## Finance Commission Agenda Tuesday, June 9, 2026 ## 6:30 PM ## City Council Chambers In accordance with Minnesota Statutes §13D.02 and City policy, Council and Commission members may attend meetings remotely up to three times per calendar year. (Times listed are approximate – please note that items may be earlier or later than listed on the agenda) 1. Roll Call - Bergquist, Dahir, Davy, Kanzenbach, Vervoort, Jeffers, Kaney, Randolph 2. Approval of Agenda ## 3. Receive Public Comment ## 4. Approval of Meeting Minutes a. Approve minutes ## 5. Business Items a. Finalize discussion items for joint City Council - Finance Commission Meeting ## b. Maintenance and Operations Center Update/Discussion ## c. Finance Tracking Document ## 6. Commission Direction on Member Initiated Agenda Items ## 7. Other Business 8. Adjourn Page 1 of 24 ## Finance Commission 1 ## Meeting Minutes 2 DRAFT – May 12, 2026 - DRAFT 3 4 5 ## Roll Call/Announcements 6 7 The Finance Commission (FC) meeting was called to order at 6:30 p.m. Chair Kanzenbach 8 requested staff call the roll. 9 10 Commissioners Present: Kevin Davy, Martin Jeffers, Matthew Kaney, Raye Kanzenbach, 11 Kyle Randolph (arrived at 6:58 p.m.), and Anna Vervoort (remote) 12 13 ## Youth Commissioners Present: Aldo Bergquist 14 15 ## Commissioners Absent: Sadiq Dahir 16 17 Staff Present: Assistant Finance Director Phil Weix, and Finance Director Sam 18 Magureanu (arrived at 7:24 p.m.) 19 20 21 Approval of Agenda 22 23 The agenda was approved by general consensus. 24 25 26 ## Receive Public Comments 27 28 There being no one present wishing to speak to the Commission on an item not on the agenda, 29 the Chair moved to the next agenda item. 30 31 32 ## Approval of Meeting Minutes 33 34 Commissioner Jeffers moved, seconded by Commissioner Kaney, to approve the April 14, 2026, 35 meeting minutes presented. The motion carried unanimously. 36 37 38 Review the 2025 ACFR 39 40 Ms. Peterson introduced herself as Rebecca Peterson, managing director with Redpath and 41 Company, and the city’s auditing firm. She explained that the auditors typically begin Finance 42 Commission presentations by reviewing a summary of the audit reports, then move into the 43 financial statements and discuss high-level financial information. 44 45 Page 2 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 2 of 16 Ms. Peterson reviewed the four audit reports issued for the city’s 2025 audit. She noted that a 46 federal single audit was not required this year because the city did not exceed the $1 million 47 federal spending threshold. She explained that auditors conduct risk-based testing rather than 48 reviewing every transaction and reported that the city received a clean, unmodified audit opinion, 49 the highest level of assurance available. 50 51 Ms. Peterson also reviewed the internal control report and noted that auditors identified two 52 findings, including one related to disbursement controls. Auditors found several transactions that 53 either lacked sufficient documentation or did not fully follow city policy. She added that staff 54 had already begun implementing corrective actions and additional controls to address the issue. 55 56 Assistant Finance Director Phil Weix explained that staff had already begun reviewing 57 disbursement procedures before the end of 2025 after noticing that some transactions lacked 58 appropriate or sufficient supporting documentation. He said staff had been working with 59 Assistant City Manager Rebecca Olsen to revise the city’s purchasing policy and update the 60 purchasing card policy to reflect current practices better. 61 62 Mr. Weix noted that the updated policies had not yet been fully implemented, but they were 63 scheduled to be presented at the upcoming department head meeting. He said the goal is to 64 communicate the new expectations to employees and improve compliance with documentation 65 and approval requirements for city transactions. 66 67 Ms. Peterson explained that the disbursement finding was relatively common in local 68 government audits and involved several transactions with insufficient documentation or policy 69 compliance. She noted the issue was classified as a significant deficiency because the dollar 70 amounts were relatively small, and she emphasized the importance of consistently following 71 internal controls. 72 73 Ms. Peterson also reviewed a second finding involving a delayed invoice for a county 74 construction project that was received in late 2024 but not paid until 2026. Because the expense 75 should have been recorded in 2024, the city restated the water fund’s beginning net position by 76 approximately $977,000. The issue also resulted in a legal compliance finding because 77 Minnesota law generally requires invoices to be paid within 35 days, while this invoice remained 78 unpaid for more than a year. 79 80 Mr. Weix commented that Ramsey County has a history of delayed follow-up on accounts 81 receivable matters and noted that the county had not aggressively pursued payment on the 82 invoices during the extended period. He added that no penalties or interest charges were assessed 83 once the invoices were paid. 84 85 Ms. Peterson acknowledged prior discussions regarding timing and reporting challenges 86 involving Ramsey County and said delays tied to county processes were not entirely unexpected. 87 88 Chair Kanzenbach referenced Ms. Peterson’s similar presentation to the city council and 89 observed that councilmembers appeared to view the matter as an accounting error rather than 90 Page 3 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 3 of 16 fraud or misconduct. He noted that although the dollar amount was significant, the issue did not 91 appear to disrupt city operations materially. 92 93 Ms. Peterson credited the finance department with identifying the issue and promptly 94 communicating it to staff once they became aware of it. 95 96 Commissioner Randolph arrived at 6:48 p.m., after the discussion had begun. 97 98 Commissioner Kaney asked how such a large invoice could fail to appear in the city’s accounts 99 payable system. 100 101 Mr. Weix explained that the invoice had been emailed directly to the engineering department and 102 was never entered into the city’s financial software. Because the finance staff relies on 103 departments to enter invoices into the system, the finance department was unaware of the 104 obligation until later. 105 106 Ms. Peterson reviewed the final report issued in conjunction with the audit, which is the required 107 communication to those charged with governance. She explained that the auditors prepare the 108 letter for city leadership and that it primarily contains standard language required under auditing 109 standards, along with several sections customized to address items specific to the city’s audit. 