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CAFR FY 2012-2013CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2013 OFFICIALS ISSUING REPORT John C. Kessel City Manager Juan F. Santoya, Jr. Director of Finance rr CITY OF SC0FD{TZ,TEXA8 TABLE 0PCONTENTS SEPTEMBER 3O,2013 INTRODUCTORY SECTION ......................................................................................................... iii LETTER [)F TRANSMITTAL ----------------------------------------iv CITYOFFICIALS ............................................................................................................................................ ir ORGANIZATIONAL CruAu/ ----------------------------------------.x CERTIFICATE OF ACHIEVEMENT ------------------------------------.xi FINANCIAL SECTION B/\8[C FINANCIAL STATEMENTS ------------------------------------|4 STATl�D�By�T(}FyJET9()SlTl(}�� .]5 STATEMENT ()F ACTIVITIES ................................................................................................................. 17 BALANCE SHEET - GOVERNMENTAL FDN[)S---------------------------' 19 RECONCILIATION OF BALANCE SHEET ............................................................................................. 2] STATEMENT {)FREVENUES, EXPENDITURES, /\ND CHANGES IN FUND BALANCES - 9LNlJS.................................................................................................................... 22 RECONCILIATION OF THE STATEMENT OF REVENUES, GOVERNMENTAL FUNDS TO THE STATEMENT (}9 ACTIVITIES ...................................................................................................... 24 STATEMENT [)F NET POSITION - PROPRIETARY FUNDS ................................................................ 25 STATEMENT (}F REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS .......................................................................................................................... 27 NOTES TO BASIC FINANCIAL STATEMENTS ........................................................................................ 30 SCl{E[DJLB OF QB\/ENLUBB` EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND ...................................................................................... 54 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ECONOMIC DEVELOPMENT CORPORATION '''''''''''----'56 NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES BN FUND BALANCE - BUDGET AND ACTUAL .'''''''''''''''''''''''''''''''''''''''------57 TEXAS MUNICIPAL RETIREMENT SYSTEM - ANALYSIS OF FUNDING PROGRESS .................. 50 SUPPLEMENTARY INFORMATION -----------------------------------. 59 COMPARATIVE BALANCE SHEETS - GENERAL FUND .................................................................... 60 STATEMENTS COMPARATIVE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE -GENERAL FUND-------------------------------------6| COMPARATIVE BALANCE SHEETS - ECONOMIC DEVELOPMENT C()llP{)B/\TT()N------ 62 COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND i CITY OF SC0FD{TZ,TEXA8 TABLE OF CONTENTS (CON7UNUBD SEPTEMBER 3O,2013 FINANCIAL SECTION (Continued) PAGE COMPARATIVE BALANCE SHEETS - DEBT SERVICE FUND ........................................................... 04 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - FUND BALANCES - GOVERNMENTAL FUNDS .............................................................................................. BUDGET TO ACTUAL - DEBT SERVICE FUND ................................................................................... 65 COMPARATIVE BALANCE SHEETS - CAPITAL PROJECTS FUND .................................................. U0 COMPARATIVE STATEMENTS (]F REVENUES, EXPENDITURES AND CHANGES IN FUND TOTAL WATER AND SEWER CONSUMPTION AND RATES .......................................................... BALANCE - CAPITAL PROJECTS FUND ''''''''''''''''''''''''''''''''''''''''''''''67 PRINCIPAL WATER AND SIIWBI( C()N8LUMBRL5 - ASSESSED VALUE AND ESTIMATED COMBINING BALANCE SHEET -N(]NMA}0ll GOVERNMENTAL FUNDS '''''''''''''''--68 ACTUAL VALUE ()P TAXABLE PROPERTY ........................................................................................ 93 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES —N(}NMAJ(]fl GOVERNMENTAL FUNDS ''''''''''''''''''''''''''''''''''7O 95 SCHEDULE UF REVENUES, EXPENDITURES, AND CHANGES DN FUNDllAlANCE - BUDGET 7O ACTUAL - HOTEL OCCUPANCY FUND '''''''''''''''''''''''''''''''''''72 97 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES QN FUNDDAL/QNCE - 90 BUDGET 1FO ACTUAL -PARK FUND '''''''''''''''''''''''''''''''''''''''''''''''''73 100 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES lN FUND BALANCE - BUDGET 7O ACTUAL - TREE MITIGATION FUND '''''''''''''''''''''''''''''''''''''74 102 SCHEDULE UF REVENUES, EXPENDITURES, AND CHANGES UN FUNDllAlANCE - BUDGET 7F0 ACTUAL - POLICE FORFEITURES FUND .'''''''''''''''''''''''''''''''''75 ]O4 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES 0N FUND BALANCE - |05 BUDGET 7O ACTUAL -LIBRARY ADVISORY BOARD '''''''''''''''''''''''''''''''''76 106 SCHEDULE 0F REVENUES, EXPENDITURES, AND CHANGES 0N FUND BALANCE - BUDGET 7O ACTUAL - HISTORICAL COMMITTEE FUND ............................................................ 77 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES /N FONDQALANCE - SECTION NET POSITION, R}, COMPONENT ------------------------------------0O CHANGE INY�BTPOS|Tl()N 02 FUND BALANCES - GOVERNMENTAL FUNDS .............................................................................................. 80 CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS .............................................................. 08 TAX REVENUE BY S()O}lCB— GOVERNMENTAL FUNDS ................................................................... 90 TOTAL WATER AND SEWER CONSUMPTION AND RATES .......................................................... 9| PRINCIPAL WATER AND SIIWBI( C()N8LUMBRL5 - ASSESSED VALUE AND ESTIMATED ACTUAL VALUE ()P TAXABLE PROPERTY ........................................................................................ 93 DIRECT AND OVERLAPPING PROPERTY TAX RATES -----------------------'94 PRINCIPAL PROPERTY TAX PAYERS ...................................................................................................... 95 PROPERTY TAX LEVIES AND COLLECTIONS -----------------------------96 TAXABLE ASSESSED VALUE .................................................................................................................... 97 RATIOS [/F OUTSTANDING DEBT BY TYPE .......................................................................................... 90 RATIOS OF GENERAL BONDED DEBT OUTSTANDING ............................................................... 100 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT - DEBT MARGIN INFORMATION 102 PLEDGED REVENUE COVERAGE .'''''''''''''''''''''''''''''''''''''''''''''''''''''l03 DEMOGRAPHIC AND ECONOMIC STATISTICS ................................................................................... ]O4 TOP TEN PRINCIPAL EMPLOYERS ......................................................................................................... |05 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION ....................... 106 d CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS (CONTINUED) SEPTEMBER 30, 2013 STATISTICAL SECTION (Continued) PAGE OPERATING INDICATORS BY FUNCTION/PROGRAM ....................................................................... 107 CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM .................................................................. 109 COMPLIANCE SECTION REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .................................................. 112 iii INTRODUCTORY SECTION III January 20, 2014 To the Honorable Mayor, City Council, and the Citizens of City of Schertz: State law requires that local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP) and audited in accordance with generally accepted auditing standards in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Schertz for the fiscal year ended September 30, 2013. This report consists of management's representations concerning the finances of the City of Schertz. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Schertz has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Schertz's financial statements in conformity with U.S. GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Schertz comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Schertz's financial statements have been audited by Armstrong, Vaughan & Associates P.C. a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Schertz for the fiscal year ended September 30, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Schertz's financial statements for the fiscal year ended September 30, 2013, are fairly presented in conformity with U.S. GAAP. The independent auditor's report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement MD &A and should be read in conjunction with it. The City of Schertz's MD &A can be found immediately following the report of the independent auditors. 1400 Schertz Parkway Schertz, Texas 78154 210.6191000 schem,mcoi,n iv Profile of the Government The City of Schertz, incorporated in 1958, is located in the central part of Texas, which is considered to be a top growth area in the state, and one of the top growth areas in the country. The City of Schertz currently occupies a land area of 32.1 square miles and serves a population of 35,201. The City of Schertz is empowered to levy a property tax on both real and personal properties located within its boundaries. It also is empowered by state statue to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the governing body. The City of Schertz has operated under the council - manager form of government since 30 November 1972. Policymaking and legislative authority are vested in a City Council consisting of the mayor and 5 other members. The City Council is responsible for establishing public policy on City matters by the passage of appropriate ordinances and resolutions. The City Manager is responsible for overseeing the day -to -day operations of the government, implementing policy established by City Council, and for appointing the heads of the various departments. The council is elected on a non - partisan basis. Council members serve two -year staggered terms, with two council members elected every two years. The mayor is elected to serve a two -year term. The mayor and all five council members are elected at large. The City of Schertz provides a full range of services, including police and fire protection, the construction and maintenance of streets, recreational facilities, cultural events, water and sewer services and EMS services. The annual budget and five -year forecast serve as the foundation for the City of Schertz's financial planning and control. All departments of the City of Schertz are required to submit requests for appropriation to the City Manager by June of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the council for review prior to 1 August. The council then holds public hearings and community meetings on the proposed budget and to adopt a final budget by no later than September 30th, the close of the City of Schertz's fiscal year. The appropriated budget is prepared by each department (e.g. police). Department heads may make transfers of appropriations within a department. The City Manager may make transfers between departments and funds with City Council approval. Budget to actual comparisons are provided in this report for each individual . governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on pages 54 -55 as part of the required supplementary information. Factors Affecting Financial Condition. The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Schertz operates. v Local economy. The City of Schertz enjoys a favorable economic environment and indicators point to continued growth. SYSCO completed their 630,000 square foot distribution