
DEPRECIATION Provision for depreciation is made using the straight-line composite group method based on estimated useful lives
ranging from 5 to 55 years. The annual provision for depreciation expense is 3.56 and 3.69 percent of the average
balance of depreciable property in service as of December 31, 2016 and 2015, respectively.
BOND DISCOUNT The bond discount and bond issue costs are being amortized using the interest method of amortization over the life
of the associated revenue bond issues.
SERVICE AREA ACQUISITION MMU and neighboring electric utility, Lyon Lincoln Electric Cooperative of Tyler, MN, entered into a Service
Territory Agreement February 1, 2010 which provides for the orderly expansion of the MMU electric service area
following annexations. The agreement is of a continuing nature and provides for payments by MMU at a
prescribed mill rate indexed to the change in the annual GDP. Payments are based upon electrical energy sold in
the annexed area for varying lengths of time. The individual annexed area payment terms expire at differing
lengths of time, but in no event would the annual payment exceed ten years.
UNAMORTIZED REFUNDED BOND DISCOUNTS
The difference between the original bond discount and amortized portion is shown as a reduction to long-term debt
and amortized to interest expense over the lives of the 2016A and 2012C refunding bond issues.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
16
1. SUMMARY OF ACCOUNTING POLICIES (Cont'd)
DEFINED BENEFIT PENSION PLAN
Public Employees Retirement Association
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense,
information about the fiduciary net position of the Public Employees Retirement Association (PERA) and
additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are
reported by PERA except that PERA’s fiscal year end is June 30. For this purpose, plan contributions are
recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and
payable in accordance with the benefit terms. Investments are reported at fair value.
ACCRUED VACATION All full time employees accrue vacation time between 10 and 25 days per year based on years of service to 25
years. Employees may accumulate up to 20 days (160 hours) by December 31st of each year to be used in the
following year. Up to 10 days of accrued vacation pay in excess of the 20-day maximum accrual will be deposited
in the Health Care Savings Plan on an annual basis. Upon termination 100% of accrued vacation pay will be
deposited into the Health Care Savings Plan.
ACCRUED SICK LEAVE Under the employee sick leave plan each employee is allowed to accumulate sick leave up to a maximum of 140
days. Thereafter, when the maximum hours have been reached, any unused sick leave will be deposited into the
employee’s Health Care Savings Plan on an annual basis. The accumulated leave is placed in the Health Care
Savings Plan at the Commission’s discretion upon retirement or death at a rate of 50% after 5 years of service,
75% after 10 years and 100% after 15 years or more of service.
Sick leave benefits are recorded as a liability in the period earned by the employees.
DEFERRED OUTFLOWS OF RESOURCES
In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred outflows
of resources. This separate financial statement element, deferred outflows of resources, represents a consumption
of net position that applies to future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then.
DEFERRED INFLOWS OF RESOURCES
In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred inflows
of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of
net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until
that time.
REVENUES Customers' meters are read and bills rendered on a cycle basis. Revenues are recorded for the accounting period
during which the meters are read.
PAYMENT IN LIEU OF TAXES
MMU remits an annually negotiated payment to the City of Marshall General Fund in lieu of taxes. This fee is
calculated on a formula based on preceding years KWH sales increased by an amount in support of industrial land
development ($30,839 and $12,318 in the years ended December 31, 2016 and 2015, respectively). Payments
under this agreement are $864,746 and $835,950 for the years ended December 31, 2016 and 2015, respectively.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing financial statements in accordance with accounting
principles generally accepted in the United States of America. Those estimates and assumptions affect the
reported amounts of assets and liabilities, and the reported revenues and expenses. Actual results could vary from
the estimates that were assumed in preparing the financial statements.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
17
2. CAPITAL ASSETS Capital asset activity for the year ended December 31, 2016 is as follows:
Beginning Ending
Balance Additions Retirements Balance
Cost:
Electric Production Plant $ 2,820,515 $ 3,158 $ 2,823,673
Electric Transmission System 16,404,370 - 16,404,370
Electric Distribution System 52,756,664 1,811,302 $ 150,084 54,417,882
Transportation and General 8,437,282 251,897 71,703 8,617,476
Water Utility 53,381,173 624,922 67,842 53,938,253
Construction in Progress 1,352,029 2,034,880 2,261,307 1,125,602
Total Cost 135,152,033 4,726,159 2,550,936 137,327,256
Accumulated Depreciation:
Electric Production Plant 2,482,345 52,555 - 2,534,900
Electric Transmission System 8,447,466 521,665 - 8,969,131
Electric Distribution System 20,417,240 2,153,265 150,084 22,420,421
Transportation and General 6,190,396 448,158 71,703 6,566,851
Water Utility 26,956,175 1,658,429 67,842 28,546,762
Total Accumulated Depreciation 64,493,622 4,834,072 289,629 69,038,065
Capital Assets, Net $ 70,658,411 $ 68,289,191
Depreciation expense charged to operations was $4,834,072 and $5,121,660 for the years ended December 31,
2016 and 2015, respectively.
3. CASH AND INVESTMENTS
A. Cash
Minnesota Statutes require that all deposits be secured by a bank guaranty bond or 110% of collateral valued
at market or par, whichever is lower, less the amount covered by the Federal Deposit Insurance Corporation
(FDIC).
Authorized collateral includes certain U.S. government securities, state or local government obligations,
and other securities authorized by Minn. Stat. 118A.03. Minnesota Statutes require that securities pledged
as collateral be held in safe keeping by MMU’s treasurer, or in a financial institution other than that
furnishing the collateral.
Custodial Credit Risk This is the risk that, in the event of failure of a depository financial institution, MMU will not be able to
recover deposits or will not be able to recover collateral securities that are in the possession of an outside
party. MMU has an investment policy, which follows the Minnesota Statutes for deposits. As of December
31, 2016, MMU’s bank balance was not exposed to custodial credit risk because it was insured and properly
collateralized with securities held by the pledging financial institution’s trust department or agent and in
MMU’s name.
B. Investments
Interest Rate Risk
MMU has adopted a formal investment policy that addresses permissible investments, portfolio diversification
and instrument maturities. Investment maturities and durations are required to coincide with the Barclays
Capital Intermediate Government Bond Index plus or minus 20%.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
18
3. CASH AND INVESTMENTS (Cont’d)
B. Investments (Cont’d)
Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
MMU’s investment policy states they may invest its available funds in those instruments specified in
Minnesota Statutes. MMU’s investments were not exposed to credit risk at December 31, 2016 or 2015.
Concentration of Credit Risk
While not a limitation of MMU’s investment policy, the following is a list of investments, which individually
comprise more than 5 percent of MMU’s total investments:
2016 2015
US Treasury Notes $ 9,954,108 $ 11,172,092
Federal Agency Bonds and Notes $ 8,265,560 $ 6,036,687
Federal Agency Mortgage Pools ** $ 1,606,570
Municipal Bonds $ 8,565,720 $ 7,016,288
Money Market Accounts $ 4,013,213 $ 4,691,411
** Not a concentration in the year presented
MMU places a 25% maximum investment limit on US Agency mortgage backed securities as well as a 25%
total investment limitation on Commercial Paper investments with a 5% individual company limitation.
Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, MMU
will not be able to recover the value of its investments or collateral securities that are in the possession of an
outside party. MMU does not have a formal policy regarding the holding of securities by counterparties;
however as of December 31, 2016 and 2015, MMU did not have any such arrangements.
MMU had the following investments at December 31, 2016:
Investment Maturities in Years
Fair Value Less Than 1 1-5 Years 6-10 Years Over 10 Years
US Treasury Notes $ 9,954,108 $ 734,758 $ 7,302,087 $ 1,518,199 $ 399,064
Federal Agency Bonds and Notes 8,265,560 200,294 6,040,322 2,024,944 -
Federal Agency Mortgage Pools 1,246,048 - 24,468 282,200 939,380 Mortgage Backed Securities 126,004 - - 126,004 -
Municipal Bonds 8,565,720 1,222,174 6,659,646 683,900 -
Money Market Accounts 4,013,213 4,013,213 - - -
Total $ 32,170,653 $ 6,170,439 $ 20,026,523 $ 4,635,247 $ 1,338,444
MMU had the following investments at December 31, 2015:
Investment Maturities in Years
Fair Value Less Than 1 1-5 Years 6-10 Years Over 10 Years
US Treasury Notes $ 11,172,092 $ 2,463,388 $ 7,305,789 $ 1,006,323 $ 396,592 Federal Agency Bonds and Notes 6,036,687 301,548 4,769,987 965,152 -
Federal Agency Mortgage Pools 1,606,570 - 40,324 330,867 1,235,379
Mortgage Backed Securities 170,740 - - 170,740 - Municipal Bonds 7,016,288 651,526 5,484,557 880,205 -
Money Market Accounts 4,691,411 4,691,411 - - -
Total $ 30,693,788 $ 8,107,873 $ 17,600,657 $ 3,353,287 $ 1,631,971
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
19
3. CASH AND INVESTMENTS (Cont’d)
B. Investments (Cont’d) The following table presents the MMU’s cash and investment balances at December 31, 2016:
Credit Percentage 2016
Cash/Investment Type Rating of Total Fair Value
Cash and Cash Equivalents:
Checking Account N/A 2.0 $ 667,784
Working Funds N/A 0.0 1,100
668,884
Investments:
US Treasury Notes * 25.6 8,412,446
Federal Agency Bonds and Notes * 21.6 7,072,595
Federal Agency Mortgage Pools * 3.3 1,078,792
Mortgage Backed Securities * 0.4 126,004
Municipal Bonds A to AAA 22.4 7,347,523
Money Market Accounts N/A 4.7 1,542,080
25,579,440
Restricted Assets:
Debt Service Reserve:
US Treasury Notes * 4.7 1,541,662
Federal Agency Bonds and Notes * 3.6 1,192,965
Federal Agency Mortgage Pools * 0.5 167,256
Municipal Bonds AA- to AAA 3.7 1,218,197
Money Market Accounts N/A 0.2 61,990
4,182,070
Bond Sinking Fund:
Money Market Accounts N/A 7.3 2,409,143
Total Cash and Investments 100.0% $ 32,839,537
* - Credit quality ratings are not required for obligations of or guaranteed by the U.S. government
The following table presents the MMU’s cash and investment balances at December 31, 2015:
Credit Percentage 2015
Cash/Investment Type Rating of Total Fair Value
Cash and Cash Equivalents:
Checking Account N/A 1.8 $ 564,482
Working Funds N/A 0.0 1,100
565,582
Investments:
US Treasury Notes * 26.6 8,318,290
Federal Agency Bonds and Notes * 18.1 5,657,104
Federal Agency Mortgage Pools * 4.5 1,396,343
Mortgage Backed Securities * 0.5 170,740
Municipal Bonds A to AAA 18.1 5,659,855
Money Market Accounts N/A 6.8 2,130,026
23,332,358
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
20
3. CASH AND INVESTMENTS (Cont’d)
B. Investments (Cont’d)
Credit Percentage 2015
Cash/Investment Type Rating of Total Fair Value
Restricted Assets:
Debt Service Reserve:
US Treasury Notes * 9.1 $ 2,853,802
Federal Agency Bonds and Notes * 1.2 379,583
Federal Agency Mortgage Pools * 0.7 210,227
Municipal Bonds A to AAA 4.3 1,356,433
Money Market Accounts N/A 0.2 41,655
4,841,700
Bond Sinking Fund:
Money Market Accounts N/A 8.1 2,519,730
Total Cash and Investments 100.0% $ 31,259,370
* - Credit quality ratings are not required for obligations of or guaranteed by the U.S. government
Statement of Net Position Presentation
The cash and investments are presented in the financial statements as follows:
2016 2015
Cash and Cash Equivalents $ 668,884 $ 565,582
Investments 25,579,440 23,332,358
Restricted Assets 6,591,213 7,361,430
Total $ 32,839,537 $ 31,259,370
C. Fair Value Measurements
In the current year, MMU implemented GASB Statement No. 72, Fair Value Measurement and
Application. This Statement provides guidance for determining a fair value measurement for financial
reporting purposes. This Statement also provides guidance for applying fair value to certain investments
and disclosures related to all fair value measurements. No restatement of the December 31, 2015, net
position occurred as a result of adopting GASB Statement No. 72.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit
price) in an orderly transaction between market participants at the measurement date. The Governmental
Accounting Standards Board (GASB) establishes a hierarchy for grouping assets and liabilities, based on the
significance of inputs used to measure fair value. The asset’s or liability’s fair value measurement level within
the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use
of unobservable inputs. There are three levels of inputs that may be used to measure fair value:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities
in active markets that MMU has the ability to access.
Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly, such as:
quoted prices for similar assets or liabilities in active markets;
quoted prices for identical or similar assets or liabilities in inactive markets;
inputs other than quoted prices that are observable for the asset or liability;
inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
21
3. CASH AND INVESTMENTS (Cont’d)
C. Fair Value Measurements (Cont’d)
Level 2 (Cont’d)
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for
substantially the full term of the asset or liability.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair market value
measurement.
MMU has the following recurring fair value measurements as of December 31, 2016 and 2015:
Fixed income securities - Fixed income securities other than bond mutual funds are valued using
market corroborated inputs. Bond mutual funds are valued at market prices for identical assets in
active markets.
There were no Level 3 inputs as of December 31, 2016 and 2015.
The following table sets forth by level, within the fair value hierarchy, MMU’s investments at fair value as
of December 31, 2016.
2016
Quoted Prices in
Active Markets Significant
For Identical Observable
Assets Inputs
Fair Value Level 1 Level 2
Investments by Fair Value Level
Fixed income securities
US Treasury Notes $ 9,954,108 $ - $ 9,954,108
Federal Agency Bonds and Notes 8,265,560 - 8,265,560
Federal Agency Mortgage Pools 1,246,048 - 1,246,048
Mortgage Backed Securities 126,004 - 126,004
Municipal Bonds 8,565,720 - 8,565,720
Total investments by fair value level $ 28,157,440 $ - $28,157,440
The following table sets forth by level, within the fair value hierarchy, MMU’s investments at fair value as
of December 31, 2015.