110 111 Ms. Peterson said one of the required communications involves notifying governance bodies 112 about any changes in accounting policies from the prior year. For 2025, she noted that the city 113 increased its capitalization threshold for certain items. She explained that capitalization 114 thresholds determine whether purchased equipment or assets are immediately expensed or 115 instead recorded as capital assets on the city’s balance sheet and depreciated over time. She 116 added that the adjustment made in 2025 was a relatively small increase affecting one category of 117 assets. 118 119 Mr. Weix explained that the city increased the capitalization threshold for individual items from 120 $10,000 to $25,000. He said the adjustment was made largely in response to inflation and rising 121 equipment costs over time. 122 123 Mr. Weix noted that maintaining the lower threshold would have created additional 124 administrative work and asset tracking requirements for items that are now more commonly 125 purchased at higher prices. He also explained that aggregated purchases of smaller items would 126 continue to be subject to a separate capitalization threshold of $100,000. 127 128 Ms. Peterson explained that the city increased its capitalization thresholds in response to updated 129 accounting standards for grouped assets, noting that tracking large numbers of lower-cost items 130 individually can create administrative challenges. She said the higher threshold allows the city to 131 manage assets more efficiently while maintaining proper accounting practices. 132 133 Ms. Peterson also reviewed accounting estimates included in the financial statements, including 134 the city’s OPEB liability. She explained that Minnesota law allows retirees to remain on the 135 Page 4 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 4 of 16 city’s health insurance plan until they become eligible for Medicare, creating a long-term 136 actuarial liability. The city’s OPEB liability at the end of 2025 was reported at just under $1.5 137 million. 138 139 Chair Kanzenbach asked when the most recent actuarial study had been completed and whether 140 the current figures reflected a roll-forward year. Ms. Peterson responded that actuarial studies are 141 required every other year and noted that the financial statement footnotes would specify whether 142 the study had been completed during the current year or carried forward from the prior year. 143 144 Chair Kanzenbach commented that the city’s OPEB liability is relatively small compared to 145 some municipalities around the country, where post-employment benefit obligations can become 146 much more significant financial burdens. 147 148 Ms. Peterson confirmed that some local governments have much larger OPEB liabilities, 149 particularly when they offer retirees additional post-employment benefits beyond health 150 insurance. 151 152 She also reviewed the city’s share of the Public Employees Retirement Association of Minnesota 153 pension liability, which totaled slightly more than $12 million at the end of 2025. Ms. Peterson 154 explained that the liability fluctuates with market conditions and actuarial assumptions and is 155 allocated among participating employers based on their contributions to the statewide pension 156 system. 157 158 Chair Kanzenbach commented that the city’s pension liability remains relatively modest 159 compared to the much larger pension obligations of many municipalities across the country. 160 161 Ms. Peterson explained that Minnesota’s pension system has improved financially over time, 162 though it is not yet fully funded. She also reported that auditors encountered no difficulties or 163 disagreements with management during the 2025 audit. 164 165 Ms. Peterson also discussed a documentation issue regarding pledge collateral records for city 166 deposits that exceed FDIC insurance limits. Because a year-end collateral report from a former 167 bank could not be obtained after the city changed financial institutions, auditors were unable to 168 complete normal verification procedures. She emphasized that no funds were lost and described 169 the matter as a documentation issue that staff have already addressed through improved record 170 retention procedures. 171 172 Mr. Weix noted that the city’s current banking institution now provides pledge collateral 173 statements weekly. He said staff has asked the bank to move to a monthly reporting schedule 174 instead, as monthly reporting would be more practical while still allowing the city to maintain 175 the necessary documentation for audit and compliance purposes. 176 177 Mr. Weix commented that staff would continue saving the weekly pledge collateral statements in 178 a designated folder to ensure the documentation is available for future audits. During the 179 Page 5 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 5 of 16 discussion, commissioners and staff noted that pledged collateral is typically held in the form of 180 treasury securities or government agency securities. 181 182 Chair Kanzenbach asked whether it was reasonable to assume the city’s deposits had in fact been 183 collateralized, even though the year-end documentation could not be produced. 184 185 Ms. Peterson responded that the city possessed collateral statements from earlier in the year, 186 including June and September, but the December statement could not be obtained. She indicated 187 that it was likely the deposits remained collateralized at year-end, although the auditors could not 188 formally verify this without the required documentation. 189 190 The commission acknowledged that the issue was appropriately categorized under “other 191 matters” in the governance communication, rather than treated as a more significant audit 192 concern. 193 194 Ms. Peterson then asked whether commissioners had any additional questions regarding the audit 195 reports or whether they would like her to continue with a broader walkthrough of the financial 196 statements. 197 198 Chair Kanzenbach reflected on the Finance Commission’s audit review process from the prior 199 year, noting that commissioners had conducted a much deeper review of the financial statements 200 and audit materials than in previous years. He said the effort, led in part by former Commissioner 201 Bester, involved detailed discussions and numerous questions aimed at better understanding how 202 the city’s financial systems and reporting processes functioned. 203 204 Chair Kanzenbach said the Finance Commission ultimately shared many of its observations and 205 questions with the city council, and councilmembers appeared to appreciate having an additional 206 level of independent review beyond city staff and the external auditors. He noted that 207 commissioners now have a stronger understanding of the audit process than they did a year 208 earlier, which may result in fewer foundational questions during the current review. 209 210 Chair Kanzenbach added that he believed the city council wanted the commission to continue 211 providing that level of detailed oversight and discussion regarding the city’s financial statements 212 and audit findings. 