lyon county board of commissioners …...jay trusty board action requested: discuss options for the...

Disclaimer: This agenda has been prepared to provide information regarding an upcoming meeting of the LyonCounty Board of Commissioners. This document does not claim to be complete and is subject to change.

Barrier Free: All Lyon County Board of Commissioners are accessible to the handicapped. Attempts willbe made to accommodate any other individual need for special services. Please contact Loren Stomber at507-537-6980 early so necessary arrangements can be made.

LYON COUNTY BOARD OF COMMISSIONERS MEETING AGENDACommissioner's Room

Lyon County Government CenterTuesday, June 4, 2019 at 9:00 AM

1. OPENINGPledge of Allegiance

2. APPROVE AGENDA

3. CONSENT AGENDA1. Approve Consent Agenda 2. Minutes 5/21/20193. Commissioner Warrants4. Auditor Warrants5. Per Diems

4. RESOLUTIONS/CONTRACTS/ROUTINE4.1. 2019 Jail Nursing Contract

Considering signing contract with Avera Marshall Regional Medical Center d/b/aAvera@Home Southwest Minnesota for jail nursing services.2019 Jail Nursing Contract.pdf

4.2. Temporary On-Sale Liquor LicenseConsider approval for a temporary on-sale liquor license for the Marshall AreaChamber of Commerce event being held on June 26, 2019 at the Redwood RiverSportsman's Club.Business After Hours.pdf

5. REGULAR AGENDA5.1. DNR land aquisition

Consider approving the acquisition of land by the DNR.Acquisition Proposal - Doyscher property.docDoyscher Cty Board Resolution.rtf

5.2. EDA DiscussionDiscuss options for the county to play a role in economic development.

5.3. Marshall Municipal Utilities Easements

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/368828/2019_Jail_Nursing_Contract.pdf

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369313/Business_After_Hours.pdf

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369375/Acquisition_Proposal_-_Doyscher_property.pdf

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369376/Doyscher_Cty_Board_Resolution.pdf

Disclaimer: This agenda has been prepared to provide information regarding an upcoming meeting of the LyonCounty Board of Commissioners. This document does not claim to be complete and is subject to change.

Barrier Free: All Lyon County Board of Commissioners are accessible to the handicapped. Attempts willbe made to accommodate any other individual need for special services. Please contact Loren Stomber at507-537-6980 early so necessary arrangements can be made.

Consider approval of a utility easement on the back side of the 6th Street parking lotand along the building maintenance garage.SKMBT_C45219052908470.pdf

5.4. Camden State Park Bridge Construction Contract AmendmentAuthorize Board Chair to sign Amendment No 1. Camden SP.Lyon Co.Co Rd 83.Amendment 1.Encumbered.5 16 19.pdf

5.5. Service Truck Body PurchaseAuthorize engineer to sign purchase agreement with Crysteel Truck Equipment forservice body and crane.2019 Lyon Co-2019 SB765798-MCB 130 DRWTHWBBSLRR ACWeldGenLM4000X-20WI 05-28-19.pdf

5.6. Lyon County Sheriff's Office Facebook PageConsider the creation of a Lyon County Sheriff's Office Facebook page that standalone from the general Lyon County Facebook page.

5.7. Technical Assistant II HireRequest Board to approve the hire of Barb Marron as Technical Assistant II in theAuditor Treasurer Office with a start date on or around June 24th. Starting pay isrecommended at $18.50/hr in pay grade 5.

5.8. Lincoln Pipestone Rural WaterHear a report of the activities and audit of the LPRW System.LPRW 2018 Audit.pdf

BOARD REPORTS

ADJOURNMENT

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/368885/Camden_SP.Lyon_Co.Co_Rd_83.Amendment_1.Encumbered.5_16_19.pdf

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369143/2019_Lyon_Co-2019_SB765798-MCB_130_DRWTHWBBSLRR_ACWeld_GenLM4000X-20WI_05-28-19.pdf


https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/361272/LPRW_2018_Audit.pdf

LYON COUNTYREQUEST FOR BOARD ACTION

Requested Board Date:6/4/2019

Item: 2019 Jail Nursing Contract

Originating Department: Sheriff

Presenter:Sheriff Eric Wallen

Board Action Requested:

Considering signing contract with Avera Marshall Regional Medical Center d/b/a Avera@Home Southwest Minnesotafor jail nursing services.

Background:

Earlier in 2019 Lyon County entered into a one year contract with Avera Marshall Regional Medical Center for jailnursing services. These services were provided by Avera clinical nursing staff. Avera has since stated that they weregoing to move these duties to their home health division nurses and felt that a new agreement clarifying Avera@HomeSouthwest Minnesota was necessary. This proposed agreement would be in place from July 1, 2019 to January 1,2020. The terms of the proposed contract are the same as the existing contract except for the addition of providingvenous blood draws and the cost of mantoux increasing from $5 to $7 per mantoux.

Supporting Documents:2019 Jail Nursing Contract.pdf

Comments:

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/368828/2019_Jail_Nursing_Contract.pdf



Item: Temporary On-Sale Liquor License

Originating Department: Auditor-Treasurer

Presenter:Loren Stomberg


Consider approval for a temporary on-sale liquor license for the Marshall Area Chamber of Commerce event beingheld on June 26, 2019 at the Redwood River Sportsman's Club.

Background:

The Marshall Area Chamber of Commerce is sponsoring a Business After Hours event at the Redwood RiverSportsman's Club located at 3068 220th St. Marshall, MN 5628 in Clifton Township.

Supporting Documents:Business After Hours.pdf

Comments:

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369313/Business_After_Hours.pdf



Item: DNR land aquisition

Originating Department: Administration

Presenter:Wendy Krueger


Consider approving the acquisition of land by the DNR.

Background:

See Attached

Supporting Documents:Acquisition Proposal - Doyscher property.doc

Doyscher Cty Board Resolution.rtf

Comments:

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369375/Acquisition_Proposal_-_Doyscher_property.pdf

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/369376/Doyscher_Cty_Board_Resolution.pdf

Acquisition ProposalMinnesota Department of Natural Resources –

Division of Wildlife

Owner: Mark and Becky DoyscherLocation: Portions of S½ Sec 25 and NE¼ Sec 36

Lake Marshall Township (T111-R41)Proposed Acquisition: 276.8 acres

Types of land to be acquired:CREP/RIM Grassland 247 acres (Donated by landowners)CRP Grassland 10.2 acresCropland (includes HEL) 15.7 acresOther (county ditch/road ROW) 3.9 acres

2018 taxes paid on proposed acquisition: $2224 or $8.03/Acre(Non-Homestead Rate)

Projected In Lieu of Tax payment from DNR (PILT): $2856 or $10.32/Acre(Including reimbursement to school district determined by the State Aid Formula)

This property is located about 5 miles southeast of Marshall and is adjacent to the existing Meadow Creek Wildlife Management Area (WMA). The majority of the tract (247 acres) is a permanent RIM grassland easement that the landowners are willing to donate if the remaining acres are purchased.

This property is a high priority for DNR Wildlife since it would provide better access to the northwest portion of the WMA via 290th Ave. Current access is from the south or the east (about 1 mile either way) and is difficult due to Meadow Creek and other wetland areas to traverse. The property is within an identified pheasant habitat complex and also within a primary deer wintering area that provides cover year round for many local wildlife species as well as pollinators and migratory birds. Established native grassland plantings, food plots, woody cover plantings and restored wetlands can be found on the Doyscher property. Additional small wetland restoration opportunity may be feasible on the 10.2 acres of CRP in the northeast corner. Currently, 15.7 acres is farmed on the west side of the property, but the field contains some steeper slopes and erodible soils that will be restored to a diverse mix of native grasses and forbs to help provide erosion control and further limit runoff and sedimentation into Meadow Creek.

This grassland and wetland habitat complex is an excellent fit to become part of the WMA since it benefits wildlife and will provide enhanced access for hunting opportunity and for our wildlife management activities. Area sportsmen and other outdoor enthusiasts will also benefit since the property will be open to the public for hunting, trapping, and other forms of wildlife-oriented recreation.

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__Lyon CountyBoard of County Commissioners

Review of Proposed State Wildlife Acquisition

In accordance with Minnesota Statutes 97A.145 Subd. 2, the Commissioner of the Department of Natural Resources on June 4, 2019 provided the county board and the appropriate town officers with a description of lands to be acquired by the State of Minnesota for water and wildlife conservation purposes.