2015
Quoted Prices in
Active Markets Significant
For Identical Observable
Assets Inputs
Fair Value Level 1 Level 2
Investments by Fair Value Level
Fixed income securities
US Treasury Notes $ 11,172,092 $ - $11,172,092
Federal Agency Bonds and Notes 6,036,687 - 6,036,687
Federal Agency Mortgage Pools 1,606,570 - 1,606,570
Mortgage Backed Securities 170,740 - 170,740
Municipal Bonds 7,016,288 - 7,016,288
Total investments by fair value level $ 26,002,377 $ - $26,002,377
Money Market Accounts, Checking Accounts, and Working Funds are not subject to the fair value
hierarchy disclosures.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
22
4. LONG-TERM LIABILITIES The bonded indebtedness of MMU consists of the following revenue bonds:
2016 2015 On April 21, 2016 MMU sold revenue refunding bonds in the
aggregate principal amount of $7,310,000 for the price of $7,506,788
with a true interest cost of 1.509% per annum. Principal payments are
due on July 1 each year beginning July 1, 2017. Interest is due semi-
annually on January 1 and July 1, through July 1, 2023. These bonds
are secured by the net revenues of MMU. $ 7,310,000 $ -
On April 24, 2014 MMU sold Public Utility Revenue Bonds in the
aggregate principal amount of $4,025,000 for the price of $4,093,058
with a true interest cost of 3.044% per annum. All proceeds are to be
spent on capital expenditures. Principal payments are due on July 1
each year beginning July 1, 2015. Interest is due semi-annually on
January 1 and July 1, through July 1, 2029. These bonds are secured
by the net revenues of MMU. Bonds maturing after July 1, 2023 shall
be subject to redemption and prepayment at the option of the City or
the Commission. 3,595,000 3,825,000
On December 18, 2013 MMU sold Public Utility Revenue Bonds in
the aggregate principal amount of $6,355,000 for the price of
$6,468,256 with a true interest cost of 3.135% per annum. All
proceeds are to be spent on capital expenditures. Principal payments
are due on July 1 each year beginning July 1, 2014. Interest is due
semi-annually on January 1 and July 1, through July 1, 2028. These
bonds are secured by the net revenues of MMU. Bonds maturing after
July 1, 2023 shall be subject to redemption and prepayment at the
option of the City or the Commission. 5,200,000 5,560,000
On June 1, 2012 MMU sold Public Utility Revenue Bonds in the
aggregate principal amount of $5,500,000 for the price of $5,626,911
with a true interest cost of 2.469% per annum. All proceeds are to be
spent on capital expenditures. Principal payments are due on July 1
each year beginning July 1, 2013. Interest is due semi-annually on
January 1 and July 1, through July 1, 2027. These bonds are secured
by the net revenues of MMU. Bonds maturing after July 1, 2023 shall
be subject to redemption and prepayment at the option of the City or
the Commission. 4,180,000 4,515,000
On June 1, 2012 MMU sold revenue refunding bonds in the aggregate
principal amount of $2,320,000 for the price of $2,387,393 with a true
interest cost of 1.536% per annum. Principal payments are due on July
1 each year beginning July 1, 2013. Interest is due semi-annually on
January 1 and July 1, through July 1, 2019. These bonds are secured
by the net revenues of MMU. 1,055,000 1,385,000
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
23
4. LONG-TERM LIABILITIES (Cont’d) 2016 2015 On November 10, 2011 MMU sold Public Utility Revenue Bonds in
the aggregate principal amount of $4,290,000 for the price of
$4,313,512 with a true interest cost of 2.962% per annum. All
proceeds are to be spent on capital expenditures. Principal payments
are due on July 1 each year beginning July 1, 2012. Interest is due
semi-annually on January 1 and July 1, through July 1, 2026. These
bonds are secured by the net revenues of MMU. Bonds maturing after
July 1, 2022 shall be subject to redemption and prepayment at the
option of the City or the Commission. $ 3,030,000 $ 3,280,000
On November 18, 2010 MMU sold Taxable Public Utility Revenue
Bonds (Build America Bonds-Direct Pay) in the aggregate principal
amount of $6,635,000 for the price of $6,667,290 with a true interest
cost of 2.953% per annum. All proceeds are to be spent on capital
expenditures. A direct payment credit from the United States
Department of Treasury is allowed in the amount equal to 35% of the
interest payable on each interest payment date. Principal payments are
due on July 1 each year beginning July 1, 2011. Interest is due semi-
annually on January 1 and July 1, through July 1, 2025. These bonds
are secured by the net revenues of MMU. Bonds maturing after July 1,
2022 shall be subject to redemption and prepayment at the option of
the City or the Commission. 4,290,000 4,690,000
On April 28, 2009 MMU sold revenue bonds in the aggregate principal
amount of $5,000,000 for the price of $5,000,000 with a true interest
cost of 3.894% per annum. Principal payments are due on July 1 each
year beginning July 1, 2010. Interest is due semi-annually on January
1 and July 1, through July 1, 2024. These bonds are secured by the net
revenues of MMU. Bonds maturing after July 1, 2018 are callable on
or after July 1, 2019. 2,995,000 3,310,000
On April 17, 2008 MMU sold revenue bonds in the aggregate principal
amount of $7,000,000 for the price of $7,010,718 with a true interest
cost of 4.024% per annum. Principal payments are due on July 1 each
year beginning July 1, 2009. Interest is due semi-annually on January
1 and July 1, through July 1, 2023. These bonds are secured by the net
revenues of MMU. Bonds maturing after July 1, 2017 are callable on
or after July 1, 2017. 3,775,000 4,240,000
On May 16, 2007 MMU sold revenue bonds in the aggregate principal
amount of $4,500,000 for the price of $4,615,402 with a true interest
cost of 3.970% per annum. Principal payments are due on July 1 each
year beginning July 1, 2008. Interest is due semi-annually on January
1 and July 1, through July 1, 2022. These bonds are secured by the net
revenues of MMU. Bonds maturing after July 1, 2017 were called on
July 1, 2016. - 2,435,000
On May 16, 2007 MMU sold revenue refunding bonds in the aggregate
principal amount of $4,930,000 for the price of $4,996,653 with a true
interest cost of 4.027% per annum. Principal payments are due on July
1 each year beginning July 1, 2008. Interest is due semi-annually on
January 1 and July 1, through July 1, 2023. These bonds are secured
by the net revenues of MMU. Bonds maturing after July 1, 2017 were
called on July 1, 2016. - 3,520,000
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
24
4. LONG-TERM LIABILITIES (Cont’d) 2016 2015 On March 16, 2006 MMU sold revenue bonds in the aggregate
principal amount of $6,440,000 for the price of $6,454,465 with a true
interest cost of 3.798% per annum. Principal payments are due on July
1 each year beginning July 1, 2007. Interest is due semi-annually on
January 1 and July 1, through July 1, 2021. These bonds are secured
by the net revenues of MMU. Bonds maturing after July 1, 2017 were
called on July 1, 2016. $ - $ 3,030,000
TOTAL LONG-TERM DEBT 35,430,000 39,790,000
LESS: CURRENT INSTALLMENTS (3,660,000) (3,645,000)
LESS: UNAMORTIZED REFUNDED BOND DISCOUNTS (52,583) (54,516)
TOTAL LONG-TERM INSTALLMENTS $ 31,717,417 $ 36,090,484
The proceeds of the 2016A Series Revenue Refunding Bonds were used by MMU to call the remaining portion of
the 2006A, 2007A, and 2007B Series Revenue Refunding Bonds resulting in a net present value interest savings of
approximately $682,068.
The proceeds of the 2012C Series Revenue Refunding Bonds were used by MMU to call the remaining portion of
the 2004A Series Revenue Refunding Bonds resulting in a net present value interest savings of approximately
$195,981.
The proceeds of the 2009A Series Revenue Refunding Bonds were used by MMU to call the remaining portion of
the 1999 Series Revenue Refunding Bonds resulting in a net present value interest savings of approximately
$57,213.
The proceeds of the 2007B Series Revenue Refunding Bonds were used by MMU to call the remaining portion of
the 1998 Series Revenue Bonds resulting in a net present value interest savings of approximately $325,845.
The scheduled aggregate principal payments of long-term bonded debt are summarized as follows:
Principal Interest Projected Federal Credit
2017 $ 3,660,000 $ 1,142,433 $ 68,932
2018 3,795,000 1,008,257 63,484
2019 3,890,000 904,894 57,534
2020 4,070,000 796,962 50,990
2021 4,205,000 676,497 43,824
2022-2026 13,390,000 1,627,795 93,444
2027-2030 2,420,000 137,304 -
TOTAL $ 35,430,000 $ 6,294,142 $ 378,208
The following is a summary of the changes in Long-Term Liabilities:
Beginning Net Ending Due Within
Balance Additions Retirements Balance One Year
Revenue Bonds $ 39,790,000 $ 7,310,000 $ 11,670,000 $ 35,430,000 $ 3,660,000
Accrued Transmission Reserve 28,291 552,462 - 580,753 -
Accrued Sick Leave 599,540 41,880 - 641,420 -
Post Employment Benefit Obligation 101,527 12,289 - 113,816 -
Net Pension Liability 2,477,244 1,915,144 559,982 3,832,406 -
Total Long-Term Liabilities $ 42,996,602 $ 9,831,775 $ 12,229,982 $ 40,598,395 $ 3,660,000
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
25
5. OTHER POST EMPLOYMENT BENEFITS MMU follows Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial
Reporting by Employers for Post Employment Benefits Other Than Pensions.
A. Plan Description
MMU provides health insurance benefits for certain retired employees under a single-employer insurance
plan. MMU provides benefits for retirees as required by State Statute to active employees when eligible to
receive a retirement benefit from the Public Employees Retirement Association (PERA) of Minnesota and if
they do not participate in any other health benefits program providing similar coverage. These retirees will be
eligible to continue coverage with respect to both themselves and their eligible dependent(s) under MMU’s
health benefits program. Retirees are required to pay 100% of the total premium cost. Since the premium is a
blended rate determined on the entire active and retiree population, the retirees are receiving an implicit rate
subsidy. As of January 1, 2014 there were 39 active participants and 10 retired participants. Benefit and
eligibility provisions are established through individual contracts. MMU’s OPEB plan issues a stand-alone
financial report that may be obtained by writing or calling MMU.
B. Annual OPEB Cost and Net OPEB Obligation
MMU’s annual other post employment benefit (OPEB) cost is calculated based on the annual required
contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of
GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to
exceed 30 years. The following table shows the components of MMU’s annual OPEB cost for 2016 and
2015, the amount actually contributed to the plan, and changes in MMU’s net OPEB obligation:
2016 2015 Annual Required Contribution (ARC) $ 35,613 $ 35,328
Interest on net OPEB Obligations 4,061 3,632
Adjustment to ARC (5,871) (5,251)
Annual OPEB Cost 33,803 33,709
Contributions made (including implicit subsidy) (21,514) (22,977)
Increase in OPEB Obligation 12,289 10,732
Net OPEB Liability, beginning of year 101,527 90,795
Net OPEB Liability, end of year $ 113,816 $ 101,527
MMU’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB
obligation for 2016 and 2015 were as follows:
Fiscal Year Annual Percentage Net OPEB
Ended OPEB Cost Contributed Obligation
December 31, 2016 $33,803 63.64% $113,816
December 31, 2015 $33,709 68.16% $101,527
C. Funding Status and Funding Progress
MMU has not funded the post employment liability and therefore the actuarial value of assets is zero.
Based upon the January 1, 2014, most recent actuarial valuation date, MMU’s unfunded actuarial and accrued
liability (UAAL) was $393,546. The annual payroll for active employees covered by the plan in the actuarial
valuation was $2,651,177 for a ratio of UAAL to covered payroll of 14.8%.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
26
5. OTHER POST EMPLOYMENT BENEFITS (Cont’d)
C. Funding Status and Funding Progress (Cont’d)
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and healthcare cost trends. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results
are compared with past expectations and new estimates are made about the future. The schedule of funding
progress immediately following the notes to the financial statements presents required supplementary
information about whether the actuarial value of plan assets is increasing or decreasing over time relative to
the actuarial accrued liabilities for benefits.
D. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (as understood by the
employer and the plan members) and include the types of benefits provided at the time of each valuation. The
actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-
term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations.
In the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was used. The
actuarial assumptions included a 4% discount rate and a 3% inflation rate. The annual healthcare cost for
medical trend rate is 7.5% initially, reduced incrementally to an ultimate rate of 5% after eight years. The
unfunded actuarial accrued liability will be amortized as a level dollar amount over an open 30-year period
beginning in 2014.
MMU is not required to have another actuarial valuation until January 1, 2017.
6. DESIGNATED NET POSITION The MMU Commission has designated a portion of unrestricted net position for operating reserves and
anticipation of future capital improvement projects. These designations are internally imposed and can be
amended or removed by future action of the Commission. As of December 31, 2016 and 2015, the following
amounts have been designated:
2016 2015
ELECTRIC DEPARTMENT
Four Month Operating Reserve $ 16,355,200 $ 17,097,779
Future Capital Improvement Projects 3,076,063 401,981
TOTAL ELECTRIC DEPARTMENT 19,431,263 17,499,760
WATER DEPARTMENT
Four Month Operating Reserve 2,427,623 2,462,069
Future Capital Improvement Projects 1,665,294 1,882,139
TOTAL WATER DEPARTMENT 4,092,917 4,344,208
TOTAL ALL DEPARMENTS $ 23,524,180 $ 21,843,968
ELECTRIC DEPARTMENT Four Month Operating Reserve: Industry experts suggest that MMU maintain a reserve to cover operational risks
such as natural disasters, market price risks of any type, and loss of sales or ability to generate sales.
Future Capital Improvement Projects: Amount available to fund future capital projects.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
27
6. DESIGNATED NET POSITION (Cont’d)
WATER DEPARTMENT
Four Month Operating Reserve: Industry experts suggest that MMU maintain a reserve to cover operational risks
such as natural disasters, market price risks of any type, and loss of sales or ability to generate sales.
Future Capital Improvement Projects: Amount available to fund future capital projects.
7. RELATED PARTY ACTIVITIES MMU provides the City of Marshall with street lighting, fire protection and utility services. A summary of
charges for these services is as follows:
2016 2015 Street Lighting $ 281,172 $ 281,172
Fire Protection 145,956 145,760
Utility Services 686,770 608,159
Billing Services 117,146 113,858
TOTALS $ 1,231,044 $ 1,148,949
Accounts receivable at December 31, 2016 and 2015 from the City of Marshall for December utility services and
other miscellaneous items is $133,712 and $136,098, respectively.
MMU bills monthly wastewater and surface water management fees charges for the City of Marshall in the
customer billings and makes transfers to the City of Marshall General Fund, as they are collected. Accounts
payable at December 31, 2016 and 2015 to the City of Marshall for these collections are as follows:
2016 2015 Wastewater Charges $ 576,007 $ 545,832
Surface Water Management Fees 183,933 167,948
TOTALS $ 759,940 $ 713,780
MMU conducts joint construction projects including industrial land development with the City of Marshall. In
addition to the above wastewater and surface water amounts, accounts payable of $98,846 and $18,850 at
December 31, 2016 and 2015, respectively, relating to water main replacement and improvement projects,
payment in lieu of taxes, and other miscellaneous items is due to the City of Marshall.
8. BENEFIT PLAN
Defined Benefit Pension Plan - Statewide
A. Plan Description
MMU participates in the following cost-sharing multiple-employer defined benefit pension plan
administered by the Public Employees Retirement Association (PERA). PERA’s defined benefit pension
plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356.
PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal
Revenue Code.
General Employees Retirement Plan (GERF)
All full-time and certain part-time employees of MMU are covered by the General Employees Plan.
General Employees Plan members belong to either the Coordinated Plan or the Basic Plan. Coordinated
Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was
closed to new members in 1967. All new members must participate in the Coordinated Plan.
B. Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute and can only be modified by the state legislature.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
28
8. BENEFIT PLAN (Cont’d)
B. Benefits Provided (Cont’d) Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. Members in plans that are at least 90% funded for two consecutive years are given
2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are
given 1% increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply
to active plan participants. Vested, terminated employees who are entitled to benefits but are not
receiving them yet are bound by the provisions in effect at the time they last terminated their public
service.
GERF Benefits
General Employees Plan benefits are based on a member’s highest average salary for any five successive
years of allowable service, age, and years of credit at termination of service. Two methods are used to
compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the
higher of a step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under
Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of average salary for each of the first
ten years of service and 2.7% for each remaining year. The annuity accrual rate for a Coordinated Plan
member is 1.2% of average salary for each of the first ten years and 1.7% for each remaining year. Under
Method 2, the annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for
Coordinated Plan members for each year of service. For members hired prior to July 1, 1989, a full
annuity is available when age plus years of service equal 90 and normal retirement age is 65. For
members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security
benefits capped at 66.
C. Contributions Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution
rates can only be modified by the state legislature.
GERF Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.50%,
respectively, of their annual covered salary in calendar years 2016 and 2015. MMU was required to
contribute 11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar
years 2016 and 2015. MMU’s contributions to the General Employees Fund for the years ended
December 31, 2016 and 2015 were $223,004 and $223,792, respectively. MMU’s contributions were
equal to the required contributions as set by State Statute.
D. Pension Costs
GERF Pension Costs
At December 31, 2016 and 2015, MMU reported a liability of $3,832,406 and $2,477,244, respectively,
for its proportionate share of the General Employees Fund’s net pension liability. MMU’s net pension
liability reflected a reduction due to the State of Minnesota’s contribution of $6 million to the fund in
2016. There was no State of Minnesota contribution in 2015. The State of Minnesota is considered a
non-employer contributing entity and the state’s contribution meets the definition of a special funding
situation. The State of Minnesota’s proportionate share of the net pension liability associated with MMU
totaled $14,919 and $-0- for 2016 and 2015, respectively. The December 31, 2016 net pension liability
was measured as of June 30, 2016 and the total pension liability used to calculate the net pension liability
was determined by an actuarial valuation as of that date. The December 31, 2015 net pension liability
was measured as of June 30, 2015 and the total pension liability used to calculate the net pension liability
was determined by an actuarial valuation as of that date. MMU’s proportion of the net pension liability
was based on MMU’s contribution received by PERA during the measurement period for employer
payroll paid dates from July 1, 2015 through June 30, 2016, and July 1, 2014 through June 30, 2015,
relative to the total employer contributions received from all of PERA’s participating employers. At
June 30, 2016 MMU proportion share was 0.0472% which was a decrease of 1.3% from its proportion
measured as of June 30, 2015.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
29
8. BENEFIT PLAN (Cont’d)
D. Pension Costs (Cont’d)
For the years ended December 31, 2016 and 2015, MMU recognized pension expense of $263,327 and
$272,667, respectively, for its proportionate share of General Employees Plan’s pension expense. In
addition, MMU recognized an additional $14,919 as pension expense (and grant revenue) for its
proportionate share of the State of Minnesota’s contribution of $6 million to the General Employees
Fund in 2016. There was no special funding situation in 2015.
At December 31, 2016, MMU reported its proportionate share of the General Employees Plan’s deferred
outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and
actual experience $ - $ 312,371 Changes in actuarial assumptions 750,389 -
Difference between projected and
actual investment earnings 729,615 - Change in proportion - 138,410 Contributions paid to PERA subsequent to the
measurement date 114,837 -
Total $ 1,594,841 $ 450,781
$114,837 reported as deferred outflows of resources related to pensions resulting from MMU’s
contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2017. Other amounts reported as deferred outflows and inflows
of resources related to pensions will be recognized in pension expense as follows:
Year ended December 31 Pension Expense Amount
2017 $ 263,870
2018 $ 263,870
2019 $ 363,050
2020 $ 138,433
2021 $ -
Thereafter $ -
At December 31, 2015, MMU reported its proportionate share of the General Employees Plan’s deferred
outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Outflows Deferred Inflows
of Resources of Resources
Differences between expected and
actual experience $ - $ 124,895 Difference between projected and
actual investment earnings 234,509 - Change in proportion - 172,633 Contributions paid to PERA subsequent to the
measurement date 115,243 -
Total $ 349,752 $ 297,528
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
30
8. BENEFIT PLAN (Cont’d)
E. Actuarial Assumptions
The total pension liability in the June 30, 2016 and 2015, actuarial valuations was determined using the
following actuarial assumptions:
2016 2015
Inflation 2.50% per year 2.75% per year
Active Member Payroll Growth 3.25% per year 3.50% per year
Investment Rate of Return 7.50% 7.90%
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors and disabilitants were based on RP-2014 tables (2016) and RP-2000 tables (2015) for the
General Employees Plan for males or females, as appropriate, with slight adjustments. Cost of living
benefit increases for retirees are assumed to be: 1% per year for all future years for the General
Employees Plan.
Actuarial assumptions used in the June 30, 2016, valuation were based on the results of actuarial
experience studies. The most recent four-year experience study in the General Employees Plan was
completed in 2015.
The following changes in actuarial assumptions occurred in 2016:
General Employees Fund
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035
and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was
changed from 7.9% to 7.5%
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25%
for payroll growth and 2.50% for inflation.
There were no changes in actuarial assumptions in 2015.
