HomeMy WebLinkAbout2010 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2010
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Page
Number
INTRODUCTORY SECTION
Letter of Transmittal ..................................................................................................... i – iv
GFOA Certificate of Achievement ............................................................................... v
Organizational Chart ..................................................................................................... vi
Principal City Officials ................................................................................................. vii
FINANCIAL SECTION
Independent Auditors’ Report ....................................................................................... 1 – 2
Management’s Discussion and Analysis ...................................................................... 3 – 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, 2010
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, 2010
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
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Court Technology Fund ........................... 51
Nonmajor Debt Service Fund
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual .................................................................... 52
Nonmajor Enterprise Funds
Combining Balance Sheet ....................................................................................... 53
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets ................................................................................ 54
Combining Statement of Cash Flows ..................................................................... 55
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Table Page
Number Number
STATISTICAL SECTION (Unaudited)
Net Assets by Component .............................................................................. 1 56
Changes in Net Assets ................................................................................... 2 57 – 58
Fund Balances – Governmental Funds .......................................................... 3 59
Changes in Fund Balances – Governmental Funds ....................................... 4 60 – 61
Assessed Value and Estimated Actual Value
of Taxable Property ..................................................................................... 5 62
Direct and Overlapping Property Tax Rates .................................................. 6 63
Principal Property Taxpayers ......................................................................... 7 64
Property Tax Levies and Collections ............................................................. 8 65
Ratios of Outstanding Debt by Type ............................................................. 9 66
Ratios of Net General Bonded Debt Outstanding .......................................... 10 67
Direct and Overlapping Governmental Activities Debt ................................. 11 68
Legal Debt Margin and Tax Rate Limitations Information ........................... 12 69
Pledged Revenue Coverage ........................................................................... 13 70
Demographic and Economic Statistics .......................................................... 14 71
Principal Employers ....................................................................................... 15 72
Fulltime Equivalent City Government Employees by
Function/Program ....................................................................................... 16 73
Operating Indicators by Function/Program ................................................... 17 74
Capital Asset Statistics by Function/Program ................................................ 18 75
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
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 ................................................................................ 76 – 77
Independent Auditors’ Report on Compliance With Requirements
That Could Have a Direct and Material Effect on Each Major
Program and on Internal Control Over Compliance
in Accordance With OMB Circular A-133 ................................................................... 78 – 79
Schedule of Expenditures of Federal Awards ............................................................... 80
Notes to Schedule of Expenditures of Federal Awards ................................................ 81
Schedule of Findings and Questioned Costs ................................................................. 82
Summary Schedule of Prior Audit Findings ................................................................. 83
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INTRODUCTORY SECTION
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February 1, 2011
TO: The Honorable Mayor, Members of the City Council, and the Citizens of Stephenville (the “City”)
Submitted herewith is a copy of the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended
September 30, 2010. Responsibility for both the accuracy of the data and the completeness and fairness of
presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed
data is accurate in all material respects and is reported in a manner designed to present fairly the financial
position and results of operations of the City. All disclosures necessary to enable the reader to gain an
understanding of the City’s financial activities have been included.
The Governmental Accounting Standards Board (GASB) requires that management provide a narrative
introduction, overview, and analysis to accompany the basic financial statements in the form of 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 independent
auditor’s report.
THE REPORTING ENTITY
The City is a political subdivision and municipal corporation of the State, duly
organized and existing under the laws of the State and the City’s home rule
Charter. 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 18,150. The City is empowered by
state statute to levy a tax on both real and business personal property located
within its boundaries. The City also has the power by state statute to extend its
corporate city limits by annexation, which is done periodically when deemed
appropriate by the City Council.
The City operates under the mayor-council form of government. Policy-making and legislative authority are
vested in a governing council consisting of the mayor and eight (8) Council members. The City Council is
responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring
the City Administrator. The City Administrator is responsible for carrying out the policies and ordinances of the
City Council, for overseeing the day-to-day operations of the City, and appointing 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.
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ECONOMY AND BUSINESS CLIMATE
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 7.0% 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 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.
Users of this document are encouraged to read the City’s Fiscal Year 2010-2011 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.
ACCOUNTING SYSTEM AND BUDGETARY CONTROL
The City’s accounting records for general governmental operations are maintained on the modified accrual
basis, with the revenues being recorded when available and measurable and expenditures being recorded when
the services or goods are received and the liabilities incurred. Accounting records for the City’s utilities are
maintained on the accrual basis.
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, the Debt Service Fund and Capital Improvements.
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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 the
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, the 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.
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The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated
amount) is at the departmental 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
included in the financial section of this report, the City continues to meet its responsibility for sound financial
management.
RELEVANT FINANCIAL POLICIES
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 09/10 annual debt service supported tax rate
requirements are $.0673 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, 2010, the average rate on the operating account balances was
.11 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 .26
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.
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INDEPENDENT AUDIT
The City’s financial statements have been audited by Pattillo, Brown and Hill LLP, Independent Certified Public
Accountants. The goal of the independent audit was to provide reasonable assurance that the financial
statements of the City for the fiscal year ended September 30, 2010, 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, 2010, 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.
AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate
of Achievement in Financial Reporting to the City of Stephenville for its Comprehensive Annual Financial
Report for the fiscal year ended September 30, 2009.
The Certificate of Achievement is a prestigious national award recognizing conformance with the highest
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standards for preparation of state and local government financial reports. This award was the 25 consecutive
year that the City of Stephenville has achieved this prestigious award. In order to be awarded a Certificate of
Achievement, a government unit must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both generally accepted accounting principles and applicable
legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive
annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are
submitting it to GFOA to determine its eligibility for another certificate.
ACKNOWLEDGEMENTS
The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated
services of the entire staff of the City. We would like to express our appreciation to all staff members who
assisted and contributed to its preparation. We would also like to thank the Mayor and City Council members
for their interest and support in planning and conducting the financial operations of the City in a responsible and
progressive manner.
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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, 2009
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.
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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
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CITY OF STEPHENVILLE, TEXAS
PRINCIPAL CITY OFFICIALS
SEPTEMBER 30, 2010
Mayor Nancy A. Hunter
Council Members Joe Cude
Dr. Malcom L. Cross
Don Zelman
Russ McDanel
Alan Nash
Alan Nix
Martha Taylor
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 Patrick Bridges
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, 2010, 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, 2010, 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 21, 2011, 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 read in conjunction with
this report in considering the results of our audit.
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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 ALBUQUERQUE, NM (505) 266-5904
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis on pages 3 through 11 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is required
by the Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or historical
context. We have applied certain limited procedures to the required supplementary information in
accordance with auditing standards generally accepted in the United States of America, which consisted
of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do
not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s financial statements as a whole. 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 financial statements. 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 Non-Profit Organizations, and is also not a required part of the financial statements.
The combining and individual nonmajor fund financial statements and schedules and the schedule of
expenditures of federal awards are the responsibility of management and were derived from and relate
directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial statements
and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the information is fairly stated in all material
respects in relation to the financial statements 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 do not express an opinion or provide any assurance on it.
January 21, 2011
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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, 2010. 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, 2010, by $56,101,635
(net assets). Of this amount, $12,892,813 (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 $1,672,794. 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 $8,791,442, a decrease of $685,815 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, $8,689,027 is
available for spending at the government’s discretion (unreserved fund balance).
As of September 30, 2010, unreserved fund balance for the General Fund was
$7,196,152 or 66 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 $166,211.
The City’s total bond debt decreased by $2,072,000 (8%) during the current fiscal
year as a result of principal retirement.
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.
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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.
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.
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A budgetary comparison statement has been provided for the General Fund to demonstrate compliance
with the annual appropriated budget. Data for the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these nonmajor governmental funds is
provided in the form of combining fund statements and schedules elsewhere in this report.
Proprietary Funds. The City 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 required 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 $56,101,635 as of September 30, 2010, an increase of 3.2%
compared to fiscal year ending 2009. 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
$30,955,525, an increase of $774,476 over prior year. The governmental activities net assets are
$25,146,110, an increase of $987,919 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 (75 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 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.
5
An additional portion of the City’s net assets, $1,120,974, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets,
$12,892,813, may be used to meet the government’s ongoing obligations to citizens and creditors.
As of September 30, 2010, the City is able to report positive balances in all three categories of net assets,
both for government as a whole, as well as for its separate governmental and business-type activities.
Governmental ActivitiesBusiness-type ActivitiesTotals
201020092010200920102009
Current and other assets9,730,170$ 10,303,819$ 6,728,514$ 8,804,442$ 16,458,684$ 19,108,261$
18,990,167 17,663,994 48,029,873 47,802,186 67,020,040 65,466,180
Capital assets
27,967,813 54,758,387 56,606,628 83,478,724 84,574,441
28,720,337
Total assets
Liabilities606,286 507,717 846,996 1,728,998 1,453,282 2,236,715
2,967,941 3,301,905 22,955,866 24,696,581 25,923,807 27,998,486
Noncurrent liabilities
3,809,622 23,802,862 26,425,579 27,377,089 30,235,201
3,574,227
Total liabilities
Net assets:
Invested in capital assets,
net of related debt16,763,870 18,471,335 25,323,978 23,495,495 42,087,848 41,966,830
Restricted429,976 434,394 690,998 710,870 1,120,974 1,145,264
7,952,264 5,252,462 4,940,549 5,974,684 12,892,813 11,227,146
Unrestricted
24,158,191$ 30,955,525$ 30,181,049$ 56,101,635$ 54,339,240$
$ 25,146,110
Total net assets
The same held true for the prior fiscal year. Overall, the City had an increase in net assets of
$1,672,794.
Governmental Activities. The City’s total revenues for governmental activities increased from the
previous year by $737,595 or 6%. General revenues decreased $349,225, which is down 3% when
compared to the prior year. The ad valorem tax revenue increased $60,599 or 2%. This increase was
due to an increase in net assessed taxable value from $890 million in the prior fiscal year to $896 million
in the current fiscal year. Also, the tax rate increased by $.0085 to $.4435 per $100 assessed valuation.