Lands to be acquired are described as follows:

~276.8 acres in portions of S½ of Section 25 and NE¼ of Section 36, Lake Marshall Township (T111N, R41W)

IT IS HEREBY RESOLVED, by the Board of County Commissioners of Lyon County on _ June 4, 2019_that the State's proposed acquisition of the above described property be (approved) (disapproved).

If applicable, reasons for disapproval:__________________________________________________________________________________________________________________________________________________________________________________________________________________

This resolution was presented by Commissioner _________________________ seconded by Commissioner _________________________ and upon vote was duly adopted.

I, _________________________, County Administrator of the County of ___Lyon______, State of Minnesota, certify that the foregoing resolution is a true and correct excerpt of the minutes of the Board of County Commissioners, County of ____Lyon_________________, State of Minnesota held at ___Marshall______________________, Minnesota on the __4th____day of _June _, 2019__.

________________________County Administrator

County of _Lyon________State of Minnesota

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Item: EDA Discussion


Presenter:Jay Trusty


Discuss options for the county to play a role in economic development.

Background:

Jay Trusty, director of the Southwest Regional Development Commission will present information on how a county canplay a role in local economic development.

Supporting Documents:

Comments:

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Item: Marshall Municipal Utilities Easements


Presenter:Stomberg


Consider approval of a utility easement on the back side of the 6th Street parking lot and along the building maintenancegarage.

Background:

See attached letter requesting the easements

Supporting Documents:SKMBT_C45219052908470.pdf

Comments:

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/368289/SKMBT_C45219052908470.pdf



Item: Camden State Park Bridge ConstructionContract Amendment

Originating Department: Highway Department

Presenter:VanMoer


Authorize Board Chair to sign Amendment No 1.

Background:

The DNR is responsible for $270,000 worth of participation in the three bridge replacements in Camden State Park. This includes the expense of the architectural surface finish (formliner and staining) and the utility relocations. Thecontract detailing this funding is set to expire June 30th. Due to the high river levels since July 2018, the contractor hasnot been able to finish the colored staining of the concrete bridges. The amendment extends the funding term for theDNR's allocated cash for this project.

In addition, they are piggy-backing on our paving contract this summer and have chosen to pave a campground loopand the beach parking lot. This is the reason for the additional $50,000 in the amendment.

Supporting Documents:Camden SP.Lyon Co.Co Rd 83.Amendment 1.Encumbered.5 16 19.pdf

Comments:

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https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/368885/Camden_SP.Lyon_Co.Co_Rd_83.Amendment_1.Encumbered.5_16_19.pdf



Item: Service Truck Body Purchase

Originating Department: Highway Department

Presenter:VanMoer


Authorize engineer to sign purchase agreement with Crysteel Truck Equipment for service body and crane.

Background:

The county board authorized the purchase of a service truck chassis in 2018. The attached quote is for the steel servicebody, 4000# crane, and installation. The quote also includes an $8000 trade value which I recommend accepting. Thecounty's current welder and compressor will be swapped onto the new truck. Quotes were solicited last year from Towmaster and Crysteel. Crysteel was the low by approximately $5000. Thequotes are State Bid pricing and are still valid.

Supporting Documents:2019 Lyon Co-2019 SB765798-MCB 130 DRWTHWBBSLRR ACWeld GenLM4000X-20WI 05-28-19.pdf

Comments:

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507-726-6041

800-722-0588

507-726-2984 FAX

52248 EMBER ROAD

P.O. BOX 733

LAKE CRYSTAL, MN. 56055-0733

May 28, 2019 Dean Berg & Andy Hoffmann X ORDER Lyon County Hwy Dept. 504 Fairgrounds Road Dean Cell Phone: 507-829-3255 Marshall, MN 56258 Andy Office Phone: 507-532-8215 Dean E-mail: [email protected]

E-mail: [email protected] ATTN: Dean & Andy We are pleased to quote the following equipment for your consideration. The equipment will be installed on a 2019 IH CV series dual rear wheel chassis, 19,500 GVW, with an Allison 1700 RDS automatic transmission with PTO provision, diesel engine, 84” cab to axle, IH 2303 Red cab color, approximate early to mid May chassis deliver. REFERENCE: COOPERATIVE PURCHASE OF EQUIPMENT FROM STATE OF MINNESOTA CONTRACT NO: 150033 RELEASE NO: T-765(5) CONTRACT PERIOD: December 28, 2018 through September 30, 2019 EXTENSION OPTION: Up to 48 months 1-UNIT STATE COOPERATIVE PRICING ITEM# DESCRIPTION PRICING

1.0 UTILITY / SERVICE BODY

MCB 96" Series Model SB96M 4816

56" Single rear wheel application

42.5" high, 48-1/2" wide floor, 16" compartments, OA width 80-1/2"

26" floor to top of compartment, 19" radius, 53" UCA

Street Side Compartments:

1st Vertical-32" wide x 42.5" high x 16" deep

(1) Adjustable Divider Tray

(1) Adjustable Shelf

Horizontal-42" wide x 21" high x 16" deep

(1) Fixed Shelf-Centered

Rear Vertical-22" wide x 42.5" high x 16" deep


(1) False Wall to protect lights

Curbside Compartments:

1st Vertical-32" wide x 42.5" high x 16" deep

(1) Adjustable Divider Tray


Horizontal-42" x 21" high x 16" deep

(1) Fixed Divider Tray-Centered

CRYSTEEL TRUCK

EQUIPMENT

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LYON COUNTY HIGHWAY DEPT.-2019 STATE BID 765 &798-MCB 130 BODY-ACCESSORIES-ELECTRIC CRANE-OPTIONAL EQUIPMENT

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Rear Vertical-22" wide x 42.5" high x 16" deep

(1) False Wall to protect lights

Body Construction-14 gauge Galvanneal

Drain Holes in bottoms of all compartments

Compartment Tops-Smooth 14 gauge Galvanneal

Loadspace Walls-Smooth 14 gauge Galvanneal

Bulkhead-14 gauge Galvanneal

Wheel Panels-12 gauge Galvanneal

Rubber Fenders-Shipped Loose

Floor-12 gauge Galvanneal Treadplate

Underframe-10 gauge Formed Channel-E-Z Mount

(6) Body Doors-Double Panel

Outers-14 gauge Galvanneal beveled edge design

Inners-18 gauge Galvanneal

Installed using hidden hinge system

(6) Gasket-Clip on-Shipped loose

(6) Rotary Paddle Handles-1 Point-Stainless Steel

(4) Spring Hold Open/Restraints on Vertical Doors

(4) Chains on Horizontal Doors

Undercoating

Tailgate-12 gauge Galvanneal-Lift and Latch design, w/ support

cables, and stainless pins and brackets

Primer-Standard Urethane-White

Price $ 5,038.70

Warranty 5 years

Date & I.D. of Price sheet N/A

Discount, if any, to be applied to price sheet N/A

Installation $ 973.96

Add for 132" body for Dual Rear Wheel $ 3,535.44

84" CA Model SB130M5320H-DW

Includes 2nd Vertical w/(1) adj.

divider tray & (1) adj. shelf/side

48” high body

NCI Add for front vertical on passenger side to be 60” high $ 546.84

NCI Shelving in lieu of standard shelving $ 5,291.73

Curb Side

CS1V: Raised to 60” high, Oxy-Acet Brackets, vented, 2-0-2 locking “J” hooks, 3 point latch system in this compartment

CS2V: (2) adjustable divider shelves with dividers

CS Horiz: (1) centered heavy duty shelf with 1” lip

CS Rear: Add for crane reinforcement 4,000 lb. capacity 132” DRW $ 1,873.11

Street Side

SS1V: (6) 4” HD Pull Out Trays with dividers

SS2V: (2) adjustable HD flat shelf w/1” lip, (1) adjustable divider shelf with dividers

SS Horiz: (2) HD pull out trays with dividers, bottom tray 3” high and floor

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3

of shelf 5” above floor of the compartment, upper tray 3” high and open on top

SS Rear: (1) flat bar mounted on back wall of compartment for hanging chains

To paint 132" bodies Basecoat/Clear coat Red to match cab color $ 2,733.25

Add for undercoat 132" & 144" bodies $ 328.88

Add for 12" high slam action tailgate ILO lift and latch $ 522.30

Add for LED rope compartment lights installed in all (8) compartments and $ 1,531.10

