HomeMy WebLinkAbout2008 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2008
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
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, 2008
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, 2008
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, 2008
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, 2008
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
SINGLE AUDIT 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
Report on Compliance With Requirements Applicable to
Each Major Program and Internal Control Over
Compliance in Accordance With OMB Circular A-133 ............................. 79 – 80
Schedule of Expenditures of Federal Awards ................................................ 81
Notes to Schedule of Expenditures of Federal Awards ................................. 82
Schedule of Findings and Questioned Costs .................................................. 83
Summary Schedule of Prior Audit Findings .................................................. 84
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INTRODUCTORY SECTION
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December 31, 2008
The Honorable Mayor, City Council and the Citizens of the City of Stephenville
The City of Stephenville (City) Financial Management Policies requires that the City’s Finance Department
prepare a complete set of financial statement presented in conformity with the 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, 2008, 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 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, 2008, 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, 2008, are fairly presented in conformity with GAAP. The independent
auditor’s 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 11.79 square miles and serves a population of about 17,428. 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 stable 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 stable
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 $99 million (8.84%) in 2008 to $890 million. 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 $.4350, a reduction from the past three (3) years.
Sales tax collections continue to experience growth this year showing a 9.05% 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
st
budget must be submitted to the City Secretary no later than August 1 with the adoption taking place no later
rd
than September 23. The City Administrator is authorized to transfer budgeted amounts between line items and
departments within any fund; however any revisions that alter the total expenditures of any fund must be
approved by the City Council.
Budgetary control has been established at the departmental level. Financial reports are produced showing
budget and actual expenditures by line item, and are distributed monthly to the departmental management and to
others upon request.
Individual line items are reviewed and analyzed for budgetary compliance. Personnel expenditures are
monitored and controlled at a position level and capital expenditures are monitored and controlled item by item.
Revenue budgets are reviewed monthly.
Budget-to-actual comparisons are provided in this report for the General Fund on pages 16 – 18.
Long Range Planning/Financial Management. Users of this document, as well as others interested in the
programs and services offered by the City of Stephenville, are encouraged to read the City’s Fiscal Year 2008–2009
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, 2008, the average rate on the operating account balances was
3.51 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 3.45
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, 2007.
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 25 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
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Stephenville
Texas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2007
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
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
Water Criminal
Parks
Suppression
Production Investigation
Fire
Inspections 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, 2008
Mayor Nancy A. Hunter
Council Members Pat Shelbourne
Dr. Malcom L. Cross
Don Zelman
Russ McDaniel
Alan Nash
Alan Nix
Mark Murphy
Scott Evans
City Administrator Mark A. Kaiser
Director of Finance/Administration Walter G. 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, 2008, 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, 2008, 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
December 31, 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.
1
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AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 WHITNEY, TX (254) 694-4600 ALBUQUERQUE, NM (505) 266-5904
The management’s discussion and analysis on pages 3 through 10 is not a required part of the
basic financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the
required supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Stephenville, Texas’ basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements and schedules, and statistical
section are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The combining and individual nonmajor fund financial statements and schedules have been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a
whole. The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of
additional analysis as required by U. S. Office of Management and Budget Circular A-133, “Audits of
States, Local Governments and Nonprofit Organizations,” and is not a required part of the basic
financial statements of the City. Such information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects,
in relation to the basic financial statements taken as a whole.
December 31, 2008
2
MANAGEMENT’S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Stephenville, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2008. 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, 2008, by $52,037,515
(net assets). Of this amount, $19,340,729 (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 $3,963,687.
As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $12,433,889. Approximately 99 percent of this
total amount, $12,335,983 is unreserved fund balance available for use within the
City’s fund designation and fiscal policies.
As of September 30, 2008, unreserved fund balance for the General Fund was
$9,555,553 or 83 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 $52,037,515 as of September 30, 2008.
A large portion of the City's net assets (61 percent) reflects its investments in capital assets (e.g., land,
buildings, equipment and infrastructure), less any outstanding debt used to acquire those assets. The
investments in capital assets net of related debt increased by $5,023,082. The City uses these capital
assets to provide services to citizens; consequently, these assets are not available for future spending.
Although the City’s investment in its capital assets is reported net of related debt, it should be noted that
the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
CITY OF STEPHENVILLE’S NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200820072008200720082007
Current and other assets13,278,949$ 12,260,995$ 13,379,464$ 14,673,646$ 26,658,413$ 26,934,641$
11,297,47512,503,386 43,654,085 36,609,064 56,157,471 47,906,539
Capital assets
23,558,47025,782,335 57,033,549 51,282,710 82,815,884 74,841,180
Total assets
Liabilities505,850 456,989 2,034,031 1,607,361 2,539,881 2,064,350
1,344,753 26,034,994 23,358,249 28,238,488 24,703,002
2,203,494
Noncurrent liabilities
1,801,7422,709,344 28,069,025 24,965,610 30,778,369 26,767,352
Total liabilities
Net assets:
Invested in capital assets,
net of related debt10,513,386 10,157,475 21,231,388 16,564,217 31,744,774 26,721,692
Restricted397,365 366,934 554,647 665,099 952,012 1,032,033
11,232,31912,162,240 7,178,489 9,087,784 19,340,729 20,320,103
Unrestricted
$ 21,756,72823,072,991$ 28,964,524$ 26,317,100$ 52,037,515$ 48,073,828$
Total net assets
5
An additional portion of the City’s assets (two percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $19,340,729
may be used to meet the government's ongoing obligations to citizens and creditors.
As of September 30, 2008, 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 $3,963,687.
Governmental Activities. Governmental activities increased the City’s net assets by $1,316,263 or 33
percent of the total growth in net assets. The net assets invested in capital assets, net of related debt
increased by $355,911 or four percent due to pay down of annual debt service. Unrestricted net assets
increased by $929,921 or eight percent.
Total revenues for governmental activities increased from the previous year by $338,770. General
revenue had a net increase of $281,181 or three percent.
Business-type Activities. Net Assets from business-type activities increased by $2,647,424 or 10
percent from $26,317,100 to $28,964,524 accounting for the other 67 percent of the total growth in net
assets. This increase is primarily due to the excess of operating revenues over operating expenditures
and net transfers.
The following table provides a summary of the City’s operations for the year ended September 30, 2008,
with comparative totals for the year ended September 30, 2007.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200820072008200720082007
Revenues:
Program revenues:
Charges for services1,567,484$ 1,291,597$ 6,391,799$ 5,826,087$ 7,959,283$ 7,117,684$
Operating grants 57,969 115,859 - - 57,969 115,859
Capital grants
and contributions148 115,556 870,718 169,370 870,866 284,926
General revenues:
Property taxes3,659,623 3,389,638 - - 3,659,623 3,389,638
Sales taxes4,745,309 4,351,269 - - 4,745,309 4,351,269
Franchise taxes1,169,858 1,370,838 - - 1,169,858 1,370,838
Other taxes434,498 388,013 - - 434,498 388,013
Investment earnings454,269 623,810 469,667 876,642 923,936 1,500,452
75,99417,186 - - 17,186 75,994
Miscellaneous
11,722,57412,106,344 7,732,184 6,872,099 19,838,528 18,594,673
Total revenues
Expenses:
General government1,331,583 1,591,258 - - 1,331,583 1,591,258
Public safety5,504,975 5,187,628 - - 5,504,975 5,187,628
Streets1,183,435 1,144,681 - - 1,183,435 1,144,681
Culture and recreation2,166,545 1,733,627 - - 2,166,545 1,733,627
Community development395,182 381,091 - - 395,182 381,091
Interest on long-term
debt103,490 65,926 - - 103,490 65,926
Water and wastewater- - 4,526,893 4,776,359 4,526,893 4,776,359
Storm water drainage- - 245,371 141,516 245,371 141,516
Sanitary landfill- - 290,349 272,010 290,349 272,010
-- 127,018 130,169 127,018 130,169
Airport
10,104,211 5,189,631 5,320,054 15,874,841 15,424,265
10,685,210
Total expenses
Increases in net assets
before transfers1,421,134 1,618,363 2,542,553 1,552,045 3,963,687 3,170,408
( 215,921)104,871)( 104,871 215,921 - -
Transfers
Change in net assets1,316,263 1,402,442 2,647,424 1,767,966 3,963,687 3,170,408
20,354,28621,756,728 26,317,100 24,549,134 48,073,828 44,903,420
Net assets - beginning
21,756,728$ 28,964,524$ 26,317,100$ 52,037,515$ 48,073,828$
$ 23,072,991
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 $12,433,889. Approximately 99 percent of this total amount, $12,335,983 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 $2,925,944
but due to actual revenues being more than budgeted and actual expenditures being less than budgeted and
some capital projects not being initiated during the year the fund balance decreased by only five percent
during the current fiscal year. Sales tax collections increased by 9% from the previous year and the City
collected 12 percent 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
$51,089; 2) franchise fees were $49,858; 3) licenses and permit fees were $144,037 more than budgeted;
and 4) service charges were also higher by $75,543 than budgeted. Expenditures were lower than
budgeted mainly because capital outlays were $1,021,917 lower.
The fund balance of the City’s General Fund decreased by five percent during the current fiscal year.
The Capital Projects Fund has a fund balance of $2,429,680, an increase of 127 percent all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $89,253, an increase of nine percent, all of which is
reserved for the repayment of debt.
The Special Revenue Funds have a fund balance of $350,750 an increase of 25 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 $7,178,489.
The increase in net assets was $2,647,424. 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 $614,650. The most
significant changes were for $93,495 to acquire park property and $450,000 street reconstruction
program. 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 $11,463,430 compared to the final budget expenditures
of $13,021,130. The $1,557,700 variance was primarily attributable to capital projects not initiated
during the year, due to close monitoring of expenditures by departments and performing better than
anticipated. Actual revenues on a budgetary basis were $11,049,953 compared to the final budget of
$10,198,177. The $851,776 variance was due primarily to increases in sales tax revenue and
licenses/permit fees.
