HomeMy WebLinkAbout2009 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2009
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................... i – v
GFOA Certificate of Achievement ............................................................................... vi
Organizational Chart ..................................................................................................... vii
Principal City Officials ................................................................................................. viii
FINANCIAL SECTION
Independent Auditors’ Report ....................................................................................... 1 – 2
Management’s Discussion and Analysis ...................................................................... 3 – 11
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets .......................................................................................... 12
Statement of Activities ............................................................................................ 13
Fund Financial Statements
Balance Sheet – Governmental Funds .................................................................... 14
Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds ................................................................ 15
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2009
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 ......................................................................................... 16
Statement of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual – General Fund .......................................... 17 – 19
Statement of Net Assets – Proprietary Funds ......................................................... 20
Statement of Revenues, Expenses and Changes in
Fund Net Assets – Proprietary Funds .................................................................. 21
Statement of Cash Flows – Proprietary Funds ........................................................ 22 – 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, 2009
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
Agency Funds
Combining Statement of Changes in Assets and Liabilities ................................... 56
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2009
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
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
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Page
Number
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
THIS PAGE LEFT BLANK INTENTIONALLY
February 1, 2010
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 statements presented in conformity with generally accepted accounting
principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed
certified public accountants. Accordingly, the Comprehensive Annual Financial Report for the City of
Stephenville, Texas for the fiscal year ended September 30, 2009 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, L.L.P., 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, 2009, 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, 2009 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 17,950. 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
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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 heads of various departments.
The Mayor and City Council members serve two (2) year terms. All elected officials are elected at large. 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.
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 generally 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.
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 Council
formally adopts the budget and legally appropriates available monies for activities of the General Fund,
Enterprise Funds, Special Revenue Funds, Debt Service Fund and Capital Projects Funds.
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No later than August 1, the City Administrator submits to the City Council a proposed budget which provides a
complete plan for the fiscal year commencing October 1. The budget includes proposed expenditures and
means of financing them. The proposed budget is made available for public inspection and a public hearing is
held to allow for citizen comment. After the public hearing, Council may make changes to any item in the
budget, except those fixed by law. No later than September 23, the budget is legally enacted via an ordinance
which sets the limit on expenditures during the fiscal year. Additional expenditures may be authorized in the
case of grave public necessity to meet unusual and unforeseen conditions which could not have reasonably been
foreseen at the time the budget was adopted.
The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated
amount) is at the department level. However expenditures are monitored monthly at the department level to
insure financial accountability by department directors. Management control of budgets is further maintained at
the line item level within the department. The City also maintains an encumbrance accounting system to further
accomplish budgetary control. Under the City’s financial policies, encumbered amounts in the General Fund at
year end lapse and balances flow forward as undesignated fund balance. Encumbrances are generally re-
appropriated as a part of the following year’s budget. As demonstrated by the statements and schedules
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included in the financial section of this report, the City continues to meet its responsibility for sound financial
management.
Economic Conditions and Outlook
The information presented in the financial statements is perhaps best understood when it is considered from the
specific environment within which the City operates.
Local Economy. The City currently enjoys a fairly stable and diversified economic environment, bolstered by
the strength of both the Cross Timbers area and the State of Texas. Local manufacturing includes coated
abrasives, oilfield related products, cream cheese, fiber gratings and fasteners, metal processing of electrical
products, trailer customizing, and forging pipe unions. Tarleton State University provides further economic
stability as the largest employer. Agriculture is Stephenville’s leading industry with dairy, horse and cattle
ranching, and agricultural crop production as the major economic contributors. Erath County is the state’s
leading milk producer. Stephenville continues to act as a retail and medical hub of the area. The local
unemployment rate of 7.1% continues to compare favorably with state and national levels. Property values,
sales tax receipts and building activity reflect the area’s positive economic climate.
The following facts reflect Stephenville’s economic condition and outlook:
Property valuations increased by $3.5 million (.39%) in 2009 to $894 million. While taxable values increase,
growth has maintained a slow yet steady upward trend. Residential and commercial construction continues to be
steady with another new residential development being established. The property tax rate is $.4435, an increase
of $.0085. This is the first increase in over three years.
The City’s largest revenue stream is generated by sales tax. In November 2008, the citizens voted to allow the
sale of beer and wine for off-premise consumption. Therefore, the 2% decrease in sales tax receipts posted over
the previous year, create a challenging comparison. The local retail industry includes such giants as Wal-Mart,
H-E-B Grocery, Staples, JCPenney, Beall’s Department Store, Tractor Supply, CVS and Walgreens.
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 2009-
2010 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 on-going economic challenges will require careful long-range planning. The
City has responded to the economy 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.
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For FY 08/09, the general fund ended the year with an unreserved fund balance of $7,358,831 or 68% of
expenditures. This compares very favorably to the City’s established Financial Management Policy of 25%
minimum.
Debt Management. The City has been funding its capital program from a combination of current revenues,
capital debt and surplus working capital since 1996. The FY 08/09 annual debt service supported tax rate
requirements are $.0588 per $100 of taxable assessed property value, well below the statutory legal limit of
$2.50 per $100 of taxable assessed property value.
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, 2009, the average rate on the operating account balances was
.43 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 1.77
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.
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. The City currently maintains third-party coverage for workers’ compensation, general
liability, automobile liability, public officials (errors and omissions) liability, law enforcement liability, and
property damage by participating in a statewide, joint, self-insurance pool operated by the Texas Municipal
League (TML) Intergovernmental Risk Pool. The City purchases insurance with limits of $2 million per
occurrence. 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. In an effort to prevent and/or minimize the risk, management promotes safety and
awareness programs through employee training in the form of films, courses and on-site instruction.
Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Stephenville for its
Comprehensive Annual Financial Report for the fiscal year ended September 30, 2008.
The Certificate of Achievement is a prestigious national award recognizing conformance with the highest
standards for preparation of state and local government financial reports. This award was the twenty-fourth
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.
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A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive
annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are
submitting it to GFOA to determine its eligibility for another certificate.
Acknowledgements. The preparation of this report on a timely basis could not be accomplished without the
efficient and dedicated services of the entire staff of the City. We would like to express our appreciation to all
staff members who assisted and contributed to its preparation. We would also like to thank the Mayor and City
Council members for their interest and support in planning and conducting the financial operations of the City in
a responsible and progressive manner.
Respectfully Submitted,
Mark A. Kaiser Walter G. Wood
City Administrator Director of Finance & Administration
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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, 2008
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.
President
Executive Director
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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
vii
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL CITY OFFICIALS
SEPTEMBER 30, 2009
Mayor Nancy A. Hunter
Council Members Joe Cude
Dr. Malcom L. Cross
Don Zelman
Russ McDaniel
Alan Nash
Alan Nix
Martha Cashon
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
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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, 2009, 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, 2009, 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
January 27, 2010, on our consideration of the City’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards, and should be considered in assessing
the results of our audit.
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AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
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The management’s discussion and analysis on pages 3 through 11 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.
January 27, 2010
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
As management of the City of Stephenville, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended September
30, 2009. 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, 2009, by $54,339,240
(net assets). Of this amount, $11,227,146 (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 $2,124,479. The majority of this increase is
attributable to capital grants and excess revenue over expenditures.
As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $9,477,257, a decrease of $2,956,632 over the prior
year. The decrease in combined ending fund balances is attributable to use of surplus
funds for capital projects. Approximately 99% of this total amount, $9,368,506 is
available for spending at the government’s discretion (unreserved fund balance).
As of September 30, 2009, unreserved fund balance for the General Fund was
$7,358,831 or 68 percent of total General Fund expenditures. Negative variances in
budgeted revenues with positive variances in expenditures resulted in an overall
planned decrease to the General Fund Balance of $2,192,695.
The City’s total bond debt increased by $1,075,000 (54%) during the current fiscal
year as a result of principal retirement offset by the issuance of $1,500,000 in general
obligation bonds to construct a new Aquatic Center.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the City of Stephenville'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 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 of Stephenville is improving or
deteriorating. The government-wide financial statements can be found on pages 12 – 13 of this report.
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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 the Statement of Net Assets and
the Statement of Activities are prepared utilizing the accrual basis of accounting as opposed to the
modified accrual basis used in prior reporting models.
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.
Reporting the City’s Most Significant Funds
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. Fund financial statements
provide detailed information about the most significant funds, not the City as a whole. Establishment of
some funds is required by state laws or bond covenants. However, the City Council established other
funds to help control and manage money for particular purposes or as evidence of meeting legal
responsibilities for using certain taxes, grants and other money. All of the funds of the City can be
divided into two categories: governmental funds and proprietary funds.
Governmental Funds. The majority of the City’s basic services are reported in governmental funds,
which focus on how money flows into and out of those funds and the available balances at year-end.
These funds are reported using an accounting method identified as the modified accrual basis of
accounting, which measures cash and all other financial assets that can readily be converted to cash.
The governmental fund statements provide a detailed short-term view of the City’s general government
operations and the basic services it provides. Governmental fund information helps the reader determine
whether there has been an increase of decrease in financial resources that can be spent in the near future
to finance the City’s programs. By comparing information presented for governmental funds with
similar information presented for governmental activities in the government-wide financial statements,
readers may better understand the long-term impact of the government’s near-term financing decisions.
The relationship or differences between governmental activities (reported in the Statement of Net Assets
and the Statement of Activities) and governmental funds are detailed in a reconciliation following the
fund financial statements. The basic governmental fund financial statements can be found on pages 14 –
16 of this report.
A budgetary comparison statement has been provided for the General Fund to demonstrate compliance
with the annual appropriated budget. The General Fund and Capital Projects Fund are both presented as
major funds. Data for the other nonmajor 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.
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Proprietary Funds. The City charges customers for the services it provides through service delivery
agreements to outside customers or through customer service agreements within the City. These
services are generally reported in proprietary funds. Proprietary funds are reported in the same manner
that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the
City’s Enterprise Funds (a component of proprietary funds) are identical to the business-type activities
that are reported in the government-wide statements, but with additional detail and information, such as
cash flows. Individual proprietary fund data is found on pages 20 – 23 of this report.
The City maintains one type of proprietary fund – Enterprise Funds. 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. All activities associated with providing such services are accounted for in these
funds, including administration, operation, maintenance, debt service, capital improvements, billing and
collection. The City’s intent is that costs of providing the services to the general public on a continuing
basis is financed through user charges in a manner similar to a private enterprise.
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 funds 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 certain supplementary information in the form of combining fund statements and schedules
for nonmajor funds. These are presented immediately following the notes to the financial statements
beginning on page 46 of this report.
THE CITY AS A WHOLE
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The City’s combined net assets were $54,339,240 as of September 30, 2009, an increase of 4.4%
compared to fiscal year ending 2008. As noted earlier, net assets may serve over time as a useful
indicator of a government's financial position. Analyzing the net assets and net expenses of
governmental and business-type activities separately, the business-type activities net assets are
$30,181,049, an increase of $1.2 million over prior year. The analysis focused on the net assets and
changes in general revenues of the City’s governmental and business-type activities.
By far, the largest portion of the City's net assets (70 percent) reflects its investments in capital assets
(e.g., land, buildings, machinery, equipment and infrastructure) less any outstanding debt used to acquire
those assets. The investments in capital assets net of related debt increased by $10,222,056. 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.
An additional portion of the City’s net assets, $1,145,264, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets,
$11,227,146, may be used to meet the City’s ongoing obligations to citizens and creditors.
5
As of September 30, 2009, the City is able to report positive balances in all three categories of net assets,
both for 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
$2,124,479.
