Management Report for
Metropolitan Library Service Agency December 31, 2024
To the Board of Trustees and Management Metropolitan Library Service Agency
St. Paul, Minnesota
We have prepared this management report in conjunction with our audit of the Metropolitan Library Service Agency’s (MELSA) financial statements for the year ended December 31, 2024. We have organized this report into the following sections:
- Audit Summary
- Financial Trends and Conditions
- Government-Wide Financial Statements
- Accounting and Auditing Updates
We would be pleased to discuss further any of the information contained in this report or any other concerns that you would like us to address. We would also like to express our thanks for the courtesy and assistance extended to us during the course of our audit.
The purpose of this report is solely to provide those charged with governance of MELSA, management, and those who have responsibility for oversight of the financial reporting process comments resulting from our audit process and information related to MELSA’s finances. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota May 7, 2025
AUDIT SUMMARY
The following is a summary of our audit work, key conclusions, and other information that we consider important or that is required to be communicated to the Board of Trustees, management, or those charged with governance of MELSA.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of MELSA as of and for the year ended December 31, 2024. Professional standards require that we provide you with information about our responsibilities under auditing standards generally accepted in the United States of America and Government Auditing Standards, as well as certain information related to the planned scope and timing of our audit. We have communicated such information to you verbally and in our audit engagement letter. Professional standards also require that we communicate the following information to you related to our audit.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously discussed and coordinated in order to obtain sufficient audit evidence and complete an effective audit.
Audit Opinions and Findings
Based on our audit of MELSA’s financial statements for the year ended December 31, 2024:
- We have issued unmodified opinions on MELSA’s basic financial
- We noted two matters involving MELSA’s internal controls over financial reporting that we consider to be material weaknesses:
- Due to the limited size of MELSA’s office staff, MELSA has limited segregation of duties in some areas.
- MELSA has our firm prepare its annual financial statements. Organizations of your size often have their annual financial statements prepared by their auditors. Although this may be the most practical and cost-effective method to complete this task, the fact that you do not have the internal resources available to prepare the annual financial statements is considered a deficiency.
- The results of our testing disclosed no instances of noncompliance required to be reported under
Government Auditing Standards.
- We reported one finding based on our testing of MELSA’s compliance with Minnesota laws and regulations:
- During our testing of general disbursements, we noted that MELSA had paid claims during the year without obtaining the signed declaration required by Minnesota Statutes
- 471.391, Subd. 2., that the claim is true, correct, and had not been paid previously. This was caused by the preprinted declaration being inadvertently omitted from MELSA’s check stock in a recent check order.
Significant Accounting Policies
Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by MELSA are described in Note 1 of the notes to basic financial statements.
No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2024.
We noted no transactions entered into by MELSA during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
Accounting Estimates and Management Judgments
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were:
- MELSA has recorded balances and activity for pension benefits. These obligations are calculated using actuarial methodologies described in Governmental Accounting Standards Board Statement No. 68. These actuarial calculations include significant assumptions, including projected investment returns, proportionate share, retirement ages, and employee turnover.
- MELSA uses estimates of useful lives for the depreciation and amortization of capital
We evaluated the key factors and assumptions used by management to develop these estimates in determining that they are reasonable in relation to the basic financial statements taken as a whole.
Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The disclosures included in the notes to the basic financial statements related to pension benefits are particularly sensitive, due to the materiality of the liabilities, and the large and complex estimates involved in determining the disclosures.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole, other than the prior period adjustment described in Note 1 of the notes to basic financial statements.
Disagreements With Management
For purposes of this report, a disagreement with management is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management representation letter dated May 7, 2025.
Management Consultations With Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to MELSA’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards with management each year prior to retention as MELSA’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to management’s discussion and analysis and the pension-related required supplementary information (RSI) that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were not engaged to report on the introductory section and other supplemental information, which accompany the financial statements, but are not RSI. Such information has 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 it.
METROPOLITAN LIBRARY SERVICE AGENCY ST. PAUL, MINNESOTA
Financial Statements
and Supplementary Information
Year Ended December 31, 2024
Table of Contents
INTRODUCTORY SECTION
ORGANIZATIONAL CHART 1
ELECTED AND APPOINTED OFFICIALS 2
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT 3–5
MANAGEMENT’S DISCUSSION AND ANALYSIS 6–18
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements
Statement of Net Position 19
Statement of Activities 20
Fund Financial Statements Governmental Funds
Balance Sheet 21
Reconciliation of the Balance Sheet to the Statement of Net Position 22
Statement of Revenue, Expenditures, and Changes in Fund Balances 23
Reconciliation of the Statement of Revenue, Expenditures, and Changes
in Fund Balances to the Statement of Activities 24
Statement of Revenue, Expenditures, and Changes in Fund Balances –
General Fund – Budget and Actual 25–26
Fiduciary Funds
Statement of Fiduciary Net Position 27
Statement of Changes in Fiduciary Net Position 27
Notes to Basic Financial Statements 28–45
REQUIRED SUPPLEMENTARY INFORMATION
PERA – General Employees Retirement Fund
Schedule of MELSA’s and Nonemployer Proportionate Share of Net
Pension Liability 46
Schedule of MELSA Contributions 46
Notes to Required Supplementary Information 47–50
OTHER SUPPLEMENTAL INFORMATION
Schedules of Selected Expenditures 51
OTHER REQUIRED 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 52–53
Independent Auditor’s Report on Minnesota Legal Compliance 54–55
Schedule of Findings 56–58
INTRODUCTORY SECTION
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Board of Trustees (1)
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Advisory Board (2)
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Executive Director
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Project Manager
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Communications Manager
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Office Manager
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Business Manager
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Youth Services and Project Manager
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(1) The Board of Trustees receives input and guidance from the Advisory Board.
(2) The Advisory Board makes recommendations to the Board of Trustees.
Elected and Appointed Officials Year Ended December 31, 2024
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BOARD OF TRUSTEES
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Term Expires
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Julie Jeppson, Vice President
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December 2025
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Anoka County Commissioner
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Matt Udermann
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December 2026
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Carver County Commissioner
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Laurie Halverson, President
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December 2026
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Dakota County Commissioner
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Debbie Goettel
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December 2026
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Hennepin County Commissioner
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Victoria Reinhardt
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December 2025
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Ramsey County Commissioner
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Beth Burns, Treasurer
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December 2025
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Mayoral Appointment Representing
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Saint Paul Public Library
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Jody Brennan
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December 2025
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Scott County Commissioner
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Karla Bigham
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December 2025
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Washington County Commissioner
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ADMINISTRATION
Sherry Wichitchu Executive Director
Mona Scott Business Manager
FINANCIAL SECTION
INDEPENDENT AUDITOR’S REPORT
To the Board of Trustees and Management Metropolitan Library Service Agency
St. Paul, Minnesota
Report on the Audit of the Financial Statements Opinions
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Metropolitan Library Service Agency (MELSA) as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise MELSA’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of MELSA as of December 31, 2024, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended, in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
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. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of MELSA, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about MELSA’s ability to continue as a going concern for 12 months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance, but is not absolute assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
- Exercise professional judgment and maintain professional skepticism throughout the
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit 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 MELSA’s internal control. Accordingly, no such opinion is
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events considered in the aggregate, that raise substantial doubt about MELSA’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
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 (RSI), as listed in the table of contents, be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 RSI 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
Management is responsible for the other information included in the annual report. The other information comprises the introductory section and other supplemental information, as listed in the table of contents, but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Prior Year Comparative Information
Malloy, Montague, Karnowski, Radosevich & Co., P.A. previously audited MELSA’s 2023 financial statements, and expressed unmodified audit opinions on the respective financial statements of the governmental activities and each major fund in their report dated May 3, 2024. In our opinion, the partial comparative information presented herein as of and for the year ended December 31, 2023 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 May 7, 2025, on our consideration of MELSA’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is solely 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 effectiveness of MELSA’s 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 MELSA’s internal control over financial reporting and compliance.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota May 7, 2025
METROPOLITAN LIBRARY SERVICE AGENCY
Management’s Discussion and Analysis Year Ended December 31, 2024
As management of the Metropolitan Library Service Agency (MELSA), we hereby provide readers of MELSA’s financial statements with this narrative overview and analysis of the financial activities of MELSA for the fiscal year ended December 31, 2024.
FINANCIAL HIGHLIGHTS
MELSA staff, Board of Trustees, Advisory Board, and staff at member library systems worked cooperatively in 2024 to benefit metro library users and advance the goals outlined in MELSA’s strategic plan.
- MELSA communicates the value and impact of public libraries in the metro
- MELSA programs and services support racial and social equity, inclusion, and
- Member libraries have the resources, support, and training needed to address changing library workforce needs.
- MELSA leverages its resources to enhance shared access to library services across the metro
- MELSA is a leader in fostering innovation, collaboration, and experimentation in metro area library
With funding received from three primary sources, Regional Library Basic System Support (RLBSS), Regional Library Telecommunications Aid (RLTA), and the Arts and Cultural Heritage Fund (ACHF, also known as the Legacy Amendment), MELSA continues to develop regionwide projects and programming, leverage its size to purchase resources and services, allocate funding to member libraries for operational and technology needs, and provide a collaborative platform for information sharing among MELSA boards and library staff. Demonstrating good stewardship of these public dollars remains a core principle of MELSA’s mission.
This summary highlights examples of MELSA’s efforts to support member library systems and enhance services to library users from the RLBSS grant and other revenue sources in 2024.
Regional Library Basic System Support (RLBSS)
Changes in the RLBSS grant for regional public library systems that were passed by the Legislature in 2023 continued to impact MELSA libraries in 2024. Increases in the appropriation, the first since 2009, allowed MELSA to increase support for member library systems in various budget areas, such as the shared eCollection, youth services programming, staff training and development, and general library operations. The additional funding will also provide MELSA library systems the opportunity to collaborate on a major initiative (to be further developed in 2025 and led by the new MELSA executive director hired in late 2024) that will address needs common to patrons and community members throughout the metro region.
Another change to the RLBSS grant was an adjustment within the factors used to calculate the allocations to regional systems. One of these factors, Equalization, which allows counties with low per capita tax bases to earn a portion of the grant dollars due to their adjusted net tax capacity, had become increasingly volatile with the fluctuation of property values throughout the state. In the new state formula, the base factor was increased, and the Equalization factor was decreased in order to provide a more stable source of funding for regional systems. Ten percent of the Equalization funds awarded regionally to MELSA are distributed to the earning library systems; Anoka County Library and Saint Paul Public Library (via Ramsey County) earned these funds in 2024.
The following programs and services are supported by RLBSS funding:
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Early in 2024, the Board of Trustees approved significant changes with the funding MELSA provides to member systems to support library operations and technology, previously referred to internally as Formula and Phase In March, Trustees approved a new formula for the
$1.5 million allocated to the Formula program with these factors: the Operations portion of the funding, $1.255 million, is calculated at 70 percent base and 30 percent population, and the Equity portion, $245,000, is calculated at 50 percent base and 50 percent poverty (population below the federal poverty level). The Equity portion is intended to “provide funds for member library systems with the goal of identifying and removing barriers to library services informed through connections with communities who have experienced historical marginalization.” Developed by the Advisory Board, the formula was refined by the Finance Committee to include 2 percent from the total reserved for annual assignment by the Governing Board. In 2024, the 2 percent was allocated to Ramsey County Library.
In June, the Trustees approved an Advisory Board recommendation to combine $500,000 in budgeted Phase funding with $1.5 million in Formula funds into one annual allocation renamed Library Systems Allocations Fund (LSAF). The new formula factors (and 2 percent reserve of the total) will apply to the combined allocations. There are no requests or usage requirements for the Operations portion of the LSAF and restrictions for prior Phase balances have been eliminated. A process for requesting the Equity portion of the LSAF was developed for the purpose of sharing uses and outcomes of the funding with other systems. In addition, Trustees approved $38,746 from the fund balance to hold three systems harmless—Dakota, Hennepin, and Ramsey—on a one-time basis for the impact of the Phase component of the combined allocations. Total LSAF distributions to each system were: $236,761 to Anoka County, $185,606 to Carver County, $260,510 to Dakota County, $436,279 to Hennepin County, $271,872 to Ramsey County, $236,436 to Saint Paul Public, $194,544 to Scott County, and $216,738 to Washington County.
- The shared eBook, eAudio, and eMagazine collections on OverDrive continue to grow in popularity and value to library users. The 2024 budget included $650,000 to purchase content, primarily focusing on high demand, high interest titles, and $180,000 for systems’ platform fees (of which
$162,000 is also available for content credit). Additional content was purchased with two $150,000 fund balance assignments throughout the year to meet holds on popular titles. At year-end, the MELSA shared collection included 111,838 copies of eBook titles, 47,250 copies of eAudiobook titles, and 5,276 magazine titles. eBook and eAudiobook checkouts of MELSA and systems’ collections combined exceeded 12 million in 2024, the highest public library consortium worldwide for OverDrive circulation.
- Use of MELSA funding for the collaborative purchase of electronic resources provided savings to member library systems and greater access for library users. The collection of resources offers a wide range of topics and services, such as local newspapers, reference databases, genealogy research, auto repair, foreign language learning, homework help, job search and resume assistance, and tutorials on a variety of subjects. Each year, a due diligence process is performed by the Electronic Resources Team to evaluate the quality of the resources, their cost effectiveness, and continued value to library In 2024, the Team researched several subject areas to improve the collection, including consumer information, comic books/graphic novel collections, value guides, and crafting. Purchase of a subscription to ConsumerReports.org was approved in 2024 for implementation in 2025.
- MELSA continued its support of these online tools for member libraries in 2024: Syndetics, a catalog enrichment product that provides cover images, professional reviews, and other features; LibCal, an event, room, and equipment reservations system; and Niche Academy, which offers video instructional materials to enhance the licensed online resources available at the library systems and can also be used as an online platform for staff training.
- An RFI process for the purchase of a mobile app for the eight systems that started in late December 2023, continued in 2024 with evaluation of proposals received and product demos and concluded with vendor selections and final contracts. To meet systems’ needs, two mobile apps were selected with implementation completed in 2024 for all but two systems.
- MELSA staff, along with a contracted consultant, successfully applied for E-rate funds, a federal telecommunications reimbursement program, for seven of eight member libraries. (Hennepin managed its own application process in ) The total amount received by member systems and the MELSA office in 2024 for E-rate funding year July 2023–June 2024 was $462,545.
- In 2024, MELSA provided $24,000 in total to the systems to support maintenance costs of NCIP, a national software protocol for library circulation and interlibrary loan.
- MELSA continues to facilitate delivery of library materials borrowed and returned, and other information and communications among the eight member library systems and the MELSA
- MELSA funding continued for classes to support job seekers and small business owners in 2024. A total of $85,000 was divided among the systems to meet programming Sixty-five classes were contracted by MELSA and taught by instructors from Calliope Search and Consulting, Loft Literary Center, and Keer Keer Creative. In addition, over 50 classes and events were contracted independently by the libraries with this funding. Classes were a blend of virtual and in-person to reach and offer flexibility for library users. Topics included search engine optimization, applications and resumes, writing for the web, social media management, and more. Over 340 library users attended MELSA-contracted classes live, while over 350 viewed recordings of the instruction. Library-contracted programs collectively had attendance and views totaling over 2,168. One particular event reached 1,344 views of the recording. In total, over 2,800 library users were served. Unspent regional and system funds of $3,368 were redirected to a one-time purchase of eBook content on related subjects.
