HomeMy WebLinkAbout2003 09 08 Proposed Annual Budget - City of friendswood CITY OF FRIENDSWOOD, TEXAS
PROPOSAL FOR
PROFESSIONAL AUDIT SERVICES
SEPTEMBER 8, .2003
PATTILLO, BROWN &HILL, L.L.P.
401 WEST HIGHWAY 6,
WACO, TEXAS .76710 . .
TELEPHONE NUMBER: 254/772-4901
CONTACT: TODD PRUITT, CPA
COPY
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TABLE OF CONTENTS
Page..
Number
Transmittal Letter 1 —2
General Requirements 3
Firm Qualifications and Experience 4—6
Partner, Supervisory and Staff Qualifications and Experience 7— 10
Audit Engagements With Other Governmental Entities 11 - 13
Specific Audit Approach 14- 16
Identification of Anticipated Potential Audit Problems 17
Concluding Remarks l . 18
Peer Review Report 19
APPENDICES
Appendix B—Proposer Guarantees S
Appendix C—Proposer Warranties
ATTACHMENT
Sample Format
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PATTILLO, BROWN & HILL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS ■ BUSINESS CONSULTANTS
September 8,2003
City of Friendswood, Texas
Attention: Deloris A. McKenzie
City Secretary
910 South Friendswood Drive
Friendswood, Texas 77546
We arepleased to have the opportunity to submit the accompanying ro osal to serve the City of
pp tYproposal
Friendswood, Texas, as independent auditors for the fiscal years ending September 30,2003 through 2005,
as well as consideration for the following three years.
We believe that our firm possesses certain unique characteristics and qualifications that are well
matched to the City of Friendswood's needs. We are a sophisticated 100-person regional accounting firm
with a broad client base, with a particular concentration in government audits. We have extensive
experience in audits of cities as indicated in our list of references. We believe that these attributes are
critical elements to the maintenance of a beneficial relationship between the City and its independent
auditors.
We have been a member of the AICPA for over 40 years and are a member of the AICPA Peer
Review Quality Control Section. As such, we are required to undergo peer reviews every three (3) years.
We completed our most recent review in 2001 and received an unqualified report. In addition, we also
received no "letter of comments," and therefore achieved the highest possible rating, obtained by only
approximately 5% of accounting-firms across the nation. Because of our high quality standards, we have
been approved by the AICPA to perform numerous peer reviews of other CPA firms across the nation.
We have identified for the City of Friendswood an experienced and proven service team. As you
can see from the résumés included in this proposal, your audit team will have significant experience
serving government clients, including cities, and are actively involved in professional organizations that
allow us to keep abreast of issues facing government organizations.
Our work will be scheduled to facilitate the needs and convenience of the City. We will adhere
' to all deadlines of the City and cognizant agencies, as well as requirements of the GFOA. Schedules
will be coordinated with the Finance Committee in order to fit their schedules and demands.
The following person is authorized to conduct contract negotiations for Pattillo, Brown & Hill,
L.L.P. He may be reached by telephone at (254) 772-4901. The address is 401 West Highway 6, Waco,
Texas 76710.
Todd Pruitt,Audit Partner—Government Audit
401 WEST HIGHWAY 6■P.O.BOX 20725•WACO,TX 76702-0725•(254)772-4901■FAX:(254)772-4920■www.pbhcpa.com
AFFILIATE OFFICES:AUSTIN,TX(512)345-1452•BROWNSVILLE,TX(956)544-7778■HILLSBORO,TX(254)582-2583
LUFKIN,TX(936)632-7648■TEMPLE,TX(254)791-3460■ALBUQUERQUE,NM(505)266-5904■RIO RANCHO,NM(505)898-3516
We appreciate your consideration of our firm as your auditors in the coming years and look
forward to discussing our merits further with you. This proposal is a firm and irrevocable offer.
Yours truly,
PATTILLO,BROWN&HILL, L.L.P.
Todd Pruitt, CPA
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If this proposal is acceptable,please indicate your acceptance below. ACCEPTED BY:
Signature
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TECHNNICAL PROPOSAL
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GENERAL REQUIREMENTS
• INDEPENDENCE
We are independent in regard to Friendswood, Texas (and all of the component units of the City of
Friendswood, Texas), as defined by auditing standards generally accepted in the United States of
America,as well as the U. S. General Accounting Officer's Government Auditing Standards(1994).
}• LICENSED TO PRACTICE IN TEXAS
The firm and all key professional staff assigned to your audit will be CPAs licensed to practice in
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• PROFESSIONAL RELATIONSHIPS WITH THE CITY OF FRIENDSWOOD
We have had no professional relationships or prior engagements with the City of Friendswood
within the last five years.
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PATTI'LLO, -BROWN & HILL, L.L.P.
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FIRM QUALIFICATIONS
AND EXPERIENCE .
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FIRM QUALIFICATIONS
\ AND EXPERIENCE
We sincerely appreciate the opportunity to present our proposal to the City of Friendswood to
provide professional auditing services. We believe that our firm possesses certain unique characteristics
and qualifications that are well matched to the City of Friendswood's needs. We are a 100-person regional
accounting firm with a broad client base, with a particular concentration in governmental auditing. We
have prepared the following- description of our firm qualifications and experience for the City of
Friendswood,which discusses our expertise and our ability to serve you.
As mentioned previously, we believe that Pattillo, Brown&Hill, L.L.P. is well suited to serve your
needs. The reasons are as follows:
• EXPERIENCE
We have in-depth experience,presently serving over 100 governmental clients. Members of our
firm are members of the Association of Government Accountants, Government Officers
Finance Association of Texas, the Texas Society of CPAs Government Accounting Standards
—` Committee, and the Special Review Committee of the GFOA. Many of our clients have elected
to pursue the Certificate of Achievement for Excellence in Financial Reporting on a regular
basis. In all instances where we have been associated with this pursuit,the GFOA has awarded
our client the certificate. Government audits continue to be the fastest growing segment of our
client base. We are committed to serving this segment, and continue to expand our department
1 and the scope of services offered to governmental organizations. Because of this commitment,
- we are able to assign experienced government auditors to serve the City of Friendswood on a
continuing basis, and still rotate staff for audit team members during a multi-year contract if
desired.
• A REPUTATION FOR QUALITY
Pattillo, Brown & Hill, L.L.P. is one of the oldest and most well respected accounting firms in
Texas. As an indication of our commitment to quality, we are a member of the AICPA SECPS
— as well as the PCPS Peer Review quality control sections. As such, we are required to undergo
peer reviews every three (3) years:- These sections have the highest evaluating criteria of all
AICPA member groups'and include reviews of governmental entities. We completed our most
~` recent-review in 2001 and received an unqualified report. In addition, we also received no
1 "letter of comments," and therefore achieved the highest possible rating, obtained by only
approximately,5%of accounting firms across the nation. Because of our high quality standards,
. . . we have been approved by the AICPA-to perform numerous peer reviews of other CPA firms
across the nation. Our review was performed by a member of the AICPA Auditing Standards
Board.
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• APPROPRIATE SIZE
-, Pattillo, Brown l& Hill, L.L.P. was founded in Waco in 1923 and has been in continuous
existence since that time.' We are a regional certified public accounting firm with offices in
Waco, Temple, Brownsville, Lufkin, Austin, McAllen and Hillsboro, Texas, and Albuquerque,
New Mexico. It is our goal to provide personalized services of the highest quality to our clients.
'We have earned a reputation for professional excellence through our demonstration of quality
work and sound financial advice. Our personnel have devoted many years developing
knowledge in auditing,accounting and consulting services.
Our Waco office, from which this engagement would be performed, consists of 7 partners, 10 '
managers, and 35 other professionals. Our government audit department in the Waco office
consists of'3 partners, 2 managers, and 21 other professionals. All of these professionals work
almost exclusively on government engagements.
Our unyielding commitment to client service has resulted in the growth of our client base,
positioning Pattillo, Brown&.Hill, L.L.P. between the very large national accounting firms and
smaller, locally-oriented firms. We are large enough to have'the resources and personnel to
resolve even the most complex accounting or compliance issue, but small enough to give you
=-. the personalized service that our clients deserve. The City of Friendswood will be a significant
and valued client at our firm. -
• COMPETENT, EXPERIENCED PERSONNEL .
We consider well-trained and experienced professionals to be the single most important element
m necessary to providing the.highest'level of service to a client. We believe that we offer our
clients a unique blend of technical expertise and responsiveness that is sometimes unavailable
from larger firms who may be focused or more sizable engagements. We have identified for the
City of Friendswood an experienced and proven service team. As you can see from the resumes
-- included in this proposal,your audit team will have significant experience serving governmental
clients including cities, and are actively involved in professional organizations that allow us to
- keep abreast of issues facing governmental organizations.
Our commitment to professional qualifications is evidenced by the following:
> One former member served on the Texas State Board of Public Accountancy.
�1 . . > One former member is past president of the Texas Society of CPAs.
> Several members are past chairmen and several are current chairmen or
members of Committees of the Texas Society of CPAs including the Society's.
Government Accounting Standards.Committee.
➢ Members are heavily,involved in continuing professional education programs '
-.'' sharpening technical skills.
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CERTIFIED PUBLIC ACCOUNTANTS■BUSINESS CONSULTANTS ,
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> Our Firm includes members of the Association of Government Accountants and
the Government Finance Officers Association of Texas.
> Four members of our firm are members of the GFOA Special Review
Committee.
• TIMELINESS AND RESPONSIVENESS
We regard timeliness and responsiveness to be critical elements to providing quality service to
our clients. We are committed to delivering reports in advance of established deadlines. With
over 60 professional personnel available, we are able to complete our work according to your
timetable. Additionally, we are solidly committed to promptly responding to questions as they
arise. We encourage our clients to contact us during the year to discuss accounting or regulatory
issues.
• VALUE AND EFFICIENCY
We recognize that clients expect the services rendered by their professional accounting firm to
go beyond the financial statements. We understand the expectations of our clients and welcome
the opportunity to serve not only as auditors, but also as advisors. Our approach places
substantial emphasis on the need to thoroughly understand your operations. This audit approach
allows us to contribute constructive suggestions regarding your internal controls, operating and
accounting procedures, and other matters worthy of management's attention. In addition, our
clients want professionals who perform their work in an efficient manner with a minimum
disruption to the City's staff. Our professionals possess these capabilities.
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PARTNER, SUPERVISO. 1(AND STAFF
QUALIFIcATIONS AND EXPERIENCE
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DETAIL OF SPECIFIC ASSIGNMENTS
WITHIN THE AUDIT TEAM
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The following descriptions detail the specific responsibilities of each member of your audit team.
Partner Engagement Partner: Todd Pruitt, CPA
The partner assigned to your audit team is responsible for the overall administration of the audit and
fmal review and approval of all reports and workpapers. In addition,the partner oversees the manager who
is directly responsible for your engagement.
Manager Engagement Manager: Chris Pruitt,CPA
The manager has primary responsibility for your engagement. All scheduling of fieldwork and
presentations are made by the manager. The manager is also responsible for staff assignments and budget
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Senior Auditor Senior Auditor—in-charge: Jennifer Gosney, CPA
The senior auditor is directly responsible for planning and directing the fieldwork during the
engagement. In addition, the senior auditor is responsible for supervising all staff auditors assigned to your
engagement.
Staff Auditors
Staff auditors work under close supervision of the senior-in-charge. All staff auditors will have
significant experience working on audits of cities.
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TODD PRUITT, CPA
Audit Partner
Todd will serve as the Partner-In-Charge of your engagement, and will supervise and direct all of our
services to the City of Friendswood, Texas. He will also be present at all key meetings. He has extensive
experience in all aspects of auditing and accounting for government entities. He has made numerous
presentations to audit committees and boards of directors across the state. Todd frequently conducts training
seminars within our firm as well as for government organizations. He is an active member of the
Government Finance Officers Association Special Review Committee.
Sample of Governmental Experience
City of San Marcos City of West University Place
City of Waco City of Kerrville
City of Pearland City of Henderson
City of Hewitt City of Columbus
City of Kerrville City of Stephenville
City of Rosenberg City of Kennedale
City of Forest Hill City of Eagle Pass
Educational Background
BBA in Accounting University of Texas at Austin
Partial List of CPE Received in the Past Three Years
2002 TARC Annual Conference
2002 The Implementation of GASB Statement No. 34: Impact on Regional Planning Commissions
2002 Implementation of GASB Statement No. 34
2001 TARC Post-Legislative Conference
2001 GFOAT Spring Institute
2001 County Auditors' Institute
2000 GFOAT Fall Institute
2000 County Auditors' Institute
2000 GASB's New Reporting Model
Professional Organizations
American Institute of Certified Public Accountants
Texas Society of Certified Public Accountants
Special Review Committee of GFOA
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CHRIS PRUITT, CPA
Audit Manager
Chris will serve as the Manager-in-Charge of your engagement, and will be directly responsible
for planning and controlling the audit. Chris has conducted numerous training seminars within our firm
and for government organizations, most recently on developing and implementing policies and
processes to generate financial statements in compliance with the new GASB requirements.
Sample of Governmental Experience
City of Forest Hill Brazos Valley Council of.Governments
City of Fredericksburg City of Balch Springs
Bowie County Sabine River Authority
City of Pearland City of Waco
City of Rosenberg City of Forest Hill
City of Columbus Grayson County
- City of Corsicana City of Kennedale
City of San Marcos Henderson County
Limestone County Nacogdoches County
Educational Background
BBA in Accounting (1992) University of Texas at Austin
Partial List of CPE Received in the Past Three Years
2002 Audit Training
2002 Forty-fourth County Auditors' Conference
2002 Implementation of GASB Statement No. 34
2001 TARC Post-Legislative Conference
2001 Forty-third County Auditors' Conference
2001 GASB 34: The New Reporting Model
2000 Forty-second County Auditors' Conference
2000 GFOAT Spring Institute
2000 Audit Training '
Professional Organizations
American Institute of Certified Public Accountants
Texas Society of Certified Public Accountants
Special Review Committee of GFOA L
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JENNIFER GOSNEY, CPA
Audit Supervisor
A CPA with five years of experience'in auditing and accounting for governmental entities, Jennifer
will serve as-the audit supervisor on the engagement. Jennifer has conducted training seminars within our
firm.on various government accounting and auditing topics, and has taught continuing professional education
credit for the Texas Society of CPAs. Jennifer has served as audit supervisor on numerous audits of cities.
The advantages of having an experienced"in-charge" such as Jennifer, include the elimination of time spent
by your personnel training our staff and a generally more efficient and cost effective audit.
Sample of Governmental Experience
City of Corinth ` Q"/ City of Lockhart
-_ City of Hearne J\� Abilene Regional M MR Center
City of Somerville Williamson County—( e.A C o un 1-4-6.
Rockwall County l.7 Medina County
Ark-Tex Council of Governments Moody Independent School District
Lifepath Systems Buckholts Independent School District
Tyler County City of Rogers
Educational Background
BS in Bioengineering Texas A&M University
Certificate in Systems Safety Engineering
CPA Requirements University of Central Texas
Partial List of CPE Received in the Past Three Years
2002 GASB Update
2002 Audit Training
2001 GASB 34: The New Reporting Model
2001 Audit Workpaper Documentation
2001 Single Audits Under OMB Circular A-133
2001 GASB Update
2001 Audit Training
2000 Audit Workpaper Documentation
2000 Single Audits Under OMB Circular A-133
2000 GASB Update
2000 Audit Training -
Professional Organizations
Texas Society of Certified Public Accountants
American Institute of Certified Public Accountants
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AUDIT ENGAGEMENTS WITH
OTHER GOVERNMENT ENTITIES
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PRIOR FIR114 EXPERIENCE IN
PUBLIC SECTOR AUDITS
-, Below is a sample of single audits within the last five years with reporting situations similar to the
City of Friendswood, Texas. Please feel free to contact any of the below mentioned references as you so
desire.
Fiscal Years Estimated
Audit Ending Contact Hours
* City of Waco 1999-2002 Janice Andrews 1,100
Waco,Texas
254/750-5769
* City of San Marcos 2000-2002 Rodney Gonzales 750
San Marcos,Texas
512/393-8170
* City of Rosenberg 20. 02 Linda Eiche 600
Rosenberg,Texas
832/595-3369
* City of Pearland 2001-2002 Mary Ross 600
Pearland,Texas
281/652-1671
rl City of Forest Hill 1996-2002 Chuck Gardener ' 320
Forest Hill,Texas .