facility in January 2012 and employs 600 full -time staff. This is a regional distribution center for SYSCO. Amazon.com completed construction of their $166 million fulfillment center on 96 acres in Schertz in time for the 2013 holiday season. The fulfillment center has 1.26 million square feet and is the largest facility in Schertz and in Guadalupe County. The new fulfillment center is expected to have 350 new full -time jobs with an annual payroll of $11 million. General Electric purchased Salof Companies which designs and manufactures small scale liquefied natural gas technologies and occupies a 390,935 square foot facility in Schertz. The purchase of Salof will allow General Electric to expand their capabilities in the liquefied natural gas industry. Baptist Emerus Emergency Hospital completed construction on its new $1.1 million facility in April 2013. Businesses with headquarters or divisions located within the city or in close proximity include Vision Works, Brandt Engineering, Cal -Tex Protective Coatings, Inc., CST Distribution which was formerly Valero, FedEx Freight, Marshall Shredding Company, Kraft Nabisco, Republic National Distributing Company, Caterpillar, Wal -Mart, and H.E.B. The region has a manufacturing and industrial base that adds to the relative stability of the unemployment rate, which was 4.7% in November 2013. The region has a labor force of approximately 325,000 and this number is expected to increase in the next several years as the region continues to experience population and business growth. Local indicators point to a strong and growing housing market. The City planned well and has an abundant water supply for meeting its future growth. Long -term financial planning. The community approved bond propositions in November 2010 for quality of life projects which included a swimming pool, improvements to the baseball fields and soccer fields, building an animal adoption facility, and improvements to Main Street. The animal adoption facility is scheduled to be completed in March 2014. . Design work was completed for the baseball and soccer fields. The baseball fields should be completed in spring 2014. Completion of the soccer fields is scheduled for the latter part of 2014. In 2006, the citizens approved bond propositions for $38.5 million in streets and drainage improvements, a new library and additional recreational facilities. The library, recreation center were completed. Most of the streets and drainage projects have been completed. Financial Information Internal Control. Management is responsible for establishing and maintaining internal controls designed to ensure that assets of the City are protected from loss, theft or misuse and to provide adequate accounting information compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles for local governments as prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). The internal control system is designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of an internal control should not exceed the benefits derived from the internal control. The City utilizes financial accounting software which is designed with a system of internal controls. These controls are continually being reevaluated to provide reasonable, but not absolute, assurances. vi Budget Controls. The City also utilizes budgetary controls. Legally expenditures cannot exceed the appropriated amount. The objective of these budgetary controls is to ensure compliance with the adopted budget approved by the City Council as mandated by the city charter and state law. The levels of budgetary control are established at the line -item basis and at the fund level. Cash management policies and practices. During the year, temporarily idle cash was invested through State local investment pools. Cash available for longer term investments was invested in agency bonds and certificates of deposit. Cash in the State local investment pools are essentially liquid. Longer term investments had an average maturity of 2 years. The average yield on investments was .38 percent. Active involvement in investment instruments was limited due to the continuation of extremely low interest rates and market uncertainty. The rate of return was simply not sufficient to justify the management expense. Risk Management. During 2013, the City continued a risk management program for worker's compensation. Various control techniques, including employee accident prevention training, have been implemented during the year to minimize accident - related losses. Third -party coverage is currently maintained for individual worker's compensation claims and all other potential losses. Additional information on the City of Schertz's risk management activity can be found in the notes to the financial statements. Pension benefits. The City of Schertz sponsors an agent multiple - employer defined benefit pension plan for its employees. Each year, an independent actuary engaged by the pension plan calculates the amount of the annual contribution the City of Schertz must make to the pension plan to ensure the plan will be able to fully meet its obligations to retired employees on a timely basis. As a matter of policy, the City of Schertz fully funds each year's annual required contribution to the pension plan as determined by the actuary. The remaining unfunded amount is being systematically funded as part of the annual required contribution calculated by the actuary. Other Financial Information: Independent Audit. An independent audit is performed every year of the general ledger, accounts, financial records, and transactions of all city departments. The audit is completed by an independent certified public accounting firm selected by the City Council. The City is in compliance with this requirement and the independent auditor's report by Armstrong, Vaughan, P.C. Certified Public Accountants, has been included in this report. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Schertz for its comprehensive annual financial report for the fiscal year ended September 30, 2012. This was the 28th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. vli A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. In addition, without the assistance of each and every department head on staff, we would have none of the successes we've enjoyed. Credit also must be given to the Mayor and the City Council for their unfailing support for the City Manager and staff. Respectfully submitted, 00�voor John C. Kessel City Manager Viii I►A�:�__zo . 9 me] I I a Ll CITY COUNCIL CITY MANAGER I pi 1 114 "s]Zeym "10 :WI CITY ATTORNEY CITY OF SCHERTZ, TEXAS CITY OFFICIALS MICHAEL CARPENTER. I I 1034 6 11911,5 /_0W" DAVID SCAGLIOLA CEDRIC EDWARDS, SR. C-- �] i-1f/_\,0i1118►L0 SYDNEY VERINDER JOHN C. KESSEL JUAN F. SANTOYA, JR. KATHERINE TAPLEY, NORTON ROSE FULBRIGHT I_3RyClY ZG),[f'> MA iZ0 - 1E\`►11f:?./_F.Y.Y074 FENIM ix • *Appointed by City Council Government Finance OfficersAssociation ffmli- _r___ Comprehensive Annual _ for the Fisc at Year Ended Executive DimctoUM xi FINANCIAL SECTION SHAREHOLDERS: Nancy L. Vaughan, CPA Deborah F. Fraser, CPA To the Honorable Mayor and Members of the City Council City of Schertz, Texas Armstrong, Vaughan & Associates, 0 Certified Public Accountants Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of City of Schertz, as of and for the year ended September 30, 2013, and the related notes to the financial statements, which collectively comprise City of Schertz's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements City of Schertz's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 941 NVest Byrd Blvd:; Suite 101 • Universal City, Texas 7814£ Phone: 210 - 658 -6229 • Fax: 210 -659 -7611 • Email: vaughan @avacpa.com 0 www.avacpa cony Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of City of Schertz, as of September 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management's discussion and analysis, budgetary comparison information, and schedule of funding progress, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. The budgetary comparison information is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. We have applied certain limited procedures to the management's discussion and analysis and schedule of funding progress in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on management's discussion and analysis and schedule of funding progress because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise City of Schertz's basic financial statements. The combining and individual nonmajor fund financial statements, introductory section, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 20, 2014 on our consideration of City of Schertz's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Schertz's internal control over financial reporting and compliance. Armstrong, Vaughan & Associates, P.C. January 20, 2014 29 MANAGEMENTS DISCUSSION AND ANALYSIS As management of the City of Schertz, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City of Schertz for the fiscal year ended September 30, 2013. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found in the introductory section of this report. Financial Highlights The assets of the City of Schertz exceeded its liabilities at the close of the most recent fiscal year by $137.0 million (net position). Of this amount, $18.6 million (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. The City's total net position increased by $7.8 million. A significant portion of this increase, 36 %, is attributable to capital contributions from developers. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $30.3 million, an increase of $3.0 million in comparison with the prior year. At the end of the fiscal year, the combined total of the General Fund assigned and unassigned fund balances was $4.8 million which is 23% of the general fund expenditures not including capital outlay. The fund balance policy is to have a 25% balance. During the fiscal year, the City issued $1.635 million in tax notes for a new fire truck and P25 compliant radios. The related principal and interest payments for the debt are from an annual ad valorem tax levied against all taxable property within the City. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements comprise three components: 1) government -wide financial statements, 2) fiend financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private- sector business. The statement of net position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Schertz is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Schertz that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Schertz include general government, public safety, streets and parks, health, and culture and recreation. The business -type activities of the City of Schertz include a water and sewer department and an emergency medical services department. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Schertz, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. The funds of the City of Schertz can be divided into two categories: governmental and proprietary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government - wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental fiends with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long -term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Schertz maintains eleven individual governmental funds. Information is presented separately in the governmental fiend balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, the economic development corporation and the capital projects fund, all of which are considered to be major funds. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fiend data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds. The City of Schertz maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business -type activities in the govermnent -wide financial statements. The City of Schertz uses enterprise fiends to account for its water and sewer department and for its emergency medical services department. