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            B.    Basis of Presentation - Fund Accounting (Continued)

                    1.     Governmental Funds:  General Fund

The General Fund is used to account for all revenues and expenditures incurred in operating the District.

                    2.     General Fixed Assets Account Group

This account group is used to record the District's general fixed assets, which include furniture and equipment.

                    3.     General Long-Term Debt Account Group

This account group records earned but unpaid vacation and sick leave that has vested or is expected to vest.

            C.    Government-Wide Financial Statements

          The government-wide financial statements (i.e. The Statement of Net Assets and the Statement of Activities) report information on all the nonfiduciary activities of the District. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Grants and similar items are recognized as soon as all eligibility requirements imposed by the provider have been met.

Fund Financial Statements

                    The government reports the general fund as its only major governmental fund. The general fund accounts for all financial resources of the government.

                    The District’s financial statements (general fund) are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when they become susceptible to accrual, that is, both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenue sources susceptible to accrual include intergovernmental revenues, charges, and interest. Expenditures are recorded when the corresponding liabilities are incurred.

                    Intergovernmental revenues are reported in conformity with the legal and contractual requirements of the individual programs. Generally, grant revenues are recognized when the corresponding expenditures are incurred. If the District also receives an annual appropriation from the County, it is recognized as revenue when received, unless it is received prior to the period to which it applies. In that case, revenue recognition is then deferred until the appropriate period.

                    Investment earnings and revenues from the sale of trees are recognized when earned. Agricultural conservation fees and other revenue are recognized when they are received in cash because they usually are not measurable until then.

Project expenditures represent costs that are funded from federal, state, or district revenues. State project expenditures consist of grants to participants of the cost-Share Program and other state programs. District project expenditures are costs of materials and supplies in District projects.

In accordance with Governmental Accounting Standards Board Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions, revenues for nonexchange transactions are recognized based on the principal characteristics of the revenue. Exchange transactions are recognized as revenue when the exchange occurs.

            D.    Budget Information

The District adopts an estimated revenue and expenditure budget for the General Fund.  Comparisons of estimated revenues and budgeted expenditures to actual are presented in the financial statements in accordance with generally accepted accounting principles.  Amendments to the original budget require board approval.  Appropriations lapse at year-end.  The District does not use encumbrance accounting.

            E.     Assets, Liabilities, and Equity Accounts

                    1.     Assets

                            Investments are stated at fair value, except for non-negotiable certificates of deposit, which are on a cost basis, and short-term money market investments, which are stated at amortized cost.

                            Beginning with statement year 2004, fixed assets (capital assets) are no longer reported on a gross basis. They are now reported on a net (depreciated) basis. General fixed assets are still valued at historical or estimated historical cost.

                    2.     Liabilities

Long-term liabilities, such as compensated absences, are accounted for in the General Long-Term Debt Account Group.

                    3.     Equity

                            Investment in general fixed assets represents the District’s equity in general fixed assets.

                            Reserved fund balance indicates the portion of fund equity that has been legally segregated for specific       purposes or is not appropriable for spending.

        Unreserved, designated account indicates the portion of fund equity that the District has set aside for planned future expenditures.

Unreserved, undesignated fund balance account indicates the portion of fund balance that is available for budgeting and spending in future periods.

            F.     Explanation of Adjustments Column in Statements

1. Capital Assets: In the Statement of Net Assets and Governmental Fund Balance Sheet, an adjustment is made if the district has capital assets. This adjustment equals the net book balance of capitalized assets as of the report date, and reconciles to the amount report in Note IV.

2. Long-Term liabilities: In the Statement of Net Assets and Government Fund Balance Sheet, an adjustment is made to reflect the total of Compensated Absence liability the district has as of the report date. See Note 1-G below.

3. Depreciation and Change in Compensated Absences for the year: In the Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance, the adjustment equals the total depreciation for the year reported, plus or minus the change in Compensated Absences between the reporting year and the previous year. This number is supported by figures in Note IV and in Note I-G below.

G.    Vacation and Sick Leave

                     Under the District's personnel policies, employees are granted vacation leave in varying amounts based on their length of service.  Vacation leave accrual varies from eight to seventeen hours per month.  Sick leave accrual is twelve days per year.  The limit on the accumulation of annual leave is 175 hours and the limit on sick leave is 800 hours.  Upon termination from the District by retirement, employees are paid accrued vacation leave and up to 400 hours of accrued sick leave.  On termination of employment by illness or death, employees are paid accrued vacation and up to 400 hours of accrued sick leave.

 II.       STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

            A.    General Fund Deficit

                     At December 31, 2009, the District’s General Fund had a deficit fund balance of $______N/A_____.  The deficit is expected to be eliminated by future revenue sources.

            B.    Excess of Expenditures Over Budget

                     During 2009, actual expenditures, $______N/A____, exceeded budgeted expenditures, $______________, by $______________.