• 817/568-3000
* These entities received their Certificate of Excellence in Financial Reporting from the GFOA.
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OTHER REFERENCES
Listed below are additional references with similar auditing requirements to the City of
Friendswood.
• OTHER REFERENCES
City Governments(45) Athens Fairfield New Braunfels
Balch Springs Forest Hill Pearland
Bellmead Fort Stockton Rogers
Belton Fredericksburg Rosebud
Beverly Hills Gatesville Rosenberg
Brady Hearne San Benito
Bynum Hewitt San Marcos
Caldwell Hillsboro Somerville
Cedar Park Hubbard Stephenville
Clifton Kennedale Thornton
Corinth Lacy-Lakeview Waco
Corsicana Live Oak West Tawakoni
Del Rio Marble Falls West University Place
DeSoto Mart •Woodway
Eagle Pass Mexia Wylie
-, County Governments(31) Bastrop Grimes Nacogdoches
Bosque Hill Orange
Bowie Jasper Pecos
Denton Johnson Randall
Dimmitt Kaufman Robertson
Ellis Leon Sabine
Fannin Limestone Tyler
Freestone Medina Upshur
Gillespie McLennan Van Zandt
Grayson Montgomery Walker
Wood
Councils of G overnments'(12) Alamo Area Council of Governments
Ark-Tex Council of Governments
Central Texas Council of Governments
Brazos Valley Council of Governments
Concho Valley Council of Governments
-Deep East Texas Council of Governments
East Texas Council of Governments
Heart of Texas Council of Governments
Permian Basin Regional Planning Commission
Rio Grande Council of Governments
South East Texas Regional Planning Commission
South Plains Association of Governments
South Texas Development Council
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• EXPERIENCE WITH GFOA'S CERTIFICATE OF ACHIEVEMENT
As indicated below, many of our clients have elected to pursue the Certificate of Achievement for
Excellence in Financial Reporting. In all instances where we have been associated with this pursuit,
the GFOA has awarded the entity the certificate. Moreover, our governmental audit staff includes
three members of the Special Review Committee of the GFOA. The following is a sample of our
clients that have received this award in the past.
Abilene Regional MHMR Center Hood County
City of Belton Johnson County MHMR Center
City of Beaumont City of Kerrville
City of Copperas Cove McLennan County
City of Del Rio City of New Braunfels
Denton County City of San Marcos
City of Eagle Pass City of Sherman
East Texas Council of Governments City of Stephenville
Ellis County City of Waco
Town of Flower Mound Walker County ,
Grayson County West University Place
1 Gregg County Williamson County
Henderson County City of Wylie
City of Rosenberg Brazos Valley Council of Governments
City of Cedar Park South Plains Association of Governments
• SAMPLE CAFR
Enclosed is a copy of a CAFR prepared for one of our clients, the City of Waco, Texas. We
assisted the City in the implementation of GASB 34 for the fiscal year ended September 30, 2002.
Please refer to this as an example of our work.
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- SPECIFIC AUDIT APPROACH
SPECIFIC AUDIT APPROACH
Todd Pruitt, CPA, will be the partner in charge of the audit. Chris Pruitt, CPA,will be the manager
,_ and Jennifer Gosney, CPA, the individual in charge of the day-to-day audit in the field. All of the
aforementioned personnel are familiar with the activities and accounting procedures associated with a city's
operations. (See Résumés in this proposal)
GENERAL PLANNING PROCEDURES
We would prefer to perform preliminary audit procedures prior to the City's fiscal year-end. These
procedures will be designed to gather information necessary to obtain an understanding of the entity's
operations, organization and internal controls. We will make an initial assessment of the risk of material
misstatement of the financial statements and of material noncompliance with laws, regulations, and
provisions of federal and state contracts and grant agreements. We will determine if a single audit is
required under OMB Circular A-133 and the State of Texas Single Audit Circular. A determination of the
City's major federal and state programs will be made, and which tests of controls and compliance tests are
to be performed. Audit work programs will be prepared for each significant area covered by the audit and a
complete time budget by audit area will be completed at this time. Staffing assignments will be determined
and the audit plan will be discussed with appropriate officials. We will provide you with a list of items to
, assemble prior to the start of fieldwork in order to facilitate the timing of the audit.
SUBSTANTIVE TESTING AND TESTS OF CONTROLS
We will perform procedures in order to determine that the financial statements are presented in
accordance with accounting principles generally accepted in the United States of America applied on a
consistent basis and that all material disclosures have been made. The fmancial statements will be cross-
referenced to supporting statements and schedules within the report, to footnotes and to the related audit
working papers.
All working papers will be systematically organized and referenced. They will be in sufficient
detail to facilitate review by the City and/or cognizant state agency or federal oversight agency. Any
weaknesses in internal accounting control or suggested improvements in accounting procedures will be
summarized in the working papers and presented in the form of a management letter at the close of the
engagement. Our working papers will be subject to continuous review beginning at the senior level and
progressing through the manager to final review by a partner at the end of fieldwork.
We will make an organization-wide financial audit in regard to the general purpose financial
statements and combining statements and perform work necessary to provide an "in-relation-to" report on
other schedules.
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Our audit will be conducted in accordance with auditing standards generally accepted in the
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United States of America established by the American Institute of Certified Public Accountants as
included in "Statements on Auditing Standards" and AICPA Industry Audit Guide "Audits of State and
Local Government Units", the standards for financial and compliance audits contained in the United
States General Accounting Office's "Government Auditing Standards" (1994 revision), the Single Audit
Act Amendments of 1996, Vernon's Texas Codes Annotated, Local Government Code, and the Office of
Management and Budget's Circular A-133. We will apply such tests of your accounting records and
account balances as are necessary for us to express an opinion regarding the conformance of your
financial statements with accounting principles generally accepted in the United States of America, and
compliance with applicable regulatory standards and law, as stated in this paragraph. Accordingly, our
audit will be an integrated audit and shall encompass the entirety of your financial operations.
The financial statement audit will be to determine whether (1) the financial statements present
fairly the fmancial position, results of operations, and cash flows or changes in financial positions in
accordance with accounting principles generally accepted in the United States of America, and (2)
whether Friendswood, Texas, has complied with the laws and regulations for those transactions and
events that may have a material effect on the financial statements. The financial related audit also
includes determining (1) whether financial reports and related items are fairly presented, (2) whether
financial information is presented in accordance with established or stated criteria including Statement 1
of the Governmental Accounting Standards Board (GASB) and the Government Finance Officers
Association (GFOA) publication "Governmental Accounting, Auditing, and Financial Reporting" and
(3)whether the City has adhered to specific financial compliance requirements.
We will select statistical samples of disbursements of the City on an organizational wide basis.
The samples will be selected randomly from the population of all checks of all City bank accounts.
Sample sizes are normally limited to 60 payroll transactions and 60 other transactions as higher sample
sizes statistically do not provide significantly higher levels of reliance on the sample chosen. Additional
samples of transactions of federal and state programs may be required in varying degrees by OMB
Circular A-133 and the State of.Texas Single Audit Circular, based on levels of funding. Such sample
sizes typically are smaller due to the limited scope of the population.
Determination of laws and regulations applicable to transactions selected by transaction tests and
those which will require additional audit test work will be determined in accordance with the American
Institute of Certified Public Accountant's "Statement on Auditing Standards" and the GAO's
"Government Auditing Standards" (1994 revision).
Analytical procedures will be performed on significantly all areas of the City's financial
statements. The complexity of such procedures will be to the extent we consider necessary in the
circumstances of the various areas. The complexity should not effect estimated time for the engagement
as we plan for substantial amount of the information required in the analytical review to be compiled
from schedules described in your request for proposals. We will use our personal computers to compile
information and perform calculations necessary for this review whenever possible.
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As a part of the audit of the general purpose financial statements,the annual audit will also include
obtaining an understanding of the City's internal control structure and reporting any reportable conditions
relating to the internal control structure that comes to our attention. Any material weakness noted during
our study and evaluation of internal accounting and administrative controls will be reported.
As part of the audit of the general purpose financial statements,transactions and records pertaining
-" to federal and state programs will also be tested for material compliance with federal and state laws, rules
and regulations, and all instances of noncompliance will be reported to City of Friendswood,Texas.
TIME REQUIREMENTS
Our work will be scheduled to facilitate the needs and convenience of the City. We will adhere
to all deadlines of the City and cognizant agencies, as well as requirements of the GFOA. Schedules
will be coordinated with the Finance Committee in order to fit their schedules and demands. Below is a
proposed schedule subject to the City's approval.
November 15, 2003 Completion of Interim Work
January 30, 2004 Completion of Fieldwork
February 9, 2004 Submittal of Draft Report
February 16, 2004 Submittal of Final Report -
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IDENTIFICATION OF ANTICIPATED
POTENTIAL AUDIT PROBLEMS
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IDENTIFICATION OF ANTICIPATED
POTENTIAL AUDIT PROBLEMS
We do not anticipate any potential audit problems.
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CONCLUDING REMARKS
-, As outlined in this proposal, we believe that our firm is well matched to the City of
Friendswood's needs. To summarize:
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• We have significant experience auditing governmental organizations, including cities.
- • We can provide you with timely services at a reasonable cost.
• We have extensive experience with the Certificate of Achievement Program of the
Government Finance Officers' Association (GFOA). In fact, four members of our
firm are active members of the Special Review Committee of the GFOA.
• We are committed to meeting your deadlines.
Pattillo, Brown & Hill, L.L.P. prides itself on being responsive to the needs of our clients. We
believe this proposal underscores the points that set us apart from other accounting firms. We look
forward to the opportunity to develop a mutually beneficial relationship with the City of Friendswood.
PATTILLO, BROWN & HILL, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS I BUSINESS CONSULTANTS 18
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.--- .
PEER REVIEW REPORT
. ... .
. . .
--�. . . . .
EB .
EUBANK & BEM
A Professional Limited Liability Company
CERTIFIED PUBLIC ACCOUNTANTS
'\ 3820 Interstate 55 North / Post Office Box 16090 / Jackson,Mississippi 39236-6090 / Phone(601)987-4300 / Fax(601)9874314
November 29,2001
To the Partners
Pattillo,Brown&Hill,L.L.P.
and the SEC Practice Section Peer Review Committee
We have reviewed the system of quality control for the accounting and auditing practice
of Pattillo,Brown &Hill, L.L.P. (the firm) in effect for the year ended May 31, 2001. A system
of quality control encompasses the firm's organizational structure and the policies adopted and
procedures established to provide it with reasonable assurance of complying with professional
standards. The elements of quality control are described in the Statements on Quality Control
Standards issued by the American Institute of Certified Public Accountants (the AICPA). The
design of the system, and compliance with it, are the responsibilities of the firm. In addition, the
firm has agreed to comply with the membership requirements of the SEC Practice Section of the
AICPA Division for CPA Finns (the Section). Our responsibility is to express an opinion on the
design of the system, and the firm's compliance with that system and the Section's membership
requirements based on our review.
Our review was conducted in accordance with standards established by the Peer Review
Committee of the Section and included procedures to plan and perform the review that are
- summarized in the attached description of the peer review process. Our review would not
necessarily disclose all weaknesses in the system of quality control or all instances of lack of
compliance with it or with the membership requirements of the Section since it was based on
selective tests. Because there are inherent limitations in the effectiveness of any system of quality
control, departures from the system may occur and not be detected. Also, projection of any
evaluation of a system of quality control to future periods is subject to the risk that the system of
_ quality control may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the system of quality control for the accounting and auditing practice of
Pattillo, Brown & Hill, L.L.P. in effect for the year ended May 31, 2001, has been designed to
meet the requirements of the quality control standards for an accounting and auditing practice
established by the AICPA, and was complied with during the year then ended to provide the firm
with reasonable assurance of complying with professional standards. Also, in our opinion, the
firm complied during that year with the membership requirements of the Section in all material
respects.
444/
EUBANK&BETTS,PLLC
MEMBERS
• American Institute • Mississippi Society •Division for CPA Firms SEC • Tax Division of the •CPA Associates International,Inc.
of Certified Public of Certified Public and Private Companies American Institute of with Associated Offices in
Accountants Accountants Practice Sections Certified Public Accountants Principal U.S.and International Cities
•
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APPENDIX B
PROPOSER GUARANTEES
1. The proposer certifies it can and will provide and make available, at a minimum, all services set
forth in Section II,Nature of Services Required.
Signature of Official:
Name (typed): Todd Pruitt, CPA
Title: Partner
Firm:Pattillo, Brown&Hill, L.L.P.
Date: September 8,2003
APPENDIX C
PROPOSER WARRANTIES
A. Proposer warrants that it is willing and able to comply with State of Texas laws with respect to
foreign(non-state of Texas) corporations.
B. Proposer warrants that it is willing and able to obtain an errors and omissions insurance policy
providing a prudent amount of coverage for the willful or negligent acts, or omissions of any
officers, employees or agents thereof.
C. Proposer warrants that it will not delegate or subcontract its responsibilities under an agreement
without the express prior written permission of the City.
D. Proposer warrants that it is willing and able to meet required dates and report deadlines. - (...'
E. Proposer warrants that all information provided in connection with this proposal is true and
accurate.
Signature of Official: ✓�.l.�i `
Nanie (typed): Todd Pruitt, CPA
Title: Partner
Firm: Pattillo, Brown&Hill, L.L.P.
Date: September 8, 2003.
4
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L.
CITY OF WACO, TEXAS '_
STATEMENT OF NET ASSETS
SEPTEMBER 30,2002
Primary Government Component Units
Waco Health
Central Waco Facilities
Governmental Business-type Development Development ,_
Activities Activities Total Corporation Corporation
ASSETS K__,
Current assets:
Cash and investments $ 41,327,374 $ 22,075,345 $ 63,402,719 $ 5,505 $ 22,601
Receivables(net of allowances for .