The following table provides a summary of the City’s operations for the year ended September 30, 2010,
with comparative totals for the year ended September 30, 2009. Governmental activities increased the
City’s net assets by $987,919 or 59 percent of the total growth in net assets. Unrestricted net assets
decreased by $771,336 or 9 percent.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
201020092010200920102009
Revenues:
Program revenues:
Charges for services1,569,968$ 1,278,031$ 6,232,051$ 6,564,355$ 7,802,019$ 7,842,386$
Operating grants 43,417 109,861 17,808 20,062 61,225 129,923
Capital grants
and contributions1,602,301 740,974 402,702 249,253 2,005,003 990,227
General revenues:
Property taxes3,979,542 3,918,943 - - 3,979,542 3,918,943
Sales taxes4,275,545 4,622,690 - - 4,275,545 4,622,690
Franchise taxes1,018,036 1,186,650 - - 1,018,036 1,186,650
Other taxes341,456 372,815 - - 341,456 372,815
Gain on sale of capital assets323,641 - - - 323,641 -
Investment earnings32,294 108,218 6,714 68,079 39,008 176,297
124,61314,190 - 7,888 14,190 132,501
Miscellaneous
12,462,795 6,659,275 6,909,637 19,859,665 19,372,432
13,200,390
Total revenues
Expenses:
General government1, 1,309,902412,441 - - 1,412,441 1,309,902
Public safety6,252,861 6,043,653 - - 6,252,861 6,043,653
Streets1,426,590 1,210,135 - - 1,426,590 1,210,135
Culture and recreation2,438,756 2,340,312 - - 2,438,756 2,340,312
Community development427,769 408,144 - - 427,769 408,144
Interest on long-term
debt141,220 72,220 - - 141,220 72,220
Water and wastewater- - 5,054,152 4,819,886 5,054,152 4,819,886
Storm water drainage- - 580,590 346,159 580,590 346,159
Sanitary landfill- - 294,407 527,255 294,407 527,255
-- 158,085 170,287 158,085 170,287
Airport
11,384,36612,099,637 6,087,234 5,863,587 18,186,871 17,247,953
Total expenses
Increases in net assets
before transfers1,100,753 1,078,429 572,041 1,046,050 1,672,794 2,124,479
( 6,771112,834) 112,834 6,771)( - -
Transfers
Change in net assets987,919 1,085,200 684,875 1,039,279 1,672,794 2,124,479
Net assets - beginning24,158,191 23,072,991 30,181,049 28,964,524 54,339,240 52,037,515
-- 89,601 177,246 89,601 177,246
Prior period adjustment
$ 24,158,19125,146,110$ 30,955,525$ 30,181,049$ 56,101,635$ 54,339,240$
Net assets - ending
Business-type Activities. Revenues of the City’s business-type activities were approximately $6.7
million for the fiscal year ended September 30, 2010. Revenues decreased approximately $250,362 or
4% compared to the prior fiscal year. Expenses for the City’s business-type activities increased
approximately $223,647 or 4%. The increase was primarily due to low turnover staffing levels and
additional maintenance costs. Net Assets from business-type activities increased by $774,476 or 3
percent, from $30,181,049 to $30,955,525, accounting for the other 41 percent of the total growth in net
assets.
7
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds. The focus of the City’s governmental funds is to provide information on near-
term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the
City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of
a government’s net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund
balances of $8,791,442, a decrease of $685,815 from the prior year. The decrease in combined fund
balance is primarily attributable to use of surplus funds for capital projects. Approximately 99% of this
total amount, $8,689,027 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 ($93,267), b) to
liquidate prepaid items ($9,148). 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 the fund balance on a budget basis of $1,028,350
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 only decreased by $166,211 or
2% during the current fiscal year. Sales tax collections decreased by 8% from the previous year but the
City collected 1% 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
$37,864; 2) licenses and permit fees were $37,375 more than budgeted; and 3) service charges were also
higher than budgeted by $105,575. Expenditures were lower than budgeted mainly because capital outlays
were $2,293 lower.
The Capital Projects Fund has a fund balance of $1,155,196, a decrease of 31 percent, all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $93,267, a decrease of 3%, all of which is reserved for the
repayment of debt.
The Special Revenue Funds have a fund balance of $337,679, an increase of one 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 $4,940,549.
The increase in net assets was $774,476. Other factors concerning the finances of these funds have
already been addressed in the discussion of the City's business-type activities.
8
General Fund Budgetary Highlights
During the year there was a $501,004 increase in appropriations between the original budget and final
amended budget. Following are the main components of the increase:
$21,000 additional appropriation in public safety for Project 25 Portable Radios.
$28,000 additional appropriation for consultant services for government and relations.
$35,000 additional appropriation for Police Dispatch Furniture.
$70,000 additional appropriation in Fire Department for mandatory overtime.
$107,000 additional appropriation for street reconstruction.
$147,000 additional appropriation in public safety to purchase Laptop Computers for
the patrol cars.
Even with these increases in appropriations, the excess in revenues during the year was sufficient to
fund these increases without reducing the budgeted General Fund fund balance.
Actual expenditures on a budgetary basis were $10,980,023 compared to the final budget expenditures
of $11,367,439. The $387,416 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 $10,580,249 compared to the final budget of $10,513,314.
The $66,935 variance was due primarily to increases in ambulance 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, 2010, amounts to $67,020,040 (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, $53,656;
Sewer Line Replacement, $76,315;
Annual Street Reconstruction, $107,325;
Water and Sewer Service to Newly Annexed Areas, $174,582;
Storm Water Drainage improvements, $359,704;
Major Thoroughfare Renovation Project, $670,952; and
Bosque River Trail, $1.2 million.
9
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
201020092010200920102009
Land2,321,250$ 2,328,617$ 909,278$ 909,278$ 3,230,528$ 3,237,895$
Buildings and
improvements4,674,820 4,671,420 17,557,688 6,334,727 22,232,508 11,006,147
Equipment6,299,906 5,970,863 2,506,836 2,393,219 8,806,742 8,364,082
Infrastructure17,389,347 15,288,837 49,736,299 41,944,333 67,125,646 57,233,170
Construction in
progress- - 76,315 17,359,605 76,315 17,359,605
Less: accumulated
( 11,695,156) 10,595,743)( 22,756,543)( 21,138,976)( 34,451,699)( 31,734,719)(
depreciation
$ 18,990,167 17,663,994$ 48,029,873$ 47,802,186$ 67,020,040$ 65,466,180$
Total capital assets
Additional information on the City's capital assets can be found on page 35 – 36 of this report.
DEBT ADMINISTRATION
At the end of the current fiscal year, the City had total bonded debt of $25,034,865. Of this amount,
$2,605,000 represents bonded debt backed by the full faith and credit of the City, $14,335,000
represents utility revenue bonds secured by water and sewer revenues and $164,865 represents revenue
bonds secured by airport revenues, and $7,930,000 secured by storm water drainage revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
201020092010200920102009
Certificates of
obligations2,605,000$ 3,065,000$ -$ -$ 2,605,000$ 3,065,000$
Revenue bonds
-- 22,429,865 24,041,865 22,429,865 24,041,865
payable
$ 3,065,0002,605,000$ 22,429,865$ 24,041,865$ 25,034,865$ 27,106,865$
The City's General Obligation, Tax and Certificates of Obligation Bond ratings are listed below.
Moody'sStandard
Investors Service& Poor's
General Obligation BondsA3A+
Additional information on the City’s long term-debt can be found in pages 38 – 41 this report.
10
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The unemployment rate for the City of Stephenville as of the fiscal year-end was 7.0% compared to the
prior year rate of 7.1% which may be an indication that the local economy is starting to stabilize. This
rate compares favorably with state and national unemployment levels.
Sales tax collections for 2009-2010 were down by 8% compared to the previous year, but collections
still exceeded budget by $25,500. 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 2010-11 fiscal
year. Accordingly, next years’ budget incorporates a $.0165 increase in the property tax rate to $.4600
per $100 valuation. Certified taxable property value for 2010 is $882 million. This is a 1.31% decrease
over the last year’s values, or $11.7 million. The largest portion of the decrease is due to the
reevaluation of existing property.
LocalSalesAndUseTax
AssessedPropertyValuations
Љ͵БЉЉЉ
$5,000,000
ВЉЉͲЉЉЉͲЉЉЉ
$4,000,000
Љ͵ЏЉЉЉ
$3,000,000
ЏЉЉͲЉЉЉͲЉЉЉ
RATE
$2,000,000
Љ͵ЍЉЉЉ
TAX
$1,000,000
ЌЉЉͲЉЉЉͲЉЉЉ
VALUATIONS
$0
200520062007200820092010
Љ͵ЋЉЉЉ
ЉЊЉЋЉЌЉЍЉЎЉЏЉАЉБЉВЊЉЊЊ
ЉЉЉЊЉЋЉЌЉЍЉЎЉЏЉАЉБЉВЊЉ
tƩƚƦĻƩƷǤğƌǒğƷźƚƓƭğǣwğƷĻ
The City uses reserves from the General Fund to supplement capital projects during the year as needs
arise and where favorable unit pricing is received on such projects. Additionally, the City’s Fiscal
Management Practices call for the designation of any surplus of revenues over expenses at fiscal year-
end as a means of providing resources for major capital projects. There are ample funds for transfers
during 2011, should the City Council so desire, and still retain the minimum fund balance provisions
established by the Fiscal Management Practices.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with
an interest in the government's finances. Questions concerning any of the information provided in this
report or requests for additional information should be addressed to Walter G. Wood, Director of
Finance, 298 West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1211.
11
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BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2010
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments7,815,999$ 2,375,281$ 10,191,280$
Receivables (net of allowances for uncollectibles):
Taxes979,024 - 979,024
Accounts540,148 1,096,949 1,637,097
Internal balances2,142,083)( 2,142,083 -
Inventory9,148 - 9,148
Restricted investments2,507,934 908,807 3,416,741
Deferred charges20,000 205,394 225,394
Capital assets:
Land2,321,250 909,278 3,230,528
Buildings and improvements4,674,820 17,557,688 22,232,508
Machinery and equipment6,299,906 2,506,836 8,806,742
Infrastructure/water and wastewater distribution17,389,347 49,736,299 67,125,646
Construction in progress- 76,315 76,315
( 22,756,543)11,695,156)( 34,451,699)(
Less: accumulated depreciation
48,029,87318,990,167 67,020,040
Total capital assets
54,758,38728,720,337 83,478,724
Total assets
LIABILITIES
Accounts payable434,604 379,620 814,224
Accrued liabilities158,176 18,224 176,400
Accrued interest payable13,506 236,711 250,217
Customer deposits- 212,441 212,441
Noncurrent liabilities:
Due within one year602,941 1,872,265 2,475,206
21,083,6012,365,000 23,448,601
Due in more than one year
23,802,8623,574,227 27,377,089
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt16,763,870 25,323,978 42,087,848
Restricted for:
Hotel/motel economic development282,004 - 282,004
Child and public safety31,339 - 31,339
Court technology24,336 - 24,336
Debt service92,297 690,998 783,295
4,940,5497,952,264 12,892,813
Unrestricted
$ 30,955,52525,146,110$ 56,101,635$
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, 2010
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 215,7571,412,441$ 6,200$ -$ 1,190,484$( -)$ 1,190,484$()
Public safety 834,1806,252,861 14,466 260,792 5,143,423( -) 5,143,423()
Streets 24,7131,426,590 - 322,152 1,079,725( -) 1,079,725()
Culture and recreation 317,9172,438,756 22,751 1,019,357 1,078,731( -) 1,078,731()
Community developmen427,769 177,401 - - 250,368( -) 250,368()
-141,220 - - 141,220)( - 141,220)(
Interest on long-term debt
12,099,637 1,569,968 43,417 1,602,301 8,883,951)( - 8,883,951)(
Total governmental activities
Business-type activities
Water and wastewater 5,396,3495,054,152 - 248,024 - 590,221 590,221
Sanitary landfill 175,153294,407 - - - 119,254( 119,254)()
Airport158,085 72,408 17,808 154,678 - 86,809 86,809
588,141580,590 - - - 7,551 7,551
Storm water drainage
6,232,0516,087,234 17,808 402,702 - 565,327 565,327
Total business-type activities
$ 18,186,871 7,802,019$ 61,225$ 2,005,003$ 8,883,951)( 565,327 8,318,624)(
Total
General revenues:
Taxes:
Property - generalpurpose3,371,138 - 3,371,138
Property - debt service -608,404 608,404
Sales -4,275,545 4,275,545
Franchise -1,018,036 1,018,036
Other -341,456 341,456
Gain on sale of capital assets -323,641 323,641
Investment earnings 6,71432,294 39,008
Miscellaneous 14,190 - 14,190
( 112,834112,834) -
Transfers
9,871,870 119,548 9,991,418
Total general revenues and transfers
Change in net assets 684,875987,919 1,672,794
Net assets, beginning 30,181,04924,158,191 54,339,240
89,601- 89,601
Prior period adjustment
24,158,191 30,270,650 54,428,841
Net assets, beginning, restated
$ 25,146,110 30,955,525$ 56,101,635$
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, 2010
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
ASSETS
Cash and investments6,523,182$ 3,377,277$ 423,474$ 10,323,933$
Receivables (net of allowance for uncollectibles):
Taxes900,536 - 78,488 979,024
Accounts391,059 149,089 - 540,148
-9,148 - 9,148
Inventory
3,526,3667,823,925 501,962 11,852,253
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable147,037 229,087 58,480 434,604
Accrued liabilities158,176 - - 158,176
Due to other funds- 2,142,083 - 2,142,083
-313,412 12,536 325,948
Deferred revenue
2,371,170618,625 71,016 3,060,811
Total liabilities
Fund balances:
Reserved for:
Inventories9,148 - - 9,148
Debt service- - 93,267 93,267
Unreserved, reported in:
General fund7,196,152 - - 7,196,152
Special revenue funds- - 337,679 337,679
1,155,196- - 1,155,196
Capital projects fund
1,155,1967,205,300 430,946
Total fund balances 8,791,442
$ 3,526,3667,823,925$ 501,962$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesandthereforearenotreportedinthe
funds.
