HomeMy WebLinkAbout2007 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2007
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2007
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, 2007
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, 2007
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, 2007
Page
Number
FINANCIAL SECTION (Continued)
Combining Fund Statements and Schedules (Continued)
Agency Funds
Combining Statement of Changes in Assets and Liabilities................................... 56
Table Page
Number Number
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, 2007
Table Page
Number Number
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
COMPLIANCE SECTION
Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance With
Government Auditing Standards................................................................. 77 – 78
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INTRODUCTORY SECTION
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February 1, 2008
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, 2007, 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, 2007, 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, 2007, 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 17,050. 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 $98,000,000 (13%) in 2007 to $818,400,000. 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 $.4650 was a reduction from the past three (3) years.
Sales tax collections continue to experience growth this year showing a 6.17% increase over the previous year.
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
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budget must be submitted to the City Secretary no later than August 1 with the adoption taking place no later
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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 2007 –2008
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, 2007, the average rate on the operating account balances was
5.40 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 5.16
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, 2006.
The Certificate of Achievement is a prestigious national award-recognizing conformance with the highest
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standards for preparation of state and local government financial reports. This award was the 24 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,
iv
v
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, 2007
Mayor Russell E. Jergins
Council Members Pat Shelbourne
Dr. Malcom Cross
Nancy Hunter
Andrew Johnson
Alan Nash
Todd McEvoy
Mark Murphy
Barry Ratliff
City Administrator Mark A. Kaiser
Director of Finance/Administration Walter Wood
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, 2007, 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, 2007, 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
February 4, 2008, 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.
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AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
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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.
February 4, 2008
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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, 2007. 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, 2007, by $48,073,828
(net assets). Of this amount, $20,320,103 (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 $3,170,408.
As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $11,486,974. Approximately 99 percent of this
total amount, $11,389,517, is unreserved fund balance available for use within the
City’s fund designation and fiscal policies.
As of September 30, 2007, unreserved fund balance for the General Fund was
$10,039,416 or 106 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 $48,073,828 as of September 30, 2007.
A large portion of the City's net assets (56 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 decreased by $445,479 mainly due to the depreciation of
capital assets. The City uses these capital assets to provide services to citizens; consequently, these
assets are not available for future spending. Although the City’s investment in its capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
CITY OF STEPHENVILLE’S NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200720062007200620072006
Current and other assets12,260,995$ 11,972,955$ 14,673,646$ 15,013,354$ 26,934,641$ 26,986,309$
11,297,475 11,329,777 36,609,064 30,743,407 47,906,539 42,073,184
Capital assets
23,558,470 23,302,732 51,282,710 45,756,761 74,841,180 69,059,493
Total assets
Liabilities456,989 1,168,536 1,607,361 894,068 2,064,350 2,062,604
1,344,753 1,779,910 23,358,249 20,313,559 24,703,002 22,093,469
Noncurrent liabilities
1,801,742 2,948,446 24,965,610 21,207,627 26,767,352 24,156,073
Total liabilities
Net assets:
Invested in capital assets,
net of related debt10,157,475 9,734,777 16,564,217 17,432,394 26,721,692 27,167,171
Restricted366,934 381,849 665,099 599,910 1,032,033 981,759
11,232,319 10,237,660 9,087,784 6,516,830 20,320,103 16,754,490
Unrestricted
$ 21,756,728 20,354,286$ 26,317,100$ 24,549,134$ 48,073,828$ 44,903,420$
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, $20,320,103,
may be used to meet the government's ongoing obligations to citizens and creditors.
As of September 30, 2007, 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 $3,170,408.
Governmental Activities. Governmental activities increased the City’s net assets by $1,402,442 or 44
percent of the total growth in net assets. The net assets invested in capital assets, net of related debt
increased by $422,698 or 4 percent due to pay down of annual debt service. Unrestricted net assets
increased by $994,659 or 10 percent.
Total revenues for governmental activities increased from the previous year by $855,329. General
revenue had a net increase of $790,545 or 8 percent.
Business-type Activities. Net Assets from business-type activities increased by $1,767,966 or 7 percent
from $24,549,134 to $26,317,100 accounting for the other 56 percent of the total growth in net assets.
This increase is primarily due to the excess of operating revenues over operating expenditures and net
transfers.
The following table provides a summary of the City’s operations for the year ended September 30, 2007,
with comparative totals for the year ended September 30, 2006.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200720062007200620072006
Revenues:
gram revenues:
Pro
Charges for services1,291,597$ 1,107,841$ 5,826,087$ 6,327,315$ 7,117,684$ 7,435,156$
Operatinggrants 115,859 172,884 - - 115,859 172,884
Capitalgrants
and contributions115,556 177,503 169,370 599,393 284,926 776,896
General revenues:
Property taxes3,389,638 3,094,252 - - 3,389,638 3,094,252
Sales taxes4,351,269 4,101,973 - - 4,351,269 4,101,973
Franchise taxes1,370,838 1,423,615 - - 1,370,838 1,423,615
Other taxes388,013 312,528 - - 388,013 312,528
Investment earnings623,810 441,986 876,642 518,164 1,500,452 960,150
34,66375,994 - 32,037 75,994 66,700
Miscellaneous
11,722,574 6,872,099 7,476,909 18,594,673 18,344,154
Total revenues
Expenses:
General government 1,441,9391,591,258 - - 1,591,258 1,441,939
Public safety 4,689,4435,187,628 - - 5,187,628 4,689,443
Streets1,144,681 1,098,979 - - 1,144,681 1,098,979
Culture and recreation1,733,627 1,646,017 - - 1,733,627 1,646,017
y development 343,135381,091 - - 381,091 343,135
Communit
Interest on long-term
debt 91,81765,926 - - 65,926 91,817
Water and wastewater -- 4,776,359 4,681,174 4,776,359 4,681,174
ge- - 141,516 18,075 141,516 18,075
Storm water draina
Sanitary landfill- - 272,010 232,955 272,010 232,955
- - 130,169 119,832 130,169 119,832
Airport
10,104,211 9,311,330 5,320,054 5,052,036 15,424,265 14,363,366
Total expenses
Increases in net assets
before transfers1,618,363 1,555,915 1,552,045 2,424,873 3,170,408 3,980,788
( 116,979)215,921)( 215,921 116,979 - -
Transfers
Change in net assets1,402,442 1,438,936 1,767,966 2,541,852 3,170,408 3,980,788
20,354,286 24,549,134 22,007,282 44,903,420 40,922,632
Net assets - beginning
$ 21,756,728$ 26,317,100$ 24,549,134$ 48,073,828$ 44,903,420$
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 $11,486,974. Approximately 99 percent of this total amount, $11,389,517, 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 $1,161,180
but due to actual revenues being more than budgeted and actual expenditures being less than budgeted, the
fund balance actually increased by 11 percent during the current fiscal year. This was primarily
attributable to capital projects not initiated during the year. Sales tax collections increased by 6% from the
previous year and the City collected $551,270 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 $89,362; 2) franchise fees were $109,071; 3) licenses and permit fees were
$38,221 more than budgeted; and 4) interest revenue was also higher due to rising interest rate by
$208,642 higher than budgeted. Expenditures were lower than budgeted mainly because street department
costs were $564,373 lower.
The fund balance of the City’s General Fund increased by 11 percent during the current fiscal year.
The Capital Projects Fund has a fund balance of $1,069,303, an increase of 2 percent, all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $82,233, an increase of 18 percent, all of which is reserved
for the repayment of debt.
The Special Revenue Funds have a fund balance of $280,798, a decrease of 12 percent, 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 $9,087,784.
The increase in net assets was $1,767,966. 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 $208,844. The most
significant changes were for $155,544 to acquire some park property, $67,100 for grant matching airport
projects, and $25,000 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 $9,470,863 compared to the final budget expenditures of
$10,430,837. The $959,974 variance was primarily due to close monitoring of expenditures by
departments and performing better than anticipated. Actual revenues on a budgetary basis was
$10,685,643 compared to the final budget of $9,184,801. The $1,500,842 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, 2007, amounts to $47,906,539 (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:
Park property acquisition of $155,544;
Storm water drainage improvements of $1.9 million;
Water and sewer line replacement program $241,803;
Sewer service to recently annexed area $1.2 million;
Airport commercial hangar project $215,920;
Surface water supply project $3 million;
Street repair equipment $207,007; and
Park and playground improvements of $33,474.
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200720062007200620072006
Land2,163,314$ 2,005,270$ 798,082$ 798,082$ 2,961,396$ 2,803,352$
Buildings and
improvements3,191,028 3,191,028 5,594,038 5,291,763 8,785,066 8,482,791
Equipment5,091,173 4,568,804 1,872,222 1,808,376 6,963,395 6,377,180
Infrastructure9,906,803 9,757,217 38,653,421 38,356,199 48,560,224 48,113,416
Construction in
progress- - 8,414,542 2,074,249 8,414,542 2,074,249
Less: accumulated
( 9,054,843)( 18,723,241)( 17,585,262)( 27,778,084)( 25,777,804)(
depreciation
$ 11,297,475 11,329,777$ 36,609,064$ 30,743,407$ 47,906,539$ 42,073,184$
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 $24,010,134. Of this amount,
$1,140,000 represents bonded debt backed by the full faith and credit of the City, $22,655,000
represents utility revenue bonds secured by water and sewer revenues, and $215,134 represents revenue
bonds secured by airport revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200720062007200620072006
General obligation330,000$ 645,000$ -$ -$ 330,000$ 645,000$
Certificates of
obligations810,000 950,000 - - 810,000 950,000
Revenue bonds
-- 22,870,134 19,805,233 22,870,134 19,805,233
payable
1,595,000$ 22,870,134$ 19,805,233$ 24,010,134$ 21,400,233$
$ 1,140,000
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
The FY 07/08 budget incorporates a $.02 reduction in the property tax rate to $.445 per $100 valuation.
