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CAFR FY 2001-02COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002 v �arf I -35 �J�F I -Ic L&N 1. A nij CITY OF SCHERTZ, TEXAS CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2002 OFFICIALS ISSUING REPORT MARK MARQUEZ City Manager VIJAY JAIN Director of Finance II I This page intentionally left blank CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2002 TABLE OF CONTENTS INTRODUCTORY SECTION PAGE TABLE OF CONTENTS i LETTER OF TRANSMITTAL iv CITY OFFICIALS x ORGANIZATIONAL CHART xi CERTIFICATE OF ACHIEVEMENT xii FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT GENERAL PURPOSE FINANCIAL STATEMENTS 1 ............3 COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS ..................................................... ..............................4 COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNITS ..................................................................................................... ............................... 8 COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND ANNUALLY BUDGETED SPECIAL REVENUE FUNDS ......................................................................................... .............................10 COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES ...................................................... .............................12 COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES ..........................13 NOTES TO FINANCIAL STATEMENTS ...................................................................... ............................... 15 COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES ............................................................................... .............................38 GOVERNMENTAL FUND TYPES GENERALFUND ............................................................................................................ ............................... 39 COMBINED BALANCE SHEETS ................................................................................. .............................40 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ........................................................................................... ............................... 41 SCHEDULE OF REVENUES COMPARED TO BUDGET ........................................... .............................42 SCHEDULE OF CURRENT EXPENDITURES COMPARED TO BUDGET .............. .............................43 CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30,2002 TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED) SPECIALREVENUE FUNDS ........................................................................................... .............................44 COMBININGBALANCE SHEET .................................................................................. .............................45 COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES.................................................................:............................................... ............................... 47 PARK SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ................................. .............................49 RECYCLING SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ...................... ............................... 50 HOTEL OCCUPANCY TAX SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ..................... 51 DEBTSERVICE FUND ..................................................................................................... .............................52 COMPARATIVE BALANCE SHEETS .......................................................................... .............................53 COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDBALANCES ..................................................................................................... ............................... 54 CAPITALPROJECTS FUND .......................................................................................... ............................... 55 COMPARATIVEBALANCE SHEETS ........................................................................ ............................... 56 COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDBALANCE ....................................................................................................... ............................... 57 PROPRIETARY FUND TYPE ENTERPRISEFUNDS .......................................................................-..... ............................... COMBINING BALANCE SHEET ......................................................... ............................... COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINEDEARNINGS ....................................................................... ............................... COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES GENERALFIXED ASSETS ........................................................... ............................... COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE ...... SCHEDULE OF GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY DISCRETELY PRESENTED COMPONENT UNITS ............................ ............................... COMBINING BALANCE SHEET ........................................................ ............................... COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUNDBALANCE ............................................................................... ............................... ii .............. 58 .............. 59 .............. 61 .............. 62 .............. 64 ..............65 .............. 66 .............. 68 .............. 70 ..................... 71 LJ ' CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2002 TABLE OF CONTENTS (CONTINUED) STATISTICAL SECTION GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION - LAST TEN FISCAL YEARS........ 73 GENERAL GOVERNMENTAL REVENUES BY SOURCE - LAST TEN FISCAL YEARS ..................... 74 PROPERTY TAX LEVIES AND COLLECTIONS - LAST TEN FISCAL YEARS ...... ............................... 75 ASSESSED AND TAXABLE VALUE OF PROPERTY - LAST TEN FISCAL YEARS ............................ 77 PROPERTY TAX RATES - ALL OVERLAPPING GOVERNMENTS - LAST TEN FISCAL YEARS.... 78 RATIO OF NET GENERAL BONDED DEBT TO TAXABLE VALUE AND NET GENERAL BONDED DEBT PER CAPITA - LAST TEN FISCAL YEARS .................................. ............................... 79 COMPUTATION OF DIRECT AND OVERLAPPING DEBT ...................................... ............................... 80 LEGALDEBT MARGIN ................................................................................................. ............................... 81 RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES - LAST TEN FISCAL YEARS ...... 82 REVENUE BOND COVERAGE - UTILITY SYSTEM BONDS - LAST TEN FISCAL YEARS .............. 83 WATERWORKS AND SEWER SYSTEM FUNDS - REVENUE BOND REQUIREMENTS DEMOGRAPHIC STATISTICS - LAST TEN FISCAL YEARS ....................... PROPERTY VALUE AND NEW CONSTRUCTION - LAST TEN FISCAL YEARS PRINCIPAL TAXPAYERS ......... ............................... MISCELLANEOUS STATISTICS .... HISTORICAL TREND INFORMATION FOR AGENT MULTIPLE- EMPLOYER PUBLIC EMPLOYEE RETIREMENT SYSTEM - LAST EIGHT FISCAL YEARS .................... 85 ..................... 86 ..................... 87 ..................... 89 ..................... 90 REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH G0VERNMENTAUDITING STANDARDS ........................................... ............................... iii W4U .....93 This page intentionally left blank January 31, 2003 1400 SCHERTZ PARKWAY P.O. DRAWER I SCHERTZ, TEXAS 78154 -0890 MARK MARQUEZ (210) 658 -7477 CITY MANAGER FAX (210) 659 -3204 To the Citizens of the City of Schertz, Texas: The comprehensive annual financial report (CAFR) of the City of Schertz, Texas, (the City) for the year ending September 30, 2002 is submitted herewith. Responsibility for both the accuracy of the presentation and all disclosures rests with the City. The data, as presented, is accurate to the best of our ability in all material aspects. The report is presented in a manner designed to set forth the financial position of the City and provide a review of various funds. We have attempted to provide all disclosures necessary to enable the reader to gain maximum understanding of the City's financial activity. The accompanying CAFR is presented in the following three (3) sections: Introduction — Includes this letter of transmittal, organization chart, comments regarding economic conditions and outlook, major occurrences of fiscal year 2001 -2002, and major initiatives for fiscal year 2002-03. 2. Financial — This section consists of: the independent auditor's report, general purpose financial statements including combined balance sheets and combined statements of revenues, expenditures, and changes in fund balance, notes to financial statements, and individual fund statements and account groups with supplemental statements including a review of the accounting system and controls and commentary. 3. Statistical — This section includes selected financial and demographic information, generally presented on a multi -year basis. No Single Audit Reports were required for this audit period because the City did not meet the $300,000 threshold, as required by The Single Audit Act, for issuance of this report. This report includes all funds and account groups of the City of Schertz. The City provides a full range of services including: police, emergency medical transportation, and fire protection; water and sewer services; waste collection; code enforcement; comprehensive planning; street maintenance and recreational activities as well as economic development efforts. While the Schertz Public Library is an operating department of city government, the Library Board serves as an advisory board and maintains a small amount of funds, derived from private sources, as a means to fund specific improvements /additions to the library outside City resources. The Schertz Development Foundation is a separate nonprofit corporation organized and operated for the charitable purpose of assisting the City of Schertz, Texas, to develop and implement plans for economic development in our City. The Schertz Economic Development Corporation was formed and operates under "4b" rules of the Economic Development Act and manages sales tax revenues for that purpose. The library, economic development corporation, and the foundation are reported as component units, discretely presented. The Schertz Volunteer Fire Department Board does not meet the criteria for inclusion in the reporting entity, and accordingly, is excluded from this report. iv ECONOMIC CONDITION & OUTLOOK The city is located near the center of the San Antonio Standard Statistical Metropolitan Area (SMSA). The economic conditions and outlook for Schertz remain very strong. While the national and regional economies have suffered somewhat, the City of Schertz has not been affected as badly as other areas in the region. Statistical data for fiscal year 2001 -2002 included 328 new housing starts, compared to 268 for 2000 -2001, to 332 for 1999 -2000 and 520 for 1998 -1999. Total building permit values in 2001 -2002 were $69,960,340 compared to $70,912,183 for 2000 -2001, $61,864,013 for 1999 -2000, and $76,501,638 in 1998 -1999. The strength of current economic conditions is further exemplified by unemployment figures that are lower than most other areas in the region. The City of Schertz continues to grow, and is one of the most dynamic communities in the Austin/ San Antonio Corridor. The near term outlook remains extremely positive. Schertz continues to be a community of choice for residential development, due to several key factors: A strong local economy, a competitive tax rate, excellent quality of life, steadily improving infrastructure, well planned growth, and stable political leadership. In addition to residential activity, the city's industrial and business growth has continued at a steady but slower pace that in part, reflects the national economy. We were more than pleased to be actively considered for the site of a major auto assembly plant. While not selected, it is clear we have positioned ourselves in the national industrial site selection marketplace. CURRENT YEAR PROJECTS The city's reputation for quality of life and visionary leadership, along with its excellent strategic location, continue to make it a target for developers and site selection professionals. This is a transitional year for the City. After having three City Managers in the last two years, we have stabilized the staff. It was the strong political leadership and the high quality of key staff members that kept us on course. The availability of land for residential, commercial and industrial development has sustained our steady and continued growth despite the impact of the national economy. We are improving the City infrastructure through continuous investment. The FM 78 project to widen that roadway is complete. The widening and improvements on Schertz Parkway are ongoing and should be complete in early 2003. New water lines on FM 1518 and Lower Seguin Road have been completed. The new Carrizo Aquifer water project is expected to provide a drought resistant 50 -year water supply for our citizens, which includes construction of the 37.5 mile pipeline system and a new 1.5 million water tank. We should be using water from the Carrizo within the next thirty days. MAJOR EVENTS Fiscal year 2001 -2002 has been a remarkable year for the City of Schertz. As noted earlier, the City is transitioning with a new City Manager. Nonetheless the City continues to move forward with our continued growth, albeit slower than the last several years, but stronger than expected. Evidence of economic growth has been demonstrated in residential, commercial and industrial sectors. In the residential arena, the first several units in the Jonas Woods subdivision have been sold out and construction is ongoing for the remaining units. At the end of the year, a new developer requested annexation of about 88 acres, and will be platting about 400 lots for immediate construction. This makes over 1000 new lots platted in the last year. This is certainly an indicator of strength in our housing market. In fact, every subdivision in the city with remaining capacity to expand is moving forward on plans for more construction. The real value of the new construction and recent annexations is shown in the assessed valuation of property within the City. We reached the $1 billion milestone in assessed valuation in 2002. v INITIATIVES FOR THE FUTURE While 2002 was a transitional year, it does not mean we are standing still. For 2002 -2003 City Council implemented Phase II of a three -phase program to insure city employees are paid at a competitive rate for their skills. Phase III will be a review and adjustment to insure market competitiveness. Improvements in employee pay were seen as an essential element in solving the problem of a high employee turnover rate last year. As part of a different approach in managing our debt service, we will make a large investment in several long- standing and long- needed capital projects. The first is an Emergency Services Sub - station on IH -35 to better serve newly annexed areas and our ever - expanding industrial park. It will house both Fire and EMS vehicles as well as meet Police requirements. We will be completely refurbishing the City's main public pool. It is about 25 -years old and needs to be completely re -done. We have planned a joint project with local businesses through a Public Improvement District. This district is intended to significantly improve the intersection at IH -35 and FM 3009, our busiest and most dangerous intersection, responsible for over 20 percent of our vehicle accidents. This is our number one priority. Immediately after the devastating flooding that occurred in 1998, the City applied for a FEMA grant to build a major drainage structure. That grant, in the amount of $4 million, was approved in late 2002. The City match is approximately $1 million. Our vehicle fleet also needed to be upgraded and expanded to meet additional service requirements as well as a need to replace equipment that had exceeded useful service life. All of these projects will be funded with a $3.3 million Certificate of Obligation program. Lastly, as a result of input from citizens, we are planning a $16 million bond project targeted to the "Quality of Life" needs of the community. It will include a multi - purpose center, a natatorium, a new library, and improved