HomeMy WebLinkAbout2006 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2006
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal..................................................................................................... i – iv
GFOA Certificate of Achievement............................................................................... v
Organizational Chart..................................................................................................... vi
Principal City Officials................................................................................................. vii
FINANCIAL SECTION
Independent Auditors’ Report....................................................................................... 1 – 2
Management’s Discussion and Analysis...................................................................... 3 – 10
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets.......................................................................................... 11
Statement of Activities............................................................................................ 12
Fund Financial Statements
Balance Sheet – Governmental Funds.................................................................... 13
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds................................................................ 14
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Page
Number
FINANCIAL SECTION (Continued)
Fund Financial Statements (Continued)
Reconciliation of the Statement of Revenues, Expenditures
and Changes in Fund Balances of Governmental Funds to the
Statement of Activities......................................................................................... 15
Statement of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – General Fund.......................................... 16 – 18
Statement of Net Assets – Proprietary Funds......................................................... 19
Statement of Revenues, Expenses and Changes in
Fund Net Assets – Proprietary Funds.................................................................. 20
Statement of Cash Flows – Proprietary Funds........................................................ 21 – 22
Statement of Fiduciary Net Assets.......................................................................... 23
Notes to Financial Statements.................................................................................... 24 – 45
Combining Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet....................................................................................... 46
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances................................................................................... 47
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Page
Number
FINANCIAL SECTION (Continued)
Combining Fund Statements and Schedules (Continued)
Nonmajor Special Revenue Funds
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Hotel/Motel
Occupancy Tax Fund........................................................................................... 48
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Child Safety Fund.................................... 49
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Public Safety Fund................................... 50
Nonmajor Debt Service Fund
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual.................................................................... 51
Nonmajor Enterprise Funds
Combining Balance Sheet....................................................................................... 52
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets................................................................................ 53
Combining Statement of Cash Flows..................................................................... 54 – 55
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Page
Number
FINANCIAL SECTION (Continued)
Combining Fund Statements and Schedules (Continued)
Agency Funds
Combining Statement of Changes in Assets and Liabilities................................... 56
Table Page
NumberNumber
STATISTICAL SECTION (Unaudited)
Net Assets by Component.............................................................................. 1 57
Changes in Net Assets................................................................................... 2 58 – 59
Fund Balances – Governmental Funds.......................................................... 3 60
Changes in Fund Balances – Governmental Funds....................................... 4 61 – 62
Assessed Value and Estimated Actual Value
of Taxable Property..................................................................................... 5 63
Direct and Overlapping Property Tax Rates.................................................. 6 64
Principal Property Taxpayers......................................................................... 7 65
Property Tax Levies and Collections............................................................. 8 66
Ratios of Outstanding Debt by Type............................................................. 9 67
Ratios of Net General Bonded Debt Outstanding.......................................... 10 68
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Table Page
NumberNumber
STATISTICAL SECTION (Unaudited)
Direct and Overlapping Governmental Activities Debt................................. 11 69
Legal Debt Margin and Tax Rate Limitations Information........................... 12 70
Pledged Revenue Coverage........................................................................... 13 71
Demographic and Economic Statistics.......................................................... 14 72
Principal Employees...................................................................................... 15 73
Fulltime Equivalent City Government Employees by
Function/Program....................................................................................... 16 74
Operating Indicators by Function/Program................................................... 17 75
Capital Asset Statistics by Function/Program................................................ 18 76
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INTRODUCTORY SECTION
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November 22, 2006
The Honorable Mayor, City Council and the Citizens of the City of Stephenville
The City of Stephenville (the “City”) Financial Management Policies requires that the City’s Finance
Department prepare a complete set of financial statements presented in conformity with generally accepted
accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm
of licensed certified public accountants. Accordingly, the Comprehensive Annual Financial Report for the City
of Stephenville, Texas for the fiscal year ended September 30, 2006, is hereby issued.
This report consists of management’s representations concerning the finances of the City. Consequently,
management assumes full responsibility for the completeness and reliability of all the information presented in
this report. To provide a reasonable basis for making representations, the City has established a comprehensive
internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to
compile sufficient reliable information for the preparation of the City’s financial statements in conformity with
GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive
framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the
financial statements will be free from material misstatements. As management, we assert that, to the best of our
knowledge and belief, this financial report is complete and reliable in all material respects.
The City’s financial statements have been audited by Pattillo, Brown and Hill LLP, Independent Certified Public
Accountants. The goal of the independent audit was to provide reasonable assurance that the financial
statements of the City for the fiscal year ended September 30, 2006, are free of material misstatements. The
independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; assessing the accounting principles used and significant estimates made by management;
and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the
audit, that there was a reasonable basis for rendering an unqualified opinion that the City’s financial statements
for the fiscal year ended September 30, 2006, are fairly presented in conformity with GAAP. The independent
auditors’ report is presented as the first component of the financial section of this report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form of a Management’s Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A
can be found immediately following the report of the independent auditor.
Profile of the City
The City was incorporated in 1889 and chartered a home-rule city under Texas law in 1961. The City occupies
approximately 10.26 square miles and serves a population of about 16,882. The City is empowered by state
statute to levy a tax on both real and business personal property located within its boundaries. The City also has
the power by state statute to extend its corporate city limits by annexation, which is done periodically when
deemed appropriate by the City Council.
The City operates under the mayor-council form of government. Policy-making and legislative authority are
vested in a governing Council consisting of the Mayor and eight (8) Council members. The City Council is
responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring
the City Administrator. The City Administrator is responsible for carrying out the policies and ordinances of the
City Council, for overseeing the day-to-day operations of the City, and appointing head of various departments.
The Mayor and City Council members serve two (2) year terms. All elected officials are elected at-large.
i
The basic financial statements of the City include all governmental activities, organizations and functions for
which the City is financially accountable as defined by the Government Accounting Standards Board (GASB).
Based on these criteria, no other governmental organizations are included in this report.
Services Provided. The City provides a full range of services, including public safety (police, fire and
emergency medical), maintenance of streets and infrastructure, sanitation services, maintenance of the treated
water distribution system and both sanitary and storm sewer collection and transmission systems, recreational
activities and cultural events, landfill operations, airport facility maintenance as well as general administrative
services.
Economic Conditions and Outlook
The information presented in the financial statements is perhaps best understood when it is considered from the
broader of the specific environment within which the City operates.
Local Economy. The City currently enjoys a favorable economic environment, bolstered by the strength of
both Cross Timbers area and the State of Texas. Stephenville continues to act as a retail hub of the area. While
many cities in the state are seeing the effect of a downturn in their economy, Stephenville has maintained its
strong economic position. Strong property values, sales tax receipts and building activity are key indicators of
the strength of the City’s economic position.
The following facts reflect Stephenville’s economic condition and outlook:
Property valuations increased by about $75,600,000 (11.7%) in 2006 to $719,600,000. Residential and
commercial activity continues to be strong. With new residential building lots going on line this year and
commercial buildings currently under construction, all signs point to property valuations continuing to increase.
The property tax rate is $.4750 was a reduction from the past three (3) years.
Sales tax collections continue to experience growth this year showing a 10.4% increase over the previous year.
LOCAL SALES AND USE TAX
ASSESSED PROPERTY VALUATIONS
$5
$800
$700
$4
$600
$500
$3
$400
$2
$300
in millions
in millions
$200
$1
$100
$-
$-
20022003200420052006
20022003200420052006
Accounting System and Budgetary Control
The City’s accounting records for general governmental operations are maintained on a modified accrual basis,
with the revenues being recorded when available and measurable and expenditures being recorded when the
services or goods are received and the liabilities incurred. Accounting records for the City’s utilities are
maintained on the accrual basis.
ii
In developing and maintaining the City’s accounting system, consideration is given to the adequacy of the
internal control structure. Internal accounting controls are designed to provide reasonable, but not absolute,
assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the
reliability of financial records for preparing financial statements and maintaining accountability of assets. The
concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to
be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management.
All internal control evaluations occur within the above framework. We believe that the City’s internal controls
adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions.
The annual budget serves as the foundation of the City’s financial planning and control. The City Charter
provides that the City Council shall adopt the annual budget prepared by the City Administrator. The proposed
st
budget must be submitted to the City Secretary no later than August 1 with the adoption taking place no later
rd
than September 23. The City Administrator is authorized to transfer budgeted amounts between line items and
departments within any fund; however any revisions that alter the total expenditures of any fund must be
approved by the City Council.
Budgetary control has been established at the departmental level. Financial reports are produced showing
budget and actual expenditures by line item, and are distributed monthly to the departmental management and to
others upon request.
Individual line items are reviewed and analyzed for budgetary compliance. Personnel expenditures are
monitored and controlled at a position level and capital expenditures are monitored and controlled item by item.
Revenue budgets are reviewed monthly.
Budget-to-actual comparisons are provided in this report for the General Fund on pages 16 – 18.
Long Range Planning/Financial Management. Users of this document, as well as others interested in the
programs and services offered by the City of Stephenville, are encouraged to read the City’s Fiscal Year 2006 –2007
Budget. The document details the City’s long-term goals and financial policies, describes program accomplishments
and initiatives, and outlines the City’s capital improvement program. Also available for reference is the City of
Stephenville’s Comprehensive Plan which was adopted in 2006 and maps out the City’s future strategies.
The City’s ability to respond to ongoing economic challenges will require careful long-range planning. The
City has responded by fiscal conservatism and implementing operating budget efficiencies that have resulted in
its maintaining healthy fund balances in its General Fund and water/wastewater funds.
Debt Management. The City has been funding its capital program from current revenues and surplus working
capital since 1996.
Cash Management. The City utilizes its bank depository contract and its investment policy in the management of
all cash. Under the bank depository contract, the City operating account earns the bank’s public fund interest rate.
During the fiscal year ended September 30, 2006, the average rate on the operating account balances was 4.36
percent. The City’s investment policy embraces current state regulations on the investment of public funds and
authorizes the City to invest in certificates of deposits from the bank depository, direct obligations of the United
States Government, obligations of an agency of the United States Government and local government investment
pools. The combination of these investment vehicles provided a weighted average return of 4.68 percent over the
fiscal year. The City requires that all deposits be collateralized with securities held in joint accounts at First
Financial Bank of Stephenville. Collateral is monitored monthly to ensure that the market value of the pledged
securities equals or exceeds the related deposit or investment balance. Investments are always executed delivery-
versus-payment method. That is, funds are not wired or paid until verification has been made that the correct
security has been received. Securities are held on behalf of the City by the City’s agent. All collateral shall be
subject to verification and audit by the Finance Director and the City’s independent auditors.
iii
Tax Appraisal/Collection Responsibilities. Under Texas law enacted in 1979, and subsequent revisions of the
State Property Tax Code, the appraised value of taxable property in Stephenville is established by the Erath County
Appraisal District. The City of Stephenville and other taxing jurisdictions in Erath County provide a pro rata share
of the budgeted expenditures incurred by the Appraisal District, based on individual levy. Erath County Tax
Assessor-Collector provides tax collection services for the City and other taxing jurisdictions in Erath County.
Risk Management. Risk management within the City is a joint effort of all City department heads in
coordination with the City’s property and casualty insurance provider. Under a contractual arrangement, the
City’s facilities, procedures and claims are reviewed and evaluated by the loss prevention representative with the
insurance provider. The representative and department heads address areas of needs as identified through both
external and internal analysis.
The minimizing of risk is addressed through employee training in the form of training films, safety courses and
on-site instruction.
The City purchases liability insurance with limits of $2 million for all exposures. The City also purchases
workers’ compensation coverage through a public entity insurance pool.
Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement in Financial Reporting to the City of Stephenville for its Comprehensive Annual
Financial Report for the fiscal year ended September 30, 2005.
The Certificate of Achievement is a prestigious national award-recognizing conformance with the highest
rd
standards for preparation of state and local government financial reports. This award was the 23 consecutive
year that the City of Stephenville has achieved this prestigious award. In order to be awarded a Certificate of
Achievement, a government unit must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both generally accepted accounting principles and applicable
legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive
annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are
submitting it to GFOA to determine its eligibility for another certificate.
Acknowledgements. The preparation of this report on a timely basis could not be accomplished without the
efficient and dedicated services of the entire staff of the City. We would like to express our appreciation to all
staff members who assisted and contributed to its preparation. We would also like to thank the Mayor and City
Council members for their interest and support in planning and conducting the financial operations of the City in
a responsible and progressive manner.
Respectfully Submitted,
Mark A. Kaiser
City Administrator
iv
CITY OF STEPHENVILLE, TEXAS
ORGANIZATION CHART
Citizens of Stephenville
Mayor and City
Council
Boards & Commissions
City Attorney
City Administrator Municipal Judge City Secretary
Community Finance/ Community
Fire Utilities Police
Development Administration Services
Planning Fire Accounting
WaterCriminal
Parks
Suppression
Production Investigation
InspectionsFire Utility Billing
Water
Patrol Recreation
Prevention
Distribution
Code Emergency
Purchasing
Wastewater
Communications Cemeteries
Enforcement Medical Services
Collection
Budget
Wastewater Records Library
Treatment
Audit
Landfill Animal Control Streets
Investments
Airport
Customer
Service
Insurance
Senior Citizens
Water Pollution
Control
Human
Resources
vi
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL CITY OFFICIALS
SEPTEMBER 30, 2006
MayorRussell E. Jergins
Council Members Dr. Malcolm L. Cross
Barry Ratliff
Alan Nash
Cyndi Godwin
Todd McEvoy
Andrew Johnson
Mark Murphy
Nancy Hunter
City Administrator Mark A. Kaiser
Director of Finance/Administration Vacant
Director of Utilities Nick Williams
Director of Community Development Betty Chew
Police Chief Roy Halsell
Fire Chief Jimmy Chew
Director of Community Services Drew Wells
City Secretary Cindy Stafford
vii
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FINANCIAL SECTION
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and
Members of City Council
City of Stephenville, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of City of
Stephenville, Texas, as of and for the year ended September 30, 2006, which collectively comprise the
City’s basic financial statements as listed in the table of contents. These financial statements are the
responsibility of the City of Stephenville’s management. Our responsibility is to express opinions on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the City of Stephenville, Texas, as of September
30, 2006, and the respective changes in financial position and cash flows, where applicable, and the
budgetary comparison for the General Fund for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
November 16, 2006, on our consideration of the City’s internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an opinion on
the internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards, and should be considered in assessing
the results of our audit.