uncollectibles of$5,998,662)
Accounts 3,194,146 6,837,790 10,031,936 - -
Special assessments 82,672 - 82,672 - -
Taxes 5,515,176 - 5,515,176 - - \_ ,
Notes receivable 1,748,427 - 1,748,427 - -
Due from other governments 883,405 520,113 1,403,518 - -
Internal balances 1,323,737 ( 1,323,737) - - -
Inventories 147,981 326,353 474,334 - -
Real estate held for resale 107,320 - 107,320 - -
Total current assets 54,330,238 28,435,864 82,766,102 5,505 . 22,601
Noncurrent assets: •,_
Restricted cash and investments - 56,598,024 56,598,024 - -
Capital assets:
Land 33,327,067 11,457,700 44,784,767 - -
Buildings 9,722,212 27,775,114 37,497,326 - - -
Improvements other than buildings 15,905,747 165,305,273 181,211,020 - -
Equipment 26,553,156 31,880,430 58,433,586 - -
Infrastructure 195,104,703 - 195,104,703 - -
Construction work in progress 9,524,247 27,811,615 37,335,862 - - , _
Less:accumulated depreciation ( 119,431,969) ( 97,593,083) ( 217,025,052) - - _ ,
Total capital assets 170,705,163 166,637,049 337,342,212 - -
Total noncurrent assets 170,705,163 223,235,073 393,940,236 - -
Total assets $ 225,035,401 $ 251,670,937 $ 476,706,338 $ 5,505 $ 22,601
_
•
(continued)
23
2
CITY OF WACO, TEXAS
STATEMENT OF NET ASSETS
(Continued)
SEPTEMBER 30,2002
m
,h Primary Government Component Units
Waco Health
', Central Waco Facilities
Governmental Business-type Development Development
Activities Activities Total Corporation Corporation
--' LIABILITIES
Current liabilities:
Accounts payable $ 2,098,829 $ 489,515 $ 2,588,344 $ - $ -
Accrued liabilities 3,823,301 1,749,845 5,573,146 - -
Unearned revenue 281,140 97,012 378,152 - -
-1 Compensated absences payable 4,279,245 811,852 5,091,097 - -
Escrow funds 245,932 39,064 284,996 - -
Customer deposits 195,210 - 195,210
Revenue bond payable - 5,442,114 5,442,114 - -
Notes payable 90,756 - 90,756 - -
Capitalized lease obligations 470,287 - 470,287 - -
Serial bonds and certificates of obligation 4,260,836 - 4,260,836 - -
Accrued interest payable - 424,785 424,785 - -
-� Estimated claims liability 2,587,512 - 2,587,512 - -
Total current liabilities 18,333,048 9,054,187 27,387,235 - -
Current liabilities payable
from restricted assets:
--, Customer deposits - 624,521 624,521 - -
Revenue bond payable - 2,370,073 2,370,073 - -
Notes payable - - - - -
Capitalized lease obligations - - - - -
Serial bonds and certificates of obligation - - - - -
Accrued interest payable - 489,750 489,750 - -
Deferred interest payable - 2,011,336 2,011,336 - -
—, Accounts payable - 571,306 571,306 - -
Total current liabilities payable
from restricted assets: - 6,066,986 6,066,986 - -
Noncurrent liabilities:
Capitalized lease obligations 1,825,202 - 1,825,202 - -
Serial bonds and certificates of obligation 48,285,750 - 48,285,750 - -
Refundable contracts 700,147 1,254,781 1,954,928 - -
1 Accrued liabilities - 1,781,468 1,781,468 - -
Contracts payable 830,000 - 830,000 - -
Compensated absences 6,874,509 734,218 7,608,727 - -
Revenue bonds payable - 101,369,249 101,369,249 - -
Deferred interest payable - 585,070 585,070 - -
M Total noncurrent liabilities 58,515,608 105,724,786 164,240,394 - -
_ Total liabilities 76,848,656 120,845,959 197,694,615 - -
Th
(continued)
24
r
CITY OF WACO, TEXAS _
STATEMENT OF NET ASSETS
(Continued)
SEPTEMBER 30,2002
Primary Government Component Units
Waco Health
Central Waco Facilities
Governmental Business-type Development Development
Activities Activities Total Corporation Corporation
NET ASSETS
Invested in capital assets,
net of related debt $ 124,263,711 $ 108,379,784 $ 232,643,495 $ - $ -
Restricted for:
Economic Development Incentives 3,605,457 - 3,605,457 - -
Tax increment financing 2,584,311 - 2,584,311 - -
Grant requirements 2,533,157 - 2,533,157 - -
Forfeitures and abandoned motor vehicle 185,873 - 185,873 - -
Court security and technology 292,969 - 292,969 - -
Debt service 525,460 2,093,889 2,619,349 - -
Parks and cemetery trust 455,729 - 455,729 - -
Unrestricted 13,740,078 20,351,305 34,091,383 5,505 22,601
Total net assets $ 148,186,745 $ 130,824,978 $ 279,011,723 $ 5,505 $ 22,601
The notes to the financial statements are an integral part of this statement.
25
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26
CITY OF WACO, TEXAS _
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2002 ,
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary Government:
Governmental activities:
General government $ 8,563,367 $ 403,653 $ 252,868 $ -
Public works 8,464,023 10,142 262,364 3,101,391
Public safety 39,228,284 3,548,674 809,462 403,149
Culture and recreation 9,726,010 698,304 729,796 168,797 - '
Public health 5,005,133 1,074,694 1,936,288 -
Housing and community development 3,364,752 - 3,672,709 -
Interest on long-term debt 2,578,876 - - - ,
Total governmental activities 76,930,445 5,735,467 7,663,487 -_ - 3,673,337
Business-type activities:
Water 19,307,477 21,588,586 - 75,078
Wastewater 13,837,373 15,096,526 - 316,396
Sanitation 11,297,869 12,400,204 - -
Airport 2,537,837 781,101 888,135 662,335
Convention services 2,516,341 607,945 - -
Ranger Hall of Fame 863,959 522,133 128,292 16,325
Cameron Park Zoo 1,946,697 472,876 3,477 724,291
Transit services 2,789,656 729,062 1,666,631 296,087 \ '
Cottonwood Creek Golf Course 1,367,201 974,481 - -
Total business-type activities 56,464,410 53,172,914 2,686,535 2,090,512
Total primary government $ 133,394,855 $ 58,908,381 $ 10,350,022 $ 5,763,849
Component Units:
Central Waco Development Corporation - - - -
Waco Health Facilities Development Corporation _ - - - -
Total component units $ - $ - $ - $ -
General revenues:
Taxes:
Property taxes,levied for general purposes
Property taxes,levied for debt service
TIF tax
Sales taxes
Franchise taxes
Hotel/motel taxes
Other taxes
Investment earnings
Miscellaneous
Transfers
Total general revenues,special items,and transfers
Change in net assets
Net assets,beginning
Prior period adjustment
Net assets,beginning,as restated •
Net assets,ending
The notes to the financial statements are an integral part of this statement.
27
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Net(Expense)Revenue and
Changes in Net Assets Component Units
Waco Health
Primary Government Central Waco Facilities
"� Governmental Business-type Development Development
Activities Activities Total Corporation Corporation
$( 7,906,846) $ - $( 7,906,846) $ - $ -
( 5,090,126) - ( 5,090,126) - -
( 34,466,999) - ( 34,466,999) - -
-
( 8,129,113) - ( 8,129,113) - -
- ( 1,994,151) - ( 1,994,151) - -
307,957 - 307,957 - -
( 2,578,876) - ( 2,578,876) - -
m•
( 59,858,154) • - ( 59,858,154) - -
- 2,356,187 2,356,187 - -
M - 1,575,549 1,575,549 - -
- 1,102,335 1,102,335 - -
"1 - ( 206,266) ( 206,266) - -
- ( 1,908,396) ( 1,908,396) - -
- ( 197,209) ( 197,209) - -
- ( 746,053) ( 746,053) - -
- ( 97,876) ( 97,876) - -
-� - ( 392,720) ( 392,720) - -
- 1,485,551 1,485,551 - _ -
$( 59,858,154) $ 1,485,551 $( 58,372,603) $ - $ -
`� $ - $ - $ - $ - $ -
$ 19,173,975 - 19,173,975 - -
6,572,445 - 6,572,445 - -
- 1,331,035 - 1,331,035 - -
23,313,374 - 23,313,374 - -
10,348,255 - 10,348,255 - -
- 1,491,844 1,491,844 - -
---1 364,887 - 364,887 - -
3,043,199 1,019,764 4,062,963 123 505
159,146 - 159,146 - -
--'\ 405,677 ( 405,677) - - -
64,711,993 2,105,931 66,817,924 123 505
4,853,839 3,591,482 8,445,321 123 505
143,155,240 127,359,636 270,514,876 5,382 22,096
177,666 ( 126,140) 51,526 - -
143,332,906 127,233,496 270,566,402 5;382 22,096
$ 148,186,745 $ 130,824,978 $ 279,011,723 $ 5,505 $ 22,601
h
1
-- 28
CITY OF WACO, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30,2002
Other Total
Governmental Governmental
General Funds Funds
ASSETS
Cash and investments $ 17,115,076 $ 21,208,883 $ 38,323,959
Receivables(net of allowances for uncollectibles)
Accounts 2,663,620 235,986 2,899,606
Special assessments - 82,672 82,672
Taxes 5,115,189 399,987 5,515,176
Notes 84,093 1,664,334 1,748,427
Due from other funds 1,602,290 - 1,602,290
Advance from other funds 270,093 168,368 438,461
Due from other governments - 883,405 883,405
Inventories 75,966 - 75,966
Real estate held for resale 48,470 58,850 107,320
Total assets $ 26,974,797 $ 24,702,485 $ 51,677,282
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable $ 1,519,947 $ 473,261 $ 1,993,208
Accrued liabilities 2,085,721 937,766 3,023,487
Deferred revenue 968,400 2,211,638 3,180,038
Due to other funds - 538,411 538,411
Deposits 195,210 - 195,210
Escrow funds 245,003 391 245,394
Total liabilities 5,014,281 4,161,467 9,175,748
Fund balances:
Reserved for.
Encumbrances 227,366 2,739,291 2,966,657 ,
Real estate held for resale 48,470 58,850 107,320
Notes receivable 84,093 - 84,093
Advances to other funds 270,093 168,368 438,461 -
Court security/technology 292,969 - 292,969
Debt service - 525,460 525,460
Purpose of trust - 455,729 455,729
Unreserved,reported in:
General fund
Designated for:
2002-2003 budget 3,582,249 - 3,582,249
Recreation • 373,102 - 373,102
•
Low Water Dam 4,831,572 - 4,831,572 _.
Contingencies 1,000,000 - 1,000,000
Undesignated 11,250,602 -
11,250,602
Special revenue funds - 6,829,089 6,829,089
Capital projects fund
Designated for street projects - 419,919 419,919
Undesignated - 9,344,312 9,344,312
Total fund balances 21,960,516 20,541,018 42,501,534
Total liabilities and fund balances $ 26,974,797 $ 24,702,485
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets used in governmental activities are not financial resources and,therefore,are not reported in the funds. 170,058,164 -
Other long-term assets are not available to pay for current-period expenditures and,therefore,are deferred in the funds. 3,191,446
An Internal Service Fund is used by management to charge the costs of certain capital assets to individual funds. The assets and
liabilities of the Internal Service Fund are included in the governmental activities in the statement of net assets. 63,967
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. ( 67,628,366)
Net assets of governmental activities $ 148,186,745
The notes to the financial statements are an integral part of this statement. .-
29
CITY OF WACO, TEXAS
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES
m GOVERNMENTAL FUNDS
FOR'1'HE YEAR ENDED SEPTEMBER 30,2002
-`)
Other Total
1 Governmental Governmental
General Funds Funds
REVENUES
-- Taxes $ 42,389,742 $ 7,989,310 $ 50,379,052
Business and occupation fees 10,348,255 - 10,348,255
—`; Permits,licenses and fees 922,553 1,031,730 1,954,283
Fines 1,645,423 - 1,645,423
Charges for services 1,408,528 - 1,408,528
-Th Investment earnings 512,708 2,466,164 2,978,872
Contributions 200,667 179,954 380,621
l Intergovernmental 832,017 6,625,780 7,457,797
Program income - 980,762 980,762
Other 4,681,055 761,634 5,442,689
-- Total revenues 62,940,948 20,035,334 82,976,282
EXPENDITURES -
Current:
General government 10,400,677 1,107,980 11,508,657
Public works 2,090,975 - 2,090,975
Public safety 36,217,494 1,209,979 37,427,473
Culture and recreation 8,800,829 65,815 8,866,644
--\ Housing and community development 96,870 4,107,575 4,204,445
Public health - 4,902,684 4,902,684
Capital outlay - 14,130,037 14,130,037
Debt service:
` Principal - 4,433,838 4,433,838
Interest and fiscal charges - 2,727,386 2,727,386
Total expenditures 57,606,845 32,685,294 90,292,139
_ \ EXCESS(DEFICIENCY)OF REVENUES
OVER(UNDER)EXPENDITURES 5,334,103 ( 12,649,960) ( 7,315,857)
O IHER FINANCING SOURCES(USES)
Transfers in 2,777,015 7,948,733 10,725,748
Transfers out ( 9,078,283) ( 1,637,470) ( 10,715,753)
Capital-related debt issued - 5,753,025 5,753,025
, Total other financing sources and uses ( 6,301,268) 12,064,288 5,763,020
1 NET CHANGE IN FUND BALANCES ( 967,165) ( 585,672) ( 1,552,837)
m FUND BALANCE,BEGINNING AS
-` PREVIOUSLY STATED 22,744,645 21,130,606 43,875,251
m
PRIOR PERIOD ADJUSTMENT 183,036 ( 3,916) 179,120
FUND BALANCE,BEGINNING AS RESTATED 22,927,681 21,126,690 44,054,371
FUND BALANCES,ENDING $ 21,960,516 $ 20,541,018 $ 42,501,534
1
The notes to the financial statements are an integral part of this statement.
30
.
CITY OF WACO, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30,2002
Amounts reported for governmental activities in the Statement of Activities (pages 27 - 28)
are different because:
Net change in fund balances-total governmental funds(page 30) $( 1,552,837)
Governmental funds report capital outlays as expenditures. However, in the statement of
activities the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. This is the amount by which capital outlays exceeded depreciation in
the current period. 5,187,625
The net effect of various miscellaneous transactions involving capital assets(i.e. , sales,trade-
ins,and donations)is to increase net assets. 2,651,733
Revenues in the statement of activities that do not provide current financial resources are not
reported as revenues in the funds. 161,187
The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt consumes the
current financial resources of governmental funds. Neither transaction, however, has any
effect on net assets. This amount is the net effect of these differences in the treatment of long-
term debt and related items. ( 991,155)
Some expenses reported in the statement of activities do not require the use of current
financial resources and,therefore,are not reported as expenditures in governmental funds. ( 912,623)
Internal Service Funds are used by management to charge the costs of certain capital assets to
individual funds. The net revenue of certain activities of internal service funds is reported
with governmental activities. 309,909
Change in net assets of governmental activities(pages 27-28) $ 4,853,839
The notes to the financial statements are an integral part of this statement.
31
CITY OF WACO, TEXAS
GENERAL FUND
--v STATEMENT OF REVENUES,EXPENDITURES
- AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
--- Final Budget-
Th Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
l
REVENUE
�
Taxes:
- Sales tax income $ 23,722,605 $ 23,722,605 $ 23,313,374 $( 409,231)
Property taxes 19,019,405 19,019,405 18,770,874 ( 248,531)
1 Interest and penalty on taxes 330,000 330,000 305,494 ( 24,506)
m Total taxes 43,072,010 43,072,010 42,389,742 ( 682,268)
Business and occupation fees:
y- Occupation fees 65,000 65,000 65,015 15
Gross receipts fees 10,372,711 10,483,026 10,283,240 ( 199,786)
Total business and occupation fees 10,437,711 10,548,026 10,348,255 ( 199,771)
4 Permits,licenses and fees:
-` Building permits 339,740 339,740 423,172 83,432
-' Plumbing permits 122,400 122,400 133,858 11,458
Electrical permits 161,000 161,000 180,342 19,342
Electrical licenses 45,000 45,000 45,319 319
Heating and air conditioning licenses 75,324 75,324 92,277 16,953
Fire inspection fees 17,500 17,500 13,176 ( 4,324)
- , House moving permits 240 240 228 ( 12)
Subdivision fees 33,000 33,000 34,181 1,181
-. Total permits,licenses and fees 794,2,04 794,204 922,553 128,349
M Fines:
Auurtfines 2,004,390 1,858,157 1,584,109 ( 274,048)
to impound fees 60,000 60,000 61,314 1,314
Total fines 2,064,390 1,918,157 1,645,423 ( 272,734)
Charges for services:
Recreation 499,597 499,597 423,579 ( 76,018)
Weed mowing 30,000 30,000 25,000 ( 5,000)
Library fees 46,691 51,691 47,665 ( 4,026)
--, Animal pick-up 6,500 6,500 3,825 ( 2,675)
Grounds maintenance 41,073 41,073 41,073 -
Graphics 61,395 84,000 99,650 15,650
Airport security services - 805,730 767,736 ( 37,994)
Total charges for services 685,256 1,518,591 1,408,528 ( 110,063)
_ (continued)
- 32
CITY OF WACO, TEXAS
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
REVENUE (Continued)
Interest on investments $ 784,806 $ 384,806 $ 512,708 $ 127,902
Contributions 143,062 143,062 200,667 57,605
Intergovernmental 817,836 817,836 832,017 14,181
Other:
Indirect expense reimbursements 3,716,441 3,716,441 3,706,046 ( 10,395)
False alarm fines 10,500 10,500 13,130 2,630 ,
BSC civil penalties - - 726 726
Rents from real estate 120,440 120,440 129,158 8,718
Miscellaneous revenue 233,100 233,100 431,662 198,562
Sale of other scrap 25,000 25,000 13,847 ( 11,153)
Zoning applications 15,000 15,000 12,706 ( 2,294)
Commission from sale of mixed drinks 265,000 265,000 279,057 14,057
Commission on municipal court fines 100,000 100,000 • 62,383 ( 37,617)
Commission on concessions 11,500 11,500 7,240 ( 4,260)
Garage sale permits 16,000 16,000 14,958 ( 1,042)
Special assessments 12,500 12,500 10,142 ( 2,3,,58)
Total other 4,525,481 4,525,481 4,681,055 155,574 '
Total revenue 63,324,756 63,722,173 62,940,948 ( 781,225)
(continued)
33
•
CITY OF WACO, TEXAS
GENERAL FUND
--, STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
, (Continued)
�l FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
-- Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
-- EXPENDITURES
GENERAL GOVERNMENT
Administrative services:
Salaries and wages $ 933,695 $ 923,643 $ 846,964 $ 76,679
- - Employee benefits 254,285 251,452 239,220 12,232
Purchased professional/technical services 28,910 26,910 29,426 ( 2,516)
__ Purchased property services 122,005 104,405 33,855 70,550
�' Maintenance 20,996 17,996 17,794 202
-, Other purchased services 124,218 126,218 105,465 20,753
Supplies 164,502 170,002 162,372 7,630
Capital expenditures 5,500 3,000 - 3,000
Other 600,550 594,058 455,369 138,689
Total administrative services 2,254,661 2,217,684 1,890,465 327,219
--') City Secretary:
Salaries and wages 189,048 189,048 186,989 2,059
' Employee benefits 54,135 54,135 52,164 1,971
Purchased professional/technical services 73,345 67,500 50,120 17,380
_) Purchased property services 611 611 378 233
Maintenance 2,883 2,883 1,470 1,413
Other purchased services 30,188 30,188 29,991 197
Supplies 7,036 12,881 11,792 1,089
Total city secretary 357,246 357,246 332,904 24,342
Finance services:
Salaries and wages 683,546 683,546 618,330 65,216
Employee benefits 178,653 178,653 158,409 20,244
1 Purchased professional/technical services 7,900 7,900 15,589 ( 7,689)
Maintenance 745 745 1,063 ( 318)
Other purchased services 29,739 29,739 27,327 2,412
;l
Supplies 32,659 32,659 41,929 ( 9,270)
Other 36,000 36,000 25,161 10,839
-- Total finance services 969,242 969,242 887,808 81,434
(continued)
i
. 34
CITY OF WACO, TEXAS _
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002 ,
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued) -
GENERAL GOVERNMENT(Continued)
Legal services:
Salaries and wages $ 582,208 $ 545,249 $ 513,977 $ 31,272
Employee benefits 144,807 144,807 124,520 20,287
Purchased professional/technical services 55,000 91,959 122,196 ( 30,237) '-.
