HomeMy WebLinkAbout2011 CAFR
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE YEAR ENDED
SEPTEMBER 30, 2011
PREPARED BY
FINANCE DEPARTMENT
CITY OF STEPHENVILLE, TEXAS
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CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2011
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, 2011
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 – 47
Combining Fund Statements and Schedules
Nonmajor Governmental Funds
Combining Balance Sheet ....................................................................................... 48
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances ................................................................................... 49
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2011
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 ........................................................................................... 50
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Child Safety Fund .................................... 51
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Public Safety Fund ................................... 52
Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual – Court Technology Fund ........................... 53
Nonmajor Debt Service Fund
Schedule of Revenues, Expenditures and Changes in
Fund Balances – Budget and Actual .................................................................... 54
Nonmajor Enterprise Funds
Combining Balance Sheet ....................................................................................... 55
Combining Statement of Revenues, Expenses and
Changes in Fund Net Assets ................................................................................ 56
Combining Statement of Cash Flows ..................................................................... 57
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Table Page
Number Number
STATISTICAL SECTION (Unaudited)
Net Assets by Component .............................................................................. 1 58
Changes in Net Assets ................................................................................... 2 59 – 62
Fund Balances – Governmental Funds .......................................................... 3 63
Changes in Fund Balances – Governmental Funds ....................................... 4 64 – 65
Assessed Value and Estimated Actual Value
of Taxable Property ..................................................................................... 5 66
Direct and Overlapping Property Tax Rates .................................................. 6 67
Principal Property Taxpayers ......................................................................... 7 68
Property Tax Levies and Collections ............................................................. 8 69
Ratios of Outstanding Debt by Type ............................................................. 9 70
Ratios of Net General Bonded Debt Outstanding .......................................... 10 71
Direct and Overlapping Governmental Activities Debt ................................. 11 72
Legal Debt Margin and Tax Rate Limitations Information ........................... 12 73
Pledged Revenue Coverage ........................................................................... 13 74
Demographic and Economic Statistics .......................................................... 14 75
Principal Employers ....................................................................................... 15 76
Fulltime Equivalent City Government Employees by
Function/Program ....................................................................................... 16 77
Operating Indicators by Function/Program ................................................... 17 78
Capital Asset Statistics by Function/Program ................................................ 18 79
(continued)
CITY OF STEPHENVILLE, TEXAS
TABLE OF CONTENTS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Page
Number
REPORT REQUIRED BY
GOVERNMENT AUDITING STANDARDS
Report on Internal Control Over Financial Reporting Standards
And on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance With
Government Auditing Standards ................................................................................... 80 – 81
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INTRODUCTORY SECTION
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February 7, 2012
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, 2011. 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
auditors’ 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 17,480. 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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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.
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. 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.
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 6.5% continues to
compare favorably with state and national levels. Property values, sales tax receipts and building activity reflect
the area’s positive economic climate.
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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 equity balances in its General Fund and Water/Wastewater Funds.
Users of this document are encouraged to read the City’s Fiscal Year 2011-2012 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.
LONG-TERM FINANCIAL PLANNING
The City issued $4.0 million in Certificates of Obligation in October 2011 for the purpose of constructing a new
Fire Station No. 2, and for major Street reconstruction projects. Construction is expected to begin on the Fire
Station in July 2012 and to be completed by July 2013. The Fire Station is estimated to cost approximately
$3.5 million. The City has designated $2.5 million towards the Fire Station the other $1 million will be coming
from our reserves. The other $1.5 million of the issue is designated to fund Street reconstruction projects.
ECONOMIC PROSPECT FOR THE FUTURE
During 2011, the City participated in an Economic Development Program with Tejas Tubular to extend Caporal
Drive by approximately 1,500 feet. By extending the drive it enabled Tejas Tubular to construct a new ERW
mill on their site. The cost to the City was approximately $329 thousand and is expected to create
approximately 10 to 20 new jobs for Stephenville as well as increasing the overall tax base.
The City also participated in a tax abatement program with FMC Technologies Fluid Control Division to expand
their facilities. The tax abatement helped to spur $12.5 million of facility improvements and $13.7 of capital
machinery and equipment for the facility expansion. This expansion also is expected to create approximately 80
new jobs when completed in the Spring of 2012.
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, 2011, 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, 2011, are fairly presented in conformity with GAAP. The independent
auditors’ report is presented as the first component of the financial section of this report.
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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, 2010.
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 26 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, 2010
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, 2011
Mayor Nancy A. Hunter
Council Members Joe Cude
Dr. Malcom L. Cross
Doug Svien
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, 2011, 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, 2011, and the respective changes in financial position, and cash flows, where applicable, thereof,
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.
As described in the notes to the financial statements, the City adopted the provisions of GASB
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, in 2011.
In accordance with Government Auditing Standards, we have also issued our report dated
January 20, 2012, on our consideration of the City’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing
the results of our audit.
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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 combining
and individual nonmajor fund financial statements and schedules 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 20, 2012
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MANAGEMENT’S
DISCUSSION AND ANALYSIS
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Management's Discussion and Analysis
This section of the City of Stephenville’s (City) annual financial report presents our discussion of the
City’s financial performance during the fiscal year ended September 30, 2011. Please read it in
conjunction with the transmittal letter, which can be found preceding this narrative, and with the City’s
financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
The assets of the City exceed its liabilities as of September 30, 2011, by $57,985,258
(net assets). Of this amount, $13,705,352 (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 $1,883,623. The majority of this increase is
attributable to excess revenue over expenses in Water and Wastewater.
As of the close of the current fiscal year, the City's governmental funds reported
combined ending fund balances of $8,458,533, a decrease of $322,909 over the prior
year. The decrease in combined ending fund balances is attributable to use of surplus
funds for capital projects. Approximately 95% of this total amount, $8,015,503 is
available for spending at the City’s discretion (assigned and unassigned fund
balance).
As of September 30, 2011, unassigned fund balance for the General Fund was
$3,779,268 or 35 percent of total general fund expenditures.
The City’s total bond debt decreased by $2,088,000 (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.
Government-wide Financial Statements. The government-wide financial statements are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private-sector
business.
The Statement of Net Assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City of Stephenville is improving or
deteriorating. The government-wide financial statements can be found on pages 12 -13 of this report.
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The Statement of Activities presents information showing how the City's net assets changed during the
most recent fiscal year. All changes in net assets are reported when the underlying event giving rise to
the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are
reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,
uncollected taxes and earned but unused compensation absences). Both the Statement of Net Assets and
the Statement of Activities are prepared utilizing the accrual basis of accounting as opposed to the
modified accrual basis.
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 and wastewater, storm water drainage, solid waste, and airport operations.
Reporting the City’s Most Significant Funds
Fund Financial Statements.The fund financial statements provide detailed information about the most
significant funds, not the City as a whole. Funds are accounting devices that the City uses to keep track
of specific sources of funding and spending for particular purposes. Some funds are required by state
laws or bond covenants. The Council establishes other funds to control and manage money for
particular purposes or as evidence of meeting legal responsibilities for using certain taxes, grants and
other money. The City has two types of funds: governmental funds and proprietary funds.
Governmental Funds. The majority of the City’s basic services are reported in governmental funds,
which focus on how money flows into and out of those funds and the available balances at year-end.
These funds are reported using an accounting method identified as the modified accrual basis of
accounting, which measures cash and all other financial assets that can readily be converted to cash.
The governmental fund statements provide a detailed short-term view of the City’s general government
operations and the basic services it provides. Governmental fund information helps the reader determine
whether there has been an increase of decrease in financial resources that can be spent in the near future
to finance the City’s programs. By comparing information presented for governmental funds with
similar information presented for governmental activities in the government-wide financial statements,
readers may better understand the long-term impact of the government’s near-term financing decisions.
The relationship or differences between governmental activities (reported in the Statement of Net Assets
and the Statement of Activities) and governmental funds are detailed in a reconciliation following the
fund financial statements. The basic governmental fund financial statements can be found on pages 14-
16 of this report.
A budgetary comparison statement has been provided for the General Fund to demonstrate compliance
with the annual appropriated budget. 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.
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Proprietary Funds. The City charges customers for the services it provides through service delivery
agreements to outside customers or through customer service agreements within the City. These
services are generally reported in proprietary funds. Proprietary funds are reported in the same manner
that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the
City’s enterprise funds (a component of proprietary funds) are identical to the business-type activities
that are reported in the government-wide statements, but with additional detail and information, such as
cash flows. Individual proprietary fund data is found on pages 20 – 23 of this report.
The City maintains one type of proprietary fund-Enterprise Funds. 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 – 47 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 48 of this report.
THE CITY AS A WHOLE
GOVERNMENT WIDE FINANCIAL ANALYSIS
The City’s combined net assets were $57,985,258 as of September 30, 2011, an increase of 3.4%
compared to fiscal year ending 2010. 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
$32,801,826, an increase of $1,846,301 over prior year. The governmental activities net assets are
$25,183,432, an increase of $37,322 over prior year.
By far, the largest portion of the City's net assets (74 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.
An additional portion of the City’s net assets, $1,135,424, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets,
$13,705,352, may be used to meet the City’s ongoing obligations to citizens and creditors.
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As of September 30, 2011, the City is able to report positive balances in all three categories of net assets,
both for the City as a whole, as well as for its separate governmental and business-type activities. The
same held true for the prior fiscal year. Overall, the City had an increase in net assets of $1,883,623.
CITY OF STEPHENVILLE’S NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
201120102011201020112010
Current and other assets9,231,566$ 9,730,170$ 7,466,296$ 6,728,514$ 16,697,862$ 16,458,684$
18,850,089 47,439,098 48,029,873 66,289,187 67,020,040
Capital assets
28,081,655 28,720,337 54,905,394 54,758,387 82,987,049 83,478,724
Total assets
Liabilities420,768 606,286 968,823 846,996 1,389,591 1,453,282
2,967,941 21,119,385 22,955,866 23,589,544 25,923,807
2,470,159
Noncurrent liabilities
2,890,927 3,574,227 22,088,208 23,802,862 24,979,135 27,377,089
Total liabilities
Net assets:
Invested in capital assets,
net of related debt16,605,859 16,763,870 26,538,623 25,323,978 43,144,482 42,087,848
Restricted420,877 429,976 714,547 690,998 1,135,424 1,120,974
8,156,696 7,952,264 5,548,656 4,940,549 13,705,352 12,892,813
Unrestricted
$ 25,183,432 25,146,110$ 32,801,826$ 30,955,525$ 57,985,258$ 56,101,635$
Total net assets
Governmental Activities. The City’s total revenues for governmental activities decreased from the
previous year by $903,135 or 7%. General revenues increased $290,944 or 3% when compared to the
prior year. The ad valorem tax revenue increased $142,925 or 4%. This increase was due to an increase
in the tax rate of .0165 to .4600 per $100 assessed valuation. The effect of the tax rate on ad valorem
tax revenue was partially offset by a decrease in net assessed taxable value from $896 million in the
prior fiscal year to $885 million in the current year.
The following table provides a summary of the City’s operations for the year ended September 30, 2011,
with comparative totals for the year ended September 30, 2010. Governmental activities increased the
City’s net assets by $37,322 or 2 percent of the total growth in net assets.