- MELSA contributes to a state-wide program called MN Writes MN Reads (this branding changes in 2025), a collaboration between Minitex and the regional public library systems of Minnesota. This program provides resources and tools for authors to create, publish, and share professional-quality eBooks and allows readers to access locally produced independent collections, free to Minnesota The project also includes an annual Minnesota Author Project contest to celebrate the winning indie titles in adult and young adult fiction.
- Member libraries offered the Winter Reads adult reading program for the 16th consecutive year. The program runs January and February and is designed to encourage adults to read and to submit book reviews. The library systems had a number of system-specific programs, activities, and giveaways, in addition to a giveaway provided by MELSA also supported programming with Winter Reads posters and wrapping paper to use for displays. In addition, MELSA provided advertising support through startribune.com and social media ads, as well as regular appearances on KSTP’s Minnesota Live television show. More than 20,000 adults participate metro-wide.
- MELSA continued the eighth year of smARTpass, a web-based arts access program for library users in partnership with local cultural organizations who donate free admissions to library users. Several new cultural organizations joined the program, and the number of free offers continued to exceed the pre-pandemic numbers. Funding for hosting and maintenance of the smARTpass website is provided by MELSA.
- In 2024, advertising continued to focus on resources for students and job seekers, the eLibrary, and on free classes and resources to support hobbies/interests/skills offered by the library systems. MELSA continued the “Connect with Your Library” campaign to showcase the ways users connect at/with the libraries as community hubs. MELSA also continued to use “Spaces for Family Fun at Your Libraries” banner ads to encourage people to visit their local branches. MELSA partnered with TPT and TPT Learning’s Be My Neighbor initiative, which in 2024 hosted summer events at eight library systems. MELSA renewed its annual contract with startribune.com, which includes phone and iPad app advertising, in addition to the startribune.com website, print ads, and e-mails to subscribers. Print and digital advertising with La Vos Latina, Mpls/St. Paul magazine, the Minnesota Women’s Press, and the Sahan Journal continued (with features introducing three library staff). MELSA continued to contract with Theory Z Media for social media advertising for Winter Reads, the eLibrary, and Teen Lit Con. The Star Tribune and KARE-11 continued their media sponsorships of Summer at Your Library, and the Minnesota Twins and SeaLife MN again donated thousands of tickets for the library systems to distribute. MELSA began a new contract with the AM950 radio station, with MELSA staff and Carver County Library staff cohosting five episodes of the “Connections” radio show. Guests included a number of library staff from each MELSA library system, as well as several smARTpass arts partners.
- MELSA continued to sponsor two in-person events in 2024 staffed by MELSA and the library systems. MELSA’s table at the Twin Cities Book Festival featured several local authors signing books and distributed print information on the eLibrary and the Club Book author series, as well as give-away items and materials provided by library systems. At the Twin Cities Pride Festival, MELSA’s library ambassadors gave out Pride buttons and bookmarks and distributed library information to thousands of attendees.
- MELSA continued annual marketing for Summer at Your Twin Cities Metro Public Library, the regional branding used by member library systems for creation of their local programming. 2024 saw a growing number of participants coming back to summer With a goal to lessen the impact of summer learning loss for children, the libraries offered a variety of reading and learning engagement programming that included STEM, music, and art activities, and live performances at library sites. The systems’ work was supported by an annual MELSA allocation of $90,000.
- Member library systems also received a combined total of $102,000 in allocations for youth and teen programming, and Science, Technology, Engineering & Math (STEM) programming for all ages. These funds enhanced local initiatives from storytime for infants to training teens on coding and life skills. As in previous years, systems also used the funding for creation of welcoming and engaging spaces for young library users to gather for library programming and social interaction.
- In 2024, the MELSA Youth Services Team worked collaboratively to educate parents and caregivers on the five early literacy practices: Reading, Talking, Writing, Playing and Singing based on research by American Library Services to Children’s Every Child Ready to Read initiative. To support these efforts, the Team used budgeted funds to print uniquely Minnesota skill-based stickers for children to receive at storytimes and other local programming.
- Each year member libraries actively encourage library users to participate in three reader choice awards through the Minnesota Youth Reading Awards (MYRA) organization. These include: Maud Hart Lovelace Divisions I (Grades 3–5) and II (Grades 6–8), and the Star of the North picture book award. MELSA supported this activity by creating nominee trackers, posters, and making online voting available.
- Library staff training and education continued to be a focus for MELSA and its member library systems. In 2024, MELSA increased the total budget for professional development allocations to the systems to $190,000, allocated with a formula using factors of population, total FTEs, and a base amount. Systems spent their allocations in a variety of ways to enhance staff performance, such as local, state, and national library conferences, classes at educational and community institutions, consultants for leadership development and organizational strategy, annual staff development events at their libraries, and memberships with library organizations that offer
- From the regional library staff training budget, MELSA coordinated a second two-day ToP (Technology of Participation) Facilitation Methods training session on September 25–26 for 22 staff from the eight This nationally recognized course teaches leadership and successful meeting facilitation tools using three approaches: focused conversations, consensus workshop and action planning. Participants received a step-by-step manual and resource guide and one hour of free 1:1 coaching after the event.
With facilitation by MELSA’s staff, representatives from member library systems meet periodically to discuss a variety of topics relating to library services and operations. Some teams are responsible for determining optimal use of specified sections of the MELSA budget and providing recommendations to the Advisory Board. Current groups focus on electronic resources, collection development, technology, youth and teen services, promotion, circulation, cataloging, adult programming, volunteer coordination, jobs and small business initiatives, accessibility, facilities, and arts programming from the Legacy Amendment.
Regional Library Telecommunications Aid (RLTA)
MELSA applied for grant funds for member library systems through the RLTA grant, a state telecommunications aid program, which supplements the E-rate program for internet and line access costs (Priority 1). Once Priority 1 costs are met for the 12 regional library systems in the state, remaining funds (Priority 2) are allocated to the regional systems using a formula with weighted population, broadband, and poverty factors. Priority 2 funding is used for E-rate eligible equipment and/or for purchases for “the improvement of internet access and access to technology with items that are not e-rated, including, but not limited to, digital or online resources.” MELSA member library systems used Priority 2 funds to meet a variety of local technology needs, such as the purchase of equipment and computers, software, e-content, and other services and tools supporting digital services for library users.
Using actual costs submitted by the systems for Priority 1, and a formula calculation using 20 percent base and 80 percent population for Priority 2 funds within MELSA, combined Priority 1 and 2 distributions to the systems were $476,167.
Arts and Cultural Heritage Fund (ACHF, also called the Legacy Amendment)
Under the Arts and Cultural Heritage Fund (ACHF), Minnesota’s 300+ public libraries receive funding distributed through the 12 regional public library systems to provide educational opportunities in the arts, history, literary arts, and cultural heritage and to preserve Minnesota’s history and cultural heritage. MELSA received an appropriation of $1,073,155 for state fiscal year 2024 (July 2023–June 2024) and an appropriation of $1,073,155 for state fiscal year 2025 (July 2024–June 2025). In state fiscal years 2024 and 2025, MELSA’s allocation was distributed in three areas:
- 72 percent for local programs coordinated by the eight MELSA library systems
- 25 percent for regional programming coordinated by MELSA
- 3 percent for administration
In 2024, MELSA and member libraries continued to deliver Legacy programs with innovative partnerships with community artists and organizations, through in-person programming, live virtual programming, prerecorded content, take-and-make kits, and more. MELSA and member libraries provided more than 200 programs with over 600 events and over 60,000 attendees.
Examples of programming supported by regional ACHF funds:
- The Club Book author program features best-selling and award-winning authors from across the country, as well as highlighting local talent. In 2024, 16 virtual and in-person events drew 1,898 live attendees. The virtual programs presented a unique opportunity to pair a moderator with each of the featured authors; each moderator was either a co-hosting library staff member or subject matter expert and acted as a proxy for the usual live Each event is recorded and archived as a podcast, and the total number of podcast views of 2024 programs was over 2,500. The total number of podcast views of all programs since 2014 has grown to over 65,000 views.
- MELSA uses Legacy funds to support History Day in Minnesota across the region through Hullabaloos. Hullabaloos are research open houses where middle and high school students visit public and academic libraries to receive help on their History Day projects, including working with librarians to locate relevant resources, accessing library databases and resources, receiving one-on-one feedback about their projects, and attending mini workshops about various aspects of History Day 483 students from 40 schools attended one of the 12 Hullaballoos held from December 2023–January 2024.
- The 2024 Teen Lit Con event was held at Edina High School. This collaborative event is coordinated by MELSA with support from Youth Services and Teen Services groups; planning partners from school and public libraries; a bookseller partner, Mackin Educational Resources; and the multitype library system, Metronet. Teen Lit Con connects teens with favorite authors, introduces them to new authors and books, and provides a space to interact with peers interested in reading. Teens can participate in a variety of activities, including author talks, book related games and arts, writing workshops, book talk breakout sessions and an exhibit Attendance was over 800, an increase of approximately one third over 2023.
This sampling of cooperative and collaborative projects demonstrates the focused areas of MELSA’s strategic plan and supports the mission: to make great metro public libraries better.
OVERVIEW OF THE FINANCIAL STATEMENTS
The management’s discussion and analysis is intended to serve as an introduction to MELSA’s basic financial statements, which are comprised of three components: 1) government-wide financial statements,
2) fund financial statements, and 3) notes to basic financial statements. This report also contains other information in addition to the basic financial statements.
Government-Wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of MELSA’s finances, in a manner similar to private sector businesses.
The Statement of Net Position presents information on all of MELSA’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of MELSA is improving or deteriorating.
The Statement of Activities shows how MELSA’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.
The government-wide financial statements distinguish functions of MELSA that are principally supported by general revenues, such as state RLBSS funding, from those with specific funding sources. The governmental activities functions presented include Legacy Grant Programs, RLTA Grant Programs, cooperative and other programs, member technology distributions, and administration.
Fund Financial Statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. MELSA, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. MELSA maintains two fund types – governmental and fiduciary funds.
Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.
MELSA maintains two governmental funds to account for its operations. Information is presented separately in the basic financial statements for the General Fund and Member Library Allocations Special Revenue Fund. MELSA adopts an annual appropriated budget for its General Fund, and a budgetary comparison statement has been provided to demonstrate compliance with this budget.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact by the government’s near-term financing decisions. Both the governmental funds Balance Sheet and the governmental funds Statement of Revenue, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
MELSA’s Board of Trustees enacted changes to member library system revenue allocations and usage requirements during the year, which resulted in a change in fund structure. The Member Library Allocations Special Revenue Fund was closed during 2024, and a new fiduciary (custodial) fund was established to account for certain funds MELSA allocates to and holds for its member libraries.
MELSA is the trustee, or fiduciary, for these assets that belong to its member libraries, and is responsible for ensuring the assets are used only for their intended purposes and by those to whom the assets belong. MELSA’s fiduciary activities are reported in a separate Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. We exclude these activities from the government-wide financial statements because MELSA cannot use these assets to finance its operations.
Notes to Basic Financial Statements – The notes to basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The following tables present summaries of net position and changes in net position, including comparative data for the prior year:
|
Current and other assets
|
$ 8,429,420
|
|
$ 10,222,906
|
|
$ (1,793,486)
|
|
Capital assets, net
|
2,419,594
|
|
2,137,514
|
|
282,080
|
|
Total assets
|
$ 10,849,014
|
|
$ 12,360,420
|
|
$ (1,511,406)
|
|
Deferred outflows of resources Pension plan deferments
|
$ 52,697
|
|
$ 104,750
|
|
$ (52,053)
|
|
Liabilities
|
|
Other liabilities
|
$ 258,669
|
|
$ 894,742
|
|
$ (636,073)
|
|
Net pension liability
|
235,314
|
|
369,064
|
|
(133,750)
|
|
Long-term liabilities, including due within one year
|
115,168
|
|
152,076
|
|
(36,908)
|
|
Total liabilities
|
$ 609,151
|
|
$ 1,415,882
|
|
$ (806,731)
|
|
Deferred inflows of resources
|
|
|
|
|
|
|
Grants received for subsequent year
|
$ 2,281,844
|
|
$ 2,324,618
|
|
$ (42,774)
|
|
Pension plan deferments
|
168,334
|
|
119,570
|
|
48,764
|
|
Total deferred inflows of resources
|
$ 2,450,178
|
|
$ 2,444,188
|
|
$ 5,990
|
|
Net position
|
|
Net investment in capital assets
|
$ 2,393,785
|
$ 2,082,461
|
$ 311,324
|
|
Unrestricted
|
5,448,597
|
6,522,639
|
(1,074,042)
|
|
Total net position
|
$ 7,842,382
|
$ 8,605,100
|
$ (762,718)
|
MELSA’s financial position is the product of many factors. For example, the determination of MELSA’s net investment in capital assets involves many assumptions and estimates, such as current and accumulated depreciation/amortization amounts. Differences in estimated useful lives and capitalization policies may produce a significant difference in the calculated amounts.
Changes in net position over time may serve as a useful indicator of a government’s financial position. MELSA’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $7,842,382 at the close of the most recent fiscal year, a decrease of $762,718 from the previous year. The overall decreases consists of $786,624 of positive operating results, offset by a negative adjustment of
$1,549,342 to beginning net position, related to the change in fund structure previously described.
At the end of the current fiscal year, MELSA reported positive balances in all categories of net position, as was the case the previous year-end. Approximately 30.5 percent of MELSA’s net position reflects its net investment in capital assets (e.g., archival database, leases, furniture and equipment, and software subscriptions). These long-term assets are used to provide services to MELSA’s stakeholders, and are consequently not available for future spending. The remaining unrestricted net position of $5,448,597 may be used to meet MELSA’s ongoing obligations to citizens and creditors.
Governmental Activities – Governmental activities increased MELSA’s net position by $786,624 during the year ended December 31, 2024, excluding the change in fund structure. Key elements of this increase are as follows:
|
Revenues
Program revenues
|
|
|
Operating grants and contributions
|
$ 1,623,704
|
$ 1,607,464
|
$ 16,240
|
|
General revenues
|
|
|
|
|
Unrestricted grants
|
6,431,538
|
5,635,619
|
795,919
|
|
Other
|
560,602
|
497,255
|
63,347
|
|
Total revenues
|
8,615,844
|
7,740,338
|
875,506
|
|
Expenses
|
|
Legacy Grant Programs
|
1,123,681
|
1,102,872
|
20,809
|
|
RLTA Grant Programs
|
476,167
|
501,947
|
(25,780)
|
|
LSTA Grant Programs
|
–
|
1,459
|
(1,459)
|
|
Cooperative and other programs
|
5,048,964
|
4,106,222
|
942,742
|
|
Member technology distributions
|
264,393
|
769,875
|
(505,482)
|
|
Administration
|
914,552
|
854,938
|
59,614
|
|
Lease interest
|
1,463
|
2,451
|
(988)
|
|
Total expenses
|
7,829,220
|
7,339,764
|
489,456
|
|
Change in net position
|
786,624
|
400,574
|
386,050
|
|
Net position – beginning, as previously reported
|
8,605,100
|
8,204,526
|
400,574
|
|
Change in fund structure
|
(1,549,342)
|
–
|
(1,549,342)
|
|
Net position – beginning, as restated
|
7,055,758
|
8,204,526
|
(1,148,768)
|
|
Net position – ending
|
$ 7,842,382
|
$ 8,605,100
|
$ (762,718)
|
Overall, MELSA’s government-wide revenue increased $875,506 from the previous year, which is comprised of changes in the following revenue line items:
- Operating grants and contributions were $16,240 higher than last year, mainly due to an increase in Legacy revenue.