1
401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901FAX: (254) 772-4920 www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 ALBUQUERQUE, NM (505) 266-5904
The management’s discussion and analysis on pages 3 through 10 is not a required part of the
basic financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Stephenville, Texas’ basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements and schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The combining and individual nonmajor fund financial statements and schedules have been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a
whole. The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
November 16, 2006
2
MANAGEMENT’S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Stephenville, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2006. We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our letter of transmittal, which can be found in the
introductory section of this report.
FINANCIAL HIGHLIGHTS
The assets of the City exceed its liabilities as of September 30, 2006, by $44,903,420
(net assets). Of this amount, $16,754,490 (unrestricted net assets) may be used to
meet the City’s ongoing obligations to citizens and creditors in accordance with the
City’s fund designation and fiscal policies.
The City's total net assets increased by $3,980,788.
As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $10,495,224. Approximately 99 percent of this
total amount, $10,415,429, is unreserved fund balance available for use within the
City’s fund designation and fiscal policies.
As of September 30, 2006, unreserved fund balance for the General Fund was
$9,045,429 or 99 percent of total general fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-wide
financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report
also contains other supplementary information in addition to the basic financial statements themselves.
Government-wide Financial Statements. The government-wide financial statements, which begin on
page 11 of this report, are designed to provide readers with a broad overview of the City's finances, in a
manner similar to a private-sector business.
The statement of net assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating.
3
The statement of activities presents information showing how the City's net assets changed during the
most recent fiscal year. All changes in net assets are reported when the underlying event giving rise to
the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused compensation absences.).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from functions that are
intended to recover all or a significant portion of their cost through user fees and charges (business-type
activities). The governmental activities of the City include general government, public safety, streets,
library, cemetery, culture and recreation, and community development. The business-type activities of
the City include water, wastewater, storm water drainage, solid waste, and airport operations.
The government-wide financial statements can be found on pages 11 – 12 of this report.
Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives.The City, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements. All of the funds of the City can be divided into two categories – governmental funds
and proprietary funds.
Governmental Funds.Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on current sources
and uses of spendable resources, as well as on balances of spendable resources available at the end of
the fiscal year. Such information may be useful in evaluating a government's near-term financing
requirements.
Because the focus on governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government's near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and governmental activities.
A budgetary comparison statement has been provided for the General Fund to demonstrate compliance
with the annual appropriated budget. Data for the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these nonmajor governmental funds is
provided in the form of combining fund statements and schedules elsewhere in this report.
Proprietary Funds. The City maintains one type of proprietary fund. Enterprise Funds are used to
report the same functions presented as business-type activities in the government-wide financial
statements. The City uses the Enterprise Funds to account for water, wastewater, storm water drainage,
solid waste, and airport operations.
4
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail.
The basic proprietary fund financial statements can be found on pages 19 – 22 of this report.
Notes to the Financial Statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 24 – 45 of this report.
Other Information. In addition to the basic financial statements and accompanying notes, this report
also presents combining fund statements and schedules that further support the information in the
financial statements.
The combining fund statements and schedules for nonmajor funds are presented immediately following
the notes to the financial statements beginning on page 46 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case of the City, assets exceeded liabilities by $44,903,420 as of September 30, 2006.
A large portion of the City's net assets (62 percent) reflects its investments in capital assets (e.g., land,
buildings, equipment and infrastructure), less any outstanding debt used to acquire those assets. The
investments in capital assets net of related debt increased by $1,905,603 mainly due to the acquisition
and depreciation of capital assets. The City uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City’s investment in its
capital assets is reported net of related debt, it should be noted that the resources needed to repay this
debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate
these liabilities.
CITY OF STEPHENVILLE’S NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200620052006200520062005
Current and other assets$ 11,972,955$ 10,336,824$ 15,013,354$ 13,403,902$ 26,986,309$ 23,740,726
11,329,777 11,095,652 30,743,407 28,824,738 42,073,184 39,920,390
Capital assets
23,302,732 21,432,476 45,756,761 42,228,640 69,059,493 63,661,116
Total assets
Liabilities1,168,536311,136894,068907,4932,062,6041,218,629
1,779,910 2,205,990 20,313,559 19,313,865 22,093,469 21,519,855
Noncurrent liabilities
2,948,446 2,517,126 21,207,627 20,221,358 24,156,073 22,738,484
Total liabilities
Net assets:
Invested in capital assets,
net of related debt9,734,7779,070,65217,432,39416,190,91627,167,17125,261,568
Restricted381,849295,721599,910514,842981,759810,563
10,237,660 9,548,977 6,516,830 5,301,524 16,754,490 14,850,501
Unrestricted
$ 20,354,286 18,915,350$ 24,549,134$ 22,007,282$ 44,903,420$ 40,922,632$
Total net assets
5
An additional portion of the City’s assets (2 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $981,759, may
be used to meet the government's ongoing obligations to citizens and creditors.
As of September 30, 2006, the City is able to report positive balances in all three categories of net assets,
both for the government as a whole, as well as for its separate governmental and business-type activities.
The same held true for the prior fiscal year. Overall, the City had an increase in net assets of
$3,980,788.
Governmental Activities. Governmental activities increased the City’s net assets by $1,438,936 or 8
percent of the total growth in net assets. The net assets invested in capital assets, net of related debt
increased by $664,125 or 7 percent due to pay down of annual debt service. Unrestricted net assets
increased by $688,683 or 7 percent.
Total revenues for governmental activities increased from the previous year by $761,239. General
revenue had a net increase of $961,398 or 11 percent.
Business-type Activities. Net Assets from business-type activities increased by $2,541,852 or 12
percent from $22,007,282 to $24,549,134 accounting for the other 59 percent of the total growth in net
assets. This increase is primarily due to the excess of operating revenues over operating expenditures
and net transfers.
The following table provides a summary of the City’s operations for the year ended September 30, 2006,
with comparative totals for the year ended September 30, 2005.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200620052006200520062005
Revenues:
Program revenues:
Charges for services1,107,841$ $ 976,894$ 6,327,315$ 5,945,434$ 7,435,156$ 6,922,328
Operatinggrants 172,884125,068 --172,884125,068
Capitalgrants
and contributions177,503556,425599,3931,513,020776,8962,069,445
General revenues:
Property taxes3,094,2522,896,273 --3,094,2522,896,273
Sales taxes4,101,9733,654,232 --4,101,9733,654,232
Franchise taxes1,423,6151,264,298 --1,423,6151,264,298
Other taxes312,528292,447 --312,528292,447
Investment earnings441,986286,301518,164305,559960,150591,860
54,06834,663 32,037 - 66,700 54,068
Miscellaneous
10,867,245 7,476,909 7,764,013 18,344,154 17,870,019
Total revenues
Expenses:
General government1,441,9391,453,986 --1,441,9391,453,986
Public safety4,689,4434,345,846 --4,689,4434,345,846
Streets1,098,979979,051 --1,098,979979,051
Culture and recreation1,646,0171,582,864 --1,646,0171,582,864
Community development343,135348,177 --343,135348,177
Interest on long-term 91,817
debt-109,153 - --109,153
Water and wastewater--4,681,1744,367,6714,681,1744,367,671
Storm water drainage- -18,0758,63318,0758,633
Sanitary landfill--232,955166,346232,955166,346
- - 119,832 99,078 119,832 99,078
Airport
9,311,330 5,052,036 4,641,728 14,363,366 13,460,805
Total expenses
Increases in net assets
before transfers1,555,9151,286,9292,424,8733,122,2853,980,7884,409,214
( 50,000)116,979)( 116,979 50,000 - -
Transfers
Change in net assets1,438,9361,236,9292,541,8523,172,2853,980,7884,409,214
17,678,421 22,007,282 18,834,997 40,922,632 36,513,418
18,915,350
Net assets - beginning
$ 20,354,286$ 24,549,134$ 22,007,282$ 44,903,420$ 40,922,632$
Net assets - ending
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds. The focus of the City’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $10,495,224. Approximately 99 percent of this total amount, $10,415,429, constitutes
unreserved fund balance. Refer to page 13 of this report for a more detailed presentation of
governmental fund balances.
7
In the General Fund, the City budgeted for a decrease in the fund balance on a budget basis of $655,634
but due to actual revenues being more than budgeted and actual expenditures being less than budgeted, the
fund balance actually increased by $681,016 during the current fiscal year. This was mainly due to higher
than projected sales tax collections. Sales tax collections increased by 12.3% from the previous year and
the City collected $501,973 more than budgeted. Other actual revenues collected were also higher than
budgeted: 1) current year and delinquent property taxes were collected at higher rates than projected to
generate $54,797; 2) franchise fees were $167,745; 3) licenses and permit fees were $77,989 more than
budgeted; and 4) interest revenue was also higher due to rising interest rate by $150,652 higher than
budgeted. Expenditures were lower than budgeted mainly because street department costs were $55,589
lower, fire department costs were $26,427 lower, park maintenance costs were $96,718 lower, and
community development costs were $95,705 lower than budgeted.
The fund balance of the City’s General Fund increased by $681,016 during the current fiscal year.
The Capital Projects Fund has a fund balance of $1,051,972, a decrease of $11,058, all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $69,443, an increase of $18,880, all of which is reserved
for the repayment of debt.
The Special Revenue Fund has a fund balance of $318,028, an increase of $70,284, all of which is
restricted for the special programs defined by revenue source.
Proprietary Funds. The City's proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
Unrestricted net assets of the City's Enterprise Funds at the end of the year amounted to $6,516,830.
The increase in net assets was $2,587,508. Other factors concerning the finances of these funds have
already been addressed in the discussion of the City's business-type activities.
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget amounted to $277,000. The most
significant changes were for $105,000 to fund utility cost increases, $28,000 for fuel cost increases, and
$56,000 for public safety communication equipment. The remaining portion of the budget difference
was used mainly to cover adjustments for unexpected maintenance and personnel costs.
Even with these increases in appropriations, the excess in revenues during the year was sufficient to
fund these increases without reducing the budgeted General Fund fund balance.
Actual expenditures on a budgetary basis were $9,011,050 compared to the final budget expenditures of
$9,144,296. The $133,246 variance was primarily due to close monitoring of expenditures by
departments and performing better than anticipated. Actual revenues on a budgetary basis was
$9,809,045 compared to the final budget of $8,625,672. The $1,183,373 variance was due primarily to
increases in sales tax revenue and interest earnings.
Capital Assets. The City's investment in capital assets for its governmental and business-type activities
as of September 30, 2006, amounts to $27,167,171 (net of accumulated depreciation). This investment
in capital assets includes land, buildings, improvements, machinery and equipment, park facilities and
infrastructure.
8
Major capital asset events occurring during the current fiscal year included the following:
Purchase of landfill dozer for $320,350;
Park improvements for $79,124;
Continuation of street improvement program for $289,234;
Rights-of-way acquisitions for the Ollie/Mary Streets expansion at $173,361;
Water and sewer line replacement programs for $84,001;
Acquired vehicles and other equipment for public safety for $179,103;
Airport commercial hangar and improvements for $670,562; and
Sewer service to recently annexed area for $1,306,991.
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200620052006200520062005
Land$ 2,005,270$ 1,831,885$ 798,082$ 799,177$ 2,803,352$ 2,631,062
Buildings and
improvements 2,377,828 2,445,947 4,335,975 3,804,368 6,713,803 6,250,315
Equipment 1,341,267 1,206,033 678,266 416,506 2,019,533 1,622,539
Infrastructure 5,605,412 5,611,787 22,856,835 23,454,853 28,462,247 29,066,640
Construction in
- - 2,074,249 349,834 2,074,249 349,834
progress
$ 11,329,777 11,095,652$ 30,743,407$ 28,824,738$ 42,073,184$ 39,920,390$
Total capital assets
Additional information on the City's capital assets can be found on page 37 – 38 of this report.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City had total bonded debt of $21,400,233. Of this amount,
$1,595,000 represents bonded debt backed by the full faith and credit of the City, $19,575,000
represents utility revenue bonds secured by water and sewer revenues and $230,233 represents revenue
bonds secured by airport revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200620052006200520062005
General obligation$ 645,000$ 945,000$ -$ -$ 645,000$ 945,000
Certificates of
obligations 950,000 1,080,000 - - 950,000 1,080,000
Revenue bonds
-- 19,805,233 19,160,233 19,805,233 19,160,233
payable
$ 2,025,0001,595,000$ 19,805,233$ 19,160,233$ 21,400,233$ 21,185,233$
9
The City's General Obligation, Tax and Certificates of Obligation Bond ratings are listed below.
Moody'sStandard
Investors Serviceand Poor's
General Obligation BondsA3A
Additional information on the City’s long term-debt can be found in pages 39 – 42 this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
In the fiscal year 2006-07 budget, General Fund revenues and transfers are budgeted to increase by 2.9%
from the 2005-06 final budget with ad valorem taxes making up 31% and sales tax collections making
up 39.6% of the General Fund revenues. Certified assessed property valuations increased by 11.75%
over the preceding year. Factors that were considered in preparing the City’s budget for the 2007 fiscal
year were increases in personnel costs by about 3%, utilities by about 38%, and fuel cost by about 24%.
During the current fiscal year, unreserved fund balance in the General Fund increased to $9,045,429.
The City uses reserves from the General Fund to supplement capital projects (e.g. street paving, code
enforcement demolition costs, park improvements, rights-of-way acquisitions, capital replacement)
during the year as the needs arise and where favorable unit pricing is received on such projects.
Additionally, the City’s Financial Management Practices call for the designation of any surplus of
revenues over expenses at fiscal year-end as a means of providing resources for major capital projects.