Certified taxable property value for 2008 is $818 million. This is a 13% increase over the last year’s
values, or $98 million. The largest portion of the increase is due to the reevaluation of existing property.
Continued growth provided an additional $16.4 million in taxable property value. Factors that were
considered in preparing the City’s budget for the 2008 fiscal year were increases in personnel costs by
about 3%, utilities and fuel costs.
The City uses reserves from the General Fund to supplement capital projects during the year as needs
arise and where favorable unit pricing is received on such projects. Additionally, the City’s Fiscal
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. The FY 07/08 budget has $1.25
million for an aquatics complex and park restroom. There are ample funds for transfers during 2008,
should the City Council so desire, and still retain the minimum fund balance provisions established by
the Fiscal Management Practices.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional information should be addressed to Walter Wood, Director of Finance,
298 West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1211.
10
BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2007
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments15,439,523$ 7,971,568$ 23,411,091$
Receivables (net of allowances for uncollectibles)
Taxes977,065 - 977,065
Accounts385,543 971,695 1,357,238
Internal balances4,556,360)( 4,556,360 -
Inventories15,224 - 15,224
Restricted investments- 921,282 921,282
Deferred charges- 252,741 252,741
Capital assets
Land2,163,314 798,082 2,961,396
Buildings and improvements3,191,028 5,594,038 8,785,066
Machinery and equipment5,091,173 1,872,222 6,963,395
Infrastructure/water and wastewater distribution9,906,803 38,653,421 48,560,224
Construction in progress- 8,414,542 8,414,542
(9,054,843)( 27,778,084)(
Less: accumulated depreciation
36,609,06411,297,475 47,906,539
Total capital assets
51,282,71023,558,470 74,841,180
Total assets
LIABILITIES
Accounts payable267,708 1,069,526 1,337,234
Accrued liabilities181,854 29,629 211,483
Accrued interest payable7,427 290,731 298,158
Customer deposits- 217,475 217,475
Noncurrent liabilities:
Due within one year515,951 1,521,124 2,037,075
828,802 21,837,125 22,665,927
Due in more than one year
1,801,742 26,767,352
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt10,157,475 16,564,217 26,721,692
Restricted for:
Hotel/motel economic development246,954 - 246,954
Child and public safety33,844 - 33,844
Debt service86,136 665,099 751,235
9,087,78411,232,319 20,320,103
Unrestricted
$ 26,317,10021,756,728$ 48,073,828$
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, 2007
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 243,9291,591,258$ 34,516$ -$ 1,312,813$( -)$ 1,312,813$()
Public safety 687,5675,187,628 47,172 - 4,452,889( -) 4,452,889()
Streets 27,4251,144,681 - 108,813 1,008,443( -) 1,008,443()
Culture and recreation 171,9311,733,627 34,171 6,743 1,520,782( -) 1,520,782()
Community developmen 160,745381,091 - - 220,346( -) 220,346()
-65,926 - - 65,926)( - 65,926)(
Interest on long-term debt
10,104,211 1,291,597 115,859 115,556 8,581,199)( - 8,581,199)(
Total governmental activities
Business-type activities
Water and wastewater 5,092,5784,776,359 - 75,773 - 391,992 391,992
Sanitary landfill 170,814272,010 - - - 101,196( 101,196)()
Airport130,169 61,916 - 93,597 - 25,344 25,344
500,779141,516 - - - 359,263 359,263
Storm water drainage
5,826,0875,320,054 - 169,370 - 675,403 675,403
Total business-type activities
$ 15,424,265 7,117,684$ 115,859$ 284,926$ 8,581,199)( 675,403 7,905,796)(
Total
General revenues:
Taxes:
Property - generalpurpose2,913,521 - 2,913,521
Property - debt service -476,117 476,117
Sales -4,351,269 4,351,269
Franchise -1,370,838 1,370,838
Other -388,013 388,013
Investment earnings 876,642623,810 1,500,452
Miscellaneous 75,994 - 75,994
( 215,921215,921) -
Transfers
9,983,641 1,092,563 11,076,204
Total general revenues and transfers
Change in net assets 1,767,9661,402,442 3,170,408
20,354,286 24,549,134 44,903,420
Net assets, beginning
$ 21,756,728 26,317,100$ 48,073,828$
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, 2007
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
ASSETS
Cash and investments9,432,054$ 5,648,968$ 358,501$ 15,439,523$
Receivables (net of allowance for uncollectibles)
Taxes888,049 - 89,016 977,065
Accounts379,287 - 6,256 385,543
-15,224 - 15,224
Inventories
10,714,614 5,648,968 453,773 16,817,355
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable154,310 23,305 85,034 262,649
Accrued liabilities181,854 - - 181,854
Due to other funds5,059 4,556,360 - 4,561,419
-318,751 5,708 324,459
Deferred revenue
4,579,665659,974 90,742 5,330,381
Total liabilities
Fund balances:
Reserved for:
Inventories15,224 - - 15,224
Debt service- - 82,233 82,233
Unreserved, reported in:
General fund10,039,416 - - 10,039,416
Special revenue funds- - 280,798 280,798
1,069,303- - 1,069,303
Capital projects fund
10,054,640 1,069,303 363,031
Total fund balances 11,486,974
$ 10,714,614 5,648,968$ 453,773$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedinthe
funds.
11,297,475
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
funds.
324,459
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(1,352,180)
$ 21,756,728
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, 2007
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
REVENUES
Taxes:
Property$ -2,919,015$ 477,393$ 3,396,408$
Sales4,351,269 - - 4,351,269
Franchise1,370,838 - - 1,370,838
Other46,232 - 341,781 388,013
Licenses and permits164,071 - - 164,071
Fines and forfeitures343,389 - 10,500 353,889
Intergovernmental 6,743101,483 3,663 111,889
Service charges735,030 - 3,496 738,526
Investment earnings534,585 65,588 23,637 623,810
119,731 - - 119,731
Miscellaneous
72,33110,685,643 860,470 11,618,444
Total revenues
EXPENDITURES
Current:
General government1,158,435 - 332,767 1,491,202
Public safety -4,906,682 49,089 4,955,771
Streets735,614 - - 735,614
Culture and recreation1,486,990 - 31,948 1,518,938
Community development -375,614 - 375,614
Debt service:
Principal - - 455,000 455,000
Interest and fiscal charges- - 71,105 71,105
807,528 - - 807,528
Capital outlay
-9,470,863 939,909 10,410,772
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
72,3311,214,780 79,439)( 1,207,672
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in - - 55,000 55,000
(215,921) 55,000)( - 270,921)(
Transfers out
(215,921) 55,000)( 55,000 215,921)(
Total other financing sources (uses)
17,331998,859 24,439)( 991,751
NET CHANGE IN FUND BALANCES
1,051,9729,055,781 387,470 10,495,223
FUND BALANCES, BEGINNING
$ 1,069,30310,054,640$ 363,031$ 11,486,974$
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, 2007
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page12)are
different because:
Net change in fund balances - total governmental funds (page 14)991,751$
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense.( 132,484)
Theneteffectofvariousmiscellaneoustransactionsinvolvingcapitalassets(i.e.,sales,trade-
ins, and donations) is to increase net assets.100,182
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds.2,657
Therepaymentoftheprincipaloflong-termdebtconsumesthecurrentfinancialresourcesof
governmental funds. 455,000
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrentfinancial
resources and, therefore, are not reported as expenditures in governmental funds.