Capital Assets. The City's investment in capital assets for its governmental and business-type activities
as of September 30, 2008, amounts to $56,157,471 (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, $93,495;
Restroom at park, $250,000;
Road paving at cemetery, $25,000;
Recreation Center face lift, $20,000;
Street reconstruction, $450,000;
Ambulance replacement, $105,000;
Surface water supply project, $2.4 million;
Storm water drainage improvements, $3.4 million.
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200820072008200720082007
Land2,539,141$ 2,163,314$ 798,082$ 798,082$ 3,337,223$ 2,961,396$
Buildings and
improvements3,398,967 3,191,028 6,031,706 5,594,038 9,430,673 8,785,066
Equipment5,305,505 5,091,173 1,955,030 1,872,222 7,260,535 6,963,395
Infrastructure10,880,627 9,906,803 41,518,819 38,653,421 52,399,446 48,560,224
Construction in
progress- - 13,226,871 8,414,542 13,226,871 8,414,542
Less: accumulated
( 9,620,854) 9,054,843)( 19,876,423)( 18,723,241)( 29,497,277)( 27,778,084)(
depreciation
$ 12,503,386 11,297,475$ 43,654,085$ 36,609,064$ 56,157,471$ 47,906,539$
Total capital assets
Additional information on the City's capital assets can be found on page 35 – 36 of this report.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City had total bonded debt of $27,539,155. Of this amount,
$1,990,000 represents bonded debt backed by the full faith and credit of the City, $17,065,000
represents utility revenue bonds secured by water and sewer revenues and $199,155 represents revenue
bonds secured by airport revenues, and $8,285,000 secured by storm water drainage revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200820072008200720082007
General obligation1,325,000$ 330,000$ -$ -$ 1,325,000$ 330,000$
Certificates of
obligations665,000 810,000 - - 665,000 810,000
Revenue bonds
- 25,549,155 22,870,134 25,549,155 22,870,134
payable
$ 1,140,0001,990,000$ 25,549,155$ 22,870,134$ 27,539,155$ 24,010,134$
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 38 – 41 this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The FY 08/09 budget incorporates a $.01 reduction in the property tax rate to $.435 per $100 valuation.
Certified taxable property value for 2008 is $890 million. This is an 8.8% increase over the last year’s
values, or $72 million. The largest portion of the increase is due to the reevaluation of existing property.
Continued growth provided an additional $18.5 million in taxable property value. Factors that were
considered in preparing the City’s budget for the 2009 fiscal year were increases in personnel costs by
about 2.5%, 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 08/09 budget has $2.0 million
for an aquatics complex. There are ample funds for transfers during 2009, should the City Council so
desire, and still retain the minimum fund balance provisions established by the Fiscal Management
Practices.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional information should be addressed to Walter Wood, Director of Finance,
298 West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1211.
10
BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2008
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments14,143,766$ 8,912,155$ 23,055,921$
Receivables (net of allowances for uncollectibles)
Taxes1,021,319 - 1,021,319
Accounts425,291 971,384 1,396,675
Internal balances2,320,080)( 2,320,080 -
Inventories8,653 - 8,653
Restricted investments- 911,444 911,444
Deferred charges- 264,401 264,401
Capital assets
Land2,539,141 798,082 3,337,223
Buildings and improvements3,398,967 6,031,706 9,430,673
Machinery and equipment5,305,505 1,955,030 7,260,535
Infrastructure/water and wastewater distribution10,880,627 41,518,819 52,399,446
Construction in progress- 13,226,871 13,226,871
(9,620,854)( 29,497,277)(
Less: accumulated depreciation
43,654,08512,503,386 56,157,471
Total capital assets
57,033,54925,782,335 82,815,884
Total assets
LIABILITIES
Accounts payable270,356 1,492,421 1,762,777
Accrued liabilities186,497 33,719 220,216
Accrued interest payable48,997 305,802 354,799
Customer deposits- 202,089 202,089
Noncurrent liabilities:
Due within one year467,699 1,559,445 2,027,144
1,735,795 26,211,344
Due in more than one year
2,709,344 30,778,369
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt10,513,386 21,231,388 31,744,774
Restricted for:
Hotel/motel economic development316,827 - 316,827
Child and public safety33,923 - 33,923
Debt service46,615 554,647 601,262
7,178,48912,162,240 19,340,729
Unrestricted
$ 28,964,52423,072,991$ 52,037,515$
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, 2008
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 219,3531,331,583$ 12$ -$ 1,112,218$( -)$ 1,112,218$()
Public safety 906,1315,504,975 30,495 148 4,568,201( -) 4,568,201()
Streets 24,0461,183,435 - - 1,159,389( -) 1,159,389()
Culture and recreation 145,2252,166,545 27,462 - 1,993,858( -) 1,993,858()
Community developmen395,182 272,729 - - 122,453( -) 122,453()
-103,490 - - 103,490)( - 103,490)(
Interest on long-term debt
10,685,210 1,567,484 57,969 148 9,059,609)( - 9,059,609)(
Total governmental activities
Business-type activities
Water and wastewater 5,469,9324,526,893 - 393,625 - 1,336,664 1,336,664
Sanitary landfill 275,915290,349 - - - 14,434( 14,434)()
Airport127,018 68,186 - 477,093 - 418,261 418,261
577,766245,371 - - - 332,395 332,395
Storm water drainage
6,391,7995,189,631 - 870,718 - 2,072,886 2,072,886
Total business-type activities
$ 15,874,841 7,959,283$ 57,969$ 870,866$ 9,059,609)( 2,072,886 6,986,723)(
Total
General revenues:
Taxes:
Property - generalpurpose3,131,702 - 3,131,702
Property - debt service -527,921 527,921
Sales -4,745,309 4,745,309
Franchise -1,169,858 1,169,858
Other -434,498 434,498
Investment earnings 469,667454,269 923,936
Miscellaneous 17,186 - 17,186
( 104,871104,871) -
Transfers
10,375,872 574,538 10,950,410
Total general revenues and transfers
Change in net assets 2,647,4241,316,263 3,963,687
21,756,728 26,317,100 48,073,828
Net assets, beginning
$ 23,072,991 28,964,524$ 52,037,515$
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, 2008
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
ASSETS
Cash and investments8,935,694$ 4,799,962$ 408,110$ 14,143,766$
Receivables (net of allowance for uncollectibles)
Taxes937,875 - 83,444 1,021,319
Accounts424,074 - 1,217 425,291
-8,653 - 8,653
Inventories
4,799,96210,306,296 492,771 15,599,029
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable168,687 50,201 46,409 265,297
Accrued liabilities186,497 - - 186,497
Due to other funds5,058 2,320,081 - 2,325,139
-381,848 6,359 388,207
Deferred revenue
2,370,282742,090 52,768 3,165,140
Total liabilities
Fund balances:
Reserved for:
Inventories8,653 - - 8,653
Debt service- - 89,253 89,253
Unreserved, reported in:
General fund9,555,553 - - 9,555,553
Special revenue funds- - 350,750 350,750
2,429,680- - 2,429,680
Capital projects fund
2,429,6809,564,206 440,003
Total fund balances 12,433,889
$ 4,799,96210,306,296$ 492,771$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedinthe
funds.
12,503,386
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
388,207
funds.
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(2,252,491)
$ 23,072,991
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, 2008
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
REVENUES
Taxes:
Property3,127,330$ -$ 527,270$ 3,654,600$
Sales4,745,309 - - 4,745,309
Franchise1,169,858 - - 1,169,858
Other50,361 - 384,137 434,498
Licenses and permits275,887 - - 275,887
Fines and forfeitures354,528 - 6,499 361,027
Intergovernmental83,871 - 3,859 87,730
Service charges831,448 - 8,236 839,684
Investment earnings391,627 48,967 13,675 454,269
-19,734 - 19,734
Miscellaneous
11,049,953 48,967 943,676 12,042,596
Total revenues
EXPENDITURES
Current:
General government1,293,925 - - 1,293,925
Public safety5,440,753 - 18,515 5,459,268
Streets824,764 - - 824,764
Culture and recreation1,607,852 - 323,994 1,931,846
Community development394,833 - - 394,833
Debt service:
Principal - - 475,000 475,000
Interest and fiscal charges- - 49,195 49,195
Bond issuance costs- 12,725 - 12,725
8651,901,303 - 1,902,168
Capital outlay
11,463,430 13,590 866,704 12,343,724
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 35,377413,477) 76,972 301,128)(
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in207,629 - - 207,629
Transfers out312,500)( - - 312,500)(
Proceeds from sale of capital assets27,914 - - 27,914
1,325,000- - 1,325,000
Proceeds from general long-term debt
( 1,325,00076,957) - 1,248,043
Total other financing sources (uses)
( 1,360,377490,434) 76,972 946,915
NET CHANGE IN FUND BALANCES
10,054,640 1,069,303 363,031 11,486,974
FUND BALANCES, BEGINNING
$ 2,429,6809,564,206$ 440,003$ 12,433,889$
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, 2008
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page12)are
different because:
Net change in fund balances - total governmental funds (page 14)946,915$
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense. 1,244,535
In the Statement of Activities, only the loss on disposals of capital assets is reported. However,
inthegovernmentalfunds,theproceedsfromthesaleincreasefinancialresources.Thus,the
change in net assets differs from the change in fund balance by the cost of capital assets sold.38,624)(
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds. 63,748
Theissuanceoflong-termdebtprovidescurrentfinancialresourcestogovernmentalfunds,
whiletherepaymentoftheprincipaloflong-termdebtconsumesthecurrentfinancial
resourcesofgovernmentalfunds.Neithertransaction,however,hasanyeffectonnetassets.
Thisamountistheneteffectofthedifferencesinthetreatmentoflong-termdebtandrelated
items.( 850,000)
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrent
financial resources and, therefore, are not reported as expenditures in governmental funds.