6
CITY OF STEPHENVILLE’S CHANGES IN NET ASSETS
Governmental ActivitiesBusiness-type ActivitiesTotals
201120102011201020112010
Revenues:
Program revenues:
Charges for services1,722,659$ 1,569,968$ 7,092,932$ 6,232,051$ 8,815,591$ 7,802,019$
Operating grants 40,015 43,417 5,184 17,808 45,199 61,225
Capital grants
and contributions258,933 1,602,301 528,471 402,702 787,404 2,005,003
General revenues:
Property taxes4,122,467 3,979,542 - - 4,122,467 3,979,542
Sales taxes4,616,312 4,275,545 - - 4,616,312 4,275,545
Franchise taxes1,120,678 1,018,036 - - 1,120,678 1,018,036
Other taxes363,645 341,456 - - 363,645 341,456
Gain on sale of capital assets12,159 323,641 - - 12,159 323,641
Investment earnings13,517 32,294 5,151 6,714 18,668 39,008
26,870 - - 26,870 14,190
Miscellaneous
13,200,390 7,631,738 6,659,275 19,928,993 19,859,665
12,297,255
Total revenues
Expenses:
General government1,374,221 1,412,441 - - 1,374,221 1,412,441
Public safety6,274,700 6,252,861 - - 6,274,700 6,252,861
Streets1,479,381 1,426,590 - - 1,479,381 1,426,590
Culture and recreation2,522,284 2,438,756 - - 2,522,284 2,438,756
Community development374,335 427,769 - - 374,335 427,769
Interest on long-term
debt97,809 141,220 - - 97,809 141,220
Water and wastewater- - 4,846,996 5,054,152 4,846,996 5,054,152
Storm water drainage- - 600,859 580,590 600,859 580,590
Sanitary landfill- - 313,982 294,407 313,982 294,407
-- 160,803 158,085 160,803 158,085
Airport
12,099,63712,122,730 5,922,640 6,087,234 18,045,370 18,186,871
Total expenses
Increases in net assets
before transfers174,525 1,100,753 1,709,098 572,041 1,883,623 1,672,794
( 137,203)( 137,203 112,834 - -
Transfers
Change in net assets37,322 987,919 1,846,301 684,875 1,883,623 1,672,794
Net assets - beginning25,146,110 24,158,191 30,955,525 30,181,049 56,101,635 54,339,240
-- - 89,601 - 89,601
Prior period adjustment
$ 25,146,11025,183,432$ 32,801,826$ 30,955,525$ 57,985,258$ 56,101,635$
Net assets - ending
Business-type Activities. Revenues of the City’s business-type activities were approximately $7.6
million for the fiscal year ended September 30, 2011. Revenues increased approximately $972,463 or
15% compared to the prior fiscal year.
Expenses for the City’s business-type activities decreased approximately $164,594 or 3%. Net Assets
from business-type activities increased by $1,846,301 or 6 percent, from $30,955,525 to $32,801,826,
accounting for the other 98 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, unassigned 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 $8,458,533, a decrease of $332,909, from the prior year. The decrease in combined fund
balance is primarily attributable to use of surplus funds for capital projects. Approximately 95% of this
total amount, $8,015,503, constitutes assigned and unassigned fund balance, which is available for
spending at the City’s discretion. The remainder of fund balance is restricted to indicate that it is not
available for new spending because it is required to be used for certain purposes. 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 $916,760
but due to actual revenues being more than budgeted and actual expenditures being less than budgeted, the
fund balance increased by $342,804 during the current fiscal year. Sales tax collections increased by 8%
from the previous year but the City collected 9% 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 $146,327; 2) licenses and permit fees were $153,969 more than budgeted;
and 3) service charges were also higher than budgeted by $103,746. Expenditures were lower than
budgeted mainly because capital outlays were lower.
The Capital Projects Fund has a fund balance of $486,235, a decrease of 58 percent, all of which is
restricted for specific construction projects.
The Debt Service Fund has a fund balance of $106,908, a decrease of 15 percent, all of which is
reserved for the repayment of debt.
The Special Revenue Funds have a fund balance of $317,286, an increase of 6 percent, all of which is
restricted for the special programs defined by revenue source.
Proprietary Funds. The City's proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
Unrestricted net assets of the City's Enterprise Funds at the end of the year amounted to $5,548,656.
The increase in net assets was $1,846,301. Other factors concerning the finances of these funds have
already been addressed in the discussion of the City's business-type activities.
General Fund Budgetary Highlights
During the year there was a $481,449 increase in appropriations between the original budget and final
amended budget. Following are the main components of the increase:
$16,000 additional appropriation in the Park department for a replacement pickup
truck.
8
$20,000 additional appropriation in the Street department for a replacement pickup
truck.
$50,000 additional appropriation for street reconstruction.
$63,000 additional appropriation for energy efficient window replacement at City
Hall.
$90,000 additional appropriation in the Police department for (3) patrol vehicles.
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 were $10,735,586 compared to the final budgeted expenditures of $11,127,490.
The $392,354 variance was primarily attributable to capital projects not initiated during the year, close
monitoring of expenditures by departments and performing better than anticipated. Actual revenues on
a budgetary basis were $11,179,128 compared to the final budget of $10,359,179. The $819,949
variance was due primarily to increases in taxes (sales and property), 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, 2011, amounts to $66,289,187 (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:
Bosque River Trail $16,264;
Storm Water Drainage improvements: $33,306;
Surface Water Supply Project $207,375;
Sewer Line Replacement $375,273;
Major Thoroughfare Renovation Project $603,334;
Approximately $61,809 of water lines was donated by developers;
Approximately $102,049 of sewer lines was donated by developers; and
Streets and sidewalks worth approximately $190,037 were donated by developers.
CITY OF STEPHENVILLE’S CAPITAL ASSETS AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
201120102011201020112010
Land2,323,057$ 2,321,250$ 909,278$ 909,278$ 3,232,335$ 3,230,528$
Buildings and
improvements4,750,224 4,674,820 17,606,457 17,557,688 22,356,681 22,232,508
Equipment6,408,502 6,299,906 2,631,963 2,506,836 9,040,465 8,806,742
Infrastructure18,205,713 17,389,347 50,662,037 49,736,299 68,867,750 67,125,646
Construction in
progress- - 100,249 76,315 100,249 76,315
Less: accumulated
( 12,837,407) 11,695,156)( 24,470,886)( 22,756,543)( 37,308,293)( 34,451,699)(
depreciation
18,990,167$ 47,439,098$ 48,029,873$ 66,289,187$ 67,020,040$
$ 18,850,089
Total capital assets
Additional information on the City's capital assets can be found on page 36 – 37 of this report.
9
DEBT ADMINISTRATION
At the end of the current fiscal year, the City had total bonded debt of $22,946,865. Of this amount,
$2,185,000 represents bonded debt backed by the full faith and credit of the City, $12,900,000
represents utility revenue bonds secured by water and sewer revenues and $146,865 represents revenue
bonds secured by airport revenues, and $7,715,000 secured by storm water drainage revenues.
OUTSTANDING DEBT AT YEAR-END
Governmental ActivitiesBusiness-type ActivitiesTotals
201120102011201020112010
Certificates of
obligations2,185,000$ 2,605,000$ -$ -$ 2,185,000$ 2,605,000$
Revenue bonds
- 20,761,865 22,429,865 20,761,865 22,429,865
payable
$ 2,605,0002,185,000$ 20,761,865$ 22,429,865$ 22,946,865$ 25,034,865$
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 39 – 42 this report.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The unemployment rate for the City of Stephenville as of the fiscal year-end was 6.50% compared to the
prior year rate of 7.0% which is an indication that the local economy is starting to stabilize. This rate
compares favorably with state and national unemployment levels.
Sales tax collections for 2010-2011 were up by 8% compared to the previous year and collections still
exceeded budget by $366,313. The economy seems to be on a rebound but we are still taking a
conservative approach in determining estimated collections for the upcoming budget year.
10
The above factors were considered in preparing the City of Stephenville’s budget for the 2011-12 fiscal
year. Accordingly, next years’ budget incorporates a $.0250 increase in the property tax rate to $.4850
per $100 valuation. Certified taxable property value for 2011 is $895 million. This is a 1.47% increase
over the last year’s values, or $13 million. The largest portion of the increase, $7 million, is new property
coming onto the tax rolls and the remainder of the increase due to the reevaluation of existing property.
The City uses funds from the General Fund to supplement capital projects during the year as needs arise
and where favorable unit pricing is received on such projects. Additionally, the City’s Fiscal Management
Practices call for the designation of any surplus of revenues over expenses at fiscal year-end as a means of
providing resources for major capital projects. There are ample funds for transfers during 2012, should the
City Council so desire, and still retain the minimum fund balance provisions established by the Fiscal
Management Practices.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City's finances for all those with an
interest in the government's finances. Questions concerning any of the information provided in this report
or requests for additional information should be addressed to Walter G. Wood, Director of Finance, 298
West Washington, Stephenville, Texas 76401-4257 or call (254) 918-1211.
11
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BASIC
FINANCIAL STATEMENTS
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2011
GovernmentalBusiness-type
ActivitiesActivitiesTotal
ASSETS
Cash and investments7,751,573$ 4,955,292$ 12,706,865$
Receivables (net of allowances for uncollectibles):
Taxes1,082,694 - 1,082,694
Accounts373,356 1,162,189 1,535,545
Internal balances12,393)( 12,393 -
Inventory18,836 - 18,836
Restricted investments- 969,392 969,392
Deferred charges17,500 367,030 384,530
Capital assets:
Land2,323,057 909,278 3,232,335
Buildings and improvements4,750,224 17,606,457 22,356,681
Machinery and equipment6,408,502 2,631,963 9,040,465
Infrastructure/water and wastewater distribution18,205,713 50,662,037 68,867,750
Construction in progress- 100,249 100,249
( 24,470,886)12,837,407)( 37,308,293)(
Less: accumulated depreciation
47,439,09818,850,089 66,289,187
Total capital assets
54,905,39428,081,655 82,987,049
Total assets
LIABILITIES
Accounts payable309,414 540,324 849,738
Accrued liabilities100,656 13,956 114,612
Accrued interest payable10,698 210,166 220,864
Customer deposits- 204,377 204,377
Unearned revenue7,296 15,360 22,656
Noncurrent liabilities:
Due within one year510,159 1,860,774 2,370,933
19,258,6111,960,000 21,218,611
Due in more than one year
22,103,5682,898,223 25,001,791
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt16,605,859 26,538,623 43,144,482
Restricted for:
Retirement of long-term debt103,591 714,547 818,138
Tourism248,772 - 248,772
Child and public safety33,524 - 33,524
Court technology34,990 - 34,990
5,548,6568,156,696 13,705,352
Unrestricted
$ 32,801,82625,183,432$ 57,985,258$
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, 2011
Net (Expense) Revenue and
Program RevenuesChanges in Net Assets
OperatingCapital
Charges forGrants andGrants andGovernmentalBusiness-type
Functions/ProgramsExpensesServicesContributionsContributionsActivitiesActivitiesTotal
Governmental activities
General government$ 216,8701,374,221$ 7,960$ 57,576$ 1,091,815$( -)$ 1,091,815$()
Public safety 893,2076,274,700 6,440 - 5,375,053( -) 5,375,053()
Streets 24,4191,479,381 - 190,037 1,264,925( -) 1,264,925()
Culture and recreation 338,6622,522,284 25,615 11,320 2,146,687( -) 2,146,687()
Community developmen374,335 249,501 - - 124,834( -) 124,834()
-97,809 - - 97,809)( - 97,809)(
Interest on long-term debt
12,122,730 1,722,659 40,015 258,933 10,101,123)( - 10,101,123)(
Total governmental activities
Business-type activities
Water and wastewater 6,147,6064,846,996 - 445,851 - 1,746,461 1,746,461
Sanitary landfill 277,985313,982 - - - 35,997( 35,997)()
Airport160,803 76,015 5,184 82,620 - 3,016 3,016
591,326600,859 - - - 9,533)( 9,533)(
Storm water drainage
7,092,9325,922,640 5,184 528,471 - 1,703,947 1,703,947
Total business-type activities
$ 18,045,370 8,815,591$ 45,199$ 787,404$ 10,101,123)( 1,703,947 8,397,176)(
Total
General revenues:
Taxes:
Property - generalpurpose3,595,948 - 3,595,948
Property - debt service -526,519 526,519
Sales -4,616,312 4,616,312
Franchise -1,120,678 1,120,678
Other -363,645 363,645
Gain on sale of capital assets -12,159 12,159
Investment earnings 5,15113,517 18,668
Miscellaneous 26,870 - 26,870
( 137,203137,203) -
Transfers
10,138,445 142,354 10,280,799
Total general revenues and transfers
Change in net assets 1,846,30137,322 1,883,623
25,146,110 30,955,525 56,101,635
Net assets, beginning
$ 25,183,432 32,801,826$ 57,985,258$
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, 2011
OtherTotal
GovernmentalGovernmental
GeneralFundsFunds
ASSETS
Cash and investments6,807,887$ 943,686$ 7,751,573$
Receivables (net of allowance for uncollectibles):
Taxes980,894 101,800 1,082,694
Accounts373,356 - 373,356
-18,836 18,836
Inventory
1,045,4868,180,973 9,226,459
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable194,131 111,692 305,823
Accrued liabilities100,656 - 100,656
Due to other funds- 12,393 12,393
Deferred revenue338,082 7,381 345,463
3,591- 3,591
Other liabilities
135,057632,869 767,926
Total liabilities
Fund balances:
Nonspendable 18,836 - 18,836
Restricted for:
Retirement of long-term debt- 106,908 106,908
Tourism- 248,772 248,772
Child and public safety- 33,524 33,524
Court technology- 34,990 34,990
Assigned for:
Right of way1,500,000 - 1,500,000
Capital projects1,000,000 486,235 1,486,235
Grant matching1,000,000 - 1,000,000
Facilities200,000 - 200,000
Economic development50,000 - 50,000
-3,779,268 3,779,268
Unassigned
910,4297,548,104
Total fund balances 8,458,533
$ 1,045,4868,180,973$
Total liabilities and fund balances
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesandthereforearenotreportedinthe
funds.