CITY OF STEPHENVILLE’S NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200920082009200820092008
Current and other assets10,303,819$ 13,278,949$ 8,804,442$ 13,379,464$ 19,108,261$ 26,658,413$
17,663,994 12,503,386 47,802,186 43,654,085 65,466,180 56,157,471
Capital assets
27,967,813 25,782,335 56,606,628 57,033,549 84,574,441 82,815,884
Total assets
Liabilities507,717 505,850 1,728,998 2,034,031 2,236,715 2,539,881
3,301,905 2,203,494 24,696,581 26,034,994 27,998,486 28,238,488
Noncurrent liabilities
3,809,622 2,709,344 26,425,579 28,069,025 30,235,201 30,778,369
Total liabilities
Net assets:
Invested in capital assets,
net of related debt18,471,335 10,513,386 23,495,495 21,231,388 41,966,830 31,744,774
Restricted434,394 397,365 710,870 554,647 1,145,264 952,012
5,252,462 12,162,240 5,974,684 7,178,489 11,227,146 19,340,729
Unrestricted
$ 24,158,191 23,072,991$ 30,181,049$ 28,964,524$ 54,339,240$ 52,037,515$
Total net assets
Governmental Activities. The City’s total revenues for governmental activities increased from the
previous year by $356,451 or 2.9%. General revenues decreased $146,814, which is down 1.4% when
compared to the prior year. The ad valorem tax revenue increased $259,320 or 7%. This increase was
due to an increase in net assessed taxable value from $818 million in the prior fiscal year to $890 million
in the current fiscal year. The tax rate decreased by .01 to $.435 per $100 assessed valuation.
The following table provides a summary of the City’s operations for the year ended September 30, 2009,
with comparative totals for the year ended September 30, 2008. Governmental activities increased the
City’s net assets by $1,085,200 or 51 percent of the total growth in net assets. The net assets invested in
capital assets, net of related debt increased by $4,108,108 or 39 percent. Unrestricted net assets
decreased by $3,059,937 or 25 percent.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
200920082009200820092008
Revenues:
Program revenues:
Charges for services1,278,031$ 1,567,484$ 6,564,355$ 6,391,799$ 7,842,386$ 7,959,283$
Operating grants 109,861 57,969 20,062 - 129,923 57,969
Capital grants
and contributions740,974 148 249,253 870,718 990,227 870,866
General revenues:
Property taxes3,918,943 3,659,623 - - 3,918,943 3,659,623
Sales taxes4,622,690 4,745,309 - - 4,622,690 4,745,309
Franchise taxes1,186,650 1,169,858 - - 1,186,650 1,169,858
Other taxes372,815 434,498 - - 372,815 434,498
Investment earnings108,218 454,269 68,079 469,667 176,297 923,936
124,613 17,186 7,888 - 132,501 17,186
Miscellaneous
12,462,795 12,106,344 6,909,637 7,732,184 19,372,432 19,838,528
Total revenues
Expenses:
General government1,309,902 1,331,583 - - 1,309,902 1,331,583
Public safety6,043,653 5,504,975 - - 6,043,653 5,504,975
Streets1,210,135 1,183,435 - - 1,210,135 1,183,435
Culture and recreation2,340,312 2,166,545 - - 2,340,312 2,166,545
Community development408,144 395,182 - - 408,144 395,182
Interest on long-term
debt72,220 103,490 - - 72,220 103,490
Water and wastewater- - 4,819,886 4,526,893 4,819,886 4,526,893
Storm water drainage- - 346,159 245,371 346,159 245,371
Sanitary landfill- - 527,255 290,349 527,255 290,349
-- 170,287 127,018 170,287 127,018
Airport
11,384,366 10,685,210 5,863,587 5,189,631 17,247,953 15,874,841
Total expenses
Increases in net assets
before transfers1,078,429 1,421,134 1,046,050 2,542,553 2,124,479 3,963,687
6,771 104,871)( 6,771)( 104,871 - -
Transfers
Change in net assets1,085,200 1,316,263 1,039,279 2,647,424 2,124,479 3,963,687
Net assets - beginning23,072,991 21,756,728 28,964,524 26,317,100 52,037,515 48,073,828
-- 177,246 - 177,246 -
Prior period adjustment
$ 24,158,191 23,072,991$ 30,181,049$ 28,964,524$ 54,339,240$ 52,037,515$
Net assets - ending
Business-type Activities. Revenues of the City’s business-type activities were approximately $6.9
million for the fiscal year ended September 30, 2009. Revenues decreased approximately $822,547 or
10.6% compared to the prior fiscal year. Expenses for the City’s business-type activities increased
approximately $673,953 or 12.9%. The increase was primarily due to low turnover staffing levels and
additional maintenance costs. Net assets from business-type activities increased by $1,216,525 or 4
percent from $28,964,524 to $30,181,049, accounting for the other 49 percent of the total growth in net
assets.
7
FINANCIAL ANALYSIS OF THE CITY’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 $9,477,257, a decrease of $2.95 million from the prior year. Approximately 99% of this total
amount, $9,368,506, constitutes unreserved and undesignated fund balance, which is available for spending
at the City’s discretion. The remainder of fund balance is reserved, to indicate that it is not available for new
spending because it has already been committed, a) to pay debt service ($96,071), and b) to liquidate prepaid
items ($12,680). Refer to page 14 of this report for a more detailed presentation of governmental fund
balances.
In the General Fund, the City budgeted for a decrease in fund balance on a budget basis of $1,199,690, 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 13 percent during the current
fiscal year. Sales tax collections decreased by 2% from the previous year but the City collected 8.8% 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 $88,529; 2) franchise fees were
$57,230; 3) licenses and permit fees were $46,292 more than budgeted; and 4) service charges were also
higher than budgeted by $66,964. Expenditures were lower than budgeted mainly because capital outlays were
$182,674 lower.
The Capital Projects Fund has a fund balance of $1,676,876, a decrease of 31 percent, all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $96,071, an increase of eight percent, all of which is reserved
for the repayment of debt.
The Special Revenue Funds have a fund balance of $332,799, a decrease of five 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 $5,974,684. The
increase in net assets was $1,039,279. 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
During the year there was a $942,800 increase in appropriations between the original budget and final
amended budget. Following are the main components of the increase:
$21,800 additional appropriation street reconstruction.
$23,600 addition to acquire right-of-way for the Ollie/Mary transportation project.
8
$25,000 additional appropriation in public safety to purchase Digital Video Systems
for the patrol cars.
$48,000 addition for consultant services for government and relations.
$126,000 transfer to Airport Fund for the completion of a new terminal.
$2,000,000 transfer to the Capital Project Fund for the construction of the Aquatics
Complex.
Actual expenditures on a budgetary basis were $10,841,564 compared to the final budget expenditures of
$11,539,746. The $698,182 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 $10,773,986 compared to the final budget of $10,278,056. The $495,930
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, 2009, amounts to $65,466,180 (net of accumulated depreciation). This investment in
capital assets includes land, buildings, improvements, vehicles and equipment, park facilities and
infrastructure.
Major capital asset events occurring during the current fiscal year included the following:
Surface Water Supply Project, $188,000
Annual Street Reconstruction, $391,000;
Water Line Replacements, $451,000;
Water and Sewer Service to Newly Annexed Areas, $488,450;
Ollie/Mary Local Transportation Project, $645,872;
Major Thoroughfare Renovation Project, $819,046;
Storm Water Drainage improvements, $3.3 million; and
Aquatic Center, $3.8 million.
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200920082009200820092008
Land2,328,617$ 2,539,141$ 909,278$ 798,082$ 3,237,895$ 3,337,223$
Buildings and
improvements4,671,420 3,398,967 6,334,727 6,031,706 11,006,147 9,430,673
Equipment5,970,863 5,305,505 2,393,219 1,955,030 8,364,082 7,260,535
Infrastructure15,288,837 10,880,627 41,944,333 41,518,819 57,233,170 52,399,446
Construction in
progress- - 17,359,605 13,226,871 17,359,605 13,226,871
Less: accumulated
( 9,620,854)10,595,743)( 21,138,976)( 19,876,423)( 31,734,719)( 29,497,277)(
depreciation
$ 12,503,38617,663,994$ 47,802,186$ 43,654,085$ 65,466,180$ 56,157,471$
Total capital assets
Additional information on the City's capital assets can be found on page 35 – 36 of this report.
9
DEBT ADMINISTRATION
At the end of the current fiscal year, the City had total bonded debt of $27,106,865. Of this amount,
$3,065,000 represents bonded debt backed by the full faith and credit of the City, $15,725,000 represents
utility revenue bonds secured by water and sewer revenues and $181,865 represents revenue bonds secured
by airport revenues, and $8,135,000 secured by storm water drainage revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
200920082009200820092008
General obligation1,050,000$ 1,325,000$ -$ -$ 1,050,000$ 1,325,000$
Certificates of
obligations2,015,000 665,000 - - 2,015,000 665,000
Revenue bonds
-- 24,041,865 25,549,155 24,041,865 25,549,155
payable
$ 1,990,0003,065,000$ 24,041,865$ 25,549,155$ 27,106,865$ 27,539,155$
The City's General Obligation, Tax and Certificates of Obligation Bond ratings are listed below.
Moody'sStandard
Investors Serviceand Poor's
gation BondsA3A+
General Obli
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 unemployment rate for the City of Stephenville as of the fiscal year-end was 7.1% up from 4.0% in the
prior year due to national economic concerns. Even though the rate has increased it still compares favorably
with state and national levels.
Sales tax collections for 2008-2009 were down by 2% compared to the previous year, but collections still
exceeded budget by $373,000 or 8.77%. With this in mind, a conservative approach is being taken in
determining estimated collections for the upcoming budget year.
The above factors were considered in preparing the City of Stephenville’s budget for the 2009-10 fiscal year.
Accordingly, next years’ budget incorporates a $.0085 increase in the property tax rate to $.4435 per $100
valuation. Certified taxable property value for 2009 is $894 million. This is a .39% increase over the last year’s
values, or $3.5 million. The largest portion of the increase is due to the reevaluation of existing property.
The City uses reserves from the General Fund to supplement capital projects during the year as needs arise
and where favorable unit pricing is received on such projects. Additionally, the City’s Fiscal Management
Practices call for the designation of any surplus of revenues over expenses at fiscal year-end as a means of
providing resources for major capital projects. There are ample funds for transfers during 2010, should the
City Council so desire, and still retain the minimum fund balance provisions established by the Fiscal
Management Practices.
10
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional information should be addressed to Walter G. Wood, Director of
Finance, 298 West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1211.
11
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BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2009
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments7,227,556$ 4,341,320$ 11,568,876$
Receivables (net of allowances for uncollectibles):
Taxes974,389 - 974,389
Accounts388,908 1,115,135 1,504,043
Internal balances2,172,055)( 2,172,055 -
Inventory12,680 - 12,680
Restricted investments3,849,841 941,034 4,790,875
Deferred charges22,500 234,898 257,398
Capital assets:
Land2,328,617 909,278 3,237,895
Buildings and improvements4,671,420 6,334,727 11,006,147
Machinery and equipment5,970,863 2,393,219 8,364,082
Infrastructure/water and wastewater distribution15,288,837 41,944,333 57,233,170
Construction in progress- 17,359,605 17,359,605
( 21,138,976)10,595,743)( 31,734,719)(
Less: accumulated depreciation
47,802,18617,663,994 65,466,180
Total capital assets
56,606,62827,967,813 84,574,441
Total assets
LIABILITIES
Accounts payable225,656 1,229,980 1,455,636
Accrued liabilities262,996 41,169 304,165
Accrued interest payable19,065 255,548 274,613
Customer deposits- 202,301 202,301
Noncurrent liabilities:
Due within one year696,905 1,776,568 2,473,473
22,920,0132,605,000 25,525,013
Due in more than one year
26,425,5793,809,622 30,235,201
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt18,471,335 23,495,495 41,966,830
Restricted for:
Hotel/motel economic development285,308 - 285,308
Child and public safety47,491 - 47,491
Debt service101,595 710,870 812,465
5,974,6845,252,462 11,227,146
Unrestricted
$ 30,181,04924,158,191$ 54,339,240$
Total net assets
The notes to the financial statements are an integral part of this statement.