213 214 Chair Kanzenbach noted that three commissioners were new to the Finance Commission and 215 suggested providing a walkthrough of the financial statement summary for their benefit. He 216 indicated that a broader review would help newer members better understand the city’s audit 217 reports and financial reporting structure before the commission moved into more detailed 218 discussion. 219 220 Commissioner Kaney asked about a section of the audit materials that discusses property tax 221 assessments and collections, particularly for commercial properties, where valuations are 222 frequently challenged through appeals or litigation. He asked whether the difference between 223 assessed values and the amounts ultimately collected in Roseville was generally consistent with 224 Page 6 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 6 of 16 what auditors see in other municipalities, or whether the city experiences a larger-than-average 225 gap between assessed and collected property tax values. 226 227 Ms. Peterson responded that she had recently discussed declining property tax collection rates 228 with the finance team during the audit exit meeting. She explained that over the past several 229 years, many cities have experienced lower collection rates as more property valuations, 230 particularly commercial valuations, have been challenged or appealed. 231 232 Ms. Peterson noted that county assessors are responsible for establishing the valuations that cities 233 ultimately rely on for tax collections. She said that when property owners successfully contest 234 valuations, the reductions can negatively affect municipal collection rates. 235 236 Ms. Peterson reported that Roseville’s collection rate is slightly lower than what she is currently 237 seeing in many other cities, although she emphasized that the difference is not dramatic. She 238 added that the city has experienced unique valuation adjustments that have contributed to the 239 trend, while noting that reduced collection rates have become more common across 240 municipalities generally. 241 242 The commission discussed whether lower property tax collection rates are currently more 243 common among commercial properties than residential properties. 244 245 Ms. Peterson confirmed that commercial properties are more frequently involved in valuation 246 appeals and tax court challenges, which can contribute to lower collection rates. 247 248 The commission noted that Roseville has a comparatively large commercial tax base, making the 249 city somewhat more susceptible to those impacts than communities with primarily residential 250 property values. 251 252 Ms. Peterson indicated that the slightly lower collection rate in Roseville was not a major 253 concern but was something the city should continue monitoring. 254 255 The commission also discussed whether the city should consider establishing a reserve or 256 making a budget adjustment to account for the likelihood that property tax collections may not 257 reach 100 percent in future years. One commissioner noted that the city’s collection rate is 258 approximately 97 percent and questioned whether recurring shortfalls should be incorporated 259 into future budgeting assumptions. 260 261 Mr. Weix explained that staff have discussed the issue with Ramsey County officials and sought 262 guidance on expectations for property valuation petitions and appeals. He said the county’s 263 recommendation was essentially to levy additional taxes in future years to offset lower collection 264 rates. However, he noted that the city already faces pressure to limit levy increases and cannot 265 easily justify automatically increasing the levy by an additional 2 percent to compensate for 266 collection uncertainty. He confirmed that the city currently budgets on the assumption of full 267 property tax collection. 268 269 Page 7 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 7 of 16 Ms. Peterson added that maintaining healthy reserve levels is one of the primary tools cities use 270 to manage occasional revenue shortfalls tied to lower collection rates. She noted that reserve 271 balances would be discussed further during the review of the city’s broader financial 272 information. 273 274 Ms. Peterson reviewed the city’s governmental and business-type funds, explaining that 275 business-type funds, such as water and sewer utilities, are intended to support themselves 276 through fees. In contrast, governmental funds rely primarily on taxes and grants. She also 277 outlined the city’s four governmental fund categories: general, special revenue, debt service, and 278 capital project funds. 279 280 Ms. Peterson noted that capital project funds increased by more than $4 million in 2025, largely 281 due to bond proceeds issued for projects that have not yet been fully spent. She emphasized that 282 those funds are restricted for specific capital purposes and are not available for general spending. 283 284 Commissioner Jeffers asked whether the city’s local sales tax collections used for capital 285 improvements were included within the approximately $4 million increase reported in the capital 286 project funds. 287 288 Mr. Weix confirmed that the sales tax revenues were included in that balance. 289 290 Mr. Weix explained that the city collected approximately $2.5 million in sales tax revenue during 291 2025 and that those funds remain within the capital project funds to support eligible capital 292 improvement and debt-related purposes. 293 294 Ms. Peterson reviewed the city’s governmental fund categories. She noted that capital project 295 funds increased by more than $4 million during 2025, largely due to unspent bond proceeds and 296 approximately $2.5 million in local sales tax collections dedicated to capital improvements. She 297 also reported that the general fund increased by nearly $500,000, while debt service and special 298 revenue funds remained relatively stable. 299 300 Ms. Peterson explained that both general fund revenues and expenditures exceeded budget 301 projections by more than $1 million, primarily due to police contracted security services that 302 generated matching overtime costs and reimbursement revenues. She also noted that excess 303 license center revenues helped support the general fund. 304 305 Ms. Peterson said the city ended 2025 with approximately $10.6 million in working capital 306 reserves, equal to 35.4 percent of the following year’s expenditures, just above the city’s 307 minimum reserve policy threshold. She added that property taxes remain the city’s largest 308 revenue source, while service charges continue to increase. 