(50,311)
$ 1,316,263
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, 2008
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
REVENUES
Taxes8,495,241$ 8,495,241$ 9,092,858$ 597,617$
Licenses and permits131,850 131,850 275,887 144,037
Fines and forfeitures325,000 325,000 354,528 29,528
Intergovernmental77,972 77,972 83,871 5,899
Service charges755,914 755,914 831,448 75,534
Investment earnings400,000 400,000 391,627 8,373()
12,20012,200 19,734 7,534
Miscellaneous
10,198,17710,198,177 11,049,953 851,776
Total revenues
EXPENDITURES
Current:
General government:
City council46,729 46,729 46,142 587
City administrator121,891 121,891 120,752 1,139
City secretary 136,498136,498 126,689 9,809
Emergency management6,450 6,850 6,774 76
Municipal buildings219,508 219,508 197,436 22,072
Financial administration and accounting 330,160330,160 327,076 3,084
Purchasing 56,39856,398 45,084 11,314
Tax assessment and collection117,000 117,000 109,895 7,105
Legal counsel70,938 70,938 71,150 212()
Municipal court96,000 136,000 139,837 3,837()
119,752119,752 103,090 16,662
Human resources
1,361,7241,321,324 1,293,925 67,799
Total general government
Public safety:
Fire and ambulance administration217,238226,338221,2735,065
Fire prevention and investigation153,645153,645154,068423()
Fire suppression980,629980,629865,164115,465
Emergency medical services966,796998,446984,52113,925
Volunteer34,18334,18331,3082,875
Police administration125,090125,090128,9833,893()
Police patrol1,662,5401,662,5401,621,70340,837
(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, 2008
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current:
Public safety(continued):
Police communications372,430$ 372,430$ 342,390$ 30,040$
Police records153,943 153,943 138,922 15,021
Criminal investigation572,544 606,044 595,962 10,082
Police reserve74,168 74,168 69,566 4,602
Animal control118,171 118,171 109,076 9,095
186,183186,183 177,817 8,366
Public safety facility
5,691,8105,617,560 5,440,753 251,057
Total public safety
Streets:
877,450867,450 824,764 52,686
Street maintenance
877,450867,450 824,764 52,686
Total streets
Culture and recreation:
Recreation administration765,633 765,633 766,746 1,113()
Park maintenance416,162 426,162 394,226 31,936
Cemeteries 124,410 124,410 121,468 2,942
Library 235,660235,660 225,403 10,257
122,208122,208 100,009 22,199
Senior citizens center
1,674,0731,664,073 1,607,852 66,221
Total culture and recreation
Community development:
Community developmentplanning 172,096172,096 165,157 6,939
Community development inspection218,491 218,491 180,435 38,056
102,266102,266 49,241 53,025
Code enforcement
492,853492,853 394,833 98,020
Total community development
10,097,9109,963,260 9,562,127 535,783
Total current
Capital outlay:
General government:
19,600139,600 21,004118,596
Municipal buildings
139,60019,600 118,596 21,004
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, 2008
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current: (Continued)
Public safety:
Fire suppression27,500$ 27,500$ 25,112$ 2,388$
Police patrol80,000 80,000 89,208 9,208)(
48,87048,870 48,732 138
Public safety facility
156,370156,370 163,052 6,682)(
Total public safety
Streets:
1,283,750833,750 1,275,817 7,933
Street maintenance
1,283,750833,750 1,275,817 7,933
Total highways and streets
Culture and recreation:
Park maintenance1,378,500 1,278,500 289,084 989,416
65,00055,000 54,754 10,246
Cemeteries
1,343,5001,433,500 343,838 999,662
Total culture and recreation
2,923,2202,443,220 1,901,303 1,021,917
Total capital outlay
13,021,13012,406,480 11,463,430 1,557,700
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
( 2,822,953)2,208,303)( 413,477)( 2,409,476
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in206,000 206,000 207,629 1,629
Transfers out245,991)( 315,991)( 312,500)( 3,491
7,0007,000 27,914 20,914
Proceeds from sale of capital assets
( 102,991)32,991)( 76,957)( 26,034
Total other financing sources (uses)
( 2,925,9442,241,294)( 490,434)( 2,435,510)
NET CHANGE IN FUND BALANCE
10,054,64010,054,640 10,054,640 -
FUND BALANCE, BEGINNING
$ 7,128,6967,813,346$ 9,564,206$ 2,435,510$
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, 2008
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
ASSETS
Current assets:
Cash and investments2,946,451$ 5,438,436$ 527,268$ 8,912,155$
Accounts receivable - net of allowances for uncollectibles896,396 64,130 10,858 971,384
Due from other funds2,382,002 - - 2,382,002
158,574752,870 - 911,444
Restricted investments
5,661,1406,977,719 538,126 13,176,985
Total current assets
Noncurrent assets:
Deferred charges176,642 87,759 - 264,401
Capital assets:
Land163,721 - 634,361 798,082
Buildings and improvements2,330,179 - 3,701,527 6,031,706
Equipment1,242,536 - 712,494 1,955,030
Water and wastewater distribution41,518,819- - 41,518,819
Construction in progress6,395,137 6,451,545 380,189 13,226,871
( -18,734,026) 1,142,397)( 19,876,423)(
Less: accumulated depreciation
6,451,54532,916,366 4,286,174 43,654,085
Total capital assets
6,539,30433,093,008 4,286,174 43,918,486
Total noncurrent assets
12,200,44440,070,727 4,824,300 57,095,471
Total assets
LIABILITIES
Current liabilities:
Accounts payable791,720695,716 4,985 1,492,421
Accrued liabilities31,233- 2,486 33,719
Due to other funds- - 61,922 61,922
Customer deposits202,089- - 202,089
Accrued interest198,22396,152 11,427 305,802
Capital lease- - 46,181 46,181
Bonds payable1,340,000 150,000 17,000 1,507,000
-5,876 388 6,264
Compensated absences payable
941,8682,569,141 144,389 3,655,398
Total current liabilities
Long-term liabilities:
Capital lease- - 131,156 131,156
Bonds payable15,725,0008,135,000 182,155 24,042,155
Compensated absences payable23,500- 1,554 25,054
-- 277,184 277,184
Liability for landfill closure
8,135,00015,748,500 592,049 24,475,549
Total long-term liabilities
9,076,86818,317,641 736,438 28,130,947
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt15,851,3661,470,340 3,909,682 21,231,388
Restricted for debt service554,647 - - 554,647
1,653,2365,347,073 178,180 7,178,489
Unrestricted
$ 3,123,57621,753,086$ 4,087,862$ 28,964,524$
Total net assets
The notes to the financial statements are an integral part of this statement.
19
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
OPERATING REVENUES
Water sales3,199,634$ -$ -$ 3,199,634$
Wastewater charges1,959,175 - - 1,959,175
Tap and collection fees171,009 - - 171,009
Delinquent charges32,074 - - 32,074
Gate charges- - 275,915 275,915
Hanger rental- - 64,264 64,264
Storm water drainage fees- 577,766 - 577,766
-108,040 3,922 111,962
Other service charges
577,7665,469,932 344,101 6,391,799
Total operating revenues
OPERATING EXPENSES
Personnel services886,604 - 77,976 964,580
Contractual services805,835 - - 805,835
Utilities606,293 - 18,401 624,694
Repairs and maintenance303,855 1,001 33,957 338,813
Other supplies and expenses248,975 200 79,697 328,872
-1,025,093 175,989 1,201,082
Depreciation
1,2013,876,655 386,020 4,263,876
Total operating expenses
576,5651,593,277 41,919)( 2,127,923
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
Investment earnings304,029 150,511 15,127 469,667
( 244,170)650,238)( 31,347)( 925,755)(
Interest and fiscal charges on debt
( 93,659)346,209)( 16,220)( 456,088)(
Total nonoperating revenues (expenses)
482,9061,247,068 58,139)( 1,671,835
INCOME BEFORE CONTRIBUTIONS AND TRANSFERS
-393,625 477,093 870,718
CAPITAL CONTRIBUTIONS
-- 312,500 312,500
TRANSFERS IN
( -207,629) - 207,629)(
TRANSFERS OUT
482,9061,433,064 731,454 2,647,424
CHANGE IN NET ASSETS
20,320,022 2,640,670 3,356,408 26,317,100
TOTAL NET ASSETS, BEGINNING
$ 21,753,086 3,123,576$ 4,087,862$ 28,964,524$
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, 2008
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers5,456,599$ 572,550$ 347,575$ 6,376,724$
Cash payments to employees for services902,927)( - 80,949)( 983,876)(
( 290,7091,828,230) 137,798)( 1,675,319)(
Cash payments to suppliers for goods and services
863,2592,725,442 128,828 3,717,529
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receivables repaid by other funds2,174,358 - 17,717 2,192,075
Interfund payables repaid to other funds- - 17,717)( 17,717)(
Cash borrowed from other funds- - 61,922 61,922
Transfers from other funds- - 312,500 312,500
( -207,629) - 207,629)(
Transfers to other funds
-1,966,729 374,422 2,341,151
Cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Proceeds from issuance of long-term debt- 4,130,000 - 4,130,000
Proceeds from sale of capital assets- - 631 631
Principal repayments on capital lease- - 42,583)( 42,583)(
Principal repayments on bonds1,290,000)( 145,000)( 15,979)( 1,450,979)(
Interest and fiscal charges on debt682,954)( 205,992)( 31,289)( 920,235)(
( 4,032,282)2,962,688)( 344,516)( 7,339,486)(
Acquisition and construction of capital assets
Cash used by capital and
( 253,274)4,935,642)( 433,736)( 5,622,652)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
150,511304,029 15,127 469,667
Interest on investments
150,511304,029 15,127 469,667
Cash provided by investing activities
NET INCREASE IN CASH AND
760,49660,558 84,641 905,695
CASH EQUIVALENTS
4,836,5143,615,263 441,073 8,892,850
CASH AND CASH EQUIVALENTS, BEGINNING
$ 5,597,0103,675,821$ 525,714$ 9,798,545$
CASH AND CASH EQUIVALENTS, ENDING
(Including $752,870 for the Water and Wastewater
fund and $158,574 for the Storm Water Drainage
fund in restricted investments)
(continued)
21
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 1,593,277$ 576,565$ 41,919)$( 2,127,923$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation1,025,093 - 175,989 1,201,082
Change in assets and liabilities:
Decrease (increase) in accounts receivable2,053 5,216)( 3,474 311
Increase (decrease) in accounts payable136,728 291,910 5,743)( 422,895
Increase (decrease) in accrued liabilities3,512 - 1,531)( 1,981
Increase (decrease) in customer deposits15,386)( - - 15,386)(
( -19,835) 1,442)( 21,277)(
Increase (decrease) in compensated absences
286,6941,132,165 170,747 1,589,606
Total adjustments
$ 863,2592,725,442$ 128,828$ 3,717,529$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ -393,625$ 477,093$ 870,718$
Contributions of capital assets
The notes to the financial statements are an integral part of this statement.