Purchased property services - 200 200 -
Maintenance 400 400 194 206
Other purchased services 31,346 31,346 29,631 1,715
Supplies 9,600 9,600 25,096 ( 15,496) ,-
Capital expenditures 18,500 18,500 - 18,500
Total legal services 841,861 842,061 815,814 26,247
Planning services:
Salaries and wages 294,991 294,991 289,409 5,582
Employee benefits 76,871 76,871 74,975 1,896
Purchased professional/technical services - - 2,885 ( 2,885)
Purchased property services - 4,100 5,179 ( 1,079)
Maintenance 600 600 50 550
Other purchased services 33,724 33,724 17,788 15,936
Supplies 24,582 24,582 18,720 5,862
Total planning services 430,768 434,868 409,006 25,862
Human resources:
Salaries and wages 437,213 437,213 432,747 4,466
Employee benefits 118,591 128,591 125,482 3,109
Purchased professional/technical services 73,419 47,024 37,368 9,656
Purchased property services - - 1,492 ( 1,492)
Maintenance 889 889 544 345
Other purchased services 58,688 58,688 52,779 5,909
Supplies 22,611 39,006 41,610 ( 2,604)
Other 10,506 10,506 197 10,309
Total human resources 721,917 721,917 692,219 29,698
(continued)
tii
35
CITY OF WACO, TEXAS
-, GENERAL FUND
- STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Th Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued) •
- , GENERAL GOVERNMENT(Continued)
Municipal information:
Salaries and wages $ 255,783 $ 255,783 $ 252,150 $ 3,633
'-, Employee benefits 73,303 73,633 71,764 1,869
Purchased professional/technical services 4,100 2,100 2,298 ( 198)
_ Maintenance 5,000 9,470 11,073 ( 1,603)
Other purchased services 15,765 15,095 15,482 ( 387)
-. Supplies 15,200 13,070 13,611 ( 541)
-' Other 22,000 84,000 71,552 12,448
__ Total municipal information 391,151 453,151 437,930 15,221
-
Information technology services:
Salaries and wages 556,054 556,054 536,266 19,788
"-. Employee benefits 145,961 145,961 137,023 8,938
l Purchased professional/technical services 106,700 106,700 69,563 37,137
Maintenance 311,710 311,710 235,228 76,482
m. Other purchased services 196,487 196,487 353,323 ( 156,836)
Supplies 166,700 211,700 256,090 ( 44,390)
Capital expenditures 494,859 449,859 343,153 106,706
Total information technology services 1,978,471 1,978,471 1,930,646 47,825
Purchasing services:
Salaries and wages 236,681 235,681 238,212 ( 2,531)
"--, Employee benefits 63,881 63,881 • 63,041 840
Purchased professional/technical services 100 100 - 100
Purchased property services 528 528 - 528
Maintenance 460 460 641 ( 181)
Other purchased services 17,195 16,195 12,870 3,325
Supplies 13,235 12,235 12,590 ( 355)
_. Total purchasing services 332,080 329,080 327,354 1,726
,
(continued)
36
j=.
CITY OF WACO, TEXAS
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued)
GENERAL GOVERNMENT(Continued)
Facilities:
Salaries and wages $ 840,016 $ 840,016 $ 834,099 $ 5,917
Employee benefits 265,014 265,014 258,742 6,272
Purchased professional/technical services 28,000 28,000 41,094 ( 13,094) ,
Purchased property services 6,219 6,219 14,438 ( 8,219)
Maintenance .276,331 273,331 282,087 ( 8,756)
Other purchased services 56,087 56,087 55,001 1,086
Supplies 174,450 181,366 157,956 23,410
Capital expenditures 25,000 21,084 26,272 ( 5,188)
Total facilities 1,671,117 1,671,117 1,669,689 1,428
Contributions:
McLennan County 82,527 82,527 88,641 ( 6,114)
Greenwood Cemetery . 1,500 1,500 1,500 -
H.O.T. Council of Governments - - 7,507 ( 7,507)
Cen-Tex Economic Development 600 600 - 600
Peoples Cemetery Association 1,500 1,500 750 750
McLennan County Appraisal District 389,000 389,000 385,025 3,975
Total contributions 475,127 475,127 483,423 ( 8,296)
Miscellaneous:
Salaries and wages ( 604,934) ( 604,934) 4,021 ( 608,955)
Employee benefits ( 112,333) ( 112,333) 71,189 ( 183,522) r
Purchased professional/technical services 170,000 170,000 220,806 ( 50,806) --.
Purchased property services 159,434 159,434 1,020 158,414 _
Maintenance - - 6,339 ( 6,339)
Other purchased services 1,500 1,500 487 1,013
Supplies 16,125 16,125 5,740 10,385
Other 123,337 123,337 213,817 ( 90,480)
Total miscellaneous ( 246,871) ( 246,871) 523,419 ( 770,290)
Total general government 10,176,770 10,203,093 10,400,677 ( 197,584)
(continued)
37
CITY OF WACO, TEXAS .
_
GENERAL FUND
Th
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
"h (Continued)
,� FOR THE YEAR ENDED SEPTEMBER 30,2002
�>
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued)
HOUSING AND COMMUNITY DEVELOPMENT
Neighborhood services:
Salaries and wages $ 51,990 $ 51,990 $ 41,831 $ 10,159
Employee benefits 12,935 12,935 10,112 2,823
Purchased professional/technical services 1,500 1,500 200 1,300
^i Purchased property services 3,112 3,112 - 3,112
Other purchased services 14,215 9,715 5,320 4,395
Supplies 5,700 5,700 2,955 2,745
Total neighborhood services 89,452 84,952 60,418 24,534
Housing services:
Salaries and wages 23,935 23,935 24,375 ( 440)
Employee benefits 6,105 6,105 6,086 19
T Other purchased services 6,500 6,500 5,500 1,000
Supplies _ 750 750 491 259
_1 Total housing services 37,290 37,290 36,452 838
-. Total housing and community development 126,742 122,242 96,870 25,372
F PUBLIC WORKS
-. Streets and drainage services:
m Salaries and wages 898,357 864,857 793,100 71,757
1 Employee benefits 321,136 321,136 280,093 41,043
Purchased professional/technical services 259,872 244,568 235,484 9,084
Purchased property services 126,453 - - -
Maintenance 393,947 411,925 395,079 16,846
Other purchased services 119,717 246,170 147,793 98,377
Supplies 117,753 144,050 63,323 80,727
Capital expenditures - 165,393 176,103 ( 10,710)
Total streets and drainage services 2,237,235 2,398,099 2,090,975 307,124
m Total public works 2,237,235 2,398,099 2,090,975 307,124
(continued)
1 38
j \
CITY OF WACO, TEXAS _
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued) '
PUBLIC SAFETY
Municipal court:
Salaries and wages $ 405,417 $ 394,906 $ 375,002 $ 19,904
Employee benefits 109,212 109,212 100,994 8,218
Purchased professional/technical services 19,724 17,943 15,300 2,643
Maintenance 1,295 1,295 1,196 99
Other purchased services 33,680 31,760 25,388 6,372
Supplies 49,860 59,371 55,466 3,905
Capital expenditures - 73,014 70,233 2,781
Other 2,348 2,348 1,717 631
Total municipal court 621,536 689,849 645,296 44,553
Tnspection services:
Salaries and wages 666,429 633,669 572,797 60,872
Employee benefits 183,757 175,279 156,280 18,999
Purchased professional/technical services 60,000 90,000 89,900 100
Purchased property services 27,946 32,146 6,355 25,791
Maintenance 14,377 14,377 16,949 ( 2,572)
Other purchased services 54,240 53,240 42,752 10,488
Supplies 47,178 48,178 63,612 ( 15,434)
Total inspection services 1,053,927 1,046,889 948,645 98,244
Emergency management services:
Salaries and wages 58,401 58,401 57,172 1,229 _
Employee benefits 14,461 14,461 13,849 612
Purchased professional/technical services 2,500 2,500 1,800 700
Purchased property services - - 1,321 ( 1,321)
Maintenance 10,380 10,070 3,261 6,809
Other purchased services 13,836 13,836 11,267 2,569
Supplies 16,092 16,402 12,638 3,764
Other 32,693 32,693 32,693 -
Total emergency management services 148,363 148,363 134,001 14,362
(continued)
39
CITY OF WACO,TEXAS
._,l
GENERAL FUND
-\ STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
= Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
`- EXPENDITURES(Continued)
m PUBLIC SAFETY
Fire services:
Salaries and wages $ 9,089,867 $ 8,821,400 $ 8,735,989 $ 85,411
Th Employee benefits 2,565,917 2,513,067 2,395,158 117,909
1 Purchased professional/technical services 258,400 255,683 225,525 30,158
Purchased property services 43,481 43,481 34,032 9,449
Maintenance 140,670 140,670 144,633 ( 3,963)
Other purchased services 274,829 274,829 266,305 8,524
Supplies 361,901 381,784 379,731 2,053
�} Capital expenditures 20,000 - 65,177 ( 65,177)
1 Total fire services 12,755,065 12,430,914 12,246,550 184,364
Police services:
Salaries and wages 13,043,397 13,621,727 13,474,073 147,654
m Employee benefits 3,742,561 3,693,961 3,752,995 ( 59,034)
Purchased professional/technical services 200,143 187,543 173,491 14,052
Purchased property services 15,352 15,352 8,695 6,657
Maintenance 582,828 582,828 665,496 ( 82,668)
--, Other purchased services 774,524 774,524 770,498 4,026
Supplies 751,674 741,048 732,372 8,676
Capital expenditures - - 41,171 ( 41,171)
1 Contracts with others 44,650 44,650 44,650 -
Total police services 19,155,129 19,661,633 19,663,441 ( 1,808)
-1
1
m
m (continued)
_ 40
`_
CITY OF WACO, TEXAS
GENERAL FUND `,
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXPENDITURES(Continued)
PUBLIC SAFETY (Continued)
Traffic services: _
Salaries and wages $ 584,383 $ 533,784 $ 501,704 $ 32,080
Employee benefits 175,584 175,584 152,742 22,842
Purchased professional/technical services - - 4,500 ( 4,500) --
Purchased property services 4,099 4,099 5,080 ( 981)
Maintenance 231,200 214,175 197,322 16,853
Other purchased services 49,929 49,929 46,355 3,574
Supplies 1,346,281 1,351,196 1,309,003 42,193
Capital expenditures 205,000 236,000 _ 205,000 31,000 '
Total traffic services 2,596,476 2,564,767 2,421,706 143,061
Contributions:
Animal shelter 157,855 157,855 157,855 -
Total contributions 157,855 157,855 157,855 -
Total public safety 36,488,351 36,700,270 36,217,494 482,776
CULTURE AND RECREATION
Library services:
Salaries and wages 1,328,866 1,328,866 1,286,820 42,046
Employee benefits 355,976 355,976 336,299 19,677
Purchased professional/technical services 74,215 71,515 58,150 13,365
Purchased property services 78,497 78,497 61,090 17,407
Maintenance 58,148 60,848 58,263 2,585
Other purchased services 112,751 112,751 101,257 11,494 _
Supplies 131,175 136,175 139,984 ( 3,809)
Capital expenditures 225,000 225,000 225,329 ( 329)
Other 75,000 75,000 75,000 -
Total library services 2,439,628 2,444,628 2,342,192 102,436
(continued)
41
CITY OF WACO, TEXAS
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
}1 AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
�, FOR THE YEAR ENDED SEPTEMBER 30,2002
1
Variance with
Final Budget-
Budgeted Amounts Actual Positive
-\ Original Final Amounts (Negative)
EXPENDITURES(Continued)
- CULTURE AND RECREATION(Continued)
Parks:
- , Salaries and wages $ 2,610,105 $ 2,553,977 $ 2,480,567 $ 73,410
Employee benefits 795,441 783,966 735,709 48,257
Purchased professional/technical services 181,451 178,451 217,989 ( 39,538)
n Purchased property services 326,070 - - -
--N Maintenance 363,299 363,299 349,385 13,914
Other purchased services 267,835 266,518 212,658 53,860
Supplies 505,888 504,027 494,716 9,311
) Capital expenditures 45,700 47,017 68,265 ( 21,248)
Other ( 97,349) 228,721 264,484 ( 35,763)
M Total parks 4,998,440 4,925,976 4,823,773 102,203
Recreation services:
Salaries and wages 509,970 488,970 473,799 15,171
Employee benefits 128,910 126,839 120,296 6,543
Purchased professional/technical services 29,047 19,047 41,369 ( 22,322)
m Purchased property services 2,968 2,968 1,762 1,206
Maintenance 35,840 33,515 13,330 20,185
Other purchased services 37,403 37,403 32,342 5,061
-� Supplies 199,224 195,224 186,020 9,204
Total recreation services 943,362 903,966 868,918 35,048
Th Performance Fund:
Salaries and wages 248,657 248,657 270,241 ( 21,584)
Employee benefits 44,180 44,180 36,501 7,679
M Purchased professional/technical services 244,320 239,320 241,175 ( 1,855)
Purchased property services 12,000 - - -
Maintenance 15,700 15,700 366 15,334
Other purchased services 47,931 59,931 46,482 13,449
Supplies 114,902 114,902 104,442 10,460
Other 5,300 10,300 66,739 ( 56,439)
.--1 Total performance fund 732,990 732,990 765,946 ( 32,956)
} Total culture and recreation 9,114,420 9,007,560 8,800,829 206,731
,1 Total expenditures 58,143,518 58,431,264 57,606,845 824,419
- , (continued)
m 42
CITY OF WACO, TEXAS
GENERAL FUND
STATEMENT OF REVENUES,EXPENDITURES
AND CHANGES IN FUND BALANCES-BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30,2002
Variance with
Final Budget-
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
EXCESS OF REVENUES
OVER EXPENDITURES $ 5,181,238 $ 5,290,909 $ 5,334,103 $ 43,194
OTHER FINANCING SOURCES(USES)
Operating transfers from other funds 2,793,804 2,793,804 2,777,015 ( 16,789)
Operating transfers to other funds:
Water - - ( 175,630) ( 175,630)
Cameron Park Zoo ( 1,065,181) ( 990,145) ( 990,145)Street reconstruction ( 3,885,972) ( 3,885,972) ( 3,885,972) -
Cottonwood Creek Golf Course ( 240,667) ( 205,667) ( 205,667) -
Transit ( 93,685) - - -
Airport services ( 57,576) ( 39,076) ( 39,076) -
Convention services ( 63,541) ( 232,541) ( 232,541) -
Health services ( 1,963,271) ( 1,963,271) ( 1,963,271) -
Ranger Hall of Fame ( 208,399) ( 214,658) ( 214,658) -
Insurance - ( 323,717) ( 323,717) -
Economic Development Incentive Fund ( 750,000) ( 750,000) ( 750,000) -
Housing demo-lot clearing ( 75,000) ( 75,000) ( 75,000) -
General obligation debt service ( 75,000) ( 75,000) ( 75,000) - \
Grant(various police) ( 301,749) ( 301,748) ( 147,606) 154,142
Total other financing sources and uses ( 5,986,237) ( 6,262,991) ( 6,301,268) ( 38,277)
NET CHANGE IN FUND BALANCES ( 804,999) ( 972,082) ( 967,165) 4,917 ,
FUND BALANCE,BEGINNING AS
PREVIOUSLY STATED 22,744,645 22,744,645 22,744,645 -
PRIOR PERIOD ADJUSTMENT - 183,036 183,036
FUND BALANCE,BEGINNING
AS RESTATED 22,744,645 22,744,645 22,927,681 183,036
FUND BALANCES,ENDING $ 21,939,646 $ 21,772,563 $ 21,960,516 $ 187,953
The notes to the financial statements are an integral part of this statement.