12
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 231,1221,309,902$ 12,400$ -$ 1,066,380$( -)$ 1,066,380$()
Public safety 677,6626,043,653 67,792 - 5,298,199( -) 5,298,199()
Streets 21,4721,210,135 - 740,974 447,689( -) 447,689()
Culture and recreation 221,5892,340,312 29,669 - 2,089,054( -) 2,089,054()
Community developmen408,144 126,186 - - 281,958( -) 281,958()
-72,220 - - 72,220)( - 72,220)(
Interest on long-term debt
11,384,366 1,278,031 109,861 740,974 9,255,500)( - 9,255,500)(
Total governmental activities
Business-type activities
Water and wastewater 5,492,2334,819,886 - - - 672,347 672,347
Sanitary landfill 414,503527,255 - - - 112,752( 112,752)()
Airport170,287 73,180 20,062 249,253 - 172,208 172,208
584,439346,159 - - - 238,280 238,280
Storm water drainage
6,564,3555,863,587 20,062 249,253 - 970,083 970,083
Total business-type activities
$ 17,247,953 7,842,386$ 129,923$ 990,227$ 9,255,500)( 970,083 8,285,417)(
Total
General revenues:
Taxes:
Property - generalpurpose3,382,272 - 3,382,272
Property - debt service -536,671 536,671
Sales -4,622,690 4,622,690
Franchise -1,186,650 1,186,650
Other -372,815 372,815
Investment earnings 68,079108,218 176,297
Miscellaneous 124,613 7,888 132,501
6,771)6,771( -
Transfers
10,340,700 69,196 10,409,896
Total general revenues and transfers
Change in net assets 1,039,2791,085,200 2,124,479
Net assets, beginning 28,964,52423,072,991 52,037,515
177,246- 177,246
Prior period adjustment
23,072,991 29,141,770 52,214,761
Net assets, beginning, restated
$ 24,158,191 30,181,049$ 54,339,240$
Net assets, ending
The notes to the financial statements are an integral part of this statement.
13
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CITY OF STEPHENVILLE, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2009
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
ASSETS
Cash and investments6,805,705$ 3,849,841$ 421,851$ 11,077,397$
Receivables (net of allowance for uncollectibles):
Taxes886,701 - 87,688 974,389
Accounts385,904 1,490 1,514 388,908
-12,680 - 12,680
Inventory
3,851,3318,090,990 511,053 12,453,374
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable146,597 2,400 76,659 225,656
Accrued liabilities262,996 - - 262,996
Due to other funds- 2,172,055 - 2,172,055
-309,886 5,524 315,410
Deferred revenue
2,174,455719,479 82,183 2,976,117
Total liabilities
Fund balances:
Reserved for:
Inventories12,680 - - 12,680
Debt service- - 96,071 96,071
Unreserved, reported in:
General fund7,358,831 - - 7,358,831
Special revenue funds- - 332,799 332,799
1,676,876- - 1,676,876
Capital projects fund
1,676,8767,371,511 428,870
Total fund balances 9,477,257
$ 3,851,3318,090,990$ 511,053$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesandthereforearenotreportedinthe
funds.
17,663,994
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
315,410
funds.
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(3,298,470)
$ 24,158,191
Net assets of governmental activities
The notes to the financial statements are an integral part of this statement.
14
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
REVENUES
Taxes:
Property3,391,477$ -$ 531,147$ 3,922,624$
Sales4,622,690 - - 4,622,690
Franchise1,186,650 - - 1,186,650
Other44,902 - 327,913 372,815
Service charges941,821 - 6,228 948,049
Fines and forfeitures212,857 - 13,226 226,083
Licenses and permits131,341 - - 131,341
Intergovernmental119,324 1,490 3,767 124,581
Investment earnings93,582 11,487 3,149 108,218
-29,342 5,847 35,189
Miscellaneous
10,773,986 12,977 891,277 11,678,240
Total revenues
EXPENDITURES
Current:
General government1,355,822 - - 1,355,822
Public safety5,817,765 - 9,653 5,827,418
Streets845,429 - - 845,429
Culture and recreation1,638,894 - 368,105 2,006,999
Community development407,208 - - 407,208
Debt service:
Principal - - 425,000 425,000
Interest and fiscal charges- - 99,652 99,652
Bond issuance costs- 25,000 - 25,000
4,489,047776,446 - 5,265,493
Capital outlay
10,841,564 4,514,047 902,410 16,258,021
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 4,501,070)67,578)( 11,133)( 4,579,781)(
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in212,771 2,248,266 - 2,461,037
Transfers out2,454,266)( - - 2,454,266)(
Proceeds from sale of capital assets21,881 - - 21,881
Issuance of bonds- 1,500,000 - 1,500,000
-94,497 - 94,497
Proceeds from insurance
( 3,748,2662,125,117) - 1,623,149
Total other financing sources (uses)
( 752,804)2,192,695)( 11,133)( 2,956,632)(
NET CHANGE IN FUND BALANCES
2,429,6809,564,206 440,003 12,433,889
FUND BALANCES, BEGINNING
$ 1,676,8767,371,511$ 428,870$ 9,477,257$
FUND BALANCES, ENDING
The notes to the financial statements are an integral part of this statement.
15
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, 2009
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page13)are
different because:
Net change in fund balances - total governmental funds (page 15)2,956,632)$(
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense. 4,429,420
Theneteffectofvariousmiscellaneoustransactionsinvolvingcapitalassets(i.e.,sales,trade-
ins, and donations) is to increase net assets.731,188
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds.( 72,797)
Theissuanceoflong-termdebtprovidescurrentfinancialresourcestogovernmentalfunds,
whiletherepaymentoftheprincipaloflong-termdebtconsumesthecurrentfinancial
resourcesofgovernmentalfunds.Neithertransaction,however,hasanyeffectonnetassets.
Thisamountistheneteffectofthedifferencesinthetreatmentoflong-termdebtandrelated
items.( 1,052,500)
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrent
financial resources and, therefore, are not reported as expenditures in governmental funds.
6,521
$ 1,085,200
Change in net assets of governmental activities (page 13)
The notes to the financial statements are an integral part of this statement.
16
CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
REVENUES
Taxes8,923,947$ 8,717,947$ 9,245,719$ 527,772$
Service charges724,859874,789941,821 67,032
Fines and forfeitures270,000270,000212,857 57,143)(
Licenses and permits135,05085,050131,341 46,291
Intergovernmental58,00058,000119,324 61,324
Investment earnings400,000250,00093,582 156,418)(
22,27029,200 29,342 7,072
Miscellaneous
10,541,056 10,278,056 10,773,986 495,930
Total revenues
EXPENDITURES
Current:
General government:
City council51,69399,69381,92217,771
City administrator123,725123,725125,5471,822)(
City secretary78,96881,38081,806426)(
Emergency management6,4506,4506,053397
Municipal buildings130,166130,167123,7956,372
Municipal Service Center98,93297,07486,62010,454
Financial administration and accounting325,218341,158369,19728,039)(
Purchasing57,14955,91050,9374,973
Tax assessment and collection117,000117,000117,219219)(
Legal counsel65,76365,76378,80113,038)(
Municipal court120,000120,000132,05012,050)(
113,346102,280 101,875 11,471
Human resources
1,351,6661,277,344 1,355,822 4,156)(
Total general government
Public safety:
Fire and ambulance administration213,305371,465230,635140,830
Fire prevention and investigation160,023166,027164,7321,295
Fire suppression903,692988,7121,040,90952,197)(
Emergency medical services907,1221,054,701977,56977,132
Volunteer35,64135,64124,47111,170
Police administration121,295123,580122,3551,225
Police patrol1,713,9021,846,7051,738,056108,649
Police communications376,042383,663364,54019,123
Police records153,071182,152173,3508,802
Criminal investigation575,574593,294610,77217,478)(
(continued)
17
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, 2009
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current:
Public safety (continued):
Police reserve75,001$ 77,769$ 73,383$ 4,386$
Animal control119,338116,870109,6877,183
192,319191,414 187,306 5,013
Public safety facility
6,132,8985,545,420 5,817,765 315,133
Total public safety
Streets:
908,408896,060 845,429 62,979
Street maintenance
908,408896,060 845,429 62,979
Total streets
Culture and recreation:
Recreation administration683,006689,753681,2038,550
Park maintenance435,940443,210431,51711,693
Cemeteries 128,763130,580123,7726,808
Library205,187208,254204,9683,286
Senior citizens center109,747110,994120,1969,202)(
150,000- 77,238 72,762
Aquatic Center
1,732,7911,562,643 1,638,894 93,897
Total culture and recreation
Community development:
Community development planning174,813179,988174,2065,782
Community development inspection172,476174,466163,89710,569
100,40999,470 69,105 31,304
Code enforcement
454,863446,759 407,208 47,655
Total community development
10,580,6269,728,226 10,065,118 515,508
Total current
(continued)
18
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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, 2009
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Capital outlay:
Public safety:
Fire suppression22,720$ 22,720$ 18,912$ 3,808$
Volunteer10,000 10,0005,1714,829
Police patrol83,000 108,000107,591409
20,00020,000 21,668 1,668)(
Criminal investigation
160,720135,720 153,342 7,378
Total public safety
Streets:
624,400579,000 497,755 126,645
Street maintenance
624,400579,000 497,755 126,645
Total highways and streets
Culture and recreation:
Park maintenance123,000 123,000 82,182 40,818
Cemeteries 31,000 31,000 30,640 360
154,000154,000 112,822 41,178
Total culture and recreation
Community development:
20,00020,000 12,527 7,473
Code enforcement
20,00020,000 12,527 7,473
Total community development inspection
959,120868,720 776,446 182,674
Total capital outlay
10,596,946 11,539,746 10,841,564 698,182
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
( 1,261,690)55,890)( 67,578)( 1,194,112
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in206,000206,000 212,7716,771
Transfers out- 151,000)( 2,454,266)( 2,303,266)(
Proceeds from sale of capital assets7,000 7,000 21,881 14,881
-- 94,497 94,497
Proceeds from insurance
62,000213,000 2,125,117)( 2,187,117)(
Total other financing sources (uses)
1,199,690)157,110( 2,192,695)( 993,005)(
NET CHANGE IN FUND BALANCE
9,564,2069,564,206 9,564,206 -
FUND BALANCE, BEGINNING
$ 8,364,5169,721,316$ 7,371,511$ 993,005)$(
FUND BALANCE, ENDING
The notes to the financial statements are an integral part of this statement.