22
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF FIDUCIARY NET ASSETS
AGENCY FUND
SEPTEMBER 30, 2008
Agency
Fund
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, 2008
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 funds:
TheWater and Wastewater Fund– is used to account for the activities necessary
for the provisions of water and wastewater services.
TheStorm Water Drainage Fund– is used to account for the activities necessary
for the provisions of storm water drainage 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.
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.”
(continued)
27
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
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.
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).
(continued)
28
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
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.
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.
29
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 $(2,252,491) difference are as follows:
General obligations1,990,000)$(
Accrued interest payable48,997)(
(213,494)
Compensated absences
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$(2,252,491)
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 $1,244,535 difference are as follows:
Capital outlay2,117,419$
(872,884)
Depreciation expense
Net adjustment to decrease net changes in fund
balances - total governmental funds to arrive at
$ 1,244,535
changes in net assets of governmental activities
(continued)
30
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
$63,748 difference are as follows:
Property taxes5,023$
58,725
Ambulance charges for services
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 63,748
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 $(50,311) difference are as follows:
Accrued interest41,570)$(
(8,741)
Compensated absences
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
$(50,311)
assets of governmental activities
31
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)
32
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:
Legal counsel212$
Municipal court3,837
Public safety:
Fire prevention and investigation423
Police administration3,893
Culture and recreation:
Recreation and administration1,113
Capital outlay:
Public safety:
Police patrol9,208
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, 2008, the City did not own any types of securities other than those permitted by statute.
As of September 30, 2008, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity (Days)
Tex Pool15,551,023$ 45
TexStar4,210,512 49
3,003,405
U. S. Government Securities116
$ 22,764,940
Total fair value
Portfolio weighted average maturity (days)55
(continued)
33
IV. DETAILED NOTES ON ALL FUNDS (Continued)
A. Deposits and Investments (Continued)
The City’s investment pools are 2a7-like pools. 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,
2008, 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.
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 andStorm WaterNonmajor
GeneralFundsWastewaterDrainageFundsTotal
Receivables:
Accounts:
Customers-$ -$ 1,258,400$ 72,107$ 5,115$ 1,335,622$
Ambulance637,371 - - - - 637,371
Municipal court fines236,776 - - - - 236,776
Other39,236 1,217 7,170 - 5,743 53,366
Taxes:
Property108,892 20,078 - - - 128,970
Sales 890,808 - - - - 890,808
75,513- - - - 75,513
Occupancy
Gross receivables1,913,083 96,808 1,265,570 72,107 10,858 3,358,426
Less: allowance for
( 12,147)551,134)( 369,174)( 7,977)( - 940,432)(
uncollectibles
$ 84,6611,361,949$ 896,396$ 64,130$ 10,858$ 2,417,994$
Net total receivables
(continued)
34
IV. DETAILED NOTES ON ALL FUNDS (Continued)
B. Receivables (Continued)
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)39,220$ -$
Delinquent property taxes receivable (debt service)6,359 -
Ambulance charges for services (general fund)105,852 -
-236,776
Municipal court fines
$ -388,207$
Total governmental funds
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, 2008, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
375,827$ -$ 2,539,141$
$ 2,163,314
Land
2,163,314 375,827 - 2,539,141
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements3,191,028 207,939 - 3,398,967
Machinery and equipment5,091,173 559,829 345,497 5,305,505
9,906,803 973,824 - 10,880,627
Infrastructure
18,189,004 1,741,592 345,497 19,585,099
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements881,319 69,687 - 951,006
Machinery and equipment3,521,628 335,740 306,873 3,550,495
4,651,896 467,457 - 5,119,353
Infrastructure
9,054,843 872,884 306,873 9,620,854
Total accumulated depreciation
9,134,161 868,708 38,624 9,964,245
Total capital assets being depreciated, net
$ 11,297,475 1,244,535$ 38,624$ 12,503,386$
Governmental activities capital assets, net
(continued)
35
IV. DETAILED NOTES ON ALL FUNDS (Continued)
D. Capital Assets (Continued)
BalanceIncreasesDecreasesBalance
Business-type activities:
Capital assets, not being depreciated:
Land798,082$ -$ -$ 798,082$
7,284,1008,414,542 2,471,771 13,226,871
Construction in progress
7,284,1009,212,624 2,471,771 14,024,953
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements5,594,038 449,668 12,000 6,031,706
Machinery and equipment1,872,222 82,808 - 1,955,030
2,865,39838,653,421 - 41,518,819
Water and wastewater system
3,397,87446,119,681 12,000 49,505,555
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,075,078 131,042 11,370 1,194,750
Machinery and equipment1,237,625 106,118 - 1,343,743
963,92216,374,008 - 17,337,930
Water and wastewater system
1,201,08218,686,711 11,370 19,876,423
Total accumulated depreciation
2,196,79227,432,970 630 29,629,132
Total capital assets being depreciated, net
$ 9,480,89236,645,594$ 2,472,401$ 43,654,085$
Business-type activities capital assets, net
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government95,254$
Public safety186,693
Culture and recreation232,994
357,943
Streets
$ 872,884
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater1,025,093$
Landfill110,402
65,587
Airport
$ 1,201,082
Total depreciation expense - business-type activities
(continued)
36
IV. DETAILED NOTES ON ALL FUNDS (Continued)
E. Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2008, is as follows:
Receivable FundPayable FundAmount
Agency General 5,058$
Water and WastewaterCapital projects2,320,081
61,922
Water and WastewaterNonmajor enterprise
$ 2,387,061
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, 2008, are as follows:
Transfers InTransfers OutAmount
Nonmajor enterpriseGeneral312,500$
207,629
GeneralWater and wastewater
$ 520,129
Total interfund transfers
Transfers in the amount of $312,500 were used to move unrestricted revenues collected in
the General Fund to finance the match for a grant received in the Airport Fund. A transfer in
the amount of $207,629 was paid from the Water and Wastewater Fund to the General Fund
for payments in lieu of taxes.
(continued)
37
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2008, was as follows:
BalanceBalanceDue Within
09/30/07AdditionsReductions09/30/08One Year
Governmental activities:
General obligation bonds1,140,000$ 1,325,000$ 475,000$ 1,990,000$ 425,000$
16,165204,753 7,424 213,494 42,699
Compensated absences payable
$ 1,341,1651,344,753$ 482,424$ 2,203,494$ 467,699$
Total governmental activities
:
Business-type activities
Revenue bonds/certificates
of obligation22,870,134$ 4,130,000$ 1,450,979$ 25,549,155$ 1,507,000$
Capital lease219,919 - 42,582 177,337 46,181
Estimated landfill closure
and postclosure costs240,654 36,530 - 277,184 -
4,23927,541 462 31,318 6,264
Compensated absences payable
$ 4,170,76923,358,248$ 1,494,023$ 26,034,994$ 1,559,445$
Total business-type activities
The General Fund is generally used to liquidate compensated absences for governmental
activities.
General Obligation Bonds
The City issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities of governmental activities and to refund previous
issues. General obligation bonded debt of the City is as follows:
Governmental activities:
$2,000,000CombinationTaxandRevenueCertificatesof
Obligation-Series1996,principaldueannuallyinseriesthrough
2016,interestduesemi-annuallyat4.8%to6.8%,certificates
callable February 15, 2006.
$ 665,000
$1,325,000CombinationTaxandRevenueCertificatesof
Obligation-Series2008,principaldueannuallyinseriesthrough
2033, interest due semi-annually at 4.06%.
1,325,000
$ 1,990,000
(continued)
38
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,
2008, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.
$ 4,905,000
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.
520,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.1,170,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.2,020,000
$275,000CombinationTaxandRevenueCertificatesofObligation,
Series2003A,principaldueannuallyinSeriesthrough2021,
interest due semi-annually at 4.125%.199,155
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.6,770,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.1,680,000
$4,300,000CombinationTaxRevenueCertificatesofObligation,
Series2006A,principaldueannuallyinseriesthrough2027,
interest due semi-annually at 3.92%.4,155,000
$4,130,000CombinationTaxRevenueCertificatesofObligation,
Series2008,principaldueannuallyinseriesthrough2033,interest
due semi-annually at 4.06%.
4,130,000
$ 25,549,155
Total Revenue Bonds
(continued)
39
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
2009425,000$ 98,690$ 523,690$
2010460,000 60,824 520,824
2011230,000 44,320 274,320
2012195,000 34,149 229,149
2013320,000 35,505 355,505
360,000 14,819 374,819
2014 - 2015
$ 288,3071,990,000$ 2,278,307$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
20091,507,000$ 1,027,769$ 2,534,769$
20101,612,000 922,210 2,534,210
20111,668,000 862,123 2,530,123
20121,734,000 799,656 2,533,656
20131,805,000 734,638 2,539,638
2014 - 20189,618,155 2,587,663 12,205,818
2019 - 20233,270,000 1,092,239 4,362,239
2024 - 20281,950,000 684,866 2,634,866
249,5892,385,000 2,634,589
2029 - 2032
$ 8,960,75325,549,155$ 34,509,908$
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.