18,990,167
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
325,948
funds.
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(2,961,447)
$ 25,146,110
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, 2010
OtherTotal
CapitalGovernmentalGovernmental
GeneralProjectsFundsFunds
REVENUES
Taxes:
Property3,334,348$ -$ 601,392$ 3,935,740$
Sales4,275,545 - - 4,275,545
Franchise1,018,036 - - 1,018,036
Other41,494 - 299,962 341,456
Service charges1,178,800 - - 1,178,800
Fines and forfeitures218,271 - 11,086 229,357
Licenses and permits138,675 - - 138,675
Intergovernmental343,459 1,019,357 3,728 1,366,544
Investment earnings12,352 19,199 743 32,294
-19,269 - 19,269
Miscellaneous
10,580,249 1,038,556 916,911 12,535,716
Total revenues
EXPENDITURES
Current:
General government1,359,012 - - 1,359,012
Public safety6,041,520 - 6,630 6,048,150
Streets850,428 - - 850,428
Culture and recreation1,768,405 - 303,926 2,072,331
Community development420,982 - - 420,982
Debt service:
Principal - - 460,000 460,000
Interest and fiscal charges- - 144,279 144,279
1,560,236539,676 - 2,099,912
Capital outlay
10,980,023 1,560,236 914,835 13,455,094
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 521,680)399,774)( 2,076 919,378)(
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in204,320 - - 204,320
Transfers out317,154)( - - 317,154)(
Proceeds from sale of capital assets338,054 - - 338,054
-8,343 - 8,343
Proceeds from insurance
-233,563 - 233,563
Total other financing sources (uses)
( 521,680)166,211)( 2,076 685,815)(
NET CHANGE IN FUND BALANCES
1,676,8767,371,511 428,870 9,477,257
FUND BALANCES, BEGINNING
$ 1,155,1967,205,300$ 430,946$ 8,791,442$
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, 2010
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page13)are
different because:
Net change in fund balances - total governmental funds (page 15)685,815)$(
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense. 895,113
Theneteffectofvariousmiscellaneoustransactionsinvolvingcapitalassets(i.e.,sales,trade-
ins, and donations) is to increase net assets.307,739
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds. 10,538
Therepaymentoftheprincipaloflong-termdebtconsumesthecurrentfinancialresourcesof
governmental funds. However, this has no effect on net assets. 460,000
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrent
financial resources and, therefore, are not reported as expenditures in governmental funds.
344
$ 987,919
Change in net assets of governmental activities (page 13)
The notes to the financial statements are an integral part of this statement.
16
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CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
REVENUES
Taxes8,731,6648,672,139$ 8,669,423$ 2,716)$(
Service charges1,073,2251,073,2251,178,800 105,575
Fines and forfeitures270,000270,000218,271 51,729)(
Licenses and permits101,300101,300138,675 37,375
Intergovernmental58,000324,950343,459 18,509
Investment earnings102,50052,50012,352 40,148)(
19,20019,200 19,269 69
Miscellaneous
10,355,889 10,513,314 10,580,249 66,935
Total revenues
EXPENDITURES
Current:
General government:
City council75,041103,04194,9298,112
City administrator129,323129,323129,31112
City secretary82,28587,28586,527758
Emergency management6,8506,8506,646204
Municipal buildings134,442134,442120,38714,055
Municipal Service Center98,85998,85994,0104,849
Financial administration and accounting336,850338,542356,17917,637)(
Purchasing55,76957,11355,6271,486
Tax assessment and collection119,300119,300117,5391,761
Legal counsel65,42565,42570,9875,562)(
Municipal court120,000120,000126,4166,416)(
106,699106,699 100,454 6,245
Human resources
1,366,8791,330,843 1,359,012 7,867
Total general government
Public safety:
Fire and ambulance administration220,309220,309217,1513,158
Fire prevention and investigation166,708166,707105,78860,919
Fire suppression1,100,0661,135,0661,136,2241,158)(
Emergency medical services1,066,2341,101,2341,001,046100,188
Volunteer30,65930,65924,1736,486
Police administration127,736127,736125,0832,653
Police patrol1,908,3741,908,3741,858,42949,945
Police communications390,276410,276406,9943,282
Police records185,510185,510178,8116,699
Criminal investigation600,827600,827608,0677,240)(
(continued)
17
CITY OF STEPHENVILLE, TEXAS
GENERAL FUND
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Current:
Public safety (continued):
Police reserve78,237$ 78,237$ 76,545$ 1,692$
Animal control114,939114,939110,2854,654
179,255179,255 192,924 13,669)(
Public safety facility
6,259,1296,169,130 6,041,520 217,609
Total public safety
Streets:
875,529875,529 850,428 25,101
Street maintenance
875,529875,529 850,428 25,101
Total streets
Culture and recreation:
Recreation administration677,090677,090678,2511,161)(
Park maintenance433,716433,716417,40816,308
Cemeteries 130,633130,633129,4041,229
Library214,518214,518192,85021,668
Senior citizens center125,861125,861126,695834)(
300,000300,000 223,797 76,203
Aquatic Center
1,881,8181,881,818 1,768,405 113,413
Total culture and recreation
Community development:
Community development planning178,393178,393174,6323,761
Community development inspection185,746185,746170,49015,256
77,97677,976 75,860 2,116
Code enforcement
442,115442,115 420,982 21,133
Total community development
10,699,435 10,825,470 10,440,347 385,123
Total current
(continued)
18
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, 2010
Variance with
Final Budget
Budgeted Amounts
ActualPositive
OriginalFinalAmounts(Negative)
EXPENDITURES(Continued)
Capital outlay:
Public safety:
Emergency medical services-$ 7,185$ 7,184$ 1$
Police patrol90,000 169,003163,5395,464
Police communications- 34,85639,8074,951)(
146,600- 146,101 499
JAG grant
357,64490,000 356,631 1,013
Total public safety
Streets:
134,32527,000 134,473 148)(
Street maintenance
134,32527,000 134,473 148)(
Total highways and streets
Culture and recreation:
50,00050,000 48,572 1,428
Park maintenance
50,00050,000 48,572 1,428
Total culture and recreation
541,969167,000 539,676 2,293
Total capital outlay
10,866,435 11,367,439 10,980,023 387,416
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
( 854,125)510,546)( 399,774)( 454,351
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in206,000206,000 204,3201,680)(
Transfers out- 387,225)( 317,154)( 70,071
Proceeds from sale of capital assets7,000 7,000 338,054 331,054
-- 8,343 8,343
Proceeds from insurance
174,225)213,000( 233,563 407,788
Total other financing sources (uses)
( 1,028,350)297,546)( 166,211)( 862,139
NET CHANGE IN FUND BALANCE
7,371,5117,371,511 7,371,511 -
FUND BALANCE, BEGINNING
$ 6,343,1617,073,965$ 7,205,300$ 862,139$
FUND BALANCE, ENDING
The notes to the financial statements are an integral part of this statement.