43
' J ) ) ) j ) J ) I ) ,) j ) ) ) )
cr)
0
t-4
tcl
CITY OF WACO, TEXAS
STATEMENT OF NET ASSETS -
PROPRIETARY FUNDS
SEPTEMBER 30,2002
Business-type Activities-Enterprise Funds
Water Wastewater Solid Waste
ASSETS
Current assets:
Cash and investments $ 9,500,860 $ 11,264,058 $ 385,000
Accounts receivable,net of allowances 3,277,319 1,886,406 1,556,669
Due from other funds - 86,512 -
Due from other governments - - -
Inventories 125,038 7,758 -
Total current assets 12,903,217 13,244,734 1,941,669
Noncurrent assets:
Restricted cash and investments 39,892,383 14,816,177 1,517,106
Advances from other funds 125,336 390,833 -
Capital assets:
Land 569,802 143,498 9,879,134
Buildings 3,420,147 707,892 556,944
Improvements other than buildings 99,797,228 46,305,725 566,991
Equipment 5,329,661 3,238,444 15,575,313
Construction work in progress 19,464,797 7,220,007 65,939
Less:accumulated depreciation ( 42,130,727) ( 16,189,734) ( 16,225,476)
Total capital assets 86,450,908 41,425,832 10,418,845
Total noncurrent assets 126,468,627 56,632,842 11,935,951
Total assets 139,371,844 69,877,576 13,877,620
LIABILITIES
Current liabilities:
Accounts payable 229,309 78,100 34,621 -
Accrued liabilities 1,067,554 37,436 233,354
Deferred revenue - - -
Due to other funds - - 86,512 - -
Compensated absences 290,276 121,867 168,781
Escrow funds - - -
Revenue bonds payable - 1,883,111 3,484,003
Accrued interest payable - 323,873 91,350
Estimated claims and judgments - - - -
Total current liabilities 1,587,139 2,444,387 4,098,621
The notes to the financial statements are an integral part of this statement.
45
•
Th
1 Governmental
Business-type Activities-Enterprise Funds Activities-
Internal
Other Service
Funds Totals Funds
•
_ $ 925,427 $ 22,075,345 $ 3,003,415
117,396 6,837,790 1,994
13,078 99,590 -
' 520,113 520,113 -
193,558 326,354 72,015
1,769,572 29,859,192 • 3,077,424
M
m 372,358 56,598,024 -
- 516,169 -
865,266 11,457,700 38,800
23,090,131 27,775,114 439,263
1 18,635,329 165,305,273 118,289
7,737,012 31,880,430 854,073
1,060,872 27,811,615 100,000
-1 ( 23,047,146) ( 97,593,083) ( 903,426)
28,341,464 166,637,049 646,999
T 28,713,822 223,751,242 646,999
30,483,394 253,610,434 3,724,423
1 147,485 489,515 105,624
--` 411,501 1,749,845 451,759
97,012 97,012 -
•
898,355 984,867 178,602
-1 230,928 811,852 152,157
39,064 39,064 538
1 75,000 5,442,114 -
--) 9,562 424,785 -
- - 2,587,512
M' 1,908,907 10,039,054 3,476,192
l
Th
- (continued)
--) 46
CITY OF WACO, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS -
(Continued)
SEPTEMBER 30,2002
Business-type Activities-Enterprise Funds
Water Wastewater Solid Waste
LIABILITIES (Continued)
Current liabilities payable from
restricted assets:
Customer deposits $ 624,521 $ - $ -
Revenue bonds payable 2,370,073 - -
Accrued interest payable 489,750 - -
Deferred interest payable 2,011,336 -Accounts payable 129,330 396,876 45,100
Total current liabilities payable
from restricted assets 5,625,010 396,876 45,100
Noncurrent liabilities:
Refundable contracts 631,824 622,957 -
Accrued liabilities - - 1,781,468
Advances to other funds - - 390,833
Compensated absences 285,808 104,694 169,217
Revenue bonds payable 62,911,899 30,012,612 7,519,738
Deferred interest payable 585,070 - -
Total noncurrent liabilities 64,414,601 30,740,263 9,861,256
Total liabilities 71,626,750 33,581,526 14,004,977
NET ASSETS
Invested in capital assets,net of
related debt 56,141,789 23,911,828 648,594
Restricted for debt service 1,698,603 217,229 141,808
Unrestricted 9,904,702 12,166,993 ( 917,759)
Total net assets $ 67,745,094 $ 36,296,050 $( 127,357)
The notes to the fmancial statements are an integral part of this statement.
47
Governmental
Business-type Activities-Enterprise Funds Activities-
Internal
Other Service
Funds Totals Funds
Th
1
$ - $ 624,521 $ -
- 2,370,073 -
1 489,750 -
- 2,011,336 -
- 571,306 -
- 6,066,986 -
1 - 1,254,781 -
- 1,781,468 -
563,797 954,630 -
174,499 734,218 184,264
925,000 101,369,249 -
- 585,070 -
1,663,296 106,679,416 184,264
3,572,203 122,785,456 3,660,456
27,677,573 108,379,784 646,999
36,249 2,093,889 -
( 802,631) 20,351,305 ( 583,032)
$ 26,911,191 $ 130,824,978 $ 63,967
1
H
48
CITY OF WACO, TEXAS
STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS _
YEAR ENDED SEPTEMBER 30,2002 _
Enterprise Funds
Water Wastewater Solid Waste
OPERATING REVENUES
Charges for services $ 21,305,862 $ 15,096,526 $ 12,262,518
Net merchandise sales - - - \_
Contributions - - - --
Other 137,971 - 137,686
Total operating revenues 21,443,833 15,096,526 12,400,204
OPERATING EXPENSES
Salaries and wages 3,436,330 1,256,497 2,323,445
Employee benefits 1,020,413 364,984 761,479
Purchased professional/technical services 1,396,940 265,158 576,529
Purchased property services 17,124 5,383,850 -
Maintenance 854,496 670,781 1,309,543
Other purchased services 662,261 117,791 205,774
Supplies 2,632,918 305,603 809,138
Other 2,978,820 2,316,192 2,000,004 \
Depreciation 3,444,586 1,679,390 2,690,293
Total operating expenses 16,443,888 12,360,246 10,676,205
OPERATING INCOME(LOSS) 4,999,945 2,736,280 1,723,999
-
NONOPERATING REVENUES(EXPENSES)
Interest and investment revenue 704,700 289,626 9,086 ,
Rental income 144,753 - -
Miscellaneous revenue - - - _-
Hotel/motel tax - - -
Donations - - -
Intergovernmental revenue - - -
Intergovernmental expenses - - -
Interest expense and fiscal charges ( 2,863,587) ( 1,477,127) ( 621,664)
Total nonoperating revenues(expenses) ( 2,014,134) ( 1,187,501) ( 612,578)
INCOME(LOSS)BEFORE CONTRIBUTIONS
AND TRANSFERS 2,985,811 1,548,779 1,111,421
CAPITAL CONTRIBUTIONS 75,078 316,396 -
TRANSFERS IN 175,630 - -
TRANSFERS OUT ( 1,602,470) ( 360,247) ( 652,623)
CHANGES IN NET ASSETS 1,634,049 1,504,928 458,798
TOTAL NET ASSETS AT BEGINNING OF
YEAR AS PREVIOUSLY REPORTED 66,209,771 34,768,705 ( 583,353) ,_`
PRIOR PERIOD ADJUSTMENT ( 98,726) 22,417 ( 2,802)
TOTAL NET ASSETS AT BEGINNING _
OF YEAR,AS RESTATED 66,111,045 34,791,122 ( 586,155) ;i
TOTAL NET ASSETS AT END OF YEAR $,_ 67,745,094 $ 36,296,050 $( 127,357)
The notes to the fmancial statements are an integral part of this statement.
49
Th
/
Enterprise Funds
Internal
Other Service
1 Funds Totals Funds
1 $ 2,914,758 $ 51,579,664 $ 5,613,491
-\ 349,750 349,750 -
3,477 3,477 -
--N, 627,554 903,211 • 60,374
3,895,539 52,836,102 5,673,865 •
3,922,147 10,938,419 1,751,102
� 1,175,660 3,322,536 502,111
558,465 2,797,092 210,940
227,320 5,628,294 2,623
-1 558,609 3,393,429 36,277
935,103 1,920,929 771,570
1,300,518 5,048,177 208,602
1,173,317 8,468,333 2,283,840
1,962,331 9,776,600 51,823
M 11,813,470 51,293,809 5,818,888
( 7,917,931) 1,542,293 ( 145,023)
16,352 1,019,764 59,248
- 144,753 -
� 195,536 195,536
1,491,844 1,491,844
1 128,292 128,292 -
2,554,766 2,554,766 -
( 148,389) ( 148,389) -
-, ( 59,832) ( 5,022,210) -
4,178,569 ` 364,356 59,248
( 3,739,362) 1,906,649 ( 85,775)
—1, 1,699,038 2,090,512 -
2,034,031 2,209,661 482,340
- ( 2,615,340) ( 86,656)
( 6,293) 3,591,482 309,909
} 26,964,513 127,359,636 ( 244,488)
( 47,029) ( 126,140) ( 1,454)
1, 26,917,484 127,233,496 ( 245,942)
~' $ 26,911,191 $ 130,824,978 $ 63,967
1
1
50
CITY OF WACO, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30,2002
Enterprise Funds
Water Wastewater Solid Waste
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 21,643,006 $ 15,837,956 $ 12,454,038
Cash paid to suppliers for goods and services ( 8,070,500) ( 8,866,849) ( 4,719,043)
Cash paid to employees for services ( 4,457,665) ( 1,571,215) ( 3,076,626)
Net Cash Provided by(Used for)Operating Activities 9,114,841 5,399,892 4,658,369
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Hotel/motel tax - - -
Rental revenue 144,753 - -
Transfers in 175,630 - -
Transfers out ( 1,602,470) ( 360,247) ( 652,623)
Intergovernmental revenue - - -
Intergovernmental expenses - - -
Donations - - -
Passenger facility charges - - -
Loans to other funds - ( 477,345) -
Payments from other funds - - -
Net Cash Provided by(Used for)Noncapital
Financing Activities ( 1,282,087) ( 837,592) ( 652,623)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition of capital assets ( 10,421,533) ( 4,679,989) ( 720,113)
Capital grants and contributions - - -
Loan from other fund - - 390,833
Proceeds from debt issues 23,080,000 5,725,000 -
Principal paid on debt ( 2,310,106) ( 1,748,032) ( 3,074,443)
Interest paid on debt ( 4,649,348) ( 1,495,900) ( 657,515)
Net Cash Provided by(Used for)Capital and
Related Financing Activities 5,699,013 ( 2,198,921) ( 4,061,238)
CASH FLOWS FROM INVESTING ACTIVITIES
Earnings on investments 704,700 289,627 9,086
Net Cash Provided by Investing Activities 704,700 289,627 9,086
NET INCREASE(DECREASE)IN CASH
AND CASH EQUIVALENTS 14,236,467 2,653,006 ( 46,406)
CASH AND CASH EQUIVALENTS,BEGINNING OF YEAR 35,156,776 23,427,229 1,948,512
CASH AND CASH EQUIVALENTS,END OF YEAR $_ 49,393,243 $ 26,080,235 $ 1,902,106 The accompanying notes are an integral part of this fmancial statement.
51
I
Enterprise Funds
Internal
Other Service
Funds Totals Funds
$ 3,999,650 $ 53,934,650 $ 5,673,936
( 4,570,800) ( 26,227,192) ( 3,264,832)
( 5,019,109) ( 14,124,615) ( 2,242,175)
( 5,590,259) 13,582,843 166,929
1,491,844 1,491,844 -
- 144,753 -
2,034,031 2,209,661 482,340
1,699,774 ( 915,566) ( 86,656)
870,639 870,639 -
( 148,389) ( 148,389) -
128,292 128,292 -
195,536 195,536 -
- ( 477,345) -
101,188 101,188 -
6,372,915 3,600,613 395,684
( 2,161,383) ( 17,983,018) ( 228,148)
1,288,342 1,288,342 -
_ 390,833 -
- 28,805,000 -
( 70,000) ( 7,202,581) -
( 60,625) ( 6,863,388) -
( 1,003,666) ( 1,564,812) ( 228,148)
16,352 1,019,765 59,248
- 16,352 1,019,765 59,248
( 204,658) 16,638,409 393,713
1,502,442 62,034,959 2,609,702
$ 1,297,784 $ 78,673,368 $ 3,003,415
(continued)
52
CITY OF WACO, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
YEAR ENDED SEPTEMBER 30,2002
Enterprise Funds
Water Wastewater Solid Waste
Reconciliation of operating income(loss)to net cash _
provided(used)by operating activities:
Operating income(loss) $ 4,999,945 $ 2,736,280 $ 1,723,999
Adjustments to reconcile operating income(loss)
to net cash provided by(used for)operating activities:
Provision for uncollectible accounts receivable 129,004 64,986 59,789
Depreciation 3,444,586 1,679,390 2,690,293
Prior period adjustment - - ( 2,800)
Changes in assets and liabilities:
Decrease(increase)in assets:
Accounts receivable 58,026 676,444 9,977
Due from other funds - - -
Inventory 30,526 3,944 -
Increase(decrease)in liabilities:.
Accounts payable ( 156,299) 178,960 ( 42,277)
Accrued liabilities 597,831 9,620 199,990
Deferred revenue - 43,858
Due to other funds - ( 32,109)
Compensated absences payable ( 924) 50,268 7,649
Customer deposits 12,146 - -
Estimated claims and judgments - - -
Escrow funds - - -
Net Cash Provided by(Used for)Operations $ 9,114,841 $ 5,399,892 $ 4,658,369
Noncash investing,capital,and financing activities:
Contributions of capital assets $ 75,078 $ 316,396 $ -
The notes to the financial statements are an integral part of this statement.
53
Enterprise Funds
Internal
Other Service
Funds Totals Funds
$( 7,917,931) $ 1,542,293 $( 145,023)
- 253,779 -
1,962,331 9,776,600 51,823
( 47,029) ( 49,829) -
24,100 768,547 71 •
1,944 1,944 -
1,501 35,971 27,062
( 71,112) ( 90,728) ( 12,217)
220,147 1,027,588 ( 493,184)
( 20,370) 23,488 -
260,261 228,152 -
53,818 110,811 11,036
12,146 -
727,361
( 57,919) ( 57,919)
_h -
$( 5,590,259) $ 13,582,843 $ 166,929
$ - $ 391,474 $ -
•
54
CITY OF WACO, TEXAS
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30,2002
Agency
Funds
ASSETS
Cash and investments $ 1,821,649
Total assets $ 1,821,649
LIABILITIES
Due to other agencies and individuals 1,821,649
Total liabilities $ 1,821,649
•
•
The notes to the financial statements are an integral part of this statement.