19
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2009
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
ASSETS
Current assets:
Cash and investments2,062,461$ 2,012,838$ 266,021$ 4,341,320$
Accounts receivable - net 885,779 64,550 164,806 1,115,135
Due from other funds2,172,055 - - 2,172,055
180,129760,905 - 941,034
Restricted investments
2,257,5175,881,200 430,827 8,569,544
Total current assets
Noncurrent assets:
Deferred charges151,399 83,499 - 234,898
Capital assets:
Land163,721 - 745,557 909,278
Buildings and improvements2,349,136 - 3,985,591 6,334,727
Equipment1,273,229 - 1,119,990 2,393,219
Water and wastewater distribution41,944,333- - 41,944,333
Construction in progress7,054,271 9,800,012 505,322 17,359,605
( -19,787,238) 1,351,738)( 21,138,976)(
Less: accumulated depreciation
9,800,01232,997,452 5,004,722 47,802,186
Total capital assets
9,883,51133,148,851 5,004,722 48,037,084
Total noncurrent assets
12,141,02839,030,051 5,435,549 56,606,628
Total assets
LIABILITIES
Current liabilities:
Accounts payable 566,564602,534 60,882 1,229,980
Accrued liabilities34,873 - 6,296 41,169
Customer deposits201,601 - 700 202,301
Accrued interest189,580 40,584 25,384 255,548
Capital lease- - 134,984 134,984
Bonds payable1,390,000 205,000 17,000 1,612,000
-28,675 909 29,584
Compensated absences payable
812,1482,447,263 246,155 3,505,566
Total current liabilities
Long-term liabilities:
Capital lease- - 364,740 364,740
Bonds payable14,335,0007,930,000 164,865 22,429,865
-- 125,408 125,408
Liability for landfill closure
7,930,00014,335,000 655,013 22,920,013
Total long-term liabilities
8,742,14816,782,263 901,168 26,425,579
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt17,423,8511,748,511 4,323,133 23,495,495
Restricted for debt service571,325 139,545 - 710,870
1,510,8244,252,612 211,248 5,974,684
Unrestricted
$ 3,398,88022,247,788$ 4,534,381$ 30,181,049$
Total net assets
The notes to the financial statements are an integral part of this statement.
20
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
OPERATING REVENUES
Water sales$ -3,168,739$ -$ 3,168,739$
Wastewater charges -2,058,985 - 2,058,985
Tap and collection fees -209,781 - 209,781
Delinquent charges 4,90030,860 - 35,760
Gate charges -- 413,398 413,398
Hanger rental 67,05067,050
Storm water drainage fees 579,53926 - 579,565
23,842 - 7,235 31,077
Other service charges
584,4395,492,233 487,683 6,564,355
Total operating revenues
OPERATING EXPENSES
Personnel services983,290- 117,024 1,100,314
Contractual services1,023,305- 130,793 1,154,098
Utilities596,639- 20,029 616,668
Repairs and maintenance314,49714,87439,524 368,895
Other 168,43020175,846 244,477
-1,081,604 268,952 1,350,556
Depreciation
15,0754,167,765 652,168 4,835,008
Total operating expenses
569,3641,324,468 164,485)( 1,729,347
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings27,23837,0243,817 68,079
Interest and fiscal charges on debt652,121)( 331,084)( 38,751)( 1,021,956)(
Intergovernmental- - 20,062 20,062
-7,888 6,623)( 1,265
Gain (loss) on sale of assets
(616,995) 294,060)( 21,495)( 932,550)(
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE CONTRIBUTIONS
275,304707,473 185,980)( 796,797
AND TRANSFERS
-- 249,253 249,253
CAPITAL CONTRIBUTIONS
-- 206,000 206,000
TRANSFERS IN
(212,771) - - 212,771)(
TRANSFERS OUT
275,304494,702 269,273 1,039,279
CHANGE IN NET ASSETS
3,123,57621,753,086 4,087,862 28,964,524
TOTAL NET ASSETS, BEGINNING
- - 177,246 177,246
PRIOR PERIOD ADJUSTMENT
3,123,57621,753,086 4,265,108 29,141,770
TOTAL NET ASSETS, BEGINNING, RESTATED
$ 3,398,88022,247,788$ 4,534,381$ 30,181,049$
TOTAL NET ASSETS, ENDING
The notes to the financial statements are an integral part of this statement.
21
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers5,498,684$ 579,119$ 486,629$ 6,564,432$
Cash payments to employees for services976,409)( - 88,776)( 1,065,185)(
( 144,227)2,292,321)( 210,224)( 2,646,772)(
Cash payments to suppliers for goods and services
434,8922,229,954 187,629 2,852,475
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receivables repaid by other funds209,947 - - 209,947
Interfund payables repaid to other funds- - 61,922)( 61,922)(
Cash received from operating grant- - 20,062 20,062
Transfers from other funds- - 206,000 206,000
( -212,771) - 212,771)(
Transfers to other funds
( -2,824) 164,140 161,316
Cash provided (used) by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Proceeds from issuance of long-term debt- - 473,731 473,731
Grant match for capital grant- - 139,341)( 139,341)(
Principal repayments on capital lease- - 151,344)( 151,344)(
Principal repayments on bonds1,340,000)( 150,000)( 17,290)( 1,507,290)(
Interest and fiscal charges on debt635,521)( 382,392)( 24,794)( 1,042,707)(
( 3,348,467)1,154,802)( 757,795)( 5,261,064)(
Acquisition and construction of capital assets
Cash used by capital and
( 3,880,859)3,130,323)( 616,833)( 7,154,284)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
37,02427,238 3,817 68,079
Interest on investments
37,02427,238 3,817 68,079
Cash provided by investing activities
NET DECREASE IN CASH AND
( 3,408,943)875,955)( 261,247)( 4,546,145)(
CASH EQUIVALENTS
5,597,0103,699,321 527,268 9,823,599
CASH AND CASH EQUIVALENTS, BEGINNING
$ 2,188,0672,823,366$ 266,021$ 5,277,454$
CASH AND CASH EQUIVALENTS, ENDING
(Including $760,905 for the Water and Wastewater
fund and $180,129 for the Storm Water Drainage
fund in restricted investments)
(continued)
22
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)1,324,468$ 569,364$ 164,485)$( 1,729,347$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation1,081,604 - 268,952 1,350,556
Change in assets and liabilities:
Decrease (increase) in accounts receivable10,617 420)( 1,454)( 8,743
Increase (decrease) in accounts payable189,450)( 129,152)( 56,197 262,405)(
Increase (decrease) in accrued liabilities7,582 - 29,052 36,634
Increase (decrease) in customer deposits4,166)( - 400 3,766)(
(701) - 1,033)( 1,734)(
Increase (decrease) in compensated absences
129,572)905,486( 352,114 1,128,028
Total adjustments
$ 439,7922,229,954$ 187,629$ 2,857,375$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ --$ 249,253$ 249,253$
Contributions of capital assets
The notes to the financial statements are an integral part of this statement.
23
CITY OF STEPHENVILLE, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
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, charges for services, fines 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.
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 $3,298,470 difference are as follows:
General obligations3,065,000$
Accrued interest payable19,065
Compensated absences236,905
(22,500)
Deferred charges
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$ 3,298,470
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 $4,429,420 difference are as follows:
Capital outlay5,492,387$
(1,062,967)
Depreciation expense
Net adjustment to increase net changes in fund
balances - total governmental funds to arrive at
$ 4,429,420
changes in net assets of governmental activities
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
$72,797 difference are as follows:
Property taxes3,681$
Ambulance charges for services22,068
47,048
Municipal court fines
Net adjustment to decrease net changes in fund balances -
total governmental funds to arrive at changes in net
$ 72,797
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 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 $6,521 difference are as follows:
Accrued interest29,932$
(23,411)
Compensated absences
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 6,521
assets of governmental activities
Another element of that reconciliation states that, “The net effect of various miscellaneous
transactions involving capital assets is to increase net assets.” The details of this $731,188
difference are as follows:
Capital contributions740,974$
(9,786)
Disposals of capital assets
Net adjustment to increase net changes in fund balances -
total governmental funds to arrive at changes in net
$ 731,188
assets of governmental activities
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.
(continued)
31
III. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)
A. Budgets (Continued)
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.
B. Expenditures over Appropriations
Expenditures exceeded appropriations in the General Fund in various departments. The
following overruns were funded by unexpected revenues.
General government:
City administrator1,822$
City secretary426
Financial administration and accounting28,039
Tax assessment and collection219
Legal counsel13,038
Municipal court12,050
Public safety:
Fire suppression52,197
Criminal investigation17,478
Culture and recreation:
Senior citizens center9,202
Capital outlay:
Criminal investigation1,668
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.
(continued)
32
IV. DETAILED NOTES ON ALL FUNDS (Continued)
A. Deposits and Investments (Continued)
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, 2009, the City did not own any types of securities other than those permitted by statute.
As of September 30, 2009, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity (Days)
Tex Pool10,163,695$ 43
TexStar4,586,427 46
1,002,890
FHLB72
$ 15,753,012
Total fair value
Portfolio weighted average maturity (days)45
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.
Under the TexPool Participation Agreement, administrative and investment services to
TexPool are provided by Lehman Brothers, Inc. and Federated Investors, Inc. through an
agreement with the State of Texas Comptroller of Public Accountants. The State
Comptroller is the sole officer, director, and shareholder of the Texas Treasury Safekeeping
Trust Company authorized to operate TexPool.
TexSTAR is a local government investment pool created under the Interlocal Cooperation Act.
The fund is rated AAAm by Standard & Poor’s and maintains a maturity of 60 days or less,
with a maximum maturity of 13 months for any individual security. The fund fulfills all
requirements of the Texas Public Funds Investment Act for local government investment pools.
TexSTAR is administered by First Southwest Asset Management, Inc. and JP Morgan Chase.
The fair value of the City’s position in these pools is the same as the value of the pool shares.
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.
(continued)
33
IV. DETAILED NOTES ON ALL FUNDS (Continued)
A. Deposits and Investments (Continued)
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,
2009, 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
CapitalNonmajorWater andStorm WaterNonmajor
GeneralProjectsFundsWastewaterDrainageFundsTotal
Receivables:
Accounts:
Customers15,735$ -$ -$ 1,255,081$ 73,299$ 12,312$ 1,356,427$
Ambulance664,508 - - - - - 664,508
Municipal court fines189,728 - - - - - 189,728
TxDOT- - - - - 152,493 152,493
Other 1,49054,762 1,514 16,151 - - 73,917
Taxes:
Property -97,633 16,611 - - - 114,244
Sales 810,244 - - - - - 810,244
Occupancy -- 80,581 - - - 80,581
- - - - - 32,077
32,077
Other
Gross receivables1,864,687 1,490 98,706 1,271,232 73,299 164,805 3,474,219
Less: allowance for
( -592,082) 9,504)( 385,453)( 8,749)( - 995,788)(
uncollectibles
$ 1,4901,272,605$ 89,202$ 885,779$ 64,550$ 164,805$ 2,478,431$
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)36,374$ -$
Delinquent property taxes receivable (debt service)5,524 -
Ambulance charges for services (general fund)83,784 -
-189,728
Municipal court fines
$ -315,410$
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, 2009, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
18,688$ -$ 2,328,617$
$ 2,309,929
Land
18,6882,309,929 - 2,328,617
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements3,398,967 1,272,453 - 4,671,420
Machinery and equipment5,305,505 751,072 85,714 5,970,863
4,191,14811,109,839 12,150 15,288,837
Infrastructure
6,214,67319,814,311 97,864 25,931,120
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements951,006 100,212 - 1,051,218
Machinery and equipment3,550,495 372,618 77,143 3,845,970
590,1375,119,353 10,935 5,698,555
Infrastructure
1,062,9679,620,854 88,078 10,595,743
Total accumulated depreciation
5,151,70610,193,457 9,786 15,335,377
Total capital assets being depreciated, net
$ 5,170,39412,503,386$ 9,786$ 17,663,994$
Governmental activities capital assets, net
(continued)
35
IV. DETAILED NOTES ON ALL FUNDS (Continued)
D. Capital Assets (Continued)
BeginningEnding
BalanceIncreasesDecreasesBalance
Business-type activities:
Capital assets, not being depreciated:
Land798,082$ 111,196$ -$ 909,278$
13,226,871
4,758,493 625,759 17,359,605
Construction in progress
14,024,953
4,869,689 625,759 18,268,883
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements6,031,706 303,021 - 6,334,727
Machinery and equipment1,955,030 535,969 97,780 2,393,219
425,51441,518,819 - 41,944,333
Water and wastewater system
1,264,50449,505,555 97,780 50,672,279
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,194,750 200,128 - 1,394,878
Machinery and equipment1,343,743 168,201 88,003 1,423,941
982,22717,337,930 - 18,320,157
Water and wastewater system
1,350,55619,876,423 88,003 21,138,976
Total accumulated depreciation
86,052)29,629,132( 9,777 29,533,303
Total capital assets being depreciated, net
$ 4,783,63743,654,085$ 635,536$ 47,802,186$
Business-type activities capital assets, net
Depreciation expense was charged to functions/programs of the government as follows:
Governmental activities:
General government65,986$
Public safety353,865
Culture and recreation203,124
439,992
Streets
$ 1,062,967
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater1,081,604$
Landfill178,235
90,717
Airport
$ 1,350,556
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, 2009, is as follows:
Receivable FundPayable FundAmount
$ 2,172,055
Water and wastewaterGeneral
$ 2,172,055
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, 2009, are as follows:
Transfers InTransfers OutAmount
Capital projectsGeneral2,248,266$
Nonmajor enterpriseGeneral206,000
212,771
GeneralWater and wastewater
$ 2,667,037
Total interfund transfers
Transfers in the amount of $2,248,266 were paid to the Capital Projects Fund from the
General Fund to finance capital projects. Transfers in the amount of $206,000 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 $212,771 was paid from the Water
and Wastewater Fund to the General Fund for payments in lieu of taxes.
