City discussion continues on fund designation

MARSHALL – Discussion of accounting policies for Marshall’s planned regional sports center continued at a city council committee meeting Wednesday. But while Ways and Means Committee member Glenn Bayerkohler again argued in favor making the sports center and MERIT Center funds enterprise funds, he found himself outvoted.

The questions of how to classify the MERIT Center and amateur sports center funds was one that had been brought up in December, as the Marshall City Council was preparing to approve the 2014 city budget and levy. At that time, Bayerkohler said he thought the city should designate the two funds as enterprise funds. Bayerkohler said enterprise funds are managed using accrual accounting and would give the council and members of the public a better picture of the funds’ revenues and expenses. He said it would also be appropriate to designate the sports center and MERIT Center funds as enterprise funds because the sports center and MERIT Center will charge money to provide services.

Marshall currently designates its municipal liquor store and wastewater funds as enterprise funds.

At Wednesday’s Ways and Means Committee meeting, Marshall City Administrator Ben Martig he had looked into accounting standards and how several other Minnesota cities designated similar funds. The MERIT Center fund and the amateur sports center fund were not required by accounting standards to be enterprise funds, he said.

“It can be designated an enterprise fund, but it’s not required to,” Martig said. However, the funds are unique in that they’re subsidized by local sales taxes, so Martig said he wouldn’t recommend they be included as part of the city’s general fund.

Martig said the city’s auditor also recommended the funds be designated as special revenue funds and not enterprise funds.

Bayerkohler repeated his argument that with an enterprise fund, it would be easier to determine the health of the funds. Using the city of Edina’s golf course and other enterprise funds as examples, he said accounting for depreciation could mean the difference between noting a profit and noting a loss for a city fund.

However, committee members John DeCramer and Mike Boedigheimer weren’t in favor of the proposal. DeCramer was concerned that designating the sports center as an enterprise fund could limit the city’s bonding options. Boedigheimer said he thought it was inappropriate to calculate depreciation on a fund that included state contributions.

“I still feel I have to speak my piece,” Bayerkohler said.

The committee voted 2-1 to recommend the city council designate the MERIT Center and amateur sports center funds as special revenue funds.