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness on a regular basis of the long-term expected rate of return using a building-block method
in which best-estimate ranges of expected future rates of return are developed for each major asset class.
These ranges are combined to produce an expected long-term rate of return by weighting the expected
future rates of return by the target asset allocation percentages. The target allocation and best estimates
of geometric real rates of return for each major asset class are summarized in the following table:
Long-Term Expected
Asset Class Target Allocation Real Rate of Return
Domestic Stocks 45% 5.50%
International Stocks 15% 6.00%
Bonds 18% 1.45%
Alternative Assets 20% 6.40%
Cash 2% 0.50%
Total 100%
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
31
8. BENEFIT PLAN (Cont’d)
F. Discount Rate
The discount rate used to measure the total pension liability in 2016 was 7.50%, a reduction from 7.9%
used in 2015. The projection of cash flows used to determine the discount rate assumed that
contributions from plan members and employees will be made at rates set in Minnesota Statutes. Based
on these assumption, the fiduciary net position of the General Employees Fund was projected to be
available to make all projected future benefit payments of current plan members. Therefore, the long-
term expected rate of return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
G. Pension Liability Sensitivity
The following presents MMU’s proportionate share of the net pension liability for General Employees
Fund, calculated using the discount rate disclosed in the preceding paragraph, as well as what MMU’s
proportionate share of the net pension liability would be if it were calculated using a discount rate 1
percentage point lower or 1 percentage point higher than the current discount rate:
1 percent decrease Current 1 percent increase
(6.5%) (7.5%) (8.5%)
$5,443,152 $3,832,406 $2,505,589
H. Pension Plan Fiduciary Net Position
Detailed information about each pension plan’s fiduciary net position is available in a separately-issued
PERA financial report that includes financial statements and required supplementary information. That
report may be obtained on the Internet at www.mnpera.org.
9. DEFERRED COMPENSATION PLAN Employees of MMU may participate in a deferred compensation plan adopted under the provisions of Internal
Revenue Code Section 457 (Deferred Compensation Plans with respect to Service for State and Local
Governments).
The deferred compensation plan is available to all employees of MMU. Under the plan, employees may elect to
defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The
deferred compensation amount is not available for withdrawal by employees until termination, retirement, death,
or unforeseeable emergency.
MMU matches employee contributions to the deferred compensation plan to the lesser of employee deferred
compensation or $1,500.
As part of its fiduciary role, MMU has selected a third party administrator of public employee deferred
compensation plans in a prudent manner and is not liable for losses that may arise from the administration of the
plan.
10. HEALTH CARE SAVINGS PLAN
MMU maintains a health care savings plan administered by a third party on behalf of individual employees, which
allows employees to pay health care costs after retirement with tax-free dollars. Contributions to the plan become
the property of each individual employee and are invested in a manner selected by the employee and can only be
accessed after employment with MMU ceases. Employees contribute to this plan through a salary reduction
agreement. Contributions are also made according to provisions of the accrued vacation and sick leave policies.
These amounts are deposited into the plan on an annual basis by MMU. Employee salary reduction contributions
are deposited in the fund, which may pay medical expenses in addition to health insurance premiums.
Contributions to this trust cannot revert back to MMU.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
32
11. RISK MANAGEMENT MMU purchases commercial insurance to cover losses in the areas of employee health, workers' compensation,
property and liability. There have been no significant reductions in insurance coverage during the year ended
December 31, 2016. Settlements have not exceeded coverage for the current year or the three prior years.
12. CONSERVATION INCENTIVE PROGRAMS Pursuant to MN Statute 216B.241, MMU has implemented energy conservation programs to assist its customers
through energy efficiency rebates and to assist in funding energy conservation measures of entities whose budgets
are supported by the general public. Expenses under these programs are $531,180 and $377,265 for the years
ended December 31, 2016 and 2015, respectively.
13. MAJOR CUSTOMERS MMU has two major customers who individually account for more than 10% of revenue in 2016 and 2015.
Revenue generated from these customers was $31,484,026 and $33,020,978 for 2016 and 2015 respectively.
These amounts represent 59% and 61% of total revenue for 2016 and 2015, respectively.
14. JOINT VENTURE
PrairieNet WAN provides for the sharing of costs, infrastructure and expertise in the field of technology and
telecommunications for MMU, the City of Marshall, Lyon County, and Marshall Public Schools. MMU acts as
a fiscal agent for this organization whose activities are centered on information technology network equipment
and its joint uses. These joint costs have been passed on to the respective members and are included in the
member’s financial statements. MMU’s ongoing financial responsibility for this joint venture organization is
limited to those activities in which it chooses to participate. Since PrairieNet WAN owns no resources and has
no equity the participants to the PrairieNet WAN have no equity interest in the joint venture.
15. DARK FIBER UTILIZATION
Members of PrairieNet WAN are able to use dark fiber owned by MMU through negotiation of dark fiber
agreements or through a month to month dark fiber fee as established by the MMU Commission. Dark Fiber
made available to participating PrairieNet WAN members shall be “lit up” by the member so acquiring the use
of the dark fiber, at their cost. With prior approval of MMU, a member using dark fiber may work with another
public body through which the member does joint work. Example of this would include Southwest Minnesota
State University working through Marshall Public Schools (MPS) fiber capacity or the State of Minnesota
working through the City of Marshall or the Lyon County fiber capacity. MMU has one dark fiber agreement
with MPS that runs through June 1, 2024 in which MPS pays MMU $1,500 per month.
16. MAJOR COMMITMENTS
Power Supply:
MMU has contracted for the delivery of a fixed amount of power with the Western Area Power Administration
(WAPA), which is a part of the US Department of Energy, through December 31, 2050. MMU has entered into an S-1 Agreement with Missouri River Energy Services (MRES) for the purchase of any
power and transmission service greater than our fixed WAPA allocation of power supply, required by MMU
through January 1, 2057. MMU has contracted to sell the capacity of its generation plant to MRES through May 31, 2029.
MARSHALL MUNICIPAL UTILITIES
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
33
16. MAJOR COMMITMENTS (Cont’d)
Transmission Service:
MMU contracted with Missouri Basin Municipal Power Agency dba Missouri River Energy Services (MRES) for
Transmission Service (the TSA). The TSA agreement, dated February 1, 2011 was terminated by the adoption of
Amendment 1 to the TSA. Among other things, MRES pays Northern States Power Company dba Xcel Energy
(NSP) monthly for MMU’s transmission costs and then MRES bill’s MMU for the cost of the transmission
through the MRES monthly power invoice. The amended S-1 agreement contains all the provisions previously
included in the TSA, but on January 2, 2017 are contained within the S-1 agreement between MRES and the City
of Marshall. MMU purchases through MRES its transmission services as Network Integrated Transmission
Services (NITS) from the NSP load zone within the MISO footprint. The NITS service has a credit applied which
is referred to as the Annual Transmission Revenue Requirement (ATRR) for the MMU transmission that is part of
the NSP load zone within MISO. MMU will be invoiced for said transmission service from MRES pursuant to the
MRES S-1 Agreement.
MMU entered into a Transmission Interconnection Agreement with NSP and the Midcontinent Independent
System Operator (MISO) for the interconnection of MMU’s transmission system into the NSP Transmission
System. The interconnection agreement is in effect for an initial ten-year period ending January 1, 2025.
Other Commitments:
MMU has entered an agreement with the City of Marshall in support of industrial land development. This
agreement calls for MMU to pay one half of the acquisition and development costs of approved projects through a
payment in lieu of taxes capped at $500,000 per year. Proceeds from subsequent sales of development projects
will be divided equally between MMU and the City of Marshall with MMU’s portion deducted from the payment
in lieu of taxes.
17. PENDING LITIGATION During 2013, MMU acquired 1.84 acres of land by eminent domain related to four water well sites for buffer
strip required by the Minnesota Department of Health regulations. The buyer and seller did not come to terms
on the price of the land. MMU, as required by state law, made an escrow deposit with the District Court for this
land. The land title has transferred to MMU. In 2014, there was a land condemnation hearing in Lyon County,
Minnesota. The hearing did not resolve the matter. The Court ordered mediation was unsuccessful. Thereafter,
a trial took place over two days in early 2016 and a District Court verdict was handed down. While the position
of MMU prevailed in District Court, the land owner has entered an appeal to the Minnesota Appellate Court. A
fourth quarter 2017 resolution is anticipated.
18. GASB STANDARD ISSUED BUT NOT YET IMPLEMENTED
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions,
replaces the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions, as they relate to governments that provide other postemployment
benefits (OPEB) to their employees. Statement No. 75 requires governments providing other postemployment
benefits to recognize their long-term obligation for OPEB as a liability for the first time, and to more
comprehensively and comparably measure the annual cost of OPEB benefits. Statement No. 75 is effective for
implementation for the year ended December 31, 2018.
REQUIRED SUPPLEMENTARY INFORMATION
MARSHALL MUNICIPAL UTILITIES
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF MMU’S SHARE OF NET PENSION LIABILITY AND
MMU’S CONTRIBUTIONS
FOR DEFINED BENEFIT PENSION PLANS
DECEMBER 31, 2016
34
PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
SCHEDULE OF MMU’S PROPORTIONATE
SHARE OF NET PENSION LIABILITY (*)
PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT FUND
REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS**) MMU’s
Proportionate Share of the
State’s Net Pension MMU’s
MMU’s Proportionate Liability and Proportionate
Proportionate Share (Amount) the State’s Share of the
MMU’s Share of the Net Proportionate Net Pension Plan Fiduciary
Proportion (Amount) Pension Share of the Liability (Asset) Net Position (Percentage) of the Liability Net Pension MMU’s as a Percentage as a Percentage
of the Net Pension Associated Liability Covered- of its of the
Fiscal Year Net Pension Liability with Associated Employee Covered-Employee Total Pension Ending Liability (Asset) (Asset) MMU with MMU Payroll** Payroll Liability
(a) (b) (a+b) (c) (a+b/c)
6/30/2016 0.0472% $ 3,832,406 $ 14,919 $ 3,847,325 $ 2,973,391 129.4% 68.9% 6/30/2015 0.0478 2,477,244 - 2,477,244 2,809,961 88.2 78.2
* This schedule is for former MERF Division Employers to present their proportionate share of the State of Minnesota’s contributions to the General Employees Fund on their behalf.
**Schedule is to be provided prospectively beginning with the employer’s fiscal year ended June 30, 2015, or after.
PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
SCHEDULE OF EMPLOYER’S CONTRIBUTIONS
PUBLIC EMPLOYEES GENERAL EMPLOYEES RETIREMENT PLAN
REQUIRED SUPPLEMENTARY INFORMATION (LAST TEN YEARS*) Contributions Contributions in Relation as a
to the Percentage of
Statutorily Statutorily Contribution Covered- Covered- Fiscal Year Required Required Deficiency Employee Employee
Ending Contribution Contribution (Excess) Payroll Payroll
(a) (b) (a-b) (d) (b/d) 12/31/2016 $ 223,004 $ 223,004 $ - $ 2,973,391 7.5%
12/31/2015 207,341 207,341 - $ 2,809,961 7.4
* Option to provide RSI for ten years at transition or to provide RSI prospectively.
MARSHALL MUNICIPAL UTILITIES
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULES OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS
FOR POSTEMPLOYMENT BENEFIT PLANS
DECEMBER 31, 2016
35
SCHEDULE OF FUNDING PROGRESS FOR POSTEMPLOYMENT BENEFIT PLANS
Other Postemployment Benefits Actuarial Actuarial Unfunded UAAL as a
Actuarial Value of Accrued Actuarial Accrued Funded Covered Percentage of
Valuation Assets Liability Liability Ratio Payroll Covered Payroll Date (a) (b) (b - a) (a / b) (c) ((b – a) / c)
1/01/2014 $ - $ 393,546 $ 393,546 0.00 $2,651,177 14.8
1/01/2011 - 349,191 349,191 0.00 2,407,762 14.5 1/01/2008 - 156,507 156,507 0.00 2,399,285 6.52
SCHEDULE OF EMPLOYER CONTRIBUTIONS FOR POSTEMPLOYMENT BENEFIT PLANS
Other Postemployment Benefits
Fiscal Year Annual Employer Percentage Net OPEB
Ended OPEB Cost Contribution Contributed Obligation
December 31, 2016 $33,803 $21,514 63.64% $113,816
December 31, 2015 33,709 22,977 68.16 101,527
December 31, 2014 33,948 31,179 91.84 90,795
December 31, 2013 32,748 16,532 50.48 88,026
December 31, 2012 32,453 16,691 51.43 71,810
December 31, 2011 32,031 13,079 40.83 56,048
December 31, 2010 17,212 6,936 40.30 37,096
December 31, 2009 17,690 4,897 27.68 26,820
Note: Schedule is intended to show 10-year trend. Additional years will be reported as they become available.
MARSHALL MUNICIPAL UTILITIES
NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION
DECEMBER 31, 2016
36
1. DEFINED BENEFIT PENSION PLAN
Public Employees Retirement Association
Changes in Actuarial Assumptions:
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035 and
2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was changed
from 7.9% to 7.5%
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The assumed
future salary increases, payroll growth, and inflation were decrease by 0.25% to 3.25% for payroll growth
and 2.50% for inflation.