19
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2010
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
ASSETS
Current assets:
Cash and investments1,036,858$ 1,143,720$ 194,703$ 2,375,281$
Accounts receivable - net 1,023,600 66,235 7,114 1,096,949
Due from other funds2,142,083 - - 2,142,083
194,452714,355 - 908,807
Restricted investments
1,404,4074,916,896 201,817 6,523,120
Total current assets
Noncurrent assets:
Deferred charges126,154 79,240 - 205,394
Capital assets:
Land163,721 - 745,557 909,278
Buildings and improvements2,349,136 10,159,7165,048,836 17,557,688
Equipment1,349,408 - 1,157,428 2,506,836
Water and wastewater distribution49,736,299- - 49,736,299
Construction in progress76,315 - - 76,315
( 253,993)20,941,806)( 1,560,744)( 22,756,543)(
Less: accumulated depreciation
9,905,72332,733,073 5,391,077 48,029,873
Total capital assets
9,984,96332,859,227 5,391,077 48,235,267
Total noncurrent assets
11,389,37037,776,123 5,592,894 54,758,387
Total assets
LIABILITIES
Current liabilities:
Accounts payable 10,000368,026 1,594 379,620
Accrued liabilities15,644 - 2,580 18,224
Customer deposits211,641 - 800 212,441
Accrued interest178,238 39,571 18,902 236,711
Capital lease- - 170,619 170,619
Bonds payable1,435,000 215,000 18,000 1,668,000
2,985- 33,646
30,661
Compensated absences payable
264,5712,239,210 215,480 2,719,261
Total current liabilities
Long-term liabilities:
Capital lease- - 194,121 194,121
Bonds payable12,900,0007,715,000 146,865 20,761,865
-- 127,615 127,615
Liability for landfill closure
7,715,00012,900,000 468,601 21,083,601
Total long-term liabilities
7,979,57115,139,210 684,081 23,802,862
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt18,398,0732,064,433 4,861,472 25,323,978
Restricted for debt service536,117 154,881 - 690,998
1,190,4853,702,723 47,341 4,940,549
Unrestricted
$ 3,409,79922,636,913$ 4,908,813$ 30,955,525$
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, 2010
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
OPERATING REVENUES
Water sales2,980,070$ -$ -$ 2,980,070$
Wastewater charges2,082,638 - - 2,082,638
Tap and collection fees277,651 - - 277,651
Delinquent charges31,480 5,019 - 36,499
Gate charges- - 174,013 174,013
Hanger rental 69,30069,300
Storm water drainage fees- 583,122 - 583,122
-24,510 4,248 28,758
Other service charges
588,1415,396,349 247,561 6,232,051
Total operating revenues
OPERATING EXPENSES
Personnel services1,015,730- 117,212 1,132,942
Contractual services1,102,094- 12,787 1,114,881
Utilities561,599- 27,165 588,764
Repairs and maintenance425,3602,69618,456 446,512
Other 179,07820135,626 214,905
253,9941,169,861 209,006 1,632,861
Depreciation
256,8914,453,722 420,252 5,130,865
Total operating expenses
331,250942,627 172,691)( 1,101,186
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings3,2243,368122 6,714
Interest and fiscal charges on debt600,241)( 323,699)( 32,240)( 956,180)(
Intergovernmental- - 17,808 17,808
( -189) - 189)(
Gain (loss) on sale of assets
( 320,331)597,206)( 14,310)( 931,847)(
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE CONTRIBUTIONS
10,919345,421 187,001)( 169,339
AND TRANSFERS
-248,024 154,678 402,702
CAPITAL CONTRIBUTIONS
-- 317,154 317,154
TRANSFERS IN
( -204,320) - 204,320)(
TRANSFERS OUT
10,919389,125 284,831 684,875
CHANGE IN NET ASSETS
3,398,88022,247,788 4,534,381 30,181,049
TOTAL NET ASSETS, BEGINNING
-- 89,601 89,601
PRIOR PERIOD ADJUSTMENT
22,247,788 3,398,880 4,623,982 30,270,650
TOTAL NET ASSETS, BEGINNING, RESTATED
$ 22,636,913 3,409,799$ 4,908,813$ 30,955,525$
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, 2010
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers5,268,568$ 586,456$ 252,859$ 6,107,883$
Cash payments to employees for services1,032,973)( - 118,852)( 1,151,825)(
( 2,897)2,409,060)( 106,077)( 2,518,034)(
Cash payments to suppliers for goods and services
583,5591,826,535 27,930 2,438,024
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receivables repaid by other funds29,972 - - 29,972
Cash received from operating grant- - 17,808 17,808
( -204,320) - 204,320)(
Transfers to other funds
( -174,348) 17,808 156,540)(
Cash provided (used) by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease- - 134,984)( 134,984)(
Principal payments on bonds1,390,000)( 205,000)( 17,000)( 1,612,000)(
Interest and fiscal charges on debt586,338)( 320,453)( 38,722)( 945,513)(
Transfers from other funds for capital acquisition- - 317,154 317,154
Proceeds from sale of capital assets1,512 - - 1,512
( 916,269)752,738)( 243,626)( 1,912,633)(
Acquisition and construction of capital assets
Cash used by capital and
( 1,441,722)2,727,564)( 117,178)( 4,286,464)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
3,3683,224 122 6,714
Interest on investments
3,3683,224 122 6,714
Cash provided by investing activities
NET DECREASE IN CASH AND
( 854,795)1,072,153)( 71,318)( 1,998,266)(
CASH EQUIVALENTS
2,192,9672,823,366 266,021 5,282,354
CASH AND CASH EQUIVALENTS, BEGINNING
$ 1,338,1721,751,213$ 194,703$ 3,284,088$
CASH AND CASH EQUIVALENTS, ENDING
(Including $714,355 for the Water and Wastewater
fund and $194,452 for the Storm Water Drainage
fund in restricted investments)
(continued)
22
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)942,627$ 331,250$ 172,691)$( 1,101,186$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation1,169,861 253,994 209,006 1,632,861
Change in assets and liabilities:
Decrease (increase) in accounts receivable137,821)( 1,685)( 5,198 134,308)(
Increase (decrease) in accounts payable140,929)( - 14,250)( 155,179)(
Increase (decrease) in accrued liabilities19,229)( - 1,509)( 20,738)(
Increase (decrease) in customer deposits10,040 - 100 10,140
-1,986 2,076 4,062
Increase (decrease) in compensated absences
252,309883,908 200,621 1,336,838
Total adjustments
$ 583,5591,826,535$ 27,930$ 2,438,024$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ -248,024$ 154,678$ 402,702$
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, 2010
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 $2,961,447 difference are as follows:
General obligations2,605,000$
Accrued interest payable13,506
Compensated absences239,620
Deferred charges20,000)(
123,321
Retainage payable
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$ 2,961,447
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 $895,113 difference are as follows:
Capital outlay2,057,941$
(1,162,828)
Depreciation expense
Net adjustment to increase net changes in fund
balances - total governmental fundsto arrive at
$ 895,113
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
$10,538 difference are as follows:
Property taxes43,802$
Ambulance charges for services23,856)(
(9,408)
Municipal court fines
Net adjustment to decrease net changes in fund balances -
totalgovernmental fundsto arrive at changes in net
$ 10,538
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 $344 difference are as follows:
Accrued interest5,559$
Amortization of deferred charges2,500)(
(2,715)
Compensated absences
Net adjustment to increase net changes in fund balances -
totalgovernmental fundsto arrive at changes in net
$ 344
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 $307,739
difference are as follows:
Capital contributions322,152$
(14,413)
Disposals of capital assets
Net adjustment to increase net changes in fund balances -
governmental fundsto arrive at changes in net
total
$ 307,739
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:
Financial administration and accounting17,637$
Legal counsel5,562
Municipal court6,416
Public safety:
Fire suppression1,158
Criminal investigation7,240
Public safety facility13,669
Culture and recreation:
Recreation administration1,161
Senior citizens center834
Capital outlay:
Police communications4,951
Street maintenance148
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, 2010, the City did not own any types of securities other than those permitted by statute.
As of September 30, 2010, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity (Days)
Tex Pool8,839,198$ 30
4,169,187
TexStar47
$ 13,008,385
Total fair value
Portfolio weighted average maturity (days)35
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. The fund is rated AAAm by Standard &
Poor’s.
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,
2010, 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:
Customers46$ -,772$ -$ 1$ 75,404,856$ 7,522$ 1,114$,534,264
Ambulance560 -,255 - - - - 560 ,255
Municipal court fines180 -,320 - - - - 180 ,320
Intergovernmental47 149,507 -,089 - - - 196 ,596
Other -11,126 3 13,084 -,961 - 28 ,171
Taxes:
Property -139,519 24 -,520 - - 164 ,039
-,479 - - - - 788 ,479
Sales 788
Occupancy -- 61 -,319 - - 61 ,319
-30,953 - - - - 30,953
Other
Gross receivables1 149,804,931 88,089 1,923 75,418,817 7,522 3,114,544,396
Less: allowance for
( -513,336) 10,435)( 395,217)( 9,287)( - 928,275)(
uncollectibles
$ 149,0891,291,595$ 78,488$ 1,023,600$ 66,235$ 7,114$ 2,616,121$
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)73,164$ -$
Delinquent property taxes receivable (debt service)12,536 -
Ambulance charges for services (general fund)59,928 -
-
180,320
Municipal court fines
-$
$ 325,948
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, 2010, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
$ -2,328,617$ 7,367$ 2,321,250$
Land
-2,328,617 7,367 2,321,250
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements4,671,420 3,400 - 4,674,820
Machinery and equipment5,970,863 399,504 70,461 6,299,906
2,100,51015,288,837 - 17,389,347
Infrastructure
2,503,41425,931,120 70,461 28,364,073
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,051,218 99,829 - 1,151,047
Machinery and equipment3,845,970 361,684 63,415 4,144,239
701,3155,698,555 - 6,399,870
Infrastructure
1,162,82810,595,743 63,415 11,695,156
Total accumulated depreciation
1,340,58615,335,377 7,046 16,668,917
Total capital assets being depreciated, net
$ 1,340,58617,663,994$ 14,413$ 18,990,167$
Governmental activities capital assets, net
(continued)
35
IV. DETAILED NOTES ON ALL FUNDS (Continued)
D. Capital Assets (Continued)
BeginningEnding
BalanceIncreasesDecreasesAdjustmentsBalance
Business-type activities:
Capital assets, not being depreciated:
Land909,278$ -$ -$ -$ 909,278$
489,67517,359,605 17,772,965 - 76,315
Construction in progress
489,67518,268,883 17,772,965 - 985,593
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements6,334,727 11,133,360 - 89,601 17,557,688
Machinery and equipment2,393,219 130,610 16,993 - 2,506,836
7,791,96641,944,333 - - 49,736,299
Water and wastewater system
19,055,93650,672,279 16,993 89,601 69,800,823
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,394,878 399,556 - - 1,794,434
Machinery and equipment1,423,941 1,178,907 15,294 - 2,587,554
54,39818,320,157 - - 18,374,555
Water and wastewater system
1,632,86121,138,976 15,294 - 22,756,543
Total accumulated depreciation
17,423,07529,533,303 1,699 89,601 47,044,280
Total capital assets being depreciated, net
$ 17,912,75047,802,186$ 17,774,664$ 89,601$ 48,029,873$
Business-type activities capital assets, net
See Note V.F. for related disclosure regarding the “Adjustments” column above.
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government61,721$
Public safety207,591
Streets539,849
Culture and recreation346,989
6,678
Community development
$ 1,162,828
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater1,169,861$
Storm water drainage253,994
Landfill106,713
102,293
Airport
$ 1,632,861
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, 2010, is as follows:
Receivable FundPayable FundAmount
$ 2,142,083
Water and wastewaterCapital projects
$ 2,142,083
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, 2010, are as follows:
Transfers InTransfers OutAmount
Nonmajor enterpriseGeneral317,154$
204,320
GeneralWater and wastewater
$ 521,474
Total interfund transfers
The transfer in the amount of $204,320 was paid from the Water and Wastewater Fund to the
General Fund for payments in lieu of taxes. The transfer in the amount of $317,154 was paid
to nonmajor Enterprise Funds to finance capital acquisitions.