(14,664)
$ 1,402,442
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, 2007
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
REVENUES
Taxes7,744,945$ 7,944,945$ 8,687,354$ 742,409$
Licenses and permits125,850 125,850 164,071 38,221
Fines and forfeitures205,000 205,000 343,389 138,389
Intergovernmental54,772 54,772 101,483 46,711
Service charges655,616 484,090 735,030 250,940
Investment earnings250,000 325,944 534,585 208,641
44,200 44,200 119,731 75,531
Miscellaneous
9,080,383 9,184,801 10,685,643 1,500,842
Total revenues
EXPENDITURES
Current:
General government:
City council47,711 47,711 50,128 2,417()
City administrator116,301 116,301 118,127 1,826()
City secretary 101,929101,929 100,250 1,679
Emergency management6,450 7,650 7,105 545
Municipal buildings208,882 216,182 221,220 5,038()
Financial administration and accounting 290,608340,608 270,799 19,809
Purchasing 53,78453,784 52,512 1,272
Tax assessment and collection117,000 117,000 91,454 25,546
Legal counsel65,855 65,855 69,612 3,757()
Municipal court88,500 98,500 99,845 1,345()
88,814 88,814 77,383 11,431
Human resources
1,235,834 1,204,334 1,158,435 45,899
Total general government
Public safety:
Fire and ambulance administration214,317 214,317 182,69431,623
Fire prevention and investigation145,344 145,344 116,43128,913
Fire suppression839,954 839,954 852,86012,906()
Emergency medical services814,471 814,471 765,07349,398
Volunteer33,832 33,832 23,9439,889
Police administration108,323 117,323 125,1797,856()
Police patrol1,560,185 1,575,485 1,549,38926,096
(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, 2007
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current:
Public safety(continued):
Police communications344,368$ 354,368$ 353,256$ 1,112$
Police records144,518 144,518 133,858 10,660
Criminal investigation424,001 429,001 444,071 15,070()
Police reserve62,636 62,636 63,916 1,280()
Animal control110,319 110,319 107,148 3,171
160,641 191,141 188,864 2,277
Public safety facility
4,962,909 5,032,709 4,906,682 126,027
Total public safety
Streets:
971,524 971,524 735,614 235,910
Street maintenance
971,524 971,524 735,614 235,910
Total streets
Culture and recreation:
Recreation administration753,723 753,723 664,548 89,175
Park maintenance416,231 416,231 384,163 32,068
Cemeteries 117,194 117,194 117,506 312()
Library 196,588196,588 206,841 10,253()
115,521 115,521 113,932 1,589
Senior citizens center
1,599,257 1,599,257 1,486,990 112,267
Total culture and recreation
Community development:
Community developmentplanning 151,993151,993 147,336 4,657
Community development inspection144,999 144,999 138,066 6,933
100,499 100,499 90,212 10,287
Code enforcement
397,491 397,491 375,614 21,877
Total community development
9,167,015 9,205,315 8,663,335 541,980
Total current
Capital outlay:
General government:
Municipal buildings- 155,544 155,544 -
25,000 25,000 7,255 17,745
Financial and administration and accounting
25,000 180,544 162,799 17,745
Total general government
(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, 2007
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Public safety:
Fire suppression92,978$ 92,978$ 101,586$ 8,608$()
Police patrol52,000 52,000 60,312 8,312)(
Criminal investigation40,000 40,000 - 40,000
192,000 207,000 154,546 52,454
Public safety facility
376,978 391,978 316,444 75,534
Total public safety
Streets:
538,000 538,000 209,537 328,463
Street maintenance
538,000 538,000 209,537 328,463
Total highways and streets
Culture and recreation:
Recreation administration2,500 2,500 2,500 -
Park maintenance101,000 101,000 109,611 8,611)(
11,500 11,500 6,637 4,863
Cemeteries
115,000 115,000 118,748 3,748)(
Total culture and recreation
1,054,978 1,225,522 807,528 417,994
Total capital outlay
10,430,83710,221,993 9,470,863 959,974
Total expenditures
OTHER FINANCING SOURCES (USES)
(19,570) 86,670)( 215,921)( 129,251
Transfers out
(19,570) 86,670)( 215,921)( 129,251
Total other financing sources (uses)
( 1,332,7061,161,180)( 998,859) 2,331,565
NET CHANGE IN FUND BALANCE
9,055,781 9,055,781 9,055,781 -
FUND BALANCE, BEGINNING
$7,894,601 7,723,075$ 10,054,640$ 2,331,565$
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, 2007
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
ASSETS
Current assets:
Cash and investments2,693,981$ 5,277,587$ 7,971,568$
Accounts receivable - net of allowances for uncollectibles 73,246898,449 971,695
Due from other funds4,556,360 - 4,556,360
-921,282 921,282
Restricted investments
5,350,8339,070,072 14,420,905
Total current assets
Noncurrent assets:
Deferred charges201,886 50,855 252,741
Capital assets:
Land163,721 634,361 798,082
Buildings and improvements2,321,930 3,272,108 5,594,038
Equipment1,159,728 712,494 1,872,222
Water and wastewater distribution38,653,421 - 38,653,421
Construction in progress5,995,279 2,419,263 8,414,542
( 1,014,308)17,708,933)( 18,723,241)(
Less: accumulated depreciation
6,023,91830,585,146 36,609,064
Total capital assets
6,074,77330,787,032 36,861,805
Total noncurrent assets
11,425,60639,857,104 51,282,710
Total assets
LIABILITIES
Current liabilities:
Accounts payable654,992414 1,534,069,526
Accrued liabilities27,7211,908 29,629
Customer deposits217,475- 217,475
Accrued interest256,18334,548 290,731
Capital lease- 42,583 42,583
Bonds payable1,290,000 161,000 1,451,000
1,83025,711 27,541
Compensated absences payable
656,4032,472,082 3,128,485
Total current liabilities
Long-term liabilities:
Capital lease- 177,337 177,337
Bonds payable17,065,0004,354,134 21,419,134
- 240,654 240,654
Liability for landfill closure
4,772,12517,065,000 21,837,125
Total long-term liabilities
5,428,52819,537,082 24,965,610
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt12,230,146 4,334,071 16,564,217
Restricted for debt service665,099 - 665,099
1,663,0077,424,777 9,087,784
Unrestricted
$ 5,997,07820,320,022$ 26,317,100$
Total net assets
The notes to the financial statements are an integral part of this statement.
19
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2007
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
OPERATING REVENUES
Water sales2,892,768$ -$ 2,892,768$
Wastewater charges1,993,153 - 1,993,153
Tap and collection fees109,089 - 109,089
Delinquent charges34,487 - 34,487
Gate charges- 168,397 168,397
Hanger rental- 57,456 57,456
Storm water drainage fees- 500,779 500,779
6,87763,081 69,958
Other service charges
733,5095,092,578 5,826,087
Total operating revenues
OPERATING EXPENSES
Personnel services864,539 71,295 935,834
Contractual services909,928 - 909,928
Utilities540,961 20,518 561,479
Repairs and maintenance262,568 67,658 330,226
Other supplies and expenses368,360 58,012 426,372
145,7411,010,349 1,156,090
Depreciation
363,2243,956,705 4,319,929
Total operating expenses
370,2851,135,873 1,506,158
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
Investment earnings592,612 284,030 876,642
( 180,471)819,654)( 1,000,125)(
Interest and fiscal charges on debt
( 103,559227,042) 123,483)(
Total nonoperating revenues (expenses)
473,844908,831 1,382,675
INCOME BEFORE CONTRIBUTIONS
75,77393,597 169,370
CAPITAL CONTRIBUTIONS
- 215,921 215,921
TRANSFERS IN
783,362984,604 1,767,966
CHANGE IN NET ASSETS
19,335,418 24,549,1345,213,716
TOTAL NET ASSETS, BEGINNING
$ 5,997,07820,320,022$ 26,317,100$
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, 2007
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers5,258,434$ 725,583$ 5,984,017$
Cash payments to employees for services834,761)( 71,311)( 906,072)(
( 140,730)1,881,018)( 2,021,748)(
Cash payments to suppliers for goods and services
513,5422,542,655 3,056,197
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash received from other funds3,726,956 233,638 3,960,594
17,717)-( 17,717)(
Cash paid to other funds
215,9213,726,956 3,942,877
Cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Proceeds from issuance of long-term debt- 4,300,000 4,300,000
Principal repayments on capital lease- 39,264)( 39,264)(
Principal repayments on bonds1,239,912)( 15,099)( 1,255,011)(
Interest and fiscal charges on debt754,798)( 202,195)( 956,993)(
Capital contributions75,773 93,597 169,370
( 1,857,881)4,771,333)( 6,629,214)(
Acquisition and construction of capital assets
Cash provided (used) by capital and
( 2,279,1586,690,270) 4,411,112)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
592,612 284,030 876,642
Interest on investments
592,612 284,030 876,642
Cash provided by investing activities
NET INCREASE IN CASH AND
3,292,651171,953 3,464,604
CASH EQUIVALENTS
1,984,9363,443,310 5,428,246
CASH AND CASH EQUIVALENTS, BEGINNING
$ 5,277,5873,615,263$ 8,892,850$
CASH AND CASH EQUIVALENTS, ENDING
(Including $921,282 for the Water and Wastewater
fund in restricted investments)
(continued)
21
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2007
Business-type Activities - Enterprise Funds
Water andOther
WastewaterFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 1,135,873$ 370,285$ 1,506,158$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation1,010,349 145,741 1,156,090
Change in assets and liabilities:
Decrease (increase) in accounts receivable110,893 7,926)( 102,967
Increase (decrease) in accounts payable200,799 5,458 206,257
Increase (decrease) in accrued liabilities9,045 137)( 8,908
Increase (decrease) in customer deposits54,963 - 54,963
20,733 121 20,854
Increase (decrease) in compensated absences
143,2571,406,782 1,550,039
Total adjustments
$ 513,5422,542,655$ 3,056,197$
Net cash provided by operating activities
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, 2007
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, 2007
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 $1,352,180 difference are as follows:
General obligations1,140,000$
Accrued interest payable7,427
204,753
Compensated absences
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$ 1,352,180
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 $(132,484) difference are as follows:
$ 807,498
Capital outlay
(939,982)
Depreciation expense
Net adjustment to decrease net changes in fund
balances - total governmental funds to arrive at
$(132,484)
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 $100,182 difference are as follows:
Inthestatementofactivities,onlythelossofcapitalassetsisreported.
However,inthegovernmentalfunds,theproceedsfromthesaleincrease
financialresources.Thus,thechangeinnetassetsdiffersfromthechange
in fund balance by the cost of capital assets sold.
$( 8,631)
Donations of capital assets increase net assets in the statement of activities,
butdonotappearinthegovernmentalfundsbecausetheyarenotfinancial
108,813
resources.