SUPPLEMENTARY FINANCIAL INFORMATION
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF NET POSITION
DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
ASSETS
CAPITAL ASSETS
Electric Production Plant $ 2,823,673 $ - $ - $ 2,823,673
Electric Transmission System 16,404,370 - - 16,404,370
Electric Distribution System 54,417,882 - - 54,417,882
Water Utility - 53,938,253 - 53,938,253
Transportation and General 7,328,556 1,288,920 - 8,617,476
Construction in Progress 155,260 970,342 - 1,125,602
81,129,741 56,197,515 - 137,327,256
Less: Accumulated Depreciation (39,485,538) (29,552,527) - (69,038,065)
NET CAPITAL ASSETS 41,644,203 26,644,988 - 68,289,191
CURRENT ASSETS
Cash and Cash Equivalents 415,571 253,313 - 668,884
Investments 20,723,978 4,855,462 - 25,579,440
Accrued Interest Receivable 110,237 42,991 - 153,228
Accounts Receivable 4,165,985 877,959 - 5,043,944
Due From City of Marshall 112,187 21,525 - 133,712
Energy Efficiency Loans Receivable 24,568 - - 24,568
Material and Supply Inventories 526,790 167,046 - 693,836
Prepaid Expenses 77,174 56,550 - 133,724
TOTAL CURRENT ASSETS 26,156,490 6,274,846 - 32,431,336
NONCURRENT ASSETS
RESTRICTED ASSETS
Debt Service Reserve 2,655,106 1,526,964 - 4,182,070
Bond Sinking Fund 1,262,012 1,147,131 - 2,409,143
TOTAL RESTRICTED ASSETS 3,917,118 2,674,095 - 6,591,213
OTHER NONCURRENT ASSETS
Bond Discount 206,291 93,193 - 299,484
Less: Accumulated Amortization (152,696) (49,085) - (201,781)
TOTAL OTHER NONCURRENT
ASSETS 53,595 44,108 - 97,703
NET DEFERRED CHARGES AND OTHER ASSETSTOTAL NONCURRENT ASSETS 3,970,713 2,718,203 - 6,688,916
TOTAL ASSETS 71,771,406 35,638,037 - 107,409,443
DEFERRED OUTFLOWS OF RESOURCES
Related to Pensions 1,116,389 478,452 - 1,594,841
2016
37
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF NET POSITION
DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
LIABILITIES
LONG TERM DEBT
Series 2016A Revenue Bonds $ 4,285,000 $ 3,025,000 $ - $ 7,310,000
Series 2014A Revenue Bonds - 3,595,000 - 3,595,000
Series 2013B Revenue Bonds - 5,200,000 - 5,200,000
Series 2012C Revenue Bonds - 1,055,000 - 1,055,000
Series 2012B Revenue Bonds 2,131,800 2,048,200 - 4,180,000
Series 2011C Revenue Bonds 3,030,000 - - 3,030,000
Series 2010C Revenue Bonds 2,745,600 1,544,400 - 4,290,000
Series 2009A Revenue Bonds 1,797,000 1,198,000 - 2,995,000
Series 2008A Revenue Bonds 3,775,000 - - 3,775,000
TOTAL BONDS OUTSTANDING 17,764,400 17,665,600 - 35,430,000
LESS CURRENT PORTION (1,904,496) (1,755,504) - (3,660,000)
LESS UNAMORTIZED REFUNDED
BOND DISCOUNTS (3,742) (48,841) - (52,583)
TOTAL LONG-TERM DEBT 15,856,162 15,861,255 - 31,717,417
CURRENT LIABILITIES
Current Portion of Long-Term Debt 1,904,496 1,755,504 - 3,660,000
Checks Issued in Excess of Bank Balance - - - -
Accounts Payable 3,230,955 87,019 - 3,317,974
Due To City of Marshall 73,230 785,556 - 858,786
Accrued Interest Payable 311,695 274,597 - 586,292
Accrued Salaries Payable 133,251 52,713 - 185,964
Customer and Lease Deposits 60,674 23,417 - 84,091
TOTAL CURRENT LIABILITIES 5,714,301 2,978,806 - 8,693,107
OTHER NONCURRENT LIABILITIES
Accrued Transmission Reserve 580,753 - - 580,753
Accrued Sick Leave 430,490 210,930 - 641,420
Post Employment Benefit Obligation 79,671 34,145 - 113,816
Net Pension Liability 2,682,684 1,149,722 - 3,832,406
TOTAL OTHER NONCURRENT
TOTAL OTHER NONCURRENT LIABILITIES LIABILITIES 3,773,598 1,394,797 - 5,168,395
TOTAL LIABILITIES 25,344,061 20,234,858 - 45,578,919
DEFERRED INFLOWS OF RESOURCES
Related to Pensions 315,547 135,234 - 450,781
NET POSITION
Net Investment in Capital Assets 23,879,803 8,979,388 - 32,859,191
Net Restricted for Debt Service and Construction 3,917,118 2,674,095 - 6,591,213
Unrestricted 19,431,263 4,092,917 - 23,524,180
TOTAL NET POSITION $ 47,228,184 $ 15,746,400 $ - $ 62,974,584
2016
38
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF NET POSITION
DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
ASSETS
CAPITAL ASSETS
Electric Production Plant $ 2,820,515 $ - $ - $ 2,820,515
Electric Transmission System 16,404,370 - - 16,404,370
Electric Distribution System 52,756,664 - - 52,756,664
Water Utility - 53,381,173 - 53,381,173
Transportation and General 7,211,834 1,225,448 - 8,437,282
Construction in Progress 962,175 389,854 - 1,352,029
80,155,558 54,996,475 - 135,152,033
Less: Accumulated Depreciation (36,601,207) (27,892,415) - (64,493,622)
NET CAPITAL ASSETS 43,554,351 27,104,060 - 70,658,411
CURRENT ASSETS
Cash and Cash Equivalents 576,797 - (11,215) 565,582
Investments 18,058,592 5,273,766 - 23,332,358
Accrued Interest Receivable 94,946 38,594 - 133,540
Accounts Receivable 4,293,282 819,556 - 5,112,838
Due From City of Marshall 102,909 33,189 - 136,098
Energy Efficiency Loans Receivable 34,380 - - 34,380
Material and Supply Inventories 502,670 161,937 - 664,607
Prepaid Expenses 86,596 60,946 - 147,542
TOTAL CURRENT ASSETS 23,750,172 6,387,988 (11,215) 30,126,945
NONCURRENT ASSETS
RESTRICTED ASSETS
Debt Service Reserve 3,039,034 1,802,666 - 4,841,700
Bond Sinking Fund 1,421,757 1,097,973 - 2,519,730
TOTAL RESTRICTED ASSETS 4,460,791 2,900,639 - 7,361,430
OTHER NONCURRENT ASSETS
Bond Discount 303,380 153,314 - 456,694
Less: Accumulated Amortization (176,872) (58,587) - (235,459)
TOTAL OTHER NONCURRENT
ASSETS 126,508 94,727 - 221,235
NET DEFERRED CHARGES AND OTHER ASSETSTOTAL NONCURRENT ASSETS 4,587,299 2,995,366 - 7,582,665
TOTAL ASSETS 71,891,822 36,487,414 (11,215) 108,368,021
DEFERRED OUTFLOWS OF RESOURCES
Related to Pensions 244,826 104,926 - 349,752
2015
39
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF NET POSITION
DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
LIABILITIES
LONG TERM DEBT
Series 2014A Revenue Bonds $ - $ 3,825,000 $ - $ 3,825,000
Series 2013B Revenue Bonds - 5,560,000 - 5,560,000
Series 2012C Revenue Bonds - 1,385,000 - 1,385,000
Series 2012B Revenue Bonds 2,302,650 2,212,350 - 4,515,000
Series 2011C Revenue Bonds 3,280,000 - - 3,280,000
Series 2010C Revenue Bonds 3,001,600 1,688,400 - 4,690,000
Series 2009A Revenue Bonds 1,986,000 1,324,000 - 3,310,000
Series 2008A Revenue Bonds 4,240,000 - - 4,240,000
Series 2007A Revenue Bonds 2,435,000 - - 2,435,000
Series 2007B Revenue Bonds - 3,520,000 - 3,520,000
Series 2006A Revenue Bonds 3,030,000 - - 3,030,000
TOTAL BONDS OUTSTANDING 20,275,250 19,514,750 - 39,790,000
LESS CURRENT PORTION (2,095,850) (1,549,150) - (3,645,000)
LESS UNAMORTIZED REFUNDED
BOND DISCOUNTS - (54,516) - (54,516)
TOTAL LONG-TERM DEBT 18,179,400 17,911,084 - 36,090,484
CURRENT LIABILITIES
Current Portion of Long-Term Debt 2,095,850 1,549,150 - 3,645,000
Checks Issued in Excess of Bank Balance - 11,215 (11,215) -
Accounts Payable 3,594,214 97,985 - 3,692,199
Due To City of Marshall 12,318 720,312 - 732,630
Accrued Interest Payable 377,101 316,726 - 693,827
Accrued Salaries Payable 126,467 58,775 - 185,242
Customer and Lease Deposits 61,574 38,878 - 100,452
TOTAL CURRENT LIABILITIES 6,267,524 2,793,041 (11,215) 9,049,350
OTHER NONCURRENT LIABILITIES
Accrued Sick Leave 408,371 191,169 - 599,540
Post Employment Benefit Obligation 71,069 30,458 - 101,527
Net Pension Liability 1,734,071 743,173 - 2,477,244
TOTAL OTHER NONCURRENT
TOTAL OTHER NONCURRENT LIABILITIES LIABILITIES 2,241,802 964,800 - 3,206,602
TOTAL LIABILITIES 26,688,726 21,668,925 (11,215) 48,346,436
DEFERRED INFLOWS OF RESOURCES
Related to Pensions 208,270 89,258 - 297,528
NET POSITION
Net Investment in Capital Assets 23,279,101 7,589,310 - 30,868,411
Net Restricted for Debt Service and Construction 4,460,791 2,900,639 - 7,361,430
Unrestricted 17,499,760 4,344,208 - 21,843,968
TOTAL NET POSITION $ 45,239,652 $ 14,834,157 $ - $ 60,073,809
2015
40
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
OPERATING REVENUES
Electric Department $ 49,803,828 $ - $ - $ 49,803,828
Water Department - 6,210,316 - 6,210,316
TOTAL 49,803,828 6,210,316 - 56,014,144
LEASED PLANT REVENUES
Revenues from Electric Plant
Leased to Others 411,202 - - 411,202
Expenses of Electric Plant
Leased to Others (77,754) - - (77,754)
NET LEASED PLANT REVENUES 333,448 - - 333,448
TOTAL OPERATING REVENUES 50,137,276 6,210,316 - 56,347,592
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 4,964 52,582 - 57,546
Station Labor - 177,917 - 177,917
Water Treatment - 255,316 - 255,316
Operating Supplies - 16,823 - 16,823
Maintenance 21,842 267,380 - 289,222
Lime Sludge Disposal - 84,242 - 84,242
Power for Pumping - 289,262 - 289,262
Conservation Rebates - 14,765 - 14,765
Outside Services - 25,133 - 25,133
Insurance 2,110 8,518 - 10,628
Employees' Welfare 3,883 118,412 - 122,295
Other General Expense - 42,728 - 42,728
TOTAL PRODUCTION COST 32,799 1,353,078 - 1,385,877
PURCHASED POWER 33,695,042 - - 33,695,042
PURCHASED WATER - 279,707 - 279,707
TRANSMISSION COST
Operations Supervision 10,530 - - 10,530
Maintenance SupervisionMaintenance Supervision 17,132 - - 17,132
Transmission by Others 6,443,652 - - 6,443,652
Load Dispatching 19,846 - - 19,846
Operating Supervision 127,208 - - 127,208
Maintenance of Lines 46,349 - - 46,349
Station Expense 68,523 - - 68,523
Equipment Maintenance 12,552 - - 12,552
Outside Services 23,900 - - 23,900
Travel 1,982 - - 1,982
Insurance 13,452 - - 13,452
Employees' Welfare 60,953 - - 60,953
Other General Expense 2,806 - - 2,806
TOTAL TRANSMISSION COST 6,848,885 - - 6,848,885
2016
41
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
OPERATING EXPENSE (Cont'd)
DISTRIBUTION COST
Operating Supervision $ 29,719 $ 43,782 $ - $ 73,501
Maintenance Supervision 52,073 53,274 - 105,347
Load Dispatching 59,689 - - 59,689
Maintenance of Lines and Mains 585,777 536,246 - 1,122,023
Station Expense 113,137 - - 113,137
Equipment Maintenance 111,978 41,925 - 153,903
Outside Services 15,846 2,320 - 18,166
Travel 12,013 2,369 - 14,382
Insurance 50,752 23,098 - 73,850
Employees' Welfare 287,222 95,316 - 382,538
Other General Expense 31,713 6,362 - 38,075
TOTAL DISTRIBUTION COST 1,349,919 804,692 - 2,154,611
DEMAND SIDE MANAGEMENT
Customer Installation Expense 4,123 - - 4,123
Energy Efficiency Rebates 482,007 - - 482,007
Advertising 9,783 - - 9,783
Outside Services 25,762 - - 25,762
Travel 4,530 - - 4,530
Insurance 74 - - 74
Employees' Welfare 1,901 - - 1,901
Other General Expense 3,000 - - 3,000
TOTAL DEMAND SIDE
MANAGEMENT 531,180 - - 531,180
CUSTOMER SERVICE AND
INFORMATION
Customer Records and Collection Salaries 194,460 83,331 - 277,791
Meter Reading Salaries 40,201 29,665 - 69,866
Customer Installation Expense Salaries 86,037 - - 86,037
General Office Expense 143,500 65,923 - 209,423
Employees' Welfare 119,883 48,942 - 168,825
Outside Services 25,682 11,007 - 36,689
TOTAL CUSTOMER SERVICE
AND INFORMATION 609,763 238,868 - 848,631
ADMINISTRATIVE AND GENERAL
Salaries of Executives 267,494 112,307 - 379,801
General Office Salaries 146,291 62,686 - 208,977
General Office Expense 74,477 3,762 - 78,239
Insurance 12,073 3,902 - 15,975
Employees' Welfare 172,324 69,507 - 241,831
Outside Services 53,186 36,680 - 89,866
Travel 22,161 8,763 - 30,924
Other General Expense 226,926 98,415 - 325,341
TOTAL ADMINISTRATIVE
AND GENERAL 974,932 396,022 - 1,370,954
DEPRECIATION 3,037,058 1,750,369 - 4,787,427
TOTAL OPERATING EXPENSE 47,079,578 4,822,736 - 51,902,314
OPERATING INCOME 3,057,698 1,387,580 - 4,445,278
2016
42
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
NONOPERATING REVENUES
Allowance for Funds Used During
Construction $ 20,389 $ 14,327 $ - $ 34,716
Investment Income 404,880 125,718 - 530,598
Build America Bonds Federal Credit 42,400 23,867 - 66,267
Change in Fair Market Value of Investments (241,093) (57,322) - (298,415)
Penalties Collected 56,997 21,799 - 78,796
Lease and Rental Income 114 32,328 - 32,442
Connection Fees - 2,265 - 2,265
Miscellaneous Income 423,967 52,387 - 476,354
Nonoperating Pension Grant Revenue 10,443 4,476 - 14,919
TOTAL NONOPERATING
REVENUES 718,097 219,845 - 937,942
NONOPERATING EXPENSE
Interest Expense 678,596 603,208 - 1,281,804
Amortization of Deferred Charges 12,900 5,226 - 18,126
Uncollectible Accounts 36,249 3,274 - 39,523
Nonoperating Pension Expense 194,772 83,474 - 278,246
TOTAL NONOPERATING
EXPENSE 922,517 695,182 - 1,617,699
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 2,853,278 912,243 - 3,765,521
Capital Contributions Received (Disbursed) - - - -
Transfers to the General Fund,
City of Marshall (864,746) - - (864,746)
CHANGE IN NET POSITION 1,988,532 912,243 - 2,900,775
NET POSITION, BEGINNING OF YEAR,
AS ORIGINALLY STATED 45,239,652 14,834,157 - 60,073,809
PRIOR PERIOD ADJUSTMENT (GASB 68) - - - -
NET POSITION, BEGINNING OF YEAR,
AS RESTATED 45,239,652 14,834,157 - 60,073,809
NET POSITION, ENDING $ 47,228,184 $ 15,746,400 $ - $ 62,974,584
2016
43
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
OPERATING REVENUES
Electric Department $ 51,401,242 $ - $ - $ 51,401,242
Water Department - 5,936,660 - 5,936,660
TOTAL 51,401,242 5,936,660 - 57,337,902
LEASED PLANT REVENUES
Revenues from Electric Plant
Leased to Others 398,358 - - 398,358
Expenses of Electric Plant
Leased to Others (77,365) - - (77,365)
NET LEASED PLANT REVENUES 320,993 - - 320,993
TOTAL OPERATING REVENUES 51,722,235 5,936,660 - 57,658,895
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 4,714 53,347 - 58,061
Station Labor - 174,784 - 174,784
Water Treatment - 239,796 - 239,796
Operating Supplies - 9,328 - 9,328
Maintenance 15,244 212,153 - 227,397
Lime Sludge Disposal - 73,189 - 73,189
Power for Pumping - 270,212 - 270,212
Conservation Rebates - 15,959 - 15,959
Outside Services - 49,513 - 49,513
Insurance 3,748 11,598 - 15,346
Employees' Welfare 3,219 117,349 - 120,568
Other General Expense - 43,300 - 43,300
TOTAL PRODUCTION COST 26,925 1,270,528 - 1,297,453
PURCHASED POWER 36,374,069 - - 36,374,069
PURCHASED WATER - 350,377 - 350,377
TRANSMISSION COST
Maintenance Supervision 11,539 - - 11,539
Maintenance Supervision 17,475 - - 17,475
Transmission by Others 5,319,893 - - 5,319,893
Load Dispatching 19,969 - - 19,969
Operating Supervision 124,105 - - 124,105
Maintenance of Lines 42,313 - - 42,313
Station Expense 56,390 - - 56,390
Equipment Maintenance 11,835 - - 11,835
Outside Services 31,095 - - 31,095
Travel 1,235 - - 1,235
Insurance 22,452 - - 22,452
Employees' Welfare 56,393 - - 56,393
Other General Expense 125 - - 125
TOTAL TRANSMISSION COST 5,714,819 - - 5,714,819
2015
44
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
OPERATING EXPENSE (Cont'd)
DISTRIBUTION COST
Operating Supervision $ 18,736 $ 40,085 $ - $ 58,821
Maintenance Supervision 52,426 54,327 - 106,753
Load Dispatching 64,038 - - 64,038
Maintenance of Lines and Mains 667,135 571,937 - 1,239,072
Station Expense 117,365 - - 117,365
Equipment Maintenance 163,482 36,178 - 199,660
Outside Services 43,796 113 - 43,909
Travel 15,836 1,710 - 17,546
Insurance 81,244 39,843 - 121,087
Employees' Welfare 316,864 90,332 - 407,196
Other General Expense 29,470 6,136 - 35,606
TOTAL DISTRIBUTION COST 1,570,392 840,661 - 2,411,053
DEMAND SIDE MANAGEMENT
Customer Installation Expense 2,657 - - 2,657
Energy Efficiency Rebates 335,735 - - 335,735
Advertising 13,337 - - 13,337
Outside Services 20,784 - - 20,784
Travel 501 - - 501
Insurance 291 - - 291
Employees' Welfare 2,765 - - 2,765
Other General Expense 1,195 - - 1,195
TOTAL DEMAND SIDE
MANAGEMENT 377,265 - - 377,265
CUSTOMER SERVICE AND
INFORMATION
Customer Records and Collection Salaries 198,554 84,966 - 283,520
Meter Reading Salaries 32,167 26,269 - 58,436
Customer Installation Expense Salaries 82,615 - - 82,615
General Office Expense 153,285 70,025 - 223,310
Employees' Welfare 121,498 48,492 - 169,990
Outside Services 24,675 10,575 - 35,250
TOTAL CUSTOMER SERVICE
AND INFORMATION 612,794 240,327 - 853,121
ADMINISTRATIVE AND GENERAL
Salaries of Executives 252,332 107,239 - 359,571