(continued)
37
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2010, was as follows:
BalanceBalanceDue Within
09/30/09AdditionsReductions09/30/10One Year
Governmental activities
:
General obligation bonds3,065,000$ -$ 460,000$ 2,605,000$ 240,000$
Retainage payable- 123,321 - 123,321 123,321
236,905 239,620 236,905 239,620 239,620
Compensated absences payable
$ 3,301,905 362,941$ 696,905$ 2,967,941$ 602,941$
Total governmental activities
Business-type activities:
Revenue bonds/certificates
of obligation24,041,865$ -$ 1,612,000$ 22,429,865$ 1,668,000$
Capital lease499,724 - 134,984 364,740 170,619
Estimated landfill closure
and postclosure costs125,408 2,207 - 127,615 -
29,584 33,646 29,584 33,646 33,646
Compensated absences payable
$ 24,696,581 35,853$ 1,776,568$ 22,955,866$ 1,872,265$
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:
$2,000,000CombinationTaxandRevenueCertificatesof
Obligation-Series1996,principaldueannuallyinseriesthrough
2016,interestduesemi-annuallyat4.8%to6.8%,certificates
callable February 15, 2006.350,000$
$1,325,000CombinationTaxandRevenueCertificatesof
Obligation-Series2008,principaldueannuallyinseriesthrough
2033, interest due semi-annually at 4.06%.755,000
nTaxandRevenueCertificatesof
$1,500,000Combinatio
Obligation-Series2009,principaldueannuallyinseriesthrough
2019, interest due semi-annually at 3.85%.
1,500,000
$ 2,605,000
(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,
2010, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.$ 4,250,000
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.275,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.910,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.1,245,000
$275,000CombinationTaxandRevenueCertificatesof
Obligation,Series2003A,principaldueannuallyinSeriesthrough
2021, interest due semi-annually at 4.125%.164,865
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.6,350,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.1,305,000
$4,300,000CombinationTaxRevenueCertificatesofObligation,
Series2006A,principaldueannuallyinseriesthrough2027,
interest due semi-annually at 3.92%.3,850,000
$4,130,000CombinationTaxRevenueCertificatesofObligation,
Series2008,principaldueannuallyinseriesthrough2033,interest
due semi-annually at 4.06%.
4,080,000
$ 22,429,865
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
2011240,000$ 101,878$ 341,878$
2012255,000 90,359 345,359
2013265,000 79,420 344,420
2014275,000 68,042 343,042
2015290,000 56,122 346,122
101,4181,280,000 1,381,418
2016-2020
$ 497,2392,605,000$ 3,102,239$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
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
20151,941,000 584,225 2,525,225
2016-20208,080,865 1,794,598 9,875,463
2021-20251,735,000 903,494 2,638,494
2026-20302,115,000 522,386 2,637,386
92,0611,485,000 1,577,061
2031-2033
$ 6,946,50422,429,865$ 29,376,369$
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$
322,607
Less: accumulated depreciation
$ 471,474
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, 2010, were as follows:
Fiscal Year Ending
September 30,
2011193,087$
2012105,163
105,163
2013
Total minimum lease payments403,413
38,673
Less: amount representing interest
$ 364,740
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 $379,896. 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 34% 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 2009Plan Year 2010
Employee deposit rate6.0%6.0%6.0%
Matching ratio (city to employee)2 to 12 to 12 to 1
Years required for vesting555
Service retirement eligibility
(expressed as age/years of service)60/5, 0/2060/5, 0/2060/5, 0/20
Updated service credit100% repeating,100% repeating,100% repeating,
transferstransferstransfers
Annuity increase (to retirees)70% of CPI70% of CPI70% of CPI
repeatingrepeatingrepeating
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
09/30/08696,664$ 696,664$ 100%-
09/30/09934,953 934,953 100%-
09/30/101,068,923 1,068,923 100%-
The required contribution rates for fiscal year 2010 were determined as part of the December
31, 2007 and 2008 actuarial valuations. Additional information as of the latest actuarial
valuation, December 31, 2009, also follows:
Actuarial Valuation Date12/31/0712/31/0812/31/09
Actuarial cost methodProjected Unit CreditProjected Unit CreditProjected Unit Credit
Amortization methodLevel percentLevel percentLevel percent
of payrollof payrollof payroll
GASB 25 equivalent single30 years;29 years;28 years;
amortization periodclosed periodclosed periodclosed period
Amortization period for30 years30 years30 years
new gains/losses
Asset valuation methodAmortized costAmortized cost10-year smoothed
market
Actuarial Assumptions:
Investment rate of return*7%7.5%7.5%
Projected salary increases*varies by agevaries by agevaries by age
and serviceand serviceand service
*Includes inflation at3.0%3.0%3.0%
Cost-of-living adjustments2.1%2.1%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
12/31/200713,396,160$ 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%
12/31/200916,141,135 23,087,454 69.9% 6,946,319 6,040,379 115.0%
(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.
The City’s contributions to the TMRS SDBF for the years ended 2010, 2009 and 2008 were
$2,455, $2,964 and $2,574, respectively, which equaled the required contributions each year.
Schedule of Contribution Rates
(Retiree-only portion of the rate)
Plan/Annual Required Actual Contribution Percentage of
Calendar YearContribution (Rate)Made (Rate)ARC Contributed
20080.05%0.05%100%
20090.05%0.05%100%
20100.04%0.04%100%
F. Prior Period Adjustment
In the current year, the City determined that prior year expenses in the Sanitary Landfill
Enterprise Fund should have been capitalized. The result of correcting this error in the
current year was an increase of $89,601 to the beginning net assets in the Sanitary Landfill
Enterprise Fund.
45
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COMBINING FUND
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds are used to account for specific revenue that is legally
restricted to expenditures for particular purposes.
Hotel/Motel Occupancy Tax – This fund is used to account for hotel/motel
occupancy tax revenue to be used for enhancing and promoting tourism and
convention activity for the benefit of the hotel industry.
Child Safety – This fund is used to account for court costs used to operate a
City school crossing guard program, or programs designated to enhance child
safety, health, or nutrition; including child abuse prevention and intervention
and drug and alcohol abuse prevention.
Public Safety – This fund is used to account for court costs used to promote
various public safety programs.
Court Technology – This fund is used to account for court costs used to
maintain technological enhancements for the municipal court.
TheDebt Service Fund is used to account for the accumulation of resources and
payment of general obligation bond principal and interest from governmental
resources.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2010
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicCourtDebtGovernmental
TaxSafetySafetyTechnologyTotalServiceFunds
ASSETS
Cash and investments279,165$ 7,196$ 24,143$ 24,336$ 334,840$ 88,634$ 423,474$
Receivables (net of allowance
for uncollectibles):
-61,319 - - 61,319 17,169 78,488
Taxes
$ 7,196340,484$ 24,143$ 24,336$ 396,159$ 105,803$ 501,962$
Total assets
LIABILITIES
Accounts payable58,480 - - - 58,480 - 58,480
-- - - - 12,536 12,536
Deferred revenue
-58,480 - - 58,480 12,536 71,016
Total liabilities
FUND BALANCES
Reserved for debt service- - - - - 93,267 93,267
7,196282,004 24,143 24,336 337,679 - 337,679
Unreserved
7,196282,004 24,143 24,336 337,679 93,267 430,946
Total fund balances
Total liabilities
$ 7,196340,484$ 24,143$ 24,336$ 396,159$ 105,803$ 501,962$
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, 2010
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicCourtDebtGovernmental
TaxSafety SafetyTechnologyTotalServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ -$ 601,392$ 601,392$
Other299,962 - - - 299,962 - 299,962
Fines and forfeitures- 3,388 1,322 6,37611,086 - 11,086
Intergovernmental- - 3,728 - 3,728 - 3,728
-660 - - 660 83 743
Investment earnings
3,388300,622 5,050 6,376 315,436 601,475 916,911
Total revenues
EXPENDITURES
Current:
Public safety- 6,000 630 - 6,630 - 6,630
Culture and recreation303,926 - - - 303,926 - 303,926
Debt service: -
Principal - - - - - 460,000 460,000
-- - - - 144,279 144,279
Interest and fiscal charges
6,000303,926 630 - 310,556 604,279 914,835
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
(3,304) 2,612)( 4,420 6,376 4,880 2,804)( 2,076
EXPENDITURES
9,808285,308 19,723 17,960 332,799 96,071 428,870
FUND BALANCES, BEGINNING
$ 7,196282,004$ 24,143$ 24,336$ 337,679$ 93,267$ 430,946$
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, 2010
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - other325,000$ 299,962$ 25,038$()
6601,500 840)(
Investment income
300,622326,500 25,878)(
Total revenues
EXPENDITURES
Current:
303,926391,209 87,283
Culture and recreation
303,926391,209 87,283
Total culture and recreation
303,926391,209 87,283
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 3,304)64,709)( 61,405
OVER (UNDER) EXPENDITURES
285,308285,308 -
FUND BALANCE, BEGINNING
$ 282,004220,599$ 61,405$
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, 2010
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 3,3884,500$ 1,112)$(
Fines and forfeitures
3,3884,500 1,112)(
Total revenues
EXPENDITURES
Current:
6,0006,000 -
Public safety
6,0006,000 -
Total public safety
6,0006,000 -
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 2,612)1,500)( 1,112)(
OVER (UNDER) EXPENDITURES
9,8089,808 -
FUND BALANCE, BEGINNING
$ 7,1968,308$ 1,112)$(
FUND BALANCE, ENDING
49
CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
PUBLIC SAFETY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Fines and forfeitures-$ 1,322$ 1,322$
3,7283,700 28
Intergovernmental
5,0503,700 1,350
Total revenues
EXPENDITURES
Current:
6303,700 3,070
Public safety
6303,700 3,070
Total public safety
6303,700 3,070
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
4,420- 4,420
OVER (UNDER) EXPENDITURES
19,723 19,723 -
FUND BALANCE, BEGINNING
$ 19,723 24,143$ 4,420$
FUND BALANCE, ENDING
50
CITY OF STEPHENVILLE, TEXAS
SPECIAL REVENUE FUND
COURT TECHNOLOGY FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
$ 6,3764,000$ 2,376$
Fines and forfeitures
6,3764,000 2,376
Total revenues
EXPENDITURES
Current:
-- -
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
6,3764,000 2,376
OVER (UNDER) EXPENDITURES
17,960 17,960 -
FUND BALANCE, BEGINNING
$ 21,960 24,336$ 2,376$
FUND BALANCE, ENDING
51
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, 2010
Variance
FinalPositive
BudgetActual(Negative)
REVENUES
Taxes - property 601,995$ 601,392$ 603)$(
831,000 917)(
Investment earnings
602,995 601,475 1,520)(
Total revenues
EXPENDITURES
Debt service:
Principal460,000460,000 -
142,995 144,279 1,284)(
Interest and fiscal charges
602,995 604,279 1,284)(
Total debt service
602,995 604,279 1,284)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
2,804)-( 2,804)(
OVER (UNDER) EXPENDITURES
96,071 96,071 -
FUND BALANCE, BEGINNING
$ 96,071 93,267$ 2,804)$(
FUND BALANCE, ENDING
52
NONMAJOR ENTERPRISE FUNDS
Enterprise Funds are used to account for operations that are financed and operated in
a manner similar to private business enterprises – where the intent is that the costs of
providing goods or services to the general public on a continuing basis be financed or
recovered primarily through user charges; or where the City has decided that periodic
determination of net income is appropriate for accountability purposes.
Sanitary Landfill – This fund is used to account for solid waste collection
and disposal services provided to the residents of the City.
