North St. Paul auditors issue clean 2025 opinion; general fund balance rises to $6.9 million

The city's auditor told the North St. Paul City Council on May 5 that LB Carlson LLP issued an unmodified (clean) opinion on the city's 2025 financial statements, and that internal control testing produced no findings.

"We issued an unmodified opinion which is a clean opinion," said Jackie Heaggel, partner with LB Carlson and lead on the city's audit. Heaggel also said auditors identified a single Minnesota legal compliance comment: two of 40 invoices tested were not paid within the 35-day payment period required by statute.

The management report showed overall improvement across funds. Auditors summarized a roughly $2.8 million increase in governmental fund balances year over year and reported the general fund had about $6.9 million in total fund balance at year end. Heaggel said unassigned general fund balance equaled about 67% of the subsequent year's budget, above the council's 50% fund-balance policy.

Dan (city staff) characterized the results as a multi-year improvement driven by council and staff decisions and noted the city recently obtained a higher bond rating. When asked by council whether the rating had changed, staff said "It's, uh, double A+." Dan told the council he and staff will return at a follow-up workshop to review the 10-year plan, cash balances and first-quarter 2026 results.

Auditors also highlighted areas for ongoing attention. The management report identified three special-revenue funds and one enterprise fund with deficit balances and urged continued monitoring. The transcript contains inconsistent references about the size of the fiber optic fund deficit (both about $1.8 million and about $424,000 are mentioned); the management report materials distributed to council should be consulted for the authoritative figure.

Other audit observations included progress reconciling deposit and escrow accounts (a prior-year comment), a procurement/publication reminder about alternative dissemination of bids (if using an alternate posting the city must also publish in the official newspaper/minutes for up to six months before switching), and a note about changes in federal Uniform Guidance thresholds (the city did not reach the $1 million single-audit threshold in 2025 but should review updated federal purchasing thresholds and internal policies).

Enterprise funds were broadly positive: the electric fund had strong operating income and a net position increase; water, surface-water and wastewater funds showed improved operating results. The solid-waste fund showed an operating loss of about $140,000 consistent with the council's prior strategy while the city completes a trash and recycling RFP.

Council next steps: staff will provide a deeper dive on the 10-year plan and fund cash balances at an upcoming workshop, and staff said it will analyze the electric fund to present options for a potential summer energy-charge cap for resident relief.

The council thanked auditors for the clear presentation; no formal council action was taken other than the usual acceptance of the report on the agenda.