309 310 Commissioner Randolph asked for clarification on the city’s intergovernmental revenue category 311 during the financial statement review. He said he had tried to locate more detailed information in 312 the audit materials but was uncertain which specific revenue sources were included in the 313 Page 8 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 8 of 16 intergovernmental revenue totals. He added that the question might reflect his being newer to the 314 commission and still learning the structure of the city’s financial reports. 315 316 Ms. Peterson explained that intergovernmental revenue primarily consists of grants and funding 317 from other governmental entities, such as the state, the federal government, Ramsey County, and 318 agencies like the Minnesota Department of Transportation. She noted that funding received for 319 street or infrastructure projects through MnDOT would be recorded within that category. 320 321 Ms. Peterson also referenced the federal American Rescue Plan Act funding received in 2022, 322 which provided the city with several million dollars that have been spent gradually over the past 323 several years. She said the city has approximately $32,000 remaining from those funds, which is 324 expected to be spent in full this year. 325 326 Mr. Weix added that intergovernmental revenues are expected to increase significantly next year 327 due to several major public safety grants. The fire department is expected to receive 328 approximately $1.6 million through a SAFER grant, while the police department is expected to 329 receive approximately $400,000 through a COPS grant. 330 331 Ms. Peterson reviewed the city’s business-type funds and explained that operating revenues 332 should exceed operating expenses to build reserves for future infrastructure needs. She noted that 333 updated utility rates have improved the water fund’s financial position, though the operating 334 margin remains below ideal, given rising infrastructure costs. 335 336 Ms. Peterson said the sewer and storm drainage funds currently maintain healthier operating 337 gaps, while the golf course and recreation fund performed positively in 2025, with revenues 338 covering nearly all operating expenses except depreciation. 339 340 Ms. Peterson reviewed the solid waste and recycling fund and noted that the presentation 341 separates operating revenues from the city's annual grant funding. She pointed to a significant 342 financial change in 2025, explaining that it was expected due to operational changes within the 343 fund. Ms. Peterson said future years are expected to more closely resemble the fund’s 2025 344 financial performance rather than prior historical trends. 345 346 Mr. Weix explained that the grant revenue remained relatively consistent from 2021 through 347 2024 because the city received regular SCORE grant funding during those years. He noted that 348 grant revenues increased significantly in 2025 because the city also received additional grant 349 funding to help offset the cost of new recycling bins. Mr. Weix said the additional funding was a 350 one-time increase and expects grant revenues to return to the normal annual SCORE grant level 351 of approximately $200,000 in future years. 352 353 The commission asked whether the sharp increase in solid waste and recycling expenses during 354 2025 was largely tied to the purchase of new recycling bins and whether those costs were 355 expected to decline in future years. 356 357 Page 9 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 9 of 16 Mr. Weix confirmed that approximately $750,000 to $800,000 had been spent on the recycling 358 carts during the year. 359 360 Ms. Peterson explained that the purchases of recycling bins were treated as inventory rather than 361 capital assets. Most of the inventory expense had been recognized by year's end, although some 362 remaining inventory still appeared on the city’s balance sheet at the close of 2025. 363 364 Commissioner Randolph asked whether the city had also changed recycling vendors when it 365 implemented the new recycling bin program, noting that he was new to Roseville and unfamiliar 366 with the city’s prior recycling operations. 367 368 Mr. Weix explained that the city had previously contracted with Eureka Recycling and used its 369 recycling bins. The city later entered into a new contract with Waste Management and chose to 370 purchase its own recycling bins as part of the transition. Mr. Weix said the change was expected 371 to reduce the city's overall recycling costs compared to the prior arrangement with Eureka 372 Recycling. 373 374 Ms. Peterson concluded her prepared presentation and told commissioners she was available to 375 answer questions or review any specific sections of the financial statements in greater detail. 376 377 Chair Kanzenbach raised questions about the growth in public safety expenses over time, 378 particularly the differences between statements prepared on a full accrual basis and on a 379 modified accrual basis. He noted that the gap between the two reporting methods appeared 380 significant and said the ratio between them had also changed over time. 381 382 Chair Kanzenbach asked for clarification on why the increase in public safety expenses appeared 383 to vary substantially depending on the accounting method used. 384 385 Ms. Peterson responded that she would need to review the reconciliation details to provide exact 386 figures. Still, she said that pension-related accounting adjustments commonly drive differences 387 between full accrual and modified accrual reporting. She noted that public safety employees 388 participate in a separate pension plan, and the allocation of pension liabilities and related 389 actuarial adjustments can significantly affect expenses reported under full accrual accounting. 390 391 Ms. Peterson explained that expenses related to the police and fire pension plan administered by 392 the Public Employees Retirement Association of Minnesota are allocated to public safety in the 393 city’s full-accrual financial statements. She noted that those pension-related expenses are not 394 reflected at the same level under modified accrual accounting, which commonly creates 395 noticeable differences between the two reporting methods for public safety expenses. 396 397 Chair Kanzenbach said he was not looking for exact figures but wanted to understand better the 398 categories driving the differences between full-accrual and modified-accrual public safety 399 expenses. Referencing trends since 2016, he noted that public safety expenses had increased 400 approximately 72 percent under modified accrual accounting compared to roughly 98 percent 401 under full accrual accounting. 402 Page 10 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 10 of 16 403 Ms. Peterson explained that the primary reason for the larger increase under full accrual 404 accounting is pension-related expenses, including allocations tied to the police and fire pension 405 plan through the Public Employees Retirement Association of Minnesota, as well as the city’s 406 fire relief pension plan. She noted that the fire relief pension incurred approximately $1.4 million 407 in expenses, all allocated to public safety, in the full accrual statements. 