sports facilities. This will be a grass roots effort. What will be unique for us is that we are requesting bonding "authority ". The intent is to issue bonds for the above facilities as our growth in assessed valuation will allow. Should our growth rate be slowed for some reason in the future, the bonds will not be issued until we establish a sufficient revenue stream to support them. While this approach may not be unique, we believe this better suits our more conservative approach to fiscal policy. The provision of high quality basic services such as Police, Fire, EMS, Water and Sewer, Drainage, and Streets remain our highest priority. These are the essential elements of local government. Our goal is to provide these services at the lowest reasonable cost. FINANCIAL INFORMATION The City's accounting records for general government operations are maintained on a modified accrual basis, with revenues being recognized when they become both measurable and available and expenditures being recognized when the services or goods are received and the liabilities are incurred. Accounting records for the City's utilities and other enterprises are maintained on the accrual basis of accounting. In developing the City's accounting systems, consideration has been given to the adequacy of internal accounting controls. Internal accounting controls have been designed to provide reasonable assurance regarding: • The safeguarding of assets against loss from unauthorized use of disposition and, vi • The reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: • The cost of a control should not exceed the benefits likely to be derived and, • The evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework. The City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. General Governmental Functions: Revenues include general, special revenue, debt service, and capital projects for general governmental function totaled $8,314,447 in 2002, an increase of 18.2% from 2001. Taxes produced 63.8% of general revenues compared to 63.3% last year. The amount of revenues from various sources and the increase /decrease from the previous year are shown in the following tabulation: $ 8,314.447 100.0% —t--1177 ,843 Expenditures: For general governmental purposes, expenditures totaled $12,365,346, an increase of 59.5% from 2001. Changes in levels of expenditures for major functions of the City over the preceding year are shown in the following tabulations: Percent Increase of (Decrease) Function Amount Total From 2001 Taxes (Property, Sales, Etc.) $ 5,305,902 63.8% $ 852,938 Licenses and Permits 663,682 8.0% 43,030 Charges for Services 883,126 10.6% 223,981 Fines and Forfeitures 538,831 6.5% (210,370) Other Revenues 922,906 11.1% 368,264 $ 8,314.447 100.0% —t--1177 ,843 Expenditures: For general governmental purposes, expenditures totaled $12,365,346, an increase of 59.5% from 2001. Changes in levels of expenditures for major functions of the City over the preceding year are shown in the following tabulations: $ 12365346 100.0% —J-4,613 ,982 vii Percent Increase of (Decrease) Function Amount Total From 2001 General Government $ 2,735,142 22.1% $ 942,746 Public Safety 2,963,924 24.0% 402,869 Streets and Parks 689,150 5.6% 62,040 Health Services 120,530 1.0% (54,518) Culture and Recreation 328,404 2.6% 57,967 Management Services - 0.0% (98,683) Capital Outlay 4,079,385 33.0% 2,390,934 Debt Service 1,448,811 11.7% 910,627 $ 12365346 100.0% —J-4,613 ,982 vii As reflected in the financial statements, general fund revenues including sales tax as well as ad valorem taxes have generally increased. Through cooperative agreements with Guadalupe County, specific intergovernmental payments for services such as library, fire, and EMS have increased. General fund expenditures have increased in a number of areas including overall personnel costs resulting from step increases and related items. We believe overall realignments in budget accounts more correctly reflect actual cost centers by activity and function than in years prior General obligation bonded debt data for the City of Schertz at the end of 2002 fiscal year was as follows: Net General Obligation Bonded Debt (Principal) General Obligation Bonds Revenue Bonds Ratio of Debt to Assessed Value (100 %) of Present Debt Amount Market Per Capita $ 10,297,926 1.25% $ 447.74 Standard & Poor's A+ A+ Property Taxes: Current tax collections are 98.2% of the tax levy. This is the nineteenth consecutive year in which current property tax collections have exceeded 97.0 %. The ratio of total collections (current and delinquent) to the current tax levy was 99.6 %. Allocations of property tax levy by purpose for 2002 and the preceding two fiscal years are as follows (amounts per $100 assessed value): General Fund General Obligation Debt 2002 2001 2000 0.3208% 0.3147% 0.3152% 0.0617% 0.0258% 0.0304% 0.3825% 0.3405% 0.3456% Cash Management: Cash temporarily idle during the year was invested in short-term time deposits and investment pools. The interest earned on such deposits during the year was $381,237, a decrease of $246,794 compared to earnings during 2001. This decrease was due to an overall decline in interest rates. Bank deposits and certificates of deposit are secured by FDIC insurance and governmental securities pledged by Schertz Bank and Trust and held in safekeeping by Frost Bank. General Fixed Assets: The general fixed assets of the City are those fixed assets used in performance of general governmental functions and exclude the fixed assets of enterprise funds. As of September 30, 2002, the general fixed assets of the City amounted to $27,322,671. This amount represents the current cost, or an estimate of the original cost of the assets. Depreciation of general fixed assets is not generally recognized in the City's accounting system. viii Water and Sewer System: Comparative data for the past two fiscal years is presented below: Total Operating Revenue Operating Income (Gross Revenues Less Operating Expenses) Net Revenues (Operating Income Plus Depreciation Less Solid Waste Revenues) Average Annual Bonded Debt Requirements 2002 2001 $ 4,663,584 889,445 1,419,060 422,229 $ 4,260,109 672,212 1,032,098 434,1.71 City of Schertz Emergency Services: During the fiscal year ended September 30, 2002, Emergency Services operations revenues increased 57.2% and operating expenses were increased by 47.3 %. This activity is fully dependent on income fees generated from services rendered and the contracted cities' support to cover operations costs. This year there was an operating income before depreciation of $431,946. Other Information Awards: The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 30, 2001. The Certificate of Achievement is the highest form of recognition for excellence in state and local government finance reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Schertz has received a Certificate of Achievement for the last 14 consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. The City Council has selected the firm Armstrong, Vaughan & Associates, P. C., of Universal City, Texas, to perform the independent audit for the fiscal year 2001 -2002. We End the background experience and interest of the firm will assure the accomplishment of the audit function in an outstanding manner and will provide educational training opportunities for our staff. Acknowledgements: I want to extend my thanks to the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in an effective and efficient manner. Mr. Vijay Jain of our staff and Ms. Nancy Vaughan, along with other representatives of the audit firm Armstrong, Vaughan & Associates, P. C., have provided a high degree of expertise and assistance for the preparation of the report. I wish to express my personal thanks and appreciation to everyone involved in the audit process for their help. Respectfully Submitted, ix CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR HONORABLE HAL BALDWIN CITY COUNCIL REGINNA AGEE MAYOR PRO -TEM KENNETH GREENWALD NORMA HEAD MAYOR PRO -TEM BILLY PITS (JULY 11, 2001 — JULY 16, 2002) TIM SWINNEY (MAY 9, 2001 — DECEMBER 18, 2001) STEVE SIMONSON (JULY 31, 2002) TONY WILENCHIK (DECEMBER 18, 2001) CITY MANAGER MANUEL (MARK) MARQUEZ DIRECTOR OF FINANCE VIJAY JAIN INDEPENDENT AUDITORS Armstrong, Vaughan & Assoc., P.C. Universal City, Texas x This page intentionally left blank X. M M= M M s M M M WN M=0 M M M M M= As of l Oct, 2002 Municipal Court Judge Asst, City Mgr. J City Council City Secretary City Manager ErRec Svcs EMS I I I Fire I I Police Dept Dept Dept Public Leisure Works Dept Services Municipal Control General Svcs Library Parks Court Opers Purchasing Pools Info Bus H/R Finance PIO Tech Office Dept Inspection /Code Enf Planning Economic Development Certificate of Achievement for Excellence in Financial Reporting Presented to City of Schertz, Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2001 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. ,M President CWMM Executive Director xii 11 1 FINANCIAL SECTION This page intentionally left blank ARMSTRONG, VAUGHAN & ASSOC., P.C. .................................................................... ............................... 1 CERTIFIED PUBLIC ACCOUNTANTS I1 INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and Members of the City Council City of Schertz, Texas 1 We have audited the accompanying general - purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 2002, as listed in the table of contents. These general - purpose financial statements are the responsibility of the City of Schertz, Texas', management. Our responsibility is to express an opinion on these general - purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of I 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 general - purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general - purpose 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 opinion. In our opinion, the general- purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Schertz, Texas, as of September 30, 2002, and the results of its ' operations and cash flows of its proprietary fund types for the year then ended in conformity with auditing standards generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 18, 2002, on our consideration of the City of Schertz, Texas', internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. ' Our audit was performed for the purpose of forming an opinion on the general- purpose financial statements of the City of Schertz, Texas, taken as a whole. The combining and individual fund and account group financial statements for the year ended September 30, 2002, and supplementary schedules listed in the table ' of contents are presented for purposes of additional analysis and are not a required part of the general- purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general - purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general - purpose financial statements taken as a whole. 1 I 459 KITTY HAWK, SUITE 119 • UNIVERSAL CITY, TEXAS 78148 • (210) 858 -8229 • FAX (21 O) 859 -7811 • www.evecpaxom I r The statistical data, as listed in the table of contents herein, has been summarized from the City's records , and was not subjected to the auditing procedures applied in the audit of the general - purpose financial statements of the City of Schertz, Texas. Accordingly, we do not express an opinion on such data. ArwL4& vtq; VaugRavv&,4ssocr., P. C. Armstrong, Vaughan & Assoc., P.C. December 18, 2002 2 GENERAL PURPOSE FINANCIAL STATEMENTS CITY OF SCHERTZ, TEXAS COMBINED BALANCE SHEET — ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS SEPTEMBER 30, 2002 The accompanying notes are an integral part of these statements. 4 Proprietary Governmental Fund Types Fund Type Special Debt Capital ASSETS & OTHER DEBITS General Revenue Service Projects Enterprise Cash and Cash Equivalents $ 2,949,996 $ 746,169 $ 306,421 $ 1,719,556 $ 2,534,698 Receivables (Net of Allowances) Taxes 108,361 - 19,198 Accounts 197,159 27,230 - 1,613,686 Other - - - 22,417 Due From Other Funds 9,538 10,000 220,122 172,616 Due From Component Units 14 - - - Inventory at Cost 15,080 97,220 Prepaid Items 56,060 - Restricted Assets: Cash and Cash Equivalents - - - - 6,580,223 Fixed Assets (Net of Accumulated Depreciation) - - - - 15,073,750 Organization Costs (Net of Accumulated Amortization) - - - - 382 Bond Issue Costs (Net of Accumulated Amortization) - - - - 124,799 Deferred Loss on Early Retirement of Debt (Net of Accumulated Amortization) - - - - 23,492 Other Debits: Amount Available in Debt Service Fund - - - - - Amount to be Provided for Retirement of General Long - Term Debt - - - - Amount to be Provided for Employee Compensated Absences and Salary Reserve - TOTAL ASSETS AND OTHER DEBITS $ 3336,208 _1__283 ,399 $ 325,619 $ 1.939,678 $ 26,243.283 The accompanying notes are an integral part of these statements. 4 23,492 299,074 299,074 10,297,926 10,297,926 23,492 34,546 299,074 156,200 10,297,926 9,557,800 380,890 Totals 380,890 380,890 Account Groups (Memorandum Totals General Only) (Memorandum Only) General Long -Term Primary Component Reporting Entity Fixed Assets Debt Government Units 2002 2001 $ $ - $ 8,256,840 $ 930,628 $ 9,187,468 $ 12,882,187 - 127,559 - 127,559 105,108 - 1,838,075 61,970 1,900,045 1,635,410 - 22,417 - 22,417 47,625 - 412,276 - 412,276 228,100 - 14 - 14 2,200 - 112,300 - 112,300 113,041 - 56,060 - 56,060 146,449 - 6,580,223 - 6,580,223 6,590,576 27,322,671 - 42,396,421 - 42,396,421 28,493,731 - - 382 - 382 430 - 124,799 - 124,799 131,538 23,492 299,074 299,074 10,297,926 10,297,926 23,492 34,546 299,074 156,200 10,297,926 9,557,800 380,890 380,890 380,890 308,979 $27,322,671 $ 10,977,890 $ 70928,748 $ 992,598 $ 71.921346 $ 60,433,920 Continued 5 CITY OF SCEERTZ, TEXAS COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS (CONTINUED) SEPTEMBER 30, 2002 - Proprietary Governmental Fund Types Fund Type LIABILITIES AND EQUITY AND OTHER CREDITS Special Debt Capital General Revenue Service Projects Enterprise Liabilities: Vouchers Payable $ 104,591 $ 27,230 $ $ $ 290,693 Withdrawals in Excess of Deposits - - - Notes Payable - Current - - Accrued Salaries and Benefits 97,470 33,557 Accrued Interest Payable - - - Salary Reserve 20,881 Compensated Absences Payable 77,703 Payable from Restricted Assets: Deposits 224,522 Revenue Bonds - - 285,000 Certificates of Obligation - - 60,000 Refunding Bonds - - 67,000 Public Facility Loan - - 5,000 Accrued Interest - - 22,481 Due to Other Funds 40,285 15,522 7,347 349,122 Due to Primary Government - - - Deferred Revenue 108,361 19,198 General Obligation Bonds Payable - - - - - Revenue Bonds Payable (Net) - - - - 4,937,939 Certificates of Obligation Payable - - - - - General Obligation Refunding Bonds - - - - 126,000 Public Facility Loan - - - - 47,000 Tax Anticipation Notes Total Liabilities 350,707 42,752 26,545 6,546,898 Fund Equity and Other Credits: Contributed Capital - - - - 12,229,435 Investment in General Fixed Assets - - - - - Retained Earnings (Deficit) Reserved for Equipment Replacement - - - - 40,000 Reserved for Contingencies - - - - 972,500 Unreserved - - - - 6,454,450 Fund Balances (Deficit) Reserved for Forfeited Property 19,814 - - - - Reserved for Inventory and Prepaids 71,140 - - - - Reserved for Municipal Court 31,401 - - - - Unreserved - Designated for: Capital Improvement - - - 1,909,450 - Designated for Borgfeld Road - - - 30,228 - General Fund Projects 2,704,133 - - - - Component Units - - Undesignated 159,013 740,647 299 074 Total Fund Equity (Deficit) and Other Credits 2,985,501 740,647 299,074 1,939,678 19,696,385 TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS L 3,J6,2D R 783.399 $ 325.619 $ 1.939.678 $26243283 The accompanying notes are an integral part of these statements. 