55
CITY OF WACO, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2002
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of Waco, Texas is a municipal corporation governed by an elected mayor and a
five-member Council. The accompanying financial statements present the government and
its component units, entities for which the government is considered to be financially
accountable. Each discretely presented component unit is reported in a separate column in
the government-wide financial statements (see note below for description) to emphasize that
it is legally separate from the government.
Discretely Presented Component Units — The component units' column in the combined
financial statements includes the financial data of the City's two component units.
Central Waco Development Corporation: The Central Waco Development
Corporation is an industrial development corporation authorized to act on behalf of
the City to promote and develop commercial, industrial and manufacturing
enterprises. The Corporation is prohibited from issuing bonded debt without the
approval of the City Council.
Waco Health Facilities Development Corporation: Waco Health Facilities
Development Corporation is a public,nonprofit corporation organized as a result of
the Health Facilities Development Act. Specifically, the corporation was formed to
issue obligations in order to finance all or part of the cost of one or more health
facilities to assist the maintenance of public health. The Corporation is prohibited
from issuing bonded debt without the approval of the City Council.
Complete financial statements for each of the individual component units may be obtained
from the City of Waco finance department.
B. Government-wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement
of activities) report information on all of the nonfiduciary activities of the primary
government and its component units. For the most part, the effect of interfund activity has
been removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenue, are reported separately from business-like activities,
which rely to a significant extent on fees and charges for support. Likewise, the primary
government is reported separately from certain legally separate component units for which
the primary government is financially accountable.
(continued)
56
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
B. Government-wide and Fund Financial Statements (Continued) •
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenue. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenue includes 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment, and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not properly included among program revenue are reported
instead as general revenue.
Separate financial statements are provided for governmental funds, proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual Enterprise Funds are
reported as separate columns in the fund financial statements.
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and
fiduciary fund financial statements. Revenue is recorded when earned and expenses are
recorded when a liability is incurred, regardless of the timing of related cash flows. Property
taxes are recognized as revenue in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
Governmental fund fmancial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenue is recognized as
soon as it is both measurable and available. Revenue is considered to be available when it is
collectible within the current period or soon enough thereafter to pay liabilities of the current
period. For this purpose, the government considers revenue to be available if collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded
when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenue
of the current fiscal period. All other revenue items are considered to be measurable and
available only when cash is received by the City.
(continued)
57
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation
(Continued)
The government has the following major governmental funds:
The General Fund is the City's primary operating fund. It accounts for all
financial resources of the general government, except those required to be
accounted for in another fund.
The government reports the following major proprietary funds:
The Water Fund accounts for the activities necessary for the provision of water
services.
The Wastewater Fund accounts for the activities necessary for the provision of
sewer services.
The Solid Waste Fund accounts for the activities necessary for the provision of
sanitation services.
Additionally,the government reports the following fund types:
Internal Service Funds account for insurance/risk management services, fleet
management services, and engineering services provided to other departments or
agencies of the government, or to other governments, on a cost reimbursement
basis.
The Permanent Fund is used to account for resources legally held in Trust.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund fmancial statements to
the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent
private-sector guidance for their business-like activities and Enterprise Funds, subject to this
same limitation. The City has elected not to follow subsequent private-sector guidance.
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are charges between the City's water and
wastewater function and various other functions of the government. Elimination of these charges
would distort the direct costs and program revenue reported for the various functions concerned.
Amounts reported as program revenues include: 1) charges to customers or applicants for goods,
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as
general revenues rather than as program revenue. Likewise, general revenue includes all taxes.
(continued)
58
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. Measurement Focus,Basis of Accounting and Financial Statement Presentation
(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 City's Enterprise Funds and Internal Service Funds are
charges to customers for sales and services. Operating expenses for Enterprise Funds and
Internal Service Funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenue and expenses not meeting this defmition are
reported as nonoperating revenue and expenses.
D. Assets,Liabilities and Net Assets or Equity
Deposits and Investments
The government's cash and cash equivalents are considered to be cash on hand, demand
deposits, government securities, mutual funds, repurchase agreements, and the Texas Local
Government Investment Pool.
State statutes authorize the government and the District to invest in obligations of the U. S.
Treasury, commercial paper, corporate bonds, repurchase agreements, and the State
Treasurer's Investment Pool
Investments for the government, as well as for its component units, are reported at fair value.
The State Treasurer's Investment Pool operates in accordance with appropriate state laws and
regulations. The reported value of the pool is the same as the fair value of the pool shares.
Receivables and Payables
Activity between funds that are representative of lending/borrowing arrangements
outstanding at the end of the fiscal year are referred to as either "due to/from other funds"
(i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the
noncurrent portion of interfund loans). All other outstanding balances between funds are
reported as "due to/from other funds." Any residual balances outstanding between the
governmental activities and business-type activities are reported in the government-wide
financial statements as"internal balances."
Advances between funds, as reported in the fund financial statements, are offset by a fund
balance reserve account in applicable governmental funds to indicate that they are not
available for appropriation and are not expendable available financial resources.
(continued)
59
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
Receivables and Payables (Continued)
All trade and property tax receivables are shown net of an allowance for uncollectibles.
Trade accounts receivable in excess of 180 days comprise the trade accounts receivable
allowance for uncollectibles. The property tax receivable allowance is equal to 12.7 percent
of outstanding property taxes at September 30,2002.
Property taxes are levied on October 1 and attach as an enforceable lien on property as of
January 1. Statements are mailed on October 1, or as soon thereafter as possible, and are due
upon receipt. All unpaid taxes become delinquent if not paid before February 1 of the
following year.
Inventories and Prepaid Items
All inventories are valued using the average cost method. Inventories of governmental funds
are recorded as expenditures when consumed rather than when purchased.
Restricted Assets
Certain proceeds of the Enterprise Fund revenue bonds and certain resources set aside for
their repayment, are classified as restricted assets on the balance sheet because their use is
limited by applicable bond covenants.
-,‘
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads,
bridges, sidewalks and similar items) are reported in the applicable governmental or
business-type activities columns in the government-wide financial statements. The City
defines capital assets as assets with an initial, individual cost of more than $5,000 (amount
not rounded) and an 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 estimated fair market 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 are 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. The total interest expense
incurred during the current fiscal year was $5,781,216 for business-type activities. Of this
amount, $759,006 was included as part of the cost of capital assets under construction in
connection with water and wastewater fund construction projects.
(continued)
60
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity(Continued)
Capital Assets (Continued)
Property, plant and equipment is depreciated using the straight-line method over the
following useful lives:
Assets Years
Landfill improvements 3-5
Buildings 20-50
Improvements 5-50
Equipment 5-20
Infrastructure(streets and drainage) 35-125
Compensated Absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick
pay benefits. All vacation pay is accrued when incurred in the government-wide and
proprietary fund financial statements. A liability is reported for a portion of accumulating
sick leave when it is probable that the government will make termination payments.
Long-term Obligations
In the government-wide financial statements and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities, or proprietary fund type
statement of net assets.
In the fund financial statements, the face amount of debt issued is reported as other financing
sources for the governmental fund types.
For governmental fund types, bond premiums and discounts, as well as issuance costs, are
recognized during the current period. Bond proceeds are reported as an other financing source.
Issuance costs, even if withheld from the actual net proceeds received, are reported as
expenditures. For proprietary fund types, bond premiums and discounts, as well as issuance
costs, are charged to current operations rather than being deferred and amortized due to the
• relatively immaterial effect on the basic financial statements taken as a whole.
Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management
plans that are subject to change.
61
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance — total
governmental funds and net assets —governmental activities as reported in the government-wide
statement of net assets. One element of that reconciliation explains, "long-term liabilities,
including bonds payable, are not due and payable in the current period and therefore are not
reported in the funds." The details of this $67,628,366 difference are as follows:
Serial Bonds and Certificates of Obligation $ 52,546,586
Accrued interest payable 348,055
Capitalized lease obligations 2,295,489
Compensated absences 10,817,333
Notes payable 90,756
Refundable contracts 700,147
Contracts payable 830,000
Net adjustment to reduce fund balance- total
governmental funds to arrive at net assets
governmental activities $ 67,628,366,
Explanation of Certain Differences Between the Governmental Fund Statement of Revenues
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities
The governmental fund statement of revenue, expenditures and changes in fund balances
includes a reconciliation between net changes in fund balances — total governmental fund and
changes in net assets of governmental activities as reported in the government-wide statement of
activities. One element of that reconciliation explains, "Governmental funds report capital
outlays as expenditures. However, in the statement of activities the cost of those assets is
allocated over their estimated useful lives and reported as depreciation expense." The details of
this $5,187,625 difference are as follows:
Capital outlay $ 12,821,082
Depreciation expense ( 7,633,457)
Net adjustment to increase net changes in fund balances
total governmental funds to arrive at changes in net
assets of governmental activities $ 5,187,625
Another element of that reconciliation states, "The net effect of various miscellaneous
transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net
assets." The details of this $2,651,733 difference are as follows:
(continued)
62
2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(Continued)
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities (Continued)
Donations of capital assets increase net assets in the statement
of activities, but do not appear in the governmental funds
because they are not fmancial resources. $ 2,651,733
Net adjustment to increase net changes in fund
balances-total governmental funds to arrive at
changes in net assets of governmental activities $ 2,651,733
Another element of that reconciliation states, "Revenues in the statement of activities that do not
provide current financial resources are not reported as revenues in the funds." The details of this
$161,187 difference are as follows:
HUD program income $ 63,580
Property taxes 97,607
Net adjustment to increase net changes in fund balances-
total governmental funds to arrive at changes in net
assets of governmental activities $ 161,187
Another element of that reconciliation states, "The issuance of long-term debt (e.g., bonds, leases)
provides current financial resources to governmental funds, while the repayment of the principal of
long-term debt consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. The details of this $991,155 difference are as
follows:
Debt issued or incurred:
Capital lease financing $( 1,803,025)
Issuance of general obligation bonds ( 3,950,000)
Principal repayments:
General obligation debt 4,433,838
Capital lease financing 328,032
Net adjustment to decrease net changes in fund balances-
total governmental funds to arrive at changes in net
assets of governmental activities $( 991,155)
Another element of that reconciliation states, "Some expenses reported in the statement of
activities do not require the use of current financial resources and therefore are not reported as
expenditures in governmental funds." The details of this $912,623 difference are as follows:
Compensated absences $( 1,061,133)
Accrued interest 148,510
Net adjustment to decrease net changes in fund balances-
total governmental funds to arrive at changes in net
assets of governmental activities $( 912,623)
(continued)
63
•
3. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Budgetary Information
Annual budgets are adopted on a basis consistent with generally accepted accounting principles.
Annual appropriated budgets are adopted for the General Fund, Health Fund and General
Obligation Debt Service Fund. All annual appropriations lapse at fiscal year-end. Project-length
financial plans are adopted for all capital projects funds and the grant fund.
Prior to August 1, the City Manager submits to the City Council a proposed operating budget for
the fiscal year commencing the following October 1. The operating budget includes proposed
expenditures and the means of financing them. A public hearing is conducted to obtain taxpayer
comments. Prior to October 1, the budget is legally enacted through passage of an ordinance.
Expenditures may not legally exceed appropriations at the fund level for each legally adopted
annual operating budget. The City Council made supplemental budgetary appropriation changes
during the fiscal year. In addition, transfer of appropriations between funds requires the approval
of the City Council. The reported budgetary data has been revised for these amendments legally
authorized during the year.
Encumbrance accounting is employed in governmental funds. Encumbrances (e.g. purchase
orders, contracts) outstanding at year-end are reported as reservations of fund balances and do
not constitute expenditures or liabilities because the commitments will be re-appropriated and
honored during the subsequent year.
Deficit Fund Equity
Deficit net assets in individual funds at September 30, 2002, consist of the following:
Invested in
Capital Assets
Net of Restricted Unrestricted Total
Related Debt Net Assets Net Assets Net Assets
Enterprise Funds:
Solid Waste $ 648,594 $ 141,808 $( 917,759) $( 127,357)
Convention Services 2,703,254 ( 129,179) 2,574,075
Cameron Park Zoo 9,561,355 ( 134,540) 9,426,815
Cottonwood Creek
Golf Course 1,420,100 ( 1,296,214) 123,886
Internal Service Funds:
Insurance $ 31,988 $ $( 877,184) ( 845,196)
The deficit net assets for the Solid Waste Fund is expected to be recovered through normal •
operations over a reasonable period. The City plans to cover the deficit net assets of its
Insurance Fund by increased charges to the participating funds and improved risk management
activities.
H
64
4. DETAILED NOTES ON ALL FUNDS
Deposits and Investments
At September 30, 2002, the government's carrying amount of deposits was $(1,533,400) and the
bank balance was $725,251. The bank balance was fully covered by federal depository
insurance ($200,000) or collateral ($525,251), held by the pledging financial institution's agent
in the City's name.
Investments are categorized into these three categories of credit risk:
1. Insured or registered, or securities held by the City or its agent in the City's name.
2. Uninsured and unregistered, with securities held by the counterparty's trust
department or agent in the City's name.
3. Uninsured and unregistered, with securities held by the counterparty, or by its
trust depat liuent or agent,but not in the City's name.
At year-end, the government's investment balances were as follows:
Category Reported Amount/
(1) (2) (3) Fair Value
U. S. Government securities $ 35,213,361 $ - $ - $ 35,213,361
Repurchase agreements 33,441,592 - - 33,436,366
Total $ 68,654,953 $ - $ - 68,649,727
Investments not subject
to categorization:
Open-end mutual funds 339,109
Texas Local Government Investment Pool 54,355,472
Total Investments $ 123,344,308
The Texas Local Government Investment Pool (TexPool) is a public funds investment pool
created pursuant to the Interlocal Cooperation Act of the State of Texas.
The State Comptroller of Public Accounts exercises oversight responsibility over TexPool.
Oversight includes the ability to significantly influence operations, designation of management
and accountability for fiscal matters. Additionally, the State Comptroller has established an
advisory board composed of both participants in TexPool and other persons who do not have a
business relationship with TexPool. The Advisory Board members review the investment policy
and management fee structure. Finally, TexPool is rated AAAm by Standard & Poors. As a
requirement to maintain the rating weekly portfolio, information must be submitted to Standard
&Poors, as well as the Office of the Comptroller of Public Accounts for review.
(continued)
65
4. DETAILED NOTES ON ALL FUNDS (Continued)
Deposits and Investments (Continued)
TexPool operates in a manner consistent with the SEC's Rule 2a7 of the Investment Company
Act of 1940. TexPool uses amortized cost rather than market value to report net assets to
compute share prices. Accordingly, the fair value of the position in TexPool is the same as the
value of TexPool shares.