$ 100,182
(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
$2,657 difference are as follows:
Property taxes6,770$( )
Ambulance charges for services49,778)(
59,205
Municipal court fines
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 2,657
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 $(14,664) difference are as follows:
Accrued interest5,179$
(19,843)
Compensated absences
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
$(14,664)
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 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 administration1,826$
Legal counsel3,757
City council2,417
Municipal court1,345
Municipal buildings5,038
Public safety:
Police administration7,856
Police reserve1,280
Criminal investigation15,070
Fire suppression12,906
Culture and recreation:
Library10,253
Cemeteries312
Capital outlay:
Public safety:
Fire suppression8,608
Police patrol8,312
Culture and recreation:
Park maintenance8,611
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, 2007, 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, 2007, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity(Days)
Tex Pool9,840,620$ 34
TexSta
r 203,630,786
9,981,400
U. S. Government Securities86
$ 23,452,806
Total fair value
Portfolio weighted average maturity(days)54
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,
2007, the City’s entire deposit balance was collateralized with securities held by the pledging
financial institution or 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-$ -$ 1,222,239$ 66,076$ 1,288,315$
Ambulance351,811 - - - 351,811
Municipal court fines1,066,184 - - - 1,066,184
Othe
r -53,610 29,103 13,987 96,700
Taxes:
Property 19,295101,261 - - 120,556
Sales 810,015 - - - 810,015
Occupancy 81,718- - - 81,718
35,326 6,256 - - 41,582
Other
Gross receivables2,418,207 107,269 1,251,342 80,063 3,856,881
Less: allowance for
( 1,150,871) 11,997)( 352,893)( 6,817)( 1,522,578)(
uncollectibles
$ 1,267,336 95,272$ 898,449$ 73,246$ 2,334,303$
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)$ -34,848$
Delinquent property taxes receivable (debt service) -5,708
Ambulance charges for services (general fund) -47,127
236,776 -
Municipal court fines
$ 324,459 -$
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, 2007, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
$ 158,0442,005,270$ -$ 2,163,314$
Land
158,0442,005,270 - 2,163,314
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements3,191,028 - - 3,191,028
Machinery and equipment 608,6814,568,804 86,312 5,091,173
149,5869,757,217 - 9,906,803
Infrastructure
758,26717,517,049 86,312 18,189,004
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements813,200 68,119 - 881,319
Machinery and equipment 371,7723,227,537 77,681 3,521,628
500,0914,151,805 - 4,651,896
Infrastructure
939,9828,192,542 77,681 9,054,843
Total accumulated depreciation
181,715)9,324,507( 8,631 9,134,161
Total capital assets being depreciated, net
$ 23,671)11,329,777$( 8,631$ 11,297,475$
Governmental activities capital assets, net
Business-type activities:
Capital assets, not being depreciated:
Land798,082$ -$ -$ 798,082$
6,340,2932,074,249 - 8,414,542
Construction in progress
6,340,293 - 9,212,624
2,872,331
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements5,291,763 302,275 - 5,594,038
Machinery and equipment 63,8461,808,376 - 1,872,222
297,22238,356,199 - 38,653,421
Water and wastewater system
663,34345,456,338 - 46,119,681
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements955,788 119,290 - 1,075,078
Machinery and equipment 107,5151,130,110 - 1,237,625
911,17415,499,364 - 16,410,538
Water and wastewater system
1,137,97917,585,262 - 18,723,241
Total accumulated depreciation
474,636)27,871,076( - 27,396,440
Total capital assets being depreciated, net
$ 5,865,65730,743,407$ -$ 36,609,064$
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$ 78,922
y231,828
Public safet
Culture and recreation214,689
Community development5,476
409,067
Streets
$ 939,982
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater$ 1,010,349
Landfill79,923
65,818
Airport
$ 1,156,090
Total depreciation expense - business-type activities
E. Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2007, is as follows:
Receivable FundPayable FundAmount
Agency General 5,059$
4,556,360
Water and WastewaterCapital projects
$ 4,561,419
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, 2007, are as follows:
Transfers InTransfers OutAmount
CapitalprojectsNonmajorgovernmental55,000$
215,921
Nonmajor enterpriseGeneral
$ 270,921
Total interfund transfers
(continued)
38
IV. DETAILED NOTES ON ALL FUNDS (Continued)
E. Interfund Receivables, Payables and Transfers (Continued)
Transfers in the amount of $55,000 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 $215,921 was used to move unrestricted revenues collected
in the General Fund to finance the Airport Fund in accordance with budgetary authorization.
F. Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2007, was as follows:
BalanceBalanceDue Within
09/30/06AdditionsReductions09/30/07One Year
Governmental activities:
General obligation bonds1,595,000$ -$ 455,000$ 1,140,000$ 475,000$
19,843184,910 - 204,753 40,951
Compensated absences payable
$ 19,8431,779,910$ 455,000$ 1,344,753$ 515,951$
Total governmental activities
Business-type activities:
Revenue bonds/certificates
of obligation19,805,233$ 4,300,000$ 1,235,099$ 22,870,134$ 1,451,000$
Capital lease259,184 - 39,265 219,919 42,583
Estimated landfill closure
and postclosure costs222,543 18,111 - 240,654 -
94226,599 - 27,541 27,541
Compensated absences payable
$ 4,319,05320,313,559$ 1,274,364$ 23,358,248$ 1,521,124$
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:
$2,000,000CombinationTaxandRevenueCertificatesof
Obligation-Series1996,principaldueannuallyinseriesthrough
2016,interestduesemi-annuallyat4.8%to6.8%,certificates
y 15, 2006.810,000$
callable Februar
$2,700,000GeneralObligationBonds-Series1997,principaldue
annuallyinseriesthrough2008,interestduesemi-annuallyat
4.43%.
330,000
$ 1,140,000
(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 as of September 30,
2007, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.5,210,000$
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.635,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.1,295,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.2,390,000
$275,000CombinationTaxandRevenueCertificatesof
Obligation,Series2003A,principaldueannuallyinSeriesthrough
2021, interest due semi-annually at 4.125%.215,134
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.6,970,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.1,855,000
$4,300,000CombinationTaxRevenueCertificatesofObligation,
Series2006A,principaldueannuallyinseriesthrough2027,
interest due semi-annually at 3.92%.
4,300,000
$ 22,870,134
Total Revenue Bonds
(continued)
40
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt (Continued)
Debt Service Requirements
Annual debt service requirements to maturity for general obligation bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
2008475,000$ 48,195$ 523,195$
2009150,000 32,845 182,845
2010165,000 24,182 189,182
2011170,000 14,885 184,885
201230,000 9,281 39,281
150,000 17,438 167,438
2013-2017
$ 1,140,000 146,826$ 1,286,826$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
20081,446,000$ 865,206$ 2,311,206$
20091,501,000 811,381 2,312,381
20101,557,000 755,547 2,312,547
20111,608,000 697,592 2,305,592
20121,674,000 637,357 2,311,357
2013-20179,165,000 2,155,236 11,320,236
2018-20224,509,134 617,965 5,127,099
1,410,000 142,688 1,552,688
2023-2027
$ 22,870,134 6,682,972$ 29,553,106$
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
77,227
Less: accumulated depreciation
$ 243,123
Total
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2007, were as follows:
Fiscal Year Ending
September 30,Principal
200861,165$
200961,165
201061,165
87,924
2011
Total minimum lease payments271,419
51,500
Less: amount representing interest
$ 219,919
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 matters 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 $240,654. 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 71% 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 821 administered by TMRS, an agent multiple-employer public
employee retirement system. All assumptions for the December 31, 2006, valuations are
contained in the 2006 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, 2005, valuation is effective for rates beginning
January 2007).