(continued)
37
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2009, was as follows:
BalanceBalanceDue Within
09/30/08AdditionsReductionsAdjustments09/30/09One Year
Governmental activities:
General obligation bonds1,990,000$ 1,500,000$ 425,000$ -$ 3,065,000$ 460,000$
236,905213,494 213,494 - 236,905 236,905
Compensated absences payable
$ 1,736,9052,203,494$ 638,494$ -$ 3,301,905$ 696,905$
Total governmental activities
Business-type activities:
Revenue bonds/certificates
gation25,549,155$ -$ 1,507,290$ -$ 24,041,865$ 1,612,000$
of obli
Capital lease177,337 473,731 151,344 - 499,724 134,984
Estimated landfill closure
and postclosure costs277,184 25,470 - 177,246( 125,408) -
29,58431,318 31,318 - 29,584 29,584
Compensated absences payable
$ 528,78526,034,994$ 1,689,952$ 177,246)$( 24,696,581$ 1,776,568$
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.
$ 515,000
$1,325,000CombinationTaxandRevenueCertificatesof
Obligation-Series2008,principaldueannuallyinseriesthrough
2033, interest due semi-annually at 4.06%.1,050,000
$1,500,000CombinationTaxandRevenueCertificatesof
Obligation-Series2009,principaldueannuallyinseriesthrough
2019, interest due semi-annually at 3.85%.
1,500,000
$ 3,065,000
(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,
2009, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.
$ 4,585,000
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.
400,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.1,040,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.1,640,000
$275,000CombinationTaxandRevenueCertificatesofObligation,
Series2003A,principaldueannuallyinSeriesthrough2021,
interest due semi-annually at 4.125%.181,865
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.6,565,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.1,495,000
$4,300,000CombinationTaxRevenueCertificatesofObligation,
Series2006A,principaldueannuallyinseriesthrough2027,
interest due semi-annually at 3.92%.4,005,000
$4,130,000CombinationTaxRevenueCertificatesofObligation,
Series2008,principaldueannuallyinseriesthrough2033,interest
due semi-annually at 4.06%.
4,130,000
$ 24,041,865
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
2010460,000$ 141,995$ 601,995$
2011240,000 101,878 341,878
2012255,000 90,359 345,359
2013265,000 79,420 344,420
2014275,000 68,042 343,042
157,5391,570,000 1,727,539
2015-2019
$ 639,2333,065,000$ 3,704,233$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
20101,612,000$ 919,475$ 2,531,475$
20111,668,000 859,638 2,527,638
20121,734,000 797,473 2,531,473
20131,805,000 728,071 2,533,071
20141,866,000 664,558 2,530,558
2015-20199,716,865 2,158,851 11,875,716
2020-20241,665,000 970,729 2,635,729
2025-20292,030,000 605,493 2,635,493
161,6901,945,000 2,106,690
2030-2033
$ 7,865,97824,041,865$ 31,907,843$
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 equipment794,081$
220,511
Less: accumulated depreciation
$ 573,570
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, 2009, were as follows:
Fiscal Year Ending
September 30,Principal
2010166,329$
2011193,087
2012105,163
105,163
2013
Total minimum lease payments569,742
70,018
Less: amount representing interest
$ 499,724
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 $250,814. The landfill site has an estimated net
capacity of 584,974 cubic yards and is expected to be closed within the next 10 years;
approximately 40% 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 eligible employees through a non-traditional,
joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement
System (TMRS), an agent multiple-employer public employee retirement system. The plan
provisions that have been adopted by the City are within the options available in the governing
state statutes of TMRS.
(continued)
42
V. OTHER INFORMATION (Continued)
D. Retirement Plan (Continued)
Plan Description (Continued)
TMRS issues a publicly available comprehensive annual financial report that includes
financial statements and required supplementary information (RSI) for TMRS; the report also
provides detailed explanations of the contributions, benefits and actuarial methods and
assumptions used by the System. This report may be obtained by writing to TMRS, P. O.
Box 149153, Austin, Texas 78714-9153 or by calling 800-924-8677; in addition, the report
is available on TMRS’ website at www.TMRS.com.
The plan provisions are adopted by the governing body of the City, within the options
available in the state statutes governing TMRS. Plan provisions for the City were as follows:
Plan Year 2008Plan Year 2009
Employee deposit rate6.0%6.0%
Matching ratio (city to employee)2 to 12 to 1
Years required for vesting55
Service retirement eligibility
(expressed as age/years of service)60/5, 0/2060/5, 0/20
Updated service credit100% repeating,100% repeating,
transferstransfers
Annuity increase (to retirees)70% of CPI70% of CPI
repeatingrepeating
Contributions
Under the state law governing TMRS, the contribution rate for each City is determined
annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate
consists of the normal cost contribution rate and the prior service cost contribution rate,
which is calculated to be a level percent of payroll from year to year. The normal cost
contribution rate finances the portion of an active member’s projected benefit allocated
annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial
liability (asset) over the applicable period for that city. Both the normal cost and prior
service contribution rates include recognition of the projected impact of annually repeating
benefits, such as Updated Service Credits and Annuity Increases.
(continued)
43
V. OTHER INFORMATION (Continued)
D. Retirement Plan (Continued)
Contributions (Continued)
The City contributes to the TMRS Plan at an actuarially determined rate. Both the
employees and the City make contributions monthly. Since the City needs to know its
contribution rate in advance for budgetary purposes, there is a one-year delay between the
actuarial valuation that serves as the basis for the rate and the calendar year when the rate
goes into effect. The annual pension cost and net pension obligation/(asset) are as follows:
AccountingAnnual ActualPercentageNet
YearPensionContributionof APCPension
EndingCost (APC)MadeContributedObligation
09/30/07590,098$ 590,098$ 100%-
09/30/08696,664 696,664 100%-
09/30/09934,953 934,953 100%-
The required contribution rates for fiscal year 2009 were determined as part of the December
31, 2006 and 2007 actuarial valuations. Additional information as of the latest actuarial
valuation, December 31, 2008, also follows:
Actuarial Valuation Date12/31/0612/31/0712/31/08
Actuarial cost methodUnit CreditProjected Unit CreditProjected Unit Credit
Amortization methodLevel percentLevel percentLevel percent
of payrollof payrollof payroll
Remaining amortization period25 years - open30 years - closed29 years - closed
Asset valuation methodAmortized costAmortized costAmortized cost
Actuarial Assumptions:
Investment rate of return7%7%7.5%
Projected salary increasesvaries by agevaries by agevaries by age
and serviceand serviceand service
Inflation3.0%3.0%3.0%
Cost-of-living adjustmentsN/A2.1%2.1%
The schedule of funding progress presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liability of benefits.
UnfundedUnfunded Actuarial
ActuarialActuarialActuarialActuarialAnnualAccrued Liability
ValuationValue ofAccruedPercentageAccruedCoveredas a Percentage
DateAssetsLiabilityFundedLiabilityPayrollof Covered Payroll
12/31/200612,884,565$ 16,154,691$ 79.8% 3,270,126$ 5,005,388$ 65.3%
12/31/200713,396,160 19,744,843 67.8% 6,348,683 5,147,282 123.3%
12/31/200814,809,934 21,450,591 69.0% 6,640,657 5,773,061 115.0%
(continued)
44
V. OTHER INFORMATION (Continued)
E. Other Postemployment Benefits
Supplemental Death Benefits Fund (SDBF)
The City also participates in the cost sharing multiple-employer defined benefit group term
life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as
the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide
group term life insurance coverage to both current and retired employees. The City may
terminate coverage under and discontinue participation in the SDBF by adopting an
ordinance before November 1 of any year to be effective the following January 1.
The death benefit for active employees provides a lump sum payment approximately equal to
the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-
month period preceding the month of death); retired employees are insured for $7,500; this
coverage is an “other postemployment benefit,” or OPEB.
Contributions
The City contributes to the SDBF at a contractually required rate as determined by an annual
actuarial valuation. The rate is equal to the cost of providing one-year term life insurance.
The funding policy for the SDBF program is to assure that adequate resources are available
to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree
term life insurance during employees’ entire careers.
(Retiree-only portion of the rate)
Plan/Annual Required Actual Contribution Percentage of
Calendar YearContribution (Rate)Made (Rate)ARC Contributed
20070.07%0.07%100%
20080.05%0.05%100%
20090.06%0.06%100%
F. Prior Period Adjustment
In the current year, the City discovered an error in the prior year calculation of the estimated
liability for landfill closure and postclosure costs. The result of correct this error in the
current year was an increase of $177,246 to the beginning net assets in the Sanitary Landfill
Enterprise Fund.
45
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COMBINING FUND
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds are used to account for specific revenue that is legally
restricted to expenditures for particular purposes.
Hotel/Motel Occupancy Tax – This fund is used to account for hotel/motel
occupancy tax revenue to be used for enhancing and promoting tourism and
convention activity for the benefit of the hotel industry.
Child Safety – This fund is used to account for court costs used to operate a
City school crossing guard program, or programs designated to enhance child
safety, health, or nutrition; including child abuse prevention and intervention
and drug and alcohol abuse prevention.
Public Safety – This fund is used to account for court costs used to promote
various public safety programs.