Wired to an in cab lighted switch

Add for MCB platform Ext/Work Bench Bumper $ 2,315.87

Notched for outriggers on both ends, thru box with vertical

hinged doors, one on each end, 18" O.A. depth x full width x 14” high, slam action handles, single point, installed and painted, 2” receiver tube incorporated into bumper

NCI Add for pipe vise holder on passenger side of work bench bumper $ 152.20

NCI Add for 10 gauge smooth steel load space side walls of load bed area and 10 gauge smooth steel compartment tops in lieu of standard $ 592.56

NCI Add for LED lighted license plate bracket at rear, LED stop/turn/tail lights, LED back up lights, LED amber strobe, LED marker lights in rear work bench bumper

$ 674.30

NCI Add for 50’ spring retract air hose reel installed in CS Rear with a hard mount fitting at the rear of compartment-see pictures, furnish and install new filter, regulator and lubricator for used Stellar SHD-60 air compressor

$ 1,148.90

NCI Remove and remount used Stellar SHD-60 hydraulic air compressor on street side compartment right behind the welder; air lines plumbed to CS Rear Compartment $ 750.00

NCI Add for PTO for an automatic transmission, new engine speed control, new pump for used Stellar SHD-60, plumb and install

$ 3,075.00

NCI Add for removing and remounting Miller engine driven AEAD-220LE welder/generator on top of driver side compartment at front

$ 319.72

Add for each LED work light installed on swivel bracket, installed ($102.22 x 3), wired to the same in dash switch, (1) each side at rear compartments, (1) at passenger side front

$ 306.66

NCI Add for rear window cab protector installed on front bulkhead of service body

$ 563.92

NCI Add for (1) ECCO mini lite bar installed on pedestal in center of cab protector, wired to the same switch as the rear strobes $ 398.84

NCI Add for Timbren load boosters installed on both sides at rear axle of chassis

$ 371.88

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Electronic back up alarm 560-STA20502-G $ 88.34

DEF fuel type fill, if required $ 120.63

NCI Add for moving camera and installing at rear if truck comes with a backup camera $ 245.00 REFERENCE: COOPERATIVE PURCHASE OF EQUIPMENT FROM STATE OF MINNESOTA CRANES INSTALLED ON CAB & CHASSIS CONTRACT NO: 125693 RELEASE NO: C-798(5) CONTRACT PERIOD: June 1, 2017 through May 31, 2019 EXTENSION OPTION: Up to 36 months 1-UNIT STATE COOPERATIVE PRICING ITEM# DESCRIPTION PRICING

1.0 MAKE AND MODEL Liftmoore 4000X

Required Frame RBM, SM & PSI of steel N/A

Lift Capacity at 5' to 9' from centerline of rotation state distance & lift capacity 2,000 lbs. @ 8 ft.

Each extension type, horizontal reach from centerline of rotation and maximum capacity at that length

Main Boom

The boom extends under power from 8 Ft. to 12 Ft with a 4-Ft. manual pull

out to 16 Ft. with one intermediate position at 14 Ft.

First Extension Hydraulic: 10 ft., 1,600 lbs.

Second Extension Hydraulic: 12 ft., 1,333 lbs.

Third Extension Manual: 14 ft., 1,143 lbs.

Fourth Extension Manual: 16 ft., 1,000 lbs.

Fifth Extension N/A

Sixth Extension N/A

Seventh Extension N/A

Crane weight 858 lbs.

Total vertical reach N/A

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5

Horizontal hook approach from centerline of rotation N/A

Vertical hook approach from mounting surface N/A

Total horizontal reach N/A

Below chassis frame reach N/A

Boom stowed height from mounting surface N/A

Crane mounting space requirement

Four 0.75” X3.0” long Grade 8 hex head cap screws and lock nuts are

provided. Mounting plate is 15” square with a 12” square bolt pattern.

Distance from back of cab to crane clearance N/A

Distance from crane to front of body clearance N/A

Crane rotation & rotation working area

The crane rotates 360 degrees continuously without limit

Rotation system brake N/A

Rotation system Drive

high torque, low speed hydraulic motor

Rotational torque in ft-lb's N/A

Outrigger description, width & design N/A

Outrigger hydraulic description (independent down, stroke length, etc. N/A

Outrigger pad size & type N/A

Throttle control, if any N/A

Hydraulic pump type, GPM, PSI

A hydraulic pump driven by a 12 volt D.C. series wound electric motor

powers the crane’s rotation, elevation and extension functions. The pump is a gear type with a 1.3 GPM capacity

at 500 PSI.

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6

Hydraulic oil reservoir size/description N/A

Is Hydraulic reservoir heated N/A

Hydraulic fluid type N/A

control locations & Description Tethered 18 Ft. remote pendant

Control valve type

Control of the hydraulic functions is through four way spring centered solenoid activated valves. Valves

have manual over-ride capability and are mounted on a manifold for easy

access.

Wireless remote included N/A

Number of wireless remote functions N/A

Boom Cylinder description

A double acting cylinder with an integral counterbalance valve elevates the boom. The counterbalance valve

has two important functions. This valve holds the cylinder in the event of hose failure and it controls the rate of

boom decent.

Crane rating 16,000 ft.-lbs.

Country of origin for crane USA

Crane Overall Weight 858 lbs.

Crane Stowed Center of Gravity N/A

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Warranty

Liftmoore, Inc. warrants each LIFTMOORE crane to be free from

defects in materials and workmanship for twelve (12) months from the date of delivery to the original customer. Under the terms of this warranty the

crane structural components manufactured by LIFTMOORE, Inc.

are warranted for thirty-six (36) months from the date of delivery to the original customer. LIFTMOORE, Inc.

will repair or replace, as its sole discretion, any equipment or part that

is returned f.o.b. to LIFTMOORE, Inc.’s plant at 7810 Pinemont Drive,

Houston, Texas 77040, or to one of its authorized dealers, and is found by LIFTMOORE, Inc. or its authorized dealer to have been defective at the

time of original delivery.

BASE UNIT PRICE FOR 4000X-20 WI: $14,305.08

NOTE: Price of Liftmoore Model 4000X-20WI includes all features of 4000X-20 but also wireless control, digital voltmeter/ammeter, PN39396 Install 4000X-20 WI crane on service body, install boom rest $ 1,218.00 Group 31 battery installed in CS Rear compartment $ 246.06

27860 REST, BOOM SA 5.0" AH 14"-19" BASE WIDTH=20.0" 206-4000 For use with Models 206REL, 208EL, 2700AR, 3200, 1032, 3612, 4000, 1640 $ 199.04

18K outriggers, manual out crank down installed PN 39028, Model 18K 36CMOCD-12SMOCD

$ 1,260.61

Installation of manual outrigger on service body $ 913.50 TOTAL INSTALLED PRICE LESS TAX FOB LAKE CRYSTAL $51,641.42 TRADE VALUE OF USED 2000 DODGE 3500 4x2 CHASSIS WITH AUTO CRANE SERVICE BODY, AUTO CRANE 3203 CRANE, HYDRAUL ($ 8,000.00) TOTAL INSTALLED PRICE LESS TAX WITH TRADE FOB LAKE CRYSTAL $43,641.42 Authorized Signature:_____________________________ Date:_______________________ Please sign, date and return this document to me and this document will be the purchase agreement for all of the equipment listed. Receiver and wire harness for remote control of truck engine. Feature includes start, stop, Engage high idle, only available with wireless controlled cranes, installed on any of the cranes

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8

Truck Chassis Delivery Option if Crysteel Picks Up or Delivers Truck Chassis

Delivery Starting Point

Lake Crystal, MN

Price Per loaded mile delivery charge

$2.75

A WRITTEN PURCHASE ORDER MUST BE RETURNED SPECIFYING PURCHASE OF THIS EQUIPMENT OFF THE STATE OF MINNESOTA COOPERATIVE PURCHASE CONTRACT NOTE: NO EXHAUST WORK INCLUDED FOR TRUCKS WITH NEW EMISSION CONTROL EXHAUST SYSTEMS. ANY EXHAUST WORK NEEDED TO COMPLETE INSTALLATION WORK ON A TRUCK WILL BE CHARGED TIME AND MATERIAL. NOTE: ALL LABOR COSTS ARE BASED ON INSTALLING EQUIPMENT ON A TRUCK CHASSIS WITH ALL TRUCK ITEMS OUT OF THE WAY FOR EQUIPMENT INSTALLATION. IF CRYSTEEL HAS TO MOVE FUEL TANKS, AIR TANKS, AIR DRYER, EXHAUST, ETC. THERE WILL BE TIME AND MATERIAL CHARGES ADDED TO BID. State Bid Submitted By; Bob Chicos, Josh Miller & Gary Brandenburg Crysteel Truck Equipment, Inc.