- Unrestricted grants increased $795,919. State RLBSS entitlements are awarded based on the state’s fiscal year, which runs from July 1 through June 30. Therefore, MELSA’s RLBSS revenue for a given year consists of half of the entitlements from two state fiscal The increase in MELSA’s 2024 RLBSS revenue reflects a net increase in these entitlements for state fiscal years ending June 30, 2025 and 2024, compared to entitlements for state fiscal years ending June 30, 2024 and 2023.
- The $63,347 increase in other general revenues was primarily the result of increased investment income, due to more favorable interest rates and market conditions.
MELSA’s government-wide expenses for 2024 were $489,456 more than 2023, as detailed in the following major expense areas:
- Legacy Grant expenses increased $20,809, corresponding with the increase in Legacy Grant
- RLTA Grant expenses as submitted by member library systems, excluding the portion used to reimburse MELSA office internet, were $25,780 less than last year.
- LSTA Grant expenses decreased $1,459, with a corresponding decrease in LSTA Grant revenue. There were no LSTA grants in 2024.
- Formula payments to member library systems, renamed Library Systems Allocations Funds (LSAF) in September 2024, increased by $440,745 in 2024, mainly due to the allocation changes adopted by the Board of Trustees in the current year.
- Expenses for the collaborative e-book and e-audio collection increased $250,220 in 2024, compared to 2023, due to additional purchases of digital content.
- Technology distributions requested by member libraries from Phase Program allocations were
$264,393 for the 2024 fiscal year, a decrease of $505,482 from 2023. This Board of Trustees eliminated the usage restrictions on these funds during 2024, at which point the remaining funds were moved to a custodial fund through a change in fund structure.
FINANCIAL ANALYSIS OF MELSA’S FUNDS
As noted earlier, MELSA uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds – The focus of MELSA’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing MELSA’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.
MELSA reports two governmental funds, the General Fund and the Member Library Allocations Special Revenue Fund.
The General Fund is the chief operating fund of MELSA. At the end of the current year, total fund balance of the General Fund was $5,888,907. As a measure of the General Fund’s liquidity, it may be useful to compare the fund balance to total fund expenditures. The unassigned fund balance of $75,817 at year-end represents 1.0 percent of the total General Fund expenditures for 2024.
The Member Library Allocations Special Revenue Fund was used to account for the Phase Program and other funding allocations committed by MELSA’s Board of Trustees to finance technology improvements and other costs for the various member library systems. Total remaining fund balance of $1,549,342 was moved to a custodial (fiduciary) fund during 2024 with removal of usage restrictions on these funds and discontinuance of the Phase Program.
|
Beginning of year
|
5,213,701
|
5,034,623
|
|
End of year
|
$ 5,888,907
|
$ 5,213,701
|
MELSA’s Board of Trustees adopted mid-year budget amendments to reflect actual revenue to be received from the RLBSS State Grant and increased investment income. Corresponding adjustments were made to the expenditures budget, reflecting the use of these funds, anticipated fund balance carryovers, and other estimated accruals.
- Total revenue was $864,562 higher than last year, mainly due to the increases in RLBSS funding and investment income, as previously discussed.
- State aid and grants revenue was over budget by $400,620, primarily because a portion of RLBSS funds (Equalization) is carried over to the subsequent year and intentionally not included in the current year budget.
- Investment income exceeded budget by $210,483, due to more favorable interest rates and market conditions than anticipated.
- Legacy Grant expenditures were $50,526 over budget (the budget is based on current year appropriations), due to increased spending by some member libraries.
- Total expenditures for cooperative programs were $691,480 less than budgeted, including:
- Electronic database expenditures were under budget by $215,617, primarily due to cancellation of two programs.
- Undesignated collaborative expenditures were $261,274 under budget, due to a pause on planned spending of excess funds during the Executive Director search process from May to October.
- Actual administration expenditures were $105,739 less than budgeted, due to conservative budgeting and the Executive Director position being vacant for part of the year.
Capital Assets – MELSA’s investment in capital assets for its governmental activities as of December 31, 2024, amounted to $2,419,594 (net of accumulated depreciation/amortization). This investment in capital assets includes intangible assets – eCollection, archival databases, eMaterials subscriptions, furniture and equipment, and leased building space. Capital asset changes during the current fiscal year included the following:
|
Archival databases
|
1,478,734
|
|
2,127,827
|
|
eMaterials subscriptions
|
687,301
|
|
492,350
|
|
Furniture and other equipment
|
45,786
|
|
40,962
|
|
Lease – office space
|
87,112
|
|
87,112
|
|
Accumulated depreciation/amortization
|
(1,174,148)
|
|
(1,670,864)
|
|
Net capital assets, depreciated/amortized
|
1,124,785
|
|
1,077,387
|
|
Total capital assets,
net of depreciation/amortization
|
$ 2,419,594
|
|
$ 2,137,514
|
|
Depreciation/amortization expense
|
$ 419,953
|
|
$ 327,355
|
Additional information on MELSA’s capital assets can be found in the notes to basic financial statements.
Long-Term Liabilities – MELSA reported long-term employee benefits liabilities at year-end of $89,359 for compensated absences and a Public Employees Retirement Association net pension liability of
$235,314. MELSA also reported $25,809 for a lease liability related to the office space lease asset shown above. Additional information on MELSA’s long-term liabilities can be found in the notes to basic financial statements.
REQUESTS FOR INFORMATION
These financial statements are designed to provide a general overview for all those with an interest in MELSA’s finances. Questions concerning any of the information provided in these statements, or requests for additional financial information, should be addressed to the Metropolitan Library Service Agency, 1619 Dayton Avenue, Suite 314, St. Paul, Minnesota 55104-6206; telephone (651) 645-5731 or e-mail
BASIC FINANCIAL STATEMENTS
|
Statement of Net Position
|
|
as of December 31, 2024
|
|
(With Partial Comparative Information as of December 31, 2023)
|
|
Governmental Activities
|
|
2024
|
2023
|
|
Assets
|
|
Cash and investments
|
|
Receivables
|
|
Interest
|
|
Accounts
|
|
Due from fiduciary fund
|
|
Prepaids
|
|
Capital assets
|
|
Not depreciated/amortized
|
|
Depreciated/amortized, net
|
|
Total assets
|
|
|
$ 7,442,062 $ 9,484,075
|
Deferred outflows of resources
|
|
Pension plan deferments
|
|
|
52,697 104,750
Total assets and deferred outflows of resources
|
Liabilities
|
|
Accounts payable
|
|
Due to member libraries
|
|
Unearned revenue
|
|
Net pension liability, due in more than one year
|
|
Long-term liabilities
|
|
Due within one year
|
|
Due in more than one year
|
|
Total liabilities
|
|
Deferred inflows of resources
|
|
Grants received for subsequent year
|
|
Pension plan deferments
|
|
Total deferred inflows of resources
|
|
Net position
|
|
Net investment in capital assets
|
|
Unrestricted
|
|
Total net position
|
|
Total liabilities, deferred inflows of
|
|
resources, and net position
|
$ 10,901,711
|
$ 140,453
|
|
2,820
|
|
115,396
|
|
235,314
|
|
|
|
2,281,844
|
|
168,334
|
|
2,450,178
|
|
|
|
2,393,785
|
|
5,448,597
|
|
7,842,382
|
|
|
$ 10,901,711
$ 12,465,170
|
$ 155,237
|
|
635,795
|
|
103,710
|
|
369,064
|
|
2,324,618
|
|
119,570
|
|
2,444,188
|
|
2,082,461
|
|
6,522,639
|
|
8,605,100
|
$ 12,465,170
|
Statement of Activities
|
|
Year Ended December 31, 2024
|
|
(With Partial Comparative Information for the Year Ended December 31, 2023)
|
|
|
2024
|
|
|
|
|
Net (Expenses)
|
|
|
|
Revenue and
|
|
Program
|
|
Changes in
|
|
Revenues
|
|
Net Position
|
|
Operating
|
|
|
|
Grants and
|
|
Governmental
|
|
Functions/Programs
|
|
Expenses
|
|
Contributions
|
|
Activities
|
|
|
|
|
|
|
|
–
|
|
|
|
|
|
|
|
–
|
|
|
|
|
|
|
|
5,048,964)
|
|
|
|
|
|
|
|
(264,393)
|
|
|
|
|
|
|
|
(890,696)
|
|
|
|
|
|
|
|
(1,463)
|
|
Total governmental activities
|
|
$ 7,829,220
|
|
$ 1,623,704
|
|
(6,205,516) (5,732,300)
|
|
Governmental activities
|
|
Legacy Grant Programs
|
|
RLTA Grant Programs
|
|
Cooperative and other programs
|
|
Member technology distributions
|
|
Administration
|
|
Lease interest
|
|
|
|
$ 1,123,681 $ 1,123,681 $
|
|
476,167 476,167
|
|
5,048,964 – (
|
|
264,393 –
|
|
914,552 23,856
|
|
1,463 –
|
|
|
|
$ –
|
|
–
|
|
(4,106,222)
|
|
(769,875)
|
|
(853,752)
|
|
(2,451)
|
|
|
|
General revenues
|
|
Unrestricted grants
|
|
Investment income
|
|
Other general revenues
|
|
|
6,431,538
555,354
5,248
Total general revenues 6,992,140 6,132,874
Change in net position 786,624 400,574
Net position – end of year
$ 7,842,382 $
8,605,100
|
|
2023
|
|
|
Net (Expenses)
|
|
|
Revenue and
|
|
|
Changes in
|
|
|
Net Position
|
|
|
|
Balance Sheet
|
|
Governmental Funds
|
|
as of December 31, 2024
|
|
(With Partial Comparative Information as of December 31, 2023)
|
|
Member Library
|
|
|
Allocations
|
Totals
|
|
Special Revenue
|
2024 2023
|
|
|
General
|
Assets
|
|
Cash and investments
|
|
Receivables
|
|
Interest
|
|
Accounts receivable
|
|
Due from other funds
|
|
Due from fiduciary fund
|
|
Prepaids
|
|
Databases
|
|
Other
|
|
|
$ 7,442,062 $
– $ 7,442,062
464,060
228,597
$ 9,484,075
Total assets
$ 8,429,420 $
– $ 8,429,420
$ 10,243,953
|
Deferred inflows of resources
|
|
Grants received for subsequent year
|
|
|
2,281,844 – 2,281,844 2,324,618
|
Total liabilities, deferred inflows of
|
|
resources, and fund balances
|
|
|
$ 8,429,420 $
– $ 8,429,420
$ 10,243,953
|
Reconciliation of the Balance Sheet to the
|
|
Statement of Net Position
|
|
Governmental Funds
|
|
as of December 31, 2024
|
|
(With Partial Comparative Information as of December 31, 2023)
|
2024 2023
Total fund balances – total governmental funds
$ 5,888,907
$ 7,003,546
Amounts reported for governmental activities in the Statement of Net Position differ because:
|
Capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds.
|
|
Cost of capital assets
|
|
Less accumulated depreciation/amortization
|
|
Long-term liabilities are included in net position, but are excluded from fund
balances until due and payable.
|
|
Lease liability
|
|
Compensated absences
|
|
Net pension liability – PERA
|
|
The recognition of certain revenues and expenses/expenditures differ between the full accrual governmental activities financial statements and the modified accrual
governmental fund financial statements.
|
|
Deferred outflows of resources – pension plan deferments
|
|
Deferred inflows of resources – pension plan deferments
|
52,697
(168,334)
Total net position – governmental activities
$ 7,842,382
$ 8,605,100
|
Statement of Revenue, Expenditures, and Changes in Fund Balances
|
|
Governmental Funds
|
|
Year Ended December 31, 2024
|
|
(With Partial Comparative Information for the Year Ended December 31, 2023)
|
|
Member Library
|
|
|
Allocations
|
Totals
|
|
Special Revenue
|
2024 2023
|
|
|
|
Expenditures
|
|
Current
|
|
LSTA Grant Programs
|
|
Legacy Grant Programs
|
|
RLTA Grant Programs
|
|
Cooperative programs
|
|
Administration
|
|
Member technology distributions
|
|
Debt service
|
|
Principal
|
|
Interest
|
|
Capital outlay
|
|
Total expenditures
|
|
|
|
–
|
|
1,123,681
|
|
476,167
|
|
4,664,329
|
|
873,965
|
|
–
|
|
|
|
–
|
|
1,123,681
|
|
476,167
|
|
4,664,329
|
|
873,965
|
|
264,393
|
|
|
|
1,459
|
|
1,102,872
|
|
501,947
|
|
3,816,736
|
|
805,848
|
|
769,875
|
|
|
General
|
29,244
|
|
–
|
|
29,244
|
|
27,362
|
|
1,463
|
|
–
|
|
1,463
|
|
2,451
|
|
736,909
|
|
–
|
|
736,909
|
|
598,539
|
|
7,905,758
|
|
264,393
|
|
8,170,151
|
|
7,627,089
|
|
|
|
Excess (deficiency) of revenue
|
|
over expenditures
|
|
|
699,096 (264,393) 434,703 113,203
Net change in fund balances 675,206 (240,503) 434,703 113,203
End of year
$ 5,888,907 $
– $ 5,888,907
$ 7,003,546
|
Reconciliation of the Statement of
|
|
Revenue, Expenditures, and Changes in Fund Balances
|
|
to the Statement of Activities
|
|
Governmental Funds
|
|
Year Ended December 31, 2024
|
|
(With Partial Comparative Information for the Year Ended December 31, 2023)
|
2024 2023
Total net change in fund balances – total governmental funds
$ 434,703
$ 113,203
Amounts reported for governmental activities in the Statement of Activities differ because:
A gain or loss on the disposal of capital assets, including the difference between the carrying value and any related sale proceeds, is included in the change in net position.