(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
Remaining Amortization25 Years - Open Period
Asset Valuation MethodAmortized Cost (GASB-25,paragraphs 36e and 138)
Investment Rate of Return7%
Projected Salary IncreasesNone
Includes Inflation at3.5%
Cost of Living AdjustmentsNone
Actuarial Valuation Date12/31/0612/31/0512/31/04
Actuarial Value of Assets12,884,565$ 11,702,174$ 11,127,229$
Actuarial Accrued Liabilities16,154,691 14,690,509 13,865,467
Percentage Funded79.8% 79.7% 80.3%
Unfunded(Overfunded) Actuarial
Accrued Liability(UAAL) 2,988,3353,270,126 2,738,238
Annual Covered Payroll5,005,388 4,510,148 4,334,782
UAAL as a Percentage of Covered Payroll65.3% 66.3% 63.2%
Net Pension Obligation (NPO)
at the Beginning of Period- - -
Annual Pension Cost:
Annual Required Contribution (ARC) 601,005590,098 524,487
Interest on NPO- - -
- - -
Adjustment to the ARC
601,005590,098 524,487
Contributions Made (100%) 601,005590,098 524,487
- - -
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, 2007
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafetySafetyTotalServiceFunds
ASSETS
Cash and investments250,270$ 9,565$ 24,279$ 284,114$ 74,387$ 358,501$
Receivables (net of allowance
for uncollectibles)
Property taxes- - - - 7,298 7,298
Accounts- - - - 6,256 6,256
-81,718 - 81,718 - 81,718
Occupancy taxes
$ 9,565331,988$ 24,279$ 365,832$ 87,941$ 453,773$
Total assets
LIABILITIES
Accounts payable85,034$ -$ -$ 85,034$ -$ 85,034$
- - - - 5,708 5,708
Deferred revenue
-85,034 - 85,034 5,708 90,742
Total liabilities
FUND BALANCES
Reserved for debt service- - - - 82,233 82,233
9,565246,954 24,279 280,798 - 280,798
Unreserved
9,565246,954 24,279 280,798 82,233 363,031
Total fund balances
Total liabilities
$ 9,565331,988$ 24,279$ 365,832$ 87,941$ 453,773$
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, 2007
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafety SafetyTotalServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ 477,393$ 477,393$
Other341,781 - - 341,781 - 341,781
Fines and forfeitures- 9,565 935 10,500 - 10,500
Intergovernmental- - 3,663 3,663 - 3,663
Service charges- - 3,496 3,496 - 3,496
17,134 - - 17,134 6,503 23,637
Investment earnings
358,915 9,565 8,094 376,574 483,896 860,470
Total revenues
EXPENDITURES
Current:
General government332,767 - - 332,767 - 332,767
Public safety- 4,862 44,227 49,089 - 49,089
Culture and recreation31,948 - - 31,948 - 31,948
Debt service:
Principal - - - - 455,000 455,000
-- - - 71,105 71,105
Interest and fiscal charges
364,715 4,862 44,227 413,804 526,105 939,909
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
(5,800) 4,703 36,133)( 37,230)( 42,209)( 79,439)(
EXPENDITURES
OTHER FINANCING SOURCES
-- - - 55,000 55,000
Transfers in
-- - - 55,000 55,000
Total other financing sources
NET CHANGE IN
( 4,7035,800) 36,133)( 37,230)( 12,791 24,439)(
FUND BALANCES
252,754 4,862 60,412 318,028 69,442 387,470
FUND BALANCES, BEGINNING
$ 246,954 9,565$ 24,279$ 280,798$ 82,233$ 363,031$
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, 2007
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - other329,900$ 341,781$ 11,881$
17,1344,000 13,134
Investment income
358,915333,900 25,015
Total revenues
EXPENDITURES
Current:
General government:
Administrative351,631 332,767 18,864
31,94833,759 1,811
Culture and recreation
364,715385,390 20,675
Total expenditures
( 5,800)51,490)( 45,690
NET CHANGE IN FUND BALANCE
252,754252,754 -
FUND BALANCE, BEGINNING
$ 246,954201,264$ 45,690$
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, 2007
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 3,000 9,565$ 6,565$
Fines and forfeitures
3,000 9,565 6,565
Total revenues
EXPENDITURES
Current:
5,138 4,862 276
Public safety
5,138 4,862 276
Total public safety
5,138 4,862 276
Total expenditures
( 4,7032,138) 6,841
NET CHANGE IN FUND BALANCE
4,862 4,862 -
FUND BALANCE, BEGINNING
$ 2,724 9,565$ 6,841$
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, 2007
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Fines and forfeitures-$ 935$ 935$
Intergovernmental3,700 3,663 37)(
3,496- 3,496
Service charges
3,700 8,094 4,394
Total revenues
EXPENDITURES
Current:
46,734 44,227 2,507
Public safety
46,734 44,227 2,507
Total expenditures
( 36,133)43,034)( 6,901
NET CHANGE IN FUND BALANCE
60,412 60,412 -
FUND BALANCE, BEGINNING
$ 17,378 24,279$ 6,901$
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, 2007
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - property 470,100$ 477,393$ 7,293$
4,000 6,503 2,503
Investment earnings
474,100 483,896 9,796
Total revenues
EXPENDITURES
Debt service:
Principal455,000 455,000 -
71,100 71,105 5)(
Interest and fiscal charges
526,100 526,105 5)(
Total general government
526,100 526,105 5)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
(52,000) 42,209)( 9,791
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES
55,000 55,000 -
Transfers in
55,000 55,000 -
Total other financing sources
12,7913,000 9,791
NET CHANGE IN FUND BALANCE
69,442 69,442 -
FUND BALANCE, BEGINNING
$ 72,442 82,233$ 9,791$
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, 2007
SanitaryStorm Water
LandfillAirportDrainageTotal
ASSETS
Current assets:
Cash and investments441,073$ -$ 4,836,514$ 5,277,587$
Accounts receivable (net of allowances for uncollectibles)2,197 12,135 58,914 73,246
17,717 - - 17,717
Due from other funds
460,987 12,135 4,895,428 5,368,550
Total current assets
Noncurrent assets:
Deferred charges- - 50,855 50,855
Capital assets:
Land40,000 594,361 - 634,361
Buildings and improvements375,109 2,896,999 - 3,272,108
Equipment597,363 115,131 - 712,494
Construction in progress- - 2,419,263 2,419,263
(422,200)(592,108) - 1,014,308)(
Less: accumulated depreciation
420,364 3,184,291 2,470,118 6,074,773
Total noncurrent assets
881,351 3,196,426 7,365,546 11,443,323
Total assets
LIABILITIES
Current liabilities:
Accounts payable3,2947,434 403,806 414,534
Accrued liabilities1,908- - 1,908
Due to other funds- 17,717 - 17,717
Accrued interest payable10,895 2,583 21,070 34,548
Capital lease42,583 - - 42,583
Bonds payable- 16,000 145,000 161,000
1,830 - - 1,830
Compensated absences payable
60,510 43,734 569,876 674,120
Total current liabilities
Long-term liabilities:
Capital lease177,337- - 177,337
Bonds payable- 199,134 4,155,000 4,354,134
240,654 -- 240,654
Liability for landfill closure
417,991 199,134 4,155,000 4,772,125
Total long-term liabilities
478,501 242,868 4,724,876 5,446,245
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt200,444 2,969,157 1,164,470 4,334,071
202,406 15,599)( 1,476,200 1,663,007
Unrestricted
$402,850 2,953,558$ 2,640,670$ 5,997,078$
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, 2007
SanitaryStorm Water
LandfillAirportDrainageTotal
OPERATING REVENUES
Gate charges168,397-$ -$ 168,397$
Hanger rental- 57,456 - 57,456
Storm water drainage fee- - 500,779500,779
2,417 4,460 - 6,877
Other service charges
61,916170,814 500,779 733,509
Total operating revenues
OPERATING EXPENSES
Personnel services71,295- - 71,295
Utilities1,00219,516 - 20,518
Repairs and maintenance41,44923,886 2,323 67,658
Other supplies and expenses45,1767,309 5,527 58,012
79,923 65,818 - 145,741
Depreciation
116,529238,845 7,850 363,224
Total operating expenses
( 54,613)68,031)( 492,929 370,285
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings24,274 335 259,421 284,030
(33,165) 13,640)( 133,666)( 180,471)(
Interest expense
(8,891) 13,305)( 125,755 103,559
Total nonoperating revenues (expenses)
( 67,918)76,922)( 618,684 473,844
INCOME(LOSS) BEFORE CONTRIBUTIONS
93,597- - 93,597
CAPITAL CONTRIBUTIONS
215,921- - 215,921
TRANSFER IN
( 241,60076,922) 618,684 783,362
CHANGE IN NET ASSETS
479,7722,711,958 2,021,9865,213,716
TOTAL NET ASSETS, BEGINNING
$ 2,953,558402,850$ 2,640,670$ 5,997,078$
TOTAL NET ASSETS, ENDING
53
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2007
SanitaryStorm Water
LandfillAirportDrainageTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers173,205$ 54,251$ 498,127$ 725,583$
Cash payments to employees71,311)( - - 71,311)(
(84,907) 47,973)( 7,850)( 140,730)(
Cash payments to suppliers for goods and services
16,987 6,278 490,277 513,542
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Cash received from other funds- 233,638 - 233,638
(17,717) - - 17,717)(
Cash paid to other funds
Cash provided (used) by noncapital
(17,717) 233,638 - 215,921
financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease39,264)( - - 39,264)(
Principal payments on bonds- 15,099)( - 15,099)(
Interest and fiscal charges on debt22,270)( 16,474)( 163,451)( 202,195)(
Proceeds from issuance of bonds- - 4,300,000 4,300,000
Capital contributions- 93,597 - 93,597
302,275)-( 1,555,606)( 1,857,881)(
Acquisition and construction of capital assets
Cash provided (used) by capital and
(61,534) 240,251)( 2,580,943 2,279,158
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
24,274 335 259,421 284,030
Interest received
24,274 335 259,421 284,030
Cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
( -37,990) 3,330,641 3,292,651
AND CASH EQUIVALENTS
479,063 - 1,505,873 1,984,936
CASH AND CASH EQUIVALENTS, BEGINNING
$ 441,073 -$ 4,836,514$ 5,277,587$
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, 2007
SanitaryStorm Water
LandfillAirportDrainageTotal
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)68,031)$( 54,613)$( 492,929$ 370,285$
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation79,923 65,818 - 145,741
Change in assets and liabilities:
Decrease (increase) in accounts receivable2,391 7,665)( 2,652)( 7,926)(
Increase (decrease) in accounts payable2,720 2,738 - 5,458
Increase (decrease) in accrued liabilities137)( - - 137)(
121 - - 121
Increase (decrease) in compensated absences
85,018 60,891 2,652)( 143,257
Total adjustments
$ 16,987 6,278$ 490,277$ 513,542$
Net cash provided by operating activities
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, 2007
BalanceBalance
October 1,September 30,
2006AdditionsDeductions2007
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 part of the City of Stephenville, Texas’ comprehensive annual financial report
presents detailed information as a context for understanding what the information in the
financial statements, note disclosures, and required supplementary information says about
the City’s overall financial health.