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer department and for the emergency medical services department, both of which are considered to be major funds of the City of Schertz. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. 0 Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's general fund budgetary schedule. The City of Schertz adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. The economic development corporation also adopts an annual budget, and a comparison schedule for it also is provided in the required supplementary information. The combining statements referred to earlier in connection with non -major governmental funds are presented immediately following the required supplementary information. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Schertz, assets exceeded liabilities by $137.0 million at the close of the most recent fiscal year. The largest portion of the City's total net position (81 %) reflects its net investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding, plus bond proceeds that have not yet been signed. The City of Schertz uses these capital assets to provide services to citizens; consequently, these assets are not available for operational type of future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's total net position (6 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $18.6 million, may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Schertz is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. TABLE A -1. NET POSITION 0 Governmental Activities Business -Type Activities Total 2013 2012* 2013 2012 2013 2012* Current and Other Assets $ 34,732,826 $ 32,263,109 $ 15,115,524 $ 14,882,981 $ 49,848,350 $ 47,146,090 Capital Assets 102,042,076 101,396,956 61,785,399 59,257,605 163,827,475 160,654,561 Total Assets 136,774,902 133,660,065 76,900,923 74,140,586 213,675,825 207,800,651 Deferred Outflows 423,735 465,508 112,125 126,593 535,860 592,101 Current Liabilities 6,585,918 5,989,398 3,195,714 2,829,343 9,781,632 8,818,741 Long -Term Liabilities 58,635,329 60,694,942 8,843,216 9,699,034 67,478,545 70,393,976 Total Liabilities 65,221,247 66,684,340 12,038,930 12,528,377 77,260,177 79,212,717 Net Investment in Capital Assets 57,543,618 56,616,809 53,071,836 50,161,157 110,615,454 106,777,966 Restricted 7,788,354 5,361,185 - - 7,788,354 5,361,185 Unrestricted 6,645,418 5,463,239 11,902,282 11,577,645 18,547,700 17,040,884 Total Net Position $ 71,977,390 $ 67,441,233 $ 64,974,118 $ 61,738,802 $ 136,951,508 $ 129,180,035 *2012 has been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). 0 The government's net position increased by $7.8 million during the current fiscal year. Thirty -seven percent of this increase represents capital contributions from developers. The following table indicates changes in net position for governmental and business -type activities followed by graphs displaying total revenues and expenses by type: TABLE A -2 CHANGES IN NET POSITION FOR GOVERNMENTAL AND BUSINESS -TYPE ACTIVITIES CHANGE IN NET POSITION $ 4,536,157 $ 2,565,462 $ 3,235,316 $ 2,458,491 $ 7,771,473 $ 5,023,953 TOTAL REVENUES- GOVERNMENT -WIDE $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Charges for Services Capital Grants and Contributions Other Taxes Miscellaneous Operating Grants and Contributions Property Taxes Unrestricted Investment Earnings ®20t3 ®201 Governmental Activities Business -Type Activities Total Revenues: 2013 2012 2013 2012 2013 2012 Program Revenues: Charges for Services $ 7,123,922 $ 6,659,050 $ 22,155,927 $ 20,972,682 $ 29,279,849 $ 27,631,732 Operating Contributions 603,159 764,997 - - 603,159 764,997 Capital Contributions 1,531,740 1,178,573 1,301,235 828,853 2,832,975 2,007,426 General Revenues Property Taxes 12,359,146 11,298,204 - - 12,359,146 11,298,204 Other Taxes 11,851,864 10,114,800 - - 11,851,864 10,114,800 Investment Earnings 54,270 60,265 53,089 36,409 107,359 96,674 Miscellaneous 505,342 621,560 664,521 666,645 1,169,863 1,288,205 Total Revenues 34,029,443 30,697,449 24,174,772 22,504,589 58,204,215 53,202,038 Expenses: General Government 7,283,947 8,030,600 - - 7,283,947 8,030,600 Public Safety 9,600,762 9,103,676 - - 9,600,762 9,103,676 Public Environment 3,622,834 3,586,087 - - 3,622,834 3,586,087 Parks and Recreation 1,807,559 1,425,517 - - 1,807,559 1,425,517 Cultural 907,676 899,487 - - 907,676 899,487 Health 344,647 357,658 - - 344,647 357,658 Administration 2,136,625 2,415,696 - - 2,136,625 2,415,696 Interest and Other Fees 3,340,951 2,250,972 - - 3,340,951 2,250,972 Water and Sewer - - 16,954,871 16,349,967 16,954,871 16,349,967 EMS - - 3,959,445 3,758,425 3,959,445 3,758,425 Total Expenses 29,045,001 28,069,693 20,914,316 20,108,392 49,959,317 48,178,085 INCREASE IN NET POSITION BEFORE TRANSFERS 4,984,442 2,627,756 3,260,456 2,396,197 8,244,898 5,023,953 Transfers (448,285) (62,294) (25,140) 62,294 (473,425) - CHANGE IN NET POSITION $ 4,536,157 $ 2,565,462 $ 3,235,316 $ 2,458,491 $ 7,771,473 $ 5,023,953 TOTAL REVENUES- GOVERNMENT -WIDE $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Charges for Services Capital Grants and Contributions Other Taxes Miscellaneous Operating Grants and Contributions Property Taxes Unrestricted Investment Earnings ®20t3 ®201 10,000,000 9,000,000 8,000,000 7,000,000 6,000, 000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 TOTAL EXPENSES - GOVERNMENT -WIDE General Public Safety Public Parks and Cultural Health Interest and Government Environment Recreation Administration Other Fees Revenues- Governmental Activities (Continued) General Revenue by Source -Governmental Activities Miscellaneou 3% Occupancy Tax 2% Franchise Tax 9% Investment Earning4 0% 0 WoPropertyTax59% Business -Type Activities Business -Type activities accounted for 42% of the growth in the net position of the City of Schertz. Of this increase, 17% is the result of capital contributions from developers. For the most part, increases in expenses closely paralleled inflation and the change in revenues was primarily related to fluctuations in capital contributions from developers. 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2013 2012 Water and Sewer Utilities EMS 10 ® Program Revenue ®Program Expense ONonoperating Revenues 0 Capital Contributions and Transfers Financial Analysis of the Government's Funds As noted earlier, the City of Schertz uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $30.3 million. Of this total amount, $4.2 million constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is non - spendable, restricted, or assigned to indicate that it is not available for new spending because it has already been committed to pay debt service, for capital improvement projects, and other assigned purposes. The general fund is the chief operating fund of the City of Schertz. At the end of the current fiscal year, unassigned fund balance of the general fund was $4.2 million, while total fund balance was $6.0 million, an increase of $2.0 million from the prior year. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fiend balance to total fund expenditures. Unassigned fund balance represents 20% of total general fund expenditures, not including capital. The debt service fund has a total fund balance of $0.5 million all of which is restricted for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $0.3 million. The capital projects fund has a total fund balance of $16.4 million, a decrease of $1.0 million. Some new tax notes were issued during the year but expenditures from prior voter approved bond issuances exceeded these proceeds. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net position of the water and sewer fund at the end of the year amounted to $11.1 million and those for the Schertz EMS fund amounted to $0.7 million. General Fund Budgetary Highlights The General Fund expenditures were $855,000 less than the $21.6 million budget. This was the result of cost savings across most of the General Fund. The only department significantly over budget was legal. Revenues were higher by $1.1 million than budgeted. Overall, the fiend balance increased by $1.7 million higher than budgeted. The original budget was amended during the year to increase total expenditures by less than 1 %. 11 CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The City's investment in capital assets for its governmental and business -type activities as of September 30, 2013, amounts to $164 million (net of accumulated depreciation). Developers contributed $1.5 million in streets and drainage improvements during the year. The City also has several projects in progress from voter approved bonds. Additional information on the City's capital assets can be found in the note 6 to the basic financial statements. TABLE A -3 CAPITAL ASSETS (Net of Depreciation) Long -Term Debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $70.6 million. Of this amount, $68 million comprises debt backed by the full faith and credit of the government. The remainder of the City's debt represents bonds secured solely by specified revenue sources, i.e., revenue bonds. During the fiscal year, the City issued $1.635 million in tax notes for a new fire truck and P25 compliant radios for police, fire and EMS. The related principal and interest payment for the bonds are from an annual ad valorem tax levied against all taxable property within the City. The City of Schertz maintains a "AA" rating from Standard and Poors. Additional information on the City's long -term debt can be found in note 9 to the basic financial statements. Governmental Business -Type Activities Activities Total 2013 2012 2013 2012 2013 2012 Land $ 7,445,117 $ 7,442,117 $ 1,254,524 $ 910,413 $ 8,699,641 $ 8,352,530 Buildings and Improvements 35,471,337 35,037,432 79,836,578 76,417,848 115,307,915 111,455,280 Machinery, Equipment, 2,215,000 2,355,000 Tax Notes and Leases 2,177,398 835,190 130,000 190,000 and Vehicles 6,354,680 6,121,702 3,051,206 2,787,698 9,405,886 8,909,400 Infrastructure 81,758,702 80,129,133 - - 81,758,702 80,129,133 Construction in Progress 3,161,422 751,277 365,904 84,996 3,527,326 836,273 Accumulated Depreciation (32,149,182) (28,084,705) (22,793,058) (20,943,350) (54,942,240) (49,028,055) TOTALS $102,042,076 $ 101,396,956 $ 61,715,154 $ 59,257,605 $ 163,757,230 $160,654,561 Long -Term Debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $70.6 million. Of this amount, $68 million comprises debt backed by the full faith and credit of the government. The remainder of the City's debt represents bonds secured solely by specified revenue sources, i.e., revenue bonds. During the fiscal year, the City issued $1.635 million in tax notes for a new fire truck and P25 compliant radios for police, fire and EMS. The related principal and interest payment for the bonds are from an annual ad valorem tax levied against all taxable property within the City. The City of Schertz maintains a "AA" rating from Standard and Poors. Additional information on the City's long -term debt can be found in note 9 to the basic financial statements. 12 Governmental Business -Type Activities Activities Total 2013 2012 2013 2012 2013 2012 General Obligation Bonds $ 58,060,000 $ 60,205,000 $ 2,120,000 $ 2,405,000 $ 60,180,000 $ 62,610,000 Certificates of Obligation 801,767 1,581,300 5,048,233 5,383,700 5,850,000 6,965,000 Revenue Bonds - - 2,215,000 2,355,000 2,215,000 2,355,000 Tax Notes and Leases 2,177,398 835,190 130,000 190,000 2,307,398 1,025,190 TOTALS $61,039,165 $62,621,490 $ 9,513,233 $10,333,700 $70,552,398 $72,955,190 12 Economic Factors and Next Year's Budgets and Rates During the current fiscal year, unassigned fund balance in the general fund increased to $4,206,735. The City of Schertz has not appropriated any portion of this amount for spending in the 2014 fiscal year budget. The intention is to build up the unassigned fund balance to 3 to 6 months of operating expenses. The City implemented a 5 -year forecast in budget year 2013 -2014 and the water and sewer rates are expected to remain stable for the next five years. Requests for Information This financial report is designed to provide a general overview of the City's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Finance Director, City of Schertz, 1400 Schertz Parkway, Schertz, Texas 78154. 