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Item: Lyon County Sheriff's Office Facebook Page

Originating Department: Sheriff

Presenter:Sheriff Eric Wallen


Consider the creation of a Lyon County Sheriff's Office Facebook page that stand alone from the general Lyon CountyFacebook page.

Background:

Over the past few years social media outlets have been become a popular means to assist law enforcement agencieswith their duties. A Facebook page specific to the Lyon County Sheriff's Office would give the Office additional meansto promote various activities the office is involved in, provide notices and communication to the public on a broad scale,and provide a means to build community relations and interaction with the Office.

Administration of the page would be limited to staff appointed by the Sheriff to ensure appropriate information is beingshared.


Comments:

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Item: Technical Assistant II Hire


Presenter:McDonald


Request Board to approve the hire of Barb Marron as Technical Assistant II in the Auditor Treasurer Office with a startdate on or around June 24th. Starting pay is recommended at $18.50/hr in pay grade 5.

Background:

1st round interviews with seven individuals were held on Friday, May 17th. 2nd interviews were conducted on May22nd with three candidates.


Comments:

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Item: Lincoln Pipestone Rural Water


Presenter:Jason Overby


Hear a report of the activities and audit of the LPRW System.

Background:

See attached audit report. Jason will be presenting around 11:00 am

Supporting Documents:LPRW 2018 Audit.pdf

Comments:

40

https://legistarweb-production.s3.amazonaws.com/uploads/attachment/pdf/361272/LPRW_2018_Audit.pdf

Lincoln Pipestone Rural Water System Lake Benton, Minnesota

For the Year Ended December 31, 2018

Annual Financial Report

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lmunguia_ABDO16C

Sticky Note

Marked set by lmunguia_ABDO16C

Lincoln Pipestone Rural Water System Lake Benton, Minnesota Annual Financial Report

Table of Contents For the Year Ended December 31, 2018

Page No.

Introductory Section Board of Directors and Administration 4

Financial Section Independent Auditor’s Report 6 Management’s Discussion and Analysis 8

Basic Financial Statements Fund Financial Statements - Enterprise Fund

Statement of Net Position 13 Statement of Activities 14 Statement of Revenues, Expenses and Changes in Net Position 15 Statement of Cash Flows 17

Notes to the Financial Statements 18

Other Required Reports Independent Auditor’s Report on Minnesota Legal Compliance 29 Independent Auditors 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 30

Federal Financial Award Programs Independent Auditor’s Report on Compliance

for Each Major Federal Program and Report on Internal Control Over Compliance Required By the Uniform Guidance 33

Schedule of Expenditures of Federal Awards 35 Notes to the Schedule of Expenditures of Federal Awards 36 Schedule of Findings, Responses and Questioned Costs 37

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INTRODUCTORY SECTION

LINCOLN PIPESTONE RURAL WATER SYSTEM LAKE BENTON, MINNESOTA

FOR THE YEAR ENDED DECEMBER 31, 2018

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Board of Commissioners and Administration For the Year Ended December 31, 2018

Name Title

Earl DeWildeMitch KlingJan Moen

Rod SpronkFrank Engels

Bill UfkinJerry Lonneman

Randy KrausJ. Brent Feikema

Ken BuysseJoe Weber

Ron Schramel

Jason Overby

Chairperson Vice-Chairperson

Secretary Treasurer

Commissioner Commissioner Commissioner Commissioner Commissioner Commissioner Commissioner Board Attorney

General Manager

Board of Commissioners

Administration

4

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lmunguia_ABDO16C

Sticky Note


FINANCIAL SECTION



5

45

100 Warren Street, Suite 600 Mankato, MN 56001 Office 507.625.2727 | Fax 507.388.9139

INDEPENDENT AUDITOR'S REPORT

Board of Commissioners Lincoln Pipestone Rural Water System Lake Benton, Minnesota

Report on the Financial Statements

We have audited the accompanying financial statements of the Lincoln Pipestone Rural Water System (the System), Lake Benton, Minnesota, as of and for the year ended December 31, 2018 and the related notes to the financial statements, which collectively comprise the System’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Board’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the System’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the System as of December 31, 2018, and the respective changes in financial position and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

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Other Matters

Report on Summarized Comparative Information

We have previously audited the System's 2017 financial statements, and we expressed unmodified opinions on the respective proprietary fund financial statements in our report dated March 27, 2018. In our opinion, the summarized comparative information presented herein for the respective proprietary fund financial statements as of and for the year ended December 31, 2017, is consistent, in all material respects, with the audited financial statements from which it has been derived.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis starting on page 8 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the System’s basic financial statements. The introductory section, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements.

The Schedule of Expenditures of Federal Awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, individual fund financial schedules and the Schedule of Expenditures of Federal Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory section 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.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 28, 2019, on our consideration of the System’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is 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 the System’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 the System’s internal control over financial reporting and compliance.

ABDO, EICK & MEYERS, LLP Mankato, Minnesota March 28, 2019

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Management’s Discussion and Analysis

As management of the Lincoln Pipestone Rural Water System, (the System), Lake Benton, Minnesota, we offer readers of the System’s financial statements this narrative overview and analysis of the financial activities of the System for the fiscal year ended December 31, 2018.

Financial Highlights

• The assets of the System exceeded its liabilities at the close of the most recent fiscal year by $54,961,701 (netposition). Of this amount, $5,130,277 (unrestricted net position) may be used to meet the System’s ongoingobligations to its users and creditors and provide for future rate stabilization.

• The System’s total net position increased by $505,585 as compared to an increase of $4,701,163 in the previousyear. The change from the previous year is due to a decrease in state and federal grants by $4,020,591 mainlyattributable to the system receiving a grant in the prior year.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the System’s basic financial statements. The System’s basic financial statements comprise two components: 1) fund financial statements, and 2) notes to the financial statements. The notes explain some of the information in the financial statements and provide more detailed data. The statements are followed by a supplementary schedules that further explains and supports the information in the financial statements.

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. The System, like other State and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The System maintains one type of fund: a proprietary fund.

Proprietary fund. The System maintains one type of proprietary fund. The System uses an enterprise fund to account for its water functions.

The basic proprietary fund financial statements can be found starting on page 13 of this report.

Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the fund financial statements. The notes to the financial statements can be found starting on page 18 of this report.

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Fund Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the System, assets exceeded liabilities by $54,961,701 at the close of the most recent fiscal year.

A large portion of the System’s net position (56.2 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment), less any related debt used to acquire those assets that are still outstanding. The System uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the System’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

Lincoln Pipestone Rural Water System’s Summary of Net Position

Increase2018 2017 (Decrease)

Current and Other Assets 6,624,565$ 11,210,434$ (4,585,869)$ Restricted Assets 24,144,175 25,092,324 (948,149) Capital Assets 66,228,627 67,132,511 (903,884)

Total Assets 96,997,367 103,435,269 (6,437,902)

Long-term Liabilities Outstanding 41,120,258 47,921,206 (6,800,948) Other Liabilities 915,408 1,057,947 (142,539)

Total Liabilities 42,035,666 48,979,153 (6,943,487)

Net Investment in Capital Assets 30,857,853 31,118,967 (261,114) Restricted 18,973,571 19,130,974 (157,403) Unrestricted 5,130,277 4,206,175 924,102

Total Net Position 54,961,701$ 54,456,116$ 505,585$

Business-type Activities

An additional portion of the System’s net position (34.5 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance, $5,130,277 or (9.3 percent) represents unrestricted net position which may be used to meet the System’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the System is able to report positive balances in both categories of net position.