Contents Page
Financial Trends 57
These schedules contain trend information to help the reader
understand how the City’s financial performance and well-being have
changed over time.
Revenue Capacity 63
These schedules contain information to help the reader assess the City’s
most significant local revenue sources. Although sales taxes are the
City’s most significant local revenue source, information about revenue
base is unavailable and information about principal revenue payers is
confidential under Texas statutes. Trend information about sales tax
revenues is provided in Table 2. Additionally, information about the
City’s second most significant local revenue source, the property tax, is
provided.
Debt Capacity 67
These schedules present information to help the reader assess the
affordability of the City’s current levels of outstanding debt and the
City’s ability to issue additional debt in the future.
Demographic and Economic Information 72
These schedules offer demographic and economic indicators to help
the reader understand the environment within which the City’s
financial activities take place.
Operating Information 74
These schedules contain service and infrastructure data to help the reader
understand how the information in the City’s financial report relates to
the services the City provides and the activities it performs.
Sources: Unless otherwise noted, the information in these schedules is derived from the
comprehensive annual financial reports for the relevant year.
THIS PAGE LEFT BLANK INTENTIONALLY
TABLE 1
CITY OF STEPHENVILLE, TEXAS
NET ASSETS BY COMPONENT
LAST FIVE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007
Governmental activities:
Invested in capital assets, net of related debt8,671,383$ 8,877,241$ 9,070,652$ 9,734,777$ 10,157,475$
Restricted- 620,104 295,721 381,849 366,934
7,932,439 8,181,076 9,548,977 10,237,660 11,232,319
Unrestricted
$ 16,603,822 17,678,421$ 18,915,350$ 20,354,286$ 21,756,728$
Total governmental activities net assets
Business-type activities:
Invested in capital assets, net of related debt11,789,690$ 14,229,406$ 16,190,916$ 17,432,394$ 16,564,217$
Restricted508,583 470,750 514,842 599,910 665,099
5,621,026 4,134,841 5,301,524 6,516,830 9,087,784
Unrestricted
$ 17,919,299 18,834,997$ 22,007,282$ 24,549,134$ 26,317,100$
Total business-type activities net assets
Total:
Invested in capital assets, net of related debt20,461,073$ 23,106,647$ 25,261,568$ 27,167,171$ 26,721,692$
Restricted508,583 1,090,854 810,563 981,759 1,032,033
13,553,465 12,315,917 14,850,501 16,754,490 20,320,103
Unrestricted
$ 34,523,121 36,513,418$ 40,922,632$ 44,903,420$ 48,073,828$
Total 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 FIVE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007
EXPENSES
Governmental activities:
General government1,262,164$ 1,421,563$ 1,453,986$ 1,441,939$ 1,591,258$
Public safety4,028,747 4,026,402 4,345,846 4,689,443 5,187,628
Streets894,193 995,046 979,051 1,098,979 1,144,681
Culture and recreation1,522,896 1,574,032 1,582,864 1,646,017 1,733,627
Community development317,743 296,244 348,177 343,135 381,091
153,445 130,388 109,153 91,817 65,926
Interest on long-term debt
8,179,188 8,443,675 8,819,077 9,311,330 10,104,211
Total governmental activities expenses
Business-type activities:
Water and wastewater3,790,830 4,582,690 4,367,671 4,681,174 4,776,359
Storm water drainage14,034 35,462 166,346 232,955 141,516
Sanitary landfill211,159 151,309 99,078 119,832 272,010
99,847 8,633 18,075 130,169
Airport
4,115,870 4,870,543 4,641,728 5,052,036 5,320,054
Total business-type activities expenses
$ 12,295,058 13,314,218$ 13,460,805$ 14,363,366$ 15,424,265$
Total expensess
PROGRAM REVENUES
Governmental activities:
Charges for services:
General government21,421$ 195,176$ 172,292$ 177,636$ 243,929$
Public safety884,349 524,561 488,292 600,332 687,567
Streets22,388 28,748 17,213 17,444 27,425
Culture and recreation157,741 147,563 135,607 132,125 171,931
Community development82,182 165,803 163,490 180,304 160,745
Operating grants and contributions146,257 189,805 125,068 172,884 115,859
185,625 366,478 556,425 177,503 115,556
Capital grants and contributions
1,499,963 1,618,134 1,658,387 1,458,228 1,523,012
Total governmental activities program revenues
Business-type activities:
Charges for services:
Water and wastewater4,261,555 4,564,193 5,245,901 5,628,658 5,092,578
Sanitary landfill154,650 174,152 174,845 162,306 170,814
Airport24,865 31,077 39,088 51,037 61,916
Storm water drainage511,427 478,143 485,600 485,314 500,779
273,101 411,474 1,513,020 599,393 169,370
Capital grants and contributions
5,225,598 5,659,039 7,458,454 6,926,708 5,995,457
Total business-type activities program revenues
$ 6,725,561 7,277,173$ 9,116,841$ 8,384,936$ 7,518,469$
Total program revenues
(continued)
58
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST FIVE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007
NET (EXPENSE) REVENUES
Governmental activities6,679,225)$( 6,825,541)$( 7,160,690)$( 7,853,102)$( 8,581,199)$(
1,109,728 788,496 2,816,726 1,874,672 675,403
Business-type activities
(5,569,497) 6,037,045)( 4,343,964)( 5,978,430)( 7,905,796)(
Total net expense
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS
Governmental activities:
Taxes:
Property - general purposes1,994,728 2,249,922 2,447,610 2,657,106 2,913,521
Property - debt service545,552 540,467 448,663 437,146 476,117
Sales3,217,670 3,538,100 3,654,232 4,101,973 4,351,269
Franchise934,965 1,209,036 1,264,298 1,423,615 1,370,838
Other208,534 262,467 292,447 312,528 388,013
Investment earnings196,542 87,990 286,301 441,986 623,810
Miscellaneous33,971 12,158 54,068 34,663 75,994
315,638 - 50,000)( 116,979)( 215,921)(
Transfers
7,447,600 7,900,140 8,397,619 9,292,038 9,983,641
Total governmental activities
Business-type activities:
Investment earnings105,970 100,773 305,559 518,164 876,642
Miscellaneous9,137 26,429 - 32,037 -
(315,638) - 50,000 116,979 215,921
Transfers
(200,531) 127,202 355,559 667,180 1,092,563
Total business-type activities
7,247,069 8,027,342 8,753,178 9,959,218 11,076,204
Total general revenues and other changes in net
CHANGE IN NET ASSETS
Governmental activities768,375 1,074,599 1,236,929 1,438,936 1,402,442
909,197 915,698 3,172,285 2,541,852 1,767,966
Business-type activities
$ 1,677,572 1,990,297$ 4,409,214$ 3,980,788$ 3,170,408$
Total change in net assets
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
1998199920002001200220032004200520062007
General fund
Reserved-$ -$ -$ -$ -$ 7,178$ 4,072$ 13,349$ 10,352$
15,224$
6,269,476 5,620,092 5,499,615 5,958,100 6,429,861 7,309,934 8,017,965 8,361,416 9,045,429 10,039,416
Unreserved
$ 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$ 10,054,640$
Total general fund
All other governmental funds
Reserved
Debt service funds671)$( 1,077$ 12,873$ 24,139$ 30,337$ 41,081$ 41,285$ 50,563$
69,443$ 82,233$
Unreserved, reported in:
Special revenue funds93,695 157,561 186,653 232,461 207,743 237,911 211,765 247,743 318,028
280,798
3,395,202 1,779,154 2,122,160 1,109,119 895,894 772,431 735,191 1,063,030 1,051,972 1,069,303
Capital projects funds
Total all other
$ 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$ 1,432,334$
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
1998199920002001200220032004200520062007
REVENUES
Taxes5,648,855$ 6,158,011$ 6,418,350$ 6,689,180$ 7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235$ 9,506,528$
Special assessments- - 664,688 - 55,415 - - 402,789 28,122
-
Licenses, fees and permits59,393 78,228 88,671 64,408 86,583 84,669 168,519 168,523 183,839
164,071
Fines and forfeitures247,631 174,225 169,085 168,271 135,897 248,426 229,922 207,407 279,716
353,889
Intergovernmental251,491 231,738 669,130 207,050 242,187 249,564 306,510 104,228 188,096
111,889
Service charges494,564 349,452 367,715 408,757 523,825 545,763 697,355 651,021 640,935
738,526
Investment earnings443,670 507,744 445,529 406,277 275,793 194,772 87,991 286,300 441,986
623,810
99,628 38,287 29,767 68,242 61,705 125,027 52,734 108,222 60,110 119,731
Miscellaneous
7,537,6857,245,232 8,852,935 8,012,185 8,449,309 8,339,293 9,347,931 10,031,624 10,765,039 11,618,444
Total revenues
EXPENDITURES
General government857,836 938,789 947,835 942,036 1,091,746 1,113,323 1,274,807 1,231,709 1,349,248 1,491,202