18,850,089
Otherlong-termassetsarenotavailabletopayforcurrent-periodexpendituresand,therefore,aredeferredinthe
338,167
funds.
Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds.
(2,463,357)
$ 25,183,432
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, 2011
OtherTotal
GovernmentalGovernmental
GeneralFundsFunds
REVENUES
Taxes:
Property3,618,710$ 531,674$ 4,150,384$
Sales4,616,312 - 4,616,312
Franchise1,120,678 - 1,120,678
Other41,373 322,272 363,645
Service charges1,076,971 - 1,076,971
Fines and forfeitures270,178 24,897 295,075
Licenses and permits255,269 - 255,269
Intergovernmental132,492 15,018 147,510
Investment earnings9,168 4,349 13,517
-37,977 37,977
Miscellaneous
11,179,128 898,210 12,077,338
Total revenues
EXPENDITURES
Current:
General government1,319,243 - 1,319,243
Public safety6,069,057 15,756 6,084,813
Streets937,367 - 937,367
Culture and recreation1,833,813 355,955 2,189,768
Community development367,228 - 367,228
Debt service:
Principal - 420,000 420,000
Interest and fiscal charges- 98,117 98,117
680,448208,878 889,326
Capital outlay
10,735,586 1,570,276 12,305,862
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
672,066)443,542( 228,524)(
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in237,443 54,609 292,052
Transfers out370,999)( 58,256)( 429,255)(
Proceeds from sale of capital assets27,316 - 27,316
-5,502 5,502
Proceeds from insurance
( 3,647)100,738)( 104,385)(
Total other financing sources (uses)
675,713)342,804( 332,909)(
NET CHANGE IN FUND BALANCES
1,586,1427,205,300 8,791,442
FUND BALANCES, BEGINNING
$ 910,4297,548,104$ 8,458,533$
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, 2011
AmountsreportedforgovernmentalactivitiesintheStatementofActivities(page13)are
different because:
Net change in fund balances - total governmental funds (page 15)332,909)$(
Governmentalfundsreportcapitaloutlaysasexpenditures.However,inthestatementof
activitiesthecostofthoseassetsisallocatedovertheirestimatedusefullivesandreportedas
depreciation expense.( 250,867)
Theneteffectofvariousmiscellaneoustransactionsinvolvingcapitalassets(i.e.,sales,trade-
ins, and donations) is to increase net assets.174,880
Revenuesinthestatementofactivitiesthatdonotprovidecurrentfinancialresourcesarenot
reported as revenues in the funds. 12,219
Therepaymentoftheprincipaloflong-termdebtconsumesthecurrentfinancialresourcesof
governmental funds. However, this has no effect on net assets. 420,000
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrent
financial resources and, therefore, are not reported as expenditures in governmental funds.
13,999
$ 37,322
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, 2011
Budgeted Amounts
ActualVariance with
OriginalFinalAmountsFinal Budget
REVENUES
Taxes8,777,858$ 8,836,578$ 9,397,073$ 560,495$
Service charges973,225973,2251,076,971 103,746
Fines and forfeitures250,000290,000270,178 19,822)(
Licenses and permits101,300101,300255,269 153,969
Intergovernmental63,600127,176132,492 5,316
Investment earnings5,5009,5009,168 332)(
21,40013,400 37,977 16,577
Miscellaneous
10,184,883 10,359,179 11,179,128 819,949
Total revenues
EXPENDITURES
Current:
General government:
City council54,08862,08854,2087,880
City administrator130,228131,025130,254771
City secretary88,99889,79584,4285,367
Emergency management6,8506,8507,360510)(
Municipal buildings125,791126,588108,80917,779
Municipal Service Center99,749100,54691,4739,073
Financial administration and accounting346,838349,231341,0748,157
Purchasing58,39759,19457,9081,286
Tax assessment and collection119,000119,000117,8801,120
Legal counsel66,05186,84883,0493,799
Municipal court120,000140,000143,8803,880)(
108,582107,785 98,920 9,662
Human resources
1,379,7471,323,775 1,319,243 60,504
Total general government
Public safety:
Fire and ambulance administration210,198211,793211,84956)(
Fire prevention and investigation159,127160,72289,75770,965
Fire suppression1,047,3531,160,2201,170,0599,839)(
Emergency medical services1,102,2571,013,422989,00724,415
Volunteer30,16930,16920,00610,163
Police administration121,878122,675117,2285,447
Police patrol1,929,9361,971,4681,941,28530,183
Police communications419,730426,110423,1073,003
Police records186,128192,621190,9851,636
Criminal investigation608,464588,197513,69274,505
(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, 2011
Budgeted Amounts
ActualVariance with
OriginalFinalAmountsFinal Budget
EXPENDITURES(Continued)
Current:
Public safety (continued):
Police reserve76,633$ 98,430$ 96,010$ 2,420$
Animal control118,349119,944117,2402,704
203,468202,671 188,832 14,636
Public safety facility
6,299,2396,212,893 6,069,057 230,182
Total public safety
Streets:
949,632864,049 937,367 12,265
Street maintenance
949,632864,049 937,367 12,265
Total streets
Culture and recreation:
Recreation administration680,855684,843692,1167,273)(
Park maintenance441,168445,156447,3692,213)(
Cemeteries 133,733135,328130,4374,891
Library203,321222,614219,1693,445
Senior citizens center127,363142,660136,1976,463
228,685228,685 208,525 20,160
Aquatic Center
1,859,2861,815,125 1,833,813 25,473
Total culture and recreation
Community development:
Community development planning180,526182,120174,4567,664
Community development inspection177,034178,628148,68529,943
67,38673,089 44,087 23,299
Code enforcement
428,134430,649 367,228 60,906
Total community development
10,646,491 10,916,038 10,526,708 389,330
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, 2011
Budgeted Amounts
ActualVariance with
OriginalFinalAmountsFinal Budget
EXPENDITURES(Continued)
Capital outlay:
General government:
$ 63,576-$ 61,297$ 2,279$
Municipal buildings
63,576- 61,297 2,279
Total general government
Public safety:
Police patrol- 90,00091,2891,289)(
Volunteer- 11,77610,7111,065
2,250- 2,250 -
JAG grant
104,026- 104,250 224)(
Total public safety
Streets:
20,000- 19,705 295
Street maintenance
20,000- 19,705 295
Total streets
Culture and recreation:
17,800- 17,094 706
Park maintenance
17,800- 17,094 706
Total culture and recreation
Community development:
6,500- 6,532 32)(
Community development planning
6,500- 6,532 32)(
Total community development
211,902- 208,878 3,024
Total capital outlay
10,646,491 11,127,940 10,735,586 392,354
Total expenditures
EXCESS (DEFICIENCY) OF REVENUES
( 768,761)461,608)( 443,542 1,212,303
OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in206,000206,000 237,44331,443
Transfers out93,282)( 370,999)( 370,999)( -
Proceeds from sale of capital assets7,000 17,000 27,316 10,316
-- 5,502 5,502
Proceeds from insurance
147,999)119,718( 100,738)( 47,261
Total other financing sources (uses)
( 916,760)341,890)( 342,804 1,259,564
NET CHANGE IN FUND BALANCE
7,205,3007,205,300 7,205,300 -
FUND BALANCE, BEGINNING
$ 6,288,5406,863,410$ 7,548,104$ 1,259,564$
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, 2011
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
ASSETS
Current assets:
Cash and investments3,662,572$ 1,092,881$ 199,839$ 4,955,292$
Accounts receivable - net 1,094,355 62,109 5,725 1,162,189
Due from other funds12,393 - - 12,393
251,562717,830 - 969,392
Restricted investments
1,406,5525,487,150 205,564 7,099,266
Total current assets
Noncurrent assets:
Deferred charges100,910 74,981 191,139 367,030
Capital assets:
Land163,721 - 745,557 909,278
Buildings and improvements2,349,136 10,193,0225,064,299 17,606,457
Equipment1,474,535 - 1,157,428 2,631,963
Water and wastewater distribution50,662,037- - 50,662,037
Construction in progress- - 100,249 100,249
( 508,819)22,198,739)( 1,763,328)( 24,470,886)(
Less: accumulated depreciation
9,684,20332,450,690 5,304,205 47,439,098
Total capital assets
9,759,18432,551,600 5,495,344 47,806,128
Total noncurrent assets
11,165,73638,038,750 5,700,908 54,905,394
Total assets
LIABILITIES
Current liabilities:
Accounts payable 10,216525,465 4,643 540,324
Accrued liabilities12,273 - 1,683 13,956
Accrued interest160,826 38,508 10,832 210,166
Customer deposits203,477 - 900 204,377
Unearned revenue- - 15,360 15,360
Capital lease- - 94,460 94,460
Bonds payable1,490,000 225,000 19,000 1,734,000
3,081- 32,314
29,233
Compensated absences payable
273,7242,421,274 149,959 2,844,957
Total current liabilities
Long-term liabilities:
Capital lease- - 99,661 99,661
Bonds payable11,410,0007,490,000 127,865 19,027,865
-- 131,085 131,085
Liability for landfill closure
7,490,00011,410,000 358,611 19,258,611
Total long-term liabilities
7,763,72413,831,274 508,570 22,103,568
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt19,550,6902,024,714 4,963,219 26,538,623
Restricted for debt service557,004 157,543 - 714,547
1,219,7554,099,782 229,119 5,548,656
Unrestricted
$ 3,402,01224,207,476$ 5,192,338$ 32,801,826$
Total net assets
The notes to the financial statements are an integral part of this statement.