There are ample funds for transfers during 2007, should the City Council so desire, and still retain the
minimum fund balance provisions established by the Financial Management Practices.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional information should be addressed to Mark A. Kaiser, City Administrator,
298 West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1225.
10
BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2006
Primary Government
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments18,937,153$ 4,611,765$ 23,548,918$
Receivables (net of allowances for uncollectibles)
Taxes890,963 - 890,963
Accounts320,029 1,074,662 1,394,691
Other97,774 - 97,774
Internal balances8,283,316)( 8,283,316 -
Inventories10,352 - 10,352
Restricted investments- 816,481 816,481
Deferred charges- 227,130 227,130
Capital assets
Land2,005,270 798,082 2,803,352
Buildings and improvements3,191,028 5,291,763 8,482,791
Machinery and equipment4,568,804 1,808,376 6,377,180
Infrastructure/water and wastewater distribution9,757,217 38,356,199 48,113,416
Construction in progress- 2,074,249 2,074,249
(8,192,542)( 25,777,804)(
Less: accumulated depreciation
30,743,40711,329,777 42,073,184
Total capital assets
45,756,76123,302,732 69,059,493
Total assets
LIABILITIES
Accounts payable986,727 488,847 1,475,574
Accrued liabilities169,870 20,721 190,591
Accrued interest payable12,606 221,988 234,594
Customer deposits- 162,512 162,512
Noncurrent liabilities:
Due within one year491,982 1,140,952 1,632,934
1,287,928 20,460,535
Due in more than one year
2,949,113 24,156,740
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt9,734,777 17,432,394 27,167,171
Restricted for:
Hotel/motel economic development252,754 - 252,754
Child and public safety65,274 - 65,274
Debt service63,821 599,910 663,731
6,516,83010,237,660 16,754,490
Unrestricted
$ 24,549,13420,354,286$ 44,903,420$
Total net assets
The notes to the financial statements are an integral part of this statement.
11
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 177,6361,441,939$ 17,438$ -$ 1,246,865$( -)$ 1,246,865$()
Public safety 600,3324,689,443 124,112 - 3,964,999( -) 3,964,999()
Streets 17,4441,098,979 - 110,719 970,816( -) 970,816()
Culture and recreation 132,1251,646,017 31,334 66,784 1,415,774( -) 1,415,774()
Community developmen 180,304343,135 - - 162,831( -) 162,831()
-91,817 - - 91,817)( - 91,817)(
Interest on long-term debt
1,107,8419,311,330 172,884 177,503 7,853,102)( - 7,853,102)(
Total governmental activities
Business-type activities
Water and wastewater 5,628,6584,681,174 - 79,691 - 1,027,175 1,027,175
Sanitary landfill 162,306232,955 - - - 70,649( 70,649)()
Airport119,832 51,037 - 519,702 - 450,907 450,907
485,31418,075 - - - 467,239 467,239
Storm water drainage
6,327,3155,052,036 - 599,393 - 1,874,672 1,874,672
Total business-type activities
$ 14,363,366 7,435,156$ 172,884$ 776,896$ 7,853,102)( 1,874,672 5,978,430)(
Total
General revenues:
Taxes:
Property - generalpurpose2,657,106 - 2,657,106
Property - debt service -437,146 437,146
Sales -4,101,973 4,101,973
Franchise -1,423,615 1,423,615
Other -312,528 312,528
Investment earnings 518,164441,986 960,150
Miscellaneous 34,663 32,037 66,700
( 116,979116,979) -
Transfers
9,292,038 667,180 9,959,218
Total general revenues and transfers
Change in net assets 2,541,8521,438,936 3,980,788
18,915,350 22,007,282 40,922,632
Net assets, beginning
$ 20,354,286 24,549,134$ 44,903,420$
Net assets, ending
The notes to the financial statements are an integral part of this statement.
12
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CITY OF STEPHENVILLE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2006
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
ASSETS
Cash and investments8,389,604$ 10,156,611$ 390,938$ 18,937,153$
Receivables (net of allowance for uncollectibles)
Taxes835,581 - 55,382 890,963
Accounts142,459 - - 142,459
Intergovernmental96,438 - 1,336 97,774
-10,352 - 10,352
Inventories
9,474,434 10,156,611 447,656 20,078,701
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable107,144 821,323 53,201 981,668
Accrued liabilities169,870 - - 169,870
Due to other funds5,059 8,283,316 - 8,288,375
-137,247 6,984 144,231
Deferred revenue
9,104,639419,320 60,185 9,584,144
Total liabilities
Fund balances:
Reserved for:
Inventories10,352 - - 10,352
Debt service- - 69,443 69,443
Unreserved, reported in:
General fund9,045,429 - - 9,045,429
Special revenue funds- - 318,028 318,028
1,051,972- - 1,051,972
Capital projects fund
9,055,781 1,051,972 387,471
Total fund balances 10,495,224
$ 9,475,101 10,156,611$ 447,656$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedinthe
funds.
11,329,777
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
funds.
321,801
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(1,792,516)
$ 20,354,286
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
13
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
REVENUES
Taxes:
Property$ -2,663,936$ 440,183$ 3,104,119$
Sales4,101,973 - - 4,101,973
Franchise1,423,615 - - 1,423,615
Other38,486 - 274,042 312,528
Special assessment- 28,122 - 28,122
Licenses and permits183,839 - - 183,839
Fines and forfeitures225,701 - 54,015 279,716
Intergovernmental 66,784117,598 3,714 188,096
Service charges640,935 - - 640,935
Investment earnings355,652 67,434 18,900 441,986
57,310 - 2,800 60,110
Miscellaneous
162,3409,809,045 793,654 10,765,039
Total revenues
EXPENDITURES
Current:
General government1,081,157 - 268,091 1,349,248
Public safety -4,553,135 9,082 4,562,217
Streets699,290 - - 699,290
Culture and recreation1,466,261 - - 1,466,261
Community development -337,659 - 337,659
Debt service:
Principal - - 430,000 430,000
Interest and fiscal charges- - 91,817 91,817
873,548 78,898 - 952,446
Capital outlay
78,8989,011,050 798,990 9,888,938
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
797,995 83,442 5,336)( 876,101
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in - - 94,500 94,500
(116,979) 94,500)( - 211,479)(
Transfers out
(116,979) 94,500)( 94,500 116,979)(
Total other financing sources (uses)
11,058)681,016( 89,164 759,122
NET CHANGE IN FUND BALANCES
1,063,0308,374,765 298,307 9,736,102
FUND BALANCES, BEGINNING
$ 1,051,9729,055,781$ 387,471$ 10,495,224$
FUND BALANCES, ENDING
The notes to the financial statements are an integral part of this statement.
14
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CITY OF STEPHENVILLE, 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, 2006
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page12)are
different because:
Net change in fund balances - total governmental funds (page 14)759,122$
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense. 40,259
Theneteffectofvariousmiscellaneoustransactionsinvolvingcapitalassets(i.e.,sales,trade-
ins, and donations) is to increase net assets.193,867
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds. 19,608
Theissuanceoflong-termdebt(e.g.,bonds,leases)providescurrentfinancialresourcesto
governmentalfunds,whiletherepaymentoftheprincipaloflong-termdebtconsumesthe
current financial resources of governmental funds. 430,000
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrentfinancial
resources and, therefore, are not reported as expenditures in governmental funds.
(3,920)
$ 1,438,936
Change in net assets of governmental activities (page 12)
The notes to the financial statements are an integral part of this statement.
15
CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
REVENUES
Taxes6,086,750$ 6,186,750$ 6,804,395$ 617,645$
Franchise1,283,000 1,283,000 1,423,615 140,615
Licenses and permits105,850 105,850 183,839 77,989
Fines and forfeitures220,000 220,000 225,701 5,701
Intergovernmental48,746 104,746 117,598 12,852
Service charges640,616 640,616 640,935 319
Investment earnings90,000 205,000 355,652 150,652
75,70069,700 57,310 18,390)(
Miscellaneous
8,544,662 8,821,662 9,809,045 987,383
Total revenues
EXPENDITURES
Current:
General government:
City council45,092 45,092 43,163 1,929
City administrator111,364 111,364 113,416 2,052()
City secretary 73,32373,323 68,773 4,550
Emergency management6,450 6,450 5,498 952
Municipal buildings196,986 226,986 231,018 4,032()
Financial administration and accounting 292,275302,275 268,426 23,849
Purchasing 51,64151,641 52,320 679()
Tax assessment and collection81,100 81,100 79,805 1,295
Legal counsel65,749 65,749 65,184 565
Municipal court88,500 88,500 84,801 3,699
79,74179,741 68,753 10,988
Human resources
1,102,221 1,122,221 1,081,157 41,064
Total general government
Public safety:
Fire and ambulance administration175,343 180,343 178,406 1,937
Fire prevention and investigation79,777 79,777 79,686 91
Fire suppression809,211 817,711 807,717 9,994
Emergency medical services786,450 791,450 786,152 5,298
Volunteer31,872 31,872 28,020 3,852
(continued)
16
CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current:
Public safety(continued):
Police administration104,991$ 104,991$ 111,726$ 6,735$()
Police patrol1,365,874 1,434,874 1,386,395 48,479
Police communications329,151 329,151 336,469 7,318()
Police records130,475 130,475 126,498 3,977
Criminal investigation342,079 342,079 378,916 36,837()
Police reserve63,043 63,043 59,445 3,598
Animal control104,925 104,925 103,880 1,045
169,235147,235 169,825 590)(
Public safety facility
4,470,426 4,579,926 4,553,135 26,791
Total public safety
Streets:
726,594694,094 699,290 27,304
Street maintenance
726,594694,094 699,290 27,304
Total streets
Culture and recreation:
Recreation administration615,509 650,509 649,744 765
Park maintenance408,214 420,214 397,173 23,041
Cemeteries 107,886 110,886 108,505 2,381
Library 227,321216,321 197,936 29,385
114,014110,014 112,903 1,111
Senior citizens center
1,457,944 1,522,944 1,466,261 56,683
Total culture and recreation
Community development:
Community developmentplanning 210,348165,348 132,684 77,664
Community development inspection123,097 128,097 120,386 7,711
94,91994,919 84,589 10,330
Code enforcement
433,364383,364 337,659 95,705
Total community development
8,108,049 8,385,049 8,137,502 247,547
Total current
(continued)
17
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CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Capital outlay:
General government:
Municipal buildings21,500$ 21,500$ -$ 21,500$
9,6009,600 32,149 22,549)(
Financial and administration and accounting
31,10031,100 32,149 1,049)(
Total general government
Public safety:
Fire suppression54,000 54,000 48,745 5,255
131,000131,000 136,018 5,018)(
Police patrol
185,000185,000 184,763 237
Total public safety
Streets:
555,500555,500 527,235 28,265
Street maintenance
555,500555,500 527,235 28,265
Total highways and streets
Culture and recreation
Park maintenance196,500 196,500 122,823 73,677
8,0008,000 1,4226,578
Cemeteries
204,500204,500 129,401 75,099
Total culture and recreation
976,100976,100 873,548 102,552
Total capital outlay
9,084,149 9,361,149 9,011,050 350,099
Total expenditures
OTHER FINANCING SOURCES (USES)
(116,147) 116,147)( 116,979)( 832
Transfers out
(116,147) 116,147)( 116,979)( 832
Total other financing sources (uses)
( 655,634655,634)( 681,016) 1,336,650
NET CHANGE IN FUND BALANCE
8,374,765 8,374,765 8,374,765 -
FUND BALANCE, BEGINNING
$7,719,131 7,719,131$ 9,055,781$ 1,336,650$
FUND BALANCE, ENDING
The notes to the financial statements are an integral part of this statement.
18
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2006
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
ASSETS
Current assets:
Cash and investments2,626,829$ 1,984,936$ 4,611,765$
Accounts receivable - net of allowances for uncollectibles1,009,342 65,320 1,074,662
Due from other funds8,283,316 - 8,283,316
-816,481 816,481
Restricted investments
2,050,25612,735,968 14,786,224
Total current assets
Noncurrent assets:
Deferred charges227,130 - 227,130
Capital assets:
Land 634,361163,721 798,082
Buildings and improvements2,321,930 2,969,833 5,291,763
Equipment1,095,882 712,494 1,808,376
Water and wastewater distribution38,356,199 - 38,356,199
Construction in progress1,585,014 489,235 2,074,249
( 886,678)16,698,584)( 17,585,262)(
Less: accumulated depreciation
3,919,24526,824,162 30,743,407
Total capital assets
3,919,24527,051,292 30,970,537
Total noncurrent assets
5,969,50139,787,260 45,756,761
Total assets
LIABILITIES
Current liabilities:
Accounts payable454,193 34,654 488,847
Accrued liabilities18,676 2,045 20,721
Customer deposits162,512 - 162,512
Accrued interest216,571 5,417 221,988
Capital lease- 39,265 39,265
Bonds payable1,085,000 10,000 1,095,000
1,7094,978 6,687
Compensated absences payable
93,0901,941,930 2,035,020
Total current liabilities
Long-term liabilities:
Capital lease- 219,919 219,919
Revenue bonds payable18,490,000 - 18,490,000
Certificate of obligation- 220,233 220,233
Compensated absences payable19,912 - 19,912
222,543- 222,543
Liability for landfill closure
662,69518,509,912 19,172,607
Total long-term liabilities
755,78520,451,842 21,207,627
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt13,733,382 3,699,012 17,432,394
Restricted for debt service599,910 - 599,910
1,514,7045,002,126 6,516,830
Unrestricted
$ 5,213,71619,335,418$ 24,549,134$
Total net assets
The notes to the financial statements are an integral part of this statement.