6 7 Totals Account Groups (Memorandum Totals General Only) (Memorandum Only) General Long -Term Primary Component Reporting Entity Fixed Assets Debt Government Units 2002 2001 $ $ $ 422,514 $ 751 $ 423,265 $ 894,790 - - - 15,445 - - - 34,564 131,027 2,064 133,091 99,846 - - - 17,404 69,808 90,689 - 90,689 72,307 311,082 388,785 - 388,785 333,321 - 224,522 - 224,522 192,846 - - 285,000 - 285,000 275,000 - - 60,000 - 60,000 60,000 - - 67,000 - 67,000 18,000 - - 5,000 - 5,000 5,000 - - 22,481 - 22,481 24,937 - - 412,276 - 412,276 228,100 - 14 14 2,200 - 127,559 - 127,559 105,108 5,095,000 5,095,000 - 5,095,000 4,935,000 - 4,937,939 - 4,937,939 5,213,991 4,375,000 4,375,000 - 4,375,000 4,645,000 127,000 253,000 - 253,000 387,000 - 47,000 - 47,000 52,000 1,000,000 1,000,000 11000,000 10,977,890 17,944,792 2,829 17,947,621 17,611,859 - 12,229,435 - 12,229,435 3,928,768 27,322,671 - 27,322,671 - 27,322,671 22,566,808 - - 40,000 - 40,000 40,000 - - 972,500 - 972,500 972,500 - - 6,454,450 - 6,454,450 5,293,608 - - 19,814 - 19,814 19,814 - - 71,140 - 71,140 142,992 - - 31,401 - 31,401 404 - - 1,909,450 - 1,909,450 4,602,534 - - 30,228 - 30,228 30,228 - - 2,704,133 - 2,704,133 2,312,332 - 989,769 989,769 920,378 1,198,734 1,198,734 1,991,695 27322,671 52,983,956 989,769 53,973,725 42,821061 122322.671 510.972890 170928.748 R 992.598 7192L346 $ 60A33920 7 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) REVENUES Taxes Licenses and Permits Charges for Services Fines and Forfeits Grants Other Revenue TOTAL REVENUES Current: General Government Public Safety Streets and Parks Health Culture and Recreation Economic Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers (Out) Operating Transfers (to) from Primary Government Operating Transfers (to) from Component Unit Proceeds of Tax Anticipation Notes TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues & Other Sources Over (Under) Expenditures & Other (Uses) Fund Balances - Beginning Residual Equity (Deficit) Transfers Fund Balances - Ending Governmental Fund Types 2,566,248 33,301 135,593 2,963,924 - - 652,195 36,955 120,530 - 328,404 1,189,174 251,488 2,638,723 937,000 511,811 7,820,475 321,744 1.448,811 2,774,316 (912,125) (36,844) (408,846) (2,693,084) (31,156) - 551,720 400,000 400,000 (31,156) 551,720 (512,125) (68,000) 142,874 (2,693,084) 3,424,076 886,961 156,200 4,632,762 73,550 (78,314) $ 2.985.501 $ 740.647 $ 299.074 $ 1.939.678 The accompanying notes are an integral part of these statements. 8 Special Debt Capital General Revenue Service Proiects $ 4,677,386 $ 50,410 $ 578,106 $ 647,784 15,898 - 883,126 - 511,407 27,424 - 2,899 42,463 185,748 148,705 461,859 81,232 6,908,350 284,900 1,039,965 81,232 2,566,248 33,301 135,593 2,963,924 - - 652,195 36,955 120,530 - 328,404 1,189,174 251,488 2,638,723 937,000 511,811 7,820,475 321,744 1.448,811 2,774,316 (912,125) (36,844) (408,846) (2,693,084) (31,156) - 551,720 400,000 400,000 (31,156) 551,720 (512,125) (68,000) 142,874 (2,693,084) 3,424,076 886,961 156,200 4,632,762 73,550 (78,314) $ 2.985.501 $ 740.647 $ 299.074 $ 1.939.678 The accompanying notes are an integral part of these statements. 8 Totals - 2,735,142 1,792,396 2,963,924 (Memorandum 2,561,055 Totals - 689,150 Only) 120,530 (Memorandum Only) Primary Component Reporting Entity Government Units 2002 2001 $ 5,305,902 $ 716,061 $ 6,021,963 $ 5,141,947 663,682 - 663,682 620,652 883,126 - 883,126 659,145 538,831 - 538,831 749,201 45,362 - 45,362 186,382 877,544 26,183 903,727 429,807 8,314,447 742,244 9,056,691 7,787,134 2,735,142 - 2,735,142 1,792,396 2,963,924 - 2,963,924 2,561,055 689,150 - 689,150 627,110 120,530 - 120,530 175,048 328,404 - 328,404 273,044 - 162,245 162,245 102,456 41079,385 708,888 4,788,273 1,792,215 937,000 937,000 257,410 511,811 511,811 280,774 12,365,346 871,133 13,236,479 7,861,508 (4,050,899) (128,889) (4,179,788) (74,374) (31,156) (31,156) - (551,720) (551,720) (388,542) 551,720 - 551,720 388,542 400,000 750,000 1,150,000 4,500,000 920,564 198,280 1,118,844 4,500,000 (3,130,335) 69,391 (3,060,944) 4,425,626 9,099,999 920,378 10,020,377 5,594,751 (4,764) (4,764) $ 5.964.900 S 989.769 S 6954.669 $ 10,020.377 E CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL AND ANNUALLY BUDGETED SPECIAL REVENUE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2002 EXPENDITURES Current: General Government Public Safety Streets and Parks Health Culture and Recreation Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) Proceeds from Tax Anticipation Notes TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balances - October 1, 2001 Residual Equity (Deficit) Transfers Fund Balances - September 30, 2002 2,527,985 3,130,237 738,180 129,117 383,388 1,532,663 8,441,570 2,566,248 2,963,924 652,195 120,530 328,404 1,189,174 7,820,475 (1,293,51.1) (912,125) (38,263) 166,313 85,985 8,587 54,984 343,489 621,095 381,386 400,000 General Fund 400,000 400,000 Variance (1,293,511) (512,125) Favorable 3,424,076 Budget Actual (Unfavorable) REVENUES 20 $ 2,204,095 $ 2,985,501 Taxes $ 4,854,804 $ 4,677,386 $ (177,418) Licenses and Permits 720,525 647,784 (72,741) Charges for Services 864,310 883,126 18,816 Fines and Forfeits 495,220 511,407 16,187 Grants - 2,899 2,899 Other Revenue 213,200 185,748 (27,452) TOTAL REVENUES 7,148,059 6,908,350 (239,709) EXPENDITURES Current: General Government Public Safety Streets and Parks Health Culture and Recreation Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) Proceeds from Tax Anticipation Notes TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balances - October 1, 2001 Residual Equity (Deficit) Transfers Fund Balances - September 30, 2002 2,527,985 3,130,237 738,180 129,117 383,388 1,532,663 8,441,570 2,566,248 2,963,924 652,195 120,530 328,404 1,189,174 7,820,475 (1,293,51.1) (912,125) (38,263) 166,313 85,985 8,587 54,984 343,489 621,095 381,386 The accompanying notes are an integral part of these statements. 10 400,000 400,000 400,000 400,000 (1,293,511) (512,125) 781,386 3,424,076 3,424,076 73,530 73,550 20 $ 2,204,095 $ 2,985,501 $ 781,406 The accompanying notes are an integral part of these statements. 10 Annually Budgeted Special Revenue Funds 61,500 23,336 Variance 35,850 36,955 Favorable Budget Actual (Unfavorable) $ 39,000 $ 40,410 $ 1,410 24,865 15,898 (8,967) 162,815 137,845 (24,970) 226,680 194,153 (32,527) 61,500 23,336 38,164 35,850 36,955 (1,105) 104,150 85,606 18,544 201,500 145,897 55,603 25,180 48,256 23,076 (15,000) (31,156) (16,156) (15,000) (31,156) (16,156) 10,180 17,1.00 6,920 381,845 381,845 - 392,025 $ 398,945 $ 6,920 11 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) OPERATING EXPENSES BEFORE DEPRECIATION 197,698 359,605 Totals Personnel Services Enterprise Internal (Memorandum Only) Sewage Treatment Funds Service 2002 2001 OPERATING REVENUES 572,057 - 572,057 392,720 Fees Charged to Users $ 6,754,690 $ 29,436 $ 6,784,126 $ 5,513,689 Reimbursements and Other 41,872 - 41,872 209,843 TOTAL OPERATING REVENUES 6,796,562 29,436 6,825,998 5,723,532 OPERATING EXPENSES BEFORE DEPRECIATION 197,698 359,605 (286,142) Personnel Services 1,726,367 - 1,726,367 1,476,123 Sewage Treatment 1,061,276 - 1,061,276 1,281,454 General and Administrative 572,057 - 572,057 392,720 Contractual Services 722,908 - 722,908 840,016 Supplies /Maintenance 238,972 238,972 284,204 Bad Debts 440,779 440,779 87,486 TOTAL OPERATING EXPENSES 4,762,359 4,762,359 4,362,003 Operating Income (Loss) before Depreciation Depreciation Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest Income Interest Expense Contributions to Joint Venture Amortization of Bond Costs TOTAL NONOPERATING REVENUES (EXPENSES) Net Income (Loss) Before Operating Transfers Operating Transfers In (Out) Net Income (Loss) 2,034,203 29,436 2,063,639 1,361,529 750,851 750,851 514,740 1,283,352 29,436 1,312,788 846,789 197,698 197,698 359,605 (286,142) (286,142) (200,253) (463,770) (463,770) (279,705) (6,787) (6,787) (3,283) (559,001) (559,001) (123,636) 724,351 29,436 753,787 723,153 31,156 31,156 755,507 29,436 784,943 723,153 Accumulated Deficits Closed to Contributed Capital - 12,818 12,818 Depreciation Closed to Contributed Capital 358,317 - 358,317 138,106 Total 1,113,824 42,254 1,156,078 861,259 Retained Earnings (Deficit) - October 1 6,353,126 (47,018) 6,306,108 5,444,849 Residual Equity (Deficit) Transfer to General Fund - 4,764 4,764 Retained Earnings - September 30 $ 7,466,950 $ $ 71466,950 $ 6.306 108 The accompanying notes are an integral part of these statements. 12 1 CITY OF SCHERTZ, TEXAS CASH FLOWS FROM CAPITAL AND COMBINED STATEMENT OF CASH FLOWS -ALL PROPRIETARY FUND TYPES ' FOR THE YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) ' Totals Enterprise Internal (Memorandum Only) ' Funds Service 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: 5,398,250 Cash Received From Customers $ 6,032,122 $ 29,436 $ 6,061,558 $ 4,984,447 Cash Payments to Suppliers for Goods - (1,497,266) and Services (2,385,153) (69,110) (2,454,263) (2,944,482) Cash Payments to Employees for Services (1,714,588) (4,318) (1,718,906) (1,494,061) Cash Received For Reimbursements and (1,164,696) ' Other 41,872 41,872 209,843 Net Cash Provided (Used) by Operating (268,595) Activities 1,974,253 (43,992) 1,930,261 755,747 CASH FLOWS FROM NON - CAPITAL FINANCING ACTIVITIES Operating Transfers in (Out) Residual Equity (Deficit) Transfers Net Cash Provided (Used) by Non - Capital Financing Activities 31,156 - 31,156 4,764 4,764 31,156 4,764 35,920 Cash Compromised of: Current Assets Restricted Assets Withdrawals in Excess of Deposits Cash and Cash Equivalents - End of Year $ 2,534,698 $ - $ 2,534,698 $ 2,726,713 6,580,223 - 6,580,223 6,590,576 - (15,445) $ 9,114,921 $ $ 9,114,921 $ 9301,844 Continued The accompanying notes are an integral part of these statements. 1 13 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ' Proceeds from Revenue Bonds 5,398,250 Acquisition and Construction of Capital Assets (1,497,266) - (1,497,266) (804,647) Principal Payments on Long -Term Debt (392,564) - (392,564) (1,164,696) ' Interest Paid on Long-Term Debt (268,595) (268,595) (206,413) Contributed (to) from Joint Venture (463,770) (463,770) (279,705) Cash Contributed from Municipal Utility Districts 271,393 - 271,393 - Net Cash Provided (Used) by Capital ' and Related Financing Activities (2,350,802) (2,350,802) 2,942,789 CASH FLOWS FROM INVESTING ACTIVITIES ' Interest on Investments 197,698 197,698 359,605 Net Cash Provided (Used) by Investing Activities 197,698 - 197,698 359,605 ' NET INCREASE (DECREASE) IN CASH (147,695) (39,228) (186,923) 4,058,141 Cash and Cash Equivalents at October 1 9,262,616 39,228 9,301,844 5,243,703 Cash and Cash Equivalents at September 30 _12d14 $ 9,114,921 $ 9,301844 Cash Compromised of: Current Assets Restricted Assets Withdrawals in Excess of Deposits Cash and Cash Equivalents - End of Year $ 2,534,698 $ - $ 2,534,698 $ 2,726,713 6,580,223 - 6,580,223 6,590,576 - (15,445) $ 9,114,921 $ $ 9,114,921 $ 9301,844 Continued The accompanying notes are an integral part of these statements. 1 13 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS -ALL PROPRIETARY FUND TYPES (CONTINUED) ' FOR THE YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) Enterprise Funds RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation Depreciation Attributed to Contributed Capital Provision for Uncollectible Accounts (Increase) Decrease in the Following Assets Accounts Receivable Inventory Prepaid Expenses Due from Other Funds Increase (Decrease) in the Following Liabilities: 1,283,352 Totals Internal (Memorandum Only) Service 2002 2001 29,436 1,312,788 846,789 401,311 401,311 379,917 349,540 349,540 138,106 440,779 440,779 87,486 (754,246) - (754,246) (616,727) (1,686) 1,921 235 (6,603) 18,306 737 19,043 (507) (119,489) - (119,489) 83,780 Vouchers Payable 42,492 Due to Other Funds 270,439 Accrued Vacation 4,640 Accrued Salaries 6,600 Salary Reserve 539 Customer Deposit 31,676 (4 246) 38,246 (215,047) (67,522) 202,917 97,300 (2,323) 2,317 8,814 (1,074) 5,526 3,085 (921) (382) (29,837) - 31,676 (20,809) Net Cash Provided (Used) by Operating Activities $ 1,974,253 $ (43,992) $ 1,930,261 $ 755,747 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Capital Assets Contributed from Municipal Utility Districts $ 8,457,368 $ $ 8,457,368 $ (at estimated fair value) Capital Assets "Transferred to General Fixed Assets (at net book value) $ (6,200) $ (50,759) $ (56,959) $ The accompanying notes are an integral part of these statements. 14 NOTES TO FINANCIAL STATEMENTS 15 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Schertz, Texas, have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Government Accounting Standards Board (GASB) is the accepted standard - setting body for establishing government accounting and financial reporting principles. The more significant of the government's accounting policies are described below. REPORTING ENTITY In evaluating how to define the government, for financial purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement 14, "The Financial Reporting Entity ". The definition of the reporting entity is based primarily on the concept of financial accountability. A primary government is financially accountable for the organizations that make up its legal entity. It is also financially accountable for legally separate organizations if its officials appoint a voting majority of an organization's governing body and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government. Individual Component Unit Disclosures Discretely presented component units. The component units columns in the combined financial statements include the financial data of the component units of the City of Schertz. The component units have been included in this report because the Council appoints a voting majority to each Board of Directors, and is able to impose its will on the organizations. Following is a summary of the component units: Schertz Economic Development Corporation: A non -profit corporation incorporated under the Development Corporation Act of 1979, Texas Revised Civil Statutes Annotated, Article 5.90.6, Section 4A. The Corporation is organized exclusively for the purpose of promoting economic development in order to eliminate unemployment and underemployment and to promote and encourage employment and public welfare of, for, and on behalf of the City. The Board of Directors consists of seven (7) members appointed by the City Council. 2. Library: The library's governing board is appointed by the City Council. The library provides services to the citizens of the City of Schertz as well as surrounding communities. The function of the Library Board is to work cooperatively with city management to provide funding and oversight for special projects of the Library. Schertz Development Foundation: The Foundation was incorporated under the Texas Non - profit Corporation Act to assist the City in developing and implementing plans for economic viability for the City. The Board of Directors is appointed by the City Council and the executive director is employed by the City. 16 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2. REPORTING ENTITY (Continued) Complete financial statements for each of the three component units may be obtained at City Hall. The following pages present condensed financial statements for each of the discretely presented component units. CONDENSED BALANCE SHEET i Schertz Economic Schertz Development The Development ' Corporation Library Foundation Total ASSETS Current Assets $ 877,231. $ 14,597 $ 100,770 $ 992,598 ' TOTAL ASSETS $ 877.231 -L--L4 .597 $ 100.770 -1--222 ,598 LLABILITIES ' Current Liabilities $ 2,796 $ 19 $ - $ 2,815 Due to Primary Government 14 14 TOTAL LIABILITIES 2,810 19 2,829 EQUITY Fund Balance 874,421 14,578 100,770 989,769 TOTAL LIABILITIES AND EQUITY $ 877.231 $ 14.597 $ 100.770 -L-2L2 .598 CONDENSED STATEMENT OF REVENUES, EXPENDITURES ' AND CHANGES IN FUND BALANCE Revenues $ 734,608 $ 4,842 $ 2,794 $ 742,244 ' Expenditmes (848,134) (2,882) (20,117) (871,133) Excess of Revenues Over (Under) Expenditures (113,526) 1,960 (17,323) (128,889) Transfers to Primary Government (551,720) - (551,720) Proceeds of Tax Notes 750,000 750,000 Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) 84,754 1,960 (17,323) 69,391 Fund Balance - Beginning 789,667 12,618 118,093 920,378 Fund Balance - Ending $ 874.421 -L—L4 .578 $ 100.770 $ 989.769 17 CITY OF SCBERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) REPORTING ENTITY (Continued) Joint Venture A joint venture is a legally separate entity that results from a contractual arrangement and that is owned, operated, or governed by two or more participating governments. The following entity meets the criteria for joint ventures: Schertz/Seguin Local Government Corporation: The Corporation is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schcrtz and Seguin in acquiring, constructing, maintaining, and operating a water utility system. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. Separate financial statements for the Schertz/Seguin Local Government Corporation may be obtained from the City of Seguin, P.O. Box 591, Seguin, Texas 78156. Summarized financial data for the joint venture has been provided in Note K. 2. FUND ACCOUNTING The City's accounts are organized on the basis of funds and account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self - balancing accounts which are comprised of each funds' assets, liabilities, fund equity, revenues, and expenditures or expenses as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into six generic fund types and three broad fund categories as follows: Governmental Fund Types: General Fund: The General Fund accounts for the resources used to finance the fundamental operations of the City. It is the basic fund of the City and covers all activities for which a separate fund has not been established. Special Revenue Funds: These funds are used to account for specific revenue sources which are legally restricted to expenditures for specified activities. Debt Service Funds: These funds are used to account for the accumulation of resources for and the payment of principal and interest on general long -term debt of the City other than Revenue Bonds. 