However, only the sale proceeds are included in the change in fund balances. (34,876) (820)
|
The recognition of certain revenues and expenses/expenditures differ between the full accrual governmental activities financial statements and the modified accrual
governmental fund financial statements.
|
|
Deferred outflows of resources – pension plan deferments
|
|
Deferred inflows of resources – pension plan deferments
|
|
|
(52,053)
(48,764)
Change in net position – governmental activities
$ 786,624
$ 400,574
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
| |
|
|
|
|
|
|
|
| |
| |
|
1,102,778
|
|
250,000
|
|
33,000
|
|
161,883
|
|
25,000
|
|
140,265
|
|
25,000
|
|
155,210
|
|
|
|
|
1,102,778
|
|
250,000
|
|
33,000
|
|
461,883
|
|
25,000
|
|
140,265
|
|
25,000
|
|
220,534
|
|
|
|
|
887,161
|
|
250,000
|
|
33,000
|
|
458,835
|
|
17,695
|
|
126,616
|
|
22,050
|
|
164,169
|
|
|
|
|
(215,617)
|
|
–
|
|
–
|
|
(3,048)
|
|
(7,305)
|
|
(13,649)
|
|
(2,950)
|
|
(56,365)
|
|
|
| |
| |
|
|
|
|
|
|
|
|
| |
| |
|
|
|
|
|
|
|
|
| |
| |
|
|
|
|
|
|
|
|
| |
| |
|
85,000
|
|
8,000
|
|
27,769
|
|
7,300
|
|
110,000
|
|
–
|
|
57,820
|
|
4,270,785
|
|
|
|
|
85,000
|
|
8,000
|
|
27,769
|
|
7,300
|
|
110,000
|
|
–
|
|
261,274
|
|
5,355,809
|
|
|
|
|
75,162
|
|
–
|
|
3,150
|
|
7,190
|
|
52,705
|
|
6,057
|
|
–
|
|
4,664,329
|
|
|
|
|
(9,838)
|
|
(8,000)
|
|
(24,619)
|
|
(110)
|
|
(57,295)
|
|
6,057
|
|
(261,274)
|
|
(691,480)
|
|
|
|
Statement of Revenue, Expenditures, and Changes in Fund Balances
|
|
General Fund
|
|
Budget and Actual
|
|
Year Ended December 31, 2024
|
Over (Under)
|
Revenue
|
|
State aid and grants
|
|
Federal grants
|
|
Investment income
|
|
Other revenue
|
|
e-Rate reimbursement revenues
|
|
Miscellaneous
|
|
Total revenue
|
|
|
|
$ 7,630,861
|
|
28,500
|
|
148,245
|
|
|
|
4,560
|
4,560
|
4,560
|
–
|
|
–
|
–
|
688
|
688
|
|
7,812,166
|
7,993,063
|
8,604,854
|
611,791
|
|
|
Actual Final Budget
|
Administration
|
|
|
|
|
|
Salaries and benefits
|
|
|
|
|
|
Salaries
|
581,484
|
543,730
|
526,513
|
(17,217)
|
|
Fringe benefits
|
190,390
|
175,936
|
153,448
|
(22,488)
|
|
Other payroll expense
|
3,500
|
3,500
|
2,536
|
(964)
|
|
Statement of Revenue, Expenditures, and Changes in Fund Balances
|
|
General Fund
|
|
Budget and Actual (continued)
|
|
Year Ended December 31, 2024
|
Over (Under)
|
20,000
|
|
11,560
|
|
7,500
|
|
19,525
|
|
5,000
|
|
1,000
|
|
–
|
|
|
|
20,000
|
|
11,560
|
|
7,500
|
|
22,750
|
|
80,000
|
|
1,000
|
|
1,300
|
|
|
|
11,284
|
|
7,967
|
|
8,303
|
|
22,750
|
|
76,841
|
|
–
|
|
1,612
|
|
|
|
(8,716)
|
|
(3,593)
|
|
803
|
|
–
|
|
(3,159)
|
|
(1,000)
|
|
312
|
|
|
Actual Final Budget
|
26,500
|
|
7,000
|
|
4,027
|
|
7,701
|
|
1,500
|
|
16,000
|
|
3,400
|
|
21,500
|
|
1,300
|
|
979,704
|
|
7,897,701
|
|
|
|
7,494
|
|
3,159
|
|
2,505
|
|
4,560
|
|
1,290
|
|
13,880
|
|
527
|
|
18,258
|
|
738
|
|
873,965
|
|
7,138,142
|
|
|
|
(19,006)
|
|
(3,841)
|
|
(1,522)
|
|
(3,141)
|
|
(210)
|
|
(2,120)
|
|
(2,873)
|
|
(3,242)
|
|
(562)
|
|
(105,739)
|
|
(759,559)
|
|
|
Capital outlay – eBooks and other 668,117 668,117 736,909 68,792
Total expenditures 7,511,157 8,596,525 7,905,758 (690,767) Excess (deficiency) of revenue over expenditures 301,009 (603,462) 699,096 1,302,558
Net change in fund balances
|
Fund balances
|
|
Beginning of year
|
$ (222,991) $
(627,462)
675,206 $
5,213,701
1,302,668
End of year $ 5,888,907
|
Statement of Fiduciary Net Position
|
|
as of December 31, 2024
|
|
Member Library
|
|
Allocations
|
|
Custodial fund
|
|
Assets
|
|
Cash and investments
|
|
|
$ 3,579,573
|
Liabilities
|
|
Due to General Fund
|
|
|
263,624
|
Net position
|
|
Restricted for member libraries
|
|
|
$ 3,315,949
|
Statement of Changes in Fiduciary Net Position
|
|
Year Ended December 31, 2024
|
|
Member Library
|
|
Allocations
|
|
Custodial fund
|
|
Additions
|
|
Contributions
|
|
Library system allocation funds
|
|
|
$ 2,038,746
907,934
Change in net position 1,130,81
End of year $ 3,315,949
Notes to Basic Financial Statements Year Ended December 31, 2024
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Operation
The Metropolitan Library Service Agency (MELSA) is a multi-jurisdictional federation of the city and county public libraries in the metropolitan Twin Cities area organized to provide cooperative services and cost-saving programs to the participants. MELSA is the administrative agency for receiving and equitable sharing of state and federal grant appropriations made available through State Library Services of the Minnesota Department of Education (MDE). MELSA was established in 1969 as a nonprofit governmental agency in accordance with the Minnesota Joint Powers Agreement, an agreement between the counties and city of the member libraries, and serves as 1 of 12 regional library systems in the state. It is governed by a Board of Trustees; one trustee is appointed by each party to the agreement. Since the merger of the Minneapolis Public Library with the Hennepin County Library in January 2008, the trustee from Hennepin County has two votes on the Board of Trustees. The trustees receive professional expertise from an Advisory Board composed of the directors from the member libraries. There are also teams and interest groups made up of staff members from the libraries organized to consider specialized areas of library operations.
The operations of MELSA are funded primarily by Regional Library Basic System Support (RLBSS) state aid. MELSA also applies for other state and federal grants through State Library Services, a unit of the MDE. The grant funds are awarded annually and are based on applications approved by State Library Services. Certain grants require that eligible expenditures are made in order to earn the grant. Revenue for these grants is recognized in the period in which eligible expenditures are incurred.
The principal services performed by MELSA are as follows:
- Equitable distribution of state and federal grant
- Seamless reciprocal borrowing for library patrons, including delivery of materials for interlibrary
- Purchase and management of a shared e-books/e-audio/e-magazines
- Access to a variety of cooperatively purchased electronic resources and tools, such as homework help and career preparation services, databases on topics ranging from ancestry search to car repair to investment information, self-publishing tools, and catalog enhancements.
- Support of library systems’ summer reading programs and other youth literacy
- Funding and information-sharing in areas such as technology, training, programming, and general library operations.
- Development of public awareness marketing and community relations
- Oversight of the Arts and Cultural Heritage Fund Grant from the state of Minnesota, including coordination of region-wide programming.
B. Reporting Entity
As required by accounting principles generally accepted in the United States of America, these financial statements include MELSA (the primary government) and its component units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to determine if the primary government is financially accountable for a component unit includes whether or not the primary government appoints the voting majority of the potential component unit’s board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit.
Based on these criteria, there are no organizations considered to be component units of MELSA for financial reporting purposes.
C. Government-Wide Financial Statements
The government-wide financial statements (Statement of Net Position and Statement of Activities) display information about the reporting government as a whole. These statements include all of the financial activities of MELSA, except for the fiduciary funds.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; 2) operating grants and contributions; and 3) capital grants and contributions. Other internally-directed revenues are reported as general revenues.
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 related cash flows. Grants and similar items are recognized as revenue when all eligibility requirements imposed by the provider have been met.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Depreciation/amortization is included in the direct expenses of each function. Interest on long-term debt is considered an indirect expense and is reported separately on the Statement of Activities.
D. Fund Financial Statement Presentation
Separate fund financial statements are provided for MELSA’s governmental and fiduciary funds. Major individual governmental funds are reported in separate columns in the fund financial statements.
Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this basis of accounting, transactions are recorded in the following manner:
- Revenue Recognition – Revenue is recognized when it becomes measurable and available. “Measurable” means the amount of the transaction can be determined and “available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, MELSA considers revenues to be available if collected within 60 days after year-end. Grants and similar items are recognized when all eligibility requirements imposed by the provider have been met. Proceeds of long-term debt are reported as other financing sources.
Major revenue susceptible to accrual includes intergovernmental revenue and interest earned on investments. In general, other revenues are recognized when cash is received.
- Recording of Expenditures – Expenditures are generally recorded when a liability is incurred, except for principal and interest on long-term debt, compensated absences, and pensions, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as capital outlay expenditures in the governmental funds.
Fiduciary funds are reported in the fiduciary fund financial statements by type (custodial), using the economic resources measurement focus and accrual basis of accounting described earlier in these notes. Since, by definition, fiduciary fund assets are being held for the benefit of a third party and cannot be used for activities or obligations of MELSA, this fund is excluded from the government-wide financial statements.
A description of the funds included in this report is as follows:
Major Governmental Funds
General Fund – The General Fund is the primary operating fund of MELSA. This fund is used to account for all financial transactions and resources except those required to be accounted for in another fund. Revenues are derived primarily from state aids and investment income.
Member Library Allocations Special Revenue Fund – This fund was used to account for resources committed through Phase and other allocations made to the member library systems by MELSA’s Board of Trustees. The Phase Program was discontinued during the current year and this fund was closed.
Fiduciary Funds
Member Library Allocations Custodial Fund – This fund was established in the current year to account for resources distributed through Library Systems Allocation Funds (LSAF) allocations by MELSA’s Board of Trustees, held in a custodial capacity for use by its member library systems. Assets held in this fund are recorded separately in MELSA’s financial records and are held in an individual bank account.
E. Budgets and Budgetary Accounting
The Board of Trustees adopts an annual budget for the General Fund on the modified accrual basis. Spending control (the level at which total expenditures may not legally exceed budget) is established at the fund level; however, management control is exercised at budgetary line-item levels. Unexpended appropriations lapse at year-end unless approved by the Board of Trustees as encumbered.
F. Cash and Investments
Cash and temporary investments are invested to the extent available in various securities as authorized by state law. Investments are generally stated at fair value, except for certain external investment pools stated at amortized cost. Short-term, highly liquid debt instruments (including negotiable certificates of deposit, commercial paper, and U.S. treasury and agency obligations) purchased with a remaining maturity of one year or less may also be reported at amortized cost. Investment income is accrued at the Balance Sheet date.
MELSA categorizes its fair value measurements within the fair value hierarchy established by accounting principles generally accepted in the United States of America. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices.
See Note 2 for MELSA’s recurring fair value measurements at year-end.
G. Receivables
Accounts receivable are stated at the amount management expects to collect from the balance outstanding at year-end. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, management has concluded that realization losses on balances outstanding at year-end will be immaterial.
H. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Prepaid items are reported using the consumption method and recorded as expenses/expenditures at the time of consumption.
I. Subscription-Based Information Technology Arrangements (SBITAs)
A SBITA is a contract that conveys control of the right to use another party’s information technology (IT) software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction. MELSA has entered into certain SBITAs for the use and hosting of digital library content. Capital assets associated with SBITAs are presented separately in Note 5. When applicable, a liability is reported for any future payments required by subscription agreements.
J. Capital Assets
Capital outlays are recorded as expenditures of the governmental funds in the fund financial statements, but are reported as capital assets in the government-wide financial statements. MELSA defines capital assets as those with an initial, individual cost of $500 or more with an estimated useful life in excess of one year. Such assets are capitalized at historical cost or estimated historical cost when actual historical cost is not available. Groups of similar assets acquired at or near the same time for a single objective, with individual costs below this threshold, are also capitalized if the aggregate cost of the assets is considered significant. Donated capital assets are recorded at their estimated acquisition value on the date of donation. Lease capital assets are recorded based on the measurement of payments applicable to the lease term. SBITA capital assets are recorded based on the measurement of any subscription liability plus any payments to a SBITA vendor at the commencement of the subscription term, including any applicable initial implementation costs as defined in the standard. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.
Lease assets are amortized over the term of the lease or over the useful life of the applicable asset class described below if future ownership is anticipated. SBITAs are amortized in a systematic and rational manner over the shorter of the subscription term or the useful life of the underlying IT assets. Intangible assets – eCollection deemed to have an inexhaustible life are not amortized. Depreciation and amortization are recorded on a government-wide basis using the straight-line method and the following estimated useful lives:
Years
Archival databases 20
Furniture and other equipment 3–10
K. Compensated Absences
MELSA recognizes a liability for compensated absences for leave time that (1) has been earned for services previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, and (3) is more likely than not to be used as time off or paid during or upon separation from employment. Based on the criteria listed, one type of leave qualify for liability recognition for compensated absences – flex leave.
The liability for compensated absences is reported as incurred in the government-wide financial statements. A liability for compensated absences is recorded in the governmental funds only if the liability has matured because of employee resignations or retirements.
L. State-Wide Pension Plans
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 the PERA’s fiduciary net position have been determined on the same basis as they are reported by the PERA. 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.
M. Deferred Outflows/Inflows of Resources
In addition to assets and liabilities, statements of financial position or balance sheets will sometimes report separate sections for deferred outflows or inflows of resources. These separate financial statement elements represent a consumption or acquisition of net position that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) or an inflow of financial resources (revenue) until then.
MELSA reports deferred outflows and inflows of resources related to pensions in the government-wide Statement of Net Position. These deferred outflows and inflows result from differences between expected and actual experience, changes in proportion, changes of assumptions, differences between projected and actual earnings on pension plan investments, and contributions to the plan subsequent to the measurement date and before the end of the reporting period. These amounts are deferred and amortized as required under pension standards.
Grants received for subsequent years, which represents advances of grants received before the period they are intended to finance, are reported as deferred inflows of resources in both the government-wide Statement of Net Position and the governmental funds Balance Sheet. Such grant funds are deferred and recognized as an inflow of resources in the government-wide financial statements in the year for which the funding is intended, and as an inflow of resources in the governmental fund financial statements during the year for which they are intended, if available.
N. Net Position
In the government-wide and fiduciary fund financial statements, net position represents the difference between assets, liabilities, and deferred inflows/outflows of resources. Net position is displayed in three components:
- Net Investment in Capital Assets – Consists of capital assets, net of accumulated depreciation and amortization, reduced by outstanding debt issued to acquire capital assets.
- Restricted Net Position – Consists of net position restricted for external restrictions imposed by creditors, grantors, or laws or regulations of other governments.
- Unrestricted Net Position – All other net position that does not meet the definition of “restricted” or “net investment in capital assets.”
MELSA applies restricted resources first when an expense is incurred for which both restricted and unrestricted resources are available.
O. Fund Balance Classifications
In the fund financial statements, governmental funds report fund balance in classifications that disclose constraints for which amounts in those funds can be spent. These classifications are as follows:
- Nonspendable – Consists of amounts that are not in spendable form, such as prepaid items, inventory, and other long-term assets.
- Restricted – Consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions.
- Committed – Consists of internally imposed constraints that are established by resolution of the Board of Trustees. Those committed amounts cannot be used for any other purpose unless the Board of Trustees removes or changes the specified use by taking the same type of action it employed to previously commit those amounts.
- Assigned – Consists of internally imposed constraints of amounts intended to be used by MELSA for specific purposes that do not meet the criteria to be classified as restricted or committed. In governmental funds, assigned amounts represent intended uses established by the governing body itself or by an official to which the governing body delegates the authority.