408 409 Ms. Peterson added that depreciation and other routine accounting adjustments also contribute to 410 the differences, but pension- and post-employment-related costs are generally the largest drivers 411 of the variance. 412 413 Chair Kanzenbach concluded that the explanation answered his question, then asked whether any 414 commissioners had identified other unusual or unclear items in the financial statements that 415 warranted additional discussion. 416 417 Commissioner Randolph said he had additional basic questions from the perspective of an 418 average Roseville resident reviewing the financial statements. Referring to the governmental 419 funds revenue breakdown, he noted that approximately 52 percent of revenues came from 420 property taxes and asked whether that percentage was typical for cities and municipalities or 421 whether Roseville’s reliance on property taxes was unusually high or low compared to other 422 communities. 423 424 Ms. Peterson responded that Roseville’s reliance on property taxes for approximately 52 percent 425 of governmental fund revenues falls within a normal range for municipalities. She explained that 426 cities take different approaches to funding services, with some relying more heavily on user fees 427 and service charges. In contrast, others prefer broader property tax support to fund services for 428 the overall community. She said Roseville’s balance between property taxes and other revenue 429 sources appeared reasonable and consistent with what she sees in other local governments. 430 431 Commissioner Randolph asked a follow-up question regarding the city’s property tax base, 432 noting that he did not see a breakdown in the financial statements separating residential and 433 commercial property tax revenues. He asked whether the city tracks or reports data comparing 434 residential versus commercial property tax contributions. 435 436 Mr. Maguraneau explained that the city tracks property tax capacity by category, including 437 residential, commercial, industrial, apartment, and affordable housing. He noted that the 438 information appears in the statistical section of the financial statements rather than within the 439 audited portion of the report, specifically in Table 6. 440 441 Mr. Maguraneau said the city’s current tax capacity includes approximately $39 million tied to 442 residential property and approximately $35 million tied to commercial property. Commissioners 443 noted that residential properties still contribute a slightly larger share of the city’s tax base than 444 commercial and industrial properties. 445 446 Page 11 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 11 of 16 Mr. Maguraneau also observed that, over the past decade and a half, the commercial share of the 447 city’s tax base has generally increased. However, he noted that during the most recent year, the 448 residential share increased slightly compared to the prior trend. 449 450 Chair Kanzenbach noted that the statistical section of the financial statements is not part of the 451 audited material, although much of the information is provided by the county assessor. He 452 observed that commercial property has generally accounted for a growing share of the city’s tax 453 base over the past 15 years. However, the residential share increased slightly in the most recent 454 year. 455 456 Chair Kanzenbach then asked for clarification regarding the tax rate information shown in Table 457 7 of the financial statements, specifically whether the figures reflected the city’s mill levy or 458 overall tax rate. Mr. Magureanu explained that the city’s total tax rate combines the operating 459 and debt service tax rates. 460 461 Mr. Magureanu further explained that the tax rate is calculated by dividing the city’s levy by its 462 total tax capacity. Using a simple example, he described tax capacity as the total assessed value 463 base available to support the city’s levy. As tax capacity changes, the tax burden is redistributed 464 among property owners. He confirmed that tax capacity is tied to assessed property values 465 provided by the county assessor. 466 467 Using updated county data, Mr. Magureanu explained that the city’s 2026 tax base was projected 468 to be approximately 58 percent residential and 42 percent commercial and industrial. He also 469 clarified that property taxes are ultimately calculated by applying the city’s tax rate to a 470 property’s assessed market value. At the same time, separate tax rates are also applied by the 471 county and school districts. 472 473 Commissioner Jeffers discussed how property taxes are distributed across the city’s tax base and 474 explained that an individual property owner’s share of taxes is tied to the proportion of total 475 assessed value represented by that property. He noted that if a homeowner divides their 476 property’s assessed value by the city’s total assessed tax capacity, that percentage generally 477 reflects their proportional share of the levy supporting city operations and services. 478 479 Mr. Magureanu clarified that property taxes are not calculated simply by dividing an individual 480 property’s value by the city’s total assessed value. Instead, he explained that the city first 481 determines its total levy, then divides that levy by the city’s total tax capacity to establish the tax 482 rate. 483 484 Using the 2026 example, Mr. Magureanu said the city’s total levy was approximately $33 485 million, and the city’s net tax capacity was about $71 million, resulting in a tax rate of 486 approximately 42.5. He explained that the rate is then converted to a percentage, which can be 487 multiplied by a property’s market value to estimate the city portion of property taxes. Using a 488 median home value of approximately $382,000, he demonstrated that the calculation would yield 489 an estimated city tax of roughly $1,621. 490 491 Page 12 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 12 of 16 Mr. Magureanu explained that the county assessor determines tax capacity and reflects the city’s 492 overall residential and commercial property values, adjusted for factors such as fiscal disparities 493 and tax increment districts. He noted that cities with stronger commercial tax bases generally 494 have larger tax capacities, while communities with limited commercial development rely more 495 heavily on residential values. He also explained that Roseville participates in the regional fiscal 496 disparities system, which redistributes a portion of commercial tax capacity among communities 497 throughout the metropolitan area. 498 499 The commission continued discussing how tax capacity and tax rates are calculated. 