General Office Salaries 143,444 61,411 - 204,855
General Office Expense 61,364 2,372 - 63,736
Insurance 16,439 3,919 - 20,358
Employees' Welfare 162,657 63,759 - 226,416
Outside Services 76,072 30,762 - 106,834
Travel 14,333 4,862 - 19,195
Other General Expense 200,707 72,271 - 272,978
TOTAL ADMINISTRATIVE
AND GENERAL 927,348 346,595 - 1,273,943
DEPRECIATION 3,001,366 2,073,649 - 5,075,015
TOTAL OPERATING EXPENSE 48,604,978 5,122,137 - 53,727,115
OPERATING INCOME 3,117,257 814,523 - 3,931,780
2015
45
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
NONOPERATING REVENUES
Allowance for Funds Used During
Construction $ 50,059 $ 157,996 $ - $ 208,055
Investment Income 413,096 159,300 - 572,396
Build America Bonds Federal Credit 44,805 25,203 - 70,008
Change in Fair Market Value of Investments (182,358) (75,723) - (258,081)
Penalties Collected 57,438 23,063 - 80,501
Lease and Rental Income 114 32,328 - 32,442
Connection Fees - 2,725 - 2,725
Miscellaneous Income 287,004 62,660 - 349,664
TOTAL NONOPERATING
REVENUES 670,158 387,552 - 1,057,710
NONOPERATING EXPENSE
Interest Expense 806,312 665,268 - 1,471,580
Amortization of Deferred Charges 24,849 13,178 - 38,027
Uncollectible Accounts 46,012 8,014 - 54,026
Nonoperating Pension Expense 33,760 14,469 - 48,229
TOTAL NONOPERATING
EXPENSE 910,933 700,929 - 1,611,862
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 2,876,482 501,146 - 3,377,628
Capital Contributions Received (Disbursed) - 158,005 - 158,005
Transfers to the General Fund,
City of Marshall (835,930) - - (835,930)
CHANGE IN NET POSITION 2,040,552 659,151 - 2,699,703
NET POSITION, BEGINNING OF YEAR,
AS ORIGINALLY STATED 44,862,854 14,888,043 - 59,750,897
PRIOR PERIOD ADJUSTMENT (GASB 68) (1,663,754) (713,037) - (2,376,791)
NET POSITION, BEGINNING OF YEAR,
AS RESTATED 43,199,100 14,175,006 - 57,374,106
NET POSITION, ENDING $ 45,239,652 $ 14,834,157 $ - $ 60,073,809
2015
46
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash Received from Customers $ 48,263,067 $ 6,221,293 $ - $ 54,484,360
Cash Received from Leased Plant and Property 411,316 32,328 - 443,644
Cash Paid to Suppliers (39,599,649) (2,126,779) 11,215 (41,715,213)
Cash Paid to Employees for Operating
Activities (2,089,420) (885,852) - (2,975,272)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 6,985,314 3,240,990 11,215 10,237,519
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers to the City of Marshall (864,746) - - (864,746)
NET CASH PROVIDED BY (USED IN)
NONCAPITAL FINANCING
ACTIVITIES (864,746) - - (864,746)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Payments for Property and Equipment (718,758) (1,260,124) - (1,978,882)
Payments to Employees Capitalized (433,638) (16,847) - (450,485)
Principal Payments on Long-Term Debt (6,795,850) (4,874,150) - (11,670,000)
Proceeds from the Issuance of Long-Term Debt 4,285,000 3,025,000 - 7,310,000
Build America Bonds Federal Credit 42,400 23,867 - 66,267
Bond Premiums (Discounts) 55,504 39,184 - 94,688
Interest Paid (743,235) (633,454) - (1,376,689)
NET CASH PROVIDED BY (USED IN)
CAPITAL AND RELATED
FINANCING ACTIVITIES (4,308,577) (3,696,524) - (8,005,101)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Investments (20,367,387) (4,886,169) - (25,253,556)
Proceeds From Sale of Investments 17,489,984 5,276,719 - 22,766,703
Net Decrease (Increase) in Restricted Cash 514,597 196,976 - 711,573
Investment Income 389,589 121,321 - 510,910
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (1,973,217) 708,847 - (1,264,370)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (161,226) 253,313 11,215 103,302
CASH AND CASH EQUIVALENTS,
BEGINNING 576,797 - (11,215) 565,582
CASH AND CASH EQUIVALENTS,
ENDING $ 415,571 $ 253,313 $ - $ 668,884
2016
47
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2016
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
RECONCILIATION OF OPERATING
INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 3,057,698 $ 1,387,580 $ - $ 4,445,278
Adjustments to Reconcile Operating Income
to Net Cash Provided by Operating
Activities:
Depreciation 3,083,703 1,750,369 - 4,834,072
Capital Asset Activity Included in
Payables and Accruals (769) - - (769)
(Increase) Decrease in Accounts Receivable 127,297 (58,403) - 68,894
(Increase) Decrease in Due From
City of Marshall (9,278) 11,664 - 2,386
(Increase) Decrease in Energy Efficiency
Loans Receivable 9,812 - - 9,812
(Increase) Decrease in Inventories (24,120) (5,109) - (29,229)
(Increase) Decrease in Prepaid Expenses 9,422 4,396 - 13,818
Increase (Decrease) in Accounts Payable (363,259) (22,181) 11,215 (374,225)
Increase (Decrease) in Due To
City of Marshall 60,912 65,244 - 126,156
Increase (Decrease) in Accrued Salaries
Payable 6,784 (6,062) - 722
Increase (Decrease) in Customer and
Lease Deposits (900) (15,461) - (16,361)
Increase (Decrease) in Accrued Sick Leave 22,119 19,761 - 41,880
Increase (Decrease) in Post Employment
Benefit Obligation 8,602 3,687 - 12,289
Increase (Decrease) in Accrued
Transmission Reserve 552,462 - - 552,462
Other Nonoperating Revenue (Expense) 444,829 105,505 - 550,334
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 6,985,314 $ 3,240,990 $ 11,215 $ 10,237,519
SCHEDULE OF NONCASH ACTIVITIES
FINANCING
Developers Contributions of Water Mains $ - $ - $ - $ -
Bond Issue Costs Deducted from
Bond Proceeds $ 25,452 $ 17,968 $ - $ 43,420
2016
48
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash Received from Customers $ 49,757,445 $ 5,964,902 $ - $ 55,722,347
Cash Received from Leased Plant and Property 398,472 32,328 - 430,800
Cash Paid to Suppliers (41,561,267) (2,437,717) (11,215) (44,010,199)
Cash Paid to Employees for Operating
Activities (2,142,933) (892,713) - (3,035,646)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 6,451,717 2,666,800 (11,215) 9,107,302
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Transfers to the City of Marshall (835,930) - - (835,930)
NET CASH PROVIDED BY (USED IN)
NONCAPITAL FINANCING
ACTIVITIES (835,930) - - (835,930)
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Payments for Property and Equipment (750,407) (1,719,444) - (2,469,851)
Payments to Employees Capitalized (442,889) (16,847) - (459,736)
Principal Payments on Long-Term Debt (3,026,650) (1,578,350) - (4,605,000)
Build America Bonds Federal Credit 44,805 25,203 - 70,008
Interest Paid (857,337) (699,307) - (1,556,644)
NET CASH PROVIDED BY (USED IN)
CAPITAL AND RELATED
FINANCING ACTIVITIES (5,032,478) (3,988,745) - (9,021,223)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Investments (15,134,296) (6,854,940) - (21,989,236)
Proceeds From Sale of Investments 13,892,467 7,758,280 - 21,650,747
Net Decrease (Increase) in Restricted Cash 486,973 22,118 - 509,091
Investment Income 427,164 168,676 - 595,840
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (327,692) 1,094,134 - 766,442
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 255,617 (227,811) (11,215) 16,591
CASH AND CASH EQUIVALENTS,
BEGINNING 321,180 227,811 - 548,991
CASH AND CASH EQUIVALENTS,
ENDING $ 576,797 $ - $ (11,215) $ 565,582
2015
49
MARSHALL MUNICIPAL UTILITIES
COMBINING SCHEDULE OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2015
ELECTRIC WATER MMU
DEPARTMENT DEPARTMENT ELIMINATIONS TOTAL
RECONCILIATION OF OPERATING
INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 3,117,257 $ 814,523 $ - $ 3,931,780
Adjustments to Reconcile Operating Income
to Net Cash Provided by Operating
Activities:
Depreciation 3,048,011 2,073,649 - 5,121,660
Capital Asset Activity Included in
Payables and Accruals 9,560 67,346 - 76,906
(Increase) Decrease in Accounts Receivable (14,624) (30,373) - (44,997)
(Increase) Decrease in Due From
City of Marshall 110,432 (21,519) - 88,913
(Increase) Decrease in Energy Efficiency
Loans Receivable 9,427 - - 9,427
(Increase) Decrease in Inventories 105,659 23,729 - 129,388
(Increase) Decrease in Prepaid Expenses 8,935 6,150 - 15,085
Increase (Decrease) in Accounts Payable (59,353) (201,192) (11,215) (271,760)
Increase (Decrease) in Due To
City of Marshall (137,706) (167,968) - (305,674)
Increase (Decrease) in Accrued Salaries
Payable (66,409) (27,704) - (94,113)
Increase (Decrease) in Customer and
Lease Deposits (1,200) (300) - (1,500)
Increase (Decrease) in Accrued Sick Leave (12,619) 14,477 - 1,858
Increase (Decrease) in Post Employment
Benefit Obligation 7,512 3,220 - 10,732
Increase (Decrease) in Accrued
Transmission Reserve 28,291 - 28,291
Other Nonoperating Revenue (Expense) 298,544 112,762 - 411,306
NET CASH PROVIDED BY
OPERATING ACTIVITIES $ 6,451,717 $ 2,666,800 $ (11,215) $ 9,107,302
SCHEDULE OF NONCASH ACTIVITIES
FINANCING
Developers Contributions of Water Mains $ - $ 158,005 $ - $ 158,005
Bond Issue Costs Deducted from
Bond Proceeds $ - $ - $ - $ -
2015
50
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF NET POSITION - ELECTRIC DEPARTMENT
DECEMBER 31, 2016 AND 2015
2016 2015
ASSETS
CAPITAL ASSETS
Electric Production Plant $ 2,823,673 $ 2,820,515
Electric Transmission System 16,404,370 16,404,370
Electric Distribution System 54,417,882 52,756,664
Transportation and General 7,328,556 7,211,834
Construction in Progress 155,260 962,175
81,129,741 80,155,558
Less: Accumulated Depreciation (39,485,538) (36,601,207)
NET CAPITAL ASSETS 41,644,203 43,554,351
CURRENT ASSETS
Cash and Cash Equivalents 415,571 576,797
Investments 20,723,978 18,058,592
Accrued Interest Receivable 110,237 94,946
Accounts Receivable 4,165,985 4,293,282
Due From City of Marshall 112,187 102,909
Energy Efficiency Loans Receivable 24,568 34,380
Material and Supply Inventories 526,790 502,670
Prepaid Expenses 77,174 86,596
TOTAL CURRENT ASSETS 26,156,490 23,750,172
NONCURRENT ASSETS
RESTRICTED ASSETS
Debt Service Reserve 2,655,106 3,039,034
Bond Sinking Fund 1,262,012 1,421,757
TOTAL RESTRICTED ASSETS 3,917,118 4,460,791
OTHER NONCURRENT ASSETS
Bond Discount 206,291 303,380
Less: Accumulated Amortization (152,696) (176,872)
TOTAL OTHER NONCURRENT ASSETS 53,595 126,508
TOTAL NONCURRENT ASSETS 3,970,713 4,587,299
TOTAL ASSETS 71,771,406 71,891,822
DEFERRED OUTFLOWS OF RESOURCES
Related to Pensions 1,116,389 244,826
51
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF NET POSITION - ELECTRIC DEPARTMENT
DECEMBER 31, 2016 AND 2015
2016 2015
LIABILITIES
LONG TERM DEBT
Series 2016A Revenue Bonds $ 4,285,000 $ -
Series 2012B Revenue Bonds 2,131,800 2,302,650
Series 2011C Revenue Bonds 3,030,000 3,280,000
Series 2010C Revenue Bonds 2,745,600 3,001,600
Series 2009A Revenue Bonds 1,797,000 1,986,000
Series 2008A Revenue Bonds 3,775,000 4,240,000
Series 2007A Revenue Bonds - 2,435,000
Series 2006A Revenue Bonds - 3,030,000
TOTAL BONDS OUTSTANDING 17,764,400 20,275,250
LESS CURRENT PORTION (1,904,496) (2,095,850)
LESS UNAMORTIZED REFUNDED BOND DISCOUNTS (3,742) -
TOTAL LONG-TERM DEBT 15,856,162 18,179,400
CURRENT LIABILITIES
Current Portion of Long-Term Debt 1,904,496 2,095,850
Accounts Payable 3,230,955 3,594,214
Due to City of Marshall 73,230 12,318
Accrued Interest Payable 311,695 377,101
Accrued Salaries Payable 133,251 126,467
Customer and Lease Deposits 60,674 61,574
TOTAL CURRENT LIABILITIES 5,714,301 6,267,524
OTHER NONCURRENT LIABILITIES
Accrued Transmission Reserve 580,753 28,291
Accrued Sick Leave 430,490 408,371
Post Employment Benefit Obligation 79,671 71,069
Net Pension Liability 2,682,684 1,734,071
TOTAL OTHER NONCURRENT LIABILITIES 3,773,598 2,241,802
TOTAL LIABILITIES 25,344,061 26,688,726
DEFERRED INFLOWS OF RESOURCES
Related to Pensions 315,547 208,270
NET POSITION
Net Investment in Capital Assets 23,879,803 23,279,101
Net Restricted for Debt Service and Construction 3,917,118 4,460,791
Unrestricted 19,431,263 17,499,760
TOTAL NET POSITION $ 47,228,184 $ 45,239,652
52
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
K.W.H. Generated
By Gas Turbine 97,000 0.02 % 85,000 0.01 %
K.W.H. Purchased 580,323,408 99.98 595,089,333 99.99
Total K.W.H. Produced & Purchased 580,420,408 100.00 595,174,333 100.00
K.W.H. Used For Station Power 117,720 0.02 116,600 0.02
Net K.W.H. Produced and Purchased 580,302,688 99.98 595,057,733 99.98
K.W.H. Sold On Line 572,499,415 98.64 587,485,240 98.71
K.W.H. Loss 7,803,273 1.34 % 7,572,493 1.27 %
% OF PER 1,000
OPERATING K.W.H.
2016 2015 REVENUE SOLD
OPERATING REVENUES
Marshall $ 47,691,421 $ 49,354,980 95.76 % $ 83.30
Transmission Credits 2,112,407 2,046,262 4.24 3.69
TOTAL 49,803,828 51,401,242 100.00 86.99
LEASED PLANT REVENUES
Revenues from Electric Plant
Leased to Others 411,202 398,358 0.83 0.72
Expenses of Electric Plant
Leased to Others (77,754) (77,365) (0.16) (0.14)
NET LEASED PLANT REVENUES 333,448 320,993 0.67 0.58
TOTAL OPERATING REVENUES 50,137,276 51,722,235 100.67 87.58
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 4,964 4,714 0.01 0.01
Maintenance 21,842 15,244 0.04 0.04
Insurance 2,110 3,748 0.00 0.00
Employees' Welfare 3,883 3,219 0.01 0.01
TOTAL PRODUCTION COST 32,799 26,925 0.06 0.06
PURCHASED POWER 33,695,042 36,374,069 67.66 58.86
TRANSMISSION COST
Operations Supervision 10,530 11,539 0.02 0.02
Maintenance Supervision 17,132 17,475 0.03 0.03
Transmission by Others 6,443,652 5,319,893 12.94 11.26
Load Dispatching 19,846 19,969 0.04 0.04
Operating Supervision 127,208 124,105 0.26 0.22
Maintenance of Lines 46,349 42,313 0.09 0.08
Station Expense 68,523 56,390 0.14 0.12
Equipment Maintenance 12,552 11,835 0.03 0.02
Outside Services 23,900 31,095 0.05 0.04
Travel 1,982 1,235 0.00 0.00
Insurance 13,452 22,452 0.03 0.02
Employees' Welfare 60,953 56,393 0.12 0.11
Other General Expense 2,806 125 0.01 0.01
TOTAL TRANSMISSION COST 6,848,885 5,714,819 13.76 11.96
53
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
% OF PER 1,000
OPERATING K.W.H.
2016 2015 REVENUE SOLD
OPERATING EXPENSE (Cont'd)
DISTRIBUTION COST
Operation Supervision $ 29,719 $ 18,736 0.06 % $ 0.05
Maintenance Supervision 52,073 52,426 0.10 0.09
Load Dispatching 59,689 64,038 0.12 0.10
Maintenance of Lines 585,777 667,135 1.18 1.02
Station Expense 113,137 117,365 0.23 0.20
Equipment Maintenance 111,978 163,482 0.22 0.20
Outside Services 15,846 43,796 0.03 0.03
Travel 12,013 15,836 0.02 0.02
Insurance 50,752 81,244 0.10 0.09
Employees' Welfare 287,222 316,864 0.58 0.50
Other General Expense 31,713 29,470 0.06 0.06
TOTAL DISTRIBUTION COST 1,349,919 1,570,392 2.70 2.36
DEMAND SIDE MANAGEMENT
Customer Installation Expense 4,123 2,657 0.01 0.01
Energy Efficiency Rebates 482,007 335,735 0.97 0.84
Advertising 9,783 13,337 0.02 0.02
Outside Services 25,762 20,784 0.05 0.05
Travel 4,530 501 0.01 0.01
Insurance 74 291 0.00 0.00
Employees' Welfare 1,901 2,765 0.00 0.00
Other General Expense 3,000 1,195 0.01 0.01
TOTAL DEMAND SIDE
MANAGEMENT 531,180 377,265 1.07 0.93
CUSTOMER SERVICE AND INFORMATION
Customer Records and Collection Salaries 194,460 198,554 0.39 0.34
Meter Reading Salaries 40,201 32,167 0.08 0.07
Customer Installation Expense Salaries 86,037 82,615 0.17 0.15
General Office Expense 143,500 153,285 0.30 0.25
Employees' Welfare 119,883 121,498 0.25 0.21
Outside Services 25,682 24,675 0.06 0.05
TOTAL CUSTOMER SERVICE
AND INFORMATION 609,763 612,794 1.25 1.07
ADMINISTRATIVE AND GENERAL
Salaries of Executives 267,494 252,332 0.54 0.47
General Office Salaries 146,291 143,444 0.29 0.26
General Office Expense 74,477 61,364 0.15 0.13
Insurance 12,073 16,439 0.02 0.02
Employees' Welfare 172,324 162,657 0.35 0.30
Outside Services 53,186 76,072 0.11 0.09
Travel 22,161 14,333 0.04 0.04
Other General Expense 226,926 200,707 0.46 0.40
TOTAL ADMINISTRATIVE
AND GENERAL 974,932 927,348 1.96 1.70
DEPRECIATION 3,037,058 3,001,366 6.09 5.31
TOTAL OPERATING EXPENSE 47,079,578 48,604,978 94.55 82.24
OPERATING INCOME 3,057,698 3,117,257 6.12 5.34
54
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
% OF PER 1,000
OPERATING K.W.H.