- Unassigned – The residual classification for the General
When both restricted and unrestricted resources are available for use, it is MELSA’s policy to first use restricted resources, then unrestricted resources as they are needed.
When committed, assigned, or unassigned resources are available for use, it is MELSA’s policy to use resources in the following order: 1) committed, 2) assigned, and 3) unassigned.
P. Risk Management
MELSA is exposed to various risks of loss related to torts: theft of, damage to, or destruction of assets; errors and omissions; injuries to employees; and natural disasters. MELSA manages these various risks through membership in the Minnesota Counties Insurance Trust (the Trust), a joint powers organization formed for the purpose of developing and administering a risk management service program. Insurance coverage obtained through the Trust includes workers’ compensation, property, general commercial liability, and public official liability. According to the Trust’s joint powers agreement, any liabilities of the Trust in excess of assets shall be assessed to the members of the Trust in a manner determined by the Trust’s Board. If the Trust’s assets are determined to be more than sufficient to meet liabilities and maintain reserves, such surplus assets may be returned to members in a manner determined by the Trust’s Board. Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three fiscal years. There were no significant reductions in insurance coverage in the current year.
Q. Use of Estimates
The preparation of financial statements, in accordance with accounting principles generally accepted in the United States of America, requires management to make estimates that affect amounts reported in the financial statements. Actual amounts could differ from such estimates.
R. Prior Period Comparative Financial Information/Reclassification
The financial statements include partial prior year comparative information. Such information does not include all of the information required or sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with MELSA’s financial statements for the year ended December 31, 2023, from which such partial information was derived. Also, amounts presented in the prior year data may be reclassified to be consistent with the current year’s presentation.
S. Change in Fund Structure
During the year ended December 31, 2024, MELSA’s Board of Trustees enacted changes to its member library system revenue allocations, creating a new LSAF Program. As part of this change, MELSA discontinued its Phase Program, converting any remaining unspent Phase Program allocations to the LSAF Program, and removed the spending restrictions previously imposed on the Phase Program funds. With the removal of these restrictions, the requirement to account for the Phase Program allocations in a special revenue fund was eliminated. Therefore, the residual unspent funds were moved to the newly established Library Allocations Custodial (fiduciary) Fund, and the Member Library Allocations Special Revenue Fund was closed.
This change in fund structure decreased the fund balance of the Member Library Allocations Special Revenue Fund in the governmental fund financial statements, and the governmental activities net position in the government-wide financial statements by $1,549,342. The net position of the Member Library Allocations Custodial Fund increased by $2,185,137, which included $635,795 previously reported as due to member libraries in the special revenue fund. See Note 8 for additional details on this change in the current year.
A. Components of Cash and Investments
Cash and investments at year-end consist of the following:
Investments $ 11,021,620
Cash on hand 15
Total $ 11,021,635
Cash and investments are presented in the financial statements as follows:
Statement of Net Position Cash and investments
Statement of Fiduciary Net Position
$ 7,442,062
Cash and investments 3,579,573
Total $ 11,021,635
B. Deposits
In accordance with applicable Minnesota Statutes, MELSA may maintain deposits at depository banks authorized by the Board of Trustees, including checking accounts and certificates of deposit. The following is considered the most significant risk associated with deposits:
Custodial Credit Risk – In the case of deposits, this is the risk that in the event of a bank failure, MELSA’s deposits may be lost.
Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes, and bonds; issues of U.S. government agencies; general obligations rated “A” or better; revenue obligations rated “AA” or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. MELSA has no additional deposit policies addressing custodial credit risk.
At year-end, the carrying amount and bank balance of MELSA’s deposits were both $0, and all deposits were fully covered by federal deposit insurance.
C. Investments
MELSA has the following investments at year-end:
|
Investment Type
|
Credit Risk
Agency Rating
|
Fair Value Measurements
Using
|
Interest Risk Maturity
Duration
|
Total
|
|
U.S. treasuries
|
Aaa Moody’s
|
Level 2
|
Less than 1 year
|
$ 877,815
|
|
Negotiable certificates of deposit
|
Not rated
|
Level 2
|
Less than 1 year
|
720,054
|
|
Investment pools – 4M Fund
|
AAA S&P
|
Amortized cost
|
Not applicable
|
9,423,751
|
|
|
|
|
|
$ 11,021,620
|
The Minnesota Municipal Money Market (4M) Fund is an external investment pool regulated by Minnesota Statutes not registered with the Securities and Exchange Commission (SEC) that follows the regulatory rules of the SEC. MELSA’s investment in this fund is measured at the net asset value per share provided by the pool, which is on the amortized cost method that approximates fair value. The 4M Fund has no restrictions on withdrawals.
Investments are subject to various risks, the following of which are considered the most significant:
Custodial Credit Risk – For investments, this is the risk that in the event of a failure of the counterparty to an investment transaction (typically a broker-dealer) MELSA would not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. MELSA’s investment policy addresses this risk by instructing management to limit its exposure by purchasing insured or registered investments, or by the control of who holds the securities.
Credit Risk – This is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Minnesota Statutes limit MELSA’s investments to direct obligations or obligations guaranteed by the United States or its agencies; shares of investment companies registered under the Federal Investment Company Act of 1940 that receive the highest credit rating, are rated in one of the two highest rating categories by a statistical rating agency, and all of the investments have a final maturity of 13 months or less; general obligations rated “A” or better; revenue obligations rated “AA” or better; general obligations of the Minnesota Housing Finance Agency rated “A” or better; bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System; commercial paper issued by United States corporations or their Canadian subsidiaries, rated of the highest quality category by at least two nationally recognized rating agencies, and maturing in 270 days or less; Guaranteed Investment Contracts guaranteed by a United States commercial bank, domestic branch of a foreign bank, or a United States insurance company, and with a credit quality in one of the top two highest categories; repurchase or reverse purchase agreements and securities lending agreements with financial institutions qualified as a “depository” by the government entity, with banks that are members of the Federal Reserve System with capitalization exceeding $10,000,000; that are a primary reporting dealer in U.S. government securities to the Federal Reserve Bank of New York; or certain Minnesota securities broker-dealers. MELSA’s investment policy does not further restrict investing in specific financial instruments.
Concentration Risk – This is the risk associated with investing a significant portion of MELSA’s investment (considered 5.0 percent or more) in the securities of a single issuer, excluding U.S. guaranteed investments (such as treasuries), investment pools, and mutual funds. MELSA does not have an investment policy that limits the concentration of investments.
Interest Rate Risk – This is the risk of potential variability in the fair value of fixed rate investments resulting from changes in interest rates (the longer the period for which an interest rate is fixed, the greater the risk). MELSA does not have an investment policy limiting the duration of investments.
A. Interfund Balances
At December 31, 2024, the General Fund had a receivable of $263,624 due from the Member Library Allocations Custodial Fund, which represents interest and redemption of a certificate of deposit due to be transferred from the Member Library Allocations Custodial Fund to the General Fund. The amounts are noninterest-bearing and are generally settled during the subsequent fiscal year.
B. Interfund Transfers
During the year, MELSA transferred $24,000 from the General Fund to the Member Library Allocations Special Revenue Fund. The transfer represents the budgeted allocation of funds to its member libraries under the NISO Circulation Interchange Protocol (NCIP) Program ($24,000) to finance NCIP maintenance at the library sites. The Member Library Allocations Special Revenue Fund transferred
$110 of residual funds to the General Fund when the fund was closed.
C. Accounting Treatment
Interfund balances and transfers reported in the fund financial statements are eliminated, to the extent possible, in the government-wide financial statements.
NOTE 4 – UNEARNED REVENUE AND DEFERRED INFLOWS OF RESOURCES
A. Unearned Revenue
Grants and entitlements received before all eligibility requirements are met are recorded as unearned revenue. Unearned revenue at December 31, 2024 consisted of:
Regional Library Telecommunications Aid $ 115,396
B. Deferred Inflows of Resources
Grant funds received prior to the period they were intended to finance, for which the only revenue recognition requirement that must be fulfilled is the passage of time, are recorded as deferred inflows of resources. Deferred inflows of resources at December 31, 2024 consisted of:
|
State aid and grants (RLBSS)
|
$ 629,397
|
|
State aid and grants (Legacy)
|
1,652,447
|
|
|
$ 2,281,844
|
Capital asset activity for the year ended December 31, 2024 was as follows:
|
A. Governmental Activities
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2023
|
Increases
|
Decreases
|
2024
|
|
Capital assets, not depreciated/amortized
|
|
|
|
|
|
Intangible assets – eCollection
|
$ 1,060,127
|
$ 234,682
|
$ –
|
$ 1,294,809
|
|
Capital assets, depreciated/amortized Archival databases
|
2,127,827
|
59,907
|
709,000
|
1,478,734
|
|
Furniture and other equipment
|
40,962
|
8,885
|
4,061
|
45,786
|
|
Lease – office space
|
87,112
|
–
|
–
|
87,112
|
|
eMaterials subscriptions
|
492,350
|
433,435
|
238,484
|
687,301
|
|
Total capital assets, depreciated/amortized
|
2,748,251
|
502,227
|
951,545
|
2,298,933
|
|
Less accumulated depreciation/amortization on Archival databases
|
1,423,674
|
76,891
|
674,775
|
825,790
|
|
Furniture and other equipment
|
30,218
|
6,281
|
3,410
|
33,089
|
|
Lease – office space
|
33,877
|
29,037
|
–
|
62,914
|
|
eMaterials subscriptions
|
183,095
|
307,744
|
238,484
|
252,355
|
|
Total accumulated depreciation/amortization
|
1,670,864
|
419,953
|
916,669
|
1,174,148
|
|
Net capital assets, depreciated/amortized
|
1,077,387
|
82,274
|
34,876
|
1,124,785
|
|
Total capital assets, net
|
$ 2,137,514
|
$ 316,956
|
$ 34,876
|
$ 2,419,594
|
B. Depreciation/Amortization Expense by Function
Depreciation/amortization expense for the year was charged to the following functions:
|
Cooperative and other programs
|
$ 384,635
|
|
Administration
|
35,318
|
|
Total
|
$ 419,953
|
A. Lease Liability
MELSA is renting office space through a lease financing agreement. The total amount of the underlying leased asset is included by major asset class and the related amortization is presented in Note 5 to the basic financial statements. Any additional payments for common area maintenance costs are not included in the lease liability below. The lease will be repaid by the General Fund. At year-end, MELSA has the following lease liability outstanding:
Final Principal
Lease Description Interest Rate Lease Date Maturity Outstanding
Office space lease 3.50% 11/01/2022 10/31/2025 $ 25,809
Future principal and interest payments for the lease liability are as follows:
Year Ending Lease Liability
December 31, Principal Interest
2025
$ 25,809
$ 416
B. Compensated Absences
Flex leave pay is provided to full-time employees and may be carried over to subsequent years. Upon separation from employment, flex leave pay earned and unused is paid to the employee at their current rate of pay up to a maximum of 500 hours. The accrual for flex leave pay, including related employer-contributed payroll benefits, amounted to $89,359 at year-end.
C. Changes in Long-Term Liabilities
December 31, December 31, Due Within
2023 Increases Decreases 2024 One Year
|
$ 55,053
|
$ –
|
$ 29,244
|
$ 25,809
|
$ 25,809
|
|
97,023
|
65,704
|
73,368
|
89,359
|
59,117
|
|
$ 152,076
|
$ 65,704
|
$ 102,612
|
$ 115,168
|
$ 84,926
|
|
|
Lease liability Compensated absences
NOTE 7 – DEFINED BENEFIT PENSION PLAN – STATE-WIDE
A. Plan Description
MELSA employees participate in General Employees Retirement Fund (GERF), a cost-sharing, multiple-employer defined benefit pension plan administered by the PERA of Minnesota. The plan provisions are established and administered according to Minnesota Statutes, Chapters 353 and 356. Minnesota Statutes Chapter 356 defines the plan’s financial reporting requirements. The PERA’s defined benefit pension plans are tax qualified plans under Section 401(a) of the Internal Revenue Code.
Membership in the GERF includes employees of counties, cities, townships, schools in noncertified positions, and other governmental entities whose revenues are derived from taxation, fees, or assessments. Plan membership is required for any employee who is expected to earn more than $425 in a month, unless the employee meets exclusion criteria.
B. GERF Benefits Provided
The PERA provides retirement, disability, and death benefits. Benefit provisions are established by state statutes and can only be modified by the State Legislature. 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. When a member is “vested,” they have earned enough service credit to receive a lifetime monthly benefit after leaving public service and reaching an eligible retirement age. Members who retire at or over their Social Security full retirement age with at least one year of service qualify for a retirement benefit.
The GERF requires three years of service to vest. 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 GERF members. Members hired prior to July 1, 1989, receive the higher of the Step or Level formulas. Only the Level formula is used for members hired after June 30, 1989. Under the Step formula, GERF members receive 1.2 percent of the highest average salary for each of the first 10 years of service, and 1.7 percent for each additional year. Under the Level formula, GERF members receive 1.7 percent of highest average salary for all years of service. For members hired prior to July 1, 1989, a full retirement benefit is available when age plus years of service equal 90, and normal retirement age is 65. Members can receive a reduced retirement benefit as early as age 55 if they have three or more years of service. Early retirement benefits are reduced by 0.25 percent for each month under age 65. Members with 30 or more years of service can retire at any age with a reduction of 0.25 percent for each month the member is younger than age 62. The Level formula allows GERF members to receive a full retirement benefit at age 65 if they were first hired before July 1, 1989 or at age 66 if they were hired on or after July 1, 1989. Early retirement begins at age 55 with an actuarial reduction applied to the benefit.
Benefit increases are provided to benefit recipients each January. The post-retirement increase is equal to 50.0 percent of the cost of living adjustment (COLA) announced by the Social Security Administration, with a minimum increase of at least 1.0 percent and a maximum of 1.5 percent. The 2024 annual increase was 1.5 percent. Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before the effective date of the increase, will receive the full increase. Recipients receiving the annuity or benefit for at least one month, but less than a full year as of the June 30 before the effective date of the increase, will receive a prorated increase.
C. GERF Contributions
Minnesota Statutes, Chapter 353 and 356 set the rates for employer and employee contributions. Contribution rates can only be modified by the State Legislature.
General Plan members were required to contribute 6.50 percent of their annual covered salary in fiscal year 2024, and MELSA was required to contribute 7.50 percent for General Plan members. MELSA’s contributions to the GERF for the year ended December 31, 2024, were $39,167. MELSA’s contributions were equal to the required contributions as set by state statutes.
D. GERF Pension Costs
At December 31, 2024, MELSA reported a liability of $235,314 for its proportionate share of the GERF’s net pension liability. MELSA’s net pension liability reflected a reduction, due to the state of Minnesota’s contribution of $16.0 million. The state of Minnesota is considered a nonemployer 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 MELSA totaled $6,085.
|
MELSA’s proportionate share of the net pension liability
State’s proportionate share of the net pension liability
|
$ 235,314
|
|
associated with MELSA
|
6,085
|
|
Total
|
$ 241,399
|
The net pension liability was measured as of June 30, 2024, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. MELSA’s proportion of the net pension liability was based on MELSA’s contributions received by the PERA during the measurement period for employer payroll paid dates from July 1, 2023 through June 30, 2024, relative to the total employer contributions received from all of the PERA’s participating employers. MELSA’s proportionate share was 0.0064 percent at the end of the measurement period and 0.0066 percent for the beginning of the period.