Airport – This fund is used to account for municipal airport services and to
support air transportation and charter services.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR ENTERPRISE FUNDS
SEPTEMBER 30, 2010
Sanitary
LandfillAirportTotal
ASSETS
Current assets:
Cash and investments154,119$ 40,584$ 194,703$
2,315 4,799 7,114
Accounts receivable (net of allowances for uncollectibles)
45,383156,434 201,817
Total current assets
Noncurrent assets:
Capital assets:
Land40,000 705,557 745,557
Buildings and improvements897,961 4,150,875 5,048,836
Equipment1,004,859 152,569 1,157,428
( 669,427)891,317)( 1,560,744)(
Less: accumulated depreciation
4,339,5741,051,503 5,391,077
Total capital assets
4,339,5741,051,503 5,391,077
Total noncurrent assets
4,384,9571,207,937 5,592,894
Total assets
LIABILITIES
Current liabilities:
Accounts payable178 1,416 1,594
Accrued liabilities2,580 - 2,580
Customer deposits800 - 800
Accrued interest payable16,716 2,186 18,902
Capital lease170,619 - 170,619
Bonds payable- 18,000 18,000
2,985 - 2,985
Compensated absences payable
21,602193,878 215,480
Total current liabilities
Long-term liabilities:
Capital lease194,121 - 194,121
Bonds payable- 146,865 146,865
-127,615 127,615
Liability for landfill closure
146,865321,736 468,601
Total long-term liabilities
168,467515,614 684,081
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt686,763 4,174,709 4,861,472
5,560 41,781 47,341
Unrestricted
$ 4,216,490692,323$ 4,908,813$
Total net assets
53
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Sanitary
LandfillAirportTotal
OPERATING REVENUES
Gate charges174,013$ -$ 174,013$
Hanger rental- 69,300 69,300
3,1081,140 4,248
Other service charges
72,408175,153 247,561
Total operating revenues
OPERATING EXPENSES
Personnel services117,212 - 117,212
Contractual services12,510 277 12,787
Utilities600 26,565 27,165
Repairs and maintenance3,790 14,666 18,456
Other 28,492 7,134 35,626
102,293106,713 209,006
Depreciation
150,935269,317 420,252
Total operating expenses
( 78,527)94,164)( 172,691)(
OPERATING LOSS
NONOPERATING REVENUES (EXPENSES)
Investment earnings122 - 122
Intergovernmental- 17,808 17,808
( 7,150)25,090)( 32,240)(
Interest expense
( 10,65824,968) 14,310)(
Total nonoperating revenues (expenses)
INCOME(LOSS) BEFORE
( 67,869)119,132)( 187,001)(
CONTRIBUTIONS AND TRANSFERS
154,678154,678-
CAPITAL CONTRIBUTIONS
67,154250,000 317,154
TRANSFER IN
153,963130,868 284,831
CHANGE IN NET ASSETS
4,062,527471,854 4,534,381
TOTAL NET ASSETS, BEGINNING
89,601- 89,601
PRIOR PERIOD ADJUSTMENT
4,062,527561,455 4,623,982
TOTAL NET ASSETS, BEGINNING, RESTATED
$ 4,216,490692,323$ 4,908,813$
TOTAL NET ASSETS, ENDING
54
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Sanitary
LandfillAirportTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers174,378$ 78,481$ 252,859$
Cash payments to employees118,852)( - 118,852)(
( 49,590)56,487)( 106,077)(
Cash payments to suppliers for goods and services
( 28,891961) 27,930
Cash provided (used) by operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
- 17,808 17,808
Cash received from operating grant
- 17,808 17,808
Cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease134,984)( - 134,984)(
Principal payments on bonds- 17,000)( 17,000)(
Interest and fiscal charges on debt31,346)( 7,376)( 38,722)(
Transfers from other funds for capital acquisition250,000 67,154 317,154
( 49,401)194,225)( 243,626)(
Acquisition and construction of capital assets
Cash used by capital and
( 6,623)110,555)( 117,178)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
-122 122
Interest received
-122 122
Cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
( 40,076111,394) 71,318)(
AND CASH EQUIVALENTS
508265,513 266,021
CASH AND CASH EQUIVALENTS, BEGINNING
$ 40,584154,119$ 194,703$
CASH AND CASH EQUIVALENTS, ENDING
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss94,164)$( 78,527)$( 172,691)$(
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation106,713 102,293 209,006
Change in assets and liabilities:
Decrease (increase) in accounts receivable875)( 6,073 5,198
Increase (decrease) in accounts payable13,302)( 948)( 14,250)(
Increase (decrease) in accrued liabilities1,509)( - 1,509)(
Increase (decrease) in customer deposits100 - 100
-2,076 2,076
Increase (decrease) in compensated absences
107,41893,203 200,621
Total adjustments
$( 28,891961)$ 27,930$
Net cash provided (used) by operating activities
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
$ - 154,678$ 154,678$
Contributions of capital assets
55
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 56
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 62
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 66
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 71
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 73
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 EIGHT FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007200820092010
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$ 16,763,870$
Restricted- 620,104 295,721 381,849 366,934 397,365 434,394 405,640
8,181,0767,932,439 9,548,977 10,237,660 11,232,319 12,162,240 5,252,462 7,952,264
Unrestricted
$ 17,678,42116,603,822$ 18,915,350$ 20,354,286$ 21,756,728$ 23,072,991$ 24,158,191$ 25,121,774$
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$ 25,323,978$
Restricted508,583 470,750 514,842 599,910 665,099 554,647 710,870 690,998
4,134,8415,621,026 5,301,524 6,516,830 9,087,784 7,178,489 5,974,684 4,566,114
Unrestricted
$ 18,834,99717,919,299$ 22,007,282$ 24,549,134$ 26,317,100$ 28,964,524$ 30,181,049$ 30,581,090$
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$ 42,087,848$
Restricted508,583 1,090,854 810,563 981,759 1,032,033 952,012 1,145,264 1,096,638
12,315,91713,553,465 14,850,501 16,754,490 20,320,103 19,340,729 11,227,146 12,518,378
Unrestricted
$ 36,513,41834,523,121$ 40,922,632$ 44,903,420$ 48,073,828$ 52,037,515$ 54,339,240$ 55,702,864$
Total net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
56
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
LAST EIGHT FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007200820092010
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$ 1,412,441$
Public safety 4,026,4024,028,747 4,345,846 4,689,443 5,187,628 5,504,975 6,043,653 6,252,861
Streets 995894,193 979,046 1,051 1,098,979 1,144,681 1,183,435 1,210,135,426,590
Culture and recreation 11,522,896 1,574,032 1,582,864 1,646,017 2,733,627 2,166,545 2,340,312,438,756
Community developmen 296,244317,743 348,177 343,135 381,091 395,182 408,144 427,769
130,388153,445 109,153 91,817 65,926 103,490 72,220 141,220
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 12,099,637
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 5,819,886,054,152
Storm water drainage 35,46214,034 166,346 232,955 141516245,371 346,159 580,590
Sanitary landfill 151,309211,159 99,078 119,832 272,010 290,349 527,255 2
101,08299,847 8,633 18,075 130,169 127,018 170,287 1
Airport
4,870,5434,115,870 4,641,728 5,052,036 5,320,054 5,189,631 5,863,587 5,634,745
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$ 17,734,382$
Total expensess
PROGRAM REVENUES
Governmental activities
Charges for services
General government$ 195,17621,421$ 172,292$ 177,636$ 243,929$ 219,353$ 231,122$ 215,757$
Public safety 524,561884,349 488,292 600,332 687,567 906,131 677,662 834,180
Streets 2822,388 17,748 17,213 27,444 24,425 21,046 24,472,713
Culture and recreation 147157,741 135,563 132,607 171,125 145,931 221,225 317,589,917
Community developmen 165,80382,182 163,490 180,304 160,745 272,729 126,186 177,401
Operatinggrants and contributions 189,805146,257 125,068 172,884 115,859 57,969 109,861 43,417
366,478185,625 556,425 177,503 115,556 148 740,974 1,602,301
Capital grants and contributions
1,618,1341,499,963 1,658,387 1,458,228 1,523,012 1,625,601 2,128,866 3,215,686
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$ 5,492,233$ ,396,349
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 478,143511,427 485,600 485,314 500,779 577,766 584,439 588,141
Operatinggrants and contributions -- - - - - 20,062 -
411,474273,101 1,513,020 599,393 169,370 870,718 249,253 248,024
Capital grants and contributions
5,659,0395,225,598 7,458,454 6,926,708 5,995,457 7,262,517 6,833,670 6,232,514
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$ 9,448,200$
Total program revenues
(continued)
57
TABLE 2
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST EIGHT FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
20032004200520062007200820092010
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)$( 8,883,951)$(
788,4961,109,728 2,816,726 1,874,672 675,403 2,072,886 970,083 597,769
Business-type activities
( 6,037,045)5,569,497)( 4,343,964)( 5,978,430)( 7,905,796)( 6,986,723)( 8,285,417)( 8,286,182)(
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 3,371,138
Property - debt service545,552 540,467 448,663 437,146 476,117 527,921 536,671 608,404
Sales3,217,670 3,538,100 3,654,232 4,101,973 4,351,269 4,745,309 4,622,690 4,275,545
Franchise934,965 1,209,036 1,264,298 1,423,615 1,370,838 1,169,858 1,186,650 1,018,036
Other208,534 262,467 292,447 312,528 388,013 434,498 372,815 341,456
Gain on sale of capital assets- - - - - - - 323,641
Investment earnings196,542 87,990 286,301 441,986 623,810 454,269 108,218 32,294
Miscellaneous33,971 12,158 54,068 34,663 75,994 17,186 124,613 14,190
-315,638 50,000)( 116,979)( 215,921)( 104,871)( 6,771 112,834)(
Transfers
7,900,1407,447,600 8,397,619 9,292,038 9,983,641 10,375,872 10,340,700 9,871,870
Total governmental activities
Business-type activities:
Investment earnings105,970 100,773 305,559 518,164 876,642 469,667 68,079 6,592
Miscellaneous9,137 26,429 - 32,037 - - 7,888 -
( -315,638) 50,000 116,979 215,921 104,871 6,771)( 204,320)(
Transfers
( 127,202200,531) 355,559 667,180 1,092,563 574,538 69,196 197,728)(