The assets acquired through capital leases are as follows:
Landfill
Asset:
Machinery and equipment219,919$
(42,582)
Less: accumulated depreciation
$ 177,337
Total
(continued)
40
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt (Continued)
Capital Lease (Continued)
The future minimum lease obligations and the net present value of these minimum lease
payments as of September 30, 2008, were as follows:
Fiscal Year Ending
September 30,Principal
200961,165$
201061,165
87,924
2011
Total minimum lease payments210,254
(32,917)
Less: amount representing interest
$ 177,337
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.
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.
(continued)
41
V. OTHER INFORMATION (Continued)
B. Commitments and Contingencies (Continued)
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 $277,184. The landfill site has an estimated net
capacity of 213,899 cubic yards and is expected to be closed within the next 10 years;
approximately 79% 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 827 administered by TMRS, an agent multiple-employer public
employee retirement system. All assumptions for the December 31, 2007, valuations are
contained in the 2007 TMRS Comprehensive Annual Financial Report, a copy of which may
be obtained by writing to P. O. Box 149153, Austin, Texas 78714-9153.
(continued)
42
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, 2006, valuation is effective for rates beginning
January 2008).
(continued)
43
V. OTHER INFORMATION (Continued)
D. Retirement Plan (Continued)
Contributions (Continued)
Assumptions and Schedule of Actuarial Liabilities and Funding Progress
Actuarial Cost MethodProjected Unit Credit
Amortization MethodLevel Percent of Payroll
Remaining Amortization25 Years - Closed Period
Asset Valuation MethodAmortized Cost
Investment Rate of Return7%
Projected Salary IncreasesVaries by age and service
Includes Inflation at3.0%
Cost of Living Adjustments2.1% (3.0% CPI)
Payroll growth assumption3.0%
Actuarial Valuation Date12/31/0712/31/0612/31/05
Actuarial Value of Assets13,396,160$ 12,884,565$ 11,702,174$
Actuarial Accrued Liabilities19,744,843 16,154,691 14,690,509
Percentage Funded67.8% 79.8% 79.7%
Unfunded (Overfunded) Actuarial
Accrued Liability (UAAL)6,348,683 3,270,126 2,988,335
Annual Covered Payroll5,147,282 5,005,388 4,510,148
UAAL as a Percentage of Covered Payroll123.3% 65.3% 66.3%
Net Pension Obligation (NPO)
at the Beginning of Period- - -
Annual Pension Cost:
Annual Required Contribution (ARC)696,664 590,098 512,482
Interest on NPO- - -
-
- -
Adjustment to the ARC
590,098696,664 512,482
Contributions Made (100%)696,664 590,098 512,482
-- -
Increase in NPO
$ --$ -$
NPO at the End of Period
At its December 8, 2007 meeting, the TMRS Board of Trustees adopted actuarial
assumptions to be used in the actuarial valuation for the year ended December 31, 2007. A
summary of actuarial assumptions and definitions can be found in the December 31, 2007
TMRS Comprehensive Annual Financial Report (CAFR).
(continued)
44
V. OTHER INFORMATION (Continued)
D. Retirement Plan (Continued)
Contributions (Continued)
Since its inception, TMRS has used the Unit Credit actuarial funding method. This method
accounts for liability accrued as of the valuation date, but does not project the potential future
liability of provisions adopted by a city. Two-thirds of the cities participating in TMRS have
adopted the Updated Service Credit and Annuity increases provisions on an annually
repeating basis. For the December 31, 2007 valuation, the TMRS Board determined that the
Projected Unit Credit (PUC) funding method should be used, which facilitates advance
funding for future updated service credits and annuity increases that are adopted on an
annually repeating basis. In addition, the Board also adopted a change in the amortization
period from a 25-year “open” to a 25-year “closed” period. TMRS Board of Trustee rules
provide that, whenever a change in actuarial assumptions or methods results in a contribution
rate increase in an amount greater than 0.5%, the amortization period will be increased to 30
years, unless a city requests that the period remain at 25 years. For cities with repeating
features, these changes would likely result initially in higher required contributions and lower
funded ratios; however, the funded ratio should show steady improvement over time. To
assist in this transition to higher rates, the Board also approved an eight-year phase-in period,
which will allow cities the opportunity to increase their contributions gradually (approx.
12.5% each year) to their full rate (or their required contribution rate).
If the changes in actuarial funding method and assumptions had not been adopted for the
2007 valuation, the City’s unfunded actuarial accrued liability would have been $17,059,352
and the funded ratio would have been 78.5%.
In addition, TMRS is currently working on its legislative package for 2009. There is a
possibility that the investment rate of return (IRR) assumption of 7% would need to be
lowered if desired legislation for the 2009 session is unsuccessful. Maintaining a 7% IRR
assumption is contingent in part on the continued diversification of the TMRS portfolio, from
an almost exclusive bond portfolio to a portfolio that includes equities as well. If state
legislation needed to facilitate the continued diversification is not enacted, TMRS may have
to revisit the continued diversification of the portfolio and consider reducing the assumed
IRR. A reduction in the IRR would result in increased actuarial accrued liabilities, thus
causing further increases in City contribution rates, following the December 31, 2009
actuarial valuation.
45
COMBINING FUND
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
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, 2008
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafetySafetyTotalServiceFunds
ASSETS
Cash and investments287,723$ 11,778$ 22,145$ 321,646$ 86,464$ 408,110$
Receivables (net of allowance
for uncollectibles)
Property taxes- - - - 7,931 7,931
Accounts- - - - 1,217 1,217
-75,513 - 75,513 - 75,513
Occupancy taxes
$ 11,778363,236$ 22,145$ 397,159$ 95,612$ 492,771$
Total assets
LIABILITIES
Accounts payable46,409$ -$ -$ 46,409$ -$ 46,409$
- - - - 6,359 6,359
Deferred revenue
-46,409 - 46,409 6,359 52,768
Total liabilities
FUND BALANCES
Reserved for debt service- - - - 89,253 89,253
11,778316,827 22,145 350,750 - 350,750
Unreserved
11,778316,827 22,145 350,750 89,253 440,003
Total fund balances
Total liabilities
$ 11,778363,236$ 22,145$ 397,159$ 95,612$ 492,771$
and fund balances
46
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafety SafetyTotalServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ 527,270$ 527,270$
Other384,137 - - 384,137 - 384,137
Fines and forfeitures- 6,132 367 6,499 - 6,499
Intergovernmental- - 3,859 3,859 - 3,859
Service charges- - 8,236 8,236 - 8,236
-9,730 - 9,730 3,945 13,675
Investment earnings
393,867 6,132 12,462 412,461 531,215 943,676
Total revenues
EXPENDITURES
Current:
Public safety- 3,919 14,596 18,515 - 18,515
Culture and recreation323,994 - - 323,994 - 323,994
Debt service:
Principal - - - - 475,000 475,000
-- - - 49,195 49,195
Interest and fiscal charges
323,994 3,919 14,596 342,509 524,195 866,704
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
69,873 2,213 2,134)( 69,952 7,020 76,972
EXPENDITURES
246,954 9,565 24,279 280,798 82,233 363,031
FUND BALANCES, BEGINNING
$ 316,827 11,778$ 22,145$ 350,750$ 89,253$ 440,003$
FUND BALANCES, ENDING
47
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, 2008
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - other299,950$ 384,137$ 84,187$
9,73010,000 270)(
Investment income
393,867309,950 83,917
Total revenues
EXPENDITURES
Current:
323,994350,723 26,729
Culture and recreation
323,994350,723 26,729
Total culture and recreation
323,994350,723 26,729
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 69,87340,773) 110,646
OVER (UNDER) EXPENDITURES
246,954246,954 -
FUND BALANCE, BEGINNING
$ 316,827206,181$ 110,646$
FUND BALANCE, ENDING
48
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, 2008
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 6,1324,000$ 2,132$
Fines and forfeitures
6,1324,000 2,132
Total revenues
EXPENDITURES
Current:
3,9193,919 -
Public safety
3,9193,919 -
Total public safety
3,9193,919 -
Total expenditures
EXCESS OF REVENUES
2,21381 2,132
OVER EXPENDITURES
9,5659,565 -
FUND BALANCE, BEGINNING
$ 11,7789,646$ 2,132$
FUND BALANCE, ENDING
49
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, 2008
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Fines and forfeitures-$ 367$ 367$
Intergovernmental3,700 3,859 159
8,236- 8,236
Service charges
12,4623,700 8,762
Total revenues
EXPENDITURES
Current:
18,700 14,596 4,104
Public safety
18,700 14,596 4,104
Total public safety
18,700 14,596 4,104
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 2,134)15,000)( 12,866
OVER (UNDER) EXPENDITURES
24,279 24,279 -
FUND BALANCE, BEGINNING
$ 22,1459,279$ 12,866$
FUND BALANCE, ENDING
50
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, 2008
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - property 523,195$ 527,270$ 4,075$
3,9455,000 1,055)(
Investment earnings
528,195 531,215 3,020
Total revenues
EXPENDITURES
Debt service:
Principal475,000475,000 -
49,195 49,195 -
Interest and fiscal charges
524,195 524,195 -
Total debt service
524,195 524,195 -
Total expenditures
EXCESS OF REVENUES
7,0204,000 3,020