For the year ended December 31, 2024, MELSA recognized pension expense of $17,118 for its proportionate share of the GERF’s pension expense. In addition, MELSA recognized an additional $163 as pension expense (and grant revenue) for its proportionate share of the state of Minnesota’s contribution of $16.0 million to the GERF.
During the plan year ended June 30, 2024, the state of Minnesota contributed $170.1 million to the General Employees Fund. The state of Minnesota is not included as a nonemployer contributing entity in the General Employees Plan pension allocation schedules for the $170.1 million in direct state aid because this contribution was not considered to meet the definition of a special funding situation. MELSA recognized $10,827 for the year ended December 31, 2024 as revenue and an offsetting reduction of net pension liability for its proportionate share of the state of Minnesota’s on-behalf contributions to the General Employees Fund.
At December 31, 2024, MELSA reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual economic experience $ 22,352 $ –
Changes in actuarial assumptions 1,156 91,463 Net difference between projected and actual earnings
on pension plan investments – 67,024
Changes in proportion 10,056 9,847
Employer contributions subsequent to the
measurement date 19,133 –
Total
$ 52,697
$ 168,334
The $19,133 reported as deferred outflows of resources related to pensions resulting from MELSA contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2025. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Year Ending Pension Expense
December 31, Amount
|
2025
|
$ (71,087)
|
|
2026
|
$ (13,250)
|
|
2027
|
$ (32,399)
|
|
2028
|
$ (18,034)
|
E. Long-Term Expected Return on Investments
The Minnesota State Board of Investment, which manages the investments of the 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:
Asset Class
Target Allocation
Long-Term Expected Real Rate of Return
|
Domestic equity
|
33.50
|
%
|
5.10
|
%
|
|
International equity
|
16.50
|
|
5.30
|
%
|
|
Fixed income
|
25.00
|
|
0.75
|
%
|
|
Private markets
|
25.00
|
|
5.90
|
%
|
Total 100.00 %
F. Actuarial Methods and Assumptions
The total pension liability for the plan was determined by an actuarial valuation as of June 30, 2024, using the entry-age normal actuarial cost method. The long-term rate of return on pension plan investments used in the determination of the total liability is 7.00 percent. This assumption is based on a review of inflation and investments return assumptions from a number of national investment consulting firms. The review provided a range of investment return rates considered reasonable by the actuary. An investment return of
7.00 percent is within that range.
Inflation is assumed to be 2.25 percent for the General Employees Plan. Benefit increases after retirement are assumed to be 1.25 percent for the General Employees Plan.
Salary growth assumptions in the General Employees Plan range in annual increments from 10.25 percent after one year of service to 3.00 percent after 27 years of service.
Mortality rates for the General Employees Plan are based on the Pub-2010 General Employee Mortality Table. The table is adjusted slightly to fit the PERA’s experience.
Actuarial assumptions for the General Employees Plan are reviewed every four years. The General Employees Plan was last reviewed in 2022. The assumption changes were adopted by the Board and became effective with the July 1, 2023 actuarial valuation.
The following changes in actuarial assumptions and plan provisions occurred in 2024:
Changes in Actuarial Assumptions Changes in Actuarial Assumptions
- Rates of merit and seniority were adjusted, resulting in slightly higher
- Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2 members.
- Minor increase in assumed withdrawals for males and
- Lower rates of
- Continued use of Pub-2010 General Mortality Table, with slight rate adjustments as recommended in the most recent experience study.
- Minor changes to form of payment assumptions for male and female
- Minor changes to assumptions made with respect to missing participant
Changes in Plan Provisions
- The workers’ compensation offset for disability benefits was The actuarial equivalent factors were updated to reflect the changes in assumptions.
G. Discount Rate
The discount rate used to measure the total pension liability in 2024 was 7.00 percent. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and employers will be made at rates set in Minnesota Statutes. Based on these assumptions, 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.
H. Pension Liability Sensitivity
The following table presents MELSA’s proportionate share of the net pension liability for all plans it participates in, calculated using the discount rate disclosed in the preceding section, as well as what MELSA’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% Decrease in Discount Rate
Current Discount Rate
1% Increase in Discount Rate
(6.00%) (7.00%) (8.00%)
MELSA’s proportionate share of the GERF net pension liability
$ 513,963 $
235,314
$ 6,099
I. 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.
NOTE 8 – MEMBER LIBRARY SYSTEM ALLOCATIONS AND BALANCES
As discussed in Note 1, MELSA utilized the Member Library Allocations Special Revenue Fund to report assets committed for member libraries to be expended for long-term capital programs, funded primarily by annual allocations from MELSA’s General Fund. Through the Phase VI Capital Automation Program (Phase Program), established in 2001, the Board of Trustees approved annual allocations to fund the member libraries’ new and expanded technology services.
These annual allocations and the related member library system expenditures were accounted for in the Member Library Allocations Special Revenue Fund, along with NCIP funds, unused Project Interconnect funds, and other funds held for member libraries.
During the year ended December 31, 2024, MELSA’s Board of Trustees created a new LSAF Program, through which annual operating and equity allocations will be made. As part of this change, MELSA discontinued its Phase Program, converting any remaining unspent Phase Program allocations to the LSAF Program, and removed the spending restrictions previously imposed on the Phase Program funds. With the removal of these restrictions, the requirement to account for the Phase Program allocations in a special revenue fund was eliminated. Therefore, the residual unspent funds were moved to the newly established Library Allocations Custodial (fiduciary) Fund, and the Member Library Allocations Special Revenue Fund was closed.
A summary of the Phase Program activity and balances transferred to the LSAF Program by member library system as of and for the year ended December 31, 2024 is as follows:
Member Library
System
Phase Program Other Amounts NCIP Balances Balances – Due to Members Allocation for 2024 to LSAF
12/31/2023 12/31/2023 Current Year Disbursements Program
|
Anoka County
|
$ 75,794
|
$ 59,226
|
$ 3,000
|
$ 78,794
|
$ 59,226
|
|
Carver County
|
301,770
|
107,867
|
3,000
|
114,009
|
298,628
|
|
Dakota County
|
347,960
|
91,580
|
3,000
|
71,590
|
370,950
|
|
Hennepin County
|
11,667
|
31,162
|
3,000
|
–
|
45,829
|
|
Ramsey County
|
428,723
|
143,742
|
3,000
|
–
|
575,465
|
|
Saint Paul Public
|
275,975
|
64,308
|
3,000
|
–
|
343,283
|
|
Scott County
|
270,081
|
80,388
|
3,000
|
–
|
353,469
|
|
Washington County
|
77,765
|
57,522
|
3,000
|
–
|
138,287
|
|
Residual (1)
|
110
|
–
|
–
|
110
|
–
|
|
Totals
|
$ 1,789,845
|
$ 635,795
|
$ 24,000
|
$ 264,503
|
$ 2,185,137
|
(1) Residual rounding balance transferred to the MELSA General Fund to close the Member Library Allocations Special Revenue Fund.
A summary of LSAF Program activity and balances by member library system for the year ended December 31, 2024 is as follows:
Member Library
System
Balances from 2024 Balances Phase, NCIP, LSAF 2024 Available
and Other Allocations Disbursements 12/31/2024
|
Anoka County
|
$ 59,226
|
$ 236,761
|
$ –
|
$ 295,987
|
|
Carver County
|
298,628
|
185,606
|
82,500
|
401,734
|
|
Dakota County
|
370,950
|
260,510
|
175,000
|
456,460
|
|
Hennepin County
|
45,829
|
436,279
|
233,195
|
248,913
|
|
Ramsey County
|
575,465
|
271,872
|
160,000
|
687,337
|
|
Saint Paul Public
|
343,283
|
236,436
|
199,717
|
380,002
|
|
Scott County
|
353,469
|
194,544
|
–
|
548,013
|
|
Washington County
|
138,287
|
216,738
|
57,522
|
297,503
|
|
Totals
|
$ 2,185,137
|
$ 2,038,746
|
$ 907,934
|
$ 3,315,949
|
REQUIRED SUPPLEMENTARY INFORMATION
|
Statutorily
|
|
Required
|
|
Contributions
|
|
|
|
Contribution
|
|
Deficiency
|
|
(Excess)
|
|
|
|
MELSA Fiscal
|
|
Year-End Date
|
|
|
METROPOLITAN LIBRARY SERVICE AGENCY
|
PERA – General Employees Retirement Fund
|
|
Schedule of MELSA’s and Nonemployer Proportionate Share of Net Pension Liability
|
|
Year Ended December 31, 2024
|
|
Proportionate
|
|
Share of the
|
|
Net Pension
|
|
Liability and
|
|
MELSA’s
|
|
Share of the
|
|
State of
|
|
Minnesota’s
|
|
Share of the
|
|
Net Pension
|
|
Liability
|
|
|
|
MELSA’s
|
|
Proportionate
|
|
Share of the
|
|
State of
|
|
Minnesota’s
|
|
Proportionate
|
|
Share of the
|
|
Net Pension
|
|
Liability
|
|
|
|
MELSA’s
|
|
Proportionate
|
|
Share of the
|
|
Net Pension
|
|
Liability as a
|
|
Percentage of
|
|
Covered
|
|
Payroll
|
|
|
|
Plan Fiduciary
|
|
Net Position
|
|
as a
|
|
Percentage
|
|
of the Total
|
|
Pension
|
|
Liability
|
|
|
|
MELSA’s
|
|
Proportion
|
|
of the Net
|
|
Pension
|
|
Liability
|
|
|
|
MELSA’s
|
|
Proportionate
|
|
Share of the
|
|
Net Pension
|
|
Liability
|
|
|
|
PERA Fiscal
|
|
Year-End Date
|
|
(Measurement
|
|
Date)
|
|
|
|
06/30/2015
|
|
06/30/2016
|
|
06/30/2017
|
|
06/30/2018
|
|
06/30/2019
|
|
06/30/2020
|
|
06/30/2021
|
|
06/30/2022
|
|
06/30/2023
|
|
06/30/2024
|
|
|
|
0.0070%
|
|
0.0073%
|
|
0.0079%
|
|
0.0079%
|
|
0.0069%
|
|
0.0066%
|
|
0.0062%
|
|
0.0064%
|
|
0.0066%
|
|
0.0064%
|
|
|
|
$ –
|
|
$ 7,746
|
|
$ 6,380
|
|
$ 14,448
|
|
$ 11,999
|
|
$ 12,196
|
|
$ 8,099
|
|
$ 14,888
|
|
$ 10,201
|
|
$ 6,085
|
|
|
|
$ 362,776
|
|
$ 600,471
|
|
$ 510,713
|
|
$ 452,709
|
|
$ 393,485
|
|
$ 407,896
|
|
$ 272,867
|
|
$ 521,770
|
|
$ 379,265
|
|
$ 241,399
|
|
|
|
$ 414,445
|
|
$ 458,272
|
|
$ 512,010
|
|
$ 532,113
|
|
$ 491,560
|
|
$ 473,388
|
|
$ 448,526
|
|
$ 482,410
|
|
$ 522,576
|
|
$ 538,713
|
|
|
|
87.53%
|
|
129.34%
|
|
98.50%
|
|
82.36%
|
|
77.61%
|
|
83.59%
|
|
59.03%
|
|
105.07%
|
|
70.62%
|
|
43.68%
|
|
|
|
78.2%
|
|
68.9%
|
|
75.9%
|
|
79.5%
|
|
80.2%
|
|
79.1%
|
|
87.0%
|
|
76.7%
|
|
83.1%
|
|
89.1%
|
|
|
|
MELSA Fiscal
|
|
Year-End Date
|
|
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
|
12/31/2019
|
|
12/31/2020
|
|
12/31/2021
|
|
12/31/2022
|
|
12/31/2023
|
|
12/31/2024
|
|
|
$ 362,776
$ 592,725
$ 504,333
$ 438,261
$ 381,486
$ 395,700
$ 264,768
$ 506,882
$ 369,064
|
Contributions
|
|
in Relation to
|
|
the Statutorily
|
|
Required
|
|
Contributions
|
|
|
|
Contributions
|
|
as a
|
|
Percentage
|
|
of Covered
|
|
Payroll
|
|
|
$ 235,314
|
PERA – General Employees Retirement Fund
|
|
Schedule of MELSA Contributions
|
|
Year Ended December 31, 2024
|
METROPOLITAN LIBRARY SERVICE AGENCY
Notes to Required Supplementary Information December 31, 2024
PERA – GENERAL EMPLOYEES RETIREMENT FUND
2024 Changes in Actuarial Assumptions
- Rates of merit and seniority were adjusted, resulting in slightly higher
- Assumed rates of retirement were adjusted as follows: increase the rate of assumed unreduced retirements, slight adjustments to Rule of 90 retirement rates, and slight adjustments to early retirement rates for Tier 1 and Tier 2 members.
- Minor increase in assumed withdrawals for males and
- Lower rates of
- Continued use of Pub-2010 General Mortality Table, with slight rate adjustments as recommended in the most recent experience study.
- Minor changes to form of payment assumptions for male and female
- Minor changes to assumptions made with respect to missing participant
2024 Changes in Plan Provisions
- The workers’ compensation offset for disability benefits was The actuarial equivalent factors were updated to reflect the changes in assumptions.
2023 Changes in Actuarial Assumptions
- The investment return assumption and single discount rate were changed from 50 percent to 7.00 percent.
2023 Changes in Plan Provisions
- An additional one-time direct state aid contribution of $170.1 million will be contributed to the Plan on October 1, 2023.
- The vesting period of those hired after June 30, 2010, was changed from five years of allowable service to three years of allowable service.
- The benefit increase delay for early retirements on or after January 1, 2024, was
- A one-time, noncompounding benefit increase of 50 percent minus the actual 2024 adjustment will be payable in a lump sum for calendar year 2024 by March 31, 2024.
2022 Changes in Actuarial Assumptions
- The mortality improvement scale was changed from Scale MP-2020 to Scale MP-
2021 Changes in Actuarial Assumptions
- The investment return and single discount rates were changed from 50 percent to 6.50 percent, for financial reporting purposes.
- The mortality improvement scale was changed from Scale MP-2019 to Scale MP-
- The price inflation assumption was decreased from 50 percent to 2.25 percent.
- The payroll growth assumption was decreased from 25 percent to 3.00 percent.
- Assumed salary increase rates were changed as recommended in the June 30, 2019 experience study. The net effect is assumed rates that average 0.25 percent less than previous rates.
- Assumed rates of retirement were changed as recommended in the June 30, 2019 experience study. The changes result in more unreduced (normal) retirements and slightly fewer Rule of 90 and early retirements.
- Assumed rates of termination were changed as recommended in the June 30, 2019 experience study. The new rates are based on service and are generally lower than the previous rates for years two through five, and slightly higher thereafter.
- Assumed rates of disability were changed as recommended in the June 30, 2019 experience study. The change results in fewer predicted disability retirements for males and females.
- The base mortality table for healthy annuitants and employees was changed from the RP-2014 Table to the Pub-2010 General Mortality Table, with The base mortality table for disabled annuitants was changed from the RP-2014 Disabled Annuitant Mortality Table to the Pub-2010 General/Teacher Disabled Annuitant Mortality Table, with adjustments.