13 rr BASIC FINANCIAL STATEMENTS 14 ASSETS Current Assets: Cash and Cash Equivalents Investments Receivables (net of allowances) Delinquent Taxes Accounts and Other Accrued Interest Income Prepaid Expenses Inventories Internal Balances Total Current Assets Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents Investments Note Receivable Capital Assets: Land Water Rights Buildings and Improvements Equipment and Vehicles Infrastructure Construction in Progress Accumulated Depreciation Total Noncurrent Assets TOTAL ASSETS CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2013 Primary Government Governmental Business -Type Activities Activities Total $ 1,303,244 10,981,620 2,361,336 2,064,250 1,197 754,443 50,768 (488,397) 17,028,461 387,795 17,196,490 120,080 7,445,117 35,471,337 6,354,680 81,758,702 3,161,422 (32,149,182) 119,746,441 $ 1,152,953 1,773,882 3,304,479 3,1.02 1,950 128,385 488,397 6,853,148 785,349 7,477,027 1,254,524 70,245 79,836,578 3,051,206 365,904 (22,793,058) 70,047,775 $ 2,456,197 12,755,502 2,361,336 5,368,729 4,299 756,393 179,1.53 23,881,609 1,173,144 24,673,517 120,080 8,699,641. 70,245 1.1.5,307,915 9,405,886 81,758,702 3,527,326 (54,942,240) 189,794,216 136,774,902 76,900,923 213,675,825 DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Debt Refundings 423,735 112,125 535,860 TOTAL DEFERRED OUTFLOWS $ 423,735 $ 11.2,1.25 $ 535,860 See Accompanying notes to basic financial statements. 15 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION (CONTINUED) SEPTEMBER 30, 2013 Current Liabilities Payable from Restricted Assets: Customer Deposits 33,916 500,488 534,404 Total Current Liabilities Payable From Restricted Assets 33,916 500,488 534,404 Total Current Liabilities 6,585,918 Primary Government 9,781,632 Governmental Business -Type Activities Activities Total LIABILITIES 868,670 Long -Term Debt 57,947,675 Current Liabilities Payable from 66,609,875 Total Noncurrent Liabilities 58,635,329 Unrestricted Assets: 67,478,545 Accounts Payable $ 1,620,1.88 $ 1,501,034 $ 3,121,222 Accrued Liabilities 361,463 1.11,297 472,760 Due to Other Governments 231,399 - 231,399 Unearned Revenue 47,386 136,820 184,206 Accrued Interest Payable 394,412 53,654 448,066 Compensated Absences 171,914 45,254 217,168 Current Portion of Long -Term Debt 3,725,240 847,167 4,572,407 Total Current Liabilities Payable Economic Development 5,152,796 - From Unrestricted Assets 6,552,002 2,695,226 9,247,228 Current Liabilities Payable from Restricted Assets: Customer Deposits 33,916 500,488 534,404 Total Current Liabilities Payable From Restricted Assets 33,916 500,488 534,404 Total Current Liabilities 6,585,918 3,195,714 9,781,632 Noncurrent Liabilities: Compensated Absences 687,654 181,016 868,670 Long -Term Debt 57,947,675 8,662,200 66,609,875 Total Noncurrent Liabilities 58,635,329 8,843,216 67,478,545 TOTAL LIABILITIES 65,221,247 1.2,038,930 77,260,177 NET POSITION Net Investment In Capital Assets 57,543,618 53,071,836 110,615,454 Restricted For: Police and Municipal Court 1,143,312 - 1,1.43,312 PEG Capital Fees 456,175 - 456,175 Tourism Development 470,250 - 470,250 Economic Development 5,152,796 - 5,152,796 Parks and Tree Mitigation 294,306 - 294,306 Debt Service 193,961 - 193,961 Other Purposes 77,554 - 77,554 Unrestricted 6,645,418 11,902,282 18,547,700 TOTAL NET POSITION $ 71,977,390 $ 64,974,118 $ 136,951,508 See Accompanying notes to basic financial statements. 16 CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2013 Functions and Programs Expenses Primary Government: Governmental Activities: General Government Public Safety Public Environment Parks and Recreation Cultural Health Administration Interest and Other Fees Total Governmental Activities Business -Type Activities Water and Sewer EMS Total Business -Type Activities Total Primary Government General Revenues: Taxes: Ad Valorem Sales Franchise Fees Hotel /Motel Mixed Drink Investment Earnings Miscellaneous Total General Revenues Transfers Change in Net Position Net Position at Beginning of Year Prior Period Adjustment Net Position at End of Year Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 7,283,947 $ 2,230,800 $ 376,485 $ 1,531,740 9,600,762 2,516,547 41,418 - 3,622,834 - - - 1,807,559 721,222 158,704 - 907,676 305,932 9,589 - 344,647 38,1.49 16,963 - 2,136,625 1,311,272 - - 3,340,951 - - - 29,045,001 7,123,922 603,159 1,531,740 16,954,871 17,696,327 - 1,301,235 3,959,445 4,459,600 - - 20,914,316 22,155,927 - 1,301,235 $ 49,959,317 $ 29,279,849 $ 603,159 $ 2,832,975 See Accompanying notes to basic financial statements. 17 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -Type Activities Activities Total $ (3,144,922) (7,042,797) (3,622,834) (927,633) (592,155) (289,535) (825,353) (3,340,951) (19,786,180) $ 2,042,691 500,155 2,542,846 $ (3,144,922) (7,042,797) (3,622,834) (927,633) (592,155) (289,535) (825,353) (3,340,951) (19,786,180) 2,042,691 500,155 2,542,846 (19,786,180) 2,542,846 (17,243,334) 12,359,146 - 12,359,146 9,637,097 - 9,637,097 1,681,079 - 1,681,079 503,267 - 503,267 30,421 - 30,421 54,270 53,089 107,359 505,342 664,521 1,169,863 24,770,622 717,610 25,488,232 (448,285) (25,140) (473,425) 4,536,157 3,235,316 7,771,473 67,630,883 61,738,802 129,369,685 (189,650) - (189,650) $ 71,977,390 $ 64,974,118 $ 136,951,508 18 CITY OF SCHERTZ, TEXAS BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 See Accompanying notes to basic financial statements. 19 General Capital Debt Fund Projects Service ASSETS Cash and Cash Equivalents $ 604,120 $ $ - Investments 4,884,186 - Receivables (net of allowances) Taxes 1,640,179 - 71,174 Accounts and Other 1,986,715 73,895 - Due from Other Funds 467,407 - - Inventory 50,768 - - Prepaid Items - 754,443 - Note Receivable - - - Restricted Assets: Cash and Cash Equivalents 9,063 259,881 118,850 Investments - 16,797,740 398,749 TOTAL ASSETS $ 9,642,438 $ 17,885,959 $ 588,773 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable $ 931,146 $ 664,745 $ 400 Accrued Salaries and Benefits 353,809 - - Customer Deposits 33,916 - Due to Other Governments 231,399 - - Due to Other Funds - 795,804 - Unearned Revenues 47,386 - - Total Liabilities 1,597,656 1,460,549 400 Deferred Inflows of Resources: Unavailable Revenues 2,027,576 - 71,174 Fund Balances: Nonspendable: Inventory 50,768 - - Prepaid Items - 754,443 - Note Receivable - - - Restricted for: Police and Public Safety 101,303 - Municipal Court 646,422 - PEG Capital Fees 456,175 - Capital Improvement - 15,360,800 - Debt Service - 517,199 Tourism Development - Parks and Tree Mitigation - Historical Committee and Library - Economic Development - - Committed for Capital Improvements - 165,000 - Assigned for: Property Replacement 456,034 - - Special Events 99,770 - Capital Improvement - 145,167 - Unassigned 4,206,734 - - Total Fund Balances 6,017,206 16,425,410 517,199 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 9,642,438 $ 17,885,959 $ 588,773 See Accompanying notes to basic financial statements. 19 Economic Nonmajor Total Development Governmental Governmental Corporation Funds Funds $ 318,397 $ 380,726 $ 1,303,243 5,152,452 944,984 10,981,622 569,259 80,726 2,361,338 1,197 3,640 2,065,447 - 20,000 487,407 - - 50,768 - 754,443 120,080 120,080 - 387,794 17,196,489 $ 6,161,385 $ 1,430,076 $ 35,708,631 $ 11,034 $ 12,379 $ 1,619,704 8,143 - 361,952 - 33,916 - - 231,399 - 180,000 975,804 - - 47,386 19,177 192,379 3,270,161 - - 2,098,750 - 50,768 - 754,443 120,080 - 120,080 - 395,587 496,890 - - 646,422 - 456,175 - 15,360,800 - - 517,199 - 470,250 470,250 - 294,306 294,306 - 77,554 77,554 6,022,128 - 6,022,128 - 165,000 - 456,034 - 99,770 - 145,167 - - 4,206,734 6,142,208 1,237,697 30,339,720 $ 6,161,385 $ 1,430,076 $ 35,708,631 20 rr CITY OF SCHERTZ, TEXAS RECONCILIATION OF BALANCE SHEET SEPTEMBER 30, 2013 TOTAL FUND BALANCE - TOTAL GOVERNMENTAL FUNDS Amounts reported for governmental activities in the Statement of Net Position are different because: Capital Assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Other long -term assets are not available to pay for current - period expenditures and, therefore, are not recognized as revenue in the funds. Long -term liabilities, including bonds payable and capital leases, are not due and payable in the current period and therefore, not reported in the funds: Bonds Payable Unamortized Premiums, Discounts, Losses on Refundings Capital Lease Payable Accrued Interest Payable Compensated Absences TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES See accompanying notes to basic financial statements. 21 $ 30,339,720 102,042,076 2,098,750 (58,861,767) (2,365,011) (22,398) (394,412) (859,568) (62,503,156) $ 71,977,390 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2013 REVENUES Taxes Permits and Fees Service Fees Fines and Fees Intergovernmental Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Public Environment Parks and Recreation Cultural Health Administration Capital Outlay Debt Service: Principal Interest and Fiscal Charges Bond Issue Costs TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Issuance of Debt Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balances at Beginning of Year Prior Period Adjustment Fund Balances at End of Year General Fund Capital Projects Debt Service Fund $ 15,411,501 $ - $ 5,051,475 1,398,781 - - 3,205,265 - - 1,870,825 - - 464,979 27,353 - 10,244 31,572 2,012 584,214 7,500 - 22,945,809 66,425 5,053,487 5,552,1.50 - - 9,113,840 - - 951,528 - - 1,120,724 - - 830,149 - - 341,961 - - 2, 597,128 - - 221,562 2,931,207 - 37,792 - 913 - - 30,000 20,767,747 2,961,207 2,178,062 (2,894,782) 61,226 (198,899) 1,635,000 337,051 2,789,533 2,341,754 1,750 5, 133,037 (79,550) 369,075 (137,673) 1,972,051 369,075 2,040,389 (922,731) 289,525 3,976, 817 17,348,141 227,674 $ 6,017,206 $ 1.6,425,410 $ 517,199 See accompanying notes to basic financial statements. 22 Economic Development Corporation Other Nonmaj or Governmental Funds Total Governmental Funds $ 3,215,620 $ 503,267 $ 24,181,863 - 211,173 1,609,954 - 197,548 3,402,813 - 56,919 1,927,744 - - 492,332 8,821 1,464 54,113 - 121,283 712,997 3,224,441 1,091,654 32,381,816 770,739 343,763 6,666,652 - - 9,113,840 - - 951,528 - 291,605 1,412,329 - 10,446 840,595 - - 341,961 - - 2,597,128 - 124,628 3,277,397 390,000 - 3,217,325 38,504 - 2,381,171 - - 31,750 1,199,243 770,442 30,831,676 2,025,198 321,212 1,550,140 - - 1,635,000 - 20,732 788,084 (369,075) (220,110) (788,084) (369,075) (199,378) 1,635,000 1,656,123 121,834 3,185,1.40 4,486,085 1,305,513 27,344,230 - (189,650) (189,650) $ 6,142,208 $ 1,237,697 $ 30,339,720 23 rr CITY OF SCHERTZ, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2013 NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS $ 3,185,140 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. In addition, capital assets contributed to governmental activities are not recorded on the fund statements. Capital Outlay 3,221,917 Capital Contributions 1,531,740 Depreciation Expense (4,125,547) 628,110 Proceeds from the sale of capital assets are reported as revenues on the governmental fund statements. However, in the statement of activities, these proceeds are reduced by the net book value of the capital asset (original cost less accumulated depreciation through the sale date). This amount represents the net book value of capital assets disposed in the current period. (8,130) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 134,890 The issuance of long -term debt (e.g. bonds, leases) provides current financial resources to governmental funds, which the repayment of the principal of long -term debt consumes the current financial reourees of governmental funds. Neither transaction, however, has any affect on net position. This amount is the net effect of these differences in the treatment of long -term debt and related items. Proceeds from the Issuance of Debt (1,635,000) Principal Repayments 3,217,325 Amortization of Premiums, Discounts, Losses (911,106) 671,219 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Compensated Absences Accrued Interest CHANGE IN NET POSITION - GOVERNMENTAL ACTIVITIES See accompanying notes to basic financial statements. 