20
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CITY OF STEPHENVILLE, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
OPERATING REVENUES
Water sales3,657,521$ -$ -$ 3,657,521$
Wastewater charges2,314,475 - - 2,314,475
Tap and collection fees123,212 - - 123,212
Delinquent charges29,792 5,656 - 35,448
Gate charges- - 276,833 276,833
Hanger rental 69,72969,729
Storm water drainage fees- 585,670 - 585,670
-22,606 7,438 30,044
Other service charges
591,3266,147,606 354,000 7,092,932
Total operating revenues
OPERATING EXPENSES
Personnel services992,276- 130,255 1,122,531
Contractual services1,040,380- 21,359 1,061,739
Utilities603,898- 31,127 635,025
Repairs and maintenance268,21830,32130,497 329,036
Other 201,24420137,878 239,323
254,8261,256,933 202,584 1,714,343
Depreciation
285,3484,362,949 453,700 5,101,997
Total operating expenses
305,9781,784,657 99,700)( 1,990,935
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES)
Investment earnings3,2891,746116 5,151
Interest and fiscal charges on debt543,289)( 315,511)( 21,085)( 879,885)(
Intergovernmental 5,184- 5,184
-
-59,242 - 59,242
Gain on sale of assets
( 313,765)480,758)( 15,785)( 810,308)(
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE CONTRIBUTIONS
7,787)1,303,899( 115,485)( 1,180,627
AND TRANSFERS
-445,851 82,620 528,471
CAPITAL CONTRIBUTIONS
-58,256 316,390 374,646
TRANSFERS IN
( -237,443) - 237,443)(
TRANSFERS OUT
7,787)1,570,563( 283,525 1,846,301
CHANGE IN NET ASSETS
22,636,913 3,409,799 4,908,813 30,955,525
TOTAL NET ASSETS, BEGINNING
$ 24,207,476 3,402,012$ 5,192,338$ 32,801,826$
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, 2011
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers6,068,687$ 595,452$ 370,849$ 7,034,988$
Cash payments to employees997,075)( - 131,056)( 1,128,131)(
( 30,306)2,023,285)( 114,342)( 2,167,933)(
Cash payments to suppliers for goods and services
565,1463,048,327 125,451 3,738,924
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Interfund receivables repaid by other funds2,129,690 - - 2,129,690
Cash received from operating grant- - 5,184 5,184
Transfers from other funds58,256 - - 58,256
( -237,443) - 237,443)(
Transfers to other funds
-1,950,503 5,184 1,955,687
Cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease- - 170,619)( 170,619)(
Principal payments on bonds1,435,000)( 215,000)( 18,000)( 1,668,000)(
Interest and fiscal charges on debt535,457)( 312,315)( 29,155)( 876,927)(
Grant match for capital grant- - 191,148)( 191,148)(
Grant proceeds restricted to capital acquisition281,993 - - 281,993
Transfers from other funds for capital acquisition- - 316,390 316,390
Proceeds from sale of capital assets59,242 - - 59,242
( 33,306)743,708)( 33,083)( 810,097)(
Acquisition and construction of capital assets
Cash used by capital and
( 560,621)2,372,930)( 125,615)( 3,059,166)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
1,7463,289 116 5,151
Investment income
1,7463,289 116 5,151
Cash provided by investing activities
NET INCREASE IN CASH AND
6,2712,629,189 5,136 2,640,596
CASH EQUIVALENTS
1,338,1721,751,213 194,703 3,284,088
CASH AND CASH EQUIVALENTS, BEGINNING
$ 1,344,4434,380,402$ 199,839$ 5,924,684$
CASH AND CASH EQUIVALENTS, ENDING
(Including $717,830 for the Water and Wastewater
fund and $251,562 for the Storm Water Drainage
fund in restricted investments)
(continued)
22
CITY OF STEPHENVILLE, TEXAS
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
(Continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Business-type Activities - Enterprise Funds
Water andStorm WaterOther
WastewaterDrainageFundsTotal
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income (loss)1,784,657$ 305,978$ 99,700)$( 1,990,935$
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation1,256,933 254,826 202,584 1,714,343
Change in assets and liabilities:
Decrease (increase) in accounts receivable70,755)( 4,126 1,389 65,240)(
Increase (decrease) in accounts payable90,455 216 3,049 93,720
Increase (decrease) in accrued liabilities3,371)( - 2,573 798)(
Increase (decrease) in unearned revenue- - 15,360 15,360
Increase (decrease) in customer deposits8,164)( - 100 8,064)(
( -1,428) 96 1,332)(
Increase (decrease) in compensated absences
259,1681,263,670 225,151 1,747,989
Total adjustments
$ 565,1463,048,327$ 125,451$ 3,738,924$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND
FINANCING ACTIVITIES
$ -163,858$ 82,620$ 246,478$
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, 2011
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 and proprietary funds.
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.
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.
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 Balance Classification
The governmental fund financial statements present fund balances based on
classifications that comprise a hierarchy that is based primarily on the extent to which the
City is bound to honor constraints on the specific purposes for which amounts in the
respective governmental funds can be spent. The classifications used in the
governmental fund financial statements are as follows:
Nonspendable: This classification includes amounts that cannot be spent because
they are either (a) not in spendable form or (b) are legally or contractually required to
be maintained intact. Nonspendable items are not expected to be converted to cash or
are not expected to be converted to cash within the next year.
Restricted: This classification includes amounts for which constraints have been
placed on the use of the resources either (a) externally imposed by creditors, grantors,
contributors, or laws or regulations of other governments, or (b) imposed by law
through constitutional provisions or enabling legislation.
Committed: This classification includes amounts that can be used only for specific
purposes pursuant to constraints imposed by resolution of the City Council, the City’s
highest level of decision making authority. These amounts cannot be used for any
other purpose unless the Council removes or changes the specified use by taking the
same type of action that was employed when the funds were initially committed. This
classification also includes contractual obligations to the extent that existing resources
have been specifically committed for use in satisfying those contractual requirements.
(continued)
29
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Assets, Liabilities and Net Assets or Equity (Continued)
Fund Balance Classification (Continued)
Assigned: This classification includes amounts that are constrained by the City’s
intent to be used for a specific purpose but are neither restricted nor committed. This
intent can be expressed by the City Council.
Unassigned: This classification includes the residual fund balance for the General
Fund. The unassigned classification also includes negative residual fund balance of
any other governmental fund that cannot be eliminated by offsetting of assigned fund
balance amounts.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balance is available, the City considers restricted funds to have been spent first. When an
expenditure is incurred for which committed, assigned, or unassigned fund balances are
available, the City considers amounts to have been spent first out of committed funds, then
assigned funds, and finally unassigned funds.
Net Assets
Net assets represent the difference between assets and liabilities. Net assets invested in
capital assets, net of related debt consists of capital assets, net of accumulated depreciation,
reduced by the outstanding balances of any borrowing used for the acquisition, construction
or improvements of those assets, and adding back unspent proceeds. Net assets are reported
as restricted when there are limitations imposed on their use either through the enabling
legislations adopted by the City or through external restrictions imposed by creditors,
grantors or laws or regulations of other governments.
Estimates
The preparation of financial statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual amounts could differ from those estimates.
30
II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the
Government-wide Statement of Net Assets
The governmental fund balance sheet includes a reconciliation between fund balance – total
governmental funds and net assets – governmental activities as reported in the government-wide
statement of net assets. One element of that reconciliation explains, “Long-term liabilities are
not due and payable in the current period and therefore are not reported in the funds.” The
details of this $(2,463,357) difference are as follows:
General obligations2,185,000)$(
Accrued interest payable10,698)(
Compensated absences225,929)(
Deferred charges17,500
(59,230)
Retainage payable
Net adjustment to reduce fund balance - total
governmental funds to arrive at net assets -
$(2,463,357)
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 $(250,867) difference are as follows:
Capital outlay941,602$
( 1,192,469)
Depreciation expense
Net adjustment to increase net changes in fund
balances - total governmental fundsto arrive at
$( 250,867)
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
$12,219 difference are as follows:
Property taxes27,917)$(
Ambulance charges for services3,080
37,056
Municipal court fines
Net adjustment to decrease net changes in fund balances -
totalgovernmental fundsto arrive at changes in net
$ 12,219
assets of governmental activities
(continued)
31
II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(Continued)
Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,
Expenditures and Changes in Fund Balances and the Government-wide Statement of
Activities (Continued)
Another element of that reconciliation states 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 $13,999 difference are as follows:
Accrued interest2,808$
Amortization of deferred charges2,500)(
13,691
Compensated absences
Net adjustment to increase net changes in fund balances -
totalgovernmental fundsto arrive at changes in net
$ 13,999
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 $174,880
difference are as follows:
Capital contributions190,037$
(15,157)
Disposals of capital assets
Net adjustment to increase net changes in fund balances -
governmental fundsto arrive at changes in net
total
$ 174,880
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)
32
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:
Emergency management510$
Municipal court3,880
Public safety:
Fire and ambulance administration56
Fire suppression9,839
Culture and recreation:
Recreation administration7,273
Park maintenance2,213
Capital outlay:
Police patrol1,289
Community development planning32
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)
33
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, 2011, the City did not own any types of securities other than those permitted by statute.
As of September 30, 2011, the City had the following investments:
Weighted Average
Investment TypeFair ValueMaturity (Days)
Tex Pool7,792,775$ 44
5,175,260
TexStar40
$ 12,968,035
Total fair value
Portfolio weighted average maturity (days)42
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)
34
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,
2011, 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 City’s individual major funds and nonmajor funds in the
aggregate, including the applicable allowances for uncollectible accounts, are as follows:
Governmental FundsEnterprise Funds
NonmajorWater andStorm WaterNonmajor
GeneralFundsWastewaterDrainageFundsTotal
Receivables:
Accounts:
Customers-$ -$ 1$ 71,504,448$ 5,611$ 1,725$,581,784
Ambulance608 -,659 - - - 608,659
Municipal court fines1 -,240,235 - - - 1,240,235
Intergovernmental1 -,978 2 -,340 - 4,318
Other43 -,571 3 -,521 - 47,092
Taxes:
Property 18117,009 -,945 - - 135,954
-,004 - - - 876,004
Sales 876
Occupancy 89- -,503 - - 89,503
1,32334,911 - - - 36,234
Other
Gross receivables2 109,922,367 1,771 71,510,309 5,611 4,725,619,783
r
Less: allowance fo
( 7,971)1,568,117)( 415,954)( 9,502)( - 2,001,544)(
uncollectibles
$ 101,8001,354,250$ 1,094,355$ 62,109$ 5,725$ 2,618,239$
Net total receivables
(continued)
35
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)50,402$ -$
Delinquent property taxes receivable (debt service)7,381 -
Ambulance charges for services 63,008 -
Municipal court fines217,376 -
7,296-
Other
$ 7,296338,167$
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, 2011, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities:
Capital assets, not being depreciated:
$ 1,8072,321,250$ -$ 2,323,057$
Land
1,8072,321,250 - 2,323,057
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements4,674,820 75,404 - 4,750,224
Machinery and equipment6,299,906 173,971 65,375 6,408,502
816,366 - 18,205,713
17,389,347
Infrastructure
1,065,74128,364,073 65,375 29,364,439
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,151,047 102,050 - 1,253,097
Machinery and equipment4,144,239 351,065 50,218 4,445,086
739,3546,399,870 - 7,139,224
Infrastructure
1,192,46911,695,156 50,218 12,837,407
Total accumulated depreciation
126,728)( 15,157 16,527,032
16,668,917
Total capital assets being depreciated, net
$ 124,921)18,990,167$( 15,157$ 18,850,089$
Governmental activities capital assets, net
(continued)
36
IV. DETAILED NOTES ON ALL FUNDS (Continued)
D. Capital Assets (Continued)
BeginningEnding
BalanceIncreasesDecreasesBalance
Business-type activities:
Capital assets, not being depreciated:
Land909,278$ -$ -$ 909,278$
100,24976,315 76,315 100,249
Construction in progress
100,249985,593 76,315 1,009,527
Total assets not being depreciated
Capital assets, being depreciated:
Buildings and improvements17,557,688 48,769 - 17,606,457
Machinery and equipment2,506,836 125,127 - 2,631,963
925,73849,736,299 - 50,662,037
Water and wastewater system
1,099,63469,800,823 - 70,900,457
Total capital assets being depreciated
Accumulated depreciation:
Buildings and improvements1,794,748 399,264 - 2,194,012
Machinery and equipment1,552,857 166,820 - 1,719,677
1,148,25919,408,938 - 20,557,197
Water and wastewater system
1,714,34322,756,543 - 24,470,886
Total accumulated depreciation
614,709)47,044,280( - 46,429,571
Total capital assets being depreciated, net
$ 514,460)48,029,873$( 76,315$ 47,439,098$
Business-type activities capital assets, net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government59,231$
Public safety200,186
Streets 543,246
Culture and recreation382,288
7,518
Community development
$ 1,192,469
Total depreciation expense - governmental activities
Business-type activities:
Water and wastewater1,256,933$
Storm water drainage254,826
Landfill105,404
97,180
Airport
$ 1,714,343
Total depreciation expense - business-type activities
(continued)
37
IV. DETAILED NOTES ON ALL FUNDS (Continued)
E. Interfund Receivables, Payables and Transfers
The composition of interfund balances as of September 30, 2011, is as follows:
Receivable FundPayable FundAmount
$ 12,393
Water and wastewaterCapital projects
$ 12,393
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, 2011, are as follows:
Transfers InTransfers OutAmount
Nonmajor enterpriseGeneral316,390$
Nonmajor governmentalGeneral54,609
Water and wastewater fundNonmajor governmental58,256
237,443
GeneralWater and wastewater
$ 666,698
Total interfund transfers
The General Fund paid $316,390 and $54,609, respectively, to nonmajor Enterprise Funds
and nonmajor Governmental Funds to finance capital acquisitions. The transfer in the amount
of $237,443 was paid from the Water and Wastewater Fund to the General Fund for
payments in lieu of taxes. The transfer in the amount of $58,256 was paid from nonmajor
Governmental Funds to the Water and Wastewater Fund to return amounts previously
transferred for capital acquisitions.