A reconciliation of cash and investments as shown on the Statement of Net Assets for the City
follows:
h
Cash on hand $ 39,590
Carrying amount of deposits ( 1,533,400)
Carrying amount of investments 123,344,308
Total $ 121,850,498
Cash and investments-governmental activities $ 41,327,374
Cash and investments-business-type activities 22,075,345
Restricted cash and investments 56,598,024
Component units 28,106
Agency Funds 1,821,649
T
Total $ 121,850,498
Receivables
Th
= F Receivables as of year-end for the government's individual major funds and nonmajor, internal
service, and fiduciary funds in the aggregate, including the applicable allowances for
uncollectible accounts, are as follows:
Nonmajor
M and
General Water Wastewater Solid Waste Other Funds Total
Th Receivables:
Taxes $ 5,286,240 $ - $ - $ - $ 399,987 $ 5,686,227
Accounts 3,857,605 - - - 959,360 4,816,965
Special assessments 297,717 4,112,485 2,478,287 2,053,530 82,672 9,024,691
Intergovernmental - - - - 1,028,564 1,028,564
Note Receivable 84,093 - - - 2,903,612 2,987,705
Gross receivables 9,525,655 4,112,485 2,478,287 2,053,530 5,374,195 23,544,152
Less:allowance for
uncollectibles ( 1,662,753) ( 835,166) ( 591,881) ( 496,861) ( 1,468,308) ( 5,054,969)
Net Total Receivables $ 7,862,902 $ 3,277,319 $ 1,886,406 $ 1,556,669 $ 3,905,887 $ 18,489,183
1
(continued)
66
4. DETAILED NOTES ON ALL FUNDS (Continued)
Receivables (Continued)
Revenue of the Water, Wastewater, and Solid Waste Fund Authority are reported net of
uncollectible amounts. Total uncollectible amounts related to revenue of the current period are
as follows:
Uncollectibles related to water sales $ 129,004
Uncollectibles related to wastewater charges 64,986
Uncollectibles related to solid waste charges 59,789
Total Uncollectibles of the Current Fiscal Year $ 253,779
Governmental funds report deferred revenue in connection with receivables for revenue that is
not considered to be available to liquidate liabilities of the current period. Governmental funds
also defer revenue recognition in connection with resources that have been received, but not yet
earned. At the end of the current fiscal year, the various components of deferred revenue and
unearned revenue reported in the governmental funds were as follows:
Unavailable Unearned
General Fund
Delinquent property taxes receivable $ 854,907 $ -
Other - 113,493
Delinquent property taxes receivable
(Debt service fund) 365,890 -
Loan receivable
(Grant fund) 1,450,491 -
Grant drawdowns(Grant fund) - 298,818
Delinquent property taxes receivable
(Tax Increment No. 1) 13,767 -
Special Assessments
(Waco Public Improvement District No. 1) 82,672 -
Governmental Funds $ 2,767,727 $ 412,311
(continued)
67
4. DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets
- % Capital asset activity for the year ended September 30, 2002,was as follows:
General Fund:
" Primary Government
Beginning Ending
Balance Increases Decreases Balance
Government Activities:
Capital assets,not being depreciated:
Land $ 33,284,517 $ 52,250 $( 9,700) $ 33,327,067
Construction work in progress 2,826,526 9,141,290 ( 2,443,569) 9,524,247
Total assets not being depreciated 36,111,043 9,193,540 ( 2,453,269) 42,851,314
Capital assets,being depreciated:
Buildings 8,708,372 1,070,343 ( 56,503) 9,722,212
Machinery and equipment 24,491,720 3,013,941 ( 952,505) 26,553,156
Improvements other than Buildings 13,528,876 2,376,871 - 15,905,747
Infrastructure - 192,452,969 2,651,734 - 195,104,703
Total capital assets being depreciated 239,181,937 9,112,889 ( 1,009,008) 247,285,818
Less accumulated depreciation _112,548,793 7,685,280 ( 802,102) 119,431,971
Total capital assets being depreciated,net 126,633,144 1,427,609 ( 206,906) 127,853,847
Governmental activities capital assets,net $ 162,744,187 $ 10,621,149 $( 2,660,173) $ 170,705,163
1
(continued)
9
68
4. DETAILED NOTES ON ALL FUNDS (Continued) 1,
Capital Assets (Continued)
Beginning Ending
Balance Increases Decreases Balance
Business-type Activities:
Capital assets,not being depreciated:
Land $ 11,457,700 $ - $ - $ 11,457,700
Construction work in progress 15,613,437 15,996,267 ( 3,798,089) 27,811,615
Total assets not being depreciated 27,071,137 15,996,267 ( 3,798,089) 39,269,315
Capital assets,being depreciated:
Buildings 27,488,131 286,983 - 27,775,114
Machinery and equipment 31,209,247 1,865,865 ( 1,194,682) 31,880,430
Improvements other than buildings 161,121,404 4,743,320 ( 559,451) 165,305,273
Total capital assets being depreciated 219,818,782 6,896,168 ( 1,754,133) 224,960,817
Depreciation 89,593,047 9,776,600 ( 1,776,564) 97,593,083
Total capital assets being depreciated,net 130,225,735 ( 2,880,432) 22,431 127,367,734
Business-type activities capital assets,net $ 157,296,872 $ 13,115,835 $( 3,775,658) $ 166,637,049
Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:
General government $ 213,033
Public works 5,023,254
Public safety 1,434,152
Culture and recreation 936,843
Public health 69,857
Housing and Community development 8,141
Total Depreciation Expense-Governmental Activities 7,685,280
Business-type Activities:
Water 3,444,586
Wastewater 1,679,390
Sanitation 2,690,293
Airport 814,357
Convention Services 174,596
Ranger Hall of Fame 21,884
Cameron Park Zoo 436,789
Transit Services 392,437
Cottonwood Creek Golf Course 122,268
Total Depreciation Expense-Business-type Activities $ 9,776,600
(continued)
69
4. DETAILED NOTES ON ALL FUNDS (Continued)
Capital Assets (Continued)
') Construction Commitments
The City has active construction projects as of September 30, 2002. At year-end, the City's
commitments with contractors are as follows:
Spent Remaining
Project to Date Commitments
Street projects $ 4,961,320 $ 1,044,816
Water projects 9,884,174 1,971,967
Wastewater projects 4,217,457 2,616,620
Solid waste projects 472,952 350,693
Total $ 19,535,903 $ 5,984,096
Discretely Presented Component Units
Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2002, is as follows:
_ Due to/from other funds:
Receivable Fund Payable Fund Amount
General Cameron Park Zoo $ 243,704
Cottonwood Creek Golf Course 638,094
Grant 525,333
Airport 16,557
Equipment Services 178,602
Wastewater Sanitation 86,512
Transit 1998 Bond Issue 9,028
Airport 2000 Bond Issue 4,050
Total $ 1,701,880
Advances from/to other funds:
) Receivable Fund Payable Fund Amount
General Cottonwood Creek Golf Course $ 270,093
Water Cottonwood Creek Golf Course 125,336
Wastewater Sanitation 390,833
Capital Improvements Cottonwood Creek Golf Course 168,368
Total $ 954,630
m
(continued)
70
4. DETAILED NOTES ON ALL FUNDS (Continued) l_
Interfund Receivables, Pavables and Transfers (Continued) v
Interfund transfers:
Transfer In
Solid Nonmajor Nonmajor Internal
General Water Wastewater Waste Governmental Enterprise Service Total
Transfer Out:
General $ - $ 175,630 $ - $ - $ 6,896,849 $ 1,682,087 $ 323,717 $ 9,078,283
Water 1,602,470 - - - - - - 1,602,470
Wastewater 360,247 - - - - - - 360,247
Solid Waste 652,623 - - - - - - 652,623
NM Governmental 75,019 - - - 1,051,884 351,944 158,623 1,637,470
NM Enterprise _
Internal Service 86,656 - - - - - 86,656
Total Transfers Out $ 2,777,015 $ 175,630 $ - $ - $ 7,948,733 $ 2,034,031 $ 482,340 $ 13,417,749
Leases
Operating Leases
The government leases building and office facilities and other equipment under noncancelable
operating, leases. Total costs for such leases were $338,607 for the year ended September 30,
2002. The future minimum lease payments for these leases are as follows:
Year Ending
September 30, Amount
2003 $ 245,095
2004 125,199
2005 4,453
Total $ 374,747
Capital Leases
The government has acquired certain fixed assets for governmental activities through the use of
lease purchase agreements. A down payment of$150,000 was made on the telephone system.
These lease agreements qualify as capital leases for accounting purposes and, therefore, have
been recorded at the present value of their future minimum lease payments as of the inception
date.
f-,
(continued)
71
•
4. DETAILED NOTES ON ALL FUNDS (Continued)
Leases (Continued)
Capital Leases (Continued)
The assets acquired through capital leases are as follows:
Accumulated
Asset Depreciation Total
Governmental Activities
Assets:
Computer equipment and software $ 237,042 $ 118,521 $ 118,521
Fire trucks and equipment 835,789 113,193 722,596
Telephone system 1,953,025 1,953,025
Total $ 3,025,856 $ 231,714 $ 2,794,142
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2002, were as follows:
Year Ending Governmental
September 30, Activities
2003 $ 558,999
2004 558,999
2005 294,849
2006 294,849
2007 294,849
2008 294,849
2009 294,849
Total minimum lease payments 2,592,243
Less: amount representing interest ( 296,754)
Present value of minimum lease payments $ 2,295,489
Long-term Debt
General Obligation Bonds
The government issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. General obligation bonds have been issued for both
governmental and business-type activities. These bonds are reported in the proprietary funds if
they are expected to be repaid from proprietary fund revenue. The original amount of general
obligation bonds issued in prior years was $180,590,000. During the year, general obligation
bonds totaling$17,755,000 were issued to fund both general obligation and revenue projects.
(continued)
72
4. DETAILED NOTES ON ALL FUNDS (Continued) ,
Long-term Debt(Continued)
General Obligation Bonds (Continued)
General obligation bonds are direct obligations and pledge the full faith and credit of the
government. These bonds generally are issued as 20-year serial bonds with equal amounts of
principal maturing each year. General obligation bonds currently outstanding are as follows:
Purpose Interest Rates Amount
Governmental activities 2.60-6.95 $ 36,080,000
Governmental activities-refunding 4.669-5.3015 16,466,586
Business-type activities 2.60-6.95 89,145,000 .;
Business-type activities-refunding 4.669-5.3015 4,518,414
$ 146,210,000
Annual debt service requirements to maturity for general obligation bonds are as follows:
Year Ending Governmental Activities Business-type Activities
September 30, Principal Interest Principal Interest
2003 $ 4,260,836 $ 2,661,530 $ 7,294,164 $ 4,925,858
2004 4,201,947 2,340,503 8,413,053 4,151,857
2005 4,218,925 2,127,412 6,391,075 3,778,877
2006 4,309,365 1,917,205 6,375,634 3,458,657
2007 4,482,299 1,701,680 6,072,701 3,153,741
2008 4,303,902 1,483,353 5,461,099 2,876,129
2009 4,366,802 1,262,912 5,258,198 2,614,850
2010 4,357,510 1,038,818 5,142,490 2,355,764
2011 3,820,000 828,271 5,125,000 2,094,561
2012 3,660,000 635,905 4,760,000 1,844,538
2013 2,115,000 488,088 4,475,000 1,615,560
2014 1,200,000 403,840 3,795,000 1,411,096
2015 1,175,000 343,163 3,070,000 1,237,689
2016 1,170,000 282,712 3,195,000 1,075,777
2017 1,170,000 221,889 3,340,000 904,782
2018 1,215,000 159,545 2,885,000 739,710
2019 700,000 109,941 3,045,000 580,363
2020 735,000 73,508 3,210,000 411,756
2021 775,000 35,174 2,205,000 269,356
2022 310,000 7,750 1,325,000 180,226
2023 - - 250,000 140,544
2024 - - 265,000 127,347
2025 - - 280,000 113,381
2026 - - 295,000 98,647
2027 - - 310,000 82,950
2028 - - 330,000 66,150
2029 - - 345,000 48,431
2030 - - 365,000 29,794
2031 - - 385,000 10,106
Total $ 52,546,586 $ 18,123,199 $ 93,663,414 $ 40,398,497
(continued)
73
, 4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
State Participation Loan
_1
The City also closed a $15,000,000 Texas Water Development Board (TWDB) State
Participation loan in 2002. The proceeds from this loan will be used to increase the conservation
storage space in Lake Waco in order to increase the dependable water supply yield of the lake.
Annual debt service requirements to maturity for the State Participation Loan are as follows:
Year Ending Business-type Activities
September 30, Principal Interest
2003 $ - $ -
2004 - -
2005 - 175,521
2006 - 175,521
-v 2007 - 263,282
2008 - 351,042
2009 - 482,683
-- 2010 - 614,323
2011 - 745,964
2012 - 877,605
--, 2013 - 877,605
2014 - 877,605
2015 - 1,604,763
-, 2016 - 1,604,763
2017 - 1,604,764
2018 - 1,604,764
- 2019 - 1,604,763
2020 - 1,604,763
2021 - 1,604,764
2022 655,000' 877,605
2023 690,000 839,746
2024 730,000 799,864
' 2025 775,000 757,305
2026 815,000 712,123
_ 2027 865,000 664,608
2028 920,000 614,178
2029 970,000 560,543
2030 1,025,000 503,991
2031 1,085,000 444,234
2032 1,150,000 380,436
2033 1,220,000 312,816
2034 1,290,000 241,080
2035 1,365,000 165,228
2036 1,445,000 84,966
Total $ 15,000,000 $ 24,633,218
Th (continued)
74
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt (Continued)
Revenue Bonds
In 1985, the City issued waterworks and sewer system refunding revenue bonds. A single
compound interest bond accreting interest at 9.5% remains as of September 30, 2002. Annual debt
service requirements to maturity for this bond are as follows:
Year Ending Business-type Activities
September 30, Principal Interest
2003 518,023 $ 2,236,977
Proceeds from general obligation and revenue bonds since 1988 are subject to arbitrage rebate
regulations. Rebate calculations have been perfoiiiied on the 1988, 1989, 1992, 1993, 1994, 1995,
1996, and 1997 issues and the total rebatable arbitrage earnings, if any, have been refunded to the
federal government. The City elected the exception to the arbitrage rules for proceeds from the
1990 and 1991 general obligation debt issues. The exception requires the City to meet certain
spending requirements or to pay a 1.5 percent penalty on construction funds that do not meet the
spending requirements. The City has met these spending requirements. General obligation and
revenue bond issues in 1998, 1999, 2000, 2001, and 2002 are also subject to arbitrage. Estimated
rebatable arbitrage has been recorded as a reduction to interest on investments.
During 1985, the City entered into a development agreement which provided that the City repay
$830,000 for public improvements at an interest rate not to exceed 8 percent. Repayment of
principal and accrual of interest will not begin until revenue is received from the area designated in
the development agreement. Annual requirements will be based on the revenue generated from
future developments,which cannot be reasonably estimated at September 30, 2002.
There is no specific maximum debt limit established by law for the City; therefore, the limit is
governed by the City's ability to levy and collect taxes. The City's maximum legal rate is $1.85
per$100 valuation; the current tax rate is $.71484 per$100 valuation.
The various bond obligations contain certain financial limitations and restrictions. The ordinances
authorizing the issuance of general obligation bonds created an interest and sinking fund (general
debt service fund). The ordinances require the City to ascertain a rate and amount of tax which
will be sufficient to pay interest as it comes due and provide a reserve fund which is adequate to
meet principal as it matures. The ordinances authorizing the issuance of revenue bonds created a
reserve fund. The gross revenue of the water and wastewater system, after deduction of reasonable
expenses of operations and maintenance, are pledged to the fund in amounts required to maintain
the reserve fund. The City is in compliance with all such significant financial restrictions.
The City maintains a policy of refunding to subdivision developers certain costs for the
construction of water and wastewater improvements. In 1977, the policy was modified to include
streets and drainage facilities, applicable to single housing developments. The modified policy
applies to the period from March 1, 1997 to 1981, with the intent and purpose of creating a policy
that will encourage the construction of single family residences within the corporate limits of the
City. Amounts under contract which have not yet been refunded of$1,954,928 have been recorded
as a liability in the accompanying statement of net assets.
(continued)
75
4. DETAILED NOTES ON ALL FUNDS (Continued)
Long-term Debt(Continued)
Changes in Long-term Liabilities
Long-term liability activity (shown in thousands of dollars) for the year ended September 30,
2002, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Government Activities
Bonds payable:
General obligation bonds $ 52,917 $ 3,950 $ 4,320 $ 52,547 $ 4,261
Contracts payable 830 - - 830 -
Notes payable 177 - - 86 91 91
Total Bonds Payable 53,924 3,950 4,406 53,468 4,352
Capital leases 734 1,803 235 2,295 470
Refundable contracts 814 - 114 700 -
1` Claims and judgments 2,631 2,271 2,066 2,836 2,836
M Compensated absences 10,082 1,073 - 11,154 4,279
Governmental Activity
Long-term Liabilities $ 14,261 $ 5,147 $ 2,415 $ 16,985 $ 7,585
'- Business-type activities
Bonds payable:
General obligation bonds $ 86,483 $ 13,805 $ 6,625 $ 93,663 $ 7,294
- , Revenue bonds 1,096 - 578 518 518
State participation loan - 15,000 - 15,000 -
Total Bonds Payable 87,579 28,805 7,203 109,181 7,812
Compensated absences 1,435 111 - 1,546 812
Refundable contracts 885 370 - 1,255 -
Deferred interest payable 3,779 - 1,183 2,596 2,011
Accrued liabilities 1,618 163 - 1,781 -
Business-type activity
Long-term Liabilities $ 7,717 $ 644 $ 1,183 $ 7,178 $ 2,823
Internal Service Funds predominantly serve the governmental funds. Accordingly, long-term
liabilities for them are included as part of the above totals for governmental activities. At year-
-' $336,421 of Internal Service Funds compensated absences are included in the above
- amounts.