2016 2015 REVENUE SOLD
NONOPERATING REVENUES
Allowance For Funds Used During
Construction $ 20,389 $ 50,059 0.04 % $ 0.04
Investment Income 404,880 413,096 0.81 0.71
Build America Bonds Federal Credit 42,400 44,805 0.09 0.07
Change in Fair Market Value of Investments (241,093) (182,358) (0.48) (0.42)
Penalties Collected 56,997 57,438 0.11 0.10
Lease and Rental Income 114 114 0.00 0.00
Miscellaneous Income 423,967 287,004 0.85 0.74
Nonoperating Pension Grant Revenue 10,443 - 0.02 0.02
TOTAL NONOPERATING REVENUES 718,097 670,158 1.44 1.26
NONOPERATING EXPENSE
Interest Expense 678,596 806,312 1.36 1.19
Amortization of Deferred Charges 12,900 24,849 0.03 0.02
Uncollectible Accounts 36,249 46,012 0.07 0.06
Nonoperating Pension Expense 194,772 33,760 0.39 0.34
TOTAL NONOPERATING EXPENSE 922,517 910,933 1.85 1.61
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 2,853,278 2,876,482 5.71 % $ 4.98
Transfers to the General Fund, City of Marshall (864,746) (835,930)
CHANGE IN NET POSTION 1,988,532 2,040,552
NET POSITION, BEGINNING OF YEAR,
AS ORIGINALLY STATED 45,239,652 44,862,854
PRIOR PERIOD ADJUSTMENT (GASB 68) - (1,663,754)
NET POSITION, BEGINNING OF YEAR,
AS RESTATED 45,239,652 43,199,100
NET POSITION, ENDING $ 47,228,184 $ 45,239,652
55
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF CASH FLOWS - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers $ 48,263,067 $ 49,757,445
Cash Received from Leased Plant and Property 411,316 398,472
Cash Paid to Suppliers (39,599,649) (41,561,267)
Cash Paid to Employees for Operating Activities (2,089,420) (2,142,933)
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,985,314 6,451,717
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Transfers to the City of Marshall (864,746) (835,930)
NET CASH PROVIDED BY (USED IN) NONCAPITAL
FINANCING ACTIVITIES (864,746) (835,930)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments for Property and Equipment (718,758) (750,407)
Payments to Employees Capitalized (433,638) (442,889)
Principal Payments on Long-Term Debt (6,795,850) (3,026,650)
Proceeds from the Issuance of Long-Term Debt 4,285,000 -
Build America Bonds Federal Credit 42,400 44,805
Bond Premiums (Discounts) 55,504 -
Interest Paid (743,235) (857,337)
NET CASH PROVIDED BY ( USED IN) CAPITAL AND RELATED
FINANCING ACTIVITIES (4,308,577) (5,032,478)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Investments (20,367,387) (15,134,296)
Proceeds From Sale of Investments 17,489,984 13,892,467
Net Decrease (Increase) in Restricted Cash 514,597 486,973
Investment Income 389,589 427,164
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,973,217) (327,692)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (161,226) 255,617
CASH AND CASH EQUIVALENTS, BEGINNING 576,797 321,180
CASH AND CASH EQUIVALENTS, ENDING $ 415,571 $ 576,797
56
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF CASH FLOWS - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 3,057,698 $ 3,117,257
Adjustments to Reconcile Operating Income to
Net Cash Provided by Operating Activities:
Depreciation 3,083,703 3,048,011
Capital Asset Activity Included in Payables and Accruals (769) 9,560
(Increase) Decrease in Accounts Receivable 127,297 (14,624)
(Increase) Decrease in Due From City of Marshall (9,278) 110,432
(Increase) Decrease in Energy Efficiency Loans Receivable 9,812 9,427
(Increase) Decrease in Inventories (24,120) 105,659
(Increase) Decrease in Prepaid Expenses 9,422 8,935
Increase (Decrease) in Accounts Payable (363,259) (59,353)
Increase (Decrease) in Due To City of Marshall 60,912 (137,706)
Increase (Decrease) in Accrued Salaries Payable 6,784 (66,409)
Increase (Decrease) in Customer Deposits (900) (1,200)
Increase (Decrease) in Accrued Sick Leave 22,119 (12,619)
Increase (Decrease) in Post Retirement Benefit Obligation 8,602 7,512
Increase (Decrease) in Accrued Transmission Reserve 552,462 28,291
Other Nonoperating Revenue (Expense) 444,829 298,544
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 6,985,314 $ 6,451,717
SCHEDULE OF NONCASH ACTIVITIES
FINANCING
Bond Issue Costs Deducted from Bond Proceeds $ 25,452 $ -
57
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Actual Budget Variance % Variance
OPERATING REVENUES
Marshall $ 47,691,421 $ 49,222,700 $ (1,531,279) (3.11) %
Transmission Credits 2,112,407 - 2,112,407 -
TOTAL 49,803,828 49,222,700 581,128 1.18
LEASED PLANT REVENUES
Revenues from Electric Plant
Leased to Others 411,202 400,200 11,002 2.75
Expenses of Electric Plant
Leased to Others (77,754) (84,145) 6,391 (7.60)
NET LEASED PLANT REVENUES 333,448 316,055 17,393 5.50
TOTAL OPERATING REVENUES 50,137,276 49,538,755 598,521 1.21
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 4,964 5,200 (236) (4.54)
Maintenance 21,842 17,200 4,642 26.99
Insurance 2,110 3,900 (1,790) (45.90)
Employees' Welfare 3,883 2,800 1,083 38.68
TOTAL PRODUCTION COST 32,799 29,100 3,699 12.71
PURCHASED POWER 33,695,042 34,787,300 (1,092,258) (3.14)
TRANSMISSION COST
Operations Supervision 10,530 10,600 (70) (0.66)
Maintenance Supervision 17,132 18,000 (868) (4.82)
Transmission by Others 6,443,652 4,853,200 1,590,452 32.77
Load Dispatching 19,846 20,200 (354) (1.75)
Operating Supervision 127,208 - 127,208 -
Maintenance of Lines 46,349 39,200 7,149 18.24
Station Expense 68,523 60,900 7,623 12.52
Equipment Maintenance 12,552 11,800 752 6.37
Outside Services 23,900 80,000 (56,100) (70.13)
Travel 1,982 4,500 (2,518) (55.96)
Insurance 13,452 24,600 (11,148) (45.32)
Employees' Welfare 60,953 57,300 3,653 6.38
Other General Expense 2,806 2,200 606 27.55
TOTAL TRANSMISSION COST 6,848,885 5,182,500 1,666,385 32.15
DISTRIBUTION COST
Operation Supervision 29,719 31,000 (1,281) (4.13)
Maintenance Supervision 52,073 53,900 (1,827) (3.39)
Load Dispatching 59,689 63,500 (3,811) (6.00)
Maintenance of Lines 585,777 662,200 (76,423) (11.54)
Station Expense 113,137 158,400 (45,263) (28.58)
Equipment Maintenance 111,978 140,500 (28,522) (20.30)
Outside Services 15,846 73,500 (57,654) (78.44)
Travel 12,013 27,200 (15,187) (55.83)
Insurance 50,752 91,000 (40,248) (44.23)
Employees' Welfare 287,222 301,600 (14,378) (4.77)
Other General Expense 31,713 32,200 (487) (1.51)
TOTAL DISTRIBUTION COST 1,349,919 1,635,000 (285,081) (17.44)
ACTUAL TO BUDGET COMPARISON
58
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Actual Budget Variance % Variance
OPERATING EXPENSE (Cont'd)
DEMAND SIDE MANAGEMENT
Customer Installation Expense $ 4,123 $ 2,100 $ 2,023 96.33 %
Energy Efficiency Rebates 482,007 375,000 107,007 28.54
Advertising 9,783 13,500 (3,717) (27.53)
Outside Services 25,762 22,000 3,762 17.10
Travel 4,530 4,000 530 13.25
Insurance 74 50 24 48.00
Employees' Welfare 1,901 600 1,301 216.83
Other General Expense 3,000 2,000 1,000 50.00
TOTAL DEMAND SIDE
MANAGEMENT 531,180 419,250 111,930 26.70
CUSTOMER SERVICE AND INFORMATION
Customer Records and Collection Salaries 194,460 196,200 (1,740) (0.89)
Meter Reading Salaries 40,201 33,500 6,701 20.00
Customer Installation Expense Salaries 86,037 84,300 1,737 2.06
General Office Expense 143,500 173,500 (30,000) (17.29)
Employees' Welfare 119,883 125,900 (6,017) (4.78)
Outside Services 25,682 25,600 82 0.32
TOTAL CUSTOMER SERVICE
AND INFORMATION 609,763 639,000 (29,237) (4.58)
ADMINISTRATIVE AND GENERAL
Salaries of Executives 267,494 271,200 (3,706) (1.37)
General Office Salaries 146,291 150,300 (4,009) (2.67)
General Office Expense 74,477 71,500 2,977 4.16
Insurance 12,073 20,300 (8,227) (40.53)
Employees' Welfare 172,324 161,600 10,724 6.64
Outside Services 53,186 50,100 3,086 6.16
Travel 22,161 20,000 2,161 10.81
Other General Expense 226,926 259,700 (32,774) (12.62)
TOTAL ADMINISTRATIVE
AND GENERAL 974,932 1,004,700 (29,768) (2.96)
DEPRECIATION 3,037,058 3,067,355 (30,297) (0.99)
TOTAL OPERATING EXPENSE 47,079,578 46,764,205 315,373 0.67
OPERATING INCOME 3,057,698 2,774,550 283,148 10.21
ACTUAL TO BUDGET COMPARISON
59
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - ELECTRIC DEPARTMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Actual Budget Variance % Variance
NONOPERATING REVENUES
Allowance For Funds Used During
Construction $ 20,389 $ 13,000 $ 7,389 56.84 %
Investment Income 404,880 384,200 20,680 5.38
Build America Bonds Federal Credit 42,400 41,900 500 1.19
Change in Fair Market Value of Investments (241,093) - (241,093) -
Penalties Collected 56,997 62,200 (5,203) (8.36)
Lease and Rental Income 114 - 114 -
Miscellaneous Income 423,967 305,500 118,467 38.78
Nonoperating Pension Grant Revenue 10,443 - 10,443 -
TOTAL NONOPERATING REVENUES 718,097 806,800 (88,703) (10.99)
NONOPERATING EXPENSE
Interest Expense 678,596 717,600 (39,004) (5.44)
Amortization of Deferred Charges 12,900 23,800 (10,900) (45.80)
Uncollectible Accounts 36,249 48,400 (12,151) (25.11)
Nonoperating Pension Expense 194,772 - 194,772 -
TOTAL NONOPERATING EXPENSE 922,517 789,800 132,717 16.80
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 2,853,278 2,791,550 61,728 2.21
Transfers to the General Fund, City of Marshall (864,746) (1,346,200) 481,454 (35.76)
CHANGE IN NET POSITION 1,988,532 1,445,350 $ 543,182 37.58 %
NET POSITION, BEGINNING 45,239,652 45,239,652
NET POSITION, ENDING $ 47,228,184 $ 46,685,002
ACTUAL TO BUDGET COMPARISON
60
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF NET POSITION - WATER DEPARTMENT
DECEMBER 31, 2016 AND 2015
2016 2015
ASSETS
CAPITAL ASSETS
Water Utility $ 53,938,253 $ 53,381,173
Transportation and General 1,288,920 1,225,448
Construction in Progress 970,342 389,854
56,197,515 54,996,475
Less: Accumulated Depreciation (29,552,527) (27,892,415)
NET CAPITAL ASSETS 26,644,988 27,104,060
CURRENT ASSETS
Cash and Cash Equivalents 253,313 -
Investments 4,855,462 5,273,766
Accrued Interest Receivable 42,991 38,594
Accounts Receivable 877,959 819,556
Due From City of Marshall 21,525 33,189
Material and Supply Inventories 167,046 161,937
Prepaid Expenses 56,550 60,946
TOTAL CURRENT ASSETS 6,274,846 6,387,988
NONCURRENT ASSETS
RESTRICTED ASSETS
Debt Service Reserve 1,526,964 1,802,666
Bond Sinking Fund 1,147,131 1,097,973
TOTAL RESTRICTED ASSETS 2,674,095 2,900,639
OTHER NONCURRENT ASSETS
Bond Discount 93,193 153,314
Less: Accumulated Amortization (49,085) (58,587)
TOTAL OTHER NONCURRENT ASSETS 44,108 94,727
NET DEFERRED CHARGES AND OTHER ASSETSTOTAL NONCURRENT ASSETS 2,718,203 2,995,366
TOTAL ASSETS 35,638,037 36,487,414
DEFERRED OUTFLOWS OF RESOURCES
Related to Pensions 478,452 104,926
61
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF NET POSITION- WATER DEPARTMENT
DECEMBER 31, 2016 AND 2015
2016 2015
LIABILITIES
LONG TERM DEBT
Series 2016A Revenue Bonds $ 3,025,000 $ -
Series 2014A Revenue Bonds 3,595,000 3,825,000
Series 2013B Revenue Bonds 5,200,000 5,560,000
Series 2012C Revenue Bonds 1,055,000 1,385,000
Series 2012B Revenue Bonds 2,048,200 2,212,350
Series 2010C Revenue Bonds 1,544,400 1,688,400
Series 2009A Revenue Bonds 1,198,000 1,324,000
Series 2007B Revenue Bonds - 3,520,000
TOTAL BONDS OUTSTANDING 17,665,600 19,514,750
LESS CURRENT PORTION (1,755,504) (1,549,150)
LESS UNAMORTIZED REFUNDED BOND DISCOUNTS (48,841) (54,516)
TOTAL LONG-TERM DEBT 15,861,255 17,911,084
CURRENT LIABILITIES
Current Portion of Long-Term Debt 1,755,504 1,549,150
Checks Issued in Excess of Bank Balance - 11,215
Accounts Payable 87,019 97,985
Due To City of Marshall 785,556 720,312
Accrued Interest Payable 274,597 316,726
Accrued Salaries Payable 52,713 58,775
Customer and Lease Deposits 23,417 38,878
TOTAL CURRENT LIABILITIES 2,978,806 2,793,041
OTHER NONCURRENT LIABILITIES
Accrued Sick Leave 210,930 191,169
Post Employment Benefit Obligation 34,145 30,458
Net Pension Liability 1,149,722 743,173
TOTAL OTHER NONCURRENT LIABILITIES 1,394,797 964,800
TOTAL LIABILITIES 20,234,858 21,668,925
DEFERRED INFLOWS OF RESOURCES
Related to Pensions 135,234 89,258
NET POSITION
Net Investment in Capital Assets 8,979,388 7,589,310
Net Restricted for Debt Service and Construction 2,674,095 2,900,639
Unrestricted 4,092,917 4,344,208
TOTAL NET POSITION $ 15,746,400 $ 14,834,157
62
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - WATER DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
CUBIC FEET PUMPED 164,775,112 100.00 % 155,885,161 100.00 %
CUBIC FEET SOLD
Residential 35,703,772 35,689,613
Commercial 13,449,490 12,984,810
Industrial I 95,424,600 83,162,800
Industrial II 12,754,545 17,376,872
TOTAL CUBIC FEET SOLD 157,332,407 95.48 % 149,214,095 95.72 %
DISTRIBUTION LOSS 7,442,705 4.52 % 6,671,066 4.28 %
% OF PER 1,000
OPERATING CU. FT
2016 2015 REVENUE SOLD
OPERATING REVENUES
Marshall $ 6,210,316 $ 5,936,660 100.00 % $ 39.47
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 52,582 53,347 0.85 0.33
Station Labor 177,917 174,784 2.86 1.13
Water Treatment 255,316 239,796 4.11 1.62
Operating Supplies 16,823 9,328 0.27 0.11
Maintenance 267,380 212,153 4.31 1.70
Lime Sludge Disposal 84,242 73,189 1.36 0.54
Power For Pumping 289,262 270,212 4.66 1.84
Conservation Rebates 14,765 15,959 0.24 0.09
Outside Services 25,133 49,513 0.40 0.16
Insurance 8,518 11,598 0.14 0.05
Employees' Welfare 118,412 117,349 1.91 0.75
Other General Expense 42,728 43,300 0.69 0.27
TOTAL PRODUCTION COST 1,353,078 1,270,528 21.80 8.60
PURCHASED WATER 279,707 350,377 4.50 1.78
DISTRIBUTION COST
Operations Supervision 43,782 40,085 0.70 0.28
Maintenance Supervision 53,274 54,327 0.86 0.34
Maintenance of Mains 536,246 571,937 8.63 3.41