(continued)
38
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt
Changes in Long-term Liabilities
Long-term liability activity from the year ended September 30, 2011, was as follows:
BalanceBalanceDue Within
09/30/10AdditionsReductions09/30/11One Year
Governmental activities
:
General obligation bonds2,605,000$ -$ 420,000$ 2,185,000$ 225,000$
Retainage payable123,321 745 64,836 59,230 59,230
239,620 225,929 239,620 225,929 225,929
Compensated absences payable
$ 2,967,941 226,674$ 724,456$ 2,470,159$ 510,159$
Total governmental activities
Business-type activities:
Revenue bonds/certificates
of obligation22,429,865$ -$ 1,668,000$ 20,761,865$ 1,734,000$
Capital lease364,740 - 170,619 194,121 94,460
Estimated landfill closure
and postclosure costs127,615 3,470 - 131,085 -
33,646 32,314 33,646 32,314 32,314
Compensated absences payable
$ 22,955,866 35,784$ 1,872,265$ 21,119,385$ 1,860,774$
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:
$1,325,000CombinationTaxandRevenueCertificatesof
Obligation-Series2008,principaldueannuallyinseriesthrough
2033, interest due semi-annually at 4.06%.$ 695,000
nTaxandRevenueCertificatesof
$1,500,000Combinatio
Obligation-Series2009,principaldueannuallyinseriesthrough
2019, interest due semi-annually at 3.85%.
1,490,000
$ 2,185,000
(continued)
39
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt (Continued)
Revenue Bonds
The City also issues revenue bonds to finance business-type activities, where it pledges net
income from service revenue to repay debt. Revenue bonds outstanding as of September 30,
2011, are as follows:
Business-type activities:
$5,500,000UtilitySystemRevenueBonds-Series2001,principal
dueannuallyinseriesthrough2016,interestduesemi-annuallyat
4.59%.3,895,000$
$1,150,000CombinationTaxandRevenueCertificatesof
Obligation-Series2002,principaldueannuallyinseriesthrough
2012, interest due semi-annually at 4.45%.140,000
$1,600,000CombinationTaxRevenueCertificatesofObligation,
Series2003B,principaldueannuallyinseriesthrough2018,
interest due semi-annually at 3.5%.785,000
$4,975,000CombinationTaxRevenueRefundingBonds-Series
2003A,principaldueannuallyinseriesthrough2013,interestdue
semi-annually at 2.75%.840,000
$275,000CombinationTaxandRevenueCertificatesof
Obligation,Series2003,principaldueannuallyinSeriesthrough
2021, interest due semi-annually at 4.125%.146,865
$7,160,000CombinationTaxRevenueBonds-Series2004,
principaldueannuallyinseriesthrough2019,interestduesemi-
annually at 4.45%.6,130,000
$2,000,000CertificateofObligationBonds-Series2006,principal
dueannuallyinseriesthrough2018,interestduesemi-annuallyat
3.77%.1,110,000
$4,300,000CombinationTaxRevenueCertificatesofObligation,
Series2006A,principaldueannuallyinseriesthrough2027,
interest due semi-annually at 3.92%.3,690,000
$4,130,000CombinationTaxRevenueCertificatesofObligation,
Series2008,principaldueannuallyinseriesthrough2033,interest
due semi-annually at 4.06%.
4,025,000
$ 20,761,865
Total Revenue Bonds
(continued)
40
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt (Continued)
Debt Service Requirements
Annual debt service requirements to maturity for general obligation bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
2012225,000$ 81,078$ 306,078$
2013230,000 71,967 301,967
2014240,000 62,557 302,557
2015250,000 52,747 302,747
2016260,000 42,735 302,735
57,558980,000 1,037,558
2017-2019
$ 368,6422,185,000$ 2,553,642$
Total
Annual debt service requirements to maturity for revenue bonds are as follows:
Fiscal Year Ending
September 30,PrincipalInterestTotal
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
20162,027,000 502,904 2,529,904
2017-20216,373,865 1,499,306 7,873,171
2022-20261,805,000 833,490 2,638,490
2027-20312,200,000 435,425 2,635,425
41,4121,010,000 1,051,412
2032-2033
$ 6,086,86420,761,865$ 26,848,729$
Total
Capital Lease
The City has entered into a lease agreement as lessee for financing the acquisition of
equipment for landfill maintenance. This lease agreement qualifies as a capital lease for
accounting purposes and, therefore, has been recorded at the present value of the future
minimum lease payments as of the inception date.
The assets acquired through capital leases are as follows:
Landfill
Asset:
Machinery and equipment794,081$
424,703
Less: accumulated depreciation
$ 369,378
Total
(continued)
41
IV. DETAILED NOTES ON ALL FUNDS (Continued)
F. Long-term Debt (Continued)
Capital Lease (Continued)
The future minimum lease obligation and the net present value of the minimum lease
payments as of September 30, 2011, were as follows:
Fiscal Year Ending
September 30,
2012105,163$
105,163
2013
Total minimum lease payments210,326
16,205
Less: amount representing interest
$ 194,121
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)
42
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 $388,240. 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)
43
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 from 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 2009Plan Year 2010Plan Year 2011
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)
44
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
09/30/09934,953$ 934,953$ 100%-
09/30/101,068,923 1,068,923 100%-
09/30/111,102,965 1,102,965 100%-
The required contribution rates for fiscal year 2011 were determined as part of the December
31, 2008 and 2009 actuarial valuations. Additional information as of the latest actuarial
valuation, December 31, 2010, also follows:
Actuarial Valuation Date12/31/0812/31/0912/31/10 - prior
12/31/10 -
to restructuringrestructured
Projected Unit
Actuarial cost methodProjected Unit Projected Unit Projected Unit
CreditCreditCreditCredit
Level percent
Amortization methodLevel percentLevel percentLevel percent
of payrollof payrollof payrollof payroll
GASB 25 equivalent single29 years;28 years;27 years;27 years;
amortization periodclosed periodclosed periodclosed periodclosed period
Amortization period for30 years30 years30 years30 years
new gains/losses
Asset valuation methodAmortized cost10-year smoothed10-year smoothed10-year smoothed
marketmarketmarket
Actuarial Assumptions:
Investment rate of return*7.5%7.5%7.5%7.0%
Projected salary increases*varies by agevaries by agevaries by agevaries by age
and serviceand serviceand serviceand service
*Includes inflation at3.0%3.0%3.0%3.0%
Cost-of-living adjustments2.1%2.1%2.1%2.1%
(continued)
45
V. OTHER INFORMATION (Continued)
D. Retirement Plan (Continued)
Contributions (Continued)
In June, 2011, SSB 350 was enacted by the Texas Legislature, resulting in a restructure of the
TMRS funds. This legislation provided for the actuarial valuation to be completed as if
restructuring had occurred on December 31, 2010. In addition, the actuarial assumptions
were updated for the new fund structure, based on an actuarial experience study that was
adopted by the TMRS Board at their May, 2011 meeting (the review compared actual to
expected experience for the four-year period of January 1, 2006 through December 31,
2009). For a complete description of the combined impact of the legislation and new
actuarial assumptions, including the effects of TMRS city rates and funding ratios, please see
the December 31, 2010 TMRS Comprehensive Annual Financial Report (CAFR).
Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are subject
to continual revision as actual results are compared to past expectations and new estimates
are made about the future. Actuarial calculations are based on the benefits provided under the
terms of the substantive plan in effect at the time of each valuation, and reflect a long-term
perspective. Consistent with that perspective, actuarial methods and assumptions used
include techniques that are designed to reduce short-term volatility in actuarial accrued
liabilities and the actuarial value of assets. The following 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
12/31/200814,809,934$ 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%
1
12/31/2010
24,306,90717,441,452 71.8% 6,865,455 6,150,305 111.6%
2
12/31/2010
28,698,94223,356,321 81.4% 5,342,621 6,150,305 86.9%
(1) Actuarial valuation performed under the original fund structure
(2) Actuarial valuation performed under the new fund structure
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.
(continued)
46
V. OTHER INFORMATION (Continued)
E. Other Postemployment Benefits (Continued)
Supplemental Death Benefits Fund (SDBF) (Continued)
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 2011, 2010 and 2009 were
$2,487, $2,455 and $2,964, 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
20090.05%0.05%100%
20100.04%0.04%100%
20110.04%0.04%100%
F. Change in Accounting Principles
For fiscal year 2011, the City has implemented Governmental Accounting Standards Board
(GASB) Statement No. 54, “Fund Balance Reporting and Governmental Fund Type
Definitions.” GASB Statement No. 54 enhances the usefulness of fund balance information
by providing clearer fund balance classifications that can be more consistently applied and by
clarifying the existing governmental fund type definitions. This statement establishes fund
balance classifications that comprise a hierarchy based primarily on the extent to which a
government is bound to observe constraints imposed upon the use of the resources reported
in governmental funds.
G. Subsequent Events
On October 11, 2011, the City issued Combination Tax and Revenue Certificates of
Obligation, Series 2011, in the amount of $4,000,000 maturing February 15, 2031 with an
average interest rate of 3.2%. The bonds were issued to construct a fire station and improve
roads.
47
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COMBINING FUND
STATEMENTS AND SCHEDULES
THIS PAGE LEFT BLANK INTENTIONALLY
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds are used to account for specific revenue that is legally
restricted to expenditures for particular purposes.
Hotel/Motel Occupancy Tax – This fund is used to account for hotel/motel
occupancy tax revenue to be used for enhancing and promoting tourism and
convention activity for the benefit of the hotel industry.
Child Safety – This fund is used to account for court costs used to operate a
City school crossing guard program, or programs designated to enhance child
safety, health, or nutrition; including child abuse prevention and intervention
and drug and alcohol abuse prevention.
Public Safety – This fund is used to account for court costs used to promote
various public safety programs.
Court Technology – This fund is used to account for court costs used to
maintain technological enhancements for the municipal court.
TheCapital Projects Fund is used to account for financial resources to be used for
the acquisition or construction of general major capital facilities. Financing is
provided primarily by the sale of general obligation bonds and developer
contributions.
The Debt Service Fund is used to account for the accumulation of resources and
payment of general obligation bond principal and interest from governmental
resources.