- The mortality improvement scale was changed from MP-2018 to MP-
- The assumed spouse age difference was changed from two years older for females to one year
- The assumed number of married male new retirees electing the 100.00 percent joint and survivor option changed from 00 percent to 45.00 percent. The assumed number of married female new retirees electing the 100.00 percent joint and survivor option changed from 15.00 percent to 30.00 percent. The corresponding number of married new retirees electing the life annuity option was adjusted accordingly.
2020 Changes in Plan Provisions
- Augmentation for current privatized members was reduced to 2.00 percent for the period July 1, 2020 through December 31, 2023, and zero percent thereafter. Augmentation was eliminated for privatizations occurring after June 30, 2020.
2019 Changes in Actuarial Assumptions
- The mortality projection scale was changed from MP-2017 to MP-
2019 Changes in Plan Provisions
- The employer supplemental contribution was changed prospectively, decreasing from $31.0 million to $21.0 million per year. The state’s special funding contribution was changed prospectively, requiring $16.0 million due per year through 2031.
- The mortality projection scale was changed from MP-2015 to MP-
- The assumed benefit increase was changed from 00 percent per year through 2044, and 2.50 percent per year thereafter, to 1.25 percent per year.
2018 Changes in Plan Provisions
- The augmentation adjustment in early retirement factors is eliminated over a five-year period starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024.
- Interest credited on member contributions decreased from 00 percent to 3.00 percent, beginning July 1, 2018.
- Deferred augmentation was changed to zero percent, effective January 1, Augmentation that has already accrued for deferred members will still apply.
- Contribution stabilizer provisions were
- Post-retirement benefit increases were changed from 00 percent per year with a provision to increase to 2.50 percent upon attainment of 90.00 percent funding ratio to 50.00 percent of the Social Security Cost of Living Adjustment, not less than 1.00 percent and not more than 1.50 percent, beginning January 1, 2019.
- For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit recipients, or survivors.
- Actuarial equivalent factors were updated to reflect revised mortality and interest
2017 Changes in Actuarial Assumptions
- The Combined Service Annuity (CSA) loads were changed from 0.80 percent for active members and 60.00 percent for vested and nonvested deferred members. The revised CSA loads are now zero percent for active member liability, 15.00 percent for vested deferred member liability, and 3.00 percent for nonvested deferred member liability.
- The assumed post-retirement benefit increase rate was changed from 00 percent per year for all years, to 1.00 percent per year through 2044, and 2.50 percent per year thereafter.
2017 Changes in Plan Provisions
- The state’s contribution for the Minneapolis Employees Retirement Fund equals $16.0 million in 2017 and 2018, and $6.0 million thereafter.
- The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund changed from $21.0 million to $31.0 million in calendar years 2019 to 2031. The state’s contribution changed from $16.0 million to $6.0 million in calendar years 2019 to 2031.
2016 Changes in Actuarial Assumptions
- The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2035, and 2.50 percent per year thereafter, to 1.00 percent per year for all years.
- The assumed investment return was changed from 7.90 percent to 7.50 percent. The single discount rate changed from 7.90 percent to 7.50 percent.
- Other assumptions were changed pursuant to the experience study June 30, The assumed future salary increases, payroll growth, and inflation were decreased by 0.25 percent to 3.25 percent for payroll growth, and 2.50 percent for inflation.
- The assumed post-retirement benefit increase rate was changed from 1.00 percent per year through 2030, and 50 percent per year thereafter, to 1.00 percent per year through 2035, and 2.50 percent per year thereafter.
2015 Changes in Plan Provisions
- On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General Employees Fund, which increased the total pension liability by $1.1 billion and increased the fiduciary plan net position by $892.0 million. Upon consolidation, state and employer contributions were revised; the state’s contribution of $6.0 million, which meets the special funding situation definition, was due September 2015.
OTHER SUPPLEMENTAL INFORMATION
METROPOLITAN LIBRARY SERVICE AGENCY
|
Schedules of Selected Expenditures
|
|
for the Years Ended December 31, 2024 and 2023
|
2024 2023
Total Legacy Grant Programs
|
Formula payments
|
|
Anoka County
|
|
Carver County
|
|
Dakota County
|
|
Hennepin County
|
|
Ramsey County
|
|
Saint Paul Public
|
|
Scott County
|
|
Washington County
|
Total formula payments
|
Equalization to earning libraries
|
|
Anoka County
|
|
Saint Paul Public
|
Total equalization to earning libraries
|
Electronic database expenditures (2)
|
|
Gale Literature and Biography
|
|
Ancestry library addition
|
|
Data Axle
|
|
ALLData
|
|
Morningstar
|
|
Newsbank
|
|
NoveList
|
|
New York Times
|
|
Transparent Languages
|
|
Zinio Magazines (RB Digital/Overdrive)
|
|
Scholastic BookFlix
|
|
LinkedIn Leaning
|
|
Udemy
|
Total electronic database expenditures
$ 1,123,681
|
$ 236,761
|
|
185,606
|
|
260,510
|
|
436,279
|
|
271,872
|
|
236,436
|
|
194,544
|
|
216,738
|
|
|
$ 2,038,746
|
$ 2,892
|
|
35,180
|
|
95,000
|
|
107,199
|
|
8,510
|
|
105,538
|
|
79,517
|
|
26,550
|
|
75,000
|
|
80,000
|
|
96,575
|
|
155,562
|
|
19,638
|
|
|
$ 32,722
$ 887,161
$ 1,102,872
|
$ 158,266
|
|
136,082
|
|
231,124
|
|
378,425
|
|
261,190
|
|
171,846
|
|
107,355
|
|
153,713
|
$ 1,598,001
$ 59,453
|
$ 34,675
|
|
34,155
|
|
95,000
|
|
107,051
|
|
89,013
|
|
102,267
|
|
76,828
|
|
27,175
|
|
75,000
|
|
80,000
|
|
94,837
|
|
153,544
|
|
19,198
|
$ 988,743
|
(1)
|
These represent actual calendar year expenditures; system allocations are based on state fiscal year.
|
|
(2)
|
Representing coverage for January through December.
|
OTHER REQUIRED 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
To the Board of Trustees and Management Metropolitan Library Service Agency
St. Paul, 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 the governmental activities, each major fund, and the aggregate remaining fund information of the Metropolitan Library Service Agency (MELSA) as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise MELSA’s basic financial statements, and have issued our report thereon dated May 7, 2025.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered MELSA’s internal control over financial reporting (internal control) as a basis for designing 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 MELSA’s internal control. Accordingly, we do not express an opinion on the effectiveness of MELSA’s 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of MELSA’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 and, therefore, material weaknesses or significant deficiencies may exist that were not identified. We did identify certain deficiencies in internal control, described in the accompanying Schedule of Findings as findings 2024-001 and 2024-002 that we consider to be material weaknesses.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether MELSA’s 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 financial statements. 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.
MELSA’s Responses to Findings
Government Auditing Standards requires the auditor to perform limited procedures on MELSA’s responses to the findings identified in our audit and described in the accompanying Schedule of Findings. MELSA’s responses were not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the responses.
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 MELSA’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering MELSA’s internal control and compliance. Accordingly, this report is not suitable for any other purpose.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota May 7, 2025
INDEPENDENT AUDITOR’S REPORT
ON MINNESOTA LEGAL COMPLIANCE
To the Board of Trustees and Management Metropolitan Library Service Agency
St. Paul, 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 the governmental activities, each major fund, and the aggregate remaining fund information of the Metropolitan Library Service Agency (MELSA) as of and for the year ended December 31, 2024, and the related notes to the financial statements, which collectively comprise MELSA’s basic financial statements, and have issued our report thereon dated May 7, 2025.
Minnesota Legal Compliance
In connection with our audit, we noted MELSA failed to comply with provisions of the claims and disbursements section of Minnesota Legal Compliance Audit Guide for Other Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota Statutes § 6.65, insofar as they relate to accounting matters as described in the accompanying Schedule of Findings as finding 2024-003. Also, in connection with our audit, nothing came to our attention that caused us to believe that MELSA failed to comply with the provisions of the contracting – bid laws, depositories of public funds and public investments, conflicts of interest, and miscellaneous provisions sections of the Minnesota Legal Compliance Audit Guide for Other Political Subdivisions, insofar as they relate to accounting matters. 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 MELSA’s noncompliance with the above referenced provisions, insofar as they relate to accounting matters.
MELSA’s Response to Finding
Government Auditing Standards requires the auditor to perform limited procedures on MELSA’s response to the legal compliance finding identified in our audit and described in the accompanying Schedule of Findings. MELSA’s response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response.
Purpose of This Report
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 report is not suitable for any other purpose.
Respectfully submitted,
LB CARLSON, LLP
Minneapolis, Minnesota May 7, 2025
Schedule of Findings Year Ended December 31, 2024
FINDINGS – INTERNAL CONTROL OVER FINANCIAL REPORTING 2024-001 SEGREGATION OF DUTIES
Criteria – Internal control over financial reporting.
Condition – Metropolitan Library Service Agency (MELSA) has limited segregation of duties in a number of areas.
Context – This is a current year and prior year finding.
Cause – The limited segregation of duties is primarily caused by the limited size of MELSA’s business office staff.
Effect – One important element of internal accounting controls is an adequate segregation of duties such that no one individual should have responsibility to execute a transaction, have physical access to the related assets, and have responsibility or authority to record the transaction. A lack of segregation of duties subjects MELSA to a higher risk that errors or fraud could occur and not be detected in a timely manner in the normal course of business.
Recommendation – We recommend that MELSA continue its efforts to segregate duties as best it can within the limits of what MELSA considers to be cost-beneficial.
Corrective Action Plan
Actions Planned – MELSA makes every effort to maximize the segregation of financial duties within the limits of its available staffing, including the utilization of its Board of Trustees to perform various review functions to mitigate assessed internal control risks. MELSA will continue to periodically review its internal controls and work with its external auditors to assess specific weaknesses identified and evaluate actions needed to eliminate or mitigate them. MELSA will weigh the related costs and benefits associated with the implementation changes needed to further segregate duties.
Official Responsible – MELSA’s Executive Director.
Planned Completion Date – December 31, 2025.
Disagreement With or Explanation of Finding – MELSA has no disagreement with this finding.
Plan to Monitor – The Executive Director will continue to monitor this deficiency and evaluate the practicality of potential changes in policies and procedures to address it within the limits of the staff available.
FINDINGS – INTERNAL CONTROL OVER FINANCIAL REPORTING (CONTINUED) 2024-002 PREPARATION OF FINANCIAL STATEMENTS
Criteria – Management is responsible for establishing and maintaining effective internal controls. These controls include the responsibility for preparation, or oversight of the preparation, of the financial statements in accordance with accounting principles generally accepted in the United States of America.
Condition – Other than the management’s discussion and analysis, MELSA had our firm prepare the annual financial statements. Like many similarly sized organizations, MELSA requested assistance from us with the drafting of the annual financial statements and related notes. Although this is common practice and may be the most practical and cost-effective method to complete this task, the fact that MELSA does not have the internal resources available to prepare the annual financial statements is considered a deficiency.
Context – This is a current year and prior year finding.
Cause – MELSA does not have the internal resources available to prepare its own annual financial statements and has made the decision that from a cost-benefit perspective, it is more efficient to have the auditor prepare them than to contract with another outside party.
Effect – The auditor prepared the draft of MELSA’s annual financial statements and disclosures.
Recommendation – We recommend that MELSA consider whether it is cost-beneficial to either provide training to its internal staff that would enable MELSA to prepare its own financial statements, or contract with another outside party to prepare them.
Corrective Action Plan
Actions Planned – MELSA will determine as to whether it is practical and cost-effective for MELSA or an outside contractor to prepare its financial statements in the future.
Official Responsible – MELSA’s Executive Director.
Planned Completion Date – December 31, 2025.
Disagreement With or Explanation of Finding – MELSA has no disagreement with this finding. MELSA reviewed and made necessary changes to the draft of the annual financial statements, which were prepared and produced by its independent auditing firm for the current year. MELSA’s management will determine whether it is cost-beneficial to change this arrangement in future years.
Plan to Monitor – The Executive Director will continue to monitor this deficiency and evaluate the practicality of potential changes in policies and procedures to address it within the limits of the staff available.
FINDINGS – MINNESOTA LEGAL COMPLIANCE 2024-003 CLAIMS DECLARATION
Criteria – Minnesota Statutes § 471.391, Subd. 2.
Condition – Minnesota Statutes require all claims submitted to MELSA for payment to include a signed declaration that the claim was true and correct and that no part of it had been paid.
Context – This is a current year finding.
Cause – Check stock used for general disbursements throughout the year lacked the preprinted statutory declaration above the check endorsement area.
Effect – Claims paid via check lacked the declaration required by Minnesota Statutes for paying claims.
Recommendation – We recommend that MELSA review all new check orders to ensure they include the necessary declaration.
Corrective Action Plan
Actions Planned – MELSA will review check stock before issuing payments to ensure they include necessary declarations. The remaining check stock lacking the necessary declaration has been destroyed.
Official Responsible – MELSA’s Executive Director.
Planned Completion Date – December 31, 2025.
Disagreement With or Explanation of Finding – MELSA has no disagreement with this finding.
Plan to Monitor – The Executive Director will ensure all checks issued by MELSA include proper declarations for payment as required by Minnesota Statutes.
FINANCIAL TRENDS AND CONDITIONS
MELSA’s General Fund accounts for the financial activity of the basic services provided to the member libraries, including grant programs, cooperative programs, and administration. The graph below displays MELSA’s General Fund trends of financial position and changes in the volume of financial activity:
General Fund Financial Position Year Ended December 31,
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
|
|
2020
|
2021
|
2022
|
2023
|
2024
|
|
|
|
Cash Balance
|
$7,073,165
|
$7,457,630
|
$6,972,954
|
$7,037,388
|
$7,442,062
|
|
|
|
Fund Balance
|
$5,561,129
|
$5,183,757
|
$5,034,623
|
$5,213,701
|
$5,888,907
|
|
|
|
Exp and Trans Out
|
$7,072,930
|
$6,987,574
|
$7,230,870
|
$7,561,214
|
$7,929,758
|
|
|
$–
MELSA’s General Fund remains in healthy financial condition with total fund balances of $5,888,907 at December 31, 2024. A healthy fund balance is important because a government, like any organization, requires a certain amount of equity to operate. Generally, a healthy financial position allows MELSA to avoid volatility in operations, helps minimize the impact of state funding changes, and allows for the consistent funding of services and purchases for member library systems, and unexpected costs.
The following table summarizes the changes in MELSA’s General Fund balances during 2024:
|
Nonspendable
|
$ 692,657
|
$ 681,874
|
$ 10,783
|
|
Assigned
|
5,120,433
|
4,435,736
|
684,697
|
|
Unassigned
|
75,817
|
96,091
|
(20,274)
|
|
Total – General Fund
|
$ 5,888,907
|
$ 5,213,701
|
$ 675,206
|
The $692,657 nonspendable fund balance corresponds to MELSA’s prepaid expenditures at year-end. Assigned fund balances increased $684,697, due to increases in assignments for contingencies of
$500,000 and collaborative initiatives of $300,000. This was partially offset by a reduction of $65,324 related to a mobile app renewal assignment in 2023, and small decreases in amounts assigned for compensated absences ($7,663) and Equalization carryforward ($42,316) compared to the previous year-end. Unassigned fund balance decreased $20,274 in fiscal 2024.