18 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) FUND ACCOUNTING (Continued) Governmental Fund Types (Continued): Capital Projects Funds: These funds are established to account for major capital expenditures not financed by proprietary or nonexpendable trust funds. Proprietary Fund Type: Enterprise Fund: The Enterprise Fund accounts for operations which are intended to be self - supporting through user charges. The City operates water and sewer services as well as emergency medical services on this basis. Internal Service Funds: Internal service funds account for operations that provide services to other departments or agencies of the government, or to other governments, on a cost - reimbursement basis. Account Groups: The accounting and reporting treatment applied to the fixed assets and long -term liabilities associated with a fund are determined by its measurement focus. All governmental fund types are accounted for on a spending "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Property, plant, and equipment used in governmental fund type operations are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Long -term liabilities expected to be financed from governmental fund types are accounted for in the General Long -Term Debt Account Group, not in the governmental fund. The two account groups are not "funds ". They are concerned only with the measurement of financial position. They are not involved with measurement or results of operations. 19 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. 0 5. BASIS OF ACCOUNTING Governmental Funds (General, Special Revenue, Debt Service and Capital Projects) are accounted for on a modified accrual basis using a current financial resources measurement focus. Revenues are recognized in the period in which they are both measurable and available and expenditures are recognized when incurred except for interest on general long -term debt which is recognized when due. Sales and property taxes are considered "measurable" when in the hands of intermediary collecting governments and are recognized as revenue at that time. Other revenues susceptible to accrual are franchise taxes, interest, and charges for services. Licenses, fines, and permits are not susceptible to accrual because generally they are not measurable until received in cash. Proprietary Funds have an economic resources measurement focus and use the full accrual method of accounting for both revenues and expenses similar to a commercial enterprise. The City has elected not to follow any pronouncements issued by the Financial Accounting Standards Board (FASB) subsequent to November 30, 1989. CASH AND CASH EQUIVALENTS Cash and cash equivalents include amounts in demand deposits, interest bearing accounts and deposits in local government investment pools. The City is allowed 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 of 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 "AA" or its equivalent; (5) certificates of deposit issued by state and national banks domiciled in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation (FDIC) or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date. In addition the City invests in local government investment pools. For purposes of the statement of cash considers all highly liquid investments accounts, deposits in local government investments to be cash equivalents. PROPERTY TAXES flows, the Enterprise Funds and Internal Service Fund including cash in banks, cash on hand, money market , investment pools, and restricted cash and temporary LJ Property taxes are levied on January 1 of each year on all taxable property within the City. The , taxes become due and payable on October 1 following the levy date and delinquent on February 1 of the subsequent year. Penalties and interest are added for payments made after the February 1 due date. The City contracts with the Guadalupe County Tax Assessor - Collector for the billing and ' collection of the property taxes. Taxes receivable are shown net of the related allowance for uncollectible taxes of $6,917. 1 20 1 CITY OF SCBERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 5. PROPERTY TAXES (Continued) For fiscal year 2002, the assessed tax rate for the City was $.3825 per $100 on an assessed valuation of $827,142,321. This is broken out as $3208 for general maintenance and operations and $.0617 for debt retirement. 6. ACCOUNTS RECEIVABLE Accounts receivable are reported net of allowances for uncollectible accounts. The allowance account represents management's estimate of uncollectible accounts based upon experience and historical trends. 7. INVENTORIES AND PREPAID ITEM$ Inventories are valued at cost, which approximates market, using the first - in/first -out (FIFO) method. The costs of governmental fund -type inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 8. RESTRICTED ASSETS Certain proceeds of Enterprise Fund revenue bonds, 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 convenants. Funds are segregated to report those proceeds of revenue bond issuances that are restricted for use in construction. Funds are also segregated to provide for debt services as provided under bond indenture agreements. 9. FIXED ASSETS Fixed assets are recorded at cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their estimated fair value at the date of donation. Costs incurred for the purchase or construction of general fixed assets are recorded as capital outlay expenditures in the General, Special Revenue, and Capital Projects Funds. All such costs are capitalized in the General Fixed Assets Account Group. Public domain, ( "infrastructure ") general fixed assets consisting of certain improvements other than buildings, including roads, curbs, gutters, streets, and sidewalks, drainage systems, and lighting systems are capitalized. Amounts expended for property, plant, and equipment in the Enterprise Fund are capitalized in the fixed asset accounts within that fund. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. 21 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 10. DEPRECIATION Depreciation and amortization are provided for in the Enterprise Fund in amounts sufficient to relate the cost of fixed assets to operations over their estimated service lives using the straight -line method. Estimated useful lives for Enterprise Fund fixed assets are as follows: Fixed Asset Buildings Water and sewer lines and mains Equipment Useful Lives (Years) 30 50 5 -10 No depreciation is provided for the general fixed assets of the City. 11. SALARY RESERVE It is the policy of the City of Schertz to retain as a liability the first forty (40) hours of service for each employee. The liability is to be paid upon termination at the rate of pay in existence at that time. Amounts of salary reserve that are not expected to be liquidated with expendable available financial resources are reported in the General Long -Term Debt Account Group. No expenditure is reported for these amounts. Salary reserve of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees 12. COMPENSATED ABSENCES Vested or accumulated vacation leave and compensatory time that is expected to be liquidated with expendable available resources is reported as an expenditure and fund liability of the governmental fund that will pay for it. Amounts of vested or accumulated vacation leave and compensatory time that are not expected to be liquidated with expendable available financial resources are reported in the General Long -Term Debt Account Group. Vested or accumulated vacation leave and compensatory time of the Proprietary Funds is recorded as an expense and liability of that fund as the benefits accrue to employees. Accumulated vacation pay and compensatory time at September 30, 2002, of $77,703 and $311,082 has been recorded in accrued liabilities of the Enterprise Fund and General Long -Term Debt Account Group, respectively. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. 13. DEFERRED REVENUE Property tax revenues, are recognized when they become available. Available means when due, or past due, and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The City recognizes property tax revenues collected within sixty (60) days after year end. 22 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 14. SHORT -TERM OBLIGATION Short-term debt, debt of less than a year duration, is recognized as a liability of the governmental fund that incurred the obligation when the intent is to liquidate the obligation from expendable available resources. 15. LONG -TERM OBLIGATION Long -term debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund for payment early in the following year. For other long -term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the general long -term debt account group. Long -term liabilities expected to be financed from proprietary fund operations are accounted for in those funds. 16. DEBT SERVICE The ad valorem tax rate is allocated each year between the General Fund and the Debt Service Fund. The full amount estimated to be required for debt service on General Obligation Debt is provided by the debt service tax, together with interest earned within the Debt Service Fund. 17. REVENUE RECOGNITION Water and sewer revenues are based on cycle billings rendered to customers on a monthly basis. Unbilled water and sewer utility service receivables are recorded at year end and are included in customer receivables. 18. FUND EQUITY The unreserved fund balances for governmental funds represent the amount available for budgeting future operations. The reserved fund balances for governmental funds represent the amount that has been legally identified for specific purposes. Designations of fund balance represent tentative management plans that are subject to change. Unreserved retained earnings for the proprietary fund represents the net assets available for future operations or distribution. Reserved retained earnings for the proprietary fund represents the net assets that have been legally identified for specific purposes. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers, or other funds. 19. BOND DISCOUNTSASSUANCE COSTS hi governmental fund types, bond discounts and issuance costs are recognized in the current period. Bond discounts and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds using the bonds - outstanding method, which approximates the effective interest method. Bond discounts are presented as a reduction of the face amount of bonds payable whereas issuance costs are recorded as deferred charges. 23 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 20. COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. 21. INTERFUND TRANSACTIONS Quasi - external transactions are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures /expenses in the reimbursing fund and as reductions of expenditures /expenses in the fund that is reimbursed. 22. BUDGETS An operating budget is adopted each fiscal year for the general fund, hotel/motel tax (special revenue) fund, park (special revenue) fund and recycling (special revenue) fund. Annual budgets are not legally required for the other special revenue funds. For capital projects funds, total estimated revenues and other financing sources and estimated expenditures are approved at the inception of each project. Accordingly, no comparison of budget to actual is presented in the annual financial statements for these funds. In addition, as part of the overall budget process, budgets are adopted for the proprietary funds, however, the City does not require a reporting as part of the comprehensive annual financial report. The budget is adopted on the same basis of accounting as described in note A 3. Budgetary preparation and control is exercised at the departmental level. The City Manager is authorized to transfer budget amounts between line items within a department; however, any transfer or supplemental appropriation that amends the total expenditures of a department or total budget requires City Council approval. During the year, the City made various departmental and line item transfers to the budget for the general fund; which had the following effect: Original Final Budget Amended Net 10/1/01 Budget Change General Fund: Revenues $ 7,039,049 $ 7,148,059 $ 109,010 Expenditures 7,028,914 8.441,570 1,412,656 Excess (Deficiency) of Revenues Over (Under) Expenditures Total $ 10.135 $ (1.293.5111 $ !1303.646) Expenditures exceeded budgeted appropriations in the following funds for the year ended September 30, 2002: Budgeted Actual Variance Appropriations Expenditures (Unfavorable) Recycling Special Revenue Fund 24 20,302 $ (20,302) CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 22. BUDGETS (Continued) All appropriations lapse at the end of each year. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditures 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. 23. BUDGET /GAAP RECONCILIATION The following schedule reconciles the amounts on the Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual to the amounts on the Combined Statement of Revenues, Expenditures and Changes in Fund Balances: Fund Balances (Budget) Funds Not Requiring Budgets: Tax Increment Financing Fund Library Grant Fund Police Dept. Forfeitures Fund FUND BALANCES (GAAP) 24. TOTAL COLUMNS Special Revenue $ 398,945 134,529 422 206,751 $ 740.647 Total columns on these statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation, as interfund eliminations have not been made in the aggregation of this information. 25. USE OF 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 25 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) , SEPTEMBER 30, 2002 NOTE B — DEPOSITS WITH FINANCIAL INSTITUTIONS , Deposits consist of demand deposit accounts and interest - bearing accounts and are carried at cost. There are , three categories of credit risk that apply to the government's bank balance: I. Insured or collateralized with securities held by the City or by the City's agent in the City's ' name. 2. Collateralized with securities held by the pledging financial institution's trust department or the City's agent in the City's name. 3. Uncollateralized. , Balances held in each category are as follows The City held investments in the following local government investment pools: Primary Government Component Units , Units Book Bank Book Bank 7,465,532 673,796 Balance Balance Balance Balance $14.544.083 Insured (FDIC) $ 113,120 $ 113,120 $ 49 $ 49 ' Uninsured: Collateral held by City's Agent in City's Name 179,860 698,160 97,967 97,967 ' Total Cash in Banks $ 292.980 $ 811.280 $ 20516 $ 98.016 The book balance is made up as follows: Primary Component , Government Units Petty Cash $ 430 $ - ' Cash in Banks 292,550 98,016 Total Collateralized/Insured Deposits 292,980 98,016 Investments with Local Government Investment Pools 14,544,083 832,612 , Total $14.837.063 $ 930.628 The City held investments in the following local government investment pools: All three investment pools have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. The fair value of the City's position in each pool is the same as the value of the pool shares. 26 Primary Component Government Units Local Government Investment Cooperative (LOGIC) $ 3,243,922 $ 92,744 MBIA Municipal Investors Service Corporation 7,465,532 673,796 Lone Star Investment Pool 3,834,629 66,072 Total $14.544.083 $ 832.612 All three investment pools have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. The fair value of the City's position in each pool is the same as the value of the pool shares. 