OVER EXPENDITURES
82,233 82,233 -
FUND BALANCE, BEGINNING
$ 86,233 89,253$ 3,020$
FUND BALANCE, ENDING
51
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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.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR ENTERPRISE FUNDS
SEPTEMBER 30, 2008
Sanitary
LandfillAirportTotal
ASSETS
Current assets:
Cash and investments527,268$ -$ 527,268$
8,9401,918 10,858
Accounts receivable (net of allowances for uncollectibles)
529,186 8,940 538,126
Total current assets
Noncurrent assets:
Capital assets:
Land40,000 594,361 634,361
Buildings and improvements375,109 3,326,418 3,701,527
Equipment597,363 115,131 712,494
Construction in progress- 380,189 380,189
(665,980) 476,417)( 1,142,397)(
Less: accumulated depreciation
346,492 3,939,682 4,286,174
Total capital assets
346,492 3,939,682 4,286,174
Total noncurrent assets
875,678 3,948,622 4,824,300
Total assets
LIABILITIES
Current liabilities:
Accounts payable4,400 585 4,985
Accrued liabilities2,486 - 2,486
Due to other funds- 61,922 61,922
Accrued interest payable8,786 2,641 11,427
Capital lease46,181 - 46,181
Bonds payable- 17,000 17,000
-388 388
Compensated absences payable
62,241 82,148 144,389
Total current liabilities
Long-term liabilities:
Capital lease131,156 - 131,156
Bonds payable- 182,155 182,155
Compensated absences payable1,554 - 1,554
277,184 - 277,184
Liability for landfill closure
409,894 182,155 592,049
Total long-term liabilities
472,135 264,303 736,438
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt169,155 3,740,527 3,909,682
234,388 56,208)( 178,180
Unrestricted
$ 403,543 3,684,319$ 4,087,862$
Total net assets
52
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Sanitary
LandfillAirportTotal
OPERATING REVENUES
Gate charges275,915$ -$ 275,915$
Hanger rental- 64,264 64,264
3,922- 3,922
Other service charges
275,915 68,186 344,101
Total operating revenues
OPERATING EXPENSES
Personnel services77,976- 77,976
Utilities63217,769 18,401
Repairs and maintenance12,28221,675 33,957
Other supplies and expenses72,9826,715 79,697
110,402 65,587 175,989
Depreciation
274,274 111,746 386,020
Total operating expenses
43,560)1,641( 41,919)(
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings15,127 - 15,127
( 15,272)16,075)( 31,347)(
Interest expense
( 15,272)948)( 16,220)(
Total nonoperating revenues (expenses)
58,832)693( 58,139)(
INCOME(LOSS) BEFORE CONTRIBUTIONS
477,093- 477,093
CAPITAL CONTRIBUTIONS
312,500- 312,500
TRANSFER IN
730,761693 731,454
CHANGE IN NET ASSETS
402,850 2,953,558 3,356,408
TOTAL NET ASSETS, BEGINNING
$403,543 3,684,319$ 4,087,862$
TOTAL NET ASSETS, ENDING
53
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Sanitary
LandfillAirportTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers276,194$ 71,381$ 347,575$
Cash payments to employees80,949)( - 80,949)(
(84,790) 53,008)( 137,798)(
Cash payments to suppliers for goods and services
110,455 18,373 128,828
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receivables repaid by other funds17,717 - 17,717
Interfund payables repaid to other funds- 17,717)( 17,717)(
Cash borrowed from other funds- 61,922 61,922
312,500- 312,500
Transfers from other funds
Cash provided by noncapital
17,717 356,705 374,422
financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease42,583)( - 42,583)(
Principal payments on bonds- 15,979)( 15,979)(
Interest and fiscal charges on debt16,075)( 15,214)( 31,289)(
Proceeds from sale of capital assets- 631 631
344,516)-( 344,516)(
Acquisition and construction of capital assets
Cash used by capital and
(58,658) 375,078)( 433,736)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
15,127 - 15,127
Interest received
15,127 - 15,127
Cash provided by investing activities
NET INCREASE IN CASH
-84,641 84,641
AND CASH EQUIVALENTS
441,073 - 441,073
CASH AND CASH EQUIVALENTS, BEGINNING
$ 525,714 -$ 525,714$
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, 2008
Sanitary
LandfillAirportTotal
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)1,641$ 43,560)$( 41,919)$(
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation110,402 65,587 175,989
Change in assets and liabilities:
Decrease (increase) in accounts receivable279 3,195 3,474
Increase (decrease) in accounts payable1,106 6,849)( 5,743)(
Increase (decrease) in accrued liabilities1,531)( - 1,531)(
( -1,442) 1,442)(
Increase (decrease) in compensated absences
108,814 61,933 170,747
Total adjustments
$ 110,455 18,373$ 128,828$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
$ 477,093-$ 477,093$
Contributions of capital assets
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, 2008
BalanceBalance
October 1,September 30,
2007AdditionsDeductions2008
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
THIS PAGE LEFT BLANK INTENTIONALLY
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 SIX FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
200320042005200620072008
Governmental activities:
Invested in capital assets, net of related debt8,671,383$ 8,877,241$ 9,070,652$ 9,734,777$ 10,157,475$ 10,513,386$
Restricted- 620,104 295,721 381,849 366,934 397,365
8,181,0767,932,439 9,548,977 10,237,660 11,232,319 12,162,240
Unrestricted
$ 16,603,822 17,678,421$ 18,915,350$ 20,354,286$ 21,756,728$ 23,072,991$
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$ 21,231,388$
Restricted508,583 470,750 514,842 599,910 665,099 554,647
4,134,8415,621,026 5,301,524 6,516,830 9,087,784 7,178,489
Unrestricted
$ 17,919,299 18,834,997$ 22,007,282$ 24,549,134$ 26,317,100$ 28,964,524$
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$ 31,744,774$
Restricted508,583 1,090,854 810,563 981,759 1,032,033 952,012
13,553,465 12,315,917 14,850,501 16,754,490 20,320,103 19,340,729
Unrestricted
$ 34,523,121 36,513,418$ 40,922,632$ 44,903,420$ 48,073,828$ 52,037,515$
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 SIX FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
200320042005200620072008
EXPENSES
Governmental activities:
General government1,262,164$ 1,421,563$ 1,453,986$ 1,441,939$ 1,591,258$ 1,331,583$
Public safety4,028,747 4,026,402 4,345,846 4,689,443 5,187,628 5,504,975
Streets894,193 995,046 979,051 1,098,979 1,144,681 1,183,435
Culture and recreation1,522,896 1,574,032 1,582,864 1,646,017 1,733,627 2,166,545
Community development317,743 296,244 348,177 343,135 381,091 395,182
153,445 130,388 109,153 91,817 65,926 103,490
Interest on long-term debt
Total governmental
8,443,6758,179,188 8,819,077 9,311,330 10,104,211 10,685,210
activities expenses
Business-type activities:
Water and wastewater3,790,830 4,582,690 4,367,671 4,681,174 4,776,359 4,526,893
Storm water drainage14,034 35,462 166,346 232,955 141516245,371
Sanitary landfill211,159 151,309 99,078 119,832 272,010 290,349
99,847 101,082 8,633 18,075 130,169 127,018
Airport
Total business-type
4,870,5434,115,870 4,641,728 5,052,036 5,320,054 5,189,631
activities expenses
$ 13,314,21812,295,058$ 13,460,805$ 14,363,366$ 15,424,265$ 15,874,841$
Total expensess
PROGRAM REVENUES
Governmental activities:
Charges for services:
General government21,421$ 195,176$ 172,292$ 177,636$ 243,929$ 219,353$
Public safety884,349 524,561 488,292 600,332 687,567 906,131
Streets22,388 28,748 17,213 17,444 27,425 24,046
Culture and recreation157,741 147,563 135,607 132,125 171,931 145,225
Community development82,182 165,803 163,490 180,304 160,745 272,729
Operating grants and contributions146,257 189,805 125,068 172,884 115,859 57,969
185,625 366,478 556,425 177,503 115,556 148
Capital grants and contributions
Total governmental activities
1,618,1341,499,963 1,658,387 1,458,228 1,523,012 1,625,601
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 5,469,932
Sanitary landfill154,650 174,152 174,845 162,306 170,814 275,915
Airport24,865 31,077 39,088 51,037 61,916 68,186
Storm water drainage511,427 478,143 485,600 485,314 500,779 577,766
273,101 411,474 1,513,020 599,393 169,370 870,718
Capital grants and contributions
Total business-type activities
5,659,0395,225,598 7,458,454 6,926,708 5,995,457 7,262,517
program revenues
$ 7,277,1736,725,561$ 9,116,841$ 8,384,936$ 7,518,469$ 8,888,118$
Total program revenues
(continued)
58
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST SIX FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
200320042005200620072008
NET (EXPENSE) REVENUES
Governmental activities6,679,225)$( 6,825,541)$( 7,160,690)$( 7,853,102)$( 8,581,199)$( 9,059,609)$(
788,4961,109,728 2,816,726 1,874,672 675,403 2,072,886
Business-type activities
( 6,037,045)5,569,497)( 4,343,964)( 5,978,430)( 7,905,796)( 6,986,723)(
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 3,131,702
Property - debt service545,552 540,467 448,663 437,146 476,117 527,921
Sales3,217,670 3,538,100 3,654,232 4,101,973 4,351,269 4,745,309
Franchise934,965 1,209,036 1,264,298 1,423,615 1,370,838 1,169,858
Other208,534 262,467 292,447 312,528 388,013 434,498
Investment earnings196,542 87,990 286,301 441,986 623,810 454,269
Miscellaneous33,971 12,158 54,068 34,663 75,994 17,186
315,638 - 50,000)( 116,979)( 215,921)( 104,871)(
Transfers
7,900,1407,447,600 8,397,619 9,292,038 9,983,641 10,375,872
Total governmental activities
Business-type activities:
Investment earnings105,970 100,773 305,559 518,164 876,642 469,667
Miscellaneous9,137 26,429 - 32,037 -
(315,638) - 50,000 116,979 215,921 104,871
Transfers
(200,531) 127,202 355,559 667,180 1,092,563 574,538
Total business-type activities
Total general revenues and other
8,027,3427,247,069 8,753,178 9,959,218 11,076,204 10,950,410