TheDebt Service Fund is used to account for the accumulation of resources and
payment of general obligation bond principal and interest from governmental
resources.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2009
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafetySafetyTotalServiceFunds
ASSETS
Cash and investments281,386$ 9,808$ 37,683$ 328,877$ 92,974$ 421,851$
Receivables (net of allowance
for uncollectibles):
Taxes80,581 - - 80,581 7,107 87,688
- - - - 1,514 1,514
Accounts
$ 9,808361,967$ 37,683$ 409,458$ 101,595$ 511,053$
Total assets
LIABILITIES
Accounts payable76,659 - - 76,659 - 76,659
- - - - 5,524 5,524
Deferred revenue
-76,659 - 76,659 5,524 82,183
Total liabilities
FUND BALANCES
Reserved for debt service- - - - 96,071 96,071
9,808285,308 37,683 332,799 - 332,799
Unreserved
9,808285,308 37,683 332,799 96,071 428,870
Total fund balances
Total liabilities
$ 9,808361,967$ 37,683$ 409,458$ 101,595$ 511,053$
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, 2009
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicDebtGovernmental
TaxSafety SafetyTotalServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ 531,147$ 531,147$
Other327,913 - - 327,913 - 327,913
Service charges- - 6,228 6,228 - 6,228
Fines and forfeitures- 5,530 7,696 13,226 - 13,226
Intergovernmental- - 3,767 3,767 - 3,767
Investment earnings2,826 - - 2,826 323 3,149
-5,847 - 5,847 - 5,847
Miscellaneous
336,586 5,530 17,691 359,807 531,470 891,277
Total revenues
EXPENDITURES
Current:
Public safety- 7,500 2,153 9,653 - 9,653
Culture and recreation368,105 - - 368,105 - 368,105
Debt service:
Principal - - - - 425,000 425,000
-- - - 99,652 99,652
Interest and fiscal charges
368,105 7,500 2,153 377,758 524,652 902,410
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
(31,519) 1,970)( 15,538 17,951)( 6,818 11,133)(
EXPENDITURES
316,827 11,778 22,145 350,750 89,253 440,003
FUND BALANCES, BEGINNING
$ 285,308 9,808$ 37,683$ 332,799$ 96,071$ 428,870$
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, 2009
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - other380,000$ 327,913$ 52,087$()
Investment income10,000 2,826 7,174)(
5,847- 5,847
Miscellaneous
336,586390,000 53,414)(
Total revenues
EXPENDITURES
Current:
368,105403,500 35,395
Culture and recreation
368,105403,500 35,395
Total culture and recreation
368,105403,500 35,395
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 31,519)13,500)( 18,019)(
OVER (UNDER) EXPENDITURES
316,827316,827 -
FUND BALANCE, BEGINNING
$ 285,308303,327$ 18,019)$(
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, 2009
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 5,5304,500$ 1,030$
Fines and forfeitures
5,5304,500 1,030
Total revenues
EXPENDITURES
Current:
7,5004,500 3,000)(
Public safety
7,5004,500 3,000)(
Total public safety
7,5004,500 3,000)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
1,970)-( 1,970)(
OVER (UNDER) EXPENDITURES
11,778 11,778 -
FUND BALANCE, BEGINNING
$ 11,778 9,808$ 1,970)$(
FUND BALANCE, ENDING
49
CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
PUBLIC SAFETY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Fines and forfeitures-$ 7,696$ 7,696$
Intergovernmental3,700 3,767 67
6,2284,000 2,228
Service charges
17,6917,700 9,991
Total revenues
EXPENDITURES
Current:
2,1533,700 1,547
Public safety
2,1533,700 1,547
Total public safety
2,1533,700 1,547
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
15,5384,000 11,538
OVER (UNDER) EXPENDITURES
22,145 22,145 -
FUND BALANCE, BEGINNING
$ 26,145 37,683$ 11,538$
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, 2009
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - property 523,690$ 531,147$ 7,457$
3235,000 4,677)(
Investment earnings
528,690 531,470 2,780
Total revenues
EXPENDITURES
Debt service:
Principal425,000425,000 -
99,690 99,652 38
Interest and fiscal charges
524,690 524,652 38
Total debt service
524,690 524,652 38
Total expenditures
EXCESS OF REVENUES
6,8184,000 2,818
OVER EXPENDITURES
89,253 89,253 -
FUND BALANCE, BEGINNING
$ 93,253 96,071$ 2,818$
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, 2009
Sanitary
LandfillAirportTotal
ASSETS
Current assets:
Cash and investments265,513$ 508$ 266,021$
1,440 163,366 164,806
Accounts receivable (net of allowances for uncollectibles)
163,874266,953 430,827
Total current assets
Noncurrent assets:
Capital assets:
Land40,000 705,557 745,557
Buildings and improvements659,173 3,326,418 3,985,591
Equipment1,004,859 115,131 1,119,990
Construction in progress- 505,322 505,322
( 567,134)784,604)( 1,351,738)(
Less: accumulated depreciation
4,085,294919,428 5,004,722
Total capital assets
4,085,294919,428 5,004,722
Total noncurrent assets
4,249,1681,186,381 5,435,549
Total assets
LIABILITIES
Current liabilities:
Accounts payable58,518 2,364 60,882
Accrued liabilities6,296 - 6,296
Customer deposits700 - 700
Accrued interest payable22,972 2,412 25,384
Capital lease134,984 - 134,984
Bonds payable- 17,000 17,000
-909 909
Compensated absences payable
21,776224,379 246,155
Total current liabilities
Long-term liabilities:
Capital lease364,740 - 364,740
Bonds payable- 164,865 164,865
-125,408 125,408
Liability for landfill closure
164,865490,148 655,013
Total long-term liabilities
186,641714,527 901,168
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt419,704 3,903,429 4,323,133
52,150 211,248
Unrestricted
$ 4,062,527471,854$ 4,534,381$
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, 2009
Sanitary
LandfillAirportTotal
OPERATING REVENUES
Gate charges413,398$ -$ 413,398$
Hanger rental- 67,050 67,050
6,1301,105 7,235
Other service charges
73,180414,503 487,683
Total operating revenues
OPERATING EXPENSES
Personnel services117,024 - 117,024
Contractual services117,178 13,615 130,793
Utilities634 19,395 20,029
Repairs and maintenance10,285 29,239 39,524
Other 68,105 7,741 75,846
90,717178,235 268,952
Depreciation
160,707491,461 652,168
Total operating expenses
( 87,527)76,958)( 164,485)(
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings3,817 - 3,817
Intergovernmental- 20,062 20,062
Interest expense29,171)( 9,580)( 38,751)(
( -6,623) 6,623)(
Loss on sale of assets
( 10,48231,977) 21,495)(
Total nonoperating revenues (expenses)
INCOME(LOSS) BEFORE
( 77,045)108,935)( 185,980)(
CONTRIBUTIONS AND TRANSFERS
249,253249,253-
CAPITAL CONTRIBUTIONS
206,000- 206,000
TRANSFER IN
( 378,208108,935) 269,273
CHANGE IN NET ASSETS
3,684,319403,543 4,087,862
TOTAL NET ASSETS, BEGINNING
-177,246 177,246
PRIOR PERIOD ADJUSTMENT
3,684,319580,789 4,265,108
TOTAL NET ASSETS, BEGINNING, RESTATED
$ 4,062,527471,854$ 4,534,381$
TOTAL NET ASSETS, ENDING
53
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
Sanitary
LandfillAirportTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers415,381$ 71,248$ 486,629$
Cash payments to employees88,776)( - 88,776)(
( 68,440)141,784)( 210,224)(
Cash payments to suppliers for goods and services
2,808184,821 187,629
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund payables repaid to other funds- 61,922)( 61,922)(
Cash received from operating grant- 20,062 20,062
- 206,000 206,000
Transfers from other funds
Cash provided by noncapital
- 164,140 164,140
financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease151,344)( - 151,344)(
Principal payments on bonds- 17,290)( 17,290)(
Interest and fiscal charges on debt14,985)( 9,809)( 24,794)(
Grant match for capital grant- 139,341)( 139,341)(
Proceeds from debt issuance473,731 - 473,731
( -757,795) 757,795)(
Acquisition and construction of capital assets
Cash used by capital and
( 166,440)450,393)( 616,833)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
-3,817 3,817
Interest received
-3,817 3,817
Cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
( 508261,755) 261,247)(
AND CASH EQUIVALENTS
-527,268 527,268
CASH AND CASH EQUIVALENTS, BEGINNING
$ 508265,513$ 266,021$
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, 2009
Sanitary
LandfillAirportTotal
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)76,958)$( 87,527)$( 164,485)$(
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation178,235 90,717 268,952
Change in assets and liabilities:
Decrease (increase) in accounts receivable478 1,932)( 1,454)(
Increase (decrease) in accounts payable54,418 1,779 56,197
Increase (decrease) in accrued liabilities29,281 229)( 29,052
Increase (decrease) in customer deposits400 - 400
( -1,033) 1,033)(
Increase (decrease) in compensated absences
90,335261,779 352,114
Total adjustments
$ 2,808184,821$ 187,629$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
$ - 249,253$ 249,253$
Contributions of capital assets
55
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CHANGES
IN ASSETS AND LIABILITIES
ALL AGENCY FUNDS
YEAR ENDED SEPTEMBER 30, 2009
BalanceBalance
October 1,September 30,
2008AdditionsDeductions2009
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
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 SEVEN FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2003200420052006200720082009
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$ 18,471,335$
Restricted- 620,104 295,721 381,849 366,934 397,365 434,394
8,181,0767,932,439 9,548,977 10,237,660 11,232,319 12,162,240 5,252,462
Unrestricted
$ 17,678,42116,603,822$ 18,915,350$ 20,354,286$ 21,756,728$ 23,072,991$ 24,158,191$
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$ 23,495,495$
Restricted508,583 470,750 514,842 599,910 665,099 554,647 710,870
4,134,8415,621,026 5,301,524 6,516,830 9,087,784 7,178,489 5,974,684
Unrestricted
$ 18,834,99717,919,299$ 22,007,282$ 24,549,134$ 26,317,100$ 28,964,524$ 30,181,049$
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$ 41,966,830$
Restricted508,583 1,090,854 810,563 981,759 1,032,033 952,012 1,145,264
12,315,91713,553,465 14,850,501 16,754,490 20,320,103 19,340,729 11,227,146
Unrestricted
$ 36,513,41834,523,121$ 40,922,632$ 44,903,420$ 48,073,828$ 52,037,515$ 54,339,240$
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 SEVEN FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2003200420052006200720082009
EXPENSES
Governmental activities
General government$ 1,421,5631,262,164$ 1,453,986$ 1,441,939$ 1,591,258$ 1,331,583$ 1,309,902$
Public safety 4,026,4024,028,747 4,345,846 4,689,443 5,187,628 5,504,975 6,043,653
Streets 995894,193 979,046 1,051 1,098,979 1,144,681 1,183,435,210,135
Culture and recreation 11,522,896 1,574,032 1,582,864 1,646,017 2,733,627 2,166,545,340,312
Community developmen 296,244317,743 348,177 343,135 381,091 395,182 408,144
130,388153,445 109,153 91,817 65,926 103,490 72,220
Interest on long-term debt
8,443,6758,179,188 8,819,077 9,311,330 10,104,211 10,685,210 11,384,366
Total governmental activities expenses
Business-type activities
Water and wastewater 43,790,830 4,582,690 4,367,671 4,681,174 4,776,359 4,526,893,819,886
Storm water drainage 35,46214,034 166,346 232,955 141516245,371 346,159