CITY OF STEPHENVILLE, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2011
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicCourtCapitalDebtGovernmental
TaxSafetySafetyTechnologyProjectsServiceFunds
ASSETS
Cash and investments225,868$ 12,465$ 24,650$ 34,990$ 543,721$ 101,992$ 943,686$
Receivables (net of allowance
for uncollectibles):
-89,503 - - - 12,297 101,800
Taxes
$ 12,465315,371$ 24,650$ 34,990$ 543,721$ 114,289$ 1,045,486$
Total assets
LIABILITIES
Accounts payable66,599 - - - 45,093 - 111,692
Due to other funds- - - - 12,393 - 12,393
Deferred revenue- - - - - 7,381 7,381
-- 3,591 - - - 3,591
Other liabilities
-66,599 3,591 - 57,486 7,381 135,057
Total liabilities
FUND BALANCES
Restricted for:
Retirement of long-term debt- - - - - 106,908 106,908
Tourism248,772 - - - - - 248,772
Child and public safety- 12,465 21,059 - - 33,524
Court technology- - - 34,990 - - 34,990
Assigned for:
-- - - 486,235 - 486,235
Capital projects
12,465248,772 21,059 34,990 486,235 106,908 910,429
Total fund balances
Total liabilities
$ 12,465315,371$ 24,650$ 34,990$ 543,721$ 114,289$ 1,045,486$
and fund balances
48
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Special Revenue
Total
Hotel/MotelNonmajor
OccupancyChildPublicCourtCapitalDebtGovernmental
TaxSafety SafetyTechnologyProjectsServiceFunds
REVENUES
Taxes:
Property-$ -$ -$ -$ -$ 531,674$ 531,674$
Other322,272 - - - - - 322,272
Fines and forfeitures- 10,871 3,372 10,654- - 24,897
Intergovernmental- - 3,698 - 11,320 - 15,018
-451 - - 3,814 84 4,349
Investment earnings
10,871322,723 7,070 10,654 15,134 531,758 898,210
Total revenues
EXPENDITURES
Current:
Public safety- 5,602 10,154 - - - 15,756
Culture and recreation355,955 - - - - - 355,955
Debt service:
Principal - - - - - 420,000 420,000
Interest and fiscal charges- - - - - 98,117 98,117
-- - - 680,448 - 680,448
Capital outlay
5,602355,955 10,154 - 680,448 518,117 1,570,276
Total expenditures
EXCESS (DEFICIENCY) OF
REVENUES OVER (UNDER)
(33,232) 5,269 3,084)( 10,654 665,314)( 13,641 672,066)(
EXPENDITURES
OTHER FINANCING SOURCES
Transfers in - - - - 54,609 - 54,609
-- - - 58,256)( - 58,256)(
Transfers out
-- - - 3,647)( - 3,647)(
Total other financing sources
NET CHANGE IN
( 5,26933,232) 3,084)( 10,654 668,961)( 13,641 675,713)(
FUND BALANCES
7,196282,004 24,143 24,336 1,155,196 93,267 1,586,142
FUND BALANCES, BEGINNING
$ 12,465248,772$ 21,059$ 34,990$ 486,235$ 106,908$ 910,429$
FUND BALANCES, ENDING
49
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, 2011
Final
BudgetActualVariance
REVENUES
Taxes - other280,000$ 322,272$ 42,272$
451500 49)(
Investment income
322,723280,500 42,223
Total revenues
EXPENDITURES
Current:
355,955330,000 25,955)(
Culture and recreation
355,955330,000 25,955)(
Total culture and recreation
355,955330,000 25,955)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 33,232)49,500)( 16,268
OVER (UNDER) EXPENDITURES
282,004282,004 -
FUND BALANCE, BEGINNING
$ 248,772232,504$ 16,268$
FUND BALANCE, ENDING
50
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, 2011
Final
BudgetActualVariance
REVENUES
$ 10,8714,500$ 6,371$
Fines and forfeitures
10,8714,500 6,371
Total revenues
EXPENDITURES
Current:
5,6025,602 -
Public safety
5,6025,602 -
Total public safety
5,6025,602 -
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 5,2691,102) 6,371
OVER (UNDER) EXPENDITURES
7,1967,196 -
FUND BALANCE, BEGINNING
$ 12,4656,094$ 6,371$
FUND BALANCE, ENDING
51
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, 2011
Final
BudgetActualVariance
REVENUES
Fines and forfeitures-$ 3,372$ 3,372$
3,6983,700 2)(
Intergovernmental
7,0703,700 3,370
Total revenues
EXPENDITURES
Current:
11,092 10,154 938
Public safety
11,092 10,154 938
Total public safety
11,092 10,154 938
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
( 3,084)7,392)( 4,308
OVER (UNDER) EXPENDITURES
24,143 24,143 -
FUND BALANCE, BEGINNING
$ 16,751 21,059$ 4,308$
FUND BALANCE, ENDING
52
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, 2011
Final
BudgetActualVariance
REVENUES
$ 10,6544,000$ 6,654$
Fines and forfeitures
10,6544,000 6,654
Total revenues
-- -
EXPENDITURES
EXCESS(DEFICIENCY) OF REVENUES
10,6544,000 6,654
OVER (UNDER) EXPENDITURES
24,336 24,336 -
FUND BALANCE, BEGINNING
$ 28,336 34,990$ 6,654$
FUND BALANCE, ENDING
53
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, 2011
Final
BudgetActualVariance
REVENUES
Taxes - property 517,216$ 531,674$ 14,458$
84100 16)(
Investment earnings
517,316 531,758 14,442
Total revenues
EXPENDITURES
Debt service:
Principal420,000420,000 -
97,316 98,117 801)(
Interest and fiscal charges
517,316 518,117 801)(
Total debt service
517,316 518,117 801)(
Total expenditures
EXCESS(DEFICIENCY) OF REVENUES
13,641- 13,641
OVER (UNDER) EXPENDITURES
93,267 93,267 -
FUND BALANCE, BEGINNING
$ 93,267 106,908$ 13,641$
FUND BALANCE, ENDING
54
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, 2011
Sanitary
LandfillAirportTotal
ASSETS
Current assets:
Cash and investments126,712$ 73,127$ 199,839$
1,232 4,493 5,725
Accounts receivable (net of allowances for uncollectibles)
77,620127,944 205,564
Total current assets
Noncurrent assets:
Deferred charges- 191,139 191,139
Capital assets:
Land40,000 705,557 745,557
Buildings and improvements913,425 4,150,874 5,064,299
Equipment1,004,859 152,569 1,157,428
Construction in progress- 100,249 100,249
( 766,607)996,721)( 1,763,328)(
Less: accumulated depreciation
4,342,642961,563 5,304,205
Total capital assets
4,533,781961,563 5,495,344
Total noncurrent assets
4,611,4011,089,507 5,700,908
Total assets
LIABILITIES
Current liabilities:
Accounts payable2,492 2,151 4,643
Accrued liabilities1,683 - 1,683
Accrued interest payable8,885 1,947 10,832
Customer deposits900 - 900
Unearned revenue- 15,36015,360
Capital lease94,460 - 94,460
Bonds payable- 19,000 19,000
3,081 - 3,081
Compensated absences payable
38,458111,501 149,959
Total current liabilities
Long-term liabilities:
Capital lease99,661 - 99,661
Bonds payable- 127,865 127,865
-131,085 131,085
Liability for landfill closure
127,865230,746 358,611
Total long-term liabilities
166,323342,247 508,570
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt767,442 4,195,777 4,963,219
(20,182) 249,301 229,119
Unrestricted
$ 4,445,078747,260$ 5,192,338$
Total net assets
55
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Sanitary
LandfillAirportTotal
OPERATING REVENUES
Gate charges276,833$ -$ 276,833$
Hanger rental- 69,729 69,729
6,2861,152 7,438
Other service charges
76,015277,985 354,000
Total operating revenues
OPERATING EXPENSES
Personnel services130,255 - 130,255
Contractual services21,359 - 21,359
Utilities574 30,553 31,127
Repairs and maintenance10,936 19,561 30,497
Other 30,817 7,061 37,878
97,180105,404 202,584
Depreciation
154,355299,345 453,700
Total operating expenses
( 78,340)21,360)( 99,700)(
OPERATING LOSS
NONOPERATING REVENUES (EXPENSES)
Investment earnings116 - 116
Intergovernmental- 5,184 5,184
( 6,448)14,637)( 21,085)(
Interest expense
( 1,264)14,521)( 15,785)(
Total nonoperating revenues (expenses)
INCOME(LOSS) BEFORE
( 79,604)35,881)( 115,485)(
CONTRIBUTIONS AND TRANSFERS
82,62082,620-
CAPITAL CONTRIBUTIONS
225,57290,818 316,390
TRANSFER IN
228,58854,937 283,525
CHANGE IN NET ASSETS
4,216,490692,323 4,908,813
TOTAL NET ASSETS, BEGINNING
$ 4,445,078747,260$ 5,192,338$
TOTAL NET ASSETS, ENDING
56
CITY OF STEPHENVILLE, TEXAS
COMBINING STATEMENT OF CASH FLOWS
NONMAJOR ENTERPRISE FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2011
Sanitary
LandfillAirportTotal
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers279,168$ 91,681$ 370,849$
Cash payments to employees131,056)( - 131,056)(
( 56,440)57,902)( 114,342)(
Cash payments to suppliers for goods and services
35,24190,210 125,451
Cash provided by operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
- 5,184 5,184
Cash received from operating grant
- 5,184 5,184
Cash provided by noncapital financing activities
CASH FLOWS FROM CAPITAL AND
RELATED FINANCING ACTIVITIES
Principal payments on capital lease170,619)( - 170,619)(
Principal payments on bonds- 18,000)( 18,000)(
Interest and fiscal charges on debt22,468)( 6,687)( 29,155)(
Grant match for capital grant- 191,148)( 191,148)(
Transfers from other funds for capital acquisition90,818 225,572 316,390
( 17,619)15,464)( 33,083)(
Acquisition and construction of capital assets
Cash used by capital and
( 7,882)117,733)( 125,615)(
related financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
-116 116
Interest on investments
-116 116
Cash provided by investing activities
NET INCREASE (DECREASE) IN CASH
( 32,54327,407) 5,136
AND CASH EQUIVALENTS
40,584154,119 194,703
CASH AND CASH EQUIVALENTS, BEGINNING
$ 73,127126,712$ 199,839$
CASH AND CASH EQUIVALENTS, ENDING
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating loss21,360)$( 78,340)$( 99,700)$(
Adjustments to reconcile operating income (loss) to
net cash provided by operating activities:
Depreciation105,404 97,180 202,584
Change in assets and liabilities:
Decrease (increase) in accounts receivable1,083 306 1,389
Increase (decrease) in accounts payable2,314 735 3,049
Increase (decrease) in accrued liabilities2,573 - 2,573
Increase (decrease) in customer deposits100 - 100
Increase (decrease) in unearned revenue- 15,360 15,360
96 - 96
Increase (decrease) in compensated absences
113,581111,570 225,151
Total adjustments
$ 35,24190,210$ 125,451$
Net cash provided by operating activities
NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES
$ - 82,620$ 82,620$
Contributions of capital assets
57
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 58
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 66
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 70
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 75
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 77
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 NINE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
200320042005200620072008200920102011
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$
16,605,859$
Restricted- 620,104 295,721 381,849 366,934 397,365 434,394 405,640 420,877
7,932,439 8,181,076 9,548,977 10,237,660 11,232,319 12,162,240 5,252,462 7,952,264 8,156,696
Unrestricted
$ 17,678,42116,603,822$ 18,915,350$ 20,354,286$ 21,756,728$ 23,072,991$ 24,158,191$ 25,121,774$ 25,183,432$
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$ 26,538,623$
Restricted508,583 470,750 514,842 599,910 665,099 554,647 710,870 690,998 714,547
5,621,026 4,134,841 5,301,524 6,516,830 9,087,784 7,178,489 5,974,684 4,566,114 5,548,656
Unrestricted
$ 18,834,99717,919,299$ 22,007,282$ 24,549,134$ 26,317,100$ 28,964,524$ 30,181,049$ 30,581,090$ 32,801,826$
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$ 43,144,482$
Restricted508,583 1,090,854 810,563 981,759 1,032,033 952,012 1,145,264 1,096,638 1,135,424
12,315,91713,553,465 14,850,501 16,754,490 20,320,103 19,340,729 11,227,146 12,518,378 13,705,352
Unrestricted
$ 36,513,41834,523,121$ 40,922,632$ 44,903,420$ 48,073,828$ 52,037,515$ 54,339,240$ 55,702,864$ 57,985,258$
Total net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
58
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
LAST NINE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2003200420052006
EXPENSES
Governmental activities:
General government1,262,164$ 1,421,563$ 1,453,986$ 1,441,939$
Public safety4,028,747 4,026,402 4,345,846 4,689,443
Streets894,193 995,046 979,051 1,098,979
Culture and recreation1,522,896 1,574,032 1,582,864 1,646,017
Community development317,743 296,244 348,177 343,135
130,388153,445 109,153 91,817
Interest on long-term debt
8,443,6758,179,188 8,819,077 9,311,330
Total governmental activities expenses
Business-type activities:
Water and wastewater3,790,830 4,582,690 4,367,671 4,681,174
Sanitary landfill211,159 151,309 99,078 119,832
Airport99,847 101,082 8,633 18,075
35,46214,034 166,346 232,955
Storm water drainage
4,870,5434,115,870 4,641,728 5,052,036
Total business-type activities expenses
$ 13,314,21812,295,058$ 13,460,805$ 14,363,366$
Total expenses
PROGRAM REVENUES
Governmental activities:
Charges for services:
General government21,421$ 195,176$ 172,292$ 177,636$
Public safety884,349 524,561 488,292 600,332
Streets22,388 28,748 17,213 17,444
Culture and recreation157,741 147,563 135,607 132,125
Community development82,182 165,803 163,490 180,304
Operating grants and contributions146,257 189,805 125,068 172,884
366,478185,625 556,425 177,503
Capital grants and contributions
1,618,1341,499,963 1,658,387 1,458,228
Total governmental activities program revenues
Business-type activities:
Charges for services:
Water and wastewater4,261,555$ 4,564,193$ 5,245,901$ 5,628,658$
Sanitary landfill154,650 174,152 174,845 162,306
Airport24,865 31,077 39,088 51,037
Storm water drainage511,427 478,143 485,600 485,314
Operating grants and contributions- - - -
411,474273,101 1,513,020 599,393
Capital grants and contributions
5,659,0395,225,598 7,458,454 6,926,708
Total business-type activities program revenues
$ 7,277,1736,725,561$ 9,116,841$ 8,384,936$
Total program revenues
59
TABLE 2
Fiscal Year
20072008200920102011
$ 1,331,5831,591,258$ 1,309,902$ 1,412,441$ 1,374,221$
5,504,9755,187,628 6,043,653 6,252,861 6,274,700
1,183,4351,144,681 1,210,135 1,426,590 1,479,381
2,166,5451,733,627 2,340,312 2,438,756 2,522,284
395,182381,091 408,144 427,769 374,335
103,49065,926 72,220 141,220 97,809
10,685,21010,104,211 11,384,366 12,099,637 12,122,730
4,526,8934,776,359 4,819,886 5,054,152 4,846,996
290,349272,010 527,255 294,407 313,982
127,018130,169 170,287 158,085 160,803
245,371141,516 346,159 580,590 600,859
5,189,6315,320,054 5,863,587 6,087,234 5,922,640
$ 15,874,84115,424,265$ 17,247,953$ 18,186,871$ 18,045,370$
$ 219,353243,929$ 231,122$ 215,757$ 216,870$
906,131687,567 677,662 834,180 893,207
24,04627,425 21,472 24,713 24,419
145,225171,931 221,589 317,917 338,662
272,729160,745 126,186 177,401 249,501
57,969115,859 109,861 43,417 40,015
148115,556 740,974 1,602,301 258,933
1,625,6011,523,012 2,128,866 3,215,686 2,021,607
$ 5,469,9325,092,578$ 5,492,233$ 5,396,349$ 6,147,606$
275,915170,814 414,503 175,153 277,985
68,18661,916 73,180 72,408 76,015
577,766500,779 584,439 588,141 591,326
-- 20,062 17,808 5,184
870,718169,370 249,253 402,702 528,471
7,262,5175,995,457 6,833,670 6,652,561 7,626,587
$ 8,888,1187,518,469$ 8,962,536$ 9,868,247$ 9,648,194$
(continued)
60
CITY OF STEPHENVILLE, TEXAS
CHANGES IN NET ASSETS
(Continued)
LAST NINE FISCAL YEARS
(Accrual Basis of Accounting)
Fiscal Year
2003200420052006
NET (EXPENSE) REVENUES
Governmental activities6,679,225)$( 6,825,541)$( 7,160,690)$( 7,853,102)$(
788,4961,109,728 2,816,726 1,874,672
Business-type activities
( 6,037,045)5,569,497)( 4,343,964)( 5,978,430)(
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
Property - debt service545,552 540,467 448,663 437,146
Sales3,217,670 3,538,100 3,654,232 4,101,973
Franchise934,965 1,209,036 1,264,298 1,423,615
Other208,534 262,467 292,447 312,528
Gain on sale of capital assets- - - -
Investment earnings196,542 87,990 286,301 441,986
Miscellaneous33,971 12,158 54,068 34,663
-315,638 50,000)( 116,979)(
Transfers
7,900,1407,447,600 8,397,619 9,292,038
Total governmental activities
Business-type activities:
Investment earnings105,970 100,773 305,559 518,164
Miscellaneous9,137 26,429 - 32,037
( -315,638) 50,000 116,979
Transfers
( 127,202200,531) 355,559 667,180
Total business-type activities
Total general revenues and other
8,027,3427,247,069 8,753,178 9,959,218
changes in net assets
CHANGE IN NET ASSETS
Governmental activities768,375 1,074,599 1,236,929 1,438,936
915,698909,197 3,172,285 2,541,852
Business-type activities
$ 1,990,2971,677,572$ 4,409,214$ 3,980,788$
Total change in net assets
Note:
The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
61
TABLE 2
Fiscal Year
20072008200920102011
$( 9,059,609)8,581,199)$( 9,255,500)$( 8,883,951)$( 10,101,123)$(
2,072,886675,403 970,083 565,327 1,703,947
( 6,986,723)7,905,796)( 8,285,417)( 8,318,624)( 8,397,176)(
3,131,7022,913,521 3,382,272 3,371,138 3,595,948
527,921476,117 536,671 608,404 526,519
4,745,3094,351,269 4,622,690 4,275,545 4,616,312
1,169,8581,370,838 1,186,650 1,018,036 1,120,678
434,498388,013 372,815 341,456 363,645
-- - 323,641 12,159
454,269623,810 108,218 32,294 13,517
17,18675,994 124,613 14,190 26,870
( 104,871)215,921)( 6,771 112,834)( 137,203)(
10,375,8729,983,641 10,340,700 9,871,870 10,138,445
469,667876,642 68,079 6,714 5,151
-- 7,888 - -
104,871215,921 6,771)( 112,834 137,203
574,5381,092,563 69,196 119,548 142,354
10,950,41011,076,204 10,409,896 9,991,418 10,280,799
1,316,2631,402,442 1,085,200 987,919 37,322
2,647,4241,767,966 1,039,279 684,875 1,846,301
$ 3,963,6873,170,408$ 2,124,479$ 1,672,794$ 1,883,623$
62
THIS PAGE LEFT BLANK INTENTIONALLY
TABLE 3
CITY OF STEPHENVILLE, TEXAS
FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2002200320042005200620072008200920102011
General fund
Reserved-$ 7,178$ 4,072$ 13,349$ 10,352$ 15,224$ 8,653$ 12,680$ 9,148$
-$
Unreserved6,429,861 7,309,934 8,017,965 8,361,416 9,045,429 10,039,416 9,555,553 7,358,831 7,196,152 -
Nonspendable - - - - - - - - - 18,836
Assigned- - - - - - - - - 3,750,000
-- - - - - - - - 3,779,268
Unassigned
$ 6,429,861 7,317,112$ 8,022,037$ 8,374,765$ 9,055,781$ 10,054,640$ 9,564,206$ 7,371,511$ 7,205,300$ 7,548,104$
Total general fund
All other governmental funds
Reserved
Debt service funds30,337$ 41,081$ 41,285$ 50,563$ 69,443$ 82,233$ 89,253$ 96,071$ 93,267$
-$
Unreserved, reported in:
Special revenue funds207,743 237,911 211,765 247,743 318,028 280,798 350,750 332,799 337,679
-
Capital projects funds895,894 772,431 735,191 1,063,030 1,051,972 1,069,303 2,429,680 1,676,876 1,155,196 -
Restricted- - - - - - - - - 424,194
-- - - - - - - - 486,235
Assigned
Total all other
$ 1,133,974 1,051,423$ 988,241$ 1,361,336$ 1,439,443$ 1,432,334$ 2,869,683$ 2,105,746$ 1,586,142$ 910,429$
governmental funds
Note:
The City implemented GASB Statement 54 in fiscal year 2011. Prior year balances have not been restated to conform to GASB Statement 54.
63
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2002200320042005200620072008200920102011
REVENUES
Taxes7,067,904$ 6,891,072$ 7,804,900$ 8,103,134$ 8,942,235$ 9,506,528$ 10,004,265$ 10,104,779$ 9,570,777$ 10,251,019$
Service charges523,825 545,763 697,355 651,021 640,935 738,526 839,684 948,049 1,178,800 1,076,971
Fines and forfeitures135,897 248,426 229,922 207,407 279,716 353,889 361,027 226,083 229,357
295,075
Licenses and permits86,583 84,669 168,519 168,523 183,839 164,071 275,887 131,341 138,675
255,269
Intergovernmental242,187 249,564 306,510 104,228 188,096 111,889 87,730 124,581 1,366,544 147,510
Investment earnings275,793 194,772 87,991 286,300 441,986 623,810 454,269 108,218 32,294
13,517
Miscellaneous61,705 125,027 52,734 108,222 60,110 119,731 19,734 35,189 19,269
37,977
-55,415 - 402,789 28,122 - - - - -
Special assessments
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 12,077,338
Total revenues
EXPENDITURES
General government1,091,746 1,113,323 1,274,807 1,231,709 1,349,248 1,491,202 1,293,925 1,355,822 1,359,012 1,319,243
Public safety3,603,448 3,821,859 3,874,454 4,140,738 4,562,217 4,955,771 5,459,268 5,827,418 6,048,150 6,084,813
Streets620,714 561,646 630,057 578,126 699,290 735,614 824,764 845,429 850,428 937,367
Culture and recreation1,294,316 1,357,624 1,336,974 1,412,305 1,466,261 1,518,938 1,931,846 2,006,999 2,072,331 2,189,768
Community development250,776 317,743 295,036 346,969 337,659 375,614 394,833 407,208 420,982
367,228
Debt service
Principal450,000 470,000 500,000 420,000 430,000 455,000 475,000 425,000 460,000 420,000
Interest178,813 157,032 133,441 111,582 91,817 71,105 49,195 99,652 144,279 98,117
Bond issuance costs- - - - - - 12,725 25,000 -
-
868,370 661,419 1,014,372 952,446 807,528 1,902,168 5,265,493 2,099,912 889,326
Capital outlay
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 12,305,862
Total expenditures
(continued)
64
TABLE 4
CITY OF STEPHENVILLE, TEXAS
CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
(Continued)
LAST TEN FISCAL YEARS
(Modified Accrual Basis of Accounting)
Fiscal Year
2002200320042005200620072008200920102011
EXCESS OF REVENUES
OVER (UNDER)
$ 173,31391,126$ 641,743$ 775,823$ 876,101$ 1,207,672$ 301,128)$( 4,579,781)$( 919,378)$( 228,524)$(
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
27,316
Proceeds from insurance- - - - - - - 94,497 8,343
5,502
Transfers in251,085 423,414 90,000 90,000 94,500 55,000 207,629 2,461,037 204,320
292,052
(102,195)( 90,000)( 140,000)( 211,479)( 270,921)( 312,500)( 2,454,266)( 317,154)( 429,255)(
Transfers out
Total other financing
148,890 - 50,000)( 116,979)( 215,921)( 1,248,043 1,623,149 233,563 104,385)(
sources (uses)
NET CHANGE IN
$ 240,016$ 641,743$ 725,823$ 759,122$ 991,751$ 946,915$ 2,956,632)$( 685,815)$( 332,909)$(
FUND BALANCES
DEBT SERVICE AS
A PERCENTAGE
OF NONCAPITAL
8.7%9.2% 8.5% 6.9% 6.2% 5.8% 5.3% 5.0% 5.6% 3.9%
EXPENDITURES
65
TABLE 5
CITY OF STEPHENVILLE, TEXAS
ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY
LAST TEN FISCAL YEARS
Estimated
Less:Total TaxableTotalActual
FiscalResidentialCommercialIndustrialTax-exemptAssessedDirectTaxable
YearPropertyPropertyPropertyPropertyValueTax RateValue
2002277,642,872$ 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
2011546,372,660 514,213,740 127,553,350 302,938,397 885,201,353 0.4600903,266,687
Source:Erath County Appraisal District.
Note:PropertyinErathCountyisreassessedonceeverythreeyearsonaverage.TheCountyassessespropertyatapproximately95percentofactualvaluefor
commercial,industrialandresidentialproperty.Estimatedactualtaxablevalueiscalculatedbydividingtaxableassessedvaluebythosepercentages.Tax
rates are per $100 of assessed value.
66
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
2002$0.3678$0.1122$0.4800$0.1690-$0.4785$1.1275
20030.38120.10380.48501.6900$0.01500.47002.6600
20040.39130.09370.48501.67000.01500.45122.6212
20050.41070.07430.48501.67000.01500.46252.6325
20060.40790.06710.47501.66000.01500.44102.5910
20070.39960.06540.46501.51990.01500.43522.4351
20080.38110.06390.44501.19200.01500.41872.0707
20090.37620.05880.43501.14700.01500.39151.9885
20100.37620.06730.44351.14700.01500.39001.9955
20110.40150.05850.46001.14700.01500.45002.0720
Source:
Erath County Appraisal District
Notes:TheCity'sbasicpropertytaxratemaybeincreasedonlybyamajorityvoteoftheCity'sresidents.Ratesfordebtservice
are set based on each year's requirements.
OverlappingratesarethoseoflocalandcountygovernmentsthatapplytopropertyownerswithintheCityofStephenville,
Texas.