19
THIS PAGE IS INTENTIONALLY LEFT BLANK
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
OPERATING REVENUES
Water sales3,494,084$ -$ 3,494,084$
Wastewater charges2,018,659 - 2,018,659
Tap and collection fees46,791 - 46,791
Delinquent charges31,258 - 31,258
Gate charges- 162,306 162,306
Hanger rental- 47,121 47,121
Storm water drainage fees- 485,314 485,314
3,91637,866 41,782
Other service charges
698,6575,628,658 6,327,315
Total operating revenues
OPERATING EXPENSES
Personnel services833,531 69,831 903,362
Contractual services701,291 875 702,166
Utilities609,780 22,320 632,100
Repairs and maintenance375,893 34,305 410,198
Other supplies and expenses411,248 48,446 459,694
178,498997,354 1,175,852
Depreciation
354,2753,929,097 4,283,372
Total operating expenses
344,3821,699,561 2,043,943
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
Investment earnings444,787 73,377 518,164
Gain on sale of capital assets- 32,037 32,037
( 16,587)752,077)( 768,664)(
Interest and fiscal charges on debt
( 88,827307,290) 218,463)(
Total nonoperating revenues (expenses)
433,2091,392,271 1,825,480
INCOME BEFORE CONTRIBUTIONS
519,70279,691 599,393
CAPITAL CONTRIBUTIONS
- 116,979 116,979
TRANSFERS IN
1,069,8901,471,962 2,541,852
CHANGE IN NET ASSETS
4,143,82617,863,456 22,007,282
TOTAL NET ASSETS, BEGINNING
$ 5,213,71619,335,418$ 24,549,134$
TOTAL NET ASSETS, ENDING
The notes to the financial statements are an integral part of this statement.
20
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers5,613,175$ 705,159$ 6,318,334$
Cash payments to employees for services829,326)( 70,318)( 899,644)(
( 35,635)2,237,502)( 2,273,137)(
Cash payments to suppliers for goods and services
599,2062,546,347 3,145,553
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash received from other funds- 116,979 116,979
(139,330) - 139,330)(
Cash paid to other funds
(139,330) 116,979 22,351)(
Cash provided (used) by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Proceeds from issuance of long-term debt2,000,000 - 2,000,000
Principal repayments on capital lease- 61,166)( 61,166)(
Principal repayments on bonds1,355,000)( 15,000)( 1,370,000)(
Interest and fiscal charges on debt720,184)( 14,608)( 734,792)(
Capital contributions79,691 519,702 599,393
Acquisition and construction of capital assets1,829,337)( 936,871)( 2,766,208)(
24,074- 24,074
Proceeds from sale of capital assets
Cash used by capital and
( 483,869)1,824,830)( 2,308,699)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
444,787 73,377 518,164
Interest on investments
444,787 73,377 518,164
Cash provided by investing activities
NET INCREASE IN CASH AND
305,6931,026,974 1,332,667
CASH EQUIVALENTS
1,679,2432,416,336 4,095,579
CASH AND CASH EQUIVALENTS, BEGINNING
$ 1,984,9363,443,310$ 5,428,246$
CASH AND CASH EQUIVALENTS, ENDING
(Including $816,481 for the Water and Wastewater
fund in restricted investments)
(continued)
21
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 1,699,561$ 344,382$ 2,043,943$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation997,354 178,498 1,175,852
Change in assets and liabilities:
Decrease (increase) in accounts receivable120,875)( 6,425 114,450)(
Increase (decrease) in accounts payable139,290)( 34,084 105,206)(
Increase (decrease) in accrued liabilities973 265)( 708
Increase (decrease) in customer deposits105,392 - 105,392
Increase (decrease) in compensated absences3,232 282)( 2,950
36,364- 36,364
Increase (decrease) in liability for landfill closure
846,786 254,824 1,101,610
Total adjustments
$ 599,2062,546,347$ 3,145,553$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ 320,350-$ 320,350$
Borrowing under capital lease
The notes to the financial statements are an integral part of this statement.
22
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF FIDUCIARY NET ASSETS
AGENCY FUNDS
SEPTEMBER 30, 2006
Agency
Funds
ASSETS
$ 5,059
Due from other funds
5,059
Total assets
LIABILITIES
5,059
Due to others
$ 5,059
Total liabilities
The notes to the financial statements are an integral part of this statement.
23
CITY OF STEPHENVILLE, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Stephenville, Texas, was incorporated August 6, 1989, and operates as a home rule
City. The City operates under a mayor-council form of government and provides the following
services as authorized by its charter, general government, public safety (police, fire and EMS),
streets, community development (planning and zoning, licensing, permitting and inspection),
water and wastewater system, culture and recreation, airport and sanitary landfill.
A.Reporting Entity
The accompanying financial statements comply with the provisions of the GASB Statements
No. 14 and 39, “The Financial Reporting Entity,” in that the financial statements include all
organizations, activities, functions and component units for which the City (the “primary
government”) is financially accountable. Financial accountability is defined as the
appointment of a voting majority of a legally separate organization’s governing body and
either (1) the City’s ability to impose its will over the organization, or (2) the potential that
the organization will provide a financial benefit to or impose a financial burden on the City.
There are no component units which satisfy requirements for blending within the City’s
financial statements or for discrete presentation.
B.Government-wide 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. 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-type activities, which rely
to a significant extent on fees and charges for support.
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.
(continued)
24
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B.Government-wide Fund Financial Statements (Continued)
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. Revenues are 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 financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized
as soon as they are both measurable and available. Revenues are considered to be available
when they are 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.
Governmental Funds are those through which most governmental functions of the City are
financed. The acquisition, use, and balances of the City’s expendable financial resources and
the related liabilities (except those accounted for in the proprietary fund type) are accounted
for through governmental funds. The measurement focus is upon determination of changes
in financial position, rather than upon net income determination.
(continued)
25
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C.Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
The City reports the following major governmental funds:
TheGeneral Fund – is the general operating fund of the City. It is used to
account for all financial resources except those required to be accounted for in
another fund.
TheCapital Projects Fund is used to account for financial resources to be used
for the acquisition or construction of general major capital facilities. Financing is
provided primarily by the sale of general obligation bonds and developer
contributions.
The City reports the following major proprietary fund:
TheWater and Wastewater Fund– is used to account for the activities necessary
for the provisions of water and wastewater services.
Additionally, the City reports the following fund type:
Fiduciary Funds – Agency Fundsare used to account for assets held by the City
in a trustee capacity or as an agent on behalf of others. Agency funds are
custodial in nature and do not present results of operations or have a measurement
focus. The City has one agency fund: the Senior Citizens Fund.
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 financial
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-type 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)
26
I. 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 are charges to customers for sales
and services. Operating expenses for Enterprise Funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenue and expenses not
meeting this definition are reported as nonoperating revenue and expenses.
When both restricted and unrestricted resources are available for use, it is the City’s policy to
use restricted resources first, then unrestricted resources as they are needed.
D.Assets, Liabilities and Net Assets or Equity
Cash and Cash Equivalents
For purpose of presenting the proprietary fund cash flow statement, cash and cash
equivalents include cash demand and time deposits and investments with a maturity date
within three months of the date acquired by the City.
Investments
State statutes authorize the City to invest in (1) obligations of the United States or its
agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies;
(3) other obligations, the principal of and interest on which are unconditionally guaranteed or
insured by the State of Texas or the United States; (4) obligations of states, agencies,
counties, cities, and other political subdivisions of any state having been rated as to
investment quality by a nationally recognized investment rating firm and having received a
rating of not less than “A” or its equivalent; (5) certificates of deposit by state and national
banks domiciled in this state that are (a) guaranteed or insured by the Federal Deposit
Insurance Corporation, or its successor; or, (b) secured by obligations that are described by
(1) – (4); or, (6) fully collateralized direct repurchase agreements having a defined
termination date, secured by obligations described by (1) pledged with third-party selected or
approved by the City, and placed through a primary government securities dealer.
Investments maturing within one year of date of purchase are stated at cost or amortized cost,
all other investments are stated at fair value, which is based on quoted market prices.
(continued)
27
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D.Assets, Liabilities and Net Assets or Equity (Continued)
Short-term Interfund Receivables/Payables
During the course of operations, numerous transactions occur between individual funds for
goods provided or services rendered. These receivables and payables are classified as “due
from other funds” or “due to other funds” on the balance sheet. Any residual balances
outstanding between the governmental activities and business-type activities are reported in
the government-wide financial statements as “internal balances.”
Inventories
All inventories are valued at cost (first-in, first-out method). Inventories of governmental
funds are recorded as expenditures when consumed rather than when purchased.
Restricted Assets
Certain bond proceeds, as well as 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 $1,000 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.
(continued)
28
I. 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 estimated useful lives:
AssetsYears
Airport improvements40
Buildings20 to 40
Waterworks and sanitation systems33 1/3
Infrastructure20
Machinery and equipment7 to 10
Compensated Absences
The City permits employees to accumulate earned but unused vacation pay benefits. Certain
employees previously covered by civil service policies also have carried forward unused sick
leave benefits. No liability is reported for unpaid accumulated sick leave for the remaining
employees. Vacation pay is accrued when incurred in the applicable governmental activities,
business-type activities, or proprietary fund type statement of net assets. A liability for these
amounts is reported in governmental funds only if they have matured for example, as a result
of employee resignations and retirements.
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. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the straight-line method, which approximates
the effect interest method. Bonds payable are reported net of the applicable bond premium or
discount. Bond issuance costs are reported as deferred charges and amortized over the term
of the related debt.
(continued)
29
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D.Assets, Liabilities and Net Assets or Equity (Continued)
Long-term Obligations (Continued)
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as issuance costs during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts are reported as other financing uses.
Issuance costs, even if withheld from the actual net proceeds received, are reported as
expenditures.
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.
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in
capital assets, net of related debt consists of capital assets, net of accumulated depreciation,
reduced by the outstanding balances of any borrowing used for the acquisition, construction
or improvements of those assets, and adding back unspent proceeds. Net assets are reported
as restricted when there are limitations imposed on their use either through the enabling
legislations adopted by the City or through external restrictions imposed by creditors,
grantors or laws or regulations of other governments.
Estimates
The preparation of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ from those estimates.
30
II. 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 are
not due and payable in the current period and therefore are not reported in the funds.” The
details of this $1,792,516 difference are as follows:
General obligations$ 1,595,000
Accrued interest payable12,606
184,910
Compensated absences
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$1,792,516
governmental activities
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
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 $40,259 difference are as follows:
$ 924,522
Capital outlay
(884,263)
Depreciation expense
Net adjustment to increase net changes in fund
balances - total governmental funds to arrive at
$ 40,259
changes in net assets of governmental activities
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 $193,867 difference are as follows:
Inthestatementofactivities,onlythelossofcapitalassetsisreported.
However,inthegovernmentalfunds,theproceedsfromthesaleincrease
financialresources.Thus,thechangenetassetsdiffersfromthechangein
fund balance by the cost of capital assets sold.
$ 111,270
Donations of capital assets increase net assets in the statement of activities,
butdonotappearinthegovernmentalfundsbecausetheyarenotfinancial
82,597
resources.
$ 193,867
(continued)
31
II. 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)
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
$19,608 difference are as follows:
Property taxes$( 9,867)
29,475
Ambulance charges for services
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 19,608
assets of governmental activities
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 $430,000
difference are as follows:
$ 430,000
Principal repayments
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 430,000
assets of governmental activities
Another element of that reconciliation states that, “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 $3.920 difference are as follows:
$(3,920)
Compensated absences
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
$(3,920)
assets of governmental activities
32
III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A.Budgets
Budgets are adopted on a basis consistent with generally accepted accounting principles.
Annual appropriated budgets are adopted for the General Fund, Special Revenue Funds, and
the Debt Service Fund. All annual appropriations lapse at the end of each fiscal year.
Budgets are adopted for the proprietary funds annually only as a management tool. There are
no legally mandated budgetary constraints for the proprietary funds.
In May of each year, budget preparation packages are distributed to all City agencies. The
agencies of the City submit requests for appropriation to the City Administrator before June
15 so that a budget may be prepared. The budget is prepared by department and includes
information on the past year, current year estimates and requested appropriations for the next
fiscal year. During August, the proposed budget is presented to the City Council for review.
The City Council holds one public hearing before August 31 and may add to, subtract from,
or change appropriations. Any changes in the budget must be within the revenue and
reserves estimated as available by the City Administrator, or the revenue estimates must be
changed by an affirmative vote of a majority of the City Council.
The appropriated budget is prepared by fund, function and department. The City’s
management may make transfers of appropriations within a department. Transfers of
appropriations between departments require the approval of the City Council. The legal level
of budgetary control is the department level. The City Council made several supplementary
budget appropriations that were not material during the year.
Encumbrances represent commitments related to unperformed contracts for goods or
services. Encumbrance accounting under which purchase orders, contracts and other
commitments for the expenditure of resources are recorded to reserve that portion of the
applicable appropriation, is utilized in the governmental funds. Encumbrances lapse at year-
end and do not constitute expenditures or liabilities because the commitments must be
reappropriated and honored during the subsequent year.
(continued)
33
III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)
B.Expenditures over Appropriations
Expenditures exceeded appropriations in the General Fund in various departments. The
following overruns were funded by unexpected revenues.
General government:
City administration$ 2,052
Purchasing679
Public safety:
Police administration6,735
Police communications7,318
Criminal investigation36,837
Public safety facility590
Capital outlay:
General government:
Financial administration and accounting22,549
Public safety:
Police patrol5,018
IV. DETAILED NOTES ON ALL FUNDS
A.Deposits and Investments
Substantially all deposits and investments are maintained in consolidated cash and
investment accounts. Interest income relating to consolidated deposits and investments is
allocated to the individual funds monthly based on each fund’s prorate share of total
consolidated cash, deposits and investments.
Legal provisions generally permit the City to invest in certificates of deposit, repurchase
agreements, public funds investment pools, direct obligations of the United States of America
or its subdivisions and state and local government securities. During the year ended September
30, 2006, the City did not own any types of securities other than those permitted by statute.
(continued)
34
IV. DETAILED NOTES ON ALL FUNDS (Continued)
A.Deposits and Investments (Continued)
As of September 30, 2006, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity(Days)
Tex Pool$ 9,105,28428
14,049,677
U. S. Treasuries127
$23,154,961
Total fair value
Portfolio wei
ghted average maturity(days)88
The City’s investment pool is 2a7-like pool. A 2a7-like pool is one which is not registered
with the Securities and Exchange Commission (“SEC”) as an investment company, but
nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s
Rule 2a7 of the Investment Company Act of 1940.