26 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE B -- DEPOSITS WITH FINANCIAL INSTITUTIONS (Continued) The City is authorized to make direct investments in U.S. Government, federal agency and instrumentality obligations, certificates of deposit, and local government investment pools. Investments represented by specific identifiable investment securities are classified as to credit risk by the three (3) categories described below: Category 1 - Insured, or registered, or securities held by the City or its agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the City's name. As of September 30, 2002, no securities were held that would be subject to credit risk as defined above. NOTE C -- CHANGES IN FIXED ASSETS Activity for general fixed assets capitalized by the City is summarized below: Land Buildings Improvements Other Than Buildings Vehicles Equipment Balance Transfers/ 10/1/2001 Adiustments Additions $ 1,577,097 $ - $ 739,483 6,053,444 45,935 76,446 Balance Deletions 9/3012002 $ 2,316,580 6,175,825 11,624,241 2,850,492 14,474,733 1,183,342 - 687,002 (38,500) 1,831,844 2,128,684 11,024 383,981 2,523,689 $ 22.566.808 $ 56.959 $ 4.737,404 _$ (38.500) $ 27,322,671 The following is a summary of the Enterprise Fund property plant, and equipment at September 30, 2002: Land and Improvements Buildings Improvements Other than Buildings Machinery, Equipment, and Vehicles Construction in Progress Less Accumulated Depreciation Net Property, Plant, and Equipment 27 Enterprise Water /Sewer Schertz EMS Total $ 234,479 $ $ 234,479 195,724 195,724 20,211,340 20,211,340 1,230,581 1,230,581 1,205,672 732,498 1,938,170 23,077,796 732,498 23,810,294 (8,249,910) (486,634) (8,736,544) $ 14.827.886 $ 245.864 $ 15.073.750 Certificates of Obligation 1990 Series 2001 Series Tax Anticipation Notes 2001 Series 2002 Series Total General Obligation Debt 850,000 7.0 -9.0% 85,000 85 000 - CITY OF SCHERTZ, TEXAS 4.1 -6.0% 4,500,000 - 125,000 4,375,000 , NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2.90 -4.0% - 750,000 150,000 600,000 SEPTEMBER 30, 2002 2.90 - 3.15% - 400,000 - , NOTE D -- LONG -TERM DEBT 9,714,000 1,820,000 937,000 ' The City had the following changes in long -term debt outstanding for the year ended September 30, 2002: , Balance Balance Outstanding Proprietary Fund Debt Outstanding Original Interest October 1, Issued/ September 30, , Amount Rates 2001 Assumed Retired 2002 General Long -Term Debt ' General Obligation Bonds 3.4 -5.2% $ 5,550,000 $ - $ 275,000 1992 Series $ 620,000 5.2 -7.2% $ 445,000 $ $ 25,000 $ 420,000 1998 Series 4,930,000 4.37 - 5.375% 4,490,000 165,000 4,325,000 , 1995 Refunding Bonds 447,000 3.75 -5.00% 194,000 67,000 127,000 1999 Combination Tax & Revenue * 4.70% - 215,000 215,000 - 1999 Combination Tax & Revenue * 5.25% - 455,000 105,000 350,000 5,488,991 - 5,129,000 670,000 577,000 5,222,000 , Certificates of Obligation 1990 Series 2001 Series Tax Anticipation Notes 2001 Series 2002 Series Total General Obligation Debt 850,000 7.0 -9.0% 85,000 85 000 - 4,500,000 4.1 -6.0% 4,500,000 - 125,000 4,375,000 , 750,000 2.90 -4.0% - 750,000 150,000 600,000 400,000 2.90 - 3.15% - 400,000 - 400,000 , 9,714,000 1,820,000 937,000 10,597,000 Compensated Absences Payable 257,935 53,147 311,082 Salary Reserve 51,044 18,764 - 69,808 Total General Long -Term Debt $10,022,979 $1,891,911 $ 937.000 $ 10,977,890 ' Proprietary Fund Debt Revenue Bonds: 2001 Series 5,550,000 3.4 -5.2% $ 5,550,000 $ - $ 275,000 $ 5,275,000 ' Less Unamortized Discounts and Loss on Defeasance (61,009) - (8,948) (52,061) 5,488,991 - 266,052 5,222,939 Certificate of Obligation: 1992 Series 200,000 5.0 -7.0% 120,000 - 60,000 60,000 General Obligation Bonds: 1995 Refunding Bonds 1,253,000 3.75 -5.0 211,000 - 18,000 193,000 , Other Debt: Public Facility Loan (HUD) 142,000 5.00% 57,000 - 5,000 52,000 Note Payable 273,000 7.60% 34,564 - 34,564 - , Total Proprietary Fund Debt $ 5,911,555 $ - $ 383,616 $ 5,527,939 * Bonded Debt Assumed from Annexed Municipal Utility Districts (See Note M ) I I 28 1 CITY OF SCBERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE D -- LONG -TERM DEBT (Continued) Debt Service Requirements The following are summaries of debt service requirements to maturity for long -term bonds, certificates, and notes for the General Long -Term and Proprietary Fund Debt: SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY FOR GENERAL LONG -TERM DEBT Year Ending September 30, Principal Interest Total 2003 $ 783,000 $ 504,162 $ 1,287,162 2004 808,000 464,289 1,272,289 2005 851,000 422,724 1,273,724 2006 625,000 385,456 1,010,456 2007 485,000 349,998 834,998 2008 480,000 319,864 799,864 2009 430,000 292,008 722,008 2010 455,000 270,653 725,653 2011 480,000 250,474 730,474 2012 510,000 228,921 738,921 2013 535,000 205,887 740,887 2014 565,000 181,396 746,396 2015 595,000 155,317 750,317 2016 630,000 127,513 757,513 2017 665,000 97,839 762,839 2018 695,000 66,391 761,391 2019 320,000 42,250 362,250 2020 335,000 25,875 360,875 2021 350,000 8,750 358,750 $ 10,597,000 $ 4,399,767 $ 14,996,767 Average annual requirements $ 789,304 0 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE D -- LONG -TERM DEBT (Continued) SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY FOR PROPRIETARY FUND DEBT Year Ending September 30, Principal Interest Total 2003 $ 417,000 $ 250,855 $ 667,855 2004 432,000 233,864 665,864 2005 449,000 216,990 665,990 2006 295,000 200,510 495,510 2007 300,000 188,950 488,950 2008 300,000 176,900 476,900 2009 310,000 164,481 474,481 2010 225,000 148,981 373,981 2011 235,000 139,271 374,271 2012 245,000 128,901 373,901 2013 252,000 117,731 369,731 2014 265,000 106,006 371,006 2015 280,000 93,419 373,419 2016 290,000 79,839 369,839 2017 295,000 65,339 360,339 2018 230,000 50,589 280,589 2019 240,000 39,089 279,089 2020 255,000 26,849 281,849 2021 265,000 13,780 278,780 $ 5.580,000 $ 2,442.344 $ 8.022.344 Average annual requirements _ $ 422,229 Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, public facility loan (HUD), and a note payable. General obligation bonds are direct obligations of the City for which its full faith and credit are pledged, and are payable from taxes levied on all taxable property located within the City. Revenue bonds are generally payable from pledged revenues generated by the water and sewer fund. The debenture agreement for water and sewer bonds require funds be available for 1 /12a the principal and 1 /6's interest requirements of the next fiscal year. Certificates of obligation are payable from a levy of ad valorem taxes upon all taxable property within the City, and are further payable from certain net revenues derived from the operation of the City's combined water and sewer systems after operations of the water and sewer systems and has equal status with first lien revenue bonds. The City is required to accumulate a Reserve Fund in an amount equal to the average annual principal and interest on the Revenue Bonds. The City has purchased a surety bond through MBIA Insurance Corporation to fund the required reserve amount. 30 CITY OF SCIIERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE D -- LONG -TERM DEBT (Continued) Advance Refunding. The City issued $5,550,000 of revenue bonds in 2001 to provide resources to improve and enlarge the existing utility system, and to discharge and refund outstanding revenue debt. $823,250 of the proceeds of the new issue were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments on $785,000 of refunded debt. As a result, the refunded bonds are considered to be defeased and the liability has been removed from the long -term debt of the Water and Sewer Fund. The reacquisition price exceeded the net carrying amount of the old debt by $54,505. This amount is being netted against the new debt and amortized over the old debt's life, which is shorter than the life of the new debt. NOTE E -- RETIREMENT PLAN Texas Municipal Retirement Fund: Plan Description The City provides pension benefits for all of its full -time employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), one of over 758 administered by TMRS, an agent multiple - employer public employee retirement system. TMRS issues a publicly available financial report that includes financial statements and required supplementary information for TMRS. That report may be obtained by writing to Texas Municipal Retirement System, P.O. Box 149153, Austin, Texas 78714. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City - financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100 %, 150 %, or 200 %) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer- financed monetary credits with interest were used to purchase an annuity. Members can retire at age 60 and above with 5 regardless of age. A member is vested after 5 years of the City, within the options available in the s constraints also in the statutes. I I or more years of service or with 20 years of service, The plan provisions are adopted by the governing body tate statutes governing TMRS and within the actuarial 31 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE E -- RETIREMENT PLAN (Continued) Texas Municipal Retirement Fund: (Continued) Contributions (Continued) The contribution rate for the employees is 5 %, and the City matching percent is currently 1.5 to 1, both as adopted by the governing body of the City. Under the State law governing TMRS, the City contribution rate is annually determined by the actuary. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 25 -year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Contributions are made monthly by both the employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one -year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect (i.e., December 31, 2001 valuation is effective for rates beginning January 2002). For 2001, the City's annual pension cost of $369,210 was equal to the City's required and actual contributions. The actuarial assumptions included (a) 8% investment rate of return, (b) no projected salary increases, (c) no inflation component and (d) the amortization period is open. The actuarial value of TMRS assets was determined based on market - related values. Schedule of Actuarial Liabilities and Funding Progress Actuarial Valuation Date Actuarial Value of Assets Actuarial Accrued Liability Percentage Funded Unfunded (Overfunded) Actuarial Accrued Liability (UAAL) Annual Covered Payroll UAAL as a Percentage of Covered Payroll Net Pension Obligation (NPO) at the Beginning of Period Annual Pension Cost: Annual Required Contribution Contributions Made Increase in NPO NPO at the End of Period 32 12/31/01 12/31/00 $ 2,795,264 $ 2,268,986 $ 4,128,746 $ 3,638,045 67.7% 62.4% 1333,482 $ 1,369,059 4,419,848 $ 3,866,975 30.1% 35.4% 12/31/99 $ 1,734,692 $ 3,076,611 56.4% $ 1,341,919 $ 3,349,515 40.1% $ 369,210 $ 301,447 $ 252,975 $ 369,210 $ 301,447 $ 252,975 $ $ $ CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE F -- INTERFUND RECEIVABLES AND PAYABLES Interfund balances as of September 30, 2002 consisted of the following receivables and payables: PRIMARY GOVERNMENT General Fund Special Revenue Funds: Police Department Forfeitures Tax Increment Financing Proprietary Funds: Water and Sewer Enterprise Fund Schertz EMS Due From Due To Other Funds Other Funds $ 9,538 $ - - 10,000 5,297 - 24,988 9,538 40,285 Special Revenue Funds Police Department Forfeitures: General 9,538 Tax Increment Financing ' General Fund 10,000 - Recycle Fund Water and Sewer Enterprise Fund - 5,984 10,000 15,522 Debt Service Fund Water and Sewer Enterprise Fund Capital Projects Fund Water and Sewer Enterprise Fund Enterprise Fund Water and Sewer Enterprise Fund General Schertz EMS Enterprise Fund Recycle (Special Revenue) Fund Debt Service Fund Capital Projects Schertz EMS Enterprise Fund General Fund Water and Sewer Enterprise Fund TOTAL INTERFUND RECEIVABLES AND PAYABLES 33 7.347 7,347 220,122 - 220,122 - 5,297 - 129,000 - 5,984 - 7,347 - - 220,122 24,988 129,000 172,616 349,122 $ 412.276 $ 412,276 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE F -- INTERFUND RECEIVABLES AND PAYABLES (Continued) COMPONENT UNITS General Fund Schertz Economic Development Corporation Schertz Economic Development Corporation General Fund TOTALS NOTE G -- OPERATING TRANSFERS Primary Government Water /Sewer Enterprise Fund Recycling (Special Revenue) Fund TOTALS Primary Government and Component Unit Debt Service Fund Schertz Economic Development Corporation TOTALS NOTE H -- CONTRIBUTED CAPITAL Due From Due To Other Funds Other Funds $ 14 $ 14 $ 14 $ 14 $ 31,156 $ - - 31,156 —:$—_—:-31 ,156 $ 31,156 $ 551,720 $ - - 551,720 $ 551.1720 $ 551,720 Changes to contributed capital during the year are as follows: Cash and Capital Assets Contributed from Municipal Utility Districts (at estimated fair value) Capital Assets transferred to General Fixed Assets (at net book value) Depreciation of Contributed Assets Accumulated Deficits Closed to Contributed Capital Contributed Capital - October 1 CONTRIBUTED CAPITAL - S.EPTEMBER 30 Water And Internal Sewer Safes Service Fund Fund Fund Total $ 8,728,761 $ - $ - $ 8,728,761 - (6,200) (50,759) (56,959) (349,540) (8,777) (358,317) - (12,818) (12,818) 3,550,650 314,541 63,577 3,928,768 $11.929.871 $ 299.564 $ - $12.229.435 34 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE I -- SEGMENT INFORMATION — ENTERPRISE FUNDS The City has two (2) enterprise operations which provide water /sewer and emergency ambulance services. Segment information for the twelve month period ended September 30, 2002, is as follows: Operating Revenues Operating Expenses, Exclusive of Depreciation and Amortization Depreciation Operating Income Other Income (Expense) Operating Transfers In (Out) Net Income Total Assets Total Equity Working Capital Additions to Fixed Assets Outstanding Debt Water /Sewer Schertz EMS Total $ 4,663,584 $ 2,132,978 $ 6,796,562 (3,061,327) (1,701,032) (4,762,359) (702,812) (48,039) (750,851) 899,445 383,907 1,283,352 (559,660) 659 (559,001) 31,156 - 31,156 $ 370,941 $ 384,566 $ 755.507 $ 24,836,666 $ 1,406,617 $ 26,243.283 -L j8 $ L2i8,611 1 19,696,385 -L-2±95 -I--L72 ,747 -J-1168 .681 $ L477,648 $ 19,618 $ 1,497.266 —L—L527,939 $ -L IL NOTE J -- 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; and natural disasters. The City contracts with the Texas Municipal League Intergovernmental Risk Pool, a public entity risk pool currently operating as a common risk management and insurance program providing insurance coverage in the following areas: general liability, automobile liability and physical damage, law enforcement liability, workers compensation, real and personal property, mobile equipment, and errors and omissions liability. The agreement for formation of the Texas Municipal League hitergovemmental Risk pool provides that the pool will be self - sustaining through member premiums and will be adjusted annually through an experience modifier. The City continues to carry commercial insurance for all other risks of loss including public official bond, employee dishonesty blanket bond, and underground tank pollution liability. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three (3) fiscal years. The pooling agreement requires the pool to be self - sustaining. It is not possible to estimate the amount of any losses for which the City might be liable. The Texas Municipal League Intergovernmental Risk Pool has published its own financial report for the year ended September 30, 2002, which can be obtained from the Texas Municipal League. 35 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE K -- COMMITMENTS AND CONTINGENCIES Schertz/Seguin Local Government Comoration The City of Schertz is jointly liable, together with the City of Seguin, for operating deficits and long -term debt of the Schertz/Seguin Local Government Corporation (See Note Al). Following is a summary of financial data as reported in the Corporation's audited financial statements dated September 30, 2002: Current Assets $ 272,663 Restricted Cash and Investments 4,838,474 Projects in Progress 38,418,413 Land 5,867,926 Equipment and Vehicles (Net) 50,659 Other Assets (Net) 2,409,486 TOTAL ASSETS $ 51,857,621 LIABILITIES & RETAINED EARNINGS Current Liabilities $ 2,124,928 Bonds Payable (Less Maturities and Net of Unamortized Discount) 50,201,802 TOTAL LIABILITIES 52,326,730 Deficit Accumulated During Development Stage (469,109) TOTAL LIABILITIES & RETAINED EARNINGS $ 51,857,621 The Corporation has issued revenue bonds in the amount of $51,040,000 to provide funds to build, improve, extend, enlarge and repair the Corporation's utility system, fund a reserve, and pay the costs of bond issuance. As of September 30, 2002, $50,845,000 remained outstanding on the bonds. The bond resolution pledges intergovernmental contract revenues from the cities of Schertz and Seguin (the participating governments) to bondholders. Under the intergovernmental water supply contract, the participating governments are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service as operating expenses from their respective utility systems. Contributions to the Corporation are reflected as "Nonoperating Expenses" in the Water and Sewer Enterprise Fund and totaled $436,770 for the year ended September 30, 2002. Liti ag tion The City is the subject of various claims and litigation that have arisen in the course of its operations. Management is of the opinion that the City's liability in these cases, if decided adversely to the City, will not have a material effect on the City's financial position. 