Equipment Maintenance 41,925 36,178 0.68 0.27
Outside Services 2,320 113 0.04 0.01
Travel 2,369 1,710 0.04 0.02
Insurance 23,098 39,843 0.37 0.15
Employees' Welfare 95,316 90,332 1.53 0.61
Other General Expense 6,362 6,136 0.10 0.04
TOTAL DISTRIBUTION COST 804,692 840,661 12.95 5.11
CUSTOMER SERVICE AND INFORMATION
Customer Records and Collection Salaries 83,331 84,966 1.34 0.53
Meter Reading Salaries 29,665 26,269 0.48 0.19
General Office Expense 65,923 70,025 1.06 0.42
Employees' Welfare 48,942 48,492 0.79 0.31
Outside Services 11,007 10,575 0.18 0.07
TOTAL CUSTOMER SERVICE
AND INFORMATION 238,868 240,327 3.85 1.52
63
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF REVENUES, EXPENSES AND CHANGES IN NET POSTION - WATER DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
% OF PER 1,000
OPERATING CU. FT
2016 2015 REVENUE SOLD
OPERATING EXPENSE (Cont'd)
ADMINISTRATIVE AND GENERAL
Salaries of Executives $ 112,307 $ 107,239 1.81 % $ 0.71
General Office Salaries 62,686 61,411 1.01 0.40
General Office Expense 3,762 2,372 0.06 0.02
Insurance 3,902 3,919 0.06 0.02
Employees' Welfare 69,507 63,759 1.12 0.44
Outside Services 36,680 30,762 0.59 0.23
Travel 8,763 4,862 0.14 0.06
Other General Expense 98,415 72,271 1.58 0.63
TOTAL ADMINISTRATIVE
AND GENERAL 396,022 346,595 6.37 2.52
DEPRECIATION 1,750,369 2,073,649 28.18 11.13
TOTAL OPERATING EXPENSE 4,822,736 5,122,137 77.65 30.65
OPERATING INCOME 1,387,580 814,523 22.35 8.82
NONOPERATING REVENUES
Allowance For Funds Used During
Construction 14,327 157,996 0.23 0.09
Investment Income 125,718 159,300 2.02 0.80
Build America Bonds Federal Credit 23,867 25,203 0.38 0.15
Change in Fair Market Value of Investments (57,322) (75,723) (0.92) (0.36)
Penalties Collected 21,799 23,063 0.35 0.14
Lease and Rental Income 32,328 32,328 0.52 0.21
Connection Fees 2,265 2,725 0.04 0.01
Miscellaneous Income 52,387 62,660 0.84 0.33
Nonoperating Pension Grant Revenue 4,476 - 0.07 0.03
TOTAL NONOPERATING REVENUES 219,845 387,552 3.53 1.40
NONOPERATING EXPENSES
Interest Expense 603,208 665,268 9.71 3.83
Amortization of Deferred Charges 5,226 13,178 0.08 0.03
Uncollectible Accounts 3,274 8,014 0.05 0.02
Nonoperating Pension Expense 83,474 14,469 1.34 0.53
TOTAL NONOPERATING EXPENSES 695,182 700,929 11.18 4.42
INCOME BEFORE CONTRIBUTIONS
AND TRANSFERS 912,243 501,146 14.70 % $ 5.80
Capital Contributions Received (Disbursed) - 158,005
CHANGE IN NET POSTION 912,243 659,151
NET POSITION, BEGINNING OF YEAR,
AS ORIGINALLY STATED 14,834,157 14,888,043
PRIOR PERIOD ADJUSTMENT (GASB 68) - (713,037)
NET POSITION, BEGINNING OF YEAR,
AS RESTATED 14,834,157 14,175,006
NET POSTION, ENDING $ 15,746,400 $ 14,834,157
64
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF CASH FLOWS - WATER DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers $ 6,221,293 $ 5,964,902
Cash Received from Leased Plant and Property 32,328 32,328
Cash Paid to Suppliers (2,126,779) (2,437,717)
Cash Paid to Employees for Operating Activities (885,852) (892,713)
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,240,990 2,666,800
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Payments for Property and Equipment (1,260,124) (1,719,444)
Payments to Employees Capitalized (16,847) (16,847)
Principal Payments on Long-Term Debt (4,874,150) (1,578,350)
Proceeds from the Issuance of Long-Term Debt 3,025,000 -
Build America Bonds Federal Credit 23,867 25,203
Bond Premiums (Discounts) 39,184 -
Interest Paid (633,454) (699,307)
NET CASH PROVIDED BY (USED IN) CAPITAL AND RELATED
FINANCING ACTIVITIES (3,696,524) (3,988,745)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Investments (4,886,169) (6,854,940)
Proceeds From Sale of Investments 5,276,719 7,758,280
Net Decrease (Increase) in Restricted Cash 196,976 22,118
Investment Income 121,321 168,676
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 708,847 1,094,134
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 253,313 (227,811)
CASH AND CASH EQUIVALENTS, BEGINNING - 227,811
CASH AND CASH EQUIVALENTS, ENDING $ 253,313 $ -
65
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF CASH FLOWS - WATER DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating Income $ 1,387,580 $ 814,523
Adjustments to Reconcile Operating Income to
Net Cash Provided by Operating Activities:
Depreciation 1,750,369 2,073,649
Capital Asset Activity Included in Payables and Accruals - 67,346
(Increase) Decrease in Accounts Receivable (58,403) (30,373)
(Increase) Decrease in Due From City of Marshall 11,664 (21,519)
(Increase) Decrease in Inventories (5,109) 23,729
(Increase) Decrease in Prepaid Expenses 4,396 6,150
Increase (Decrease) in Accounts Payable (22,181) (201,192)
Increase (Decrease) in Due To City of Marshall 65,244 (167,968)
Increase (Decrease) in Accrued Salaries Payable (6,062) (27,704)
Increase (Decrease) in Customer and Lease Deposits (15,461) (300)
Increase (Decrease) in Accrued Sick Leave 19,761 14,477
Increase (Decrease) in Post Employment Benefit Obligation 3,687 3,220
Other Nonoperating Revenue (Expense) 105,505 112,762
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,240,990 $ 2,666,800
SCHEDULE OF NONCASH ACTIVITIES
FINANCING
Developers Contributions of Water Mains $ - $ 158,005
Bond Issue Costs Deducted from Bond Proceeds $ 17,968 $ -
66
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - WATER DEPARTMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Actual Budget Variance % Variance
OPERATING REVENUES
Marshall $ 6,210,316 $ 5,834,100 $ 376,216 6.45 %
OPERATING EXPENSE
PRODUCTION COST
Operating Supervision 52,582 52,900 (318) (0.60)
Station Labor 177,917 179,700 (1,783) (0.99)
Water Treatment 255,316 258,800 (3,484) (1.35)
Operating Supplies 16,823 15,800 1,023 6.47
Maintenance 267,380 260,700 6,680 2.56
Lime Sludge Disposal 84,242 72,000 12,242 17.00
Power For Pumping 289,262 298,500 (9,238) (3.09)
Conservation Rebates 14,765 15,000 (235) (1.57)
Outside Services 25,133 25,000 133 0.53
Insurance 8,518 14,800 (6,282) (42.45)
Employees' Welfare 118,412 113,400 5,012 4.42
Other General Expense 42,728 43,900 (1,172) (2.67)
TOTAL PRODUCTION COST 1,353,078 1,350,500 2,578 0.19
PURCHASED WATER 279,707 366,000 (86,293) (23.58)
DISTRIBUTION COST
Operating Supervision 43,782 43,500 282 0.65
Maintenance Supervision 53,274 55,500 (2,226) (4.01)
Maintenance of Mains 536,246 570,100 (33,854) (5.94)
Equipment Maintenance 41,925 40,900 1,025 2.51
Outside Services 2,320 - 2,320 -
Travel 2,369 3,400 (1,031) (30.32)
Insurance 23,098 47,700 (24,602) (51.58)
Employees' Welfare 95,316 93,100 2,216 2.38
Other General Expense 6,362 5,000 1,362 27.24
TOTAL DISTRIBUTION COST 804,692 859,200 (54,508) (6.34)
CUSTOMER SERVICE AND INFORMATION
Customer Records and Collection Salaries 83,331 84,100 (769) (0.91)
Meter Reading Salaries 29,665 27,400 2,265 8.27
General Office Expense 65,923 76,100 (10,177) (13.37)
Employees' Welfare 48,942 52,600 (3,658) (6.95)
Outside Services 11,007 11,000 7 0.06
TOTAL CUSTOMER SERVICE
AND INFORMATION 238,868 251,200 (12,332) (4.91)
ADMINISTRATIVE AND GENERAL
Salaries of Executives 112,307 113,400 (1,093) (0.96)
General Office Salaries 62,686 64,200 (1,514) (2.36)
General Office Expense 3,762 4,500 (738) (16.40)
Insurance 3,902 6,000 (2,098) (34.97)
Employees' Welfare 69,507 62,100 7,407 11.93
Outside Services 36,680 31,900 4,780 14.98
Travel 8,763 5,200 3,563 68.52
Other General Expense 98,415 102,350 (3,935) (3.84)
TOTAL ADMINISTRATIVE
AND GENERAL 396,022 389,650 6,372 1.64
DEPRECIATION 1,750,369 1,816,000 (65,631) (3.61)
TOTAL OPERATING EXPENSE 4,822,736 5,032,550 (209,814) (4.17)
OPERATING INCOME 1,387,580 801,550 586,030 73.11
ACTUAL TO BUDGET COMPARISON
67
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - WATER DEPARTMENT
FOR THE YEAR ENDED DECEMBER 31, 2016
Actual Budget Variance % Variance
NONOPERATING REVENUES
Allowance For Funds Used During
Construction $ 14,327 $ 27,100 $ (12,773) (47.13) %
Investment Income 125,718 138,000 (12,282) (8.90)
Build America Bonds Federal Credit 23,867 23,600 267 1.13
Change in Fair Market Value of Investments (57,322) - (57,322) -
Penalties Collected 21,799 24,300 (2,501) (10.29)
Lease and Rental Income 32,328 32,300 28 0.09
Connection Fees 2,265 3,700 (1,435) (38.78)
Miscellaneous Income 52,387 65,600 (13,213) (20.14)
Nonoperating Pension Grant Revenue 4,476 - 4,476 -
TOTAL NONOPERATING REVENUES 219,845 314,600 (94,755) (30.12)
NONOPERATING EXPENSES
Interest Expense 603,208 624,600 (21,392) (3.42)
Amortization of Deferred Charges 5,226 13,200 (7,974) (60.41)
Uncollectible Accounts 3,274 8,100 (4,826) (59.58)
Nonoperating Pension Expense 83,474 - 83,474 -
TOTAL OTHER EXPENSES 695,182 645,900 49,282 7.63
CHANGE IN NET POSITION 912,243 470,250 $ 441,993 93.99 %
NET POSITION, BEGINNING 14,834,157 14,834,157
NET POSTION, ENDING $ 15,746,400 $ 15,304,407
ACTUAL TO BUDGET COMPARISON
68
OTHER SUPPLEMENTARY FINANCIAL INFORMATION
MARSHALL MUNICIPAL UTILITIES
OPERATING STATISTICS - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 ANALYSIS OF REVENUE PER K.W.H. SOLD
Amount Average % To Total Meters In
K.W.H. Billed Per K.W.H. K.W.H. Amount Service
Residential 35,757,787 $ 3,949,201 $ 0.1104 6.25 % 8.28 % 3,789
Residential All Electric 21,801,290 2,148,366 0.0985 3.81 4.50 1,650
Residential Interruptible 2,186,793 190,688 0.0872 0.38 0.40 119
Commercial Electric 34,099,601 3,726,121 0.1093 5.96 7.81 945
Commercial Interruptible 485,811 32,689 0.0673 0.08 0.07 13
Demand Metered - Small 38,462,824 4,446,081 0.1156 6.72 9.32 68
Demand Interruptible - Small 2,633,720 261,984 0.0995 0.46 0.55 6
Demand Metered - Large 85,483,450 7,371,131 0.0862 14.93 15.46 12
Demand Interruptible - Large 21,279,900 1,271,150 0.0597 3.72 2.67 4
Industrial 329,056,000 24,012,838 0.0730 57.48 50.35 1
TOTAL 571,247,176 47,410,249 0.0830 99.79 99.41 6,607
Street Lights 1,252,239 281,172 0.2245 0.21 0.59
TOTAL SALES 572,499,415 $ 47,691,421 0.0833 100.00 % 100.00 %
2015 ANALYSIS OF REVENUE PER K.W.H. SOLD
Amount Average % To Total Meters In
K.W.H. Billed Per K.W.H. K.W.H. Amount Service
Residential 35,010,463 $ 3,939,699 $ 0.1125 5.96 % 7.98 % 3,779
Residential All Electric 21,933,505 2,147,953 0.0979 3.73 4.35 1,646
Residential Interruptible 2,173,533 190,765 0.0878 0.37 0.39 120
Commercial Electric 34,746,859 3,817,712 0.1099 5.91 7.74 939
Commercial Interruptible 462,159 30,996 0.0671 0.08 0.06 13
Demand Metered - Small 36,350,479 4,305,723 0.1185 6.19 8.72 65
Demand Interruptible - Small 2,981,890 300,118 0.1006 0.51 0.61 7
Demand Metered - Large 90,436,950 7,960,091 0.0880 15.39 16.13 12
Demand Interruptible - Large 21,564,400 1,293,807 0.0600 3.67 2.62 4
Industrial 340,606,000 25,086,944 0.0737 57.98 50.83 1
TOTAL 586,266,238 49,073,808 0.0837 99.79 99.43 6,586
Street Lights 1,219,002 281,172 0.2307 0.21 0.57
TOTAL SALES 587,485,240 $ 49,354,980 0.0840 100.00 % 100.00 %
69
MARSHALL MUNICIPAL UTILITIES
OPERATING STATISTICS - ELECTRIC DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
Name Plate
Unit Started Unit Size And Type Unit
Number Operation General Electric Gas Turbine Capacity
6 1969 21,176 K.W.
2016
Accredited Running Unit
Unit Unit K.W.H. Hours In Capacity Gallons Of K.W.H.
Number Capacity Generated Operation Factor Fuel Used Per Gallon
6 15,600 97,000 6.13 101.43 % 10,641 9.12
ANNUAL MAXIMUM 30 MINUTE PEAK DEMAND 83,428
ANNUAL SYSTEM LOAD FACTOR 82.53%
2015
Accredited Running Unit
Unit Unit K.W.H. Hours In Capacity Gallons Of K.W.H.
Number Capacity Generated Operation Factor Fuel Used Per Gallon
6 15,600 85,000 5.45 99.98 % 8,680 9.79
ANNUAL MAXIMUM 30 MINUTE PEAK DEMAND 83,330
ANNUAL SYSTEM LOAD FACTOR 82.26%
70
MARSHALL MUNICIPAL UTILITIES
OPERATING STATISTICS - WATER DEPARTMENT
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 ANALYSIS OF REVENUE PER CUBIC FOOT SOLD
Amount Average % To Total Meters In
Cubic Feet Billed Per Cu. Ft Cu. Ft Amount Service
Residential 35,703,772 $ 2,054,558 $ 0.0575 22.69 % 33.08 % 4,113Commercial 13,449,490 650,048 0.0483 8.55 10.47 511Industrial I 95,424,600 2,937,263 0.0308 60.65 47.30 104Industrial II 12,754,545 387,664 0.0304 8.11 6.24 1 TOTAL 157,332,407 6,029,533 0.0383 100.00 97.09 4,729
Fire Protection Unmeasured 180,783 2.91
TOTAL SALES 157,332,407 $ 6,210,316 0.0395 100.00 % 100.00 %
2015 ANALYSIS OF REVENUE PER CUBIC FOOT SOLD
Amount Average % To Total Meters In
Cubic Feet Billed Per Cu. Ft Cu. Ft Amount Service
Residential 35,689,613 $ 2,023,250 $ 0.0567 23.92 % 34.08 % 4,097
Commercial 12,984,810 631,612 0.0486 8.70 10.64 499
Industrial I 83,162,800 2,594,364 0.0312 55.73 43.70 104
Industrial II 17,376,872 507,361 0.0292 11.65 8.55 1
TOTAL 149,214,095 5,756,587 0.0386 100.00 96.97 4,701
Fire Protection Unmeasured 180,073 3.03
TOTAL SALES 149,214,095 $ 5,936,660 0.0398 100.00 % 100.00 %
71
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
Original Unrealized Fair
Cost Gain (Loss) Value
Investments
Wells Capital Management
Electric Unrestricted Designated Investments
US Treasury Notes $ 3,582,259 $ (77,999) $ 3,504,260
Federal Agency Bonds and Notes 838,356 (36,592) 801,764
Federal Agency Mortgage Pools 380,178 (7,575) 372,603
Mortgage Backed Securities 121,205 4,799 126,004
Municipal Bonds 4,723,988 5,935 4,729,923
Money Market Account 177,191 - 177,191
Total Electric Unrestricted Designated Investments 9,823,177 (111,432) 9,711,745
Total Wells Capital Management 9,823,177 (111,432) 9,711,745
Bremer Trust, N.A.