Interest Rate Risk. In accordance with its investment policy, the City manages its exposure
to declines in fair market values by limiting the weighted average maturity of its investment
portfolios to a maximum of 180 days.
Custodial Credit Risk. In the case of deposits, this is the risk that in the event of a bank
failure, the City’s deposits may not be returned to it. State statues require that all deposits in
financial institutions be fully collateralized by U. S. Government obligations or its agencies
and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that
have a fair value of not less than the principal amount of deposits. As of September 30,
2006, $1,110,028 of the City’s $1,310,028 deposit balance was collateralized with securities
held by the pledging financial institution.The remaining balance, $200,000, was covered by
FDIC insurance.
Credit Risk. It is the City’s policy to limit its investments to investment types with an
investment quality rating not less than A or its equivalent by a nationally recognized
statistical rating organization.The City’s investment pool was rated AAAm and the U. S.
Treasuries were rated AAA by Standard and Poor’s Investors Service.
(continued)
35
IV. DETAILED NOTES ON ALL FUNDS (Continued)
B.Receivables
Receivables as of year-end for the government’s individual major funds and nonmajor funds
in the aggregate, including the applicable allowances for uncollectible accounts, are as
follows:
Governmental FundsEnterprise Funds
NonmajorWater andNonmajor
GeneralFundsWastewaterFundsTotal
Receivables:
Accounts:
Customers$ -$ -$ 1,337,628$ 59,083$ 1,396,711
Ambulance 623,429 - - - 623,429
Taxes:
Pro
perty 112,075 22,478 - - 134,553
Sales 787,960 - - - 787,960
Occupancy- 46,918 - - 46,918
Intergovernmental 96,438 1,336 - - 97,774
4,993 - 32,765 9,058 46,816
Other
Gross receivables 1,624,895 70,7321,370,39368,1413,134,161
Less: allowance for
( 550,417) 14,014)( 361,051)( 2,821)( 928,303)(
uncollectibles
$ 1,074,478 56,718$ 1,009,342$ 65,320$ 2,205,858$
Net total receivables
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:
UnavailableUnearned
Delinquent property taxes receivable (general fund)$ 40,342$ -
Delinquent property taxes receivable (debt service)6,984 -
96,905 -
Ambulance charges for services (general fund)
$ 144,231 -$
Total governmental funds
(continued)
36
IV. DETAILED NOTES ON ALL FUNDS (Continued)
C.Property Tax Calendar
Property taxes assessed on property valuations as of January 1 each year are levied on the
subsequent October 1. Property taxes attach as an enforceable lien on property at the time
levied. Property taxes are considered due when levied and become delinquent on the
following February 1. On this date, penalties and interest may be assessed by the City.
D.Capital Assets
Capital asset activity for the year ended September 30, 2006, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
$ 173,3851,831,885$ -$ 2,005,270$
Land
173,3851,831,885 - 2,005,270
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements3,191,028 --3,191,028
Machinery and equipment4,233,138347,33111,6654,568,804
486,4039,270,814 - 9,757,217
Infrastructure
833,73416,694,980 11,665 17,517,049
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements745,08168,119-813,200
Machinery and equipment3,027,105323,367 122,9353,227,537
492,7783,659,027 - 4,151,805
Infrastructure
884,2647,431,213 122,935 8,192,542
Total accumulated depreciation
50,530)9,263,767( 111,270)( 9,324,507
Total capital assets being depreciated, net
$ 122,85511,095,652$ 111,270)$( 11,329,777$
Governmental activities capital assets, net
Business-type activities:
Capital assets, not being depreciated:
Land$ 799,177$ -$ 1,095$ 798,082
1,724,415349,834 - 2,074,249
Construction in progress
1,724,4151,149,011 1,095 2,872,331
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements4,621,200670,563-5,291,763
Machinery and equipment1,624,761368,241 1 84,6261,808,376
303,99638,052,203 - 38,356,199
Water and wastewater system
1,342,80044,298,164 184,626 45,456,338
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements816,832138,956-955,788
Machinery and equipment1,208,255134,882 2 13,0271,130,110
902,01414,597,350 - 15,499,364
Water and wastewater system
1,175,85216,622,437 213,027 17,585,262
Total accumulated depreciation
166,94827,675,727 28,401)( 27,871,076
Total capital assets being depreciated, net
$ 1,891,36328,824,738$ 27,306)$( 30,743,407$
Business-type activities capital assets, net
(continued)
37
IV. DETAILED NOTES ON ALL FUNDS (Continued)
D.Capital Assets (Continued)
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government$ 80,149
y209,759
Public safet
Culture and recreation185,254
Community development5,476
403,626
Streets
$ 884,264
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater$ 997,354
Landfill113,070
65,428
Airport
$ 1,175,852
Total depreciation expense - business-type activities
E.Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2006, is as follows:
Receivable FundPayable FundAmount
Agency General $ 5,059
8,283,316
Water and WastewaterCapital projects
$ 8,288,375
Total
Balances resulted from the time lag between the dates that 1) interfund goods and services
are provided on reimbursable expenditures occur, and 2) transactions are recorded in the
accounting system, and 3) payments between funds are made.
Interfund transfers during the year ended September 30, 2006, are as follows:
CapitalprojectsNonmajorgovernmental$ 94,500
116,979
Nonmajor enterpriseGeneral
$ 211,479
Total interfund transfers
(continued)
38
IV. DETAILED NOTES ON ALL FUNDS (Continued)
E.Interfund Receivables, Payables and Transfers (Continued)
Transfers in the amount of $94,500 are used to move receipts restricted to debt service from
the funds collecting the receipts to the Debt Service Fund as debt service payments become
due. A transfer in the amount of $116,979 was used to move unrestricted revenues collected
in the General Fund to finance the Airport Fund in accordance with budgetary authorization.
F.Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2006, was as follows:
BalanceBalanceDue Within
09/30/05AdditionsReductions09/30/06One Year
Governmental activities:
General obligation bonds$2,025,000$ -$ 430,000$ 1,595,000$ 455,000
188,506180,990 184,586 184,910 36,982
Compensated absences payable
$ 188,5062,205,990$ 614,586$ 1,779,910$ 491,982$
Total governmental activities
Business-type activities:
Revenue bonds/certificates
of obligation$ 19,160,233$ 2,000,000$ 1,355,000$ 19,805,233$1,095,000
Less deferred loss on
refundings(54,205)-(54,205) - -
Capital lease-320,350 61,166259,18439,265
Estimated landfill closure
and postclosure costs186,17936,364-222,543 -
26,61621,658 21,675 26,599 6,687
Compensated absences payable
$ 2,383,33019,313,865$ 1,383,636$ 20,313,559$ 1,140,952$
Total business-type activities
The General Fund is generally used to liquidate compensated absences for governmental
activities.
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities of governmental activities and to refund previous
issues. General obligation bonded debt of the City is as follows:
Governmental activities:
$2,000,000CombinationTaxandRevenueCertificatesof
Obligation-Series1996,principaldueannuallyinseriesthrough
2016,interestduesemi-annuallyat4.8%to6.8%,certificates
callable February 15, 2006.$ 950,000
$2,700,000GeneralObligationBonds-Series1997,principaldue
annuallyinseriesthrough2008,interestduesemi-annuallyat
4.43%.
645,000
$ 1,595,000
(continued)
39
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F.Long-term Debt (Continued)
Revenue Bonds
The City also issues revenue bonds to finance business-type activities, where it pledges net
income from service revenue to repay debt. Revenue bonds outstanding, net of deferred loss
on refunding as of September 30, 2006, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.$ 5,500,000
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.745,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.1,420,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.2,750,000
$275,000CombinationTaxandRevenueCertificatesof
Obligation,Series2003A,principaldueannuallyinSeriesthrough
2021, interest due semi-annually at 4.125%.230,233
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.7,160,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.
2,000,000
$19,805,233
Total Revenue Bonds
(continued)
40
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F.Long-term Debt (Continued)
Defeasance of Bonds
In prior years, the City defeased certain certificates of obligation bonds by placing the
proceeds of new bonds in an irrevocable trust to provide for all future debt service payments
on the old bonds. Accordingly, the trust account assets and liabilities for the defeased bonds
are not included in the City’s financial statements. On September 30, 2006, bonds
considered defeased and still outstanding were in the amount of $3,700,000.
Debt Service Requirements
Annual debt service requirements to maturity for general obligation bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
2007$ 455,000$ 70,106$ 525,106
2008475,00048,195523,195
2009150,00032,845182,845
2010165,00024,182189,182
2011170,00014,885184,885
180,000 26,719 206,719
2012-2016
$ 1,595,000 216,932$ 1,811,932$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
2007$ 1,095,000$ 672,514$ 1,767,514
20081,271,000732,5392,003,539
20091,341,000658,2311,999,231
20101,397,000608,6572,005,657
20111,443,000557,0652,000,065
2012-20168,085,0001,710,0649,795,064
5,173,233 214,511 5,387,744
2017-2021
$19,805,233 5,153,581$ 24,958,814$
Total
Capital Lease
The City has entered into a lease agreement as lessee for financing the acquisition of
equipment for landfill maintenance. 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.
(continued)
41
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F.Long-term Debt (Continued)
Capital Lease (Continued)
The assets acquired through capital leases are as follows:
Landfill
Asset:
Machinery and equipment$ 320,350
(36,039)
Less: accumulated depreciation
$ 284,311
Total
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2006, were as follows:
Fiscal Year Ending
September 30,Principal
2007$ 61,165
200861,165
200961,165
201061,165
87,924
2011
Total minimum lease payments332,584
(73,400)
Less: amount representing interest
$ 259,184
Present value of minimum lease payments
G.Contingent Arbitrage Liabilities
The City has invested a portion of revenue bond proceeds as a reserve for the retirement of
the bonds. Any excess of interest revenue earned on invested proceeds over interest paid on
the bonds must be rebated to the federal government every five years.
V. OTHER INFORMATION
A.Risk Management
The City is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; employee health benefits;
and other claims of various nature. The City participates in the Texas Municipal League
Intergovernmental Risk Pool. As an insured, the City is not obligated to reimburse the pool
for losses. The City has not had any significant reductions in insurance coverage, nor have
insurance settlements for the last three fiscal years exceeded insurance coverage. Any losses
reported, but unsettled or incurred and not reported, are believed to be insignificant to the
City’s financial statements.
(continued)
42
V. OTHER INFORMATION (Continued)
B.Commitments and Contingencies
The City is defendant in lawsuits occurring in the normal course of business. Although the
outcome of these maters is not presently determinable, in the opinion of the City’s attorney,
their resolution will not have a material adverse effect on the financial condition of the City.
Amounts received or receivable from grantor agencies are subject to audit and adjustment by
such agencies. Any disallowed claims, including amounts already collected may constitute a
liability of the applicable funds. The amount, if any, of expenditures which may be
disallowed by the grantor cannot be determined at this time although the City expects such
amounts, if any, to be immaterial.
C.Municipal Solid Waste Landfill Closure and Post Closure Costs
The City has constructed a Type IV sanitary landfill, which began operations on December 1,
1995. This facility is permitted to accept only brush and/or construction demolition wastes
and rubbish free of household wastes.
State and federal laws and regulations require the City to place a final cover on the landfill
site when it stops accepting waste and to perform certain maintenance and monitoring
functions at the site for a period of five years after closure. Although closure and post
closure care costs will be paid only near or after the date that the landfill stops accepting
waste, the City will report a portion of these closure and post closure costs as an operating
expense in each period based on landfill capacity used to date. Estimated closure and 5-year
post closure costs are approximately $222,543. The landfill site has an estimated net
capacity of 248,000 cubic yards and is expected to be closed within the next 10 years;
approximately 54% of the landfill was used at year-end. Actual costs may be higher due to
inflation, changes in technology, or changes in regulations.
The City has received written authorization from the state that no annual contributions are
required, thus the intent of the City is to fund the required expenses as incurred.
D.Retirement Plan
Plan Description
The City provides pension benefits for all of its fulltime employees through a nontraditional,
joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement
System (TMRS), one of 794 administered by TMRS, an agent multiple-employer public
employee retirement system. All assumptions for the December 31, 2005, valuations are
contained in the 2005 TMRS Comprehensive Annual Financial Report, a copy of which may
be obtained by writing to P. O. Box 149153, Austin, Texas 78714-9153.
(continued)
43
V. OTHER INFORMATION (Continued)
D.Retirement Plan (Continued)
Plan Description (Continued)
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%) 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.
Members can retire at ages 60 and above with 5 or more years of service or with 20 years of
service regardless of age. A member is vested after 5 years. 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.
Contributions
The contribution rate for the employees is 6%, and the City matching ratio is currently 2 to 1,
both as adopted by the governing body of the City. 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 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
unfounded (overfunded) 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 to budget for it, 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, 2004, valuation is effective for rates beginning
January 2006).
(continued)
44
V. OTHER INFORMATION (Continued)
D.Retirement Plan (Continued)
Contributions (Continued)
Assumptions and Schedule of Actuarial Liabilities and Funding Progress
Actuarial Cost MethodUnit Credit
Amortization MethodLevel Percent of Payroll
g Amortization25 Years - Open Period
Remainin
Asset Valuation MethodAmortized Cost (GASB-25,paragraphs 36e and 138)
Investment Rate of Return7%
jected Salary IncreasesNone
Pro
Includes Inflation at3.5%
Cost of Living AdjustmentsNone
Actuarial Valuation Date12/31/0512/31/0412/31/03
Actuarial Value of Assets$ 11,702,174$ 11,127,229$ 9,980,272
Actuarial Accrued Liabilities14,690,509 13,865,46712,451,107
Percentage Funded79.7%80.3%80.2%
Unfunded(Overfunded) Actuarial
Accrued Liability(UAAL)2,988,335 2,738,2382,470,835
Annual Covered Payroll4,510,148 4,334,7824,099,356
UAAL as a Percentage of Covered Payroll66.3%63.2%60.3%
Net Pension Obligation (NPO)
at the Beginning of Period- - -
Annual Pension Cost:
Annual Required Contribution (ARC)601,005 524,487472,242
Interest on NPO- - -
-- -
Adjustment to the ARC
601,005 524,487472,242
Contributions Made (100%)601,005 524,487472,242
-- -
Increase in NPO
$ --$ -$
NPO at the End of Period
45
COMBINING FUND
STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds are used to account for specific revenue that is legally
restricted to expenditures for particular purposes.