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The System’s net position increased by $505,585 during the current fiscal year. Key elements of this increase are as follows:

Lincoln Pipestone Rural Water System’s Changes in Net Position


RevenuesProgram Revenues

Charges for services 5,755,523$ 5,551,853$ 203,670$ Capital Grants and Contributions 1,976,114 6,172,120 (4,196,006)

General RevenuesInvestment income 183,129 116,947 66,182 Other 605,986 866,445 (260,459)

Total Revenues 8,520,752 12,707,365 (4,186,613)

ExpensesOperating Expenses 7,062,851 6,779,597 283,254 Non-operating 952,316 1,226,605 (274,289)

Total expenses 8,015,167 8,006,202 8,965

Change in Net Position 505,585 4,701,163 (4,195,578)

Net Position - January 1 54,456,116 49,754,953 4,701,163

Net Position - December 31 54,961,701$ 54,456,116$ 505,585$

Business-type Activities

The following graph shows revenues by source for 2018:

Revenues by Source

Charges for Services67.6%

Other7.1%

Capital Grants and

Contributions23.2%

Investment Income2.1%

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Capital Asset and Debt Administration

Capital assets. The System’s investment in capital assets as of December 31, 2018, amounts to $66,228,627 (net of accumulated depreciation). This investment in capital assets includes land, buildings and distribution system. The total decrease in the System’s investment in capital assets for the current fiscal year was 1.3 percent.

The major capital asset events during the current fiscal year included the following:

• New Computers and Server - $35,335• KHC Holland Plant Media Filter - $50,804• Three work trucks - $80,445• Improvements added to construction in progress of $1,169,928

Lincoln Pipestone Rural Water System’s Capital Assets (net of depreciation)


Land and Improvements 3,866,544$ 3,869,469$ (2,925)$ Construction in Progress 389,539 10,614,494 (10,224,955) Distribution System 61,703,598 52,320,549 9,383,049 Buildings 40,394 45,604 (5,210) Machinery and Equipment 85,903 118,900 (32,997) Vehicles 141,021 158,156 (17,135) Office Equipment 1,628 5,339 (3,711)

Total 66,228,627$ 67,132,511$ (903,884)$

Water System

Additional information on the System’s capital assets can be found in Note 2C starting on page 24 of this report.

Long-term debt. At the end of the current fiscal year, the System had total bonded debt outstanding of $40,841,000 . All of which is revenue debt. While all of the System’s bonds have revenue streams, they are all backed by the full faith and credit of the System.

Lincoln Pipestone Rural Water System’s Outstanding Debt


Revenue Bonds 40,841,000$ 47,572,000$ (6,731,000)$

Water System

The System’s total debt decreased $6,731,000, or 14.1 percent during the current fiscal year.

Additional information of the System’s long-term debt can be found on Note 2D starting on page 25 of this report.

Factors Bearing on the Systems Future

The system is dependent on the United States Department of Agriculture for the vast majority of it funding. The continuation of this funding is dependent on the actions taken by the Minnesota and Federal legislature in the future.

Requests for Information

This financial report is designed to provide a general overview of the System’s finances for all those with an interest in the System’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Lincoln Pipestone Rural Water System’s office, 415 East Benton Street, Box 188, Lake Benton, MN 56149.

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FUND FINANCIAL STATEMENTS ENTERPRISE FUND



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Lincoln Pipestone Rural Water SystemLake Benton, Minnesota

Statement of Net PositionDecember 31, 2018

With Comparative Totals for December 31, 2017.

2018 2017AssetsCurrent Assets

Cash and temporary investments 4,386,544$ 4,168,664$ Cash with fiscal agent - 5,254,051Receivables

Interest 1,258 1,486 Accounts 477,824 100,346

Inventories 334,815 369,612 Special assessment - current portion 741,048 663,919 Prepaid items 36,987 19,851

Total Current Assets 5,978,476 10,577,929

Restricted assetsCash and investments 12,073,001 12,545,391 Receivables

Notes 52,395 70,995 Special Assessments 12,018,779 12,475,938

Other assetsPatronage Dividend Receivable 646,089 632,505

Capital assetsNondepreciable 3,866,544 3,869,469 Construction in progress 389,539 10,614,494 Depreciable, net 61,972,544 52,648,548

Total Noncurrent Assets 91,018,891 92,857,340

Total Assets 96,997,367 103,435,269

LiabilitiesCurrent Liabilities

Accounts payable 79,028 141,908 Due to other governments 1,568 1,458 Accrued salaries payable 30,257 26,324Compensated absences payable 47,358 44,934 Unearned revenue 43,149 58,984 Accrued interest payable 714,048 784,339 Current portion of long-term liabilities 11,093,000 6,391,000

Total Current Liabilities 12,008,408 7,448,947

Noncurrent LiabilitiesCompensated absences payable - net of current portion 8,286 13,388 Bonds payable - net of current portion 30,018,972 41,516,818

Total Noncurrent Liabilities 30,027,258 41,530,206

Total Liabilities 42,035,666 48,979,153

Net PositionNet investment in capital assets 30,857,853 31,118,967 Restricted for:

Debt Service 17,847,256 18,534,656 Short-term Assets 755,466 415,960 Tank Maintenance 370,849 180,358

Unrestricted 5,130,277 4,206,175

Total Net Position 54,961,701$ 54,456,116$

Noncurrent Assets

The notes to the financial statements are an integral part of this statement.13

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Lincoln Pipestone Rural Water SystemStatement of Activities

For the Year Ended December 31, 2018With Comparative Totals for Year Ended December 31, 2017

Operating CapitalCharges for Grants and Grants and

Functions/Programs Expenses Services Contributions Contributions 2018 2017Business-Type Activities

Water 8,015,167$ 6,048,041$ -$ 1,976,114$ 8,988$ 3,717,771$

General revenuesUnrestricted investment earnings 183,129 116,947 Other revenues 313,468 866,445 Total General Revenues 496,597 983,392

Change in net position 505,585 4,701,163

Net position, January 1 54,456,116 49,754,953

Net position, December 31 54,961,701$ 54,456,116$

Program Revenues

Activities

Net (Expenses)Revenues andChanges in Net Position

Business-type


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Lincoln Pipestone Rural Water SystemLake Benton, Minnesota

Statement of Revenues, Expenses and Changes in Net PositionFor the Year Ended December 31, 2018

With Comparative Actual Amounts for Year Ended December 31, 2017

2018 2017Operating Revenues

Charges for sales and servicesConsumers 4,291,133$ 4,022,275$ Municipalities 1,372,040 1,402,064 Other 92,350 127,514

Total Operating Revenues 5,755,523 5,551,853

Operating ExpensesSources of supply and pumping

Salaries 193,150 185,184Employee benefits 84,169 71,258Transportation 10,461 12,746Purchased power 284,151 322,708New water source/well head protection 22,518 110,122Repairs and materials 182,965 196,117Chemical and supplies 235,602 275,290Telephone 11,412 10,765Licenses, Permits, Fees 57,017 64,989Water Purchases 967,634 715,364

Total Source of Supply and Pumping 2,049,079 1,964,543 SCADA

Salaries 77,556 85,633Employee benefits 34,427 31,181Transportation 13,643 8,027Purchased power 221,652 186,498Repairs and materials 65,076 12,282Utilities 1,872 5,400Telephone 11,758 5,785

Total SCADA 425,984 334,806 Distribution

Salaries 376,995 389,534Employee benefits 180,435 155,449Transportation 70,693 71,053Repairs and materials 138,013 105,625Gopher Location 7,011 9,271Telephone 22,047 11,027Damage claims 6,289 7,489Purchased power 3,427 13,359

Total Distribution 804,910 762,807 General and admistrative

Salaries 253,127 253,014Employee benefits 92,748 80,482Directors fees 76,514 73,716Board Meetings 4,048 3,273Supplies 22,494 34,001Other services and charges 149,374 163,003Repairs and materials 37,295 26,789Transportation 12,398 8,262Advertising and promotion 17,399 16,924Dues and memberships 11,398 3,263Training 2,000 6,848Insurance 65,248 72,190Utilities 15,448 10,155Real estate taxes 32,808 33,026Other 8,913 19,169

Total General and adminstrative 801,212 804,115

Depreciation 2,981,666 2,913,326

Total Operating Expenses 7,062,851 6,779,597

Operating Loss (1,307,328) (1,227,744) The notes to the financial statements are an integral part of this statement.