36 I CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2002 NOTE K -- COMMITMENTS AND CONTINGENCIES (Continued) 1 Commitments The City has entered into contract for the following projects to be financed from bond issues and tax anticipation notes: ;1 Computer Software Conversion Schertz Parkway Elevated Storage Tanks Pump Station NOTE L -- RESIDUAL EQUITY TRANSFERS Project Authorization $ 314,682 $ 4,142,663 $ 1,490,000 $ 1,142,868 Expended to Date $ 54,701 $ 2,351,211 $ 343,774 $ 490,659 Future Commitment $ 259,981 $ 1,791,452 $ 1,146,226 $ 652,209 During the year the fleet services operations were transferred from the internal service fund to the general fund. The fixed assets used by fleet services were transferred to the General Fixed Asset Account Group at the current book value. All accumulated deficits of the internal service fund were absorbed by the General Fund and are reflected as a residual deficit transfer. The FEMA Flood (Special Revenue) Fund was closed during the year and the residual equity transferred to the General Fund. Following is a schedule of residual equity transfers as of September 30, 2002: General Fund FEMA Flood (Special Revenue) Fund Fleet Services ( Intemal Service) Fund Special Revenue General Fund Internal Service General Fund Residual Equity Transfer FROM (TO) $ 78,314 (4,764) 78,314 - (4,764) $ 73,550 $ 73,550 NOTE M -- CONTRIBUTIONS FROM MUNICIPAL UTILITY DISTRICTS On January 1, 2002, the City of Schertz annexed the Guadco Municipal Utility District No. I and Guadco Municipal Utility District No. 2. The existing assets and liabilities of the Districts were transferred to the City of Schertz and are recorded as contributions to capital in the Water and Sewer Enterprise Fund, with the exception of funds held for payment of debt service collected from ad valorem taxes. Those funds have been recorded as "Other Revenue" in the Debt Service Fund. In addition, bonded debt assumed by the City has been recorded in the General Long -term Debt Account Group. The existing utility system fixed assets have been recorded at the estimated fair value in the Water and Sewer Enterprise Fund. 37 This page intentionally left blank COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES I 1 I'l 11 11 I1, 1 38 This page intentionally left blank I 1 GENERALFUND The General Fund accounts for the resources used to finance the fundamental operations of the City. It is the basic fund of the City and covers all activities for which a separate fund has not been established. 1 1 j F 1 39 CITY OF SCHERTZ, TEXAS GENERAL FUND COMBINED BALANCE SHEETS SEPTEMBER 30, 2002 AND 2001 ASSETS Cash and Cash Equivalents Delinquent Taxes Receivable (Net of Allowances of $6,917 and $6,055) Accounts Receivable Due from Other Funds Due from Component Unit Inventory of Supplies, at Cost Prepaid Items TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Vouchers Payable Accrued Salaries and Benefits Bond Escrow Due to Other Funds Deferred Revenue Total Liabilities Fund Balance Reserved for Forfeited Property Reserved for Inventory of Supplies and Prepaid Items Reserved for Municipal Court Um•eserved: Designated for Economic Development Designated for Equipment Replacement Designated for Self- Insurance Designated for AC Replacement Designated for Vehicle Replacement Designated for Contingencies Designated for Police Building Undesignated Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE :I September 30, 2002 2001 $ 2,949,996 $ 3,266,936 108,361 94,869 197,159 195,355 9,538 108,764 14 2,200 15,080 15,586 56,060 127,406 $ 3,336,208 $ 3,811,116 104,591 $ 220,356 97,470 71,815 40,285 - 108,361 94,869 350,707 387,040 19,814 19,814 71,140 142,992 31,401 404 18,821 18,821 225,000 242,857 - 368,263 - 73,653 40,001 188,093 2,420,000 1,420,000 311 645 159,013 948,534 2,985,501 3,424,076 S 3,336,208 $ 3,811,116 EXPENDITURES Current General Government 2,527,985 CITY OF SCHERTZ, TEXAS (38,263) 1,638,648 Public Safety 3,130,237 GENERAL FUND 166,313 2,561,055 ' SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - 85,985 627,110 BUDGET AND ACTUAL 129,117 120,530 ' (WITH COMPARATIVE YEAR ENDED SEPTEMBER 30, 2002 ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2001) 54,984 270,437 Manaeement Services - ' 98,683 2002 1,532,663 2001 343,489 458,031 TOTAL EXPENDITURES Variance 7,820,475 621,095 5,829,012 Favorable ' REVENUES Budget Actual (Unfavorable) Actual Taxes $ 4,854,804 $ 4,677,386 $ (177,418) $ 4,210,792 Licenses and Permits 720,525 647,784 (72,741) 612,745 Charges for Services 864,310 883,126 18,816 659,145 Fines and Forfeits 495,220 511,407 16,187 438,772 Grants - 2,899 2,899 - Other Revenue 213,200 185,748 (27,452) 257,443 TOTAL REVENUES 7,148,059 6,908,350 (239.709) 6,178,897 EXPENDITURES Current General Government 2,527,985 2,566,248 (38,263) 1,638,648 Public Safety 3,130,237 2,963,924 166,313 2,561,055 Streets and Parks 738,180 652,195 85,985 627,110 Health 129,117 120,530 8,587 175,048 Culture and Recreation 383,388 328,404 54,984 270,437 Manaeement Services - - 98,683 Capital Outlay 1,532,663 1,189,174 343,489 458,031 TOTAL EXPENDITURES 8,441,570 7,820,475 621,095 5,829,012 Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Tax Notes TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October I Residual Equity (Deficit) Transfers Fund Balance - September 30 (1,293,511) (912,125) 381,386 349,885 400,000 400,000 400,000 400,000 (1293,511) (512,125) 781,386 349,885 3,424,076 3,424,076 - 3,074,141 73,530 73,550 20 - $ 2,204,095 $ 2,985,501 $ 781,406 $ 3,424,076 41 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30,200 1) 2002 2001 Variance Favorable REVENUES Budget Actual (Unfavorable) Actual Taxes Ad Valorem $ 2,837,064 $ 2,646,444 $ (190,620) $ 2,301,097 Tax Penalty 18,000 27,696 9,696 23,376 ' City Sales Tax 1,442,500 1,436,968 (6,432) 1,381,199 Utility Franchise 552,740 562,224 9,484 500,514 Other 4,500 4,954 454 4,606 ' Total Taxes 4,854.804 4,677,386 (177,418) 4,210,792 Licenses and Permits 720,525 647,784 (72,741) 612,7,45 ' Charges for Services: General Government Administration 574,557 574,557 - 387,220 ' Swimming Pool 27,050 34,766 7,716 36,154 Animal Shelter 79,025 91,071 12,046 76,037 Building Rental 10,250 11,842 1,592 10,861 ' Library and Fire 148,178 164,887 16,709 143.829 Other 25,250 6,003 (19,247) 5,044 Total Charges for Service 864,310 883,126 18,816 659,145 ' Fines and Forfeitures 495,220 511,407 16,187 438,772 ' Grants - 2,899 2,899 - ' Other Revenue: Reimbursements 3,000 20,844 17,844 2,987 Cibolo Creek Municipal Authority 5,000 - (5 000) 4,297 ' Interest 177,500 79,541 (97,959) 179,608 Sale of Merchandise /Assets 5,300 - (5,300) 18,979 Miscellaneous 22,400 85,363 62,963 51,572 ' Total Other Revenue 213,200 185,748 (27,452) 257,443 TOTAL REVENUES $ 7,148,059 $ 6,908,350 _L __g39,709 $ 6,178,897 ' I J 42 11 CITY OF SCHERTZ, TEXAS GENERALFUND ' SCHEDULE OF CURRENT EXPENDITURES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 2002 ' (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2001) ' 2002 Variance 2001 Favorable Budget Actual (Unfavorable) Actual CURRENT General Government City Council $ 24,450 $ 25,579 $ (1,129) $ 33,270 ' City Manager 223,952 281,336 (57,384) 167,093 Business Office 271,308 282,131 (10,823) 243,121 Planning and Zoning 209,185 265,053 (55,868) 257,678 Legal 260,000 256,750 3,250 169,757 Municipal Court 217,655 192,275 25,380 170,799 Municipal Building 304,390 251,762 52,628 200,173 City Secretary 102,552 109,397 (6,845) 86,336 ' Finance 177,033 167,865 9,168 145.678 Information Technology 134,620 113,646 20,974 ' Human Resources Fleet Services 184,962 143,438 265,007 116,955 (80,045) 26,483 Other - Unclassified 274,440 238,492 35,948 164,743 ' Total General Government 2,527,985 2,566,248 (38,263) 1,638,648 Public Safety Police Department 1,894,753 1,757,090 137,663 1,555,156 ' Fire Department 999,714 988,477 11,237 827,545 Inspection 235,770 218,357 17,413 178,354 Total Public Safety 3,130,237 2,963,924 166,313 2,561,055 Streets and Parks Streets 582,260 513,592 68,668 511,716 Parks 155,920 138,603 17,317 115,394 Total Streets and Parks 738,180 652,195 85,985 627,110 Health ' Animal Control 129,117 120,530 8,587 175,048 Culture and Recreation Swimming Pool 92,174 67,563 24,611 77,524 Library 291,214 260,841 30,373 192,913 Total Culture and Recreation 383,388 328,404 54,984 270,437 Management Services 98,683 ' Capital Outlay 1,532,663 1,189,174 343,489 458,031 TOTAL EXPENDITURES $ 8-441 570 $ 7,820,475 $ 621,095 $ 5829,012 t43 This page intentionally left blank CIS 1 SPECIAL REVENUE FUNDS Special Revenue funds account for the proceeds of specific revenues (other than expendable trusts or for major capital projects) that are legally restricted to expenditure for specified purposes. Park Fund - to account for revenues from developers' fees (in lieu of park land dedication), grants, and donations and designed to monitor and manage improvement of park system. Recycling Fund - to account for revenues received from the recycling fee on all residential water bills and the sale of recyclable material and used to buy down solid waste collection costs. Tax Increment Financing Fund — to account for the proceeds of designated property taxes to be used for the widening of Schertz Parkway. 1998 FEMA Fund — to account for the funds received from the Federal Emergency Management Association which are used to repair damages incurred in the flood of 1998. Hotel Occupancy Tax Fund — to account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. Library Grant Fund — to account for funds from a state grant to be used for purchasing computers at the library to be used for access to the internet. Police Department Forfeitures Fund - to account for revenue received from drug related cases in conjunction with other law enforcement agencies. VJ CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30,200 1) ASSETS Cash and Cash Equivalents Accounts Receivable Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Due to Other Funds Total Liabilities Fund Balance Unreserved Designated TOTAL LIABILITIES AND FUND BALANCE 45 Tax Park Recycling Increment Fund Fund Financing $ 151,483 $ 7,843 $ 124,529 - - 10,000 $ 151,483 $ 7 843 $ 134,529 5,984 _ 5,984 151,483 1,859 134,529 $ 151,483 $ 7,843 $ 134,529 Totals 2002 2001 $ $ 245,603 $ 422 $ 216,289 $ 746,169 $ 840,403 - 27,230 - 27,230 104,202 - - - 10,000 - $ $ 245,603 $ 27,652 $ 216.289 $ 783,399 $ 944,605 $ $ $ 27,230 $ - $ 27,230 $ 2,622 - 9,538 15 „522 55,022 27,230 9,538 42,752 57,644 245,603 422 Police Hotel Library Department 1998 Occupancy Grant Forfeitures FEMA Tax Fund Fund Totals 2002 2001 $ $ 245,603 $ 422 $ 216,289 $ 746,169 $ 840,403 - 27,230 - 27,230 104,202 - - - 10,000 - $ $ 245,603 $ 27,652 $ 216.289 $ 783,399 $ 944,605 $ $ $ 27,230 $ - $ 27,230 $ 2,622 - 9,538 15 „522 55,022 27,230 9,538 42,752 57,644 245,603 422 206,751 740,647 886,961 $ $ 245,603 $ 27,652 $ 21b,289 $ 783,394 $ 944.605 Uri CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) REVENUES Other Taxes Developer Fees Property Forfeitures Grants Sale of Recycling Materials Miscellaneous Revenue Interest TOTAL REVENUES EXPENDITURES General and Administrative Streets and Parks Contractual Services Capital Outlay TOTAL EXPENDITURES Excess (Deficiency of Revenues) Over Expenditures OTHER FINANCING SOURCES (USES) Transfers (Out) TOTAL OTHER FINANCING SOURCES (USES) Excess ( Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October I Residual Equity Transfers Fund Balances - September 30 47 Tax Park Recycling Increment Fund Fund Financing $ - $ $ 10,000 15,898 - - 11,354 119,029 - - 2,897 - 2,406 137,824 11,354 12,406 36,955 - - - 20,302 449 85,606 122,561 20,302 449 15,263 (8,948) 11,957 (31,156) (31,156) 15,263 (40,104) 11,957 136,220 41,963 122,572 $ 151,483 $ 1,859 $ 134,529 Totals 2002 2001 $ $ 40,410 Police Hotel Library Department 1998 Occupancy Grant Forfeitures FEMA Tax Fund Fund Totals 2002 2001 $ $ 40,410 $ $ $ 50,410 $ 51,282 - 15,898 7,907 27,424 27,424 310,429 5,531 36,932 - 42,463 186,382 - - - 11,354 21,298 925 - 2,200 122,154 - 308 4,565 - 5,021 15,197 24,865 6,764 44,975 36,932 34,645 284,900 602,163 - 3,034 - - 3,034 4,500 - - 36,955 - 9,516 - 30,267 25,087 - 28,538 137,344 251,488 345,545 - 3,034 38,054 137,344 321,744 375,132 6,764 41,941 (1,122) (102,699) (36,844) 227,031 - - (31,156) - - (31,156) 6,764 41,941 (1,122) (102,699) (68,000) 227,031 71,550 203,662 1,544 309,450 886,961 659,930 (78,31.4) - - (78,314) - $ $ 245,603 $ 422 $ 206,751 $ 7402647 $ 886,961 48 CITY OF SCHERTZ, TEXAS PARK SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 2001) Variance 2002 Favorable 2001 Budget Actual (Unfavorable) Actual REVENUES Developer Fees $ 24,865 $ 15,898 $ (8,967) $ 7,907 Miscellaneous Revenue 126,000 119,029 (6,971) - Interest Income 11,135 2,897 (8,238) 10,283 TOTAL REVENUES 162,000 137,824 (24,176) 18,190 IOIi493017110111 f31 Supplies 350 3,897 (3,547) Contractual Services 35,500 33,058 2,442 - Capital Outlay 104,150 85,606 18,544 185,878 TOTAL EXPENDITURES 140,000 122 „561 17,439 185,878 Excess (Deficiency) of Revenues Over (Under) Expenditures $ 22,000 15,263 $ (6,737} (167,688) Fund Balance - October 1 136,220 303,908 Fund Balance - September 30 $ 151,483 $ 136,220 Im CITY OF SCHERTZ, TEXAS RECYCLING SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 200 1) Variance 2002 Favorable 2001 Budget Actual (Unfavorable) Actual REVENUES Sale of Recycling Materials $ 18,000 $ 11,354 $ (6,646) $ 21,298 TOTAL REVENUES 18,000 11,354 (6,646) 21,298 Contractual Services 20,302 (20,302) 9,915 TOTAL EXPENDITURES - 20,302 (20,302) 9,915 Excess (Deficiency) of Revenues Over (Under) Expenditures 18,000 (8,948) (26,948) 11,383 OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October I Fund Balance - September 30 (15,000) (31,156) (16,156) (15,000) (31,156) (16,156) $ 3,000 (40,104) $ (43,104) 50 41,963 $ 1,859 11,383 30,580 41,963 CITY OF SCHERTZ, TEXAS HOTEL OCCUPANCY TAX SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 200 1) Variance 2002 Favorable 2001 Budget Actual (Unfavorable) Actual REVENUES Occupancy Tax $ 39,000 $ 40,410 $ 1,410 $ 41,282 Interest Income 7,680 4,565 (3,115) 7,974 TOTAL REVENUES 46,680 44,975 (1,705) 49,256 Contractual Services 61,500 3,034 58,466 3,700 TOTAL EXPENDITURES 61,500 3,034 58,466 3,700 Excess (Deficiency) of Revenues Over (Under) Expenditures $ (14,820) 41,941 $ 56,761 45,556 Fund Balance - October 1 203,662 158,106 Fund Balance - September 30 S 245,603 $ 203,662 51 DEBT SERVICE FUND This fund is used to account for the accumulation of resources for and the payment of principal, interest, and ' related costs on general long -term debt of the City. 1 III LJ 7 1 52 This page intentionally left blank CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2002 AND 2001 ASSETS Cash and Cash Equivalents Delinquent Taxes Receivable (Net of Allowances) Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accrued Interest Due to Other Funds Deferred Revenue Ad Valorem Taxes Total Liabilities Fund Balance Reserved for Debt Service TOTAL LIABILITIES AND FUND BALANCE 53 SEPTEMBER 30, 2002 2001 $ 306,421 $ 134,268 19,198 10,239 - 39,336 $ 3252619 $ 183,843 $ $ 17,404 7,347 - 19,198 10,239 26,545 27,643 299,074 156,200 $ 3252619 $ 183,843 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEARS ENDED SEPTEMBER 30, 2002 AND 2001 Taxes Contributions from Municipal Utility Districts Interest Income TOTAL REVENUES EXPENDITURES Debt Service Bond Principal Bond Interest Fiscal Agent Fees TOTAL EXPEP Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers from Component Unit TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October 1 Fund Balance - September 30 54 2002 Actual $ 578,106 454,290 7,569 1,039,965 937,000 508,098 3,713 1,448,811 2001 Actual $ 190,890 9,933 200,823 257,410 278,461 2,313 538,184 (408,846) (337,361) 551,720 388,542 551,720 388,542 142,874 51,181 156,200 105,019 $ 299,074 $ 156,200 CAPITAL PROJECTS FUND The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary fund types.) 