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 9,674,142
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 1,085,200 987,919
915,698909,197 3,172,285 2,541,852 1,767,966 2,647,424 1,039,279 400,041
Business-type activities
$ 1,990,2971,677,572$ 4,409,214$ 3,980,788$ 3,170,408$ 3,963,687$ 2,124,479$ 1,387,960$
Total change in net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
58
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TABLE 3
CITY OF STEPHENVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2001200220032004200520062007200820092010
General fund
Reserved-$ -$ 7,178$ 4,072$ 13,349$ 10,352$ 15,224$ 8,653$ 12,680$
9,148$
6,429,8615,958,100 7,309,934 8,017,965 8,361,416 9,045,429 10,039,416 9,555,553 7,358,831 7,196,152
Unreserved
$ 6,429,8615,958,100$ 7,317,112$ 8,022,037$ 8,374,765$ 9,055,781$ 10,054,640$ 9,564,206$ 7,371,511$ 7,205,300$
Total general fund
All other governmental funds
Reserved
Debt service funds24,139$ 30,337$ 41,081$ 41,285$ 50,563$ 69,443$ 82,233$ 89,253$ 96,071$
93,267$
Unreserved, reported in:
Special revenue funds232,461 207,743 237,911 211,765 247,743 318,028 280,798 350,750 332,799
337,679
895,8941,109,119 772,431 735,191 1,063,030 1,051,972 1,069,303 2,429,680 1,676,876 1,155,196
Capital projects funds
Total all other
$ 1,133,9741,365,719$ 1,051,423$ 988,241$ 1,361,336$ 1,439,443$ 1,432,334$ 2,869,683$ 2,105,746$ 1,586,142$
governmental funds
59
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2001200220032004200520062007200820092010
REVENUES
Taxes6,689,180$ 7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235$ 9,506,528$ 10,004,265$ 10,104,779$ 9,570,777$
Special assessments- 55,415 - - 402,789 28,122 - - -
-
Licenses, fees and permits64,408 86,583 84,669 168,519 168,523 183,839 164,071 275,887 131,341
138,675
Fines and forfeitures168,271 135,897 248,426 229,922 207,407 279,716 353,889 361,027 226,083
229,357
Intergovernmental207,050 242,187 249,564 306,510 104,228 188,096 111,889 87,730 124,581
1,366,544
Service charges408,757 523,825 545,763 697,355 651,021 640,935 738,526 839,684 948,049 1,178,800
Investment earnings406,277 275,793 194,772 87,991 286,300 441,986 623,810 454,269 108,218
32,294
61,70568,242 125,027 52,734 108,222 60,110 119,731 19,734 35,189 19,269
Miscellaneous
8,012,185 8,449,309 8,339,293 9,347,931 10,031,624 10,765,039 11,618,444 12,042,596 11,678,240 12,535,716
Total revenues
EXPENDITURES
General government942,036 1,091,746 1,113,323 1,274,807 1,231,709 1,349,248 1,491,202 1,293,925 1,355,822 1,359,012
Public safety3,325,599 3,603,448 3,821,859 3,874,454 4,140,738 4,562,217 4,955,771 5,459,268 5,827,418 6,048,150
Streets588,038 620,714 561,646 630,057 578,126 699,290 735,614 824,764 845,429 850,428
Culture and recreation1,243,096 1,294,316 1,357,624 1,336,974 1,412,305 1,466,261 1,518,938 1,931,846 2,006,999 2,072,331
Community development236,431 250,776 317,743 295,036 346,969 337,659 375,614 394,833 407,208
420,982
Debt service
Principal430,000 450,000 470,000 500,000 420,000 430,000 455,000 475,000 425,000 460,000
Interest200,415 178,813 157,032 133,441 111,582 91,817 71,105 49,195 99,652 144,279
Bond issuance costs- - - - - - - 12,725 25,000
-
1,667,368 868,370 366,753 661,419 1,014,372 952,446 807,528 1,902,168 5,265,493 2,099,912
Capital outlay
8,632,983 8,358,183 8,165,980 8,706,188 9,255,801 9,888,938 10,410,772 12,343,724 16,258,021 13,455,094
Total expenditures
(continued)
60
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
(Continued)
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2001200220032004200520062007200820092010
EXCESS OF REVENUES
OVER (UNDER)
$(620,798) 91,126$ 173,313$ 641,743$ 775,823$ 876,101$ 1,207,672$ 301,128)$( 4,579,781)$( 919,378)$(
EXPENDITURES
OTHER FINANCING
SOURCES (USES)
Issuance of bonds- - - - - - - 1,325,000 1,500,000
-
Proceeds from sale of
capital assets- - - - - - - 27,914 21,881
338,054
Proceeds from insurance- - - - - - - - 94,497
8,343
Transfers in448,316 251,085 423,414 90,000 90,000 94,500 55,000 207,629 2,461,037
204,320
(325,000)( 107,776)( 90,000)( 140,000)( 211,479)( 270,921)( 312,500)( 2,454,266)( 317,154)(
Transfers out
Total other financing
123,316 315,638 - 50,000)( 116,979)( 215,921)( 1,248,043 1,623,149 233,563
sources (uses)
NET CHANGE IN
$(497,482) 240,016$ 488,951$ 641,743$ 725,823$ 759,122$ 991,751$ 946,915$ 2,956,632)$( 685,815)$(
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
9.2%10.0% 8.7% 8.5% 6.9% 6.2% 5.8% 5.3% 5.0% 5.3%
EXPENDITURES
61
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
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
2010541,059,730 514,106,150 145,588,370 305,171,070 895,583,180 0.4435913,860,388
Source:Erath County Appraisal District.
Note:PropertyinErathCountyisreassessedonceeverythreeyearsonaverage.TheCountyassessespropertyatapproximately98percentofactualvaluefor
commercial,industrialandresidentialproperty.Estimatedactualtaxablevalueiscalculatedbydividingtaxableassessedvaluebythosepercentages.Tax
rates are per $100 of assessed value.
62
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
2001$0.3552$0.1172$0.4724$1.7500-$0.4785$2.7009
20020.36780.11220.48000.1690-0.47851.1275
20030.38120.10380.48501.6900$0.01500.47002.6600
20040.39130.09370.48501.67000.01500.45122.6212
20050.41070.07430.48501.67000.01500.46252.6325
20060.40790.06710.47501.66000.01500.44102.5910
20070.39960.06540.46501.51990.01500.43522.4351
20080.38110.06390.44501.19200.01500.41872.0707
20090.37620.05880.43501.14700.01500.39151.9885
20100.37620.06730.44351.14700.01500.39001.9955
Source:
Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.Ratesfordebtservice
are set based on each year's requirements.
OverlappingratesarethoseoflocalandcountygovernmentsthatapplytopropertyownerswithintheCityofStephenville,
Texas.
63
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20102001
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company39,748,826$ 4.44% 22,114,881$ 4.52%
Saint Gobain Abrasives16,731,777 1.87% 15,311,010 3.13%
Stephenville Campus Crest9,416,720 1.05% - -%
Bosque River Associates8,837,900 0.99% 8,553,570 1.75%
Oncor Electric Delivery8,040,210 0.90% 7,310,290 1.49%
Stephenville Student Housing LP7,260,800 0.81% - -%
Wal-Mart Stores, Inc. #17,727,270 0.86% 7,694,070 1.57%
United Telephone Company
(Century Link)6,474,050 0.72% 5,424,040 1.11%
Seam Mac Tube LLC- -% 4,285,960 0.88%
Wilmington Trust (Wal-Mart #2)6,351,350 0.71% 6,748,260 1.38%
Rayloc Genaut- -% 4,134,076 0.84%
-%- 4,112,286 0.84%
Emerson Electric Company
Subtotal110,588,903$ 12.35% 85,688,443$ 17.51%
87.65%784,994,277 403,671,265 82.49%
Remaining Roll
$ 100.00%895,583,180 489,359,708$ 100.00%
Total
64
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 Levy09/30/10
20012,236,217$ 2,192,628$ 98.05% 41,761$ 2,234,389$ 99.92% 1,828$
20022,348,927 2,294,810 97.70% 51,913 2,346,723 99.91% 2,204
20032,513,625 2,462,155 97.95% 45,139 2,507,294 99.75% 6,331
20042,788,419 2,726,244 97.77% 58,417 2,784,661 99.87% 3,758
20052,832,529 2,808,747 99.16% 19,290 2,828,037 99.84% 4,492
20063,066,225 3,018,008 98.43% 43,866 3,061,874 99.86% 4,351
20073,344,539 3,307,083 98.88% 29,420 3,336,503 99.76% 8,036
20083,641,808 3,602,598 98.92% 27,346 3,629,944 99.67% 11,864
3,822,4923,874,843
2009 31,44498.65% 3,853,936 98.65% 20,907
3,887,0383,965,938
2010 -98.01% 3,887,038 98.01% 78,900
Sources: Erath County Appraisal District and Erath County Tax Assessor-Collector.
65
TABLE 9
CITY OF STEPHENVILLE, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental ActivitiesBusiness-type Activities
GeneralCertificatesWaterCertificatesTotalPercentage
FiscalObligationofRevenueofCapitalPrimaryof PersonalPer
YearBondsParticipationBondsParticipationLeasesGovernmentIncomeCapita
20012,310,000$ 1,555,000$ 14,455,000$ -$ -$ 18,320,000$ 5.22% 1,228$
20021,970,000 1,445,000 13,455,000 1,150,000 - 18,020,000 5.09% 1,201
20031,615,000 1,330,000 6,660,000 7,905,000 - 17,510,000 4.91% 1,118
20041,235,000 1,210,000 6,295,000 14,174,233 - 22,914,233 6.09% 1,443
2005945,000 1,080,000 5,910,000 13,250,233 - 21,185,233 5.19% 1,300
2006645,000 950,000 5,500,000 14,305,233 259,184 21,659,417 5.03% 1,283
2007330,000 810,000 5,210,000 17,660,134 219,920 24,230,054 5.02% 1,421
5.51%27,716,492 1,590
20081,325,000 665,000 4,905,000 20,644,155 177,337
N/A1,53827,606,589
20092,550,000 515,000 4,585,000 19,456,865 499,724
N/A1,39925,399,605
20102,255,000 350,000 4,250,000 18,179,865 364,740
Notes:Details regarding the City's outstanding debt can be found in the notes to the financial statements.
See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.
66
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
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
0.24%1,990,000 114
20092,550,000 515,000
0.34%3,065,000 171
20102,255,000 350,000
0.29%2,605,000 144
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.
67
TABLE 11
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2010
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes:
Stephenville Independent School District9,939,081$ 68.17%6,775,472$
2,721,600
Erath County7,000,000 38.88%
Subtotal, overlapping debt9,497,072
2,605,000
City of Stephenville direct debt
$ 12,102,072
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.
68
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.
UnderArticleXI,Section5oftheTexasConstitution,notaxforanypurposeshalleverbelawfulforanyoneyear,whichshallexceedtwoandone-halfpercentofthetaxableproperty
of the City.
AlltaxablepropertywithintheCityissubjecttoassessment,levyandcollectionbytheCityofacontinuing,directannualadvaloremtaxsufficienttoprovideforthepaymentof
principalandinterestonthebondswithinthelimitsprescribedbylaw.UnderrulespromulgatedbytheOfficeoftheAttorneyGeneralofTexas,suchofficewillnotapprovetaxbonds
of the City unless the City can demonstrate its ability to pay debt service requirements on all outstanding City tax bonds, including the issue to be approved.