500 501 Mr. Magureanu explained that the city’s tax rate is determined by dividing the total levy by the 502 city’s net tax capacity, which is based on property values established by the county assessor and 503 adjusted for fiscal disparities and tax increment districts. He noted that increases in tax capacity 504 are generally positive because they spread the tax burden across a larger share of property value, 505 potentially helping stabilize tax rates. Conversely, if city spending rises while tax capacity 506 remains flat, tax rates increase. 507 508 Mr. Magureanu said the city closely monitors tax capacity and tax rates during the budget 509 process to minimize large tax increases. He noted that Roseville experienced significant growth 510 in tax capacity in recent years due to rising commercial property values. However, subsequent 511 valuation appeals and tax court petitions reduced some of that growth. He described 2026 as a 512 relatively stable year because tax capacity and tax rates increased at roughly the same rate. 513 514 The commission also discussed the city’s public safety expenditures and revenues. 515 516 Mr. Magureanu explained that public safety represents the city’s largest governmental expense 517 category, accounting for roughly 40 percent of general fund spending. While the city receives 518 some offsetting revenues through contracted police services, grants, and service charges, he 519 noted that public safety operations are primarily supported through property tax levy revenues 520 because governmental funds are intended to provide services rather than generate profits. 521 522 Reviewing the budget-to-actual figures for the general fund, the commission asked about a 523 substantial increase in service revenue charges. 524 525 Mr. Magureanu explained that the increase was largely tied to contracted police services 526 provided to businesses, such as retailers, for which the city receives reimbursement revenue, 527 which is then used to cover overtime costs for officers assigned to those details. He also noted 528 that increased personnel costs and additional staffing positions contributed to changes within the 529 general fund during 2025. 530 531 The commission additionally reviewed unemployment data included within the statistical section 532 of the financial statements. 533 534 Page 13 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 13 of 16 Mr. Magureanu explained that the unemployment figures were obtained from the Minnesota 535 Department of Employment and Economic Development and reflected Roseville-specific data 536 rather than countywide figures. 537 538 The commission noted that the unemployment rate increased significantly from the prior year 539 and discussed the potential effect higher unemployment levels could have on future tax 540 collections and economic conditions within the city. 541 542 Chair Kanzenbach concluded the discussion by asking whether commissioners had any 543 additional questions for the auditors. He thanked Ms. Peterson for attending and assisting with 544 the review of the city’s financial statements and audit materials. 545 546 547 Discuss Items for Joint City Council – Finance Commission Meeting 548 549 The commission discussed preparations for the upcoming joint meeting between the finance 550 commission and the city council, which is tentatively scheduled for June 8. 551 552 Chair Kanzenbach explained that the annual meeting allows the commission to discuss topics it 553 believes are important for the council to consider, and noted that last year’s presentation included 554 both verbal discussion and written materials summarizing the commission’s observations. 555 556 The commission discussed preparing bullet-point materials again this year so councilmembers 557 could review topics in advance. 558 559 Mr. Magureanu reviewed the commission’s prior work plan topics. He encouraged the 560 commission to focus less on simply reviewing the annual financial report itself and more on 561 identifying broader financial trends or issues that could help inform councilmembers and the 562 public. 563 564 The commission discussed several possible topics, including rising property taxes, increasing 565 public safety costs, reserve levels in the general fund, pension and long-term liabilities, and 566 trends in tax capacity and tax rates. 567 568 Chair Kanzenbach expressed concern about the pace of tax levy growth and noted that property 569 taxes and city spending have continued increasing in recent years. He said those increases 570 ultimately affect residents and should remain an important focus for the commission moving 571 forward. 572 573 Mr. Magureanu responded that many neighboring cities have experienced similar tax rate 574 increases and displayed comparative historical tax rate data showing similar trends across 575 communities such as Roseville and Maplewood. He noted that maintaining stable tax rates while 576 balancing service demands remains a central challenge during the budget process. 577 578 Page 14 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 14 of 16 The commission also discussed the city’s reserve policy and the importance of maintaining 579 general fund balances at or above the city’s minimum 35 percent reserve target. 580 581 Mr. Magureanu explained that the city had recently relied on reserve transfers from other funds 582 to maintain compliance with reserve policies. He cautioned that future budget pressures could 583 require additional levy increases or further reserve adjustments if expenditures continue to 584 outpace revenue growth. The commission indicated that reserve stability could be an important 585 topic to discuss with the city council. 586 587 Additional discussion focused on contracted police services provided to local businesses. The 588 commission asked questions about how those contracts operate, whether the services are 589 intended primarily to recover costs or generate revenue, and what long-term staffing impacts 590 could result from the arrangement. 591 592 Mr. Magureanu explained that revenues and expenses tied to the contracted police details are 593 being tracked separately to ensure the city is not subsidizing those activities with general tax 594 dollars. 595 596 The commission also discussed long-term public safety staffing costs, including concerns about 597 the expiration of future grant funding and the ongoing financial impact of recently approved 598 staffing increases. The commission further discussed future debt issuance plans tied to major city 599 projects, including projects expected to be supported through local sales tax revenues. 600 601 Mr. Magureanu explained that future debt issuances will likely be structured separately from the 602 operating budget process and may involve both capital project funds and debt service funds to 603 track project costs and repayment obligations. He also noted that the city will likely work with 604 bond advisors later in the year, once project timing and financing amounts are more clearly 605 defined. 