Hotel/Motel Occupancy Tax – This fund is used to account for hotel/motel
occupancy tax revenue to be used for enhancing and promoting tourism and
convention activity for the benefit of the hotel industry.
Child Safety – This fund is used to account for court costs used to operate a
City school crossing guard program, or programs designated to enhance child
safety, health, or nutrition; including child abuse prevention and intervention
and drug and alcohol abuse prevention.
Public Safety – This fund is used to account for court costs used to promote
various public safety programs.
TheDebt Service Fund is used to account for the accumulation of resources and
payment of general obligation bond principal and interest from governmental
resources.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2006
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafetySafetyTotalServiceFunds
ASSETS
Cash and investments259,037$ 4,862$ 60,412$ 324,311$ 66,627$ 390,938$
Receivables (net of allowance
for uncollectibles)
Property taxes- - - - 8,464 8,464
Intergovernmental- - - - 1,336 1,336
46,918 - - 46,918 - 46,918
Occupancy taxes
$ 305,955 4,862$ 60,412$ 371,229$ 76,427$ 447,656$
Total assets
LIABILITIES
Accounts payable53,201$ -$ -$ 53,201$ -$ 53,201$
-- - - 6,984 6,984
Deferred revenue
53,201 - - 53,201 6,984 60,185
Total liabilities
FUND BALANCES
Reserved for debt service- - - - 69,443 69,443
252,754 4,862 60,412 318,028 - 318,028
Unreserved
252,754 4,862 60,412 318,028 69,443 387,471
Total fund balances
Total liabilities
$ 305,955 4,862$ 60,412$ 371,229$ 76,427$ 447,656$
and fund balances
46
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CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafety SafetyTotalServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ 440,183$ 440,183$
Other274,042 - - 274,042 - 274,042
Fines and forfeitures- 2,869 51,146 54,015 - 54,015
Intergovernmental- - 3,714 3,714 - 3,714
Investment earnings12,886 - - 12,886 6,014 18,900
-- 2,800 2,800 - 2,800
Miscellaneous
2,869286,928 57,660 347,457 446,197 793,654
Total revenues
EXPENDITURES
Current:
General government268,091 - - 268,091 - 268,091
Public safety- 2,225 6,857 9,082 - 9,082
Debt service:
Principal - - - - 430,000 430,000
-- - - 91,817 91,817
Interest and fiscal charges
2,225268,091 6,857 277,173 521,817 798,990
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
18,837 644 50,803 70,284 75,620)( 5,336)(
EXPENDITURES
OTHER FINANCING SOURCES
-- - - 94,500 94,500
Transfers in
-- - - 94,500 94,500
Total other financing sources
NET CHANGE IN
64418,837 50,803 70,284 18,880 89,164
FUND BALANCES
4,218233,917 9,609 247,744 50,563 298,307
FUND BALANCES, BEGINNING
$ 4,862252,754$ 60,412$ 318,028$ 69,443$ 387,471$
FUND BALANCES, ENDING
47
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CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
HOTEL/MOTEL OCCUPANCY TAX FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - other220,000$ 274,042$ 54,042$
12,8864,000 8,886
Interest
286,928224,000 62,928
Total revenues
EXPENDITURES
Current:
General government:
268,091269,900 1,809
Administrative
268,091269,900 1,809
Total general government
268,091269,900 1,809
Total expenditures
( 18,83745,900) 64,737
NET CHANGE IN FUND BALANCE
233,917233,917 -
FUND BALANCE, BEGINNING
$ 252,754188,017$ 64,737$
FUND BALANCE, ENDING
48
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CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
CHILD SAFETY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 2,500 2,869$ 369$
Fines and forfeitures
2,500 2,869 369
Total revenues
EXPENDITURES
Current:
2,500 2,225 275
Public safety
2,500 2,225 275
Total public safety
2,500 2,225 275
Total expenditures
644- 644
NET CHANGE IN FUND BALANCE
4,218 4,218 -
FUND BALANCE, BEGINNING
$ 4,218 4,862$ 644$
FUND BALANCE, ENDING
49
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CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
PUBLIC SAFETY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Fines and forfeitures-$ 51,146$ 51,146$
Intergovernmental3,700 3,714 14
2,800- 2,800
Miscellaneous
3,700 57,660 53,960
Total revenues
EXPENDITURES
Current:
3,700 6,857 3,157)(
Public safety
3,700 6,857 3,157)(
Total public safety
3,700 6,857 3,157)(
Total expenditures
50,803- 50,803
NET CHANGE IN FUND BALANCE
9,609 9,609 -
FUND BALANCE, BEGINNING
$ 9,609 60,412$ 50,803$
FUND BALANCE, ENDING
50
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CITY OF STEPHENVILLE, TEXAS
DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - property 425,500$ 440,183$ 14,683$
2,000 6,014 4,014
Investment earnings
427,500 446,197 18,697
Total revenues
EXPENDITURES
Debt service:
Principal430,000 430,000 -
91,000 91,817 817)(
Interest and fiscal charges
521,000 521,817 817)(
Total general government
521,000 521,817 817)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
(93,500) 75,620)( 17,880
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES
94,500 94,500 -
Transfers in
94,500 94,500 -
Total other financing sources
18,8801,000 17,880
NET CHANGE IN FUND BALANCE
59,841 50,563 9,278)(
FUND BALANCE, BEGINNING
$ 60,841 69,443$ 8,602$
FUND BALANCE, ENDING
51
NONMAJOR ENTERPRISE FUNDS
Enterprise Funds are used to account for operations that are financed and operated in
a manner similar to private business enterprises – where the intent is that the costs of
providing goods or services to the general public on a continuing basis be financed or
recovered primarily through user charges; or where the City has decided that periodic
determination of net income is appropriate for accountability purposes.
Sanitary Landfill – This fund is used to account for solid waste collection
and disposal services provided to the residents of the City.
Airport – This fund is used to account for municipal airport services and to
support air transportation and charter services.
Storm Water Drainage – This fund is used to account for revenues collected
and project costs for mitigating storm water drainage problems throughout the
City.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR ENTERPRISE FUNDS
SEPTEMBER 30, 2006
SanitaryStorm Water
LandfillAirportDrainageTotal
ASSETS
Current assets:
Cash and investments479,063$ -$ 1,505,873$ 1,984,936$
4,588 4,470 56,262 65,320
Accounts receivable (net of allowances for uncollectibles)
483,651 4,470 1,562,135 2,050,256
Total current assets
Noncurrent assets:
Capital assets:
Land40,000 594,361 - 634,361
Buildings and improvements375,109 2,594,724 - 2,969,833
Equipment597,363 115,131 - 712,494
Construction in progress- - 489,235 489,235
(356,382)(530,296) - 886,678)(
Less: accumulated depreciation
482,176 2,947,834 489,235 3,919,245
Total noncurrent assets
965,827 2,952,304 2,051,370 5,969,501
Total assets
LIABILITIES
Current liabilities:
Accounts payable574 4,696 29,384 34,654
Accrued liabilities2,045 - - 2,045
Accrued interest payable- 5,417 - 5,417
Capital lease39,265 - - 39,265
Certificate of obligations- 10,000 - 10,000
1,709 - - 1,709
Compensated absences payable
43,593 20,113 29,384 93,090
Total current liabilities
Long-term liabilities:
Capital lease219,919 - - 219,919
Certificate of obligations- 220,233 - 220,233
222,543 - - 222,543
Liability for landfill closure
442,462 220,233 - 662,695
Total long-term liabilities
486,055 240,346 29,384 755,785
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt482,176 2,727,601 489,235 3,699,012
(2,404) 15,643)( 1,532,751 1,514,704
Unrestricted
$479,772 2,711,958$ 2,021,986$ 5,213,716$
Total net assets
52
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CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
SanitaryStorm Water
LandfillAirportDrainageTotal
OPERATING REVENUES
Gate charges162,306$ -$ -$ 162,306$
Hanger rental- 47,121 - 47,121
Storm water drainage fee- - 485,314 485,314
3,916- - 3,916
Other service charges
51,037162,306 485,314 698,657
Total operating revenues
OPERATING EXPENSES
Personnel services69,831 - - 69,831
Contractual services875 - - 875
Utilities1,099 21,221 - 22,320
Repairs and maintenance6,756 9,474 18,075 34,305
Other supplies and expenses41,324 7,122 - 48,446
65,428113,070 - 178,498
Depreciation
103,245232,955 18,075 354,275
Total operating expenses
( 52,208)70,649)( 467,239 344,382
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings20,262 2,985 50,130 73,377
Gain on sale of capital assets
-32,037 - 32,037
16,587)-( - 16,587)(
Interest expense
52,299( 50,130 88,827
Total nonoperating revenues (expenses)
( 65,810)18,350)( 517,369 433,209
INCOME(LOSS) BEFORE CONTRIBUTIONS
519,702- - 519,702
CAPITAL CONTRIBUTIONS
116,979- - 116,979
TRANSFER IN
( 570,87118,350) 517,369 1,069,890
CHANGE IN NET ASSETS
2,141,087498,122 1,504,617 4,143,826
TOTAL NET ASSETS, BEGINNING
$ 2,711,958479,772$ 2,021,986$ 5,213,716$
TOTAL NET ASSETS, ENDING
53
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2006
SanitaryStorm Water
LandfillAirportDrainageTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers173,233$ 47,400$ 484,526$ 705,159$
Cash payments to employees70,318)( - - 70,318)(
( 33,639)13,305)( 11,309 35,635)(
Cash payments to suppliers for goods and services
13,76189,610 495,835 599,206
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
- 116,979 - 116,979
Cash received from other funds
Cash provided by noncapital
- 116,979 - 116,979
financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease61,166)( - - 61,166)(
Principal payments on bonds- 15,000)( - 15,000)(
Interest and fiscal charges on debt- 14,608)( - 14,608)(
Capital contributions- 519,702 - 519,702
Acquisition and construction of capital assets20,438)( 670,563)( 245,870)( 936,871)(
-24,074 - 24,074
Proceeds from sale of capital assets
Cash used by capital and
( 180,469)57,530)( 245,870)( 483,869)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
2,98520,262 50,130 73,377
Interest received
2,98520,262 50,130 73,377
Cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
46,744)52,342( 300,095 305,693
AND CASH EQUIVALENTS
46,744426,721 1,205,778 1,679,243
CASH AND CASH EQUIVALENTS, BEGINNING
$ -479,063$ 1,505,873$ 1,984,936$
CASH AND CASH EQUIVALENTS, ENDING
(continued)
54
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2006
Storm Water
Sanitary
Drainage
LandfillAirportTotal
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)70,649)$( 52,208)$( 467,239$ 344,382$
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation113,070 65,428 - 178,498
Change in assets and liabilities:
Decrease (increase) in accounts receivable10,850 3,637)( 788)( 6,425
Increase (decrease) in accounts payable462 4,238 29,384 34,084
Increase (decrease) in accrued liabilities205)( 60)( - 265)(
Increase (decrease) in compensated absences282)( - - 282)(
-36,364 - 36,364
Increase (decrease) in liability for landfill closure
65,969160,259 28,596 254,824
Total adjustments
$ 13,76189,610$ 495,835$ 599,206$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ -320,350$ -$ 320,350$
Borrowing under capital lease
55
FIDUCIARY FUNDS
Agency funds are used to account for assets held by the City as an agent for
individuals, private organizations, other governments and/or other funds.
Senior Citizens – This fund is used to account for assets held for the benefit of
a citizens’ group.