            C.    Uncollateralized deposits

                     During 2009, the District’s deposits with financial institutions did not (exceeded at various times, did not exceed) insurance, surety bond, or collateral.

III.       DEPOSITS AND INVESTMENTS

            Minnesota Statutes 118A.02 and 118A.04 authorize the District to deposit its cash and to invest in certificates of deposit in financial institutions designated by the Board of Supervisors.  At December 31, 2009, the District’s deposits totaled $ 1,045,981.00 , of which $  620,143.00   were cash deposits and $  425,837.67   was invested in certificates of deposit.  Minnesota Statutes require that all District deposits be covered by insurance, surety bond, or collateral.  At December 31, 2009, all the District’s deposits were covered by insurance or collateralized with securities held by the District or its agent in the District’s name.

IV.       CHANGES IN CAPITAL ASSETS

            Equipment

                    Balance January 1, 2009                                     $ 40,435

                                    Additions                                             $ 0

                                    Deletions                                             $ 0     

                                    2009 depreciation                               $6,822

                    Balance December 31, 2009                               $ 33,613

Note: Beginning and Ending Balance are net of accumulated depreciation, which totaled $ 6,822  as of December 31, 2009.

The District uses a threshold of $500.00 for capitalizing assets purchased. Those physical assets under $xx are expenses directly and not capitalized.

V.        DEFFERRED REVENUE

            Deferred Revenue represents unearned advances from the Minnesota Board of Water and Soil Resources and Winona County for various programs.  Revenues will be recognized when the related program expenditures are recorded. 

            Total Deferred Revenue as itemized on “Deferred Revenue Breakdown” is  $902,506.

VI.       COMPENSATED ABSENCES PAYABLE

            Changes in long-term debt for the period ended December 31, 2009 are:

                    Balance January 1, 2009                                     $ 23,678

                    Net Changes in Compensated Absences            $ 3,787

                    Balance December 31, 2009                               $ 27,465

VI – B. ADJUSTMENTS TO FINANCIAL STATEMENTS

            See Note 1-F.

VII.     RISK MANAGEMENT

            The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; employee health; and natural disasters. To cover these risks, the District has purchased commercial insurance.  Property and casualty liabilities and workers’ compensation are insured through Minnesota Counties Insurance Trust.  The District is covered for errors and omissions through Minnesota Counties Insurance Trust.

            The Minnesota Counties Insurance Trust is a public entity risk pool currently operated as a common risk  

            management and insurance program for its members.

            There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years.

VIII.    PENSION PLAN

            A.    Plan Description

                    The District contributes to a cost-sharing multiple-employer defined benefit pension plan administered by the Public Employees Retirement Association of Minnesota (PERA). The PERA provides retirement benefits as well as disability to members, and benefits to survivors upon death of eligible members. PERA administers the Public Employees Retirement Fund (PERF.) The plan and its benefits are established and administered in accordance with Minnesota Statute Chapters 353 and 356. PERA issues a publicly available financial report that includes financial statements and required supplementary information.  That report may be obtained by writing to the Public Employees Retirement Association, 60 Empire Drive, Suite 200, St. Paul, Minnesota, 55103-1855.

            B.    Funding Policy

                    Minnesota Statues Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The District makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.0%, respectively, of their annual covered salary in 2009.  The District was required to contribute the following percentages of annual covered payroll:  11.78% for Basic Plan PERF members and 6.75% for Coordinated Plan PERF members.  Employer contribution rates for the Coordinated Plan will increase to 7.00% effective January 1, 2010. The District’s employer share of contributions to PERA for the years ending December 31, 2009, 2008, and 2007 were $ 11,172.38 , $10,259.67, and $9,284.77 respectively, equal to the contractually required contributions for each year as set by Minnesota Statute.

IX.       OPERATING LEASES

The District leases office space on a yearly basis.  Under the current agreement, total costs for 2009 were $11,615.00.

MANAGEMENT’S DISCUSSION AND ANALYSIS

USING THIS ANNUAL REPORT

This annual report consists of three parts: management’s discussion and analysis (this section), the basic financial statements, and required supplementary information.  The basic financial statements include a series of financial statements.  The Statement of Net Assets and the Statement of Activities (on page 1) provide information about the activities of the Winona County Soil and Water Conservation District (SWCD) as a whole and present a longer-term view of the Winona County SWCD’s finances.  Fund financial statements start on page 2.  For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending.  Fund financial statements also report the Winona County SWCD’s operations in more detail than the government-wide statements by providing information about the Winona County SWCD’s most significant funds.  Since SWCD’s are single-purpose special purpose governments they are generally able to combine the government-wide and fund financial statements into single presentations.  Winona County SWCD has elected to present in this format.