Electric Bond Escrow Money Market Account 1,262,012 - 1,262,012
Water Bond Escrow Money Market Account 1,147,131 - 1,147,131
Total Bond Escrow Accounts 2,409,143 - 2,409,143
Electric Debt Service Fund
US Treasury Notes 1,024,272 (9,781) 1,014,491
Federal Agency Bonds and Notes 877,130 (11,810) 865,320
Federal Agency Mortgage Pools 128,754 (221) 128,533
Municipal Bonds 605,000 8,288 613,288
Money Market Account 33,474 - 33,474
Total Electric Debt Service Fund 2,668,630 (13,524) 2,655,106
Water Debt Service Fund
US Treasury Notes 546,221 (19,050) 527,171
Federal Agency Bonds and Notes 340,000 (12,355) 327,645
Federal Agency Mortgage Pools 40,271 (1,548) 38,723
Municipal Bonds 600,000 4,909 604,909
Money Market Account 28,516 - 28,516
Total Water Debt Service Fund 1,555,008 (28,044) 1,526,964
Electric Unrestricted Designated Account
US Treasury Notes 3,805,851 (22,712) 3,783,139
Federal Agency Bonds and Notes 4,722,070 (61,087) 4,660,983
Federal Agency Mortgage Pools 302,195 12,962 315,157
Municipal Bonds 1,306,463 9,638 1,316,101
Money Market Account 936,853 - 936,853
Total Electric Unrestricted Designated Investments 11,073,432 (61,199) 11,012,233
Water Unrestricted Designated Investments
US Treasury Notes 1,102,772 22,275 1,125,047
Federal Agency Bonds and Notes 1,628,649 (18,801) 1,609,848
Federal Agency Mortgage Pools 377,860 13,172 391,032
Municipal Bonds 1,300,383 1,116 1,301,499
Money Market Account 428,036 - 428,036
Total Water Unrestricted Designated Investments 4,837,700 17,762 4,855,462
Total Bremer Trust, N.A. 22,543,913 (85,005) 22,458,908
Total Investments $ 32,367,090 $ (196,437) $ 32,170,653
Investment Accounts on the Statement of Net Position
Total Restricted Assets $ 6,591,213
Investments 25,579,440
Total $ 32,170,653
72
MARSHALL MUNICIPAL UTILITIES
SCHEDULES OF MATERIAL AND SUPPLY INVENTORIES
DECEMBER 31, 2016 AND 2015
2016 2015
Electric Distribution Supplies $ 462,366 $ 419,060
Turbine Fuel 64,424 83,610
Chemical Supplies 22,666 19,537
Water Distribution Supplies 144,380 142,400
TOTAL $ 693,836 $ 664,607
73
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF INSURANCE COVERAGE
DECEMBER 31, 2016
Policy Number
& Coverage Policy Policy Annual
Amount Date Expires Premium
Hartford Steam Boiler Company FBP-2217424 10-01-16 10-01-17 $ 39,829
Boiler and Machinery $39,772,000
League of MN Cities Insurance Trust CMC 39552 10-01-16 10-01-17 7,411
Bodily Injury - Automobile $2,000,000
Property Damage - Automobile
League of MN Cities Insurance Trust MEL-8994 10-01-16 10-01-17 14,620
Excess Liability $1,000,000
League of MN Cities Insurance Trust CMC 39552 10-01-16 10-01-17 86,323
Property $79,461,825
General Liability
League of MN Cities Insurance Trust 02-000368-31 01-01-16 01-01-17 53,086
Workers Compensation Statutory
Rudnik Surety Inc CPP1902050 03-07-16 03-07-17 792
Employee Dishonesty $325,000/Occurrence
Forgery or Alteration $200,000/Occurrence
Total Insurance Premiums $ 202,061
74
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF INVESTMENT IN UTILITY PLANT
FOR THE YEAR ENDED DECEMBER 31, 2016
Additions Retirements Net
Electric Utility
Station Load Management Equipment $ 3,158 $ 3,158
Station Equipment - Distribution 812,175 812,175
Underground Line 658,109 $ 139,238 518,871
Line Transformers 70,403 3,385 67,018
Fiber Optic Lines 106,758 - 106,758
Customers Electric Meters 19,233 6,436 12,797
Street Lighting 136,314 1,025 135,289
Load Management Receivers 8,309 - 8,309
Structure Improvements 32,650 - 32,650
Office Equipment and Furniture 11,162 - 11,162
Transportation Equipment 53,986 41,621 12,365
Tools and Work Equipment 5,199 7,667 (2,468)
Power Operated Equipment 2,221 - 2,221
Communication Equipment - IT 38,139 - 38,139
Misc Equipment 22,652 - 22,652
Total Electric Utility Additions 1,980,468 199,372 1,781,096
Water Utility
Distribution Mains 557,810 67,842 489,968
Water Meters 18,252 - 18,252
Land 48,861 - 48,861
Structures and Improvements 27,068 - 27,068
Office Equipment and Furniture 4,784 - 4,784
Transportation Equipment 30,295 22,415 7,880
Tools and Work Equipment 3,720 - 3,720
Power Operated Equipment 3,604 - 3,604
Communication Equipment - IT 16,417 - 16,417
Total Water Utility Additions 710,811 90,257 620,554
Net Utility Plant Additions 2,401,650
Increase (Decrease) in Construction in Progress (226,427)
Net Additions $ 2,175,223
75
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
DECEMBER 31, 2016
Original Depreciation Depreciated
Cost Allowance Value
Electric Production Plant
Land $ 36,691 $ 36,691
Engines 2,120,212 $ 1,868,130 252,082
Generators 41,570 41,570 -
Load Management Equipment 625,200 625,200 -
Total Electric Production 2,823,673 2,534,900 288,773
Electric Transmission System
Station Equipment 6,153,964 1,714,954 4,439,010
Poles and Fixtures 10,250,406 7,254,177 2,996,229
Total Transmission System 16,404,370 8,969,131 7,435,239
Electric Distribution System
Substations 10,890,284 4,813,783 6,076,501
Poles, Fixtures and Towers 499,676 62,917 436,759
Underground Line 32,412,045 10,119,689 22,292,356
Line Transformers 4,335,813 3,406,247 929,566
Customer Services 215,399 215,399 -
Fiber Optic Lines 1,289,535 277,638 1,011,897
Customer Electric Meters 962,287 740,324 221,963
Street Lighting 3,300,655 2,272,236 1,028,419
Load Management Receivers 512,188 512,188 -
Total Electric Distribution System 54,417,882 22,420,421 31,997,461
Transportation And General
Land 242,311 - 242,311
Structures and Improvements 4,200,146 3,042,652 1,157,494
Office Furniture and Equipment 949,470 891,074 58,396
Transportation Equipment 1,418,870 1,180,502 238,368
Storage Equipment 62,687 62,687 -
Tools and Work Equipment 712,050 618,658 93,392
Power Operated Equipment 484,844 419,066 65,778
Communication Equipment 255,687 217,905 37,782
Communication Equipment - IT 215,521 89,165 126,356
Miscellaneous Equipment 75,890 45,142 30,748
Total Transportation And General 8,617,476 6,566,851 2,050,625
Water Utility
Land 291,817 - 291,817
Pump Houses 26,860 13,970 12,890
Wells 2,780,855 1,754,524 1,026,331
Pumping Equipment 70,674 70,674 -
Transmission Mains 16,591,099 4,904,778 11,686,321
Water Storage 2,747,050 2,747,050 -
Distribution Mains 17,416,358 5,042,226 12,374,132
Filtration Plant 13,370,137 13,370,137 -
Customer Water Meters 592,572 592,572 -
Water Hydrants 50,831 50,831 -
Total Water Utility 53,938,253 28,546,762 25,391,491
Construction in Progress 1,125,602 - 1,125,602
Total Property, Plant And Equipment $ 137,327,256 $ 69,038,065 $ 68,289,191
76
MARSHALL MUNICIPAL UTILITIES
SCHEDULE OF FIRE PROTECTION COSTS
DECEMBER 31, 2016
ALLOCATION OF ANNUAL EXPENSECHARGEABLE TO FIRE PROTECTION
Annual Expense Fire Protection
Source of Supply Operation
Power for Pumping $ 289,262 2 % $ 5,785
Water Station Labor 177,917 2 3,558
Pumping Maintenance
Water Plant Maintenance 142,145 2 2,843
Transmission And Distribution
(Supervision And Engineering)
Operating Supervision 149,639 10 14,964
Maintenance of Mains 474,720 25 118,680
Water Distribution Maintenance Labor 153,402 25 38,351
Hydrant Maintenance 9,866 100 9,866
Equipment Maintenance 41,926 5 2,096
Station Supplies and Expense 16,823 5 841
Insurance 31,616 25 7,904
Employees' Welfare 213,728 10 21,373
Customer Service And Information
Customer Records and Collection Salaries 83,331 10 8,333
Employees' Welfare 48,942 2 979
Administration And General
Salaries of Executives 112,307 10 11,231
Water Office Salaries 62,686 10 6,269
Insurance 3,902 2 78
Employees' Welfare 69,507 2 1,390
TOTAL ANNUAL EXPENSE $ 2,081,719 $ 254,541
Annual Fire Protection
Capital Cost Capital Cost
Transmission And Distribution
Depreciation on Wells $ 132,091 2 % $ 2,642
Depreciation on Water Tower and Tank - 50 -
Depreciation on Transmission Mains 231,397 10 23,140
Depreciation on Distribution Mains 686,205 10 68,621
Depreciation on Water Hydrants - 100 -
Depreciation on Transportation Equipment 24,312 5 1,216
Depreciation on Tools and Power Equipment 18,891 5 945
TOTAL ANNUAL CAPITAL COST $ 1,092,896 $ 96,564
Total Fire Protection Expense $ 254,541
Total Fire Protection Capital Cost 96,564
$ 351,105
Payments Received For Fire Protection
City of Marshall $ 145,000
Private Parties 35,783
$ 180,783
Net Income (Loss) $ (170,322)
Percentage allocations are taken from the American Water
Works Association's Manual of Water Supply Practices.
ALLOCATION OF ANNUAL CAPITAL COST
CHARGEABLE TO FIRE PROTECTION
77
MARSHALL MUNICIPAL UTILITIES
COMPARATIVE STATISTICS
DECEMBER 31, 2016
Electric Water
Total Department Department
2016 Sales Units 572,499,415 K.W.H. 157,332,407 Cu. Ft.
2015 Sales Units 587,485,240 K.W.H. 149,214,095 Cu. Ft.
Increase (Decrease) (14,985,825) K.W.H. 8,118,312 Cu. Ft.
% Increase (Decrease) (2.55) % 5.44 %
2016 Sales $ 53,901,737 $ 47,691,421 $ 6,210,316
2015 Sales $ 55,291,640 $ 49,354,980 $ 5,936,660
Increase (Decrease) $ (1,389,903) $ (1,663,559) $ 273,656
% Increase (Decrease) (2.51) % (3.37) % 4.61 %
2016 Operating Expense $ 51,902,314 $ 47,079,578 $ 4,822,736
2015 Operating Expense $ 53,727,115 $ 48,604,978 $ 5,122,137
Increase $ (1,824,801) $ (1,525,400) $ (299,401)
% Increase (3.40) % (3.14) % (5.85) %
2016 Net Operating Revenue $ 4,445,278 $ 3,057,698 $ 1,387,580
2015 Net Operating Revenue $ 3,931,780 $ 3,117,257 $ 814,523
Increase (Decrease) $ 513,498 $ (59,559) $ 573,057
% Increase (Decrease) 13.06 % (1.91) % 70.35 %
2016 Residential Sales Units 59,745,870 K.W.H. 35,703,772 Cu. Ft.
2015 Residential Sales Units 59,117,501 K.W.H. 35,689,613 Cu. Ft.
Increase (Decrease) 628,369 K.W.H. 14,159 Cu. Ft.
% Increase (Decrease) 1.06 % 0.04 %
2016 Commercial/Industrial Sales Units 511,501,306 K.W.H. 121,628,635 Cu. Ft.
2015 Commercial/Industrial Sales Units 527,148,737 K.W.H. 113,524,482 Cu. Ft.
Increase (Decrease) (15,647,431) K.W.H. 8,104,153 Cu. Ft.
% Increase (Decrease) (2.97) % 7.14 %
78
MARSHALL MUNICIPAL UTILITIES
COMPARATIVE STATISTICS
DECEMBER 31, 2016
Electric Water
Total Department Department
2016 Salaries $ 3,030,164 $ 2,126,926 $ 903,238
2016 Sales $ 53,901,737 $ 47,691,421 $ 6,210,316
Sales to Labor 5.62 % 4.46 % 14.54 %
2015 Salaries $ 2,954,123 $ 2,071,417 $ 882,706
2015 Sales $ 55,291,640 $ 49,354,980 $ 5,936,660
Sales to Labor 5.34 % 4.20 % 14.87 %
2016 Sales $ 53,901,737 $ 47,691,421 $ 6,210,316
2016 Net Income $ 3,765,521 $ 2,853,278 $ 912,243
% of Return 6.99 % 5.98 % 14.69 %
2015 Sales $ 55,291,640 $ 49,354,980 $ 5,936,660
2015 Net Income $ 3,377,628 $ 2,876,482 $ 501,146
% of Return 6.11 % 5.83 % 8.44 %
2016 Net Utility Plant $ 68,289,191 $ 41,644,203 $ 26,644,988
2016 Net Income $ 3,765,521 $ 2,853,278 $ 912,243
% of Return 5.51 % 6.85 % 3.42 %
2015 Net Utility Plant $ 70,658,411 $ 43,554,351 $ 27,104,060
2015 Net Income $ 3,377,628 $ 2,876,482 $ 501,146
% of Return 4.78 % 6.60 % 1.85 %
2016 Bad Debt Expense $ 39,523 $ 36,249 $ 3,274
2016 Sales $ 53,901,737 $ 47,691,421 $ 6,210,316
Sales to Bad Debts 0.07 % 0.08 % 0.05 %
2015 Bad Debt Expense $ 54,026 $ 46,012 $ 8,014
2015 Sales $ 55,291,640 $ 49,354,980 $ 5,936,660
Sales to Bad Debts 0.10 % 0.09 % 0.13 %
2016 Average Net Assets $ 61,524,197 $ 46,233,918 $ 15,290,279
2016 Net Income $ 3,765,521 $ 2,853,278 $ 912,243
% of Return 6.12 % 6.17 % 5.97 %
2015 Average Net Assets $ 59,912,353 $ 45,051,253 $ 14,861,100
2015 Net Income $ 3,377,628 $ 2,876,482 $ 501,146
% of Return 5.64 % 6.38 % 3.37 %
79
MARSHALL MUNICIPAL UTILITIES
ELECTRIC DEPARTMENT
FINANCIAL RATIOS COMPARED TO 2015 APPA DATA
DECEMBER 31, 2016
APPA
5,000 - 10,000
Customers
2015 Data 2016 2015
Debt to Total Assets - (the lower the ratio the better)
Total Assets $ 71,771,406 $ 71,891,822
Total Liabilities $ 25,344,061 $ 26,688,726
Debt to Assets 0.162 0.353 0.371
Current Ratio - (The higher the ratio the better)
Total Current Assets $ 26,156,490 $ 23,750,172
Total Current Liabilities $ 5,714,301 $ 6,267,524
Current Ratio 2.68 4.58 3.79
Times Interest Earned - (The higher the ratio the better)
Net Income plus Interest on Long-Term Debt $ 2,667,128 $ 2,846,864
Interest Expense $ 678,596 $ 806,312
Times Interest Earned 5.54 3.93 3.53
Debt Service Coverage - (The higher the ratio the better)
Net Revenues available for Debt Service $ 6,937,835 $ 6,822,922
Total Long-Term Debt Paid $ 3,189,446 $ 3,832,962
Debt Service Coverage 4.49 2.18 1.78
The ratio is calculated by dividing total liabilities by total assets. This ratio measures a utility's ability to meet its current and
long-term liabilities based on availability of assets. If the ratio is less than one, most of the assets are financed through equity.
The ratio of total current assets to total current liabilities. This is a measure of the utlity's short-term liquidity. The current
ratio takes a snapshot of the utility's liquidity at a point in time and thus may vary considerably at other times of the year.
The ratio of net electric utility income plus interest paid on long-term debt, to interest on long-term debt. This ratio measures
the ability of a utility to cover interest charges and is indicative of the safety margin to lenders.
This ratio reflects net revenues available for debt service to long-term debt service for the year. This ratio measures the utility's
ability to meet its annual long-term debt obligation. Net revenue available for debt service equal net electric utility income
plus electric utility non-operating income plus depreciation. Debt service includes principal on long-term debt and interest
expense. Bond covenants require a 1.25 minimum coverage. This is an important ratio to bond holders and rating agencies.
80
REPORTS
903 East College Drive P.O. Box 548
Marshall, MN 56258 www.hoffmanbrobst.com
81 507 532 5735 Fax 537 0696
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
Members of the Marshall Municipal Utilities Commission
City of Marshall, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the
standards applicable to the financial audits contained in Government Auditing Standards issued by the Comptroller
General of the United States, the financial statements of Marshall Municipal Utilities, an autonomous enterprise fund of
the City of Marshall, Minnesota, as of and for the year ended December 31, 2016, and the related notes to the financial
statements, which collectively comprise Marshall Municipal Utilities’ basic financial statements, and have issued our
report thereon dated April 5, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Marshall Municipal Utilities’ internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of Marshall Municipal Utilities’ internal control. Accordingly, we do not
express an opinion on the effectiveness of Marshall Municipal Utilities’ internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements
on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that
there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented,
or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in
internal control that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies.
Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be
material weaknesses. However, material weaknesses may exist that have not been identified.
82
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Marshall Municipal Utilities' financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Hoffman & Brobst, PLLP
Certified Public Accountants
Marshall, Minnesota
April 5, 2017
903 East College Drive P.O. Box 548
Marshall, MN 56258 www.hoffmanbrobst.com
83 507 532 5735 Fax 537 0696
INDEPENDENT AUDITOR'S REPORT ON
MINNESOTA LEGAL COMPLIANCE
Members of the Marshall Municipal Utilities Commission
City of Marshall, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of America, and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States, the financial statements of Marshall Municipal Utilities, an autonomous enterprise fund of
the City of Marshall, Minnesota as of and for the year ended December 31, 2016, and the related notes to the financial
statements, which collectively comprise Marshall Municipal Utilities’ basic financial statements, and have issued our
report thereon dated April 5, 2017.
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor pursuant to Minn. Stat. §
6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts
of interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment financing. Our
audit considered all of the listed categories, except that we did not test for compliance with the provisions for tax
increment financing because this provision does not apply to Marshall Municipal Utilities.
In connection with our audit, nothing came to our attention that caused us to believe that Marshall Municipal Utilities
failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Cities. However, our audit
was not directed primarily toward obtaining knowledge of such noncompliance. Accordingly, had we performed
additional procedures, other matters may have come to our attention regarding Marshall Municipal Utilities’
noncompliance with the above referenced provisions.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of that testing, and
not to provide an opinion on compliance. Accordingly, this communication is not suitable for any other purpose.
Hoffman & Brobst, PLLP
Certified Public Accountants
Marshall, Minnesota
April 5, 2017