67
TABLE 7
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL PROPERTY TAXPAYERS
CURRENT YEAR AND NINE YEARS AGO
20112002
PercentagePercentage
of Total Cityof Total City
TaxableTaxableTaxableTaxable
AssessedAssessedAssessedAssessed
TaxpayerValueValueValueValue
FMC Company37,355,452$ 4.22% 22,566,189$ 4.35%
Saint Gobain Abrasives16,632,836 1.88% 16,322,241 3.15%
Stephenville Campus Crest11,872,640 1.34% - -%
Bosque River Associates8,118,020 0.92% 9,543,390 1.84%
Oncor Electric Delivery7,569,510 0.86% 7,240,170 1.40%
Stephenville Student Housing LP8,956,830 1.01% - -%
Wal-Mart Stores, Inc. #18,737,210 0.99% 8,284,090 1.60%
United Telephone Company
(Century Link)6,928,430 0.78% 5,496,420 1.06%
Bruner Motors- -% 3,469,480 0.67%
Wilmington Trust (Wal-Mart #2)6,000,730 0.68% 6,793,140 1.31%
Rayloc Genaut- -% 4,485,122 0.86%
-%- 4,672,463 0.90%
Emerson Electric Company
Subtotal112,171,658$ 12.67% 88,872,705$ 17.14%
87.33%773,029,695 429,760,651 82.86%
Remaining Roll
$ 100.00%885,201,353 518,633,356$ 100.00%
Total
Source: Erath County Appraisal District State Property Tax Board Report.
68
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 Levy09/30/11
20022,348,927$ 2,294,810$ 97.70% 52,617$ 2,347,427$ 99.94% 1,500$
20032,513,625 2,462,155 97.95% 44,531 2,506,686 99.72% 6,939
20042,788,419 2,726,244 97.77% 58,974 2,785,218 99.89% 3,201
20052,832,529 2,808,747 99.16% 19,774 2,828,521 99.86% 4,008
20063,066,225 3,018,008 98.43% 44,457 3,062,465 99.88% 3,760
20073,344,539 3,307,083 98.88% 33,018 3,340,101 99.87% 4,438
20083,641,808 3,602,598 98.92% 32,781 3,635,379 99.82% 6,429
3,822,4923,874,843
2009 41,91098.65% 3,864,402 99.73% 10,441
3,887,0383,965,938
2010 54,03398.01% 3,941,071 99.37% 24,867
4,007,4494,059,655
2011 -98.71% 4,007,449 98.71% 52,206
Sources: Erath County Appraisal District and Erath County Tax Assessor-Collector.
69
TABLE 9
CITY OF STEPHENVILLE, TEXAS
RATIOS OF OUTSTANDING DEBT BY TYPE
LAST TEN FISCAL YEARS
Governmental ActivitiesBusiness-type Activities
GeneralCertificatesWaterCertificatesTotalPercentage
FiscalObligationofRevenueofCapitalPrimaryof PersonalPer
YearBondsParticipationBondsParticipationLeasesGovernmentIncomeCapita
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 -
4.91%17,510,000 1,118
20041,235,000 1,210,000 6,295,000 14,174,233 -
6.09%22,914,233 1,443
2005945,000 1,080,000 5,910,000 13,250,233 -
5.19%21,185,233 1,300
2006645,000 950,000 5,500,000 14,305,233 259,184
5.03%21,659,417 1,283
2007330,000 810,000 5,210,000 17,660,134 219,920
5.02%24,230,054 1,421
20081,325,000 665,000 4,905,000 20,644,155 177,337
5.56%27,716,492 1,607
20092,550,000 515,000 4,585,000 19,456,865 499,724
N/A1,53827,606,589
20102,255,000 350,000 4,250,000 18,179,865 364,740
N/A1,48325,399,605
20112,185,000 - 3,895,000 16,866,865 194,121
N/A1,32423,140,986
Notes:The City issued over $5 million of new certificates of participation in 2008.
See Table 14 for personal income and population data. These ratios are calculated using personal income and population for the prior calendar year.
Personal income is not available for 2009-2011.
70
TABLE 10
CITY OF STEPHENVILLE, TEXAS
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
LAST TEN FISCAL YEARS
General Bonded Debt Outstanding
Percentage of
GeneralActual Taxable
FiscalObligationCertificates ofValue ofPer
YearBondsObligationsTotalPropertyCapita
20021,970,000$ 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%1,990,000 115
20092,550,000 515,000
0.34%3,065,000 171
20102,255,000 350,000
0.29%2,605,000 152
20112,185,000 -
0.25%2,185,000 125
Notes:
See Table 5 for property value data.
Population data can be found in Table 14.
71
TABLE 11
CITY OF STEPHENVILLE, TEXAS
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
AS OF SEPTEMBER 30, 2011
Estimated
Share of
EstimatedDirect and
DebtPercentageOverlapping
Government Unit
OutstandingApplicableDebt
Debt repaid with property taxes:
Stephenville Independent School District9,169,326$ 68.45%6,276,404$
2,534,151
Erath County6,533,000 38.79%
Subtotal, overlapping debt8,810,555
2,185,000
City of Stephenville direct debt2,185,000 100.00%
$ 10,995,555
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.
72
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 2011
Taxable assessed valuation885,201,353$
Constitutional tax rate limit2.50% of assessed valuation
Maximum constitutional revenue available 22,130,034$
Tax rate to achieve maximum tax revenue $2.50 per $100 of valuation
Tax rate for FY 2009-2010$0.4600 per $100 of valuation
Available unused constitutional max tax rate$2.0400 per $100 of valuation
Debt applicable to limit:
General obligation debt2,185,000$
DEBT TAX RATE ADEQUACY
2011 Principal and Interest Requirements
$ 306,075
$0.0352 Tax Rate at 98% Collection Produces
306,070
Average Annual Principal and Interest Requirement, 2012-2019
319,205
$0.0367 Tax Rate at 98% Collection Produces
319,204
Maximum Principal and Interest Requirements
306,075
$0.0588 Tax Rate at 98% Collection Produces
306,070
DEBT SERVICE FUND BUDGET PROJECTION
Tax Obligation Debt Service Requirements, Fiscal Year Ending 9-30-2012
306,075
Debt Service Fund, 9-30-11
$ 106,908
412,978306,070$
Debt Service Fund Tax Levy @ 98% Collection
73
TABLE 13
CITY OF STEPHENVILLE, TEXAS
PLEDGED REVENUE COVERAGE
LAST TEN FISCAL YEARS
Water and Wastewater Revenue Bonds
UtilityLess:Net
FiscalServiceOperatingAvailableDebt Service
YearChargesExpensesRevenuePrincipalInterestCoverage
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
20116,147,606 3,106,016 3,041,590 1,435,000 543,289 1.54
Notes:Operating expenses do not include interest, depreciation, or amortization expenses.
74
TABLE 14
CITY OF STEPHENVILLE, TEXAS
DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Per Capita
CalendarPersonalPersonalSchool CollegeUnemployment
YearPopulationIncomeIncomeEnrollmentEnrollmentRate
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%
200817,250 498,231,750 28,883 3,496 7,763 4.0%
200917,950 535,448,500 29,830 3,553 8,242 7.1%
201017,123 N/AN/A3,794 8,896 7.0%
201117,480 N/AN/A3,584 9,575 6.5%
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 2009-2011.
75
Table 15
CITY OF STEPHENVILLE, TEXAS
PRINCIPAL EMPLOYERS
CURRENT YEAR
2011
Percentage
of Total City
EmployerEmployeesEmployment
Tarleton State University1,166 6.52%
FMC Company790 4.42%
Saint Gobain Abrasives477 2.67%
Stephenville Independent School District236 1.32%
Wal-Mart Stores, Inc.460 2.57%
Scheiber Foods341 1.91%
Texas Health Harris Methodist Hospital Stephenville 279 1.56%
Western Dairy Transport150 0.84%
Outlaw Conversions105 0.59%
Erath County174 0.97%
United Cooperative Services50 0.28%
Emerson Electric Company128 0.72%
Stephenville Medical & Surgical Clinic128 0.72%
Tejas Tubular (Caporal Forging)165 0.92%
Fibergrate Composite Structures134 0.75%
Bruner Motors150 0.84%
Southwestern Linen38 0.21%
Texstar Ford35 0.20%
Reynolds Nationwide Transport35 0.20%
0.11%19
USTRA (USTRC)
Subtotal5,060 28.29%
71.71%12,828
Remaining Employers
100.00%17,888
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.
76
TABLE 16
CITY OF STEPHENVILLE, TEXAS
FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program2002200320042005200620072008200920102011
General government
Management services4 4 4 4 4 4 4 4 4 4
Finance6 7 7 7 7 7 7 7 7 7
Planning2 2 2 2 2 2 2 2 2 2
Building1 1 1 1 2 2 2 2 2 2
Other1 1 1 1 1 1 1 1 1 1
Police
Officers30 30 31 31 31 34 38 38 38 38
Civilians11 11 11 13 13 12 12 12 12 12
Fire
Firefighters and officers26 26 26 26 27 28 31 31 31 31
Parks and recreation11 13 13 13 13 13 13 13 13 13
Library4 4 4 4 4 3 3 3 3 3
Streets7 7 7 7 7 7 7 7 7 7
Water9 9 9 9 10 13 13 13 13 13
Wastewater8 8 8 8 8 5 5 5 5 5
22 2 2 2 2 2 2 2 2
Landfill
125122 126 128 131 133 140 140 140 140
Total
Source:City Human Resource Office
Notes:Afulltimeemployeeisscheduledtowork2080hoursperyear(includingvacationandsickleave).Fulltimeequivalentemploymentis
calculated by dividing total labor hours by 2080.
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TABLE 17
CITY OF STEPHENVILLE, TEXAS
OPERATING INDICATORS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program2002200320042005200620072008200920102011
General government
Building permits issued234 222 140 172 125 153 135 109 90
148
Building permits value$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$29,365,010
Police
Calls for service10,207 10,203 10,483 10,358 11,234 11,730 11,739 12,730 13,424 17,278
Physical arrests762 1,134 825 959 999 1,447 1,023 953 916 717
Parking violations404 530 324 386 334 498 171 206 346
401
Traffic violations3,164 5,094 5,350 3,588 3,066 4,469 2,473 1,634 1,478 4,639
Fire
Ambulance responses1,468 1,372 1,183 1,291 1,255 1,537 1,472 1,502 1,442 1,524
Fires responses412 339 185 235 305 235 219 230 241 282
Inspections149 135 132 109 105 313 280 326 359 316
Refuse collection
Refuse collected (tons)- - - - - - - - 15,984 15,538
Other public works
Street resurfacing (miles)2.352.391.351.141.522.702.232.681.250.90
Library
Volumes in collection40,161 43,331 46,938 48,548 47,510 43,737 43,827 44,200 39,333 33,709
Total volumes borrowed237 110 138 155 114 116 94 227 129
132
Water
New connections5,319 5,242 5,521 5,253 5,550 5,660 5,670 5,700 5,624 5,698
Water main breaks52 49 54 50 48 49 44 61 62
70
Average daily consumption2,158,000 2,124,000 1,971,990 2,042,000 2,254,000 1,828,000 2,080,000 2,004,000 1,970,000 2,447,000
(thousands of gallons)
Peak daily consumption4,174,000 4,133,000 3,598,000 3,499,000 4,397,000 3,091,000 3,848,000 3,663,000 3,666,000 4,765,000
(thousands of gallons)
Wastewater
Average daily sewage treatment1,311,000 1,354,000 1,456,000 1,334,000 1,414,000 1,691,000 1,548,000 1,518,000 1,745,000 1,395,000
(thousands of gallons)
Source: Various City departments
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TABLE 18
CITY OF STEPHENVILLE, TEXAS
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
Function/Program2002200320042005200620072008200920102011
Police
Stations1 1 1 1 1 1 1 1 1
1
Patrol units9 10 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 92 92 92 92 96 96 96 91
91
Highways (miles)19 19 19 19 19 21 21 21 23
23
Streetlights992 1,013 1,013 1,013 1,013 1,070 1,080 1,096 1,119 1,121
Parks and recreation
Acreage134 134 134 134 134 134 130 130 130 130
Playgrounds4 4 4 4 4 4 4 4
4 4
Baseball/softball diamonds9 9 9 9 9 9 9 9
11 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)112 116 117 117 120 122 124 125 125
126
Fire hydrants623 650 670 670 680 692 720 735 771
788
Storage capacity5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,500,000 5,750,000 5,750,000 5,750,000 5,750,000
(thousands of gallons)
Wastewater
Sanitary sewers (miles)96 105 105 110 110 113 114 115 115
116
Storm sewers (miles)10 10 10 10 10 10 10.5 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
REPORT REQUIRED BY
GOVERNMENT AUDITING STANDARDS
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, 2011, which collectively comprise the
City’s basic financial statements and have issued our report thereon dated January 20, 2012. 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.
80
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 20, 2012
81