606 607 608 ## Maintenance and Operations Center Update/Discussion 609 610 Mr. Magureanu explained that the information included in the packet reflects the city’s current 611 understanding of the proposed projects, although planning and design work is still ongoing. He 612 noted that discussions involving the possible purchase of an additional parcel of land could help 613 support both planned facilities. However, he said details were still being developed following a 614 closed meeting on the matter. 615 616 Mr. Magureanu explained that no major changes or significant new developments had occurred 617 since the previous discussions and described the projects as still largely in the design and 618 planning phase. 619 620 621 ## Finance Tracking Document 622 623 Page 15 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 15 of 16 Chair Kanzenbach reviewed the Finance Commission Tracking Report. 624 625 626 ## Workplan and Future Discussion Items 627 628 The commission discussed updates to its work plan and future discussion topics, including a 629 proposal to revisit the city’s investment policy statement. 630 631 Chair Kanzenbach said he would be willing to take the lead on that review and suggested 632 scheduling the discussion during a less crowded meeting later in the summer. 633 634 During the discussion, the commission realized the previously proposed June 8 joint meeting 635 with the city council conflicted with the commission’s planned June 9 meeting, which had been 636 intended to finalize discussion topics for the council presentation. After reviewing the calendar, 637 the commission agreed that moving the joint meeting to June 15 would provide additional time 638 for preparation and discussion. 639 640 Mr. Magureanu indicated he would confirm the revised date with the city council. 641 642 The commission discussed the possibility of preparing written materials before the June 9 643 meeting and continuing to explore whether remote collaboration would be permissible under 644 open meeting law requirements. 645 646 Mr. Magureanu agreed to consult with the city attorney regarding allowable communication 647 methods between commissioners outside formal meetings. 648 649 The commission also reviewed future work plan scheduling and discussed whether the 650 investment policy statement review should occur during the July meeting. 651 652 Mr. Magureanu noted that the July agenda already includes a substantial discussion regarding the 653 city’s capital improvement plan and suggested that the investment policy discussion could 654 potentially occur during the June 9 meeting if time allows. 655 656 657 ## Commission Direction on Member Initiated Agenda Items 658 659 None. 660 661 662 ## Other Business 663 664 None. 665 666 667 Adjourn 668 Page 16 of 24 ## Finance Commission Minutes May 12, 2026 – Draft Minutes Page 16 of 16 669 Commissioner Jeffers made a motion, seconded by Commissioner Kaney to adjourn. The motion 670 carried unanimously. 671 672 Meeting adjourned at 8:31 p.m. 673 Page 17 of 24 ## Roseville Finance Commission ## Agenda Item DATE: June 9, 2026 ITEM: 5.a. ITEM DESCRIPTION: Finalize discussion items for joint City Council - Finance Commission Meeting ## Background The Finance Commission has a joint meeting with the City Council on June 15, 2026, for the purposes of reviewing the Commission’s activities during the past year, to receive any Commission guidance or recommendations, and to discuss the Commission’s workplan for the current year. Since the last joint meeting on June 17, 2025, the Finance Commission has conducted the following discussions or activities: • Reviewed and made recommendation on the 2026-2045 Capital Improvement Plan review #1 – July 8th, 2025 • Reviewed and provided recommendations on the 2026 Budget, Tax Levy and Utility Rates — August 27th, 2025 • Reviewed and made recommendation on the 2026-2045 Capital Improvement Plan review #2 — August 27th, 2025 • Established Recommendation on 2026 City Manager Recommended Budget & Tax Levy — September 9th, 2025 • Establish Recommendation on 2026-2046 Capital Improvement Plan — September 9th, 2025 • Present Budget Recommendation to City Council — September 15th, 2025 • Update on the Council's adopted 2026 preliminary Budget & Tax Levy — October 14th, 2025 • Review final 2026 Budget & Levy — January 13th, 2026 • CIP discussion — should inflation be included, debt issuance — February 10th, 2026 • Review 2025 Investment Portfolio and performance — March 10th, 2026 • Reviewed excess cash reserve fund for 2025 • Received and reviewed 2025 audit reports The Finance Commission should determine who will be presenting the various topics – past accomplishments, current workplan, etc. ## Recommendation Discussion on topics and preparation of recommendations for City Council consideration at a Joint City Council-Finance Commission meeting. ## Attachments 1. Finance Commission notes for Joint Meeting on June 15th Page 18 of 24 ## Finance Commission notes for Joint Meeting on June 15 th , 2026 Here are few of the questions and answers: • City golf course not profitable – Correct. The fund can barely cover operating costs. From an operations standpoint, 2025 was essentially break-even with a positive net position change of $14,636. However, all capital needs are supported through transfers from the Capital Building Replacement Fund 410 and the Capital Parks Fund 402. For 2025, the transfer amount was $82,169. • Police contracts with Target and Walmart – These contracts began in 2025. There isn’t much historical data yet, but the primary focus is ensuring the rates we charge cover officer overtime costs as well as administrative overhead. Staff is monitoring these contracts and will review the current rate structure. • Difference in property tax revenue between residential and commercial properties – The City’s tax rate applies to both categories, while the County Assessor determines the valuations for each. Since valuations are outside our control, our focus is primarily on the tax rate, which is driven by the City budget. • License Center revenue – This is an important point to highlight. The License Center continues to perform very strongly and remains a key contributor to keeping the General Fund levy low. Resolving their ongoing space constraints is critical, and the City is already moving toward approving a new facility for both the License Center and the Passport Center. • Private trash vs. city recycling – This varies by city preference. Some cities take on billing for all services to enhance customer service and maintain closer engagement with residents. The downside is additional workload for City staff, who then need to manage more calls and mediate issues between residents and haulers, often requiring additional staffing and higher rates. When residents work directly with haulers, the City is generally less involved unless residents bring issues forward. Page 19 of 24 • Commend the Finance Department for speedily issuing the ACFR and for again being awarded the GFOA Certificate of Achievement for