changes in net assets
CHANGE IN NET ASSETS
Governmental activities768,375 1,074,599 1,236,929 1,438,936 1,402,442 1,316,263
909,197 915,698 3,172,285 2,541,852 1,767,966 2,647,424
Business-type activities
$ 1,990,2971,677,572$ 4,409,214$ 3,980,788$ 3,170,408$ 3,963,687$
Total change in net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
59
TABLE 3
CITY OF STEPHENVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
1999200020012002200320042005200620072008
General fund
Reserved-$ -$ -$ -$ 7,178$ 4,072$ 13,349$ 10,352$ 15,224$
8,653$
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 9,555,553
Unreserved
$ 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$ 9,564,206$
Total general fund
All other governmental funds
Reserved
Debt service funds1,077$ 12,873$ 24,139$ 30,337$ 41,081$ 41,285$ 50,563$ 69,443$ 82,233$
89,253$
Unreserved, reported in:
Special revenue funds157,561 186,653 232,461 207,743 237,911 211,765 247,743 318,028 280,798
350,750
1,779,154 2,122,160 1,109,119 895,894 772,431 735,191 1,063,030 1,051,972 1,069,303 2,429,680
Capital projects funds
Total all other
$ 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$ 2,869,683$
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
1999200020012002200320042005200620072008
REVENUES
Taxes6,158,011$ 6,418,350$ 6,689,180$ 7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235$ 9,506,528$ 10,004,265$
Special assessments- 664,688 - 55,415 - - 402,789 28,122 -
-
Licenses, fees and permits78,228 88,671 64,408 86,583 84,669 168,519 168,523 183,839 164,071
275,887
Fines and forfeitures174,225 169,085 168,271 135,897 248,426 229,922 207,407 279,716 353,889
361,027
Intergovernmental231,738 669,130 207,050 242,187 249,564 306,510 104,228 188,096 111,889 87,730
Service charges349,452 367,715 408,757 523,825 545,763 697,355 651,021 640,935 738,526 839,684
Investment earnings507,744 445,529 406,277 275,793 194,772 87,991 286,300 441,986 623,810
454,269
29,76738,287 68,242 61,705 125,027 52,734 108,222 60,110 119,731 19,734
Miscellaneous
8,852,9357,537,685 8,012,185 8,449,309 8,339,293 9,347,931 10,031,624 10,765,039 11,618,444 12,042,596
Total revenues
EXPENDITURES
General government938,789 947,835 942,036 1,091,746 1,113,323 1,274,807 1,231,709 1,349,248 1,491,202 1,293,925
Public safety2,885,336 3,146,946 3,325,599 3,603,448 3,821,859 3,874,454 4,140,738 4,562,217 4,955,771 5,459,268
Streets665,954 562,728 588,038 620,714 561,646 630,057 578,126 699,290 735,614 824,764
Culture and recreation1,013,705 1,081,294 1,243,096 1,294,316 1,357,624 1,336,974 1,412,305 1,466,261 1,518,938 1,931,846
Community development188,246 182,517 236,431 250,776 317,743 295,036 346,969 337,659 375,614
394,833
Debt service
Principal486,967 429,391 430,000 450,000 470,000 500,000 420,000 430,000 455,000 475,000
Interest263,320 225,283 200,415 178,813 157,032 133,441 111,582 91,817 71,105 49,195
Bond issuance costs- - - - - - - - -
12,725
2,184,0742,747,738 1,667,368 868,370 366,753 661,419 1,014,372 952,446 807,528 1,902,168
Capital outlay
8,760,0689,190,055 8,632,983 8,358,183 8,165,980 8,706,188 9,255,801 9,888,938 10,410,772 12,343,724
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
1999200020012002200320042005200620072008
EXCESS OF REVENUES
OVER (UNDER)
$( 92,8671,652,370)$ 620,798)$( 91,126$ 173,313$ 641,743$ 775,823$ 876,101$ 1,207,672$ 301,128)$(
EXPENDITURES
OTHER FINANCING
SOURCES (USES)
Issuance of bonds- - - - - - - - -
1,325,000
Proceeds from sale of
capital assets48,329 26,449 - - - - - - -
27,914
Transfers in1,168,134 800,449 448,316 251,085 423,414 90,000 90,000 94,500 55,000 207,629
( 656,348)1,763,910)( 325,000)( 102,195)( 107,776)( 90,000)( 140,000)( 211,479)( 270,921)( 312,500)(
Transfers out
Total other financing
( 170,550547,447) 123,316 148,890 315,638 - 50,000)( 116,979)( 215,921)( 1,248,043
sources (uses)
NET CHANGE IN
$( 263,4172,199,817)$ 497,482)$( 240,016$ 488,951$ 641,743$ 725,823$ 759,122$ 991,751$ 946,915$
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
11.1%13.2% 10.0% 9.2% 8.7% 8.5% 6.9% 6.2% 5.8% 5.3%
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
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
2008473,515,020 493,287,390 139,045,430 287,501,749 818,346,091 0.4450835,047,032
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
1999$0.3377$0.1347$0.4724$1.3000-$0.4785$2.2509
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$0.01500.47002.6600
20040.39130.09370.48501.67000.01500.45122.6212
20050.41070.07430.48501.67000.01500.46252.6325
20060.40790.06710.47501.66000.01500.44102.5910
20070.39960.06540.46501.51990.01500.43522.4351
20080.38110.06390.44501.19200.01500.41872.0707
Source:Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.
Rates for debt service are set based on each year's requirements.
Overlapping rates are those of local and county governments that apply to property owners within the City of Stephenville,
The Middle Trinity Water District did not exist in fiscal years 1999 through 2002.
64
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20081999
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company39,303,300$ 4.41% 25,330,327$ 5.48%
Saint Gobain Abrasives9,753,003 1.09% 16,977,814 3.67%
Bosque River Associates9,494,910 1.07% 8,533,480 1.84%
TXU Electric Delivery8,824,410 0.99% 6,240,020 1.35%
Stephenville Student Housing LP8,750,010 0.98% - -%
Wal-Mart Stores, Inc. #17,758,020 0.87% 13,867,090 3.00%
Saint Gobain Abrasives7,047,610 0.79% - -%
United Telephone Company (Embarq)6,451,400 0.72% 5,129,190 1.11%
PRVS Holdings, L.L.C.6,397,050 0.72% - -%
Wilmington Trust (Wal-Mart #2)6,351,350 0.71% - -%
Rayloc Genaut- -% 4,880,935 1.06%
Emerson Electric Company- -% 4,285,324 0.93%
-%- 4,288,275 0.93%
FMC Technologies
Subtotal110,131,063$ 12.35% 89,532,455$ 19.37%
87.65%780,637,386 373,000,750 80.63%
Remaining Roll
$ 100.00%890,768,449 462,533,205$ 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
19992,181,037$ 2,133,063$ 97.80% 43,891$ 2,176,954$ 99.81%
20002,185,007 2,143,729 98.11% 37,445 2,181,174 99.82%
20012,236,217 2,192,628 98.05% 39,342 2,231,970 99.81%
20022,348,927 2,294,810 97.70% 50,076 2,344,886 99.83%
20032,513,625 2,462,155 97.95% 43,404 2,505,559 99.68%
20042,788,419 2,726,244 97.77% 56,290 2,782,534 99.79%
20052,832,529 2,808,747 99.16% 16,188 2,824,935 99.73%
20063,066,225 3,018,008 98.43% 40,723 3,058,731 99.76%
20073,344,539 3,307,083 98.88% 22,447 3,329,530 99.55%
20083,641,808 3,602,598 98.92% - 3,602,598 98.92%
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
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 N/A1,283
2007330,000 810,000 - 5,210,000 17,660,134 219,920 24,230,054 N/A1,421
20081,325,000 665,000 - 4,905,000 20,644,155 177,337 27,716,492 N/A1,590
Note: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
19992,935,000$ 1,810,278$ 1,077$ 4,744,201$ 1.03% 324$
20002,630,000 1,685,887 12,873 4,303,014 0.93% 293
20012,310,000 1,555,000 24,139 3,840,861 0.82% 257
20021,970,000 1,445,000 30,336 3,384,664 0.69% 226
20031,615,000 1,330,000 41,082 2,903,918 0.56% 185
20041,235,000 1,210,000 41,285 2,403,715 0.42% 151
2005945,000 1,080,000 50,563 1,974,437 0.33% 121
2006645,000 950,000 69,443 1,525,557 0.24% 90
2007330,000 810,000 82,233 1,057,767 0.15% 62
20081,325,000 665,000 89,253 1,900,747 0.23% 109
Notes:
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, 2008
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes
Stephenville Independent School District11,599,606$ 68.35%7,928,331$
1,990,000
City direct debt
$ 9,918,331
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 2008
Taxable assessed valuation818,346,091$
2.50% of assessed valuation
Constitutional tax rate limit
Maximum constitutional revenue available 20,458,652$
$2.50 per $100 of valuation
Tax rate to achieve maximum tax revenue
$0.445 per $100 of valuation
Tax rate for FY 2007-2008
$2.025 per $100 of valuation
Available unused constitutional max tax rate
Debt applicable to limit:
General obligation debt$ 1,140
DEBT TAX RATE ADEQUACY
2008 Principal and Interest Requirements.................................................................................................................
$ 523,690
$0.0742 Tax Rate at 98% Collection Produces...................................................................................................……..
595,069
Average Annual Principal and Interest Requirement, 2008-2018..........................................……………………….
284,788
$0.0202 Tax Rate at 98% Collection Produces.................................................................................................……..
162,000
Maximum Principal and Interest Requirements...................................................................................................……..
523,690
$0.0742 Tax Rate at 98% Collection Produces...................................................................................................……..
595,069
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2008
$ 523,690
Debt Service Fund, 9-30-07
$ 82,232
677,301595,069$
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
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
20085,469,932 2,851,562 2,618,370 1,290,000 650,238 1.35
Note: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
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%
200616,882 438,003,490 25,945 3,550 7,776 3.9%
200717,050 N/AN/A3,521 7,840 3.8%
200817,428 N/AN/A3,496 7,763 4.0%
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 is not available for 2006 - 2008.