The following graph presents General Fund revenues, expenditures, and other changes in fund balances for the last five years:
General Fund Change in Fund Balances Year Ended December 31,
$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
|
0,000)
|
Revenues
|
Expenditures
|
Debt Issued
|
Phase Transfers
|
Change in Fund
Balances
|
|
2020
|
$6,963,903
|
$6,409,561
|
$–
|
$663,369
|
$(109,027)
|
|
2021
|
$6,610,202
|
$6,290,974
|
$–
|
$696,600
|
$(377,372)
|
|
2022
|
$6,994,624
|
$6,709,270
|
$87,112
|
$521,600
|
$(149,134)
|
|
2023
|
$7,740,292
|
$6,857,214
|
$–
|
$704,000
|
$179,078
|
|
2024
|
$8,604,854
|
$7,905,758
|
$–
|
$23,890
|
$675,206
|
|
|
$–
$(1,00
MELSA’s General Fund balance increased $675,206 in 2024, compared to a decrease of $627,462 projected in the final budget. This variance resulted from the combination of revenues and other financing sources exceeding budget by $611,901, while expenditures and other financing uses were $690,767 less than anticipated. A significant portion of the remaining variance is from unexpended funds designated as fund balance assignments for use in 2025 and beyond.
The following graph shows MELSA’s General Fund sources of revenue:
General Fund Revenue Year Ended December 31,
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State Aid and Grants
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Federal Grants
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Other
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2023 Actual
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$7,241,578
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$1,459
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$497,255
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2024 Budget
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$7,643,632
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$–
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$349,431
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2024 Actual
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$8,044,252
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$–
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$560,602
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$9,000,000
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$–
The graph above reflects MELSA’s reliance on state aid as its primary funding source. State aid and grants totaled $8,044,252 for 2024, representing 93.5 percent of MELSA’s total General Fund revenue.
Total General Fund revenue was $8,604,854 for 2024, an increase of $864,562 (11.2 percent) from 2023. Revenue from state aid and grants was $802,674 higher than last year, mainly due to a $795,919 increase in RLBSS entitlement revenue recognized. Revenue from “other” sources, as shown above, increased
$63,347 from the prior year, mainly due to an increase in investment income.
Total General Fund revenue was over budget by $611,791. State aid and grants were $400,620 over budget. This was mainly due to RLBSS revenue exceeding budget by $350,094, as the portion of 2023 RLBSS Equalization funding intended to be carried over as assigned fund balance for 2024 was not included in the revenue budget. Revenue from “other” sources was $211,171 higher than budget, mainly due to increased investment income.
The following graph summarizes MELSA’s General Fund expenditures by function:
General Fund Expenditures Year Ended December 31,
$5,500,000
$5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
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Legacy
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RLTA
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Other Grants
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Cooperative
Programs
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Administrative
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Debt Service
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Capital Outlay
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2023 Actual
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$1,102,872
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$501,947
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$1,459
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$3,816,736
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$805,848
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$29,813
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$598,539
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2024 Budget
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$1,073,155
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$489,033
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$–
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$5,355,809
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$979,704
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$30,707
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$668,117
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2024 Actual
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$1,123,681
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$476,167
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$–
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$4,664,329
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$873,965
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$30,707
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$736,909
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$–
Total General Fund expenditures were $7,905,758 for 2024, an increase of $1,048,544 from the prior year, mainly relating to increases in cooperative programs of $847,593 and capital outlay of $138,370.
Total expenditures for 2024 were $690,767 (8.0 percent) under budget. The largest variance to budget was in expenditures for various cooperative programs and projects, which were $691,480 under budget. Some of the larger areas of underspending included: electronic databases ($215,617 under budget, due to the termination of two programs) and additional undesignated collaborative spending ($261,274 under budget, due to planned spending of excess funds yet to take place). In many cases, these budgetary savings were in fund balance assignments at year-end to be spent in subsequent years.
Administrative expenditures were also under budget by $105,739, with savings distributed across all administrative categories.
Cooperative Program
The following graphs illustrate the components of MELSA’s Cooperative Program expenditures:
Cooperative Program Expenditures – 2024
Cooperative Program expenditures for 2024 of $4,664,329 were $691,480 under budget. Expenditures were under budget in most areas, with the largest variances related to spending for electronic databases and other, undesignated collaborative spending, as previously mentioned.
Cooperative Program Expenditures Year Ended December 31, 2024
Total General Fund Cooperative Program expenditures increased $847,593 (22.2 percent) from the prior year, with increases of $439,648 in collaborative purchases, such as e-book and e-audio collections and mobile apps, and $414,014 in formula and equalization distributions due to MELSA’s new LSAF allocation program.
Administration
The following graphs illustrate the components of MELSA’s administrative expenditures:
Administrative Expenditures – 2024
Total General Fund administrative expenditures for 2024 were $873,965, which was $105,739 under budget. The variance was spread among all categories shown here, with the largest savings in salaries and benefits of $40,669, due to the vacant Executive Director position being contracted for part of the year.
Administrative Expenditures Year Ended December 31,
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Salaries and Benefits
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Travel and Training
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Supplies and Printing
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Contracted Services
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Rent
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Other
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2023 Actual
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$688,095
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$5,172
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$1,508
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$47,423
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$2,343
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$61,307
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2024 Budget
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$723,166
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$15,000
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$8,500
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$144,110
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$4,027
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$84,901
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2024 Actual
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$682,497
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$8,292
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$2,008
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$128,757
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$2,505
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$49,906
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$750,000
$700,000
$650,000
$600,000
$550,000
$500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$–
The total General Fund administrative expenditures were $68,117 (8.5 percent) more than the previous year, predominantly in contracted services, which increased $81,334, due to contracted Executive Director services. The remaining categories decreased $13,217, mainly due to decreased salaries, equipment, maintenance, and meeting costs.
Member Library Allocations Special Revenue Fund
MELSA’s Member Library Allocations Special Revenue Fund was used to record allocations of funding made by MELSA’s Board of Trustees to reimburse member library systems’ technology improvements and other costs.
During the year ended December 31, 2024, MELSA’s Board of Trustees created a new Library Systems Allocation Funds (LSAF) Program, through which annual operating and equity allocations will be made. As part of this change, MELSA discontinued its Phase Program, converting any remaining unspent Phase Program allocations to the LSAF Program, which removed the spending restrictions previously imposed on the Phase Program funds. With the removal of these restrictions, the requirement to account for the Phase Program allocations in a special revenue fund was eliminated. The residual unspent funds, totaling
$2,185,137, were moved to the newly established Library Allocations Custodial (fiduciary) Fund, and the Member Library Allocations Special Revenue Fund was closed.
Member Library Allocations Custodial (Fiduciary) Fund
MELSA’ Member Library Allocations Custodial (fiduciary) Fund was established in 2024 to account for the unused funds previously allocated to its member library systems through the Phase Program, along with future allocations through its new LSAF Program. Allocations held in this fund belong to the member library systems, and are immediately available to be disbursed upon request, with no spending restrictions or approval requirements.
During the year ended December 31, 2024, MELSA’s Board of Trustees allocated $2,038,746 to its member library systems through the newly established LSAF Program. The allocations included
$1,500,000 representing budgeted formula funding ($1,255,000 operating and $245,000 equity), $500,000 budgeted for current year Phase Program funding, and $38,746 to hold certain library systems harmless on a one-time basis for the impact of the Phase Program portion of the new allocations.
The following graph presents current year LSAF Program allocations, disbursements, and year-end fund balances by member library:
LSAF Program
Year Ended December 31, 2024
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
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Anoka County
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Carver County
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Dakota County
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Hennepin County
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Ramsey County
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Saint Paul Public
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Scott County
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Washington County
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2024 Allocation
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$236,761
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$185,606
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$260,510
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$436,279
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$271,872
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$236,436
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$194,544
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$216,738
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2024 Disbursements
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$–
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$82,500
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$175,000
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$233,195
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$160,000
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$199,717
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$–
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$57,522
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Balance 12/31/2024
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$295,987
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$401,734
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$456,460
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$248,913
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$687,337
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$380,002
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$548,013
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$297,503
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$–
GOVERNMENT-WIDE FINANCIAL STATEMENTS
In addition to fund-based information, the current reporting model for governmental entities also requires the inclusion of two government-wide financial statements designed to present a clear picture of MELSA as a single, unified entity. These government-wide financial statements provide information on the total cost of delivering services, including capital assets, long-term liabilities, and deferred outflows/inflows of resources.
Statement of Net Position
The Statement of Net Position essentially presents what MELSA owns and owes at a given point in time, the last day of the fiscal year. Theoretically, net position represents the resources MELSA has leftover to use for providing services after its debts are settled. However, those resources are not always in spendable form, or there may be restrictions on how some of those resources may be used. Therefore, net position consists of three components: net investment in capital assets, restricted, and unrestricted.
The following table presents the components of MELSA’s net position as of December 31, 2024 and 2023 for governmental activities:
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Total fund balance
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$ 5,888,907
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$ 7,003,546
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Net book value of capital assets
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2,419,594
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2,137,514
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Lease liability
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(25,809)
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(55,053)
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Compensated absences
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(89,359)
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(97,023)
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PERA pension liability and deferments
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(350,951)
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(383,884)
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Net investment in capital assets
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$ 2,393,785
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$ 2,082,461
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Unrestricted
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5,448,597
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6,522,639
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MELSA ended 2024 with total net position of $7,842,382, a decrease of $762,718 from the prior year. Net position decreased by $1,549,342 due to the closing of the Member Library Allocations Special Revenue Fund, as the residual assets from that fund were moved to a custodial (fiduciary) fund and are consequently now excluded from the government-wide financial statements. This was partially offset by a $786,624 increase resulting from current year operations.
MELSA’s investment in capital assets increased $311,324 from the prior year, due to capitalization of current digital content purchases. Unrestricted net position decreased $1,074,042 during 2024, due to the change in fund structure and current year operating results.
Statement of Activities
The Statement of Activities tracks MELSA’s yearly revenues and expenses, as well as any other transactions that increase or reduce total net position. These amounts represent the full cost of providing services. The Statement of Activities provides a more comprehensive measure than just the amount of cash that changed hands, as reflected in the fund-based financial statements. This statement includes the cost of supplies used, depreciation/amortization of long-lived capital assets, and other accrual-based expenses.
The following table presents the change in net position of MELSA for the years ended December 31, 2024 and 2023:
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Legacy Grant Programs
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$ 1,123,681
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$ 1,123,681
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$ –
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$ –
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RLTA Grant Programs
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476,167
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476,167
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–
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–
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Cooperative and other programs
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5,048,964
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–
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(5,048,964)
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(4,106,222)
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Member technology distributions
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264,393
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–
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(264,393)
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(769,875)
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Administration
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914,552
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23,856
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(890,696)
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(853,752)
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Lease interest
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1,463
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–
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(1,463)
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(2,451)
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Subtotal
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$ 7,829,220
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$ 1,623,704
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(6,205,516)
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(5,732,300)
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General revenues Unrestricted grants
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6,431,538
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5,635,619
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Investment income
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555,354
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491,623
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Other general revenues
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5,248
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5,632
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Total general revenues
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6,992,140
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6,132,874
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Change in net position
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$ 786,624
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$ 400,574
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One of the goals of this statement is to provide a side-by-side comparison to illustrate the difference in the way MELSA’s governmental operations are financed. MELSA’s governmental operations rely primarily on grants from the state, which provide most of the operating grants (program revenue) and unrestricted grants (general revenue), shown above.
Overall, MELSA’s operating results for 2024 were similar to the prior year. The biggest differences from 2023 to 2024 were an increase in unrestricted grant revenues due to an increase in state RLBSS funding, and an increase in expenditures for cooperative programs, which included allocations under the new LSAF Program.
ACCOUNTING AND AUDITING UPDATES
The following is a summary of Governmental Accounting Standards Board (GASB) standards expected to be implemented in the next few years.
GASB STATEMENT NO. 102, CERTAIN RISK DISCLOSURES
The objective of this statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints.
This statement defines a concentration as a lack of diversity related to an aspect of a significant inflow of resources or outflow of resources. A constraint is a limitation imposed on a government by an external party or by formal action of the government’s highest level of decision-making authority. Concentrations and constraints may limit a government’s ability to acquire resources or control spending. A government will be required to assess whether a concentration or constraint makes the primary government reporting unit or other reporting units that report a liability for revenue debt vulnerable to the risk of a substantial impact. Additionally, a government must assess whether an event or events associated with a concentration or constraint that could cause the substantial impact have occurred, have begun to occur, or are more likely than not to begin to occur within 12 months of the date the financial statements are issued.
If a government determines that those criteria for disclosure have been met for a concentration or constraint, it should disclose information (as outlined in the standard) in notes to financial statements in sufficient detail to enable users of financial statements to understand the nature of the circumstances disclosed and the government’s vulnerability to the risk of a substantial impact. The disclosures should also include any actions taken by the government to mitigate the risk.
The requirements of this statement are effective for fiscal years beginning after June 15, 2024, and all reporting periods thereafter. Earlier application is encouraged.
GASB STATEMENT NO. 103, FINANCIAL REPORTING MODEL IMPROVEMENTS
The objective of this statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This statement also addresses certain application issues.
This statement continues the requirement that the basic financial statements be preceded by management’s discussion and analysis (MD&A), which is presented as required supplementary information (RSI). This statement requires that the information presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long-Term Financing Activity, and
(5) Currently Known Facts, Decisions, or Conditions. Furthermore, this statement stresses that the detailed analyses should explain why balances and results of operations changed rather than simply presenting the amounts or percentages by which they changed. In addition, this statement continues the requirement that information included in MD&A distinguish between that of the primary government and its discretely presented component units.
This statement defines unusual or infrequent items as transactions and other events that are either unusual in nature or infrequent in occurrence, and requires governments to display the inflows and outflows related to each unusual or infrequent item separately.
This statement requires that the proprietary fund statement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues and expenses. In addition to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in fund net position, this statement requires that a subtotal for operating income (loss) and noncapital subsidies be presented before reporting other nonoperating revenues and expenses.
This statement requires governments to present each major component unit separately in the reporting entity’s statement of net position and statement of activities if it does not reduce the readability of the statements. If the readability of those statements would be reduced, combining statements of major component units should be presented after the fund financial statements.
This statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present (1) variances between original and final budget amounts and (2) variances between final budget and actual amounts. An explanation of significant variances is required to be presented in the notes to RSI.
The requirements of this statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter. Earlier application is encouraged.
GASB STATEMENT NO. 104, DISCLOSURE OF CERTAIN CAPITAL ASSETS
The objective of this statement is to provide users of government financial statements with essential information about certain types of capital assets.
This statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by GASB Statement No. 34. Lease assets recognized in accordance with Statement No. 87, Leases, and intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital assets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements, also should be separately disclosed. In addition, this statement requires intangible assets other than those three types to be disclosed separately by major class.
This statement also requires additional disclosures for capital assets held for sale. A capital asset is considered held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. Capital assets held for sale are required to be evaluated each reporting period. Governments should disclose (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset.
The requirements of this statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter. Earlier application is encouraged.
