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CITY OF RAMSEY Notes to Basic Financial Statements December 31, 2018 NOTE 1— SIGNIFICANT ACCOUNTING POLICIES A. Organization The City of Ramsey, Minnesota (the City) operates under the Home Rule Charter City foini of government as defined in Minnesota Statutes. Under this plan, the government of the City is run by a City Council composed of an elected Mayor and elected Councilmembers. The City Council exercises legislative authority and deteiniines all matters of policy. The accounting policies of the City confoini to accounting principles generally accepted in the United States of America as applicable to governmental units. The accounting policies of the City confoini to accounting principles generally accepted in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. B. Reporting Entity As required by accounting principles generally accepted in the United States of America, these financial statements include the City (the primary government) and its component units. Component units are legally separate entities for which the primary government is financially accountable, or for which the exclusion of the component unit would render the financial statements of the primary government misleading. The criteria used to deteiniine if the primary government is financially accountable for a component unit include whether or not the primary government appoints the voting majority of the potential component unit's Board, is able to impose its will on the potential component unit, is in a relationship of financial benefit or burden with the potential component unit, or is fiscally depended upon by the potential component unit. 1. Blended Component Units In confoiniity with generally accepted accounting principles, the financial statements of the component unit has been included in the financial reporting entity as a blended component unit. The Ramsey Economic Development Authority (EDA) is an entity legally separate from the City. However, for financial reporting purposes, the EDA is reported as if it were part of the City's operations because the members of the City Council serve as EDA Board Members. The EDA provides services entirely to the city, with its purpose to promote development within the City. The activity of the EDA is reported in the Nonmajor Special Revenue Fund entitled Economic Development Authority. Separate financial statements are not prepared for the EDA. 2. Jointly Governed Organization The City is a member of Local Governmental Infoiniation Systems (LOGIS), a consortium of Minnesota municipalities that provides data processing services and support to its members. LOGIS is a legally separate entity that is financially independent of the City. Further, the City does not appoint a voting majority of LOGIS' Board of Directors. Therefore, it has not been incorporated into the City's reporting entity. During the 2018 fiscal year, the City paid LOGIS approximately $217,561 for services and equipment provided. 61