24 (83,292) 8,220 (75,072) $ 4,536,157 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION - PROPRIETARY FUNDS SEPTEMBER 30, 2013 ASSETS Current Assets: Cash and Cash Equivalents Investments Accounts Receivable, Net of Allowance: Customer Accounts Due from Other Funds Accrued Interest Prepaid Expenses Inventory Total Current Assets Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents Investments Capital Assets: Land Water Rights Buildings and Improvements Machinery, Equipment, and Vehicles Construction in Progress Less: Accumulated Depreciation Total Noncurrent Assets TOTAL ASSETS Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total $ 1,152,953 $ - $ 1,152,953 1,773,882 - 1,773,882 1,913,982 1,390,497 3,304,479 823,139 - 823,139 3,102 - 3,102 - 1,950 1,950 76,895 51,490 128,385 5,743,953 1,443,937 7,187,890 785,349 - 785,349 7,477,027 - 7,477,027 1,254,524 - 1,254,524 70,245 - 70,245 79,830,078 6,500 79,836,578 1,459,193 1,592,013 3,051,206 365,904 - 365,904 (21,634,323) (1,158,735) (22,793,058) 69,607,997 439,778 70,047,775 75,351,950 1,883,715 77,235,665 Governmental Activities Internal Service Fund DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Refunding 112,125 - 112,125 - TOTAL DEFERRED OUTFLOWS $ 112,125 $ - $ 112,125 $ - See accompanying notes to basic financial statements. 25 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION - PROPRIETARY FUNDS (CONTINUED) SEPTEMBER 30, 2013 LIABILITIES Current Liabilities: Accounts Payable Accrued Liabilities Customer Deposits Accrued Interest Payable Due to Other Funds Unearned Revenue Current Portion of Compensated Absences Current Portion of Long -Term Debt Total Current Liabilities Noncurrent Liabilities: Compensated Absences Long -Term Debt (Net of Current Portion) Total Noncurrent Liabilities TOTAL LIABILITIES NET POSITION Net Investment in Capital Assets Unrestricted TOTAL NET POSITION Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total Governmental A,.,.,. mternat Service Fund $ 1,187,187 $ 313,847 $ 1,501,034 $ - 43,142 68,155 111,297 - 500,488 - 500,488 - 52,477 1,177 53,654 - 117,453 217,289 334,742 - 136,820 - 136,820 - 17,340 27,914 45,254 - 750,500 96,667 847,167 2,805,407 725,049 3,530,456 - 69,362 111,654 181,016 - 8,530,533 131,667 8,662,200 - 8,599,895 243,321 8,843,216 - 11,405,302 968,370 12,373,672 - 52,860,392 211,444 53,071,836 - 11,198,381 703,901 11,902,282 - $ 64,058,773 $ 915,345 $ 64,974,118 $ - See accompanying notes to basic financial statements. 26 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2013 OPERATING REVENUES Fees Charged to Users Charges for Premiums Other Charges TOTAL OPERATING REVENUES OPERATING EXPENSES Personnel Services Contribution to Joint Ventures Water Purchase Garbage Contractor Sewage Treatment General and Administrative Contractual Services Supplies and Maintenance Depreciation TOTAL OPERATING EXPENSES OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment Earnings Lease Income Miscellaneous Interest Expense Amortization Expense TOTAL NONOPERATING REVENUES (EXPENSES) INCOME BEFORE CONTRIBUTIONS AND TRANSFERS Transfers In (Out) Capital Contributions CHANGE IN NET POSITION NET POSITION AT BEGINNING OF YEAR NET POSITION AT END OF YEAR Governmental Business -Type Activities - Enterprise Funds Activities Water Internal and Sewer Schertz Service System EMS Total Fund $ 17,640,390 $ 4,459,600 $ 22,099,990 $ - - - - 1,955,268 55,937 - 55,937 - 17,696,327 4,459,600 22,155,927 1,955,268 1,809,382 2,781,261 4,590,643 1,955,268 1,739,708 - 1,739,708 - 2,852,811 - 2,852,811 - 3,370,488 - 3,370,488 - 2,438,409 - 2,438,409 - 1,858,571 407,178 2,265,749 - 205,080 140,194 345,274 - 278,825 473,764 752,589 - 1,845,962 138,325 1,984,287 - 16,399,236 3,940,722 20,339,958 1,955,268 1,297,091 518,878 1,815,969 - 52,744 345 53,089 - 198,322 - 198,322 - 373,805 92,394 466,199 - (383,843) (9,804) (393,647) - (171,792) (8,919) (180,711) - 69,236 74,016 143,252 - 1,366,327 592,894 1,959,221 - (25,140) - (25,140) - 1,301,235 - 1,301,235 - 2,642,422 592,894 3,235,316 - 61,416,351 322,451 61,738,802 - $ 64,058,773 $ 915,345 $ 64,974,118 $ - See accompanying notes to basic financial statements. 27 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2013 Cash Flows From Operating Activities: Cash Received From Customers and Users Cash Received from Interfund Services Cash Paid to Employees for Services Cash Paid to Supplier for Goods & Services Net Cash Provided (Used) by Operating Activities Cash Flows From Noncapital Financing Activities: Cash Advances From /(To) Other Funds Net Cash Provided (Used) by Noncapital Financing Activities Cash Flows From Capital and Related Financing Activities: Acquisition and Construction of Capital Assets Interest Paid on Long -Term Debt Principal Paid on Long -Term Debt Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows From Investing Activities: Purchase of Investments Proceeds from the Sale of Investments Payments from Leases Interest and Investment Earnings Net Cash Provided (Used) by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year: Cash and Cash Equivalents Restricted Cash and Cash Equivalents Cash and Cash Equivalents at End of Year: Cash and Cash Equivalents Restricted Cash and Cash Equivalents Noncash Capital and Related Financing Transactions: Developer Contributions of Capital Assets Contribution of Capital Asset to General Fund Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total Governmental Service Fund $ 19,116,031 $ 3,959,883 $ 23,075,914 $ - - - - 1,955,268 (1,797,925) (2,767,264) (4,565,189) (1,955,268) (12,629,476) (932,749) (13,562,225) - 4,688,630 259,870 4,948,500 - 127,096 (176,482) (49,386) - 127,096 (176,482) (49,386) - (2,952,720) (283,266) (3,235,986) - (387,281) (10,216) (397,497) - (728,800) (91,667) (820,467) - (4,068,801) (385,149) (4,453,950) - (573,056) - (573,056) - - 301,415 301,415 - 198,322 - 198,322 - 52,734 346 53,080 - (322,000) 301,761 (20,239) - 424,925 - 424,925 - 1,012,438 - 1,012,438 - 500,939 - 500,939 - 1,513,377 - 1,513,377 - 1,152,953 - 1,152,953 - 785,349 - 785,349 - $ 1,938,302 $ - $ 1,938,302 $ - $ 1,301,235 $ $ 25,140 $ See accompanying notes to basic financial statements. 28 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (CONTINUED) FOR THE YEAR ENDED SEPTEMBER 30, 2013 Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating Income Revenues from Other Sources Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation Decrease (Increase) in Assets: Accounts Receivable (net) Prepaid Expenses Inventory Increase (Decrease) in Liabilities: Accounts Payable Accrued Liabilities Customer Deposits Unearned Revenue Compensated Absences NET CASH PROVIDED BY (USED) FOR OPERATING ACTIVITIES Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total Governmental Activities Internal Service Fund $ 1,297,091 $ 518,878 $ 1,815,969 $ - 373,805 92,394 466,199 - 1,845,962 138,325 1,984,287 - 896,432 (592,111) 304,321 - 9,583 (455) 9,128 - 17,031 16,703 33,734 - 87,802 72,139 159,941 - 8,769 9,416 18,185 - 41,925 - 41,925 - 107,542 - 1.07,542 - 2,688 4,581 7,269 - $ 4,688,630 $ 259,870 $ 4,948,500 $ - See accompanying notes to basic financial statements. 29 NOTES TO BASIC FINANCIAL STATEMENTS 30 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Schertz is a municipal corporation governed by an elected mayor and five- member council. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below: A. Reporting Entity Component Units - As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations; thus, data from these units are be combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government -wide financial statements to emphasize it is legally separate from the government. The City reports the following blended component units: Schertz Economic Development Corporation - The Corporation was organized 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. The City is financially accountable for the Corporation because the city council approves the Corporation's budget. Complete financial statements for the Schertz Economic Development Corporation may be obtained from City Hall. 2. Parks and Recreation Foundation — The Corporation was organized to improve and expand the community parks, trails, venues, and recreational programs providing fun leisure and healthy activities. The foundation's governing board is comprised of Schertz residents and employees of the City, the accounting records are maintained by the finance department, cash is pooled with City funds, and the City provides financing for the foundation. In addition, the City includes the Foundation as part of the City budget process. The City and its citizens are the sole beneficiaries of the Foundation. Separate financials are not issued for the Parks and Recreation Foundation. Joint Ventures - 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 entities meet the criteria as joint ventures. Separate financial statements for these entities may be obtained at City Hall. Schertz /Seguin. Local Government Corporation - is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schertz 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. 2. Cibolo Valley Local Government Corporation — is a public, nonprofit corporation organized July 28, 2011 to aid, assist, and act on behalf of the cities of Cibolo, Converse and Schertz 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. 31 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges of customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fiend financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Nonexchange revenues that are measurable but not available are recorded as unavailable revenue (a deferred inflow of resources). Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Exchange revenues (payments for services) received in advance of the service being provided are recorded as unearned revenue. 32 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The City reports the following major governmental funds: The General Fund is the City's primary operating fund which accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long -term general obligation debt of governmental funds. The Capital Proiects Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities and is principally financed by the sale of bonds or certificates of obligation and grants. Economic Development Corporation collects sales taxes to support business development and expansion within the City. The government reports the following major proprietary funds: The Water and Sewer System Fund accounts for the water and sewer services provided to the citizens through user charges. The EMS Fund accounts for the emergency medical services provided to the citizens of the City and other participating governments through user charges. Internal Service Fund accounts for the City's group medical insurance program. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this are charges between the City's general government function and various other functions of the City. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applications for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. General revenues include all taxes and investment earnings. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water and sewer enterprise fund and the EMS enterprise fiend are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 33 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. D. Cash and Cash Equivalents The City's cash and cash equivalents are considered to be cash on hand and demand deposits. E. Investments The City is authorized 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 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 is authorized to invest in local government investment pools. The investment pools operate in accordance with appropriate state laws and regulations and 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 fair value of the pool shares. F. Receivables and Payables Activities between the funds that are representative of interfund loans outstanding at the end of the fiscal year are referred to as due to /from other funds. Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances ". 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. Property taxes for the City are levied each October 1 on the taxable value as of the preceding January 1, the date a lien attaches, for all taxable real and personal property located in the City. Taxes are due by January 31 following the October 1 assessment date and become delinquent on February 1, at which time they begin accruing penalty and interest. The enforceable legal claim date for property taxes is the assessment date; therefore, the City did not record a receivable for accrual of future taxes at year end. Accordingly, no current taxes receivable are reported. Delinquent taxes have been reported in the financial statements net of the allowance for uncollectible taxes. Tax revenues are recognized as they become available. Accordingly, an amount equal to taxes not yet available has been reported as unavailable revenue (a deferred inflow of resources) at the government fund level. G. Inventories All inventories are valued at cost using the first- in/first -out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 34 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) H. Restricted Assets Certain proceeds from bonds, resources set aside for their repayment, and other restrictive agreements are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants and/or contractual arrangements. I. Capital Assets Capital assets, which include land, buildings and improvements, machinery, equipment, vehicles, and infrastructure assets (i.e., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. When capital assets are purchased, they are capitalized and depreciated in the government -wide financial statements and the proprietary fund statements. Capital assets are recorded as expenditures of the current period in the governmental fund financial statements. Capital assets are valued at cost where historical records are available and at an estimated cost where no records exist. Donated capital assets are valued at their estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements to capital assets that materially extend the life of the asset or add to the value are capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction will not be capitalized in the governmental activities on the government -wide financial statements; however capitalization of interest is required for business -type activities. There was no capitalized interest during the current fiscal year. Capital assets are depreciated over their useful lives on a straight -line basis as follows: Useful Lives Assets (Years) Buildings and Improvements 10-50 Machinery, Equipment, and Vehicles 2-20 Infrastructure 15-30 J. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits. There is no liability for unpaid accumulated sick leave since the City does not have a policy to pay any amounts when employees separate from service with the City. All vacation and compensatory time pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 35 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. Bond premiums and discounts, losses on defeasance, as well as issuance costs, are amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount and losses on defeasance. Bond issuance costs are expensed as incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L. Fund Equity Fund balances in governmental funds are classified as follows: Nonspendable — Represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid items) or legally required to remain intact. Restricted — Represents amounts that are constrained by external parties, constitutional provisions or enabling legislation. Committed — Represents amounts that can only be used for a specific purpose because of a formal action by the government's highest level of decision making authority: an ordinance adopted by City Council prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigned — Represents amounts which the City intends to use for a specific purpose but do not meet the criteria of restricted or committed. The City Council may make assignments through formal documentation in the minutes. The City Council authorized (by way of policy) the City Manager to also make assignments. The City Manager's assignments do not require formal action; however, the City Manager has not assigned any funds at this time. Unassigned — Represents the residual balance that may be spent on any other purpose of the City. When an expenditure is incurred for a purpose in which multiple classifications are available, the City considers restricted balances spent first, committed second, and assigned third. 36 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Net Position Net position represents the difference between assets plus deferred outflows of resources less liabilities and deferred inflows of resources. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed by creditors, grantors, or laws or regulations of other governments. N. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. O. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds except the library grant special revenue fund, police department forfeiture special revenue fund and the capital projects fund, which adopts project - length budgets. P. Change in Accounting Method/Policy For the year ending September 30, 2013, the City has made the following changes in their accounting policies: 1. Adoption of Governmental Accounting Standards Board (GASB) Statement No. 63 and 65. The adoption of these statements has resulted in the City removing unamortized bond issue costs from the financial statements. The effect on the current and prior periods was not significant to these financial statements. The adoption also resulted in some presentation changes: Net Assets is now referred to as Net Position and deferred losses on debt refundings, previously reported in liabilities, is now reported as a deferred outflow of resources on the Statement of Net Position. 2. Component Units. Previously, the City reported the Economic Development Corporation, the Library Board, and the Parks and Recreation Foundation as discrete component units. In 2013, the City has reevaluated these entities and blended all three. All information presented for prior years has been updated to include these component units as if they were blended. 3. Split nonmajor funds. Previously, the nonmajor park fund help parkland dedication and tree mitigation fees. The tree mitigation fees have been segregated to a new fund. The restricted fund balance for tree mitigation previously in the park fund has been shown as a beginning fund balance in the new tree mitigation fund. Likewise, the beginning fund balance in the park fund has been reduced by the portion restricted for tree mitigation in the previous year. This split had no effect on beginning fund balance of nonmajor funds. 37 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS The City's operating deposits are held at one institution. The institution provides a combination of pledged collateral and FDIC insurance to completely collateralize the City's deposits. As of September 30, 2013, the City had the following pooled investment funds: Investment Type LOGIC Lone Star Investment Pool Texas CLASS Schertz Bank & Trust - Certificate of Deposit Capital One - U.S. Agency Securities Total Weighted Average Book Fair Maturity Value Value in Days $ 5,185,932 $ 5,185,932 - 19,876,045 19,876,045 - 7,204,074 7,204,074 - 2,100,21.0 2,100,210 90 3,062,758 3,062,758 712 $ 37,429,019 $ 37,429,019 63 Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the City's investment portfolio to highly liquid investments to meet unanticipated cash requirements, and /or to redeploy cash into other investments expected to outperform current holdings. Credit Risk. State law limits investments in certificates of deposit to guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor or the National Credit Union Share Insurance Fund, or its successor and investment pools continuously rated no lower than AAA or an equivalent rating by at least one nationally recognized rating service. The City's investment policy does not further limit its investment choices. As of September 30, 2013, the City's investments in the pooled investment funds were rated AAAm by Standard & Poor's. The City has also invested in debt securities provided by the Federal Home Loan Bank, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Farm Credit Banks, and U.S Treasury Notes. Custodial Credit Risk - Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits may not be returned. As of September 30, 2013, the City's cash and cash equivalents (including certificates of deposit, and component unit holdings) were fully collateralized by the City's depository by a combination of pledged collateral and FDIC insurance. All collateral is held in the City's name. Custodial Credit Risk - Investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. All of the government securities owned by the City are held by its agent in the City's name. 38 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 3 - PROPERTY TAX Taxes are levied on and payable as of October 1. The City has contracted with the Guadalupe County Tax Assessor - Collector to collect taxes on its behalf. Current taxes become delinquent February 1. Current year delinquent taxes not paid by July 1 are turned over to attorneys for collection action. The total taxable value as of October 1, 2012, upon which the fiscal 2013 levy was based, was $2,769,417,187 (i.e., market value less exemptions). The estimated market value was $2,877,621,822, making the taxable value 96.2% of the estimated market value. The City is permitted by the Constitution of the State of Texas to levy taxes up to $2.50 per $100 of taxable assessed valuation for all governmental purposes. Pursuant to a decision of the Attorney General of the State of Texas, up to $1.50 per $100 of assessed valuation may be used for the payment of long -term debt. The combined tax rate to finance general governmental services, including the payment of principal and interest on long -term debt for the year ended September 30, 2013, was $0.4999 per $100 of assessed value, which means that the City has a tax margin of $2.0001 for each $100 value and could increase its annual tax levy by approximately $55,391,11.4 based upon the present assessed valuation before the limit is reached. However, the City may not adopt a tax rate that exceeds the tax rate calculated in accordance with the Texas Property Tax Code without holding a public hearing. The Property Tax Code subjects an increase in the effective tax rate to a referendum election, if petitioned by registered voters, when the effective tax rate increase is more than eight percent (8 %) of the previous year's effective tax rate. Property taxes are recorded as receivables and unearned revenues at the time the taxes are assessed. In governmental funds, revenues are recognized as the related ad valorem taxes are collected. Additional amounts estimated to be collectible in the time to be a resource for payment of obligations incurred during the fiscal year and therefore susceptible to accrual in accordance with generally accepted accounting principles have been recognized as revenue. In the government -wide financial statements, the entire levy is recognized as revenue, net of estimated uncollectible amounts (if any), at the levy date. NOTE 4 - RECEIVABLES Receivables as of year -end for the government's individual major funds and nonmajor fiends