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2018 2017Nonoperating Revenues (Expenses)

Interest income 183,129$ 116,947Capacity charges 292,518 563,611Farm rental (net) 178,987 129,306Intergovernmental

Federal 95,840 831,092State 29,734 3,315,073

Amortization of bond premium 64,846 64,846Miscellaneous income 134,481 173,528Bond issuance costs (4,245) (1,200) Interest expense (1,015,568) (1,289,198)Miscellaneous expense (1,000) (1,053) Gain (loss) on sale of capital assets 3,651 -

Total Nonoperating Revenues (Expenses) (37,627) 3,902,952

Income (Loss) Before Contributions (1,344,955) 2,675,208

Special assessment revenue 1,507,115 1,546,129Capital Contributions 343,425 479,826

Change in Net Position 505,585 4,701,163

Net Position, January 1 54,456,116 49,754,953

Net Position, December 31 54,961,701$ 54,456,116$

With Comparative Actual Amounts for Year Ended December 31, 2017For the Year Ended December 31, 2018

Statement of Revenues, Expenses and Changes in Net Position (Continued)Lake Benton, Minnesota

Lincoln Pipestone Rural Water System


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Lincoln Pipestone Rural Water SystemLake Benton, MinnesotaStatement of Cash Flows

For the Year Ended December 31, 2018With Comparative Actual Amounts for Year Ended December 31, 2017

2018 2017Cash Flows From Operating Activities

Receipts from customers 5,348,626$ 5,490,546$ Payments to suppliers and vendors (2,833,687) (2,875,393) Payments to and on behalf of employees (1,291,352) (1,269,986)

Net Cash Provided (Used) By Operating Activities 1,223,587 1,345,167

Cash Flows From Noncapital Financing ActivitiesMicellaneous non-operating expense (1,000) (1,053) Micellaneous non-operating income 134,481 173,528

Net Cash Provided by Noncapital Financing Activities 133,481 172,475 Cash Flows From Capital and Related Financing Activities

Acquisition of capital assets (2,080,707) (4,802,880) Intergovernmental - Federal 95,840 941,352 Intergovernmental - State 29,734 3,315,073 Proceeds from sale of capital assets 6,576 17,683 Capacity charges 292,518 563,611 Farm rental income 178,987 129,306 Notes receivable 18,600 21,881 Interest on notes receivable 4,968 4,849 Special assessments 1,887,145 1,810,807 Capital contributions and grants 343,425 479,826 Principal paid on long-term debt (6,731,000) (1,374,000) Interest and fees paid on long-term debt (1,090,104) (1,222,857)

Net Cash Used By Capital and Related Financing Activities (7,044,018) (115,349) Cash Flows From Investing Activities

Interest received on cash and investments 178,389 112,314 Net Increase (Decrease) in Cash and Cash Equivalents (5,508,561) 1,514,607 Cash and Cash Equivalents, January 1 21,968,106 20,453,499

Cash and Cash Equivalents, December 31 16,459,545$ 21,968,106$

Reconcilaition Of Cash and Temporary InvestmentsCash and temporary investments - Unrestricted 4,386,544$ 4,168,664$ Cash held with fiscal agent - 5,254,051 Cash and temporary investments - Restricted 12,073,001 12,545,391

Total Cash and Temporary Investments 16,459,545$ 21,968,106$

Reconciliation of Operating Loss to NetCash Provided (Used) By Operating Activities:Operating loss (1,307,328)$ (1,227,744)$ Adjustments to reconcile operating loss to net cash

provided (used) by operating activitiesDepreciation 2,981,666 2,913,326 Prior period adjustment - (41,135) (Increase) decrease in assets

Accounts receivable (377,478) (84,283) Inventories 34,797 (5,166) Prepaid items (17,136) 4,631 Patronage dividend (13,584) (36,008)

Increase in liabilitiesAccounts payable (62,880) (261,553) Due to other governments 110 1,231 Accrued salaries payable 3,933 26,839 Compensated absences payable (2,678) (3,955) Unearned revenue (15,835) 58,984

Net Cash Provided (Used) By Operating Activities 1,223,587$ 1,345,167$

Noncash Investing, Capital and Financing ActivitiesBook value of disposed/traded capital assets 2,925$ 17,683$ Amortization of bond (premium) discount (64,846)$ (64,846)$

The notes to the financial statements are an integral part of this statement.

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Notes to the Financial Statements December 31, 2018

Note 1: Summary of Significant Accounting Policies

A. Reporting Entity

The Lincoln Pipestone Rural Water System (the System) was established pursuant to MN Statues 116A under the jurisdiction of the Fifth Judicial District. The participating counties of Lincoln, Pipestone, Jackson, Murray, Rock, Nobles, Lyon, Lac qui Parle, Redwood and Yellow Medicine have agreed to guarantee their share of the debt arising within each respective county. The Lincoln Pipestone Rural Water System provides water for participating rural water users and cities within the water district.

The System is governed by an eleven member board appointed for terms of four years by the District Court. The board of Commissioners has control over all activities relating to Lincoln Pipestone Rural Water System.

The System considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the System are such that exclusion would cause the System’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization’s governing body, and (1) the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the primary government. The System has no component units that meet the GASB criteria.

B. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The System’s financial statements are reported using the economic resources measurement focus and the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Under this method, revenues are recorded when earned and expenses are recorded when a liability is incurred.

The System is accounted for as an enterprise fund. Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the determination of net income is necessary or useful to sound financial administration. The intent of the governing body is that the costs of providing goods or services to the members and cities on a continuing basis be financed or recovered primarily through user charges.

Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place.

Non-exchange transactions, in which the System receives value without directly giving equal value in return, include grants, entitlement and donations. Revenue from grants, entitlements and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the System must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the System on a reimbursement basis.

Unearned revenue arises when assets are recognized before revenue recognition criteria have been satisfied. Grants and entitlements received before eligibility requirements are met are also recorded as unearned revenue.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

The System reports the following major proprietary fund:

The Water fund accounts for the activities of the System’s water distribution system operations.

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Note 1: Summary of Significant Accounting Policies (Continued)

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the System’s enterprise fund is charges to customers for sales and services. The System also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the System’s policy to use restricted resources first, then unrestricted resources as they are needed.

C. Assets, Liabilities and Net Position

Deposits and Investments

The System’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash balances are invested to the extent available in various deposits and investments authorized by Minnesota State statutes. For purposes of the statement of cash flows, cash equivalents include demand deposit account balances and certificates of deposit.

The System may also invest idle funds as authorized by Minnesota statutes, as follows:

1. Direct obligations or obligations guaranteed by the United States or its agencies.

2. Shares of investment companies registered under the Federal Investment Company Act of 1940 and received thehighest credit rating, rated in one of the two highest rating categories by a statistical rating agency, and have afinal maturity of thirteen months or less.

3. General obligations of a state or local government with taxing powers rated “A” or better; revenue obligationsrated “AA” or better.

4. General obligations of the Minnesota Housing Finance Agency rated “A” or better.

5. Obligation of a school district with an original maturity not exceeding 13 months and (i) rated in the highestcategory by a national bond rating service or (ii) enrolled in the credit enhancement program pursuant to statutesection 126C.55.

6. Bankers’ acceptances of United States banks eligible for purchase by the Federal Reserve System.

7. Commercial paper issued by United States banks corporations or their Canadian subsidiaries, of highest qualitycategory by at least two nationally recognized rating agencies, and maturing in 270 days or less.

8. Repurchase or reverse repurchase agreements and securities lending agreements with financial institutionsqualified as a “depository” by the government entity, with banks that are members of the Federal Reserve Systemwith capitalization exceeding $10,000,000, a primary reporting dealer in U.S. government securities to the FederalReserve Bank of New York, or certain Minnesota securities broker-dealers.

9. Guaranteed investment contracts (GIC's) issued or guaranteed by a United States commercial bank, a domesticbranch of a foreign bank, a United States insurance company, or its Canadian subsidiary, whose similar debtobligations were rated in one of the top two rating categories by a nationally recognized rating agency.

Broker money market funds operate in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the shares.

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The System categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. 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; Level 3 inputs are significant unobservable inputs.

The System has the following recurring fair value measurements as of December 31, 2018:

• Negotiable certificates of deposit of $1,484,067 are valued using a matrix pricing model (Level 2 inputs)

The Minnesota Municipal Money Market Fund is regulated by Minnesota statutes and the Board of Directors of the League of Minnesota Cities and is an external investment pool not registered with the Securities Exchange Commission (SEC) that follows the regulatory rules of the SEC. In accordance with GASB Statement No. 79, the System’s investment in this pool is valued at amortized cost, which approximates fair value. There are no restrictions or limitations on withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses, and other costs attributable to the early redemption. Financial statements of the 4M Fund can be obtained by contracting RBC Global Management at 100 South Fifth Street, Suite 2300, Minneapolis, MN 55402-1240.