Sanitary landfill 151,309211,159 99,078 119,832 272,010 290,349 527,255
101,08299,847 8,633 18,075 130,169 127,018 170,287
Airport
4,870,5434,115,870 4,641,728 5,052,036 5,320,054 5,189,631 5,863,587
Total business-type activities expenses
$ 13,314,21812,295,058$ 13,460,805$ 14,363,366$ 15,424,265$ 15,874,841$ 17,247,953$
Total expensess
PROGRAM REVENUES
Governmental activities
Charges for services
General government$ 195,17621,421$ 172,292$ 177,636$ 243,929$ 219,353$ 231,122$
Public safety 524,561884,349 488,292 600,332 687,567 906,131 677,662
Streets 2822,388 17,748 17,213 27,444 24,425 21,046,472
Culture and recreation 147157,741 135,563 132,607 171,125 145,931 221,225,589
Community developmen 165,80382,182 163,490 180,304 160,745 272,729 126,186
Operatinggrants and contributions 189,805146,257 125,068 172,884 115,859 57,969 109,861
366,478185,625 556,425 177,503 115,556 148 740,974
Capital grants and contributions
1,618,1341,499,963 1,658,387 1,458,228 1,523,012 1,625,601 2,128,866
Total governmental activities program revenues
Business-type activities
Charges for services
Water and wastewater$ 44,261,555$ 5,564,193$ 5,245,901$ 5,628,658$ 5,092,578$ 5,469,932$ ,492,233
Sanitary landfill 174,152154,650 174,845 162,306 170,814 275,915 414,503
Airport 3124,865 39,077 51,088 61,037 68,916 73,186,180
Storm water drainage 478,143511,427 485,600 485,314 500,779 577,766 584,439
Operatinggrants and contributions -- - - - - 20,062
411,474273,101 1,513,020 599,393 169,370 870,718 249,253
Capital grants and contributions
5,659,0395,225,598 7,458,454 6,926,708 5,995,457 7,262,517 6,833,670
Total business-type activities program revenues
$ 7,277,1736,725,561$ 9,116,841$ 8,384,936$ 7,518,469$ 8,888,118$ 8,962,536$
Total program revenues
(continued)
58
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST SEVEN FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2003200420052006200720082009
NET (EXPENSE) REVENUES
Governmental activities6,679,225)$( 6,825,541)$( 7,160,690)$( 7,853,102)$( 8,581,199)$( 9,059,609)$( 9,255,500)$(
788,4961,109,728 2,816,726 1,874,672 675,403 2,072,886 970,083
Business-type activities
( 6,037,045)5,569,497)( 4,343,964)( 5,978,430)( 7,905,796)( 6,986,723)( 8,285,417)(
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 3,382,272
Property - debt service545,552 540,467 448,663 437,146 476,117 527,921 536,671
Sales3,217,670 3,538,100 3,654,232 4,101,973 4,351,269 4,745,309 4,622,690
Franchise934,965 1,209,036 1,264,298 1,423,615 1,370,838 1,169,858 1,186,650
Other208,534 262,467 292,447 312,528 388,013 434,498 372,815
Investment earnings196,542 87,990 286,301 441,986 623,810 454,269 108,218
Miscellaneous33,971 12,158 54,068 34,663 75,994 17,186 124,613
-315,638 50,000)( 116,979)( 215,921)( 104,871)( 6,771
Transfers
7,900,1407,447,600 8,397,619 9,292,038 9,983,641 10,375,872 10,340,700
Total governmental activities
Business-type activities:
Investment earnings105,970 100,773 305,559 518,164 876,642 469,667 68,079
Miscellaneous9,137 26,429 - 32,037 - - 7,888
( -315,638) 50,000 116,979 215,921 104,871 6,771)(
Transfers
( 127,202200,531) 355,559 667,180 1,092,563 574,538 69,196
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 10,409,896
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 1,085,200
915,698909,197 3,172,285 2,541,852 1,767,966 2,647,424 1,039,279
Business-type activities
$ 1,990,2971,677,572$ 4,409,214$ 3,980,788$ 3,170,408$ 3,963,687$ 2,124,479$
Total change in net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
59
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TABLE 3
CITY OF STEPHENVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2000200120022003200420052006200720082009
General fund
Reserved-$ -$ -$ 7,178$ 4,072$ 13,349$ 10,352$ 15,224$ 8,653$
12,680$
5,958,1005,499,615 6,429,861 7,309,934 8,017,965 8,361,416 9,045,429 10,039,416 9,555,553 7,358,831
Unreserved
$ 5,958,1005,499,615$ 6,429,861$ 7,317,112$ 8,022,037$ 8,374,765$ 9,055,781$ 10,054,640$ 9,564,206$ 7,371,511$
Total general fund
All other governmental funds
Reserved
Debt service funds12,873$ 24,139$ 30,337$ 41,081$ 41,285$ 50,563$ 69,443$ 82,233$ 89,253$
96,071$
Unreserved, reported in:
Special revenue funds186,653 232,461 207,743 237,911 211,765 247,743 318,028 280,798 350,750
332,799
1,109,1192,122,160 895,894 772,431 735,191 1,063,030 1,051,972 1,069,303 2,429,680 1,676,876
Capital projects funds
Total all other
$ 1,365,7192,321,686$ 1,133,974$ 1,051,423$ 988,241$ 1,361,336$ 1,439,443$ 1,432,334$ 2,869,683$ 2,105,746$
governmental funds
60
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
2000200120022003200420052006200720082009
REVENUES
Taxes6,418,350$ 6,689,180$ 7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235$ 9,506,528$ 10,004,265$ 10,104,779$
Special assessments664,688 - 55,415 - - 402,789 28,122 - -
-
Licenses, fees and permits88,671 64,408 86,583 84,669 168,519 168,523 183,839 164,071 275,887
131,341
Fines and forfeitures169,085 168,271 135,897 248,426 229,922 207,407 279,716 353,889 361,027
226,083
Intergovernmental669,130 207,050 242,187 249,564 306,510 104,228 188,096 111,889 87,730
124,581
Service charges367,715 408,757 523,825 545,763 697,355 651,021 640,935 738,526 839,684 948,049
Investment earnings445,529 406,277 275,793 194,772 87,991 286,300 441,986 623,810 454,269
108,218
68,24229,767 61,705 125,027 52,734 108,222 60,110 119,731 19,734 35,189
Miscellaneous
8,012,1858,852,935 8,449,309 8,339,293 9,347,931 10,031,624 10,765,039 11,618,444 12,042,596 11,678,240
Total revenues
EXPENDITURES
General government947,835 942,036 1,091,746 1,113,323 1,274,807 1,231,709 1,349,248 1,491,202 1,293,925 1,355,822
Public safety3,146,946 3,325,599 3,603,448 3,821,859 3,874,454 4,140,738 4,562,217 4,955,771 5,459,268 5,827,418
Streets562,728 588,038 620,714 561,646 630,057 578,126 699,290 735,614 824,764 845,429
Culture and recreation1,081,294 1,243,096 1,294,316 1,357,624 1,336,974 1,412,305 1,466,261 1,518,938 1,931,846 2,006,999
Community development182,517 236,431 250,776 317,743 295,036 346,969 337,659 375,614 394,833
407,208
Debt service
Principal429,391 430,000 450,000 470,000 500,000 420,000 430,000 455,000 475,000 425,000
Interest225,283 200,415 178,813 157,032 133,441 111,582 91,817 71,105 49,195 99,652
Bond issuance costs- - - - - - - - 12,725
25,000
1,667,3682,184,074 868,370 366,753 661,419 1,014,372 952,446 807,528 1,902,168 5,265,493
Capital outlay
8,632,9838,760,068 8,358,183 8,165,980 8,706,188 9,255,801 9,888,938 10,410,772 12,343,724 16,258,021
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)
2000200120022003200420052006200720082009
EXCESS OF REVENUES
OVER (UNDER)
$ 620,798)92,867$( 91,126$ 173,313$ 641,743$ 775,823$ 876,101$ 1,207,672$ 301,128)$( 4,579,781)$(
EXPENDITURES
OTHER FINANCING
SOURCES (USES)
Issuance of bonds- - - - - - - - 1,325,000
1,500,000
Proceeds from sale of
capital assets26,449 - - - - - - - 27,914
21,881
Proceeds from insurance- - - - - - - - -
94,497
Transfers in800,449 448,316 251,085 423,414 90,000 90,000 94,500 55,000 207,629
2,461,037
( 325,000)656,348)( 102,195)( 107,776)( 90,000)( 140,000)( 211,479)( 270,921)( 312,500)( 2,454,266)(
Transfers out
Total other financing
123,316170,550 148,890 315,638 - 50,000)( 116,979)( 215,921)( 1,248,043 1,623,149
sources (uses)
NET CHANGE IN
$ 497,482)263,417$( 240,016$ 488,951$ 641,743$ 725,823$ 759,122$ 991,751$ 946,915$ 2,956,632)$(
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
10.0%11.1% 9.2% 8.7% 8.5% 6.9% 6.2% 5.8% 5.3% 5.0%
EXPENDITURES
62
TABLE 5
CITY OF STEPHENVILLE, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Estimated
Less:Total TaxableTotalActual
FiscalResidentialCommercialIndustrialTax-exemptAssessedDirectTaxable
YearPropertyPropertyPropertyPropertyValueTax RateValue
2000258,328,927$ 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
2009530,504,500 521,967,390 134,864,860 296,981,931 890,354,819 0.4350908,525,326
Source:Erath County Appraisal District.
Note:PropertyinErathCountyisreassessedonceeverythreeyearsonaverage.TheCountyassessespropertyatapproximately98percentofactualvaluefor
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
2000$0.3359$0.1365$0.4724$1.4500-$0.4785$2.4009
20010.35520.11720.47241.7500-0.47852.7009
20020.36780.11220.48000.1690-0.47851.1275
20030.38120.10380.48501.6900$0.01500.47002.6600
20040.39130.09370.48501.67000.01500.45122.6212
20050.41070.07430.48501.67000.01500.46252.6325
20060.40790.06710.47501.66000.01500.44102.5910
20070.39960.06540.46501.51990.01500.43522.4351
20080.38110.06390.44501.19200.01500.41872.0707
20090.37620.05880.43501.14700.01500.39151.9885
Source:
Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.Ratesfordebtservice
are set based on each year's requirements.
OverlappingratesarethoseoflocalandcountygovernmentsthatapplytopropertyownerswithintheCityofStephenville,
Texas.
64
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20092000
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company39,748,826$ 4.46% 18,056,084$ 3.81%
Saint Gobain Abrasives10,151,297 1.14% 17,790,885 3.76%
Stephenville Campus Crest9,416,720 1.06% - -%
Bosque River Associates8,837,900 0.99% 8,533,480 1.80%
Oncor Electric Delivery8,040,210 0.90% 6,620,570 1.40%
Stephenville Student Housing LP7,260,800 0.82% - -%
Wal-Mart Stores, Inc. #17,727,270 0.87% 6,919,940 1.46%
Saint Gobain Abrasives6,580,480 0.74% - -%
United Telephone Company (Embarq)6,474,050 0.73% 5,129,190 1.08%
Seam Mac Tube LLC- -% 4,285,960 0.91%
Wilmington Trust (Wal-Mart #2)6,351,350 0.71% 6,748,260 1.43%
Rayloc Genaut- -% 4,253,678 0.90%
-%- 8,325,650
Emerson Electric Company1.76%
Subtotal110,588,903$ 12.42% 86,663,697$ 18.31%
87.58%779,765,916 377,060,624 81.69%
Remaining Roll
$ 100.00%890,354,819 463,724,321$ 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 SubsequentPercentageO/S as of
Year EndedFiscal YearAmountof LevyYearsAmountof Levy09/30/09
20002,185,007$ 2,143,729$ 98.11% 37,445$ 2,181,174$ 99.82% 2,679$
20012,236,217 2,192,628 98.05% 39,342 2,231,970 99.81% 2,363
20022,348,927 2,294,810 97.70% 50,076 2,344,886 99.83% 6,459
20032,513,625 2,462,155 97.95% 43,404 2,505,559 99.68% 3,888
20042,788,419 2,726,244 97.77% 56,290 2,782,534 99.79% 4,863
20052,832,529 2,808,747 99.16% 16,188 2,824,935 99.73% 5,059
20063,066,225 3,018,008 98.43% 40,723 3,058,731 99.76% 10,608
20073,344,539 3,307,083 98.88% 22,447 3,329,530 99.55% 15,697
20083,641,808 3,602,598 98.92% 29,172 3,631,770 99.72% 45,287
3,822,4923,874,843 -52,351
2009 98.65% 98.65%3,822,492
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
FiscalObligationofTermRevenueTermofCapitalof PersonalPer
YearBondsParticipationLoanBondsLoanParticipationLeasesTotalIncomeCapita
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
20092,550,000 515,000 - 4,585,000 - 19,456,865 499,724 27,606,589 N/A1,538
Note:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
The City issued over $5 million of new certificates of participation in 2008.