Tax Rate Limitation Calculation for Fiscal Year 2010
Taxable assessed valuation895,583,180$
Constitutional tax rate limit2.50% of assessed valuation
Maximum constitutional revenue available 22,389,580$
Tax rate to achieve maximum tax revenue $2.50 per $100 of valuation
Tax rate for FY 2009-2010$0.4435 per $100 of valuation
Available unused constitutional max tax rate$2.0565 per $100 of valuation
Debt applicable to limit:
General obligation debt3,065,000$
DEBT TAX RATE ADEQUACY
2010 Principal and Interest Requirements
$ 516,816
$0.0588 Tax Rate at 98% Collection Produces
516,071
Average Annual Principal and Interest Requirement, 2011-2019
341,161
$0.0388 Tax Rate at 98% Collection Produces
340,537
Maximum Principal and Interest Requirements
516,816
$0.0588 Tax Rate at 98% Collection Produces
516,071
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2011
516,816
Debt Service Fund, 9-30-10
$ 93,267
516,071
609,338
Debt Service Fund Tax Levy @ 98% Collection
69
TABLE 13
CITY OF STEPHENVILLE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Water and Wastewater Revenue Bonds
UtilityLess:Net
FiscalServiceOperatingAvailableDebt Service
YearChargesExpensesRevenuePrincipalInterestCoverage
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 1,220,000 819,564 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
20105,396,349 3,283,861 2,112,488 1,390,000 600,240 1.06
Notes:Operating expenses do not include interest, depreciation, or amortization expenses.
70
TABLE 14
CITY OF STEPHENVILLE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per Capita
CalendarPersonalPersonalSchool CollegeUnemployment
YearPopulationIncomeIncomeEnrollmentEnrollmentRate
200114,921$ 350,718,105$ 23,505$ 3,477$ 6,549$ 2.0%
200215,000 354,210,000 23,614 3,444 6,827 3.3%
200315,665 356,817,370 22,778 3,530 7,197 3.2%
200415,884 376,387,264 23,696 3,417 7,347 2.7%
200516,300 407,858,600 25,022 3,512 7,589 3.9%
200616,882 430,929,932 25,526 3,550 7,776 3.9%
200717,050 483,043,550 28,331 3,521 7,840 3.8%
200817,428 503,372,924 28,883 3,496 7,763 4.0%
200917,950 N/AN/A3,553 8,242 7.1%
201018,150 N/AN/A3,794 8,896 7.0%
Sources:Population,medianage,andeducationlevelinformationprovidedbytheStateDepartmentofPlanning.
PersonalincomeandunemploymentdataprovidedbytheStateDepartmentofCommerceandLabor.
SchoolenrollmentdataprovidedbytheStephenvilleIndependentSchoolDistrictandTarletonState
University.
Note:Population,medianage,andeducationlevelinformationarebasedonsurveysconductedduringthelast
quarterofthecalendaryear.Personalincomeinformationisatotalfortheyear.Unemploymentrate
information is an adjusted yearly average. School enrollment is based on the census at the start of the school
year.
Personal income is not available for 2009-2010
71
Table 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2010
Percentage
of Total City
EmployerEmployeesEmployment
Tarleton State University1,169 6.56%
FMC Company488 2.74%
Saint Gobain Abrasives441 2.47%
Stephenville Independent School District445 2.50%
Wal-Mart Stores, Inc.455 2.55%
Scheiber Foods400 2.24%
Texas Health Harris Methodist Hospital Stephenville 270 1.51%
Western Dairy Transport175 0.98%
Outlaw Conversions100 0.56%
Erath County180 1.01%
United Cooperative Services50 0.28%
Emerson Electric Company129 0.72%
Stephenville Medical & Surgical Clinic108 0.61%
Caporal Forging45 0.25%
Fibergrate Composite Structures130 0.73%
Associated Milk Producers110 0.62%
Bruner Motors120 0.67%
Southwestern Linen35 0.20%
Texstar Ford33 0.19%
0.10%18
USTRA
Subtotal4,901 27.49%
72.51%12,930
Remaining Employers
100.00%17,831
Total
Source:
City Community Development Division. Total employee data is provided by the State Department of Commerce
and Labor.
Notes:
Total employee information is based on entire Erath County. Principal employers are only those that operate from
within the corporate city limits of Stephenville.
Information on principal employers is not available for the period nine years ago.
72
TABLE 16
CITY OF STEPHENVILLE, TEXAS
FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program2001200220032004200520062007200820092010
General government
Management services4 4 4 4 4 4 4 4 4 4
Finance6 6 7 7 7 7 7 7 7 7
Planning2 2 2 2 2 2 2 2 2 2
Building1 1 1 1 1 2 2 2 2 2
Other1 1 1 1 1 1 1 1 1 1
Police
Officers30 30 30 31 31 31 34 38 38 38
Civilians10 11 11 11 13 13 12 12 12 12
Fire
Firefighters and officers23 26 26 26 26 27 28 31 31 31
Parks and recreation11 11 13 13 13 13 13 13 13 13
Library4 4 4 4 4 4 3 3 3 3
Streets7 7 7 7 7 7 7 7 7 7
Water9 9 9 9 9 10 13 13 13 13
Wastewater8 8 8 8 8 8 5 5 5 5
22 2 2 2 2 2 2 2 2
Landfill
122118 125 126 128 131 133 140 140 140
Total
Source:City Human Resource Office
Notes:Afulltimeemployeeisscheduledtowork2080hoursperyear(includingvacationandsickleave).Fulltimeequivalentemploymentis
calculated by dividing total labor hours by 2080.
73
TABLE 17
CITY OF STEPHENVILLE, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Function/Program2001200220032004200520062007200820092010
General government
Building permits issued265 234 222 140 172 125 153 135 109
90
Building permits value$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$8,456,287
Police
Calls for service9,114 10,207 10,203 10,483 10,358 11,234 11,730 11,739 12,730 13,424
Physical arrests716 762 1,134 825 959 999 1,447 1,023 953 916
Parking violations805 404 530 324 386 334 498 171 206
346
Traffic violations4,501 3,164 5,094 5,350 3,588 3,066 4,469 2,473 1,634 1,478
Fire
Ambulance responses1,321 1,468 1,372 1,183 1,291 1,255 1,537 1,472 1,502 1,442
Fires responses357 412 339 185 235 305 235 219 230 241
Inspections149 149 135 132 109 105 313 280 326 359
Other public works
Street resurfacing (miles)1.882.352.391.351.141.522.702.232.681.25
Library
Volumes in collection41,905 40,161 43,331 46,938 48,548 47,510 43,737 43,827 44,200 39,333
Total volumes borrowed130 237 110 138 155 114 116 94 227
129
Water
New connections5,319 5,319 5,242 5,521 5,253 5,550 5,660 5,670 5,700 5,624
Water main breaks53 52 49 54 50 48 49 44 61
62
Average daily consumption2,341,000 2,158,000 2,124,000 1,971,990 2,042,000 2,254,000 1,828,000 2,080,000 2,004,000 1,970,000
(thousands of gallons)
Peak daily consumption4,549,000 4,174,000 4,133,000 3,598,000 3,499,000 4,397,000 3,091,000 3,848,000 3,663,000 3,666,000
(thousands of gallons)
Wastewater
Average daily sewage treatment1,387,000 1,311,000 1,354,000 1,456,000 1,334,000 1,414,000 1,691,000 1,548,000 1,518,000 1,745,000
(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
Function/Program2001200220032004200520062007200820092010
Police
Stations1 1 1 1 1 1 1 1 1
1
Patrol units9 9 10 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 92 92 92 92 96 96 96
91
Highways (miles)19 19 19 19 19 19 21 21 21
23
Streetlights992 992 1,013 1,013 1,013 1,013 1,070 1,080 1,096 1,119
Parks and recreation
Acreage126 134 134 134 134 134 134 130 130 130
Playgrounds3 4 4 4 4 4 4 4
4 4
Baseball/softball diamonds9 9 9 9 9 9 9 9
9 11
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)58 112 116 117 117 120 122 124 125
125
Fire hydrants623 623 650 670 670 680 692 720 735
771
Storage capacity4,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,750,000 5,750,000 5,750,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)68 96 105 105 110 110 113 114 115
115
Storm sewers (miles)10 10 10 10 10 10 10 10.5
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
Note: No capital asset indicators are available for the general government function.
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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, 2010, which collectively comprise the
City’s basic financial statements and have issued our report thereon dated January 21, 2011. 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 deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a
timely basis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be deficiencies, 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.
76
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 ALBUQUERQUE, NM (505) 266-5904
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 21, 2011
77
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON 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, 2010. 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, 2010.
78
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 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.
Adeficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance
requirement of a federal program on a timely basis. A material weakness in internal control over
compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that
there is a reasonable possibility that material noncompliance with a type of compliance requirement of a
federal program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, 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 21, 2011
79
CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
FederalPass-through
Federal Grantor/Pass-through Grantor/CFDAEntity IdentifyingFederal
Program TitleNumberNumberExpenditures
U. S. Department of Housing and Urban Development
Passed through the Texas Department of Rural Affairs:
Texas Community Development Block Grant Program14.22872977952,987$
52,987
Total Passed through the Texas Department of Rural Affairs
52,987
Total U. S. Department of Housing and Urban Development
U. S. Department of Justice
Passed through the Governor's Office of Criminal Justice:
ARRA - Edward Byrne Memorial Justice Assistance Grant16.803SU-09-A10-22477-01146,078
56,630
ARRA - Edward Byrne Memorial Justice Assistance Grant16.803SF-10-A10-021810-01
202,708
Total CFDA# 16.803
Total Passed through the Governor's
202,708
Office of Criminal Justice
Direct Programs:
30,228
ARRA - Edward Byrne Memorial Justice Assistance Grant16.8042009-SB-B9-1710
30,228
Total Direct Programs
232,936
Total U. S. Department of Justice
U. S. Department of Transportation
Passed through the Texas Department of Transportation:
Airport Terminal Project-200820.10608TBSTVLE154,678
966,370
Bosque River Trail20.205CSJ 0902-49-032
1,121,048
Total Passed through the Texas Department of Transportation
1,121,048
Total U. S. Department of Transportation
$1,406,971
Total Expenditures of Federal Awards
The accompanying notes are an integral part of this schedule.
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CITY OF STEPHENVILLE, TEXAS
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
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.
81
CITY OF STEPHENVILLE, TEXAS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
Summary of Auditors' Results
Financial Statements:
Type of auditors' report issuedUnqualified
Internal control over financial reporting:
Material weakness(es) identified?No
Significant deficiency(ies) identified?None reported
Noncompliance material to financial statements
noted?None
Federal Awards:
Internal control over major programs:
Material weakness(es) identified?No
Significant deficiency(ies) identified?None reported
Type of auditors' report issued on compliance
for major programsUnqualified
Any audit findings disclosed that are required
to be reported in accordance with Section
510(a) of OMB Circular A-133?None
Identification of major programs:
CFDA Number(s)Name of Federal Program or Cluster:
#20.205 Local Transportation Project - Bosque
River Trail
Dollar threshold used to distinguish between type A
and type B programs$300,000
Auditee qualified as low-risk auditee?No
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
82
CITY OF STEPHENVILLE, TEXAS
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
FOR THE YEAR ENDED SEPTEMBER 30, 2010
None
83