Public safety2,957,431 2,885,336 3,146,946 3,325,599 3,603,448 3,821,859 3,874,454 4,140,738 4,562,217 4,955,771
Streets538,272 665,954 562,728 588,038 620,714 561,646 630,057 578,126 699,290 735,614
Culture and recreation957,735 1,013,705 1,081,294 1,243,096 1,294,316 1,357,624 1,336,974 1,412,305 1,466,261 1,518,938
Community development178,310 188,246 182,517 236,431 250,776 317,743 295,036 346,969 337,659
375,614
Debt service
Principal195,272 486,967 429,391 430,000 450,000 470,000 500,000 420,000 430,000 455,000
Interest166,924 263,320 225,283 200,415 178,813 157,032 133,441 111,582 91,817 71,105
707,770 2,747,738 2,184,074 1,667,368 868,370 366,753 661,419 1,014,372 952,446 807,528
Capital outlay
9,190,0556,559,550 8,760,068 8,632,983 8,358,183 8,165,980 8,706,188 9,255,801 9,888,938 10,410,772
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
1998199920002001200220032004200520062007
EXCESS OF REVENUES
OVER (UNDER)
$ 685,682 1,652,370)$( 92,867$ 620,798)$( 91,126$ 173,313$ 641,743$ 775,823$ 876,101$ 1,207,672$
EXPENDITURES
OTHER FINANCING
SOURCES (USES)
Issuance of bonds2,700,000 - - - - - - - -
-
Proceeds on sale of
capital assets86,171 48,329 26,449 - - - - - -
-
Payments to escrow
account252,933 - - - - - - - - -
Transfers in92,664 1,168,134 800,449 448,316 251,085 423,414 90,000 90,000 94,500
55,000
(3,228) 1,763,910)( 656,348)( 325,000)( 102,195)( 107,776)( 90,000)( 140,000)( 211,479)( 270,921)(
Transfers out
Total other financing
547,447)3,128,540( 170,550 123,316 148,890 315,638 - 50,000)( 116,979)( 215,921)(
sources (uses)
NET CHANGE IN
$ 2,199,817)3,814,222$( 263,417$ 497,482)$( 240,016$ 488,951$ 641,743$ 725,823$ 759,122$ 991,751$
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
6.6% 13.2% 11.1% 10.0% 9.2% 8.7% 8.5% 6.9% 6.2% 5.8%
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
1998235,475,135$ 271,591,756$ 118,064,572$ 203,850,850$ 421,280,613$ $0.4333429,878,177$
1999251,534,041 279,552,526 120,232,379 191,106,538 460,212,408 0.4724469,604,498
2000258,328,927 282,242,502 117,284,814 194,131,922 463,724,321 0.4724473,188,083
2001275,008,292 277,180,795 110,482,050 192,478,165 470,192,972 0.4724479,788,747
2002277,642,872 302,960,725 97,250,070 189,978,791 487,874,876 0.4800497,831,506
2003300,285,040 341,944,306 97,673,680 221,495,172 518,407,854 0.4850528,987,606
2004332,268,337 380,965,905 111,273,080 249,575,629 574,931,693 0.4850586,664,993
2005352,795,683 386,744,845 105,901,750 253,232,383 592,209,895 0.4850604,295,811
2006387,312,400 403,019,380 113,971,870 260,321,554 643,982,096 0.4750657,124,588
2007436,191,340 446,012,320 124,665,270 287,207,489 719,661,441 0.4650734,348,409
Source:Erath County Appraisal District.
Note:PropertyinErathCountyisreassessedonceeverythreeyearsonaverage.TheCountyassessespropertyatapproximately95percentofactualvaluefor
commercial,industrialandresidentialproperty.Estimatedactualtaxablevalueiscalculatedbydividingtaxableassessedvaluebythosepercentages.Tax
rates are per $100 of assessed value.
63
TABLE 6
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING PROPERTY TAX RATES
LAST TEN FISCAL YEARS
City Direct RatesOverlapping Rates
GeneralMiddleTotal
ObligationTotalStephenvilleTrinityDirect and
FiscalBasicDebtDirectSchoolWaterErathOverlapping
YearRateServiceRateDistrictDistrictCountyRates
1998$0.3643$0.0690$0.4333$1.2000-$0.4785$2.1118
19990.33770.13470.47241.3000-0.47852.2509
20000.33590.13650.47241.4500-0.47852.4009
20010.35520.11720.47241.7500-0.47852.7009
20020.36780.11220.48000.1690-0.47851.1275
20030.38120.10380.48501.6900$0.01500.47002.6600
20040.39130.09370.48501.67000.01500.45122.6212
20050.41070.07430.48501.67000.01500.46252.6325
20060.40790.06710.47501.66000.01500.44102.5910
20070.39960.06540.46501.51990.01500.43522.4351
Source:Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.
Rates for debt service are set based on each year's requirements.
Overlapping rates are those of local and county governments that apply to property owners within the City of Stephenville,
The Middle Trinity Water District did not exist in fiscal years 1997 through 2002.
64
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20071998
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company32,311,337$ 3.95% 26,391,205$ 5.73%
Saint Gobain Abrasives12,599,041 1.54% 25,913,180 5.62%
TXU Electric Delivery8,519,590 1.04% 5,855,420 1.27%
Bosque River Associates9,349,200 1.14% 8,536,044 1.85%
Wal-Mart Stores, Inc. #17,926,540 0.97% 8,147,730 1.77%
STAM Ltd5,536,000 0.68% - -%
Saint Gobain Abrasives7,047,610 0.86% - -%
United Telephone Company 6,850,950 0.84% 5,297,442 1.15%
Wilmington Trust6,307,740 0.77% 6,748,266 1.46%
Rayloc Genaut9,453,949 1.16% 6,705,836 1.46%
Emerson Electric Company- -% 4,285,324 0.93%
-%- 3,428,981 0.74%
FMC Technologies
Subtotal105,901,957$ 12.95% 101,309,428$ 21.98%
87.05%712,441,134 359,401,547 78.02%
Remaining Roll
$ 100.00%818,343,091 460,710,975$ 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 Within the
Fiscal Year of the LevyTotal Collections to Date
Taxes LeviedCollections
Fiscalfor thePercentagein SubsequentPercentage
Year EndedFiscal YearAmountof LevyYearsAmountof Levy
19981,824,677$ 1,786,443$ 97.90% 33,306$ 1,819,749$ 99.73%
19992,181,037 2,133,063 97.80% 43,874 2,176,937 99.81%
20002,185,007 2,143,729 98.11% 37,382 2,181,111 99.82%
20012,236,217 2,192,628 98.05% 39,279 2,231,907 99.81%
20022,348,927 2,294,810 97.70% 49,989 2,344,799 99.82%
20032,513,625 2,462,155 97.95% 43,082 2,505,237 99.67%
20042,788,419 2,726,244 97.77% 54,876 2,781,120 99.74%
20052,832,529 2,808,747 99.16% 13,487 2,822,234 99.64%
20063,066,225 3,018,008 98.43% 33,478 3,051,486 99.52%
20073,346,426 3,307,083 98.82% - 3,307,083 98.82%
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
GeneralCertificatesWaterCertificatesPercentage
FiscalObligationofTermRevenueofCapitalof PersonalPer
YearBondsParticipationLoanBondsParticipationLeasesTotalIncomeCapita
19983,205,000$ 1,865,000$ 162,245$ 11,725,000$ 250,000$ -$ 17,207,245$ 5.61% 1,179$
19992,935,000 1,770,000 40,278 10,840,000 125,000 - 15,710,278 4.90% 1,072
20002,630,000 1,665,000 20,887 9,920,000 - - 14,235,887 4.36% 968
20012,310,000 1,555,000 - 14,455,000 - - 18,320,000 5.21% 1,228
20021,970,000 1,445,000 - 13,455,000 1,150,000 - 18,020,000 5.03% 1,201
20031,615,000 1,330,000 - 6,660,000 7,905,000 - 17,510,000 4.79% 1,118
20041,235,000 1,210,000 - 6,295,000 14,174,233 - 22,914,233 5.70% 1,443
2005945,000 1,080,000 - 5,910,000 13,250,233 - 21,185,233 5.80% 1,300
2006645,000 950,000 - 5,500,000 14,305,233 259,184 21,659,417 -% 1,283
2007330,000 810,000 - 5,210,000 17,660,134 219,920 24,230,054 -% 1,421
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.
67
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
19983,205,000$ 2,027,245$ -$ 5,232,245$ 1.24% $ 358.37
19992,935,000 1,810,278 1,077 4,746,355 1.03% 323.98
20002,630,000 1,685,887 12,873 4,328,760 0.93% 294.47
20012,310,000 1,555,000 24,139 3,889,139 0.83% 260.65
20021,970,000 1,445,000 30,336 3,445,336 0.71% 229.69
20031,615,000 1,330,000 41,082 2,986,082 0.58% 190.62
20041,235,000 1,210,000 41,285 2,486,285 0.43% 156.53
2005945,000 1,080,000 50,563 2,075,563 0.35% 127.34
2006645,000 950,000 69,443 1,664,443 0.26% 98.59
2007330,000 810,000 82,233 1,057,767 0.15% 62.04
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, 2007
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes
Stephenville Independent School District12,494,659$ 68.35%8,540,099$
1,140,000
City direct debt
$ 9,680,099
Total direct and overlapping debt
Sources:
AssessedvaluedatausedtoestimateapplicablepercentagesprovidedbytheErathCountyAppraisalDistrictand
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 2007
Taxable assessed valuation719,661,441$
2.50% of assessed valuation
Constitutional tax rate limit
Maximum constitutional revenue available 17,991,536$
$2.50 per $100 of valuation
Tax rate to achieve maximum tax revenue
$0.465 per $100 of valuation
Tax rate for FY 2006-2007
$2.035 per $100 of valuation
Available unused constitutional max tax rate
Debt applicable to limit:
General obligation debt1,595,000$
DEBT TAX RATE ADEQUACY
2007 Principal and Interest Requirements.................................................................................................................