Excellence in Financial ## Reporting • Roseville is in generally good financial condition • Long-term liabilities are low Bonded debt is currently very low, but will be increasing Pension funds (run by the state) have fairly low unfunded liabilities OPEB liabilities are very low • Unrestricted fund balances are just adequate At year-end General Fund balance was just over 35% (the minimum recommended by the state) The Cash Reserve Fund was completely depleted in order to reach the 35% level General Fund will need to operate at a surplus in 2026 and in future years in order to maintain the 35% level due to increasing expenditures Especially important to have adequate fund balances when we are evaluated by the bond rating agencies for our upcoming bond issuance • Fair value of investments rose $1.8 million primarily due to natural recovery of bond prices from the large decline in 2022 • Number of employees has been fairly stable over the last decade except for police • Primary driver of increasing expenditures has been in Public Safety (Note: the following figures use accrual accounting and do not include the 2025 expenditures which are reimbursed for special policing for retailers) Expenditures rose 69% from 2020 to 2025, an 11.1% compound annual increase Public Safety comprised 45.4% of Governmental Expenses in 2025, up from 34.7% in 2020 • The assessed value of commercial property has grown more rapidly than residential property over the past decade, which lessens the tax burden on residences. This reversed in 2025, as total commercial property value declined. Commercial property is still a very high 47% of total assessed value. • Roseville’s tax rate is ??????, which compares to ???? average for Ramsey County suburbs (SAM: CAN YOU GET THIS INFO FROM THE COUNTY, PLEASE) – The City’s Tax rate for Roseville for 2026 is 42.453 (which includes the EDA rate as well) Page 20 of 24 • Tax collection rate has declined slightly in recent years primarily due to assessed value challenges. The collection rate is still acceptable, but likely will remain below 100%, which should be considered when budgeting • A major issue for the City is how to balance continued increases in property taxes with the cost of services residents desire Page 21 of 24 ## Roseville Finance Commission ## Agenda Item DATE: June 9, 2026 ITEM: 5.b. ## ITEM DESCRIPTION: Maintenance and Operations Center Update/Discussion ## Background At each meeting throughout the planning and construction process, staff will provide updates on the progress of the Maintenance and Operations Center. The February 11th Commission meeting contained a lot of information with regard to this project, and it is recommended that Commission members bring this information to each meeting for reference. The Below information was provided by the City Public Works Director, Jesse Freihammer: Both the License Passport Center and Dance Studio (LPCDS) and Maintenance Operations Center (MOC) are still in schematic design. Both the LPCDS and MOC schematic design reports will be presented to Council at their June 15 th council meeting. The Council will consider approving an agreement with the VFW to purchase a portion of their parking lot for the project. The agreement would include a shared parking agreement and storm water easement over the parking lot. A third stakeholder meeting will be held, tonight, Wednesday, June 3, 2026 to review updated plans and to get feedback on the building architecture as well as buffers around the sites. Stakeholder minutes and presentations can be found here. https://www.cityofroseville.com/4017/Civic-Campus-Final-Design- ## Stakeholder-Gr The overall project is looking to be bid late this year with construction starting in 2027. ## Recommendation No recommendation at this time. ## Attachments ## None Page 22 of 24 ## Roseville Finance Commission ## Agenda Item DATE: June 9, 2026 ITEM: 5.c. ## ITEM DESCRIPTION: Finance Tracking Document ## Background ## Recommendation ## Attachments ## 1. Tracking Document Page 23 of 24 ## No.RecommendationDescription ## Date Recommend Date Presented ## StatusDiscussion and Next Steps 2025-06 Finance Commission agrees with the proposed update and revisions including the update to the statutory limit of 3% of estimated market value of taxable property. The Commission recommends changing the "AAA Bond rating" to "Strong Credit Rating". With these changes the Commission recommends approval by City Council. Debt Policy review and revision 10/14/2025 10/27/2025Implemented Finance Commission reviewed and discussed proposed changes and updates to Debt Policy. 2026-01 Finance Commission recommends expanded disclosures in the statistical section of the Annual Comprehensive ## Financial Report. (ACFR) Recommendation is to expand disclosures in Table 5. Recommends adding a new column to disclose the annual % increase in Property Tax. Further recommends adding new columns for Sales Tax and Franchise Fees. The intent of this recommendation is to show the annual change in city tax burden for homeowners and businesses. Also report annual property tax on median value home 1/13/2026Pending Finance Commission will continue the conversation about this recommendation at the meeting of 2/10/26. We expect the continuing conversation will include an examination of the annual change in city tax burden on median value home. 2026-02 Finance Commission would like to review a sample copy of a simplified ACFR report to determine if it might be a worthy addition to our standard financial reports. Finance Director made reference to a simplified ACFR format that might be easier to read and understand. 1/13/2026Pending Discussion about the complex format of the ACFR. Probably beyond what is reasonable for the average reader to comprehend and synthesize. 2026-03 Numerous questions or recommendations were discussed in many of the City Funds. For example, suggested use of borrowing as a source of funds for fire engines. Another example is use of state grants or borrowed funds for OVAL improvements. A common theme of these suggestions is creative or alternative sources of funding so that levy is not the sole source of CIP funding. Finance Commission reviewed the first draft of the Capital Improvement Plan for 2027. 1/13/2026Pending The Finance Commission asked questions or made recommendations about the CIP draft for the consideration of staff or City Council. 2026-04 Finance Commission recommends 20 year CIP report without inflation. Also recommends 10 year CIP report with a 3% inflation factor. Finance Commission discussed format options for the CIP budget worksheets. Are the last 10 years of a 20 year look ahead really useful? Should we add a cost of living escalator of some sort? 1/13/2026Pending It was noted that costs contained in the CIP budget worksheets are updated to estimated market conditions each year ## Roseville Finance Commission ## Recommendation Tracking Report Report Date - April 14, 2026 Page 24 of 24