The System has not adopted a formal investment policy that addresses interest rate and credit risk.

Restricted Cash

The System has received monies restricted for specific purposes. The balance in restricted cash represents unspent deposits of $12,073,001 to be used for capital improvements and debt payments.

Accounts Receivable

Accounts receivable include amounts billed for services provided before year end. Unbilled utility enterprise fund receivables are also included for services provided in 2018. All receivables are reported at their gross value and, if appropriate, reduced by the estimated portion that is expected to be uncollectible. Uncollectible accounts are periodically charged to operations on a direct write-off method. There is no allowance for uncollectible amounts in the fund.

Special Assessments

Special assessments represent the financing for public improvements paid for by benefiting property owners. These assessments are recorded as receivable upon certification to the County. Special assessments are recognized as revenue when they are received in cash or within 60 days after year end.

Inventories and Prepaid Items

All inventories are valued at the lower of cost or market using the first-in, first-out (FIFO) method.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items.

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Capital Assets

Capital assets, which include property, plant and equipment, are reported in the financial statements. Capital assets are defined by the System as assets with an initial estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects as constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

Property, plant and equipment are depreciated in the proprietary fund of the System using the straight line method over the following estimated useful lives:

Assets Years

Distribution System 7 - 40Machinery and Equipment 5 - 20Buildings 20

Compensated Absences

The established vacation year is the calendar year, January 1 through December 31 each year. Vacations are accrued or earned based on the employee’s length of service and the time actually worked. Employees will not continue to accrue vacation time once they have accrued 125 percent of the maximum number of hours they can earn in the current calendar year.

Full-time employees will accrue paid vacation according to the following schedule, (annual totals will be rounded to the nearest whole hour):

Service Period Paid Vacation Accrual Rate

First calendar year or part thereof 3.333 hours per month worked(40 hours per year maximun earned)

Calendar years 2 though 5 6.666 hours per month worked(80 hours per year maximun earned)

Calendar years 6 though 15 10.0 hours per month worked(120 hours per year maximun earned)

Calendar years 16 and over 13.33 hours per month worked(160 hours per year maximun earned)

Employees may not receive vacation pay in lieu of time off. In addition, employee will cease to earn additional vacation time once they have accrued 125 percent of the maximum number of hours they can earn in the current calendar year.

When employment is terminated, employees will received vacation pay for any unused vacation accrued at the time of termination.

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Long-term Obligations

Long-term debt and other long-term obligations are reported as liabilities. The recognition of bond premiums and discounts are deferred and amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as an expense in the period incurred.

Net Position

Net position represents the difference between assets and liabilities. Net position is displayed in three components:

a. Net Investment in capital assets - Consists of capital assets, net of accumulated depreciation reduced by anyoutstanding debt attributable to acquire capital assets.

b. Restricted net position - Consists of net position restricted when there are limitations imposed on their usethrough external restrictions imposed by creditors, grantors, laws or regulations of other governments.

c. Unrestricted net position - All other net position that do not meet the definition of “restricted” or “Net investment incapital assets.”

Note 2: Detailed Notes

A. Deposits and Investments

Deposits

Custodial credit risk for deposits and investments is the risk that in the event of a bank failure, the System’s deposits may not be returned or the System will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes and as authorized by the System, the System maintains deposits at those depository banks, all of which are members of the Federal Reserve System.

Minnesota statutes require that all System deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110 percent of the deposits not covered by insurance or bonds.

Authorized collateral in lieu of a corporate surety bond includes:

• United States government Treasury bills, Treasury notes, Treasury bonds;

• Issues of United States government agencies and instrumentalities as quoted by a recognized industry quotationservice available to the government entity;

• General obligation securities of any state or local government with taxing powers which is rated “A” or better by anational bond rating service, or revenue obligation securities of any state or local government with taxing powerswhich is rated “AA” or better by a national bond rating service;

• General obligation securities of a local government with taxing powers may be pledged as collateral against fundsdeposited by that same local government entity;

• Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality accompanied bywritten evidence that the bank’s public debt is rated “AA” or better by Moody’s Investors Service, Inc., or Standard& Poor’s Corporation; and

• Time deposits that are fully insured by any federal agency.

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Note 2: Detailed Notes (Continued)

Minnesota statutes require that all collateral shall be placed in safekeeping in a restricted account at a 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. The selection should be approved by the government entity.

At year end, the System’s carrying amount of deposits was $7,376,219 and the bank balance was $7,536,235. At the end of the year, $6,241,198 was covered by FDIC insurance. The remaining was covered by collateral.

Investments

As of December 31, 2018, the System had the following investments that are insured or registered, or securities held by the System’s agent in the System’s name:

Credit SegmentedQuality/ Time

Ratings (1) Distribution (2) Amount Level 1 Level 2Pooled Investments at Amortized Costs

4M Fund N/A less than 6 months 4,270,278$ 4M Fund N/A 6 months to 1 year 1,462,800 4M Fund N/A 1 to 3 years 1,475,882

Non-pooled Investments at Amortized CostsMoney Market Funds N/A less than 6 months 390,011

Non-Pooled Investments at Fair ValueNegotiable certificates of deposits N/A less than 6 months 499,740 -$ 499,740$ Negotiable certificates of deposits N/A 6 months to 1 year 984,327 - 984,327

Total Investments 9,083,038$ -$ 1,484,067$

Fair Value Measurement UsingTypes of Investments

(1) Ratings are provided by various credit rating agencies where applicable to indicate associated credit risk.(2) Interest rate risk is disclosed using the segmented time distribution method.N/A Indicates not applicable or available.

A reconciliation of cash and investments as shown on the statement of net position for the System follows:

Carrying Amount of Deposits 7,376,219$ Investments 9,083,038 Cash on Hand 288

Total 16,459,545$

Cash and Temporary Investments 4,386,544$ Restricted Cash and Temporary Investments 12,073,001

Total Deposits 16,459,545$

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Note 2: Detailed Notes (Continued) B. Notes Receivable

Municipalities which are benefited by the Rural Water System have contracted to pay their share of the cost of the construction. The contract for a period of 27 years in the form of a direct reduction loan at 5 percent interest. The balance of the loans outstanding at December 31, 2018, are as follows:

Balance atMunicipality Year End

Fairview 18,086$ Ihlen 7,562 Hardwick 26,747

Total 52,395$

C. Capital Assets

Capital asset activity for the System for the year ended December 31, 2018 was as follows:

Beginning EndingBalance Increases Decreases Balance

Capital Assets Not Being DepreciatedLand 3,869,469$ -$ (2,925)$ 3,866,544$ Construction in progress 10,614,494 1,169,928 (11,394,883) 389,539

Total capital assets not being depreciated 14,483,963 1,169,928 (11,397,808) 4,256,083

Capital Assets Being DepreciatedDistribution System 97,012,214 12,225,217 - 109,237,431Buildings 193,138 - - 193,138 Vehicles 504,268 80,445 (69,140) 515,573 Machinery and equipment 1,206,916 - - 1,206,916 Office Equipment 88,526 - - 88,526

Total Capital Assets Being Depreciated 99,005,062 12,305,662 (69,140) 111,241,584

Less Accumulated Depreciation forDistribution System (44,691,665) (2,842,168) - (47,533,833) Buildings (147,534) (5,210) - (152,744) Vehicles (346,112) (97,580) 69,140 (374,552) Machinery and equipment (1,088,016) (32,997) - (1,121,013) Office Equipment (83,187) (3,711) - (86,898)

Total Accumulated Depreciation (46,356,514) (2,981,666) 69,140 (49,269,040)

Total Capital Assets Being Depreciated, Net 52,648,548 9,323,996 - 61,972,544

67,132,511$ 10,493,924$ (11,397,808)$ 66,228,627$ Total Capital Assets, Net

The depreciation was all part of the water system and totaled $2,981,666.

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D. General Long-term Debt

General Obligation Revenue Bonds

The following bonds will be repaid from future revenues.