72
TABLE 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2008
Percentage
of Total City
Employer
EmployeesEmployment
Tarleton State University895 4.91%
FMC Company630 3.46%
Saint Gobain Abrasives575 3.16%
Stephenville Independent School District468 2.57%
Wal-Mart Stores, Inc.450 2.47%
Scheiber Foods446 2.45%
Harris Methodist Erath County Hospital255 1.40%
Western Dairy Transport197 1.08%
Outlaw Conversions190 1.04%
Erath County179 0.98%
United Cooperative Services150 0.82%
Emerson Electric Company150 0.82%
Stephenville Medical & Surgical Clinic148 0.81%
Caporal Forging120 0.66%
Fibergrate Composite Structures115 0.63%
Associated Milk Producers110 0.60%
Bruner Motors101 0.55%
Southwestern Linen38 0.21%
Texstar Ford35 0.19%
0.10%18
USTRA
Subtotal5,270 28.91%
71.09%12,950
Remaining employers
100.00%18,220
Total
Source:
CityCommunityDevelopmentDivision.TotalemployeedataisprovidedbytheStateDepartmentofCommerceand
Labor.
Notes:
TotalemployeeinformationisbasedonentireErathCounty.Principalemployersareonlythosethatoperatefrom
within the corporate City limits of Stephenville.
Information for 1999 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/Program1999200020012002200320042005200620072008
General government
Management services4 4 4 4 4 4 4
4 4 4
Finance7 7 6 6 7 7 7 7
7 7
Planning1 1 2 2 2 2 2 2
2 2
Building1 1 1 1 1 1 1 2
2 2
Other1 1 1 1 1 1 1 1
1 1
Police
Officers30 30 30 30 30 31 31 31
34 38
Civilians10 10 10 11 11 11 13 13
12 12
Fire
Firefighters and officers23 23 23 26 26 26 26
27 28 31
Parks and recreation9 9 11 11 13 13 13 13
13 13
Library4 4 4 4 4 4 4 4
3 3
Streets7 7 7 7 7 7 7 7
7 7
Water8 8 9 9 9 9 9 10
13 13
Wastewater7 7 8 8 8 8 8 8
5 5
22 2 2 2 2 2 2 2 2
Landfill
114114 118 122 125 126 128 131 133 140
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/Program1999200020012002200320042005200620072008
General government
Building permits issued238 242 265 234 222 140 172 125
153 135
Building permits value$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$27,821,098
Police
Calls for serviceN/A 9,138 9,114 10,207 10,203 10,483 10,358 11,234 19,732 11,739
Physical arrests1,019 1,019 716 762 1,134 825 959 999 1,447
1,023
Parking violations182 182 805 404 530 324 386 334 498
171
Traffic violations3,178 3,178 4,501 3,164 5,094 5,350 3,588 3,066 4,469
2,473
Fire
Ambulance responses1,236 1,271 1,321 1,468 1,372 1,183 1,291 1,255 1,537
1,472
Fires extinguished318 376 357 412 339 185 235 305 235
219
Inspections150 150 149 149 135 132 109 105 313
280
Other public works
Street resurfacing (miles)0.32 1.30 1.88 2.35 2.39 1.35 1.14 1.52
2.70 2.23
Library
Volumes in collection42,214 43,065 41,905 40,161 43,331 46,938 48,548 47,510 43,737
43,827
Total volumes borrowed82 120 130 237 110 138 155 114
116 94
Water
New connections5,256 5,256 5,319 5,319 5,242 5,521 5,253 5,550 5,660
5,670
Water main breaks51 47 53 52 49 54 50 48
49 44
Average daily consumption2,295,000 2,482,000 2,341,000 2,158,000 2,124,000 1,971,990 2,042,000 2,254,000 1,828,000 2,080,000
(thousands of gallons)
Peak daily consumption4,589,000 4,700,000 4,549,000 4,174,000 4,133,000 3,598,000 3,499,000 4,397,000 3,091,000 3,848,000
(thousands of gallons)
Wastewater
Average daily sewage treatment1,253,000 1,253,000 1,387,000 1,311,000 1,354,000 1,456,000 1,334,000 1,414,000 1,691,000 1,548,000
(thousands of gallons)
Source: Various City departments
75
TABLE 18
CITY OF STEPHENVILLE, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program1999200020012002200320042005200620072008
Police
Stations1 1 1 1 1 1 1 1
1 1
Patrol units6 6 9 9 10 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 92 92 92 92
96 96
Highways (miles)19 19 19 19 19 19 19 19
21 21
Streetlights952 983 992 992 1,013 1,013 1,013 1,013 1,070
1,080
Parks and recreation
Acreage126 126 126 134 134 134 134 134 134
130
Playgrounds3 3 3 4 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 58 112 116 117 117 120
122 124
Fire hydrants616 616 623 623 650 670 670 680
732 747
Storage capacity4,500,000 4,500,000 4,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,750,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)68 68 68 96 105 105 110 110
113 114
Storm sewers (miles)10 10 10 10 10 10 10 10
10 11
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
76
THIS PAGE LEFT BLANK INTENTIONALLY
SINGLE AUDIT SECTION
THIS PAGE LEFT BLANK INTENTIONALLY
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, 2008, which collectively comprise the
City’s basic financial statements and have issued our report thereon dated December 31, 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
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AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 WHITNEY, TX (254) 694-4600 ALBUQUERQUE, NM (505) 266-5904
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.
December 31, 2008
78
REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL
CONTROL OVER COMPLIANCE IN ACCORDANCE WITH
OMB CIRCULAR A-133
The Honorable Mayor and
Members of the City Council
City of Stephenville, Texas
Compliance
We have audited the compliance of the City of Stephenville, Texas, with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133
Compliance Supplement that are applicable to its major federal program for the year ended September
30, 2008. The City of Stephenville, Texas’ major federal program is identified in the summary of
auditors’ results section of the accompanying Schedule of Findings and Questioned Costs. Compliance
with the requirements of laws, regulations, contracts and grants applicable to its major federal program
is the responsibility of the City of Stephenville, Texas’ management. Our responsibility is to express an
opinion on the City of Stephenville, Texas’ compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in
the United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133,
Audits of States, Local Governments and Nonprofit Organizations. Those standards and OMB Circular A-
133 require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct and
material effect on a major federal program occurred. An audit includes examining, on a test basis,
evidence about the City of Stephenville, Texas’ compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination on the City of
Stephenville, Texas’ compliance with those requirements.
In our opinion, the City of Stephenville, Texas complied, in all material respects, with the
requirements referred to above that are applicable to its major federal program for the year ended
September 30, 2008.
79
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AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
TEMPLE, TX (254) 791-3460 WHITNEY, TX (254) 694-4600 ALBUQUERQUE, NM (505) 266-5904
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with the requirements of laws, regulations, contracts, and grants applicable to
federal programs. In planning and performing our audit, we considered the City’s internal control over
compliance with the requirements that could have a direct and material effect on a major federal
program in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control
over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal
control over compliance.
Acontrol deficiency in an entity’s internal control over compliance 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 noncompliance with a type of compliance requirement of a federal
program on a timely basis. A significant deficiency is a control deficiency, or combination of control
deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is
more than a remote likelihood that noncompliance with a type of compliance requirement of a federal
program that is more than inconsequential will not be prevented or detected by the entity’s internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a federal program will not be prevented or detected by the entity’s internal control.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal control
that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in
internal control over compliance that we consider to be material weaknesses, as defined above.
This report is intended solely for the information and use of management, the City Council, and
federal awarding agencies and pass-through entities and is not intended to be and should not be used by
anyone other than these specified parties.
December 31, 2008
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CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
FederalPass-through
Federal Grantor/Pass-through Grantor/CFDAEntity IdentifyingFederal
Program TitleNumberNumberExpenditures
U. S. Department of Transportation
Passed through the Texas Department of Transportation:
Airport Improvement Project - Hanger Number 220.1060502STVLE157,632$
Airport Terminal Project - 200620.10606TBSTVLE421,558
Airport Pavement Rehab - 200620.1060602STVLE6,574
Airport Pavement Rehab - 200720.1060702STVLE8,911
20,147
Airport Terminal Project-200820.10608TBSTVLE
614,822
Total Passed through Texas Department of Transportation
614,822
Total U. S. Department of Transportation
Federal Emergency Management Agency
N/A
Hurricane Ike97.039 1,495
8,569
Hurricane Ike97.039
N/A
10,064
Total Federal Emergency Management Agency
$ 624,886
Total Expenditures of Federal Awards
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CITY OF STEPHENVILLE, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR YEAR ENDED SEPTEMBER 30, 2008
1. GENERAL
The Schedule of Expenditures of Federal Awards presents the activity of all applicable federal
awards programs of the City. The City's reporting entity is defined in Note 1 of the basic financial
statements. Federal awards received directly from federal agencies, as well as federal awards passed
through other government agencies, are included on the Schedule of Expenditures of Federal
Awards.
2. BASIS OF ACCOUNTING
The Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of
accounting. The modified accrual basis of accounting is described in Note 1 of the basic financial
statements.
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CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2008
Summary of Auditors' Results
Type of report on financial statementsUnqualified
Internal control over financial reporting:
Material weakness(es) identified?No
Significant deficiencies identified that are not
considered to be material weakness(es)?None reported
Internal control over major programs:
Material weakness(es) identified?No
Significant deficiencies identified that are not
considered to be material weakness(es)?None reported
Noncompliance which is material to the
basic financial statementsNone
Type of report on compliance with major
programUnqualified
Findings and questioned costs for federal
awards as defined in Section 501(a), OMB
Circular A-133 disclosedNone
Dollar threshold considered between Type A
and Type B federal programs$300,000
Low risk auditee statementThe City was not classified as a low-risk auditee
in the context of OMB Circular A-133.
Major federal programAirport Improvement Program,
CFDA #20.106
Findings Relating to the Financial Statements Which are
Required to be Reported in Accordance With Generally
Accepted Auditing Standards
None
Findings and Questioned Costs for Federal Awards
None
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CITY OF STEPHENVILLE, TEXAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR YEAR ENDED SEPTEMBER 30, 2008
None
84