Segment Information
The City issued refunding bonds in 1985 which are secured by a pledge of net revenues of the
City's Water and Wastewater systems. In 2002, the City closed on a loan with the Texas Water
Development Board which is secured by Water revenues. Summary financial information for the
`,, Water and Wastewater funds is presented below.
(continued)
76
4. DETAILED NOTES ON ALL FUNDS (Continued)
Segment Information (Continued)
Condensed Statement of Net Assets
Water Wastewater
Assets:
Current assets $ 12,903,217 $ 13,244,734
Advances from other funds 125,336 390,833
Restricted assets 39,892,383 14,816,177
Capital assets 86,450,908 41,425,832
Total Assets 139,371,844 69,877,576
Liabilities:
Current liabilities 1,587,139 2,444,387
Current liabilities payable from restricted assets 5,625,010 396,876
Noncurrent liabilities 64,414,601 30,740,263
Total Liabilities 71,626,750 33,581,526
Net Assets:
Invested in capital assets,net of related debt 56,141,789 23,911,828
Restricted 1,698,603 217,229
Unrestricted 9,904,702 12,166,993 ,
Total Net Assets $ 67,745,094 $ 36,296,050
Condensed Statement of Revenue,Expenses and Changes in Net Assets
Water Wastewater
Charges for services $ 21,443,833 $ 15,096,526
Depreciation expense ( 3,444,586) ( 1,679,390)
Other operating expenses ( 12,999,302) ( 10,680,856)
Operating Income 4,999,945 2,736,280
Nonoperating Revenue(Expenses)
Investment earnings 704,700 289,626
Rental income 144,753 -
Interest expense ( 2,863,587) ( 1,477,127)
Capital contributions 75,078 316,396
Transfers in 175,630 -
Transfers out ( 1,602,470) ( 360,247)
Change in Net Assets 1,634,049 1,504,928
Beginning Net Assets 66,111,045 34,791,122
Ending Net Assets $ 67,745,094 $ 36,296,050
(continued)
77
4. DETAILED NOTES ON ALL FUNDS (Continued)
Segment Information (Continued)
Condensed Statement of Cash Flows
Water Wastewater
Net Cash Provided(Used)by:
Operating activities $ 9,114,841 $ 5,399,892
Noncapital financing activities ( 1,282,087) ( 837,592)
Capital and related financing activities 5,699,013 ( 2,198,921)
Investing activities 704,700 289,627
Net Increase(Decrease) 14,236,467 2,653,006
Beginning Cash and Cash Equivalents 35,156,776 23,427,229
Ending Cash and Cash Equivalents $ 49,393,243 $ 26,080,235
Restricted Assets
The balances of the restricted asset accounts in the Enterprise Funds are as follows:
Customer deposits $ 624,521
Revenue bond construction account 51,868,278
Revenue bond debt service account
4,105,225
Total Restricted Assets $ 56,598,024
Other Information
Risk Management
The City is exposed to various risks of losses related to torts; theft of, damage to, and destruction
of assets; errors and omissions; and natural disasters for which the government carries
} commercial insurance. The City has established the Insurance Fund (Internal Services Fund) to
account for and finance its risk management activities. Premiums are paid into the Insurance
Fund by all other funds and are available to pay claims, claim reserves and administrative costs
of the program.
(continued)
78
4. DETAILED NOTES ON ALL FUNDS (Continued)
Other Information (Continued)
Risk Management(Continued)
Liabilities of the fund are reported when it is probable that a loss has occurred and the amount of
the loss can be reasonably estimated. Liabilities include an amount for claims that have been
incurred but not reported(IBNRs). The result of the process to estimate the claims liability is not
an exact amount as it depends on many complex factors, such as inflation, changes in legal
doctrines, damage awards (including frequency and amount of payouts), and economic and
social trends. Accordingly, claims are reevaluated periodically to consider the effects of such
factors. The estimate of the claims and other amounts for incremental claim adjustment
expenses related to specific claims and other claim adjustment expenses regardless of whether
allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are
another component of the claims liability estimate.
The Insurance Fund provides coverage for up to a maximum of $400,000 for each workers'
compensations claim. The City purchases commercial insurance for workers' compensation
claims in excess of coverage provided by the fund. For general liability claims prior to fiscal
year 2002, the Insurance Fund provided coverage for up to $250,000 for each individual and
$500,000 aggregate for general liability claims and up to $100,000 for each property damage
claim. Beginning with fiscal year 2002, the Insurance Fund provides coverage up to $50,000 for
each general liability or property damage claim. The City purchases commercial insurance for
claims in excess of $50,000. The commercial liability insurance limits are $1,000,000 per
occurrence for general liability with a$5,000,000 annual aggregate for law enforcement liability.
The commercial insurance limits for the City's property coverages are: $10,000,000 aggregate
for automobile catastrophe, $147,352,575 aggregate for real and personal property, $9,158,635
aggregate for mobile equipment and$5,000,000 per accident for boiler and machinery. Changes
in the amounts of estimated unpaid liability claims during the past two years are as follows
(shown in thousands of dollars):
Year Ended Year Ended
09/30/02 09/30/01
Unpaid claims,beginning of fiscal year $ 2,631 $ 1,403
Incurred claims(including IBNRs) 2,271 2,422
Claim payments ( 2,066) ( 1,194)
Unpaid claims, end of fiscal year $ 2,836 $ 2,631
(continued)
79
4. DETAILED NOTES ON ALL FUNDS (Continued)
Subsequent Events
In December 2002, the City Council authorized publication of a notice of intention to issue
combination tax and revenue certificates of obligation not to exceed$9,000,000. The certificates
were to bear interest at a rate to be determined within the discretion of the City Council at the
time of issuance and will mature over a period not to exceed 30 years. The proceeds will be used
for various general City improvements and improvements to the City's water and solid waste
systems.
In October 2002, the City Council authorized the issuance of $28,290,000 General Obligation
Refunding Bonds, Series 2002. The general obligation refunding bonds will retire $18,870,000
of Combination Tax and Revenue Certificates of Obligation, Series 1993, Series 1995, Series
1996 and Series 2000, as well as $7,040,000 of General Obligation Refunding Bonds, Series
1993, resulting in a net present value benefit to the City of$1,652,662.
Contingent Liabilities
Amounts received or receivable from grant agencies are subject to audit and adjustment by
grantor agencies,principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenditures that may be disallowed by the grantor cannot be determined at this time, although
the government expects such amounts, if any, to be immaterial.
There are currently several claims and lawsuits pending against the City. It is the opinion of the
City Attorney and City Staff that there is no pending litigation against the City that, if decided
against the City, would have a material adverse effect upon the operations of the City or that
would exceed the contingency amounts set aside for such purpose.
Commitments
Water storage rights in Lake Waco were acquired by contract with Brazos River Authority in
1965. Total consideration for the water storage rights over the 50-year term is $9,416,500 with
payments of$188,330 due annually. Such payments are reported as operating deductions of the
Water Fund in the year the payments are made.
The City entered into an agreement with the Brazos River Authority in 1971, whereby the
Authority receives, treats and disposes of the City's sewage. The City is charged a monthly
amount for sewer services based on the amount of sewage treated. The City's net expense for
the year ended September 30,2002,was $5,379,257.
(continued)
80
4. DETAILED NOTES ON ALL FUNDS (Continued)
Other Post Employment Benefits
The City provides postretirement life insurance benefits for certain eligible retirees. According
to City personnel policy, retirees who have retired under the Texas Municipal Retirement System
at age 60 or above with a minimum of 5 years of service, or at any age with a minimum of 20
years of service, are eligible for postretirement life insurance benefits. The City pays 100
percent of the premiums of life coverage for the eligible retirees. At September 30, 2002, there
were 446 employees who had retired and were receiving benefits. The City finances the plan on
a pay-as-you-go basis. Life insurance benefits amounted to $16,859 for 2002.
Pension Plans—Primary Government
Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan, available to all City employees, permits them to defer a
portion of their salary until future years. Participation in the plan is optional. The deferred
compensation is not available to employees until termination, retirement, death, or unforeseeable
emergency.
Defined Benefit Plan—Texas Municipal Retirement System(TMRS)
Plan Description. The City provides pension benefits for all of its full-time employees through a
nontraditional,joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal
Retirement System(TMRS), an agent multiple-employer public employee retirement system.
Benefits depend upon the sum of the employee's contributions to;the plan, with interest, and the
City-financed monetary credits, with interest. At the date the plan began, the City granted
monetary credits for service rendered before the plan began of a theoretical amount equal to two
times what would have been contributed by the employee, with interest, prior to establishment of
the plan. Monetary credits for service since the plan began are a percent (100%, 150%, or 200%)
of the employee's accumulated contributions. In addition, the city can grant, as often as annually,
another type of monetary credit referred to as an updated service credit which is a theoretical
amount which, when added to the employee's accumulated contributions and the monetary credits
for service since the plan began, would be the total monetary credits and employee contributions
accumulated with interest if the current employee contribution rate and City matching percent had
always been in existence and if the employee's salary had always been the average of his salary in
the last three years that are one year before the effective date. At retirement, the benefit is -
calculated as if the sum of the employee's accumulated contributions with interest and the
employer-financed monetary credits with interest were used to purchase an annuity.
(continued)
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4. DETAILED NOTES ON ALL FUNDS (Continued)
Pension Plans—Primary Government(Continued)
The plan provisions are adopted by the governing body of the City, within the options available
in the state statutes governing TMRS and within the actuarial constraints also in the statutes.
Plan provisions for the City were as follows
Deposit Rate: 6%
Matching Ratio(City to Employee): 2 to 1
A member is vested after 5 years
Members can retire at certain ages, based on the years of service with the City. The Service
Retirement Eligibilities for the City are: 5 yrs/age 60, 20 yrs/any age
Contributions
Under the state law governing TMRS, the actuary annually determines the City contribution rate.
This rate consists of the normal cost contribution rate and the prior service cost contribution rate,
both of which are calculated to be a level percent of payroll from year to year. The normal cost
contribution rate finances the currently accruing monetary credits due to the City matching percent,
which are the obligation of the City as of an employee's retirement date, not at the time the
employee's contributions are made. The normal cost contribution rate is the actuarially determined
percent of payroll necessary to satisfy the obligation of the City to each employee at the time
his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded
• (over funded) actuarial liability (asset) over the remainder of the plan's 25-year amortization
period.
The unit credit actuarial cost method is used for determining the City contribution rate. Both the
employees and the City make contributions monthly. Since the City needs to know its
contribution rate in advance for budgetary purposes, there is a one-year delay between the
actuarial valuation that is the basis for the rate and the calendar year when the rate goes into
effect(i.e. December 31, 2001 valuation is effective for rates beginning January 2003).
Schedule of Actuarial Liabilities and Funding Progress
For the Years Ended September 30, 1999,2000 and 2001
Actual valuation Date 12/31/99 12/31/00 12/031/01
Actuarial value of assets $ 104,867,208 $ 110,339,132 $ 116,538,758
Actuarial accrued liability 137,828,236 145,481,518 156,308,523
Percent funded 76.1% 75.8% 74.6%
Unfunded(overfunded)actuarial accrued liability(UAAL) 32,961,028 35,142,386 39,769,765
Annual covered payroll 40,442,848 43,882,274 476,156,352
UAAL as a percentage of covered payroll 81.5% 80.1% 8.4%
Net pension obligation(NPO at the beginning of period
Annual Pension Cost:
Annual required contribution(ARC) 5,173,020 5,451,585 5,733,325
Interest on NPO
Adjustment to the ARC 5,173,020 5,451,585 5,733,225
Contributions made 5,173,020 5,451,585 5,733,225
Increase in NPO
NPO at the end of the period
(continued)
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4. DETAILED NOTES ON ALL FUNDS (Continued)
r-
Pension Plans—Primary Government(Continued)
Contributions (Continued)
Actuarial Assumptions
Actuarial Cost Method - Unit Credit
Amortization Method - Level Percent of Payroll
Remaining Amortization Period - 25 Years-Open Period
Asset Valuation Method - Amortized Cost(to accurately reflect the
requirements of GASB Statement No. 25,
paragraphs 36e and 138)
Amortzation Period - Open
Investment Rate of Return - 8%
Projected Salary Increases - None
Includes Inflation at - None
Cost-of-living Adjustments - None
The City is one of 758 municipalities having the benefit plan administered by TMRS. Each of
the 758 municipalities have an annual, individual actuarial valuation performed. All assumptions
for the December 31, 2001, valuations are contained in the 2001 TMRS Comprehensive Annual
Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin,
Texas 78714-9153.
Fire and Police One-half Pay Pension
The City funded on a pay-as-you-go basis and administered a one-half single-employer defined
benefit pension plan for employees who were not eligible to participate when TMRS was
adopted. Any policeman, fireman or fire alarm operator employed by the City prior to
September 12, 1950, and their named dependents are entitled to benefits under this plan.
Employees were able to retire after 25 years of service. The City Council passed an ordinance
for pension pay equal to one-half of the salary for each employee at the time of retirement.
There are 26 retired firemen and policemen under this plan with no eligible active employees.
An actuarial valuation has not been performed on this plan due to its small relative size. The
estimated unfunded liability based on the present value of future benefits with a 7.5 percent
interest rate assumption is $817,649 at September 30, 2002.
These benefits are budgeted and recorded in the General Fund as expenditures in the year paid.
Total costs of these paid benefits for the three years ended September 30, are as follows:
2002 $ 228,718
2001 278,422
2000 302,716
(continued)
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4. DETAILED NOTES ON ALL FUNDS (Continued)
Solid Waste Landfill Closure and Post-closure Care Cost
State and federal laws and regulations require that the City place a final cover on its landfill
when closed and perform certain maintenance and monitoring functions at the landfill site for
thirty years after closure. In addition to operating expenses related to current activities of the
landfill, an expense provision and related liability are being recognized based on the future
closure and post closure care costs that will be incurred near or after the date the landfill no
longer accepts waste. The recognition of these landfill closure and post closure care costs is
based on the amount of usage of the landfill during the year. The estimated liability for landfill
closure and post closure care costs included in accrued liabilities is $1,781,468 as. of September
30, 2002,which is based on 34.8%usage (filled) of the landfill. It is estimated that an additional
$3,337,693 will be recognized as closure and post closure care expenses between the date of the
balance sheet and the date the landfill is expected to be filled to capacity(2035). The estimated
total current cost of the landfill closure and post closure care ($5,119,161) is based on the
amount that would be paid if all equipment, facilities, and services required to close,monitor and
maintain the landfill were acquired as of September 30, 2002. However, the actual cost of
closure and post closure care may change due to inflation, changes in technology, or changes in
landfill laws and regulations.
Conduit Debt Obligations
From time to time, Central Waco Development Corporation and Waco Health facilities
Development Corporation have issued industrial revenue bonds to provide financial assistance to
private-sector entities for the acquisition and construction of industrial, commercial and health
facilities deemed to be in the public interest. The bonds are secured by the property financed and
are payable solely from payments received on the underlying mortgage debt. Upon repayment of
the bonds, ownership of the facilities transfers to the private-sector entity served by the bond
issue. Neither Central Waco Development Corporation, Waco Health Facilities Development
, Corporation, the City, nor any political subdivision thereof is obligated in any manner for
repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the financial
statements of Central Waco Development Corporation, Waco Health Facilities Development
Corporation or the City.
As of September 30, 2002, there were 29 series of industrial revenue bonds outstanding. The
aggregate rinci al amount payable for the 3 series issued after 1, 1995, was $12 800 000.
principal pY July >
The aggregate principal amount payable for the 26 series issued prior to July 1, 1995, could not
be readily determined; however, their original issue amounts totaled$206,236,180.
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