See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.
67
TABLE 10
CITY OF STEPHENVILLE, TEXAS
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
General Bonded Debt Outstanding
Percentage of
GeneralActual Taxable
FiscalObligationCertificates ofValue ofPer
YearBondsObligationsTotalPropertyCapita
20002,630,000$ 1,685,887$ 4,315,887$ 0.93% 294$
20012,310,000 1,555,000 3,865,000$ 0.82% 259
20021,970,000 1,445,000 3,415,000$ 0.70% 228
20031,615,000 1,330,000 2,945,000$ 0.57% 188
20041,235,000 1,210,000 2,445,000$ 0.43% 154
2005945,000 1,080,000 2,025,000$ 0.34% 124
2006645,000 950,000 1,595,000$ 0.25% 94
2007330,000 810,000 1,140,000$ 0.16% 67
20081,325,000 665,000 1,990,000$ 0.24% 114
20092,550,000 515,000 3,065,000$ 0.34% 171
Notes:
Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 5 for property value data.
Population data can be found in Table 14.
68
TABLE 11
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2009
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes
Stephenville Independent School District10,745,524$ 68.35%7,344,566$
3,065,000
City direct debt
$10,409,566
Total direct and overlapping debt
Sources:
AssessedvaluedatausedtoestimateapplicablepercentagesprovidedbytheErathCountyAppraisalDistrictand
assessment debt outstanding data provided by each governmental unit.
Notes:
Overlappinggovernmentsarethosethatcoincide,atleastinpart,withthegeographicboundariesoftheCity.
Thisscheduleestimatestheportionoftheoutstandingdebtofthoseoverlappinggovernmentsthatisborneby
theresidentsandbusinessesoftheCityofStephenville.Thisprocessrecognizesthat,whenconsideringthe
City'sabilitytoissueandrepaylong-termdebt,theentiredebtburdenbornebytheresidentsandbusinesses
shouldbetakenintoaccount.However,thisdoesnotimplythateverytaxpayerisaresident--andtherefore
responsible for repaying the debt--of each overlapping government.
69
TABLE 12
CITY OF STEPHENVILLE, TEXAS
LEGAL DEBT MARGIN AND TAX RATE LIMITATIONS INFORMATION
As a home rule city, the City of Stephenville is not limited by law in the amount of debt it may issue.
Under Article XI, Section 5 of the Texas Constitution, no tax for any purpose shall ever be lawful for any one year, which shall exceed two and one-half percent of the taxable property
of the City.
AlltaxablepropertywithintheCityissubjecttoassessment,levyandcollectionbytheCityofacontinuing,directannualadvaloremtaxsufficienttoprovideforthepaymentofprincipaland
interestonthebondswithinthelimitsprescribedbylaw.UnderrulespromulgatedbytheOfficeoftheAttorneyGeneralofTexas,suchofficewillnotapprovetaxbondsoftheCityunlessthe
City can demonstrate its ability to pay debt service requirements on all outstanding City tax bonds, including the issue to be approved.
Tax Rate Limitation Calculation for Fiscal Year 2009
Taxable assessed valuation890,354,819$
2.50% of assessed valuation
Constitutional tax rate limit
Maximum constitutional revenue available 22,258,870$
$2.50 per $100 of valuation
Tax rate to achieve maximum tax revenue
$0.435 per $100 of valuation
Tax rate for FY 2008-2009
$2.065 per $100 of valuation
Available unused constitutional max tax rate
Debt applicable to limit:
General obligation debt1,990,000$
DEBT TAX RATE ADEQUACY
$ 601,996
2009 Principal and Interest Requirements……………………………………………………………………………
601,185
$0.0689 Tax Rate at 98% Collection Produces………………………………………………………………………
370,423
Average Annual Principal and Interest Requirement, 2010-2019……………………………………………………..
369,960
$0.0424 Tax Rate at 98% Collection Produces………………………………………………………………………
Maximum Principal and Interest Requirements………………………………………………………………………
601,996
601,185
$0.0689 Tax Rate at 98% Collection Produces………………………………………………………………………
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2009
$ 601,996
Debt Service Fund, 9-30-08
$ 89,253
690,438601,185$
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
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
20095,492,233 3,060,691 2,431,542 1,340,000 652,120 1.22
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
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%
200917,950 N/AN/A3,553 8,956 7.1%
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 2007 - 2009.
72
TABLE 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2009
Percentage
of Total City
Employer
EmployeesEmployment
Tarleton State University1,051
5.90%
FMC Company510
2.86%
Saint Gobain Abrasives470
2.64%
Stephenville Independent School District440
2.47%
Wal-Mart Stores, Inc.448
2.51%
Scheiber Foods446
2.50%
Harris Methodist Erath County Hospital300
1.68%
Western Dairy Transport200
1.12%
Outlaw Conversions110
0.62%
Erath County175
0.98%
United Cooperative Services152
0.85%
Emerson Electric Company150
0.84%
Stephenville Medical & Surgical Clinic125
0.70%
Caporal Forging49
0.28%
Fibergrate Composite Structures127
0.71%
Associated Milk Producers110
0.62%
Bruner Motors101
0.57%
Southwestern Linen36
0.20%
Texstar Ford 35
0.20%
18
0.10%
USTRA
Subtotal5,053 28.37%
71.63%12,761
Remaining employers
100.00%17,814
Total
Source:
CityCommunityDevelopmentDivision.TotalemployeedataisprovidedbytheStateDepartmentofCommerceand
Labor.
Notes:
TotalemployeeinformationisbasedonentireErathCounty.Principalemployersareonlythosethatoperatefrom
within the corporate City limits of Stephenville.
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/Program2000200120022003200420052006200720082009
General government
Management services4 4 4 4 4 4 4
4 4 4
Finance7 6 6 7 7 7 7 7
7 7
Planning1 2 2 2 2 2 2 2
2 2
Building1 1 1 1 1 1 2 2
2 2
Other1 1 1 1 1 1 1 1
1 1
Police
Officers30 30 30 30 31 31 31 34
38 38
Civilians10 10 11 11 11 13 13 12
12 12
Fire
Firefighters and officers23 23 26 26 26 26 27
28 31 31
Parks and recreation9 11 11 13 13 13 13 13
13 13
Library4 4 4 4 4 4 4 3
3 3
Streets7 7 7 7 7 7 7 7
7 7
Water8 9 9 9 9 9 10 13
13 13
Wastewater7 8 8 8 8 8 8 5
5 5
22 2 2 2 2 2 2 2 2
Landfill
118114 122 125 126 128 131 133 140 140
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/Program2000200120022003200420052006200720082009
General government
Building permits issued242 265 234 222 140 172 125 153
135 109
Building permits value$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$11,978,341
Police
Calls for service9,138 9,114 10,207 10,203 10,483 10,358 11,234 19,732 11,739
12,730
Physical arrests1,019 716 762 1,134 825 959 999 1,447 1,023
953
Parking violations182 805 404 530 324 386 334 498 171
206
Traffic violations3,178 4,501 3,164 5,094 5,350 3,588 3,066 4,469 2,473
1,634
Fire
Ambulance responses1,271 1,321 1,468 1,372 1,183 1,291 1,255 1,537 1,472
1,502
Fires extinguished376 357 412 339 185 235 305 235 219
230
Inspections150 149 149 135 132 109 105 313 280
326
Other public works
Street resurfacing (miles)1.30 1.88 2.35 2.39 1.35 1.14 1.52 2.70
2.23 2.68
Library
Volumes in collection43,065 41,905 40,161 43,331 46,938 48,548 47,510 43,737 43,827
44,200
Total volumes borrowed120 130 237 110 138 155 114 116
94 227
Water
New connections5,256 5,319 5,319 5,242 5,521 5,253 5,550 5,660 5,670
5,700
Water main breaks47 53 52 49 54 50 48 49
44 61
Average daily consumption2,482,000 2,341,000 2,158,000 2,124,000 1,971,990 2,042,000 2,254,000 1,828,000 2,080,000 2,004,000
(thousands of gallons)
Peak daily consumption4,700,000 4,549,000 4,174,000 4,133,000 3,598,000 3,499,000 4,397,000 3,091,000 3,848,000 3,663
(thousands of gallons)
Wastewater
Average daily sewage treatment1,253,000 1,387,000 1,311,000 1,354,000 1,456,000 1,334,000 1,414,000 1,691,000 1,548,000 1,518,000
(thousands of gallons)
Source: Various City departments
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TABLE 18
CITY OF STEPHENVILLE, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program2000200120022003200420052006200720082009
Police
Stations1 1 1 1 1 1 1 1
1 1
Patrol units6 9 9 10 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 92 92 92 92 96
96 96
Highways (miles)19 19 19 19 19 19 19 21
21 21
Streetlights983 992 992 1,013 1,013 1,013 1,013 1,070 1,080
1,096
Parks and recreation
Acreage126 126 134 134 134 134 134 134 130
130
Playgrounds3 3 4 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 58 112 116 117 117 120 122
124 125
Fire hydrants616 623 623 650 670 670 680 732
747 735
Storage capacity4,500,000 4,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,750,000 5,750,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)68 68 96 105 105 110 110 113
114 115
Storm sewers (miles)10 10 10 10 10 10 10 10
10.5 10.5
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
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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
The Honorable Mayor and
Members of the City Council
City of 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, 2009, which collectively comprise the
City’s basic financial statements and have issued our report thereon dated January 27, 2010. We
conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City’s internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
City’s internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the City’s internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the City’s ability to initiate, authorize, record, process, or
report financial data reliably in accordance with generally accepted accounting principles such that there
is more than a remote likelihood that a misstatement of the City’s financial statements that is more than
inconsequential will not be prevented or detected by the City’s internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements will not
be prevented or detected by the City’s internal control.
77
401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901 FAX: (254) 772-4920 www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
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,
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.
January 27, 2010
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 each of its major federal programs for the year ended
September 30, 2009. The City of Stephenville, Texas’ major federal programs are 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 programs are 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 each of its major federal programs for the year ended
September 30, 2009.
79
401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901 FAX: (254) 772-4920 www.pbhcpa.com
AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583
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,
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.
January 27, 2010
80
CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
FederalPass-through
Federal Grantor/Pass-through Grantor/CFDAEntity IdentifyingFederal
Program TitleNumberNumberExpenditures
U. S. Department of Transportation
Passed through the Texas Department of Transportation:
Airport Terminal Project-200820.10608TBSTVLE205,878$
740,974
Ollie-Mary Local Transportation Project20.205STP 2007(843)
946,852
Total Passed through the Texas Department of Transportation
946,852
Total U. S. Department of Transportation
$ 946,852
Total Expenditures of Federal Awards
The accompanying notes are an integral part of this schedule.
81
CITY OF STEPHENVILLE, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
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.
82
CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
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 OMB Circular A-133None
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 programsAirport Terminal Project - 2008
CFDA #20.106
Ollie-Mary Local Transportation Project
CFDA #20.205
Findings Relating to the Financial Statements Which
Are Required to be Reported in Accordance with
Government Auditing Standards
None
Findings and Questioned Costs for Federal Awards
None
83
CITY OF STEPHENVILLE, TEXAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED SEPTEMBER 30, 2009
None
84