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CHANGES
IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
YEAR ENDED SEPTEMBER 30, 2006
BalanceBalance
October 1,September 30,
2005AdditionsDeductions2006
SENIOR CITIZENS
Assets
$ -5,059$ -$ 5,059$
Due from other funds
$ -5,059$ -$ 5,059$
Total assets
Liabilities
$ -5,059$ -$ 5,059$
Due to others
$ -5,059$ -$ 5,059$
Total liabilities
56
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STATISTICAL SECTION
THIS PAGE IS INTENTIONALLY LEFT BLANK
TABLE 1
CITY OF STEPHENVILLE, TEXAS
NET ASSETS BY COMPONENT
LAST FOUR FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2006200520042003
Governmental activities:
Invested in capital assets, net of related debt$ 9,734,777$ 9,070,652$ 8,877,241$ 8,671,383
Restricted 381,849 295,721 620,104 -
10,237,6609,548,9778,181,0767,932,439
Unrestricted
$ 20,354,286$ 18,915,350$ 17,678,421$ 16,603,822
Total governmental activities net assets
Business-type activities:
Invested in capital assets, net of related debt$ 17,432,394$ 16,190,916$ 14,229,406$ 11,789,690
Restricted 599,910 514,842 470,750 508,583
6,516,8305,301,5244,134,841 5,621,026
Unrestricted
$ 24,549,134$ 22,007,282$ 18,834,997$ 17,919,299
Total business-type activities net assets
Primary government:
Invested in capital assets, net of related debt$ 27,167,171$ 25,261,568$ 23,106,647$ 20,461,073
Restricted 981,759 810,563 1,090,854 508,583
16,754,49014,850,50112,315,917 13,553,465
Unrestricted
$ 44,903,420$ 40,922,632$ 36,513,418$ 34,523,121
Total primary government net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
57
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
LAST FOUR FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2006200520042003
EXPENSES
Governmental activities:
General government$ 1,441,939$ 1,453,986$ 1,421,563$ 1,262,164
Public safety 4 ,689,443 4 ,345,846 4 ,026,402 4 ,028,747
Streets 1 ,098,979 979,051 995,046 894,193
Culture and recreation 1 ,646,017 1 ,582,864 1 ,574,032 1 ,522,896
Community development 343,135 348,177 296,244 317,743
91,817109,153130,388 153,445
Interest on long-term debt
9,311,3308,819,0778,443,675 8,179,188
Total governmental activities expenses
Business-type activities:
Water and wastewater 4 ,681,174 4 ,367,671 4 ,582,690 3 ,790,830
Storm water drainage 232,955 166,346 35,462 14,034
Sanitary landfill 119,832 99,078 151,309 211,159
18,0758,633101,082 99,847
Airport
5,052,0364,641,7284,870,543 4,115,870
Total business-type activities expenses
$14,363,366$13,460,805$13,314,218$ 12,295,058
Total primary government program revenues
PROGRAM REVENUES
Governmental activities:
Charges for services:
General government$ 177,636$ 172,292$ 195,176$ 21,421
Public safety 600,332 488,292 524,561 884,349
Streets 17,444 17,213 28,748 22,388
Culture and recreation 132,125 135,607 147,563 157,741
Community development 180,304 163,490 165,803 82,182
Operating grants and contributions 172,884 125,068 189,805 146,257
177,503556,425366,478 185,625
Capital grants and contributions
1,458,2281,658,3871,618,134 1,499,963
Total governmental activities program revenues
Business-type activities:
Charges for services:
Water and wastewater 5 ,628,658 5 ,245,901 4 ,564,193 4 ,261,555
Sanitary landfill 162,306 174,845 174,152 154,650
Airport 51,037 39,088 31,077 24,865
Storm water drainage 485,314 485,600 478,143 511,427
599,3931,513,020411,474 273,101
Capital grants and contributions
6,926,7087,458,4545,659,039 5,225,598
Total business-type activities program revenues
$8,384,936$9,116,841$7,277,173$6,725,561
Total primary government program revenues
(continued)
58
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST FOUR FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2006200520042003
NET(EXPENSE) REVENUES
Governmental activities$( 7,853,102)$( 7,160,690)$( 6,825,541)$( 6,679,225)
1,874,6722,816,726788,496 1,109,728
Business-type activities
(5,978,430)(4,343,964)(6,037,045)( 5,569,497)
Total primary government net expense
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS
Governmental activities:
Taxes:
Property - general purposes 2 ,657,106 2 ,447,610 2 ,249,922 1 ,994,728
Property - debt service 437,146 448,663 540,467 545,552
Sales 4 ,101,973 3 ,654,232 3 ,538,100 3 ,217,670
Franchise 1 ,423,615 1 ,264,298 1 ,209,036 934,965
Other 312,528 292,447 262,467 208,534
Investment earnings 441,986 286,301 87,990 196,542
Miscellaneous 34,663 54,068 12,158 33,971
(116,979)(50,000)- 315,638
Transfers
9,292,0388,397,6197,900,140 7,447,600
Total governmental activities
Business-type activities:
Investment earnings 518,164 305,559 100,773 105,970
Miscellaneous 32,037 - 26,429 9,137
116,97950,000-( 315,638)
Transfers
667,180355,559127,202( 200,531)
Total business-type activities
9,959,2188,753,1788,027,342 7,247,069
Total primary government
CHANGE IN NET ASSETS
Governmental activities 1 ,438,936 1 ,236,929 1 ,074,599 768,375
2,541,8523,172,285915,698 909,197
Business-type activities
$3,980,788$4,409,214$1,990,297$1,677,572
Total primary government
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
59
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TABLE 3
CITY OF STEPHENVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
1997199819992000200120022003200420052006
General fund
Reserved$ 2,162$ -$ -$ -$ -$ -$ 7,178$ 4,072$ 13,349$
10,352
5,398,0416,269,4765,620,0925,499,6155,958,1006,429,8617,309,9348,017,9658,361,4169,045,429
Unreserved
$ 5,400,203$ 6,269,476$ 5,620,092$ 5,499,615$ 5,958,100$ 6,429,861$ 7,317,112$ 8,022,037$ 8,374,765$ 9,055,781
Total general fund
All other governmental funds
Reserved
Debt service funds$ 3,304$( 671)$ 1,077$ 12,873$ 24,139$ 30,337$ 41,081$
41,285$ 50,563$ 69,443
Unreserved, reported in:
Special revenue funds 108,775 93,695 157,561 186,653 232,461 207,743 237,911 211,765 247,743
318,028
749,6373,395,2021,779,1542,122,1601,109,119895,894772,431735,1911,063,030 1,051,972
Capital projects funds
Total all other
$ 861,716$ 3,488,226$ 1,937,792$ 2,321,686$ 1,365,719$ 1,133,974$ 1,051,423$ 988,241$ 1,361,336$ 1,439,443
governmental funds
60
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
1997199819992000200120022003200420052006
REVENUES
Taxes$ 5,375,901$ 5,648,855$ 6,158,011$ 6,418,350$ 6,689,180$ 7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235
Special assessments - - 664,688 - 55,415 - - 402,789 28,122
Licenses, fees and permits 85,776 59,393 78,228 88,671 64,408 86,583 84,669 168,519
168,523 183,839
Fines and forfeitures 246,898 247,631 174,225 169,085 168,271 135,897 248,426 229,922 207,407
279,716
Intergovernmental 192,539 251,491 231,738 669,130 207,050 242,187 249,564 306,510 104,228
188,096
Service charges 596,914 494,564 349,452 367,715 408,757 523,825 545,763 697,355 651,021
640,935
Investment earnings 438,812 443,670 507,744 445,529 406,277 275,793 194,772 87,991 286,300
441,986
36,21399,62838,28729,76768,24261,705125,02752,734108,222 60,110
Miscellaneous
6,973,0537,245,2327,537,6858,852,9358,012,1858,449,3098,339,2939,347,93110,031,62410,765,039
Total revenues
EXPENDITURES
General government 803,012 857,836 938,789 947,835 942,036 1,091,746 1,113,323 1,274,8071,231,709 1,349,248
Public safety 2,666,287 2,957,431 2,885,336 3,146,946 3,325,599 3,603,448 3,821,859 3,874,454 4,140,738 4,562,217
Streets 509,448 538,272 665,954 562,728 588,038 620,714 561,646 630,057 578,126 699,290
Culture and recreation 910,317 957,735 1,013,705 1,081,294 1,243,096 1,294,316 1,357,624 1,336,974 1,412,305
1,466,261
Community development 175,319 178,310 188,246 182,517 236,431 250,776 317,743 295,036 346,969
337,659
Debt service
Principal 217,241 195,272 486,967 429,391 430,000 450,000 470,000 500,000 420,000
430,000
Interest 159,312 166,924 263,320 225,283 200,415 178,813 157,032 133,441 111,582
91,817
2,058,835707,7702,747,7382,184,0741,667,368868,370366,753661,4191,014,372952,446
Capital outlay
7,499,7716,559,5509,190,0558,760,0688,632,9838,358,1838,165,9808,706,1889,255,801 9,888,938
Total expenditures
(continued)
61
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
(Continued)
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
1997199819992000200120022003200420052006
EXCESS OF REVENUES
OVER (UNDER)
$(526,718)$ 685,682$(1,652,370)$ 92,867$(620,798)$ 91,126$ 173,313$ 641,743$ 775,823$ 876,101
EXPENDITURES
OTHER FINANCING
SOURCES (USES)
Issuance of bonds - 2,700,000 - - - - - - -
-
Proceeds on sale of
capital assets 43,528 86,171 48,329 26,449 - - - -
- -
Payments to escrow
account 252,933 - - - - - - - -
Transfers in 89,424 92,664 1,168,134 800,449 448,316 251,085 423,414 90,000 90,000
94,500
(100,000)(3,228)(1,763,910)(656,348)(325,000)(102,195)(107,776)(90,000)(140,000)( 211,479)
Transfers out
Total other financing
32,9523,128,540(547,447)170,550123,316148,890315,638-(50,000)( 116,979)
sources (uses)
NET CHANGE IN
$(493,766)$ 3,814,222$(2,199,817)$ 263,417$(497,482)$ 240,016$ 488,951$ 641,743$ 725,823$ 759,122
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
7.4%6.6%13.2%11.1%10.0%9.2%8.7%8.5%6.9%6.2%
EXPENDITURES
62
TABLE 5
CITY OF STEPHENVILLE, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Estimated
Less:Total TaxableTotalActual
FiscalResidentialCommercialIndustrialTax-exemptAssessedDirectTaxable
YearPropertyPropertyPropertyPropertyValueTax RateValue
1997$ 220,832,244$ 253,586,720$ 51,933,813$ 179,523,650$ 346,829,127$0.4393$1,523,620
1998 235,475,135 271,591,756 118,064,572 203,850,850 421,280,6130.43331,825,409
1999 251,534,041 279,552,526 120,232,379 191,106,538 460,212,4080.47242,174,043
2000 258,328,927 282,242,502 117,284,814 194,131,922 463,724,3210.47242,190,634
2001 275,008,292 277,180,795 110,482,050 192,478,165 470,192,9720.47242,221,192
2002 277,642,872 302,960,725 97,250,070 189,978,791 487,874,8760.48002,341,799
2003 300,285,040 341,944,306 97,673,680 221,495,172 518,407,8540.48502,514,278
2004 332,268,337 380,965,905 111,273,080 249,575,629 574,931,6930.48502,788,419
2005 352,795,683 386,744,845 105,901,750 253,232,383 592,209,8950.48502,872,218
2006 387,312,400 403,019,380 113,971,870 260,321,554 643,982,0960.47503,058,915
Source:Erath County Appraisal District.
Note:PropertyinErathCountyisreassessedonceeverythreeyearsonaverage.TheCountyassessespropertyatapproximately95percentofactualvalueforcommercial,
industrialandresidentialproperty.Estimatedactualtaxablevalueiscalculatedbydividingtaxableassessedvaluebythosepercentages.Taxratesareper$100of
assessed value.
63
TABLE 6
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
City Direct RatesOverlapping Rates
GeneralMiddle
ObligationTotalStephenvilleTrinity
FiscalBasicDebtDirectSchoolWaterErath
YearRateServiceRateDistrictDistrictCounty
1997$0.3643$0.0750$0.4393$1.2000-$0.5000
19980.36430.06900.43331.2000-0.4785
19990.33770.13470.47241.3000-0.4785
20000.33590.13650.47241.4500-0.4785
20010.35520.11720.47241.7500-0.4785
20020.36780.11220.48000.1690-0.4785
20030.38120.10380.48501.6900$0.01500.4700
20040.39130.09370.48501.67000.01500.4512
20050.41070.07430.48501.67000.01500.4625
20060.40790.06710.47501.66000.01500.4410
Source:Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.Ratesfordebt
service are set based on each year's requirements.
Overlapping rates are those of local and county governments that apply to property owners within the City of Stephenville, Texas.
The Middle Trinity Water District did not exist in fiscal years 1997 through 2002.
64
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20061997
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company$ 20,239,816 2.81%$ 23,365,752 5.55%
Saint Gobain Abrasives 10,523,898 1.46% 56,203,761 13.34%
TXU Electric Delivery 8,427,920 1.17% 6,441,578 1.53%
Bosque River Associates 7,752,330 1.08% 8,536,044 2.03%
Wal-Mart Stores, Inc. #1 7,673,710 1.07% 8,530,885 2.02%
STAM Ltd 7,239,420 1.01% - - %
Saint Gobain Abrasives 6,789,370 0.94% - - %
United Telephone Company (Embarq) 6,646,910 0.92% - - %
Wilmington Trust (Wal-Mart #2) 6,249,360 0.87% 6,748,266 1.60%
Rayloc Genaut 4,654,381 0.65% 18,237,444 4.33%
Emerson Electric Company - -% 6,312,988 1.50%
FMC Technologies - -% 7,211,108 1.71%
--%7,820,717 1.86%
Fibergrate
Subtotal$ 86,197,115 11.98%$ 149,408,543 35.47%
633,464,32688.02%271,872,070 64.53%
Remaining Roll
$719,661,441100.00%$ 421,280,613 100.00%
Total
Source: Erath County Appraisal District State Property Tax Board Report.
65
TABLE 8
CITY OF STEPHENVILLE, TEXAS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
Collected With the
Fiscal Year of the LevyTotal Collections to Date
Taxes LeviedCollections
Fiscalfor thePercentagein SubsequentPercentage
Year EndedFiscal YearAmountof LevyYearsAmountof Levy
1997$ 1,731,091$ 1,691,620 9 7.72%$ 22,760$ 1,714,380 99.03%
1998 1,824,677 1,786,443 9 7.90% 2 8,665 1,815,108 99.48%
1999 2,181,037 2,133,063 9 7.80% 4 0,029 2,173,092 99.64%
2000 2,185,007 2,143,729 9 8.11% 4 4,706 2,188,435 100.16%
2001 2,236,217 2,192,628 9 8.05% 3 2,162 2,224,790 99.49%
2002 2,348,927 2,294,810 9 7.70% 4 4,918 2,339,728 99.61%
2003 2,513,625 2,462,155 9 7.95% 4 6,558 2,508,713 99.80%
2004 2,788,419 2,726,244 9 7.77% 6 2,175 2,788,419 100.00%
2005 2,832,529 2,808,747 9 9.16% 5 2,752 2,861,499 101.02%
2006 3,066,225 3,018,008 9 8.43% 4 2,102 3,060,110 99.80%
Sources: Erath County Appraisal District and Erath County Tax Assessor-Collector.