The Statement of Net Assets and the Statement of Activities

Our analysis of the Winona County SWCD as a whole begins on page 2.  One of the most important questions asked about the Winona County SWCD’s finances is, “Is the Winona County SWCD as a whole better or worse off as a result of the year’s activities?”   The Statement of Net Assets and the Statement of Activities report information about the Winona County SWCD as a whole and about its activities in a way helps answer this question.  These statements include all assets and liabilities using accrual basis of accounting, which is similar to the accounting used by the most private-sector companies.  All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the Winona County SWCD’s net assets and changes in them.  You can think of the Winona County SWCD’s net assets — the difference between assets and liabilities—as one way to measure the Winona County SWCD’s financial health, or financial position.  Over time, increases or decreases in the Winona County SWCD’s net assets are one indicator of whether its financial health is improving or deteriorating. 

In the Statement of Net Assets and the Statement of Activities, the Winona County SWCD presents Governmental activities.  All of the Winona County SWCD’s basic services are reported here.  Appropriations from the county and state finance most activities.

Reporting the Winona County SWCD’s General Fund

Fund Financial Statements

The fund financial statements provide detailed information about the general fund—not the Winona County SWCD as a whole.   The Winona County SWCD presents only a general fund, which is a governmental fund.  All of the Winona County SWCD’s basic services are reported in the general fund, which focuses on how money flows into and out of those funds and the balances left at year-end that are available for spending.  The fund is reported using an accounting method called modified accrual accounting.  This method measures cash and all other financial assets that can be readily converted to cash.  The general fund statements provide a detailed short-term view of the Winona County SWCD’s general government operations and the basic services it provides.  Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Winona County SWCD’s programs.  We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in a reconciliation included with the financial statements.

THE WINONA COUNTY SWCD AS A WHOLE

The Winona County SWCD’s combined net assets were higher, decreasing from $354,473.07 to $301,714.00.  In contrast, last year net assets decreased by $52,759.07.  Looking at the net assets and net expenses of governmental and business-type activities separately, however, two very different stories emerge.  Our analysis below focuses on the net assets (Table 1) and changes in net assets (Table 2) of the Winona County SWCD’s governmental and business-type activities.

Table 1

Net Assets                            

Governmental      

   Activities           

2008                   2009

Net assets of the Winona County SWCD governmental activities increase by about 31 percent $73,014 compared to $234,847.  Unrestricted net assets—the part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements—changed from $234,857 at 12/31/07 to $307,861 at the end of this year.

TABLE 2

Changes in Net Assets

                                             Governmental        

                                                                 Activities              

The Winona County SWCD’s total revenues increased by $134,196.  The total cost of all programs and services increased by $138,243.

GOVERNMENTAL ACTIVITIES

Revenues for the Winona County SWCD governmental activities increased by 14.5 percent ($134,196) and total expenses increased just over 16.5 percent ($138,243).

The cost of all governmental activities this year was $972,967 compared to $834,724 last year.  Overall, the Winona County SWCD’s governmental program revenues, including intergovernmental aid and fees for services, increased in 2009 from $911,785 to $1,045,981 principally based on increases in governmental aid.

THE WINONA COUNTY SWCD’s FUNDS

As the Winona County SWCD completed the year, its general fund reported a combined fund balance of $307,861 which is above last year’s total of $234,847.

General Fund Budgetary Highlights

Over the course of the year, the Board of Supervisors revised the Winona County SWCD’s budget several times.  The district had an actual revenue over what the budgeted amounts were predicted.  One of the reasons for this increase was Flood Relief Cost-Share.  After the August 2007, the district entered into four Cost-Share Grant Agreements with BWSR to aid with flood relief and repair efforts.  We also increased our Charges for Service primarily due to Native Grass plantings and sales that assist with CREP/RIM/CRP contracts.  We did have a decrease to our County Revenue, however, because of a 10% allocation cut.  Our local revenues were also decreased because of less local cooperative agreements that were available.

Again, the expenses were actually higher than budgeted because of State Cost-Share project expenses.  Because of the increased Cost-Share, more money was expended.  However, overall, the district operational costs were lower than budgeted for. 

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

At the end of 2009, the Winona County SWCD had $33,613 invested in a broad range of capital assets, including computers, vehicles, etc.  This amount represents a net decrease (including additions and deductions) of $30,435 over last year.

Long-Term Liabilities

Winona County SWCD obligations include accrued vacation pay and sick leave.  More detailed information about the Winona County SWCD’s long-term liabilities is presented in the Notes to the Financial Statements.

CONTACTING THE WINONA COUNTY SWCD’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Winona County SWCD’s finances and to show the Winona County SWCD’s accountability for the money it receives.  If you have questions about this report or need additional financial information, contact the Winona County SWCD at P.O. Box 39, 400 Wilson Street, Lewiston, MN  55952.  The telephone number is (507)523-2171.