55 This page intentionally left blank CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2002 AND 2001 ASSETS Cash and Cash Equivalents Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Due to Other Funds Total Liabilities Fund Balances Unreserved Designated for Borgfeld Road Undesignated Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 56 TOTALS 2002 2001 $ 1,719,556 $ 5,052,112 220,122 $ 1,939,678 $ 5.052,11.2 $ 419,350 419,350 30,228 30,228 1,909,450 4,602,534 1,939,678 4,632,762 $ 1939,678 $ 5.052,112 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEARS ENDED SEPTEMBER 30, 2002 AND 2001 A LL/ Other Interest Income TOTAL REVENUES Bond Issuance Costs Professional and Contractual Services Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds of Certificates of Obligation TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October 1 Fetid Balance - September 30 57 TOTALS 2002 2001 $ 81,232 $ 54,721 81,232 54,721 - 57,915 135,593 66,246 2,638,723 884,875 2,774,316 1,009,036 (2,693,084) (954,315) 4,500,000 4,500,000 (2,693,084) 3,545,685 4,632,762 1,087,077 $ 119392678 $ 4,632,762 Ll 1 0 1 ' PROPRIETARY FUND TYPE ENTERPRISE FUNDS Enterprise Funds are established to account for operations that are financed and operated in a manner similar 1 to private business enterprises — where the intent of the governing body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City operates the Water and Sewer System and the Schertz 1 Area Facility for Emergency Services (SAFES) on this basis. 1 1 d II I I 1 1 58 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) Restricted Assets: Cash and Cash Equivalents 6,580,223 6,580,223 6,590.576 Fixed Assets Land and Improvements WATER AND 234,479 160,521 Buildings 195,724 SEWER SCHERTZ TOTALS 20,211,340 - 20,211,340 SYSTEM EMS 2002 2001 ASSETS Construction in Progress 1,205,672 - 1,205,672 Current Assets: 23,077,796 732,498 23,810,294 13,889,957 , Cash and Cash Equivalents $ 2,457,588 $ 77,110 S 2,534,698 S 2,687,485 Accounts Receivable (Net of Allowances 124,799 124,799 131,538 or $11,053 and $345,824 respectively) 577,182 1,036,504 1,613,686 1,275,013 Accounts Receivable - Other 22,417 22,417 47,625 Due from Other Funds 147,628 24,988 172,616 80,000 Inventory of Supplies, at Cost 75,069 22,151 97,220 95,534 Prepaid Expenses - - - 18,306 Total Current Assets 3,279,884 1,160,753 4,440,637 4,203,963 Restricted Assets: Cash and Cash Equivalents 6,580,223 6,580,223 6,590.576 Fixed Assets Land and Improvements 234,479 234,479 160,521 Buildings 195,724 195,724 222,380 Improvements Other than Buildings 20,211,340 - 20,211,340 11,599,698 Machinery, Equipment, and Vehicles 1,230,581 732,498 1,963,079 1,907,358 Construction in Progress 1,205,672 - 1,205,672 Bond Issuance Costs (Net of 23,077,796 732,498 23,810,294 13,889,957 Less: Accumulated Depreciation (8,249,910) (486,634) (8,736,544) (8,013,790) Total Fixed Assets 14,827,886 245.864 15,073,750 5,876,167 Other Assets: Organizational Costs (Net of Accumulated Amortization of $1,518 and $1,471 for 2002 and 2001) 382 382 430 Bond Issuance Costs (Net of , Accumulated Amortization of $9,974 and $3,235 for 2002 and 200 1) 124,799 124,799 131,538 Deferred Loss on Early Retirement ' of Debt (Net of Accumulated Amortization of $70,483 and $59,429 for 2002 and 2001) 23,492 23,492 34,546 ' Total Other Assets 148,673 - 148,673 166,514 TOTAL ASSETS $ 24,836,666 $ 1,406,617 $ 26,243,283 $ 16,837,220 Continued ' 59 CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING BALANCE SHEET (CONTINUED) SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) LIABILITIES AND EQUITY Current Liabilities: Vouchers Payable Withdrawals in Excess of Deposits Note Payable - Current Maturity Due to Other Funds Accrued Salaries and Benefits Salary Reserve Compensated Absences Payable Total Current Liabilities Current Liabilities Payable From ' Restricted Assets Customer Deposits Revenue Bonds ' Certificates of Obligation Refunding Bonds Public Facility Loan Accrued Interest ' Total Current Liabilities Payable From Restricted Assets 1 Noncurrent Liabilities: Revenue Bonds Payable (Net of Unamortized Discounts) ' Certificate of Obligation Payable Refunding Bonds Public Facility Loan Total Noncurrent Liabilities TOTAL LIABILITIES EQUITY Contributed Capital Retained Earnings - Reserved: Revenue Bond Retirement Equipment Replacement Contingencies Unreserved TOTAL EQUITY TOTAL LIABILITIES AND EQUITY WATER AND SEWER SCHERTZ "TOTALS SYSTEM EMS 2002 2001 $ 287,696 $ 2,997 $ 290,693 $ 248,202 - - - 15,445 - - - 34,564 220,122 129,000 349,122 105,556 15,206 18,351 33,557 26,957 10,884 9,997 20,881 20,342 50,042 27,661 77,703 73,063 583,950 188,006 771,956 524,129 224,522 - 224,522 192,846 285,000 - 285,000 275,000 60,000 - 60,000 60,000 67,000 - 67,000 18,000 5,000 - 5,000 5,000 22,481 - 22,481 24,937 664,003 664,003 5751783 4,937,939 4,937,939 5,213,991 - - - 60,000 126,000 - 126,000 193,000 47,000 - 47,000 52,000 5,110,939 - 5,110,939 5,518,991 6,358,892 188,006 6,546,898 6,618,903 11,929,871 299,564 12,229,435 3,865,191 40,000 - 40,000 40,000 750,000 222,500 972,500 972,500 5,757,903 696,547 6,454,450 5,340,626 18,477,774 1,218,611 19,696,385 10,218,317 $ 24,836,666 $ 1,406,617 $ 26.243,283 $ 16,837,220 ,1 r i CITY OF SCHERTZ, TEXAS ENTERPRISE FUND ' COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED SEPTEMBER 30, 2002 ' (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) 11 61 1 WATER AND ' SEWER SCHERTZ TOTALS SYSTEM EMS 2002 2001 OPERATING REVENUES ' Fees Charged to Users $ 4,626,106 $ 2,128,584 $ 6,754,690 $ 5,407,220 Reimbursements and Other 37,478 4,394 41,872 209,843 TOTAL OPERATING REVENUES 4,663,584 2,132,978 6,796,562 5,617,063 ' OPERATING EXPENSES Personnel Services 773,073 953,294 1,726,367 1,420,341 Sewage Treatment 1,061,276 - 1,061,276 1,281,454 , General and Administrative 553,729 18,328 572,057 392,720 Contractual Services 539,060 183,848 722,908 821,985 . Supplies/Maintenance 133,412 105,560 238,972 259,602 Bad Debts 777 440,002 440,779 87,486 ' TOTAL OPERATING EXPENSES BEFORE DEPRECIATION 3,061,327 1,701,032 4,762,359 4,263,588 ' Operating Income (Loss) Before Depreciation 1,602,257 431,946 2,034,203 1,353,475 Depreciation 702,812 48,039 750,851 511,634 ' OPERATING INCOME (LASS) 899,445 383,907 1,283,352 841,841 ' NONOPERATING REVENUES (EXPENSES) Interest Income 197,039 659 197,698 358,904 Interest Expenses (286,142) - (286,142) (200,253) ' Contributions to Joint Venture (463,770) (463,770) (279,705) Amortization of Bond Costs (6,787) - (6,787) (3,283) TOTAL NONOPERATING REVENUE (EXPENSES) (559,660) 659 (559,001) (124,337) ' NET INCOME (LOSS) BEFORE OPERATING TRANSFERS 339,785 384,566 724,351 717,504 ' Operating Transfers In (Out) 31,156 - 31,156 - NET INCOME (LOSS) 370,941 384,566 755,507 717,504 Add Back of Depreciation Closed to ' Contributed Capital 349,540 8,777 358,317 138,106 TOTAL 720,481 393,343 1,113,824 855,610 ' Retained Earnings - October 1 5,827,422 525,704 6,353,126 5,497,516 Retained Earnings - September 30 $ 6,547,903 _E___219 A47 -t-2 ,466,950 $ 6,353,126 ' 11 61 1 CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING STATEMENT OF CASH FLOWS — ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) WATER AND SEWER SCHERTZ TOTALS SYSTEM EMS 2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received From Customers $ 4,728309 $ 1,303,813 $ 6,032,122 $ 4,877,978 Cash Payments to Suppliers (392,564) (392,564) (1,164,696) (268,595) for Goods and Services (2,124,109) (261,044) (2,385,153) (2,904,373) Cash Payments to Employees for Services (767,452) (947,136) (1,714,588) (1,437,497) Cash Received From Reimbursements $ 9,262,616 and Other 37,478 4,394 41,872 209,843 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,874,226 100,027 1,974,253 745,951 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfers (to) from Other Funds 31,156 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from Revenue Bonds Acquisition and Construction of Capital Assets Principal Payments on Long -Term Debt Interest Paid on Long -Term Debt Contributions (to) from Joint Venture Cash Contributed from Municipal Utility District NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Interest on Investments NET INCREASE (DECREASE) IN CASH CASH AND EQUIVALENTS AT BEGINNING OF YEAR: CASH AND EQUIVALENTS AT END OF YEAR: 31,156 271,393 271,393 (2,331,184) (19,618) (2,350,802) 2,942,789 197,039 659 5,398,250 (1,477,648) (19,618) (1,497,266) (804,647) (392,564) (392,564) (1,164,696) (268,595) (268,595) (206,413) (463,770) (463,770) (279,705) 271,393 271,393 (2,331,184) (19,618) (2,350,802) 2,942,789 197,039 659 197,698 358,904 (228,763) 81,068 (147,695) 4,047,644 9,266,574 (3,958) 9,262,616 5,214,972 $ 9,037,811 $ 77110 $ 9,114,921 $ 9,262,616 62 CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES (CONTINUED) YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) 1.RWAV 0 SEWER SCHERTZ TOTALS SYSTEM EMS 2002 2001 Comprised o£ Current Assets $ 2,457,588 $ 77,110 $ 2,534,698 $ 2,687,485 Restricted Assets 6,580,223 6,580,223 6,590,576 Withdrawals in Excess of Deposits - - (15,445) CASH AND CASH EQUIVALENTS END OF YEAR $ 9,037,811 $ 77.110 $ 9,114,921 $ 9,262,616 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING INCOME: Operating income (Loss) $ 899,445 $ 383,907 S 1,283,352 $ 841,841 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities Depreciation/Amortization 353,273 48,039 401,312 376,811 Depreciation Attributed to Contributed Capital 349,540 - 349,540 138,106 Provision for Uncollectible Accounts 777 440,002 440,779 87,486 (increase) Decrease in the Following Assets: Accounts Receivable 70,525 (824,771) (754,246) (616,727) Inventory 5,061 (6,747) (1,686) (6,603) Prepaid Expenses 8,160 10,146 18,306 - Due from Other Funds (67,628) (24,988) (92,616) 83,780 Increase (Decrease) in the Following Liabilities: Vouchers Payable 43,210 (719) 42,491 (218,078) Due to Other Funds 174,566 69,000 243,566 97,300 Accrued Vacation 2,147 2,493 4,640 8,654 Accrued Salaries and Benefits 2,433 4,167 6,600 3,077 Salary Reserve 1,041 (502) 539 (28,887) Customer Deposits 31,676 - 31,676 (20,809) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Capital Assets Contributed Assets Transferred to General Fixed Assets - at net book value $ 1 874,226 $ 100 027 $ 1.974,253 $ 745,951 ' $ 8,457,368 $ - $ 8,457,368 $ 87,772 ' $ - $ (6,200) $ (6,200) $ - , 63 11 GENERAL FIXED ASSETS This account group is established to account for the fixed assets owned by the City exclusive of those relating to Proprietary Fund operations. Expenditure transactions to acquire general fixed assets occur in the General Fund. This page intentionally left blank r L .1 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE SEPTEMBER 30, 2002 AND 2001 GENERAL FIXED ASSETS Land Buildings Improvements Other than Buildings Vehicles Equipment TOTALS INVESTMENT IN GENERAL FIXED ASSETS BY SOURCE General Fund Capital Projects General Obligation Bonds Certificates of Obligation Time Warrants Contractual Obligations Grant Contributed Special Revenue - Development Foundation Component Unit TOTALS 65 SEPTEMBER 30, 2002 2001 $ 2,316,580 $ 1,577,097 6,175,825 6,053,444 14,474,733 11,624,241 1,831,844 1,183,342 2,523,689 2,128,684 $ 27,322,671 $ 22,566,808 $ 5,115,727 $ 3,764,437 7,927,677 7,927,677 2,821,409 182,686 317,005 317,005 113,614 113,614 782,700 782,700 9,519,359 9,462,400 10,504 10,504 714,676 5,785 $ 27,322,671 $ 22,566,808 CITY OF SCHERTZ, TEXAS SCHEDULE OF GENERAL FIXED ASSETS — BY FUNCTION AND ACTIVITY YEAR ENDED SEPTEMBER 30, 2002 M. Balance Balance October 1, Adjustments/ September 30, 2001 Transfers Additions Deductions 2002 General Government $ 2,123,109 $ 56,959 $ 1,105377 $ $ 3,285,445 Public Safety Police 2,533,565 - 125,894 2,659,459 Fire 2,242,102 - 645,402 (38,500) 2,849,004 EMS 1,128,399 - - - 1,128,399 Inspection 29,500 - 16,672 - 46,172 Streets and Park Streets 11,475,348 - 2,695,478 - 14,170,826 Pool 601,795 - - - 601,795 Parks 1,366,917 - 125,581 - 1,492,498 Health Animal Control 260,933 - - - 260,933 Library 802,754 - 23,000 - 825,754 Economic Development Foundation 2,386 - - 2,386 TOTALS $22,566,808 $ 56,959 $ 4,737,404 $ (38,500) S 27,322,671 M. COMPONENTS TO GENERAL FIXED ASSETS Improvements Other Than Land Buildings Buildings Vehicles Equipment $ 1,053,741 $ 1,205,122 $ 33,854 $ 100,592 $ 892,136 41,793 1,764,832 - 332,359 520,475 41,793 1,398,597 - 1,047,625 360,989 41,793 1,065,522 - - 21,084 - - - 37,132 9,040 304,669 13,313,587 217,767 334,803 - - 600,000 - 1,795 774,600 186,472 372,292 49,090 110,044 23;161 124,320 30,000 47,279 36,173 35,030 430,960 125,000 - 234,764 2,386 $ 2,316,580 $ 6,175,825 $ 14,474,733 $ 1,831,844 $ 2,523,689 67 This page intentionally left blank DISCRETELY PRESENTED COMPONENT UNITS 1 Discretely presented component units consist of separate entities whose governing bodies are not substantively the same as the governing body of the primary government. The discretely presented component units also provide services to areas other than the primary government. 1 II 11 i 1 1 68 This page intentionally left blank CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING BALANCE SHEET SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2001) Schertz Economic Schertz Development The Development Corporation Library Foundation ASSETS Totals 2002 2001 Cash and Cash Equivalents $ 815,261 $ 14,597 $ 100,770 $ 930,628 $ 861,755 Accounts Receivable 61,970 - - 61,970 60,840 TOTAL ASSETS $ 877,231 $ 14,597 $ 100,770 $ 992,598 $ 922,595 LIABILITIES & FUND BALANCE Liabilities Accounts Payable $ 732 $ 19 $ - $ 751 $ 17 Accrued Salaries and Benefits 2,064 - - 2,064 - Due to Primary Government 14 - - 14 2,200 Total Liabilities 2,810 19 - 2,829 2,217 Fund Balances Unreserved/Designated 874,421 14,578 100,770 989,769 920,378 Total Fund Balance 874,421 14,578 100,770 989,769 920,378 TOTAL LIABILITIES & FUND BALANCE $ 877,231 $ 14,597 $ 100,770 $ 992,598 $ 922,595 70 CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED SEPTEMBER 30, 2002 (WITH COMPARATIVE TOTALS FOR 200 1) TOTAL REVENUES 734,608 4,842 2,794 742,244 75M30 Current Culture and Recreation Schertz Economic Development 142,128 - 20,117 162,245 3,773 Capital Outlay 706,006 2.882 - 708,888 103,764 Total Expenditures Economic Schertz Development The Development Totals Corporation Library Foundation 2002 2001 REVENUES Taxes $ 716,061 $ - $ $ 716,061 $ 688,983 Other Net Sales - 2,656 2,656 22,676 Donations - 11917 500 2,417 2,421 Interest 18,547 269 2,294 21,110 36,450 TOTAL REVENUES 734,608 4,842 2,794 742,244 75M30 Current Culture and Recreation - - - 2,607 Economic Development 142,128 - 20,117 162,245 3,773 Capital Outlay 706,006 2.882 - 708,888 103,764 Total Expenditures 848,134 2,882 20,117 871,133 110,144 Excess (Deficiency) of Revenues Over Expenditures (113,526) 1,960 (17,323) (128,889) 640,386 OTHER FINANCING SOURCES (USES) ' Transfers to Primary Government (551,720) (551,720) (388,542) Proceeds of Tax Anticipation Notes 750,000 750,000 Total Other Financing Sources (Uses) 198,280 198,280 (388,542) Excess (Deficiency) of , Revenues and Other Sources Over (Under) Expenditures and Other ' (Uses) 84,754 1,960 (17,323) 69,391 2517844 Fund Balances - October 1 789,667 12,618 118,093 920,378 668,534 Fund Balances - September 30 $ 874,421 $ 14,578 $ 100,770 $ 989,769 $ 920,378 11 I 71 I STATISTICAL SECTION 72 CITY OF SCHERTZ, TEXAS GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS TABLE 1 Fiscal General Public Streets Total Period Government Safety And Parks Health Other Expenditures* 1993 $ 741,305 $ 924,222 $ 373,213 $ 75,441 $ 479,836 $ 2,594,017 1994 744,801 978,121 308,126 80,494 645,063 2,756,605 1995 813,789 1,059,331 349,659 80,324 633,582 2,936,685 1996 886,090 1,174,371 304,722 85,685 1,5107303 3,961,171 1997 976,032 1,472,534 397,807 102,293 798,071 3,746,737 1998 1,063,835 1,702 b84 408,461 127,065 1,165,475 4,467,520 1999 1,306,500 2,023,379 806,029 142,287 2,142,364 6,420,559 2000 1,479,496 2,172,619 793 700 155,814 1,898,888 6,500,517 2001 1,668,235 2,561,055 627,110 1.75,048 1,710,880 6,742,328 2002 2,599,549 2,963 924 689,150 120,530 3,217,877 9,591,030 * Includes General, Special Revenue, and Debt Service Funds 73 CITY OF SCBERTZ, TEXAS GENERAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS TABLE 2 Charges Fiscal Licenses and for Fines and Period Taxes Permits Services Forfeits Other Total 1993 $ 1,895,333 $ 173,310 $ 327,434 $ 196,200 $ 112,248 $ 2,704,525 1994 2,109,202 145,229 343,731 195,964 195,320 2,989 446 1995 2,285,735 134,391 353,050 209,719 340,232 3,323,127 1996 2,38%765 394,841 375,767 317,403 244,638 3,722,414 1997 2,698,175 546,159 452,890 331,244 242,905 4,271,373 1998 3,168,926 610,943 472,366 343,943 654,095 5,250,273 1999 3,768,037 680,316 558,904 379,584 1,100,315 6,487,156 2000 4,088,491 731,488 626,464 444331 625,841 6,516,615 2001 4,452,964 620,652 659,145 749,201 499,921 6,981,883 2002 5,305,902 663,682 883,126 538,831 841,674 8,233,215 *Includes General, Special Revenue, and Debt Service Funds 74 CITY OF SCIIERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS TABLE 3 Fiscal Year Total Tax Levy Current Tax Collections * Percent of Current Levy Collected Delinquent Collections Total Tax Collections September30, 1993 $ 1,102,209 $ 1,083,800 98.3% $ 17,037 $ 1,100,837 September 30, 1994 1,212,063 1,192,569 98.4% 14,634 1,207,203 September 30, 1995 1,337,010 1,290,283 96.5% 13,280 1,303,563 September 30, 1996 1,360,548 1,342,990 98.7% 13,194 1,356,184 September 30, 1997 1,408,699 1,384,497 98.3% 18,639 1,403,136 September 30, 1998 1,600,008 1,565,295 97.8% 18,922 1,584,217 September 30, 1999 1,892,640 1,869,557 98.8% 42,720 1,912,277 September 30, 2000 2,198.381 2,153,542 98.0% 43,622 2,197,164 September 30, 2001 2,490,095 2,459,900 98.8% 39,687 2,499,587 September 30, 2002 3,163,819 3,107,209 98.2% 44,624 3,151,833 *Amounts for 2002 are exclusive of the effects of the annexations of GUADCO MUDS #1 and 42. 