$ 523,194
$0.0742 Tax Rate at 98% Collection Produces...................................................................................................……..
523,309
Average Annual Principal and Interest Requirement, 2007-2017..........................................……………………….
142,981
$0.0202 Tax Rate at 98% Collection Produces.................................................................................................……..
142,464
Maximum Principal and Interest Requirements...................................................................................................……..
523,194
$0.0742 Tax Rate at 98% Collection Produces...................................................................................................……..
523,309
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2007
$ 523,194
Debt Service Fund, 9-30-06
$ 69,443
Special Assessment Operating Reserve Transfer In
55,000
647,752523,309$
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
19984,422,142$ 1,921,867$ 2,500,275$ 995,000$ 668,930$ 1.50
19994,285,128 1,882,313 2,402,815 1,010,000 543,862 1.55
20004,664,232 3,906,752 757,480 1,045,000 500,290 0.49
20014,743,061 2,621,741 2,121,320 965,000 465,568 1.48
20024,578,747 2,459,300 2,119,447 1,000,000 641,944 1.29
20034,372,612 2,321,847 2,050,765 1,145,000 642,281 1.15
20044,556,045 2,569,643 1,986,402 1,240,000 559,001 1.10
20055,511,586 2,553,909 2,957,677 1,331,000 712,056 1.45
20065,628,658 2,931,743 2,696,915 1,355,000 752,077 1.28
20075,092,578 2,946,356 2,146,222 1,220,000 819,654 1.05
Notes:
DetailsregardingtheCity'soutstandingdebtcanbefoundinthenotestothefinancialstatements.Operating
expenses do not include interest, depreciation, or amortization expenses.
71
TABLE 14
CITY OF STEPHENVILLE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per Capita
CalendarPersonalPersonalSchool CollegeUnemployment
YearPopulationIncomeIncomeEnrollmentEnrollmentRate
199814,600 306,527,000$ 20,995$ 3,327 6,333 3.1%
199914,650 320,703,150 21,891 3,419 6,163 2.9%
200014,700 326,736,900 22,227 3,361 6,359 2.7%
200114,921 351,419,392 23,552 3,477 6,549 2.0%
200215,000 355,515,000 23,701 3,444 6,827 3.3%
200315,665 359,402,095 22,943 3,530 7,197 3.2%
200415,884 382,010,200 24,050 3,417 7,347 2.7%
200516,300 417,720,100 25,627 3,512 7,589 3.9%
200616,882 - - 3,550 7,776 3.9%
200717,050 - - 3,524 7,840 3.8%
Sources:Population,medianage,andeducationlevelinformationprovidedbytheStateDepartmentofPlanning.
PersonalincomeandunemploymentdataprovidedbytheStateDepartmentofCommerceandLabor.School
enrollment data provided by the Stephenville Independent School District and Tarleton State University.
Notes:Population,medianage,andeducationlevelinformationarebasedonsurveysconductedduringthelast
quarterofthecalendaryear.Personalincomeinformationisatotalfortheyear.Unemploymentrate
informationisanadjustedyearlyaverage.Schoolenrollmentisbasedonthecensusatthestartoftheschool
year.
Personal income for 2006 and 2007 is not available.
72
TABLE 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2007
Percentage
of Total City
Employer
EmployeesEmployment
Tarleton State University887 5.11%
FMC Company652 3.76%
Saint Gobain Abrasives586 3.38%
Stephenville Independent School District318 1.83%
Wal-Mart Stores, Inc.450 2.59%
Harris Methodist Erath County Hospital319 1.84%
Emerson Electric Company145 0.84%
Outlaw Conversions207 1.19%
Erath County185 1.07%
Stephenville Medical & Surgical Clinic150 0.86%
Caporal Forging136 0.78%
0.90%157
Fibergrate Composite Structures
Subtotal4,192 24.15%
13,170 75.85%
Remaining employers
17,362 100.00%
Total
Source:
CityCommunityDevelopmentDivision.TotalemployeedataisprovidedbytheStateDepartmentofCommerceand
Labor.
Notes:
TotalemployeeinformationisbasedonentireErathCounty.Principalemployersareonlythosethatoperatefrom
within the corporate City limits of Stephenville.
Information for 1998 is not available.
73
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/Program1998199920002001200220032004200520062007
General government
Management services4 4 4 4 4 4 4
4 4 4
Finance7 7 7 6 6 7 7 7
7 7
Planning1 1 1 2 2 2 2 2
2 2
Building1 1 1 1 1 1 1 1
2 2
Other1 1 1 1 1 1 1 1
1 1
Police
Officers30 30 30 30 30 30 31 31
31 34
Civilians10 10 10 10 11 11 11 13
13 12
Fire
Firefighters and officers23 23 23 23 26 26 26
26 27 28
Parks and recreation9 9 9 11 11 13 13 13
13 13
Library4 4 4 4 4 4 4 4
4 3
Streets7 7 7 7 7 7 7 7
7 7
Water9 8 8 9 9 9 9 9
10 13
Wastewater7 7 7 8 8 8 8 8
8 5
2 2 2 2 2 2 2 2 2 2
Landfill
114115 114 118 122 125 126 128 131 133
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/Program1998199920002001200220032004200520062007
General government
Building permits issued325 238 242 265 234 222 140 172
125 153
Building permits value$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$16,144,842
Police
Calls for serviceaa9,138 9,114 10,207 10,203 10,483 10,358 11,234 19,732
Physical arrests943 1,019 1,019 716 762 1,134 825 959 999
1,447
Parking violations417 182 182 805 404 530 324 386
334 498
Traffic violations3,666 3,178 3,178 4,501 3,164 5,094 5,350 3,588 3,066
4,469
Fire
Ambulance responses1,598 1,236 1,271 1,321 1,468 1,372 1,183 1,291 1,255
1,537
Fires extinguished536 318 376 357 412 339 185 235
305 235
Inspections155 150 150 149 149 135 132 109
105 313
Other public works
Street resurfacing (miles)2.06 0.32 1.30 1.88 2.35 2.39 1.35 1.14
1.52 2.70
Library
Volumes in collection41,711 42,214 43,065 41,905 40,161 43,331 46,938 48,548 47,510
43,737
Total volumes borrowed210 82 120 130 237 110 138 155
114 116
Water
New connections5,142 5,256 5,256 5,319 5,319 5,242 5,521 5,253 5,550
5,660
Water main breaks50 51 47 53 52 49 54 50
48 49
Average daily consumption2,340,000 2,295,000 2,482,000 2,341,000 2,158,000 2,124,000 1,971,990 2,042,000 2,254,000 1,828,000
(thousands of gallons)
Peak daily consumption4,406,000 4,589,000 4,700,000 4,549,000 4,174,000 4,133,000 3,598,000 3,499,000 4,397,000 3,091,000
(thousands of gallons)
Wastewater
Average daily sewage treatment1,460,000 1,253,000 1,253,000 1,387,000 1,311,000 1,354,000 1,456,000 1,334,000 1,414,000 1,691,000
(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/Program1998199920002001200220032004200520062007
Police
Stations1 1 1 1 1 1 1 1
1 1
Patrol units6 6 6 9 9 10 10 10
10 10
Fire
Stations2 2 2 2 2 2 2 2
2 2
Other public works
Streets (miles)87 87 87 87 87 92 92 92
92 96
Highways (miles)19 19 19 19 19 19 19 19
19 21
Streetlights950 952 983 992 992 1,013 1,013 1,013 1,013
1,070
Parks and recreation
Acreage126 126 126 126 134 134 134 134 134
134
Playgrounds3 3 3 3 4 4 4
4 4 4
Baseball/softball diamonds9 9 9 9 9 9 9
9 9 9
Soccer/football fields1 1 1 1 1 1 1
1 1 1
Community centers2 2 2 2 2 2 2
2 2 2
Water
Water mains (miles)58 58 58 58 112 116 117 117
120 122
Fire hydrants580 616 616 623 623 650 670 670
680 732
Storage capacity4,500,000 4,500,000 4,500,000 4,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)68 68 68 68 96 105 105 110
110 113
Storm sewers (miles)10 10 10 10 10 10 10 10
10 10
Treatment capacity9,000,000 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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COMPLIANCE SECTION
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the City Council
City of Stephenville, Texas
Stephenville, Texas
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Stephenville,
Texas, (the “City”) as of and for the year ended September 30, 2007, which collectively comprise the
City’s basic financial statements and have issued our report thereon dated February 4, 2008. 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.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City’s internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
City’s internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City’s internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the City’s ability to initiate, authorize, record, process, or
report financial data reliably in accordance with generally accepted accounting principles such that there
is more than a remote likelihood that a misstatement of the City’s financial statements that is more than
inconsequential will not be prevented or detected by the City’s internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements will not
be prevented or detected by the City’s internal control.
77
401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901 FAX: (254) 772-4920 www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
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Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in internal
control over financial reporting that might be significant deficiencies or material weaknesses. We did
not identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit, and accordingly, we do not express
such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that
are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of management, the City Council, and
federal and state awarding agencies and pass-through entities and is not included to be and should not be
used by anyone other than these specified parties.
February 4, 2008
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