Authorized Issue Maturity Balance atDescription and Issued Date Date Year End

G.O. Water System Refunding Bonds of 2012 1,050,000$ 2.00 % 02/15/12 01/01/22 370,000$ G.O. Water Revenue Crossover Refunding Bonds of 2012A 1,595,000 2.00 04/01/12 01/01/24 770,000 G.O. Water Revenue Bonds of 2011A 5,000,000 3.00 12/20/11 01/01/52 4,553,000 G.O. Water Revenue Bonds of 2011B 5,917,000 3.00 12/20/11 01/01/52 5,387,000 G.O. Water System Refunding Bonds of 2013A 3,055,000 2.00 - 2.35 12/11/13 01/01/23 1,380,000 G.O. Water Revenue Bonds of 2010 8,500,000 3.75 12/20/10 01/01/50 7,330,000

Jackson-NoblesG.O. Water Bonds 800,000 3.25 09/22/10 01/01/49 704,000 G.O. Water Revenue Refunding Bonds of 2013A 2,910,000 3.00 -3.75 12/11/13 03/01/32 2,400,000 G.O. Water Revenue Refunding Bonds of 2016A 4,260,000 2.00 - 2.50 06/01/16 01/01/34 4,020,000 G.O. Water Revenue Refunding Bonds of 2016A -

Pipestone 1,080,000 1.75 - 2.10 03/15/16 01/01/28 980,000 G.O. Water Temporary Water Revenue Bonds of 2016B 9,890,000 1.00 10/03/16 10/01/19 9,890,000 G.O. Water Revenue Bonds of 2016B -

Lincoln 3,108,000 2.25 06/16/16 01/01/56 3,057,000

Total Revenue Bonds 40,841,000$

InterestRate

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The annual service requirements to maturity for the general obligation revenue bonds are as follows:

Year EndingDecember 31, Principal Interest Total

2019 11,093,000$ 940,605$ 12,033,605$ 2020 1,565,000 851,206 2,416,206 2021 1,537,000 806,061 2,343,061 2022 1,443,000 770,821 2,213,821 2023 1,137,000 736,233 1,873,233

2024 - 2028 5,218,000 3,285,139 8,503,139 2029 - 2033 5,063,000 2,568,213 7,631,213 2034 - 2038 3,475,000 1,913,640 5,388,640 2039 - 2043 3,525,000 1,382,055 4,907,055 2044 - 2048 3,946,000 796,083 4,742,083 2049 - 2053 2,492,000 191,228 2,683,228 2054 - 2056 347,000 15,725 362,725

Total 40,841,000$ 14,257,009$ 55,098,009$

Revenue BondsBusiness-type Activities

Changes in Long-term Liabilities

During the year ended December 31, 2018, the following changes occurred in non-current liabilities reported on the government-wide statements.

Beginning Ending Due WithinBalance Increases Decreases Balance One Year

Business-Type Activities:Bonds Payable

Revenue bonds 47,572,000$ -$ (6,731,000)$ 40,841,000$ 11,093,000$ Bond Premium 335,818 - (64,846) 270,972 - Compensated Absences

Payable 58,322 59,999 (62,677) 55,644 47,358

Business-Type Activity Long-term Liabilities 47,966,140$ 59,999$ (6,858,523)$ 41,167,616$ 11,140,358$

Note 3: Other Information

A. Retirement Plan

The System has adopted a SAR/SEP retirement plan effective January 1, 1986. The plan allows employees to make contributions immediately upon becoming employed, provided they are at least 21 years old. The System may make employer contributions up to 15 percent of an eligible employee’s compensation. The total company contributions for 2018 were $46,315 and total employee contributions paid were $53,160.

B. Concentration

The System provides only water as its main source of revenue. If these water sales or any of the major customers were to experience any substantial changes it may have an adverse effect on the revenues of the system.

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Note 3: Other Information (Continued)

C. Risk Management

The System is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the System carries insurance. The System obtains insurance through participation in the League of Minnesota Cities Insurance Trust (LMCIT) which is a risk sharing pool with approximately 800 other governmental units. The System pays an annual premium to LMCIT for its property and casualty insurance. The LMCIT is self-sustaining through member premiums and will reinsure for claims above a prescribed dollar amount for each insurance event. Settled claims have not exceeded the System’s coverage in any of the past three fiscal years.

Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The System’s management is not aware of any incurred but not reported claims.

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OTHER REQUIRED REPORTS



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INDEPENDENT AUDITOR’S REPORT ON MINNESOTA LEGAL COMPLIANCE


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 the Government Auditing Standards, issued by the Comptroller General of the United States, the accompanying financial statements of the Lincoln Pipestone Rural Water System (the System) as of and for the year ended December 31, 2018, and the related noted to the financial statements, and have issued our report thereon dated March 28, 2019.

The Minnesota Legal Compliance Audit Guide for Other Political Subdivisions, promulgated by the State Auditor pursuant to Minnesota Statute §6.65, contains seven categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and disbursements, miscellaneous provisions and tax increment financing. Our audit considered all of the listed categories except tax increment financing because the System has not established any tax increment financing districts.

In connection with our audit, nothing came to our attention that caused us to believe that the System failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for Other Political Subdivisions. 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 the System’s noncompliance with the above referenced provisions.


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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


We have audited, in accordance with the 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 enterprise fund activities of the Lincoln Pipestone Rural Water System (the System), as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the System’s basic financial statements, and have issued our report thereon dated March 28, 2019.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the System's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the System’s internal control. Accordingly, we do not express an opinion on the effectiveness of the System’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 a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the System'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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

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Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the System’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the System’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


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FEDERAL FINANCIAL AWARD PROGRAMS

CITY OF SAMPLE SAMPLE, MINNESOTA


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INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT

ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE


Report on Compliance for Each Major Federal Program

We have audited the Lincoln Pipestone Rural Water System (the System), Lake Benton, Minnesota compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the System’s major federal programs for the year ended December 31, 2018. The System’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

Management’s Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the System’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the System’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the System’s compliance.

Opinion on Each Major Federal Program

In our opinion, the System complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2018.

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Report on Internal Control Over Compliance

Management of the System is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the System’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the System’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.


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Lincoln Pipestone Rural Water SystemSchedule of Expenditures of Federal Awards


FederalDomestic Pass-Through

Assistance Entity Identifying Total FederalNumber Number Expenditures

U.S. Department of Water and Waste Disposal 10.760 N/A 753,568$ Agriculture Systems for Rural

Communities

Federal ProgramFunding Source Name

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Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2018

1. Basis of Presentation

The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the Lincoln Pipestone Rural Water System (the System) for the year ended December 31, 2018. The System's reporting entity is defined in Note 1A to the System's financial statements. The information in this schedule is presented in accordance with the requirement of the Uniform Guidance, Audits of States, Local Governments, and Non-Profit Organizations. All Federal awards received directly from Federal agencies as well as Federal awards passed through other government agencies are included on the schedule.

2. Summary of Significant Accounting Policies for Expenditures

Expenditures reported on this schedule are reported on the modified accrual basis of accounting.

3. Pass-through Entity Identifying Numbers

Pass-through entity identifying numbers are presented where available.

4. Subrecipients

No federal expenditures presented in this schedule were provided to subrecipients.

5. Indirect Cost Rate

During the year ended December 31, 2018, the System did not elect to use the 10 percent de minimis indirect cost rate.

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Section I - Summary of Auditor's Results

Financial Statements

Type of auditor's report issued UnmodifiedInternal control over financial reporting

Material weaknesses identified? NoSignificant deficiencies identified not considered to be material weaknesses? None reported

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programsMaterial weaknesses identified? NoSignificant deficiencies identified not considered to be material weaknesses? None reported

Type of auditor's report issued on compliance for major programs UnmodifiedAny audit findings disclosed that are required to be reported in accordance with

2CFR section 200.516(a)? No

Identification of Major Programs/Projects CFDA No.

Water and Waste Disposal Systems for Rural Communities 10.760

Dollar threshold used to distinguish between Type A and Type B Programs 750,000$

Auditee qualified as low-risk auditee? Yes

Section II - Financial Statement Findings

Section III - Major Federal Award Findings and Questioned Costs

Section IV - Schedule of Prior Year Audit Findings

None

There are no significant deficiencies, material weaknesses, or instances of noncompliance including questioned costs that are required to be reported in accordance with Uniform Guidance.

Lincoln Pipestone Rural Water SystemSchedule of Findings, Responses and Questioned Costs


None

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