75 Ratio of Total Tax Collections Outstanding to Total Delinquent Tax Levy Taxes 99.9% $ 99.6% 97.5% 99.7% 99.6% 99.0% 102.3% 99.9% 100.4% 99.6% 85,876 71,161 81,404 89,860 97,394 111,856 1.06,230 95,438 11.1,817 135,701 Ratio of Delinquent Taxes to Total Tax Levy 7.8% 5.9% 6.1% 6.6% 6.9% 7.0% 5.6% 4.3% 4.5% 4.3% 76 CITY OF SCHERTZ, TEXAS ASSESSED AND TAXABLE VALUE OF PROPERTY LAST TEN FISCAL YEARS TABLE 4 Levy Year Fiscal Year Ended Estimated Actual Values Assessment Percentage Assessed Valuations Tax Rate Tax Levy 1992 09 -30 -93 $256,861,608 100 % $259,038,483 .4255% $ 1,102,209 1993 09 -30 -94 264,286,116 100% 258,766,426 .4684 % 1,212,063 1994 09 -30 -95 362,247,758 100% 312,676,505 .4275% 1,337,010 1995 09 -30 -96 346,130,091. 100% 334,122,763 .4072% 1,360.548 1996 09 -30 -97 369,917,233 100% 378,784,051 .3719% 1,408,699 1997 09 -30 -98 452,1.63,752 1.00% 450,199,212 .3554% 1,600,008 1998 09 -30 -99 545,742,286 100% 534,039,183 .3544% 1,892,640 1999 09 -30 -00 636,157,284 100% 636,157,284 .3456% 2,198,381 2000 09 -30 -01 731,305,433 100% 731,305,433 .3405% 2,490,095 2001 09 -30 -02 827,142,321 100% 827,142,321 .3825% 3,163,81.9 77 II CITY OF SCHERTZ, TEXAS PROPERTY TAX RATES - ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TABLE 5 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 78 City School County County Road 100% 100% 100% 100% Assessment Assessment Assessment Assessment Year ** Rate* Rate* Rate Rate 1993 .4255 1.4777 .3599 .0850 1994 .4684 1.4499 .3036 .0950 1995 .4275 1.3095 .2995 .0867 1996 .4072 1.3712 .3018 .0833 1997 .3719 1.4089 .2997 .0758 1998 .3554 1.4299 .3040 .0730 1999 .3544 1.6923 .3192 .0600 2000 .3455 1.4945 .3417 .0582 2001 .3405 1.6267 .3193 .0630 2002 .3825 1.7100 3499 .0420 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 78 CITY OF SCHERTZ, TEXAS RATIO OF NET GENERAL BONDED DEBT TO TAXABLE VALUE AND NET GENERAL BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Fiscal Year September 30, 1993 September 30, 1994 September 30, 1995 September 30, 1996 September 30, 1997 September 30, 1998 September 30, 1999 September 30, 2000 September 30, 2001 September 30, 2002 Estimated Assessed Net General Bonded Debt 12,000 $259038,486 $ 1,190,645 12,500 258,766,426 1,132,129 13,500 312,676,405 1,056,611 14,500 334,122,763 1,215,000 15,000 378,784,051 1,095,000 17,500 450,199,212 5,901,000 18,000 534,039,183 5,622,230 18,694 636,157,284 5,321,410 22,000 731,305,433 5,129,000 23,000 827,142,321 5,222,000 79 TABLE 6 Ratio Net of Net General Bonded Debt Bonded Debt To Assessed Per Capita .46 99.22 .43 90.57 .34 78.27 .36 83.79 .29 73.00 1.31 337.20 1.05 312.35 .84 284.66 .70 233.14 .63 227.04 CITY OF SCBERTZ, TEXAS COMPUTATION OF DIRECT AND OVERLAPPING DEBT YEAR ENDED SEPTEMBER 30, 2002 *Bexar County *Coma] County *Corral Independent School District *Guadalupe County *Schertz- Cibolo- Universal City Independent School District *San Antonio, RA *Alamo Community College District Total Net Overlapping Debt Net Bonded Debt $ 122,500,280 8,040,135 143,019,427 14,500,000 60,865,984 64,570,000 38,470,565 City of Schertz 10,297,926 TOTAL DIRECT AND OVERLAPPING DEBT (5.91% OF ASSESSED VALUE - 82,125 PER CAPITA) *Source of Data - Texas Municipal Reports, City of Schertz, Compiled and Published by Municipal Advisory Council of Texas EE Estimated Percent Applicable 1.65% 1.99% TABLE 7 Direct And Estimated Overlapping Bonded Debt $ 2,021,255 159,999 0.12 % 171,623 20.37% 2,953,650 51..88% 31,577,272 1.65% 1,065,405 1.65% 634,764 38,583,968 100.00% 10,297,926 $ 48,881,894 CITY OF SCHERTZ, TEXAS LEGAL DEBT MARGIN YEAR ENDED SEPTEMBER 30, 2002 I II. TABLE 8 ' Texas municipalities are not bound by and direct constitutional or statutory maximums as to the amount of , general obligation bonds which may be issued; however, all local bonds must be submitted to and approved by the State Attorney General. It is the established practice of the Attorney General not to approve a prospective bond issue if it will result in the levy of a tax for bonded debt of over $1.00 for cities under , 5,000 population or $1.50 for cities over 5,000 population. I Li L I C F I I I I I E 81 CITY OF SCHERTZ, TEXAS RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES LAST TEN FISCAL YEARS TABLE 9 * Includes General, Special Revenue, and Debt Service Funds 82 Ratio of Debt Debt Service to Fiscal Service General Year Principal Interest Total Expenditures* Expenditures September 30, 1993 $ 57,000 $ 42,830 $ 99,830 $ 2,594,017 3.9% September 30, 1994 58,000 97,493 155 493 2,756,605 5.6% September 30, 1995 85,000 74,1.39 159,139 2,936,945 5.4% September 30, 1996 341,000 87,098 428,098 3,961,171 10.8% September 30, 1997 120,000 65,540 185,540 3,746,737 5.0% September 30, 1998 124,000 58,916 182,916 4,467,520 4.1% September 30, 1999 278,770 303,468 582,238 6,420,559 11.00/0 September 30, 2000 300,820 286,435 587,225 6,500,517 9.0% September 30, 2001 192,410 269,942 462,352 6,742,328 6.9% September 30, 2002 577,000 289,792 866;792 9,591,030 9.00/0 * Includes General, Special Revenue, and Debt Service Funds 82 CITY OF SCBERTZ, TEXAS REVENUE BOND COVERAGE — UTILITY SYSTEM BONDS LAST TEN FISCAL YEARS Fiscal Operating Year Revenues September 30, 1993 $ September 30, 1994 September 30, 1995 September 30, 1996 September 30, 1997 September 30, 1998 September 30, 1999 September 30, 2000 September 30, 2001 September 30, 2002 1,617,768 1,997,654 1,967,127 2,390,600 2,879,730 3,316,900 3,250,589 3,958,054 4,260,109 4,663,584 83 TABLE 10 Total Operating Operating Expenses Income Before Before Depreciation Depreciation $ 1,387,165 $ 230,603 1,206,670 790,984 1,292,499 674,628 1,325,796 1,064,804 1,556,271 1,323,459 1,71 1,388 1,605,512 2,145,249 11105,340 2,717,774 1,240,280 3,115,427 1,144,682 3,061,327 1,602,257 M Number of Debt Service Requirements Customers Principal Interest Total Coverage Water Sewer $ 90,000 $ 128,672 $ 218,672 1.06:1 4.074 3,377 95,000 122,106 217,106 3.64:1 4,231 3,488 100,000 115,028 215,028 3.13:1 4,282 3;584 445,000 92,080 537,080 1.98:1 4,877 4,031 55,000 70,578 125,578 10.54:1 5,641 4,622 55,000 67,013 122,013 13.16:1 6,914 5,767 80,000 63,588 143,588 7.70:1 7,351 6,226 35,000 58,375 93,375 13.28:1 6,837 5,814 35,000 55,750 90,750 12.61:1 7,103 6,185 275,000 246,263 521,263 3.07:1 7,311 6,511 M CITY OF SCFIERTZ, TEXAS WATERWORKS AND SEWER SYSTEM FUNDS REVENUE BOND REQUIREMENTS YEAR ENDED SEPTEMBER 30, 2002 UTILITY SYSTEM REVENUE BONDS, SERIES 2001 Principal Payment, Due September 1, 2003 Interest Payment, Due March 1, 2003 Total Requirements TABLE 11 Annual Requirement Principal/ At Semi - Annual September 30, Interest Basis 2002 $ 285,000 1/12 th $ 23,750 118,457 1/6 th M743 $ 43,443 The City was in compliance with revenue bond requirements as of September 30, 2002 RESERVE FUND REQUIREMENTS The City is required to make monthly deposits sufficient to meet the total reserve fund requirement within sixty (60) months of the closing date for the 2001 issue. The City has purchased a surety bond through MBIA Insurance Corporation to meet the reserve fund requirement. 85 CITY OF SCBERTZ, TEXAS 1 DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS I TABLE 12 Source: (1) 2000 Bureau of the Census ' Department of Planning, University of Texas (2) Department of Economics, University of Texas ' United States Department of Labor (Information not Available for Odd Years) (3) Texas Workforce Commission (4) Texas Education Agency District Performance Report 86 1993 Level In 13,500 32 14 ' Per Years Of 1994 12,500 Est. Capita Median Formal School Unemployment 3.9 Fiscal Population Income Age Education Enrollment Rate in % ' Year (1) (2) (1) (1) (4) (3) Source: (1) 2000 Bureau of the Census ' Department of Planning, University of Texas (2) Department of Economics, University of Texas ' United States Department of Labor (Information not Available for Odd Years) (3) Texas Workforce Commission (4) Texas Education Agency District Performance Report 86 1993 12,000 Est. $ 13,500 32 14 4,700 3.9 1994 12,500 Est. 13,600 32 14 4,576 3.9 1995 13,500 Est. 13,600 32 14 4,678 3.9 ' 1996 14,500 Est. 13,600 32 14 4,841 3.9 1997 15,000 Est. 13,600 33 14 5,136 39 1998 17,500 Est. 16,500 32.6 14.6 5,951 3.9 ' 1999 18,000 Est. 16,500 32.6 14.6 5,777 3.9 2000 18,694 Act. 31,768 35.1 14.6 6,186 2.4 ' 2001 2002 22,000 Est. 23,000 Est. 36,478 36,478 35.1 35.1 14.6 14.6 6,440 6,440 2.4 2.4 Source: (1) 2000 Bureau of the Census ' Department of Planning, University of Texas (2) Department of Economics, University of Texas ' United States Department of Labor (Information not Available for Odd Years) (3) Texas Workforce Commission (4) Texas Education Agency District Performance Report 86 CITY OF SCHERTZ, TEXAS PROPERTY VALUE AND NEW CONSTRUCTION LAST TEN FISCAL YEARS TABLE 13 87 Commercial Residential Construction Construction Number Value Number Value 1993 9 $ 235,825 245 $ 22,537308 1994 21 4,868,688 92 8,323,846 1995 31 4,271,904 126 12,815,060 1996 25 14,758,928 468 48,959,088 1997 32 10,587,644 524 57,591,942 1998 22 1.7,173,013 537 60,529,538 1999 27 14,396,374 520 58,783,734 2000 21 13,169,373 353 43,092,362 2001 20 29,559,090 268 36,711,105 2002 21 14,091,596 328 36,517,687 Sources; City Building Inspection Records City Tax Records S. W. T. Research Center Schertz State Bank Surety Southwest State Bank & Trust 87 Property Value* Commercial Residential Nontaxable $ 31,626,493 $ 182,817,263 $ 5,360,890 33,775,788 216,454372 5,374,948 54,009,275 246,501,668 5,607,897 40,363,499 246,223,426 8,557,521 52,420,249 333,173,109 10,448,019 71,693,462 395,802,747 10,898,210 258,298,378 354,485,210 22,672,637 324,331,981 403,920,536 31,850,206 353,891,071 440,964,561 34,354,559 435,104,986 483,437,631 44,767,932 * Estimated Actual Value 0 CITY OF SCHERTZ, TEXAS PRINCIPAL TAXPAYERS YEAR ENDED SEPTEMBER 30, 2002 of Business Grocery Sales Banking Real Estate Apartment Complex Machine Fabricating Industrial Industrial Real Estate Utility Concrete 89 TABLE 14 2001 Principal Taxpayers Assessed Total Assessed 1. H E Butt Grocery Co 2. S.P. Richards Co. 3. C & W Ranches, LTD 4. Sycamore Apartments LTD 5. PSPI, Inc. 6. Negley Paint Co. 7. AER Manufacturing 8. CMH Parks 9. Guadalupe Valley Electric 10. Torres Bros. Concrete Other Assessed Properties .41 TOTAL ASSESSMENTS of Business Grocery Sales Banking Real Estate Apartment Complex Machine Fabricating Industrial Industrial Real Estate Utility Concrete 89 TABLE 14 2001 Percentage Of Assessed Total Assessed Valuation Valuation $ 9344,547 1.13% 8,292,873 1.00 6,027,928 .73 5,003,434 .60 4,348,226 .53 4,002,737 .48 3,634,658 .44 3,414,245 .41 3,392,800 .41 3,000,000 .36 776,680,873 93.91 $ 827,142,321 100.00% CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 2002 TABLE 15 Date of Incorporation: December, 1958 Date of First Charter Adopted: April, 1974 Date Present Charted Adopted: Amended May, 1997 Form of Government:. Council- Manager Year Square Miles 2002 26.02 2001 24.18 2000 24.18 1999 24.15 1998 24.15 1997 24.15 1996 24.15 1995 24.15 1994 24.15 1993 24.15 Miles of Highways, Streets, and Alleys Streets and Highways, Paved 100.42 Miles Streets, Unpaved 8.98 Miles Alleys 3.44 Miles Sidewalks 16.95 Miles Miles of Sewer: Storm 4.08 Miles Sanity 53.87 Miles Building Permits: Value Of Year Permits Issued Buildings 2002 2,812 $50,609,283 2001 2,754 70,912,183 2000 3,716 61,864,013 1999 3,690 76,501,638 1998 3,767 82,800,348 1997 3,373 71,741,172 1996 2 „559 64,267,503 1995 2,066 21,150,682 1994 2,771 18,917,416 1993 2,167 27,705,848 Continued go CITY OF SCBERTZ, TEXAS MISCELLANEOUS STATISTICS (CONTINUED) SEPTEMBER 30, 2002 Fire Protection: Number of Stations Number of Employees (Full and Part -Time) Number of Volunteers Recreation: Parks Playgrounds Other Recreational Facilities: Baseball Fields Baseball Practice Fields Softball Fields Large Pavilion Small Pavilion Picnic Tables: Uncovered Restrooms: Male Female Concessions Stands Community Center City. Employees: September 30, 2002 Elections: Number of Registered Voters Number of Votes in: Last Municipal Election Percentage of Registered Voters Voting in: Last Municipal Election Source: Municipal Election Records Population: Census Population Count 2002 2001 (Estimate) 2000 1999 (Estimate) 1998 (Estimate) 1997 (Estimate) 1990 1980 1970 1960 1950 91 TABLE 15 21 5 7 117 3 3 2 10,000 Square Feet Covered 600 Square Feet Covered 50 194 12,391 445 3.9% 23,000 22,000 18,694 18,000 17,500 15,000 10,597 7,260 4,061 2,281 1,200 CITY OF SCHERTZ, TEXAS HISTORICAL TREND INFORMATION FOR AGENT MULTIPLE- EMPLOYER PUBLIC EMPLOYEE RETIREMENT SYSTEM LAST EIGHT FISCAL YEARS TABLE 16 Legend: PBO: Pension Benefit Obligation UAAL: Unfunded Actuarial Accrued Liability Information is being developed prospectively. 92 UAAL Employer Net Assets As a As a Percentage Contributions Calendar Percentage of of Covered As a Percentage Year PBO Payroll of Covered Payroll 1994 36.51% 30.18% 4.97% 1995 47.05% 30.97% 5.09% 1996 50.75% 25.09% 5.46% 1997 55.94% 28.08% 5.28% 1998 53.26% 36.03% 7.20% 1999 56.40% 40.10% 7.55% 2000 62.40% 35.40% 7.80% 2001 67.70% 30.10% 8.33% Legend: PBO: Pension Benefit Obligation UAAL: Unfunded Actuarial Accrued Liability Information is being developed prospectively. 92 ARMSTRONG, VAUGHAN & ASSOC., P.C. ................................................................... ............................... CERTIFIED PUBLIC ACCOUNTANTS REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERN41ENTA UDITING STANDARDS The Honorable Mayor and Members of the City Council City of Schertz, Texas We have audited the financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 2002, and have issued our report thereon dated December 18, 2002. 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. Compliance As part of obtaining reasonable assurance about whether the City of Schertz, Texas, general - purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material affect on the determination of the 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 that are required to be reported under Government Auditing Standards. Internal Compliance Over Financial Reporting In planning and performing our audit, we considered the City of Schertz, Texas, internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general - purpose financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgement, could adversely affect the City of Schertz, Texas' ability to record, process, summarize and report financial data consistent with the assertions of management in the general purpose financial statements. Reportable conditions are described as follows: Reconciliation Procedures: The City does not currently have in place procedures to ensure that trial balance control totals are compared to subsidiary records on a periodic basis. The effect of the reportable condition is that errors continue to accumulate in balance sheet accounts and interim period reports of revenues and expenditures compared to budgeted amounts are inaccurate. Balance sheet accounts that are affected are accounts receivable, accounts payable, and prepaid payroll expenses and benefits. 489 KITTY HAWK, SUITE 118 • UNIVERSAL CITY, TEXAS 78148 • (210) 658-6229 • FAX (210) 859 -7611 • w .RVE pa.wm 93 I A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we consider the reportable condition described above to be a material weakness. We also noted other matters involving the internal control over financial reporting that we have reported to management of the City of Schertz, Texas, in a separate letter dated December 18, 2002. This report is intended solely for the information and use of the audit committee, management, others within the organization, and City Council and is not intended to be and should not be used by anyone other than these specified parties. Arm4tra tgs Vaugta*i/Er Abboc., P.C. Armstrong, Vaughan & Assoc., P.C. December 18, 2002 I 1 This page intentionally left blank