66
TABLE 9
CITY OF STEPHENVILLE, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental ActivitiesBusiness-type Activities
GeneralCertificatesWaterCertificatesTotalPercentage
FiscalObligationofTermRevenueofCapitalPrimaryof PersonalPer
YearBondsParticipationLoanBondsParticipationLeasesGovernmentIncomeCapita
1997$ 570,000$ 1,955,000$ 219,228$ 12,575,000$ 375,000$ -$ 15,694,228 5.74%$ 1,097
1998 3,205,000 1,865,000 1 62,245 11,725,000 250,000 - 17,207,245 5.61% 1,179
1999 2,935,000 1,770,000 4 0,278 10,840,000 125,000 - 15,710,278 4.90% 1,072
2000 2,630,000 1,665,000 2 0,887 9,920,000 - - 14,235,887 4.36% 968
2001 2,310,000 1,555,000 - 14,455,000 - - 18,320,000 5.21% 1,228
2002 1,970,000 1,445,000 - 13,455,000 1,150,000 - 18,020,000 5.03% 1,201
2003 1,615,000 1,330,000 - 6,660,000 7,905,000 - 17,510,000 4.79% 1,118
2004 1,235,000 1,210,000 - 6,295,000 14,174,233 - 22,914,233 5.70% 1,443
2005 945,000 1,080,000 - 5,910,000 13,250,233 - 21,185,233 -% 1,300
2006 645,000 950,000 - 5,500,000 14,305,233 259,184 21,659,417 -% 1,283
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
The City issued over $2 million of new certificates of participation in 2006.
See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.
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TABLE 10
CITY OF STEPHENVILLE, TEXAS
RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
Net General Bonded Debt Outstanding
Percentage of
GeneralAccumulatedActual Taxable
FiscalObligationCertificates ofResourcesValue ofPer
YearBondsObligationsfor RepaymentTotalPropertyCapita
1997$ 570,000$ 2,174,228$ 3,304$ 2,747,532 0.79%$ 192.14
19983,205,0002,027,245 -5,232,245 1.24% 3 58.37
19992,935,000 1 ,810,278 1,0774,746,355 1.03% 3 23.98
20002,630,000 1 ,685,887 12,8734,328,760 0.93% 2 94.47
20012,310,000 1 ,555,000 24,1393,889,139 0.83% 2 60.65
20021,970,000 1 ,445,000 30,3363,445,336 0.71% 2 29.69
20031,615,000 1 ,330,000 41,0822,986,082 0.58% 1 90.62
20041,235,000 1 ,210,000 41,2852,486,285 0.43% 1 56.53
2005 9 45,0001,080,000 50,5632,075,563 0.35% 1 27.34
2006 6 45,000 9 50,000 6 9,4431,664,443 0.26% 9 8.59
Notes:
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 5 for property value data.
Population data can be found in Table 14.
68
TABLE 11
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2006
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes
Stephenville Independent School District$ 15,490,96768.29%$10,579,071
Erath County General Obligation Debt -40.00% -
Other debt
-
Middle Trinity Groundwater Conservation District -38.58%
Subtotal overlapping debt 10,579,071
1,595,000
City direct debt
$ 12,174,071
Total direct and overlapping debt
Sources:
AssessedvaluedatausedtoestimateapplicablepercentagesprovidedbytheErathCountyAppraisalDistrict
and Assessment Debt outstanding data provided by each governmental unit.
Notes:
Overlappinggovernmentsarethosethatcoincide,atleastinpart,withthegeographicboundariesoftheCity.
Thisscheduleestimatestheportionoftheoutstandingdebtofthoseoverlappinggovernmentsthatisborneby
theresidentsandbusinessesoftheCityofStephenville.Thisprocessrecognizesthat,whenconsideringthe
City'sabilitytoissueandrepaylong-termdebt,theentiredebtburdenbornebytheresidentsandbusinesses
shouldbetakenintoaccount.However,thisdoesnotimplythateverytaxpayerisaresident--andtherefore
responsible for repaying the debt--of each overlapping government.
69
TABLE 12
CITY OF STEPHENVILLE, TEXAS
LEGAL DEBT MARGIN AND TAX RATE LIMITATIONS INFORMATION
As a home rule city, the City of Stephenville is not limited by law in the amount of debt it may issue.
Under Article XI, Section 5 of the Texas Constitution, no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent of the taxable property
of the City.
AlltaxablepropertywithintheCityissubjecttoassessment,levyandcollectionbytheCityofacontinuing,directannualadvaloremtaxsufficienttoprovideforthepaymentofprincipaland
interestonthebondswithinthelimitsprescribedbylaw.Underrulesprescribedbylaw.UnderrulespromulgatedbytheOfficeoftheAttorneyGeneralofTexas,suchofficewillnotapprovetax
bonds of the City unless the City can demonstrate its ability to pay debt service requirements on all outstanding City tax bonds, including the issue to be approved.
Tax Rate Limitation Calculation for Fiscal Year 2006
Taxable assessed valuation$ 643,982,096
2.50% of assessed valuation
Constitutional tax rate limit
Maximum constitutional revenue available $ 16,099,552
$2.50 per $100 of valuation
Tax rate to achieve maximum tax revenue
$0.475 per $100 of valuation
Tax rate for FY 2005-2006
$2.025 per $100 of valuation
Available unused constitutional max tax rate
Debt applicable to limit:
General obligation debt$ 2,025,000
DEBT TAX RATE ADEQUACY
2006 Principal and Interest Requirements.................................................................................................................
$ 520,819
$0.0671 Tax Rate at 98% Collection Produces...................................................................................................……..
423,470
Average Annual Principal and Interest Requirement, 2006-2016..........................................……………………….
212,068
$0.0336 Tax Rate at 98% Collection Produces.................................................................................................……..
212,050
Maximum Principal and Interest Requirements...................................................................................................……..
525,106
$0.0832 Tax Rate at 98% Collection Produces...................................................................................................……..
525,077
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2006
$ 520,819
Debt Service Fund, 9-30-05
$ 50,563
Special Assessment Operating Reserve Transfer In
94,500
423,470$ 568,533
Debt Service Fund Tax Levy @ 98% Collection
70
TABLE 13
CITY OF STEPHENVILLE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Water and Wastewater Revenue Bonds
UtilityLess:Net
FiscalServiceOperatingAvailableDebt Service
YearChargesExpensesRevenuePrincipalInterestCoverage
1997$ 4,101,306$ 1,762,495$ 2,338,811$ 905,000$ 710,648 1.45
1998 4,422,142 1,921,867 2,500,275 9 95,000 668,930 1.50
1999 4,285,128 1,882,313 2,402,815 1 ,010,000 543,862 1.55
2000 4,664,232 3,906,752 757,480 1 ,045,000 500,290 0.49
2001 4,743,061 2,621,741 2,121,320 9 65,000 465,568 1.48
2002 4,578,747 2,459,300 2,119,447 1 ,000,000 641,944 1.29
2003 4,372,612 2,321,847 2,050,765 1 ,145,000 642,281 1.15
2004 4,556,045 2,569,643 1,986,402 1 ,240,000 559,001 1.10
2005 5,511,586 2,553,909 2,957,677 1 ,331,000 712,056 1.45
2006 5,628,658 2,931,743 2,696,915 1 ,340,000 752,077 1.29
Notes:
DetailsregardingtheCity'soutstandingdebtcanbefoundinthenotestothefinancialstatements.Operating
expenses do not include interest, depreciation, or amortization expenses.
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TABLE 14
CITY OF STEPHENVILLE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per Capita
CalendarPersonalPersonalSchoolCollegeUnemployment
YearPopulationIncomeIncomeEnrollmentEnrollmentRate
1997 1 4,300$ 273,244,400$ 19,108 3,426 6,381 3.1%
1998 1 4,600 306,527,000 20,995 3,327 6,333 3.1%
1999 1 4,650 320,703,150 21,891 3,419 6,163 2.9%
2000 1 4,700 326,736,900 22,227 3,361 6,359 2.7%
2001 1 4,921 351,419,392 23,552 3,477 6,549 2.0%
2002 1 5,000 358,230,000 23,882 3,444 6,827 3.3%
2003 1 5,665 365,495,780 23,332 3,530 7,197 3.2%
2004 1 5,884 402,262,300 25,325 3,417 7,347 2.7%
2005 1 6,300 - - 3,512 7,589 3.5%
2006 1 6,882 - - 3,550 7,776 3.7%
Sources:Population,medianage,andeducationlevelinformationprovidedbytheStateDepartmentofPlanning.
PersonalincomeandunemploymentdataprovidedbytheStateDepartmentofCommerceandLabor.School
enrollment data provided by the Stephenville Independent School District and Tarleton State University.
Notes:Population,medianage,andeducationlevelinformationarebasedonsurveysconductedduringthelastquarter
ofthecalendaryear.Personalincomeinformationisatotalfortheyear.Unemploymentrateinformationisan
adjusted yearly average. School enrollment is based on the census at the start of the school year.
Personal income for 2005 and 2006 is not available.
72
TABLE 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2006
Percentage
of Total City
Employer
EmployeesEmployment
Tarleton State University 8 95 5.01%
FMC Company 6 30 3.53%
Saint Gobain Abrasives 5 75 3.22%
Stephenville Independent School District 4 68 2.62%
Wal-Mart Stores, Inc. 4 50 2.52%
Harris Methodist Erath County Hospital 2 55 1.43%
Emerson Electric Company 1 92 1.08%
Outlaw Conversions 1 90 1.06%
Erath County 1 79 1.00%
Stephenville Medical & Surgical Clinic 1 50 0.84%
Caporal Forging 1 20 0.67%
Rayloc Genaut 1 15 0.64%
115 0.64%
Fibergrate Composite Structures
Subtotal 4 ,334 24.28%
13,519 75.72%
Remaining employers
17,853 100.00%
Total
Source:
CityCommunityDevelopmentDivision.TotalemployeedataisprovidedbytheStateDepartmentofCommerce
and Labor.
Notes:
TotalemployeeinformationisbasedonentireErathCounty.Principalemployersareonlythosethatoperatefrom
within the corporate City limits of Stephenville.
Information for 1997 is not available.
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TABLE 16
CITY OF STEPHENVILLE, TEXAS
FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fulltime Equivalent Employees as of September 30,
Function/Program1997199819992000200120022003200420052006
General government
Management services4444444444
Finance6777667777
Planning1111222222
Building1111111112
Other1111111111
Police
Officers30303030303030313131
Civilians9101010101111111313
Fire
Firefighters and officers23232323232626262627
Parks and recreation9999111113131313
Library4444444444
Streets7777777777
Water99889999910
Wastewater7777888888
2222222222
Landfill
113115114114118122125126128131
Total
Source:City Human Resource Office
Notes:Afulltimeemployeeisscheduledtowork2080hoursperyear(includingvacationandsickleave).Fulltimeequivalentemploymentiscalculatedby
dividing total labor hours by 2080.
74
TABLE 17
CITY OF STEPHENVILLE, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program1997199819992000200120022003200420052006
General government
Building permits issued 3 22 3 25 2 38 2 42 2 65 234 2 22 140 172 125
Building permits value$7,417,724$13,259,095$10,293,611$14,721,989$5,563,166$12,118,416$10,467,400$21,515,373$18,442,334$12,262,542
Police
Calls for serviceaaa 9 ,138 9 ,114 1 0,207 1 0,203 1 0,483 1 0,358 11,234
Physical arrestsa 9 43 1 ,019 1 ,019 7 16 762 1 ,134 825 959 999
Parking violationsa 4 17 1 82 1 82 8 05 404 5 30 324 386 334
Traffic violationsa 3 ,666 3 ,178 3 ,178 4 ,501 3,164 5 ,094 5,350 3,588 3,066
Fire
Ambulance responses 1 ,730 1 ,598 1 ,236 1 ,271 1 ,321 1,468 1 ,372 1,183 1,291 1,255
Fires extinguished 4 87 5 36 3 18 3 76 3 57 412 3 39 185 235 305
Inspections 1 86 1 55 1 50 1 50 1 49 149 1 35 132 109 105
Other public works
Street resurfacing (miles) 1 .75 2 .06 0 .32 1 .30 1 .88 2.35 2 .39 1.35 1.14
1.52
Library
Volumes in collection 4 1,623 4 1,711 42,214 4 3,065 4 1,905 4 0,161 4 3,331 4 6,938 4 8,548 47,510
Total volumes borrowed 2 05 2 10 8 2 1 20 1 30 237 1 10 138 155 114
Water
New connections 5 ,116 5 ,142 5 ,256 5 ,256 5 ,319 5,319 5 ,242 5,521 5,253 5,550
Water main breaks 4 8 5 0 5 1 4 7 5 3 52 4 9 54 50
48
Average daily consumption 2,632,000 2,340,000 2,295,000 2,482,000 2,341,000 2 ,158,000 2,124,000 1 ,971,990 2 ,042,0002,254,000
(thousands of gallons)
Peak daily consumption 3,820,000 4,406,000 4,589,000 4,700,000 4,549,000 4 ,174,000 4,133,000 3 ,598,000 3 ,499,0004,397,000
(thousands of gallons)
Wastewater
Average daily sewage treatment 1,969,000 1,460,000 1,253,000 1,253,000 1,387,000 1 ,311,000 1,354,000 1 ,456,000 1 ,334,0001,414,000
(thousands of gallons)
Source: Various City departments
Note: a - Information is not available.
75
TABLE 18
CITY OF STEPHENVILLE, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program1997199819992000200120022003200420052006
Police
Stations1111111111
Patrol units66669910101010
Fire
Stations2222222222
Other public works
Streets (miles)87878787878792929292
Highways (miles)19191919191919191919
Streetlights 929 950 952 983 992 992 1,013 1,013
1,013 1,013
Traffic signals - - - - - - - - -
-
Parks and recreation
Acreage 126 126 126 126 126 134 134 134
134 134
Playgrounds3333344444
Baseball/softball diamonds9999999999
Soccer/football fields1111111111
Community centers2222222222
Water
Water mains (miles)5858585858 112 116 117 117 120
Fire hydrants 580 580 616 616 623 623 650 670
670 680
Storage capacity 4,500,000 4,500,000 4,500,000 4,500,000 4,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)686868686896 105 105 110 110
Storm sewers (miles)10101010101010101010
Treatment capacity 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000
(thousands of gallons)
Source: Various City departments
Note: No capital asset indicators are available for the general government or library function.
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