in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Property Taxes Sales Taxes Occupancy Taxes Franchise Taxes Customers Court Fines Grants Other Gross Receivables Less: Allowance for Uncollectibles Net Total Receivables 39 Governmental Funds Proprietary Funds Capital Economic Debt Nonmajor Water and Schertz General Projects Development Service Funds Sewer Fund EMS $ 132,683 $ - $ - $ 75,868 1,138,518 - 569,259 - - - - - - 80,726 377,188 - - - - - 83,613 - - - - 1,973,312 2,473,729 4,675,926 - - - - - - - 27,353 - - - - - 46,542 1,197 - 3,640 - 30,572 6,407,928 73,895 570,456 75,868 84,366 1,973,312 2,504,301 2,781,034 - - 4,694 - 59,330 1,113,804 _L j,626 $ 73,895 $ 570.456 $ 71,174 84,366 1,913,982 $ 1,390,497 39 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 4 — RECEIVABLES (Continued) Governmental funds report unavailable revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unearned/ unavailable revenue and unavailable revenue reported in the governmental funds were as follows: General Fund Delinquent Property Taxes Receivable Court Fines Permits Library Other Total General Fund Debt Service Fund Delinquent Property Taxes Receivable Total Debt Service Fund Total Governmental Funds > Tnavailahle $ 124,474 1,903,102 5,809 20,000 21 ,577 2,074,962 71,1.74 71,174 $ 2,146,136 The Schertz Economic Development Corporation approved a loan to SPV Ventures for $150,000 for twenty years at 0 %. The loan is repaid in increments upon the sale of real property or upon maturity, whichever occurs first. Management considers the loan to be fully collectible. Additionally, there is no imputed interest included in the face amount of the Note Receivable. The balance of the note as of September 30, 2013 was $120,080. The composition of interfund balances as of September 30, 2013 is as follows: Due From EMS Nonmajor Governmental Capital Projects EMS Nonmajor Governmental Water & Sewer Due To Amount Water & Sewer $ 27,335 Nonmajor Governmental 20,000 Water & Sewer 795,804 General 189,955 General 160,000 General 117,453 Purnose Structured loan between funds Supplement funding Portion of bond proceeds for water projects Short-term cash flow borrowing Short-term cash flow borrowing Reimbursement The following schedule briefly summarizes the City's transfer activity: Transfer From Nonmajor Governmental General Nonmajor Governmental Economic Development General Nonmajor Governmental Water & Sewer Transfer To Amount General $ 61,226 Nonmajor Governmental 732 Nonmajor Governmental 20,000 Debt Service 369,075 Capital Projects 198,167 Capital Projects 138,884 Governmental Activities 25,140 M Pumose Hotel tax support of special events Supplement historical committee Hotel tax support of parks and recreation Pledge in support of debt service Supplement capital projects funding Supplement capital projects funding Transfer of equipment CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 6 - CAPITAL ASSETS Capital asset activity for the year ended September 30, 2013 was as follows: Beginning Ending D- 1.,- -- D- 1.,- -- Governmental Activities: Capital Assets, Not Being Depreciated Land $ 7,442,117 $ 3,000 $ $ - $ 7,445,117 Construction in Progress 751,277 2,944,879 (534,734) 3,161,422 Total Capital Assets Not Being Depreciated 8,193,394 2,947,879 (534,734) 10,606,539 Capital Assets, Being Depreciated (20,320,934) Total Accumulated Depreciation (28,084,705) Buildings and Improvements 35,037,432 - 433,905 35,471,337 Machinery, Equipment, and Vehicles 6,121,702 277,038 (89,488) 45,428 6,354,680 Streets and Infrastructure 80,129,133 1,528,740 100,829 81,758,702 Total Capital Assets Being Depreciated 121,288,267 1,805,778 (89,488) 580,162 123,584,719 Accumulated Depreciation Buildings and Improvements (6,729,106) (977,025) - (7,706,131) Machinery, Equipment, and Vehicles (3,678,562) (504,625) 81,358 (20,288) (4,122,117) Streets and Infrastructure (17,677,037) (2,643,897) - (20,320,934) Total Accumulated Depreciation (28,084,705) (4,125,547) 81,358 (20,288) (32,149,182) Total Capital Assets Being Depreciated, Net 93,203,562 (2,319,769) (8,130) 559,874 91,435,537 Governmental Activities Capital Assets, Net $ 101,396,956 $ 628,110 $ (8,130) $ 25,140 $ 102,042,076 Beginning Ending Balance Increases Deletions Transfers Balance Business -Type Activities: Capital Assets, Not Being Depreciated.- Land $ 910,413 $ 344,111 $ $ $ 1,254,524 Water Rights 70,245 - 70,245 Construction in Progress 84,996 991,852 (710,944) 365,904 Total Assets Not Being Depreciated 1,065,654 1,335,963 (710,944) 1,690,673 Capital Assets, Being Depreciated.• Buildings and Improvements 76,417,848 2,707,786 710,944 79,836,578 Machinery, Equipment, and Vehicles 2,717,453 493,472 (114,291) (45,428) 3,051,206 Total Capital Assets Being Depreciated 79,135,301 3,201,258 (114,291) 665,516 82,887,784 Accumulated Depreciation: Buildings and Improvements (18,858,720) (1,745,702) - - (20,604,422) Machinery, Equipment, and Vehicles (2,084,630) (225,784) 101,490 20,288 (2,188,636) Total Accumulated Depreciation (20,943,350) (1,971,486) 101,490 20,288 (22,793,058) Total Capital Assets Being Depreciated, Net 58,191,951 1,229,772 (12,801) 685,804 60,094,726 Business -Type Activities Capital Assets, Net $ 59,257,605 $ 2,565,735 $ (12,801) $ (25,140) $ 61,785,399 41 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 6 - CAPITAL ASSETS (Continued) Depreciation expense was charged to functions /programs of the primary government as follows: Governmental Activities: Total General Government $ 670,157 Public Safety 400,840 Public Environment 2,669,240 Parks and Recreation 301,275 Cultural 59,140 Health 5,953 Administration 18,942 Total Depreciation Expense - Governmental Activities $ 4,125,547 Business -Type Activities: Water and Sewer System $ 1,833,161 EMS 138,325 Total Depreciation Expense - Business Type Activities $ 1,971,486 NOTE 7 - OPERATING LEASE The City has agreements with several telecommunication companies to place cellular towers on City water towers. The following schedule represents the future minimum lease payments. Fiscal Year Ending September 30, Total 2014 $ 176,931 2015 184,009 2016 191,369 2017 199,024 2018 206,985 2019 40,032 $ 998,350 NOTE 8 - CAPITAL LEASE The City has entered into a lease agreement to finance equipment. The lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of the future minimum lease payments at the inception date. The assets acquired through capital lease are as follows: Assets: Equipment $ 148,294 Less Accumulated Depreciation (51,903) Total $ 96,391 42 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 8 - CAPITAL LEASE (Continued) Future minimum obligations and the net present value of these minimum lease payments as of September 30, 2013 are as follows: Year Ending September 30, 2014 $ 22,578 Total Payments 22,578 Less: Amount Representing Interest (180) Present Value of Minimum Lease Payments $ 22,398 The City issues a variety of long -term debt instruments in order to acquire and/or construct major capital facilities and equipment for governmental activities. These instruments include general obligation bonds, certificates of obligation, and capital leases. These debt obligations are secured by either future property or hotel tax revenue or liens on property and equipment. In April 2013, the City issued $835,000 in Tax Notes Series 2013 for a new fire truck. In June 2013, the City issued $800,000 in Tax Notes Series 2013A for the purchase of P25 compliant radios. The payment of the related principal and interest is to be made from an annual ad valorem tax levied against all taxable property within the City. Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, and tax notes. General obligation bonds and certificates of obligation 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 requires that funds be available for 1 /12th of the principal and 1 /6th of the interest requirements of the next fiscal year. The City is required to accumulate a reserve fund in an amount equal to the average principal and interest on the revenue bonds. 43 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 9 - LONG -TERM DEBT (Continued) A summary of the terms of general obligation bonds and combination of tax and revenue certificates of obligation outstanding at September 30, 2013, follows: Revenue Bonds 2005 Series Issue Amount Maturity Rate Balance Primary Government General Obligation Bonds 2,675,000 2021 2.0%-3.0% 2,120,000 2006 Series $ 15,000,000 2031 4.0%-5.25% $ 13,455,000 2007 Series 6,000,000 2027 4.07% 4,540,000 2008 Series 9,900,000 2028 4.13% 8,260,000 2009 Series 9,500,000 2033 2.0%-5.50% 7,680,000 2010 Series, Refunding 2,865,000 2021 2.0%-4.0% 2,300,000 2011 Series 8,250,000 2036 3.0%-6.0% 7,960,000 2011A Series, Refunding 6,745,000 2024 2.33% 6,535,000 2012 . Series 7,625,000 2032 2.00% 7,330,000 Tax Notes 2010 . Notes 1,270,000 2015 1.2%-2.55% 520,000 2013 . Notes 835,000 2018 0.7%-1.7% 835,000 2013A Notes 800,000 2018 1.30% 800,000 Certificates of Obligation 2007 Series CIB 2 438,900 2016 4.01% 155,100 2007 Series CIB 4 569,500 2016 4.01% 196,667 2007 Series CIB 5 1,300,000 2016 4.01% 450,000 Total Governmental Long -Term Obligations $ 61,016,767 Revenue Bonds 2005 Series $ 3,200,000 2025 3.0%-4.0% $ 2,215,000 General Obligation Bonds 2011 Series, Refunding 2,675,000 2021 2.0%-3.0% 2,120,000 Certificates of Obligation 2007 Series CIB 1 6,600,000 2026 4.01% 4,870,000 2007 Series CIB 2 226,100 2016 4.01% 79,900 2007 Series CIB 4 280,500 2016 4.01% 98,334 Tax Notes 2010 . Notes 31.0,000 2015 1.20% - 2.55% 130,000 Total Business -Type Long -Term Obligations $ 9,51.3,234 .. CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 9 - LONG -TERM DEBT (Continued) Changes in long -term debt for the year ending September 30, 2013 are as follows: Business -Type Activities Revenue Bonds Balance - $ (140,000) $ 2,215,000 $ Balance Due Within (12,344) 9130/2012 Additions Reductions 9/30/2013 One Year Governmental Activities: 2,120,000 290,000 Unamortized Premium 8,471 - (969) General Obligation Bonds $ 51,050,000 $ - $ (1,825,000) $ 49,225,000 $ 1,960,000 Unamortized Premium 569,948 - (27,297) 542,651 27,297 General Obligation Refunding Bonds 9,155,000 - (320,000) 8,835,000 875,000 Unamortized Premium 103,811 - (12,712) 91,099 12,712 Certificates of Obligation 1,581,300 - (779,533) 801,767 257,833 Tax Notes 775,000 1,635,000 (255,000) 2,155,000 570,000 Capital Lease 60,190 - (37,792) 22,398 22,398 Compensated Absences 776,276 243,996 (160,704) 859,568 171,914 Total Governmental Activities $ 64,071,525 $ 1,878,996 $ (3,418,038) $ 62,532,483 $ 3,897,154 Business -Type Activities Revenue Bonds $ 2,355,000 $ - $ (140,000) $ 2,215,000 $ 145,000 Unamortized Discount (12,344) - 975 (11,369) (975) General Obligation Refunding Bonds 2,405,000 - (285,000) 2,120,000 290,000 Unamortized Premium 8,471 - (969) 7,502 975 Certificates of Obligation 5,383,700 - (335,466) 5,048,234 347,167 Tax Notes 190,000 - (60,000) 130,000 65,000 Compensated Absences Payable 219,001 51,069 (43,800) 226,270 45,254 19,688,243 2029 -2033 9,975,000 Total Business -Type Activities $ 10,548,828 $ 51,069 $ (864,260) $ 9,735,637 $ 892,421 Annual debt service requirements of bonded debt as of September 30, 2013, are as follows: M Governmental Activities September 30, Principal Interest Total 2014 . $ 3,662,833 $ 2,318,482 $ 5,981,315 2015 3,806,134 2,197,435 6,003, 569 2016 3,667,800 2,078,492 5,746,292 2017 3,505,000 1,957,974 5,462,974 2018 3,620,000 1,841,921 5,461,921 2019 -2023 15,835,000 7,471,605 23,306,605 2024 - 2028 1.5,365,000 4,323,243 19,688,243 2029 -2033 9,975,000 1,397,981 11,372,981 2034 -2036 1 ,580,000 121,250 1,701,250 Total $ 61,016,767 $ 23,708,383 $ 84,725,150 M CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 9 - LONG -TERM DEBT (Continued) NOTE 10 - RETIREMENT PLAN A. Plan Description The City provides pension benefits for its eligible employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), an agent multiple - employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. TMRS issues publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contribution, benefits and actuarial methods and assumptions used by the System. This report may be obtained from TMRS' website at www.TMRS.com. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Employee deposit rate Matching ratio (City to employee) Years required for vesting Service retirement eligibility (expressed as age /years of service) Updated Service Credit Annuity Increase (to retirees) Plan Year 2012 7.0% 2 to 1. 5 60/5,0/20 100% Repeating, Transfers 70% of CPI Repeating .m Plan Year 2013 7.0% 2 to 1. 5 60/5,0/20 100% Repeating, Transfers 70% of CPI Repeating Business -Type Activities September 30, Principal Interest Total 2014 $ 847,167 $ 342,390 $ 1,189,557 2015 883,867 315,121 1,198,988 2016 837,200 287,414 1,124,614 2017 795,000 259,802 1,054,802 2018 735,000 233,869 968,869 2019 -2023 3,610,000 756,179 4,366,179 2024 -2026 1,805,000 129,942 1,934,942 Total $ 9,513,234 $ 2,324,717 $ 11,837,951 NOTE 10 - RETIREMENT PLAN A. Plan Description The City provides pension benefits for its eligible employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), an agent multiple - employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. TMRS issues publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contribution, benefits and actuarial methods and assumptions used by the System. This report may be obtained from TMRS' website at www.TMRS.com. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Employee deposit rate Matching ratio (City to employee) Years required for vesting Service retirement eligibility (expressed as age /years of service) Updated Service Credit Annuity Increase (to retirees) Plan Year 2012 7.0% 2 to 1. 5 60/5,0/20 100% Repeating, Transfers 70% of CPI Repeating .m Plan Year 2013 7.0% 2 to 1. 5 60/5,0/20 100% Repeating, Transfers 70% of CPI Repeating CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 10 - RETIREMENT PLAN (Continued) B. Contributions Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service 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 portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for the City. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one -year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and net pension obligation (asset) are as follows: The required contribution rates for fiscal year 2013 were determined as part of the December 31, 2010 . and 2011 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2012, also follows: Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Amortization of New Gains /Losses Asset Valuation Method Investment Rate of Return Projected Salary Increases Inflation Rate Cost -of- Living Adjustments December 31, 2010 Projected Unit Credit Level Percent of Payroll 27.1 years - Closed Period 30 years December 31, 2011 Projected Unit Credit Level Percent of Payroll 26.1 years - Closed Period 30 years December 31, 2012 Projected Unit Credit Level Percent of Payroll 25.1 years - Closed Period 30 years 10 -year Smoothed Market 10 -year Smoothed Market 10 -year Smoothed Market 7.0% 7.0% 7.0% Varies by age and service Varies by age and service Varies by age and service 3.0% 3.0% 3.0% 2.1% 2.1% 2.1% IN Annual Actual Percentage of Net Pension Fiscal Year Pension Cost Contribution Made APC Contributed Obligation 2013 $ 2,190,352 $ 2,190,352 100% $ - 2012 2,120,746 2,120,746 100% - 2011 2,089,658 2,089,658 100% - The required contribution rates for fiscal year 2013 were determined as part of the December 31, 2010 . and 2011 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2012, also follows: Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Amortization of New Gains /Losses Asset Valuation Method Investment Rate of Return Projected Salary Increases Inflation Rate Cost -of- Living Adjustments December 31, 2010 Projected Unit Credit Level Percent of Payroll 27.1 years - Closed Period 30 years December 31, 2011 Projected Unit Credit Level Percent of Payroll 26.1 years - Closed Period 30 years December 31, 2012 Projected Unit Credit Level Percent of Payroll 25.1 years - Closed Period 30 years 10 -year Smoothed Market 10 -year Smoothed Market 10 -year Smoothed Market 7.0% 7.0% 7.0% Varies by age and service Varies by age and service Varies by age and service 3.0% 3.0% 3.0% 2.1% 2.1% 2.1% IN CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 10 - RETIREMENT PLAN (Continued) B. Contributions (Continued) The funded status as of December 31, 2012, the most recent actuarial valuation date, is as follows: Actuarial Actuarial Value Valuation Date of Assets 12/31/2012 $ 26,273,784 Actuarial UAAL as a Accrued Unfunded Percentage of Liability (AAL) Funded Ratio AAL (UAAL) Covered Payroll Covered Payroll $ 38,771,665 67.8% $ 12,497,881 $ 13,853,458 90.2% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revisions as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long -term perspective. Consistent with that perspective, actuarial methods and assumptions used to include techniques that are designed to reduce short -term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi -year information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits. C. Other Post - Employment Benefits The City also participates in the cost sharing multiple- employer defined benefit group -term life insurance plan operated by TMRS known as Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group -term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12 -month period preceding the month of death); retired employees are insured for $7,500; this coverage is an "other postemployment benefit," or OPEB. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one -year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre -fund retiree life insurance during the employees' entire careers. The City's contributions to the TMRS SDBF for the years ended 2013, 2012, and 2011 were $21,251, $22,274, and $25,723, respectively, which equaled the required contributions each year. CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 11 - JOINT VENTURES Schertz /Seguin Local Government Corporation The Schertz /Seguin Local Government Corporation is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schertz 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. Contributions to the corporation are reflected as "operating expenses" in the water and sewer fiend and totaled $1,516,043 for the year ended September 30, 2013. Separate financial statements for the Schertz /Seguin Local Government Corporation may be obtained from the City of Seguin, 210 East Gonzales Street, Seguin, Texas 781.56. 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. Following is a summary of financial data as reported in the Corporation's audited financial statements dated September 30, 2012: ASSETS: Current Assets $ 5,349,235 Restricted Cash and Cash Equivalents 35,496,599 Property, Plant & Equipment (net) 63,425,232 Other Assets 2,271,147 TOTAL ASSETS 106,542,213 LIABILITIES: Current Liabilities 3,174, 832 Revenue Bonds (Less Current Maturities) 98,800,023 TOTAL LIABILITIES 101,974,855 NET POSITION: Net Investment in Capital Assets (3,1 83,819) Restricted 4,846,559 Unrestricted 2,904,618 TOTAL NET POSITION $ 4,567,358 The Corporation had revenue bonds outstanding in the amount of $101,120,000 (as of September 30, 2012) 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. The bond resolution pledges intergovernmental contract revenues from the cities of Schertz and Seguin (the participating governments) to bond holders. Under the intergovernmental water supply contract, the participating governments are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service from the operation of their respective utility systems. .• CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 11 - JOINT VENTURES (Continued) Cibolo Valley Local Government Corporation The Cibolo Valley Local Government Corporation (CVLGC) is a public nonprofit corporation incorporated in March 2012 to assist and act on behalf of the cities of Schertz, Converse and Cibolo to obtain additional water sources. 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. Contributions to the corporation are reflected as "operating expenses" in the water and sewer fund. Separate financial statements for the CVLGC may be obtained from the City of Seguin, 210 East Gonzales Street, Seguin, Texas 78156. The City of Schertz is jointly liable, together with the City of Seguin, City of Converse, and City of Cibolo, for operating deficits and long -term debt of CVLGC. Following is a summary of financial data as reported in the Corporation's audited financial statements dated September 30, 2012: ASSETS: Current Assets $ 1,032,058 TOTAL ASSETS 1,032,058 LIABILITIES: Current Liabilities 18,975 TOTAL LIABILITIES 18,975 NET POSITION: Unrestricted 1,013,083 TOTAL NET POSITION $ 1,013,083 NOTE 12 - COMMITMENTS AND CONTINGENCIES Tax Increment Financing (the "Zone') The City is a principal in the City of Schertz Tax Increment Reinvestment Zone #2, pursuant to Chapter 311 of the Texas Tax Code. Under the terms of the Zone agreement, the City of Schertz, Bexar County, and San Antonio River Authority are funding infrastructure improvements through tax increment financing to the Sedona Development Project. At the time the Zone was created, the property tax base was "frozen" and increment taxes resulting from the increases to property tax base are being used to finance Zone improvements. The total projected cost is a combined figure of $45,000,000. Project costs of the developer will be funded up to 100% of the tax increment generated by the City of Schertz, Bexar County, and San Antonio River Authority (SARA). The City of Schertz (combined with SARA) have committed up to $32,877,000 of the total $45,000,000. The Zone has a statutory termination date of December 31, 2027. The TIRZ has collected $186,745 from taxing entities (net of administrative reimbursements) and remitted $50,376 to the developer as of September 30, 2013. W CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued) 380 Agreements To encourage economic growth, the City has entered into various 380 agreements with businesses in the City. These agreements involve rebates of future ad valorem taxes and or sales taxes. These agreements are rebates of future taxes, and should not have a significant impact on current tax base in future years. Once the terms of the 380 agreements expire, the tax base of the City will be increased to include these new businesses. Construction Commitments The City of Schertz has entered into commitments for various projects as follows: Primary Government: Governmental Activities: Natatorium Project Woodland Oaks Detention Facility Skate Park Project Soccer Fields Improvement Athletic Fields Improvements Schertz Animal Services Facility FM 78 and Main Street Ware Seguin Road Improvements Lower Seguin Road Improvements Lazy Oak Drive Laura Heights Projects Total Governmental Commitments Business -Type Activities: S. W.W. Treatment Plant SE Quad Elevated Tank Waterline at Maske Rd-FM 1518 Aviation Heights Waterline Replacement Northcliffe Waterline Upgrades East Live Oak Water Plan Upgrades Commercial Place Project Town Creek Sewer Project - Phase III Total Business -Type Activities Total Estimated Future Commitments Estimated Project Cost to City $ 6,160,500 32,000 137,000 4,051,000 1,727,150 2,412,447 1,000,000 487,499 544,841 172,420 80,394 16,805,251 3,985,000 200,552 74,045 400,000 730,064 245,000 1,980,000 695,807 8,310,468 Expended to Estimated Future Date Commitment $ 221,499 5,830 1,800 625,233 504,833 1,865,463 20,430 11,786 6,510 23,382 40,043 3,326,809 132,938 12,251 43,643 32,481 57,966 22,847 1,749,806 980 2,052,912 $ 5,939,001 26,170 135,200 3,425,767 1,222,317 546,984 979,570 475,713 538,331 149,038 40,351 13,478,442 3,852,062 188,301 30,402 367,519 672,098 222,153 230,194 694,827 6,257,556 $ 25,115,719 $ 5,379,721 $ 19,735,998 51 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2013 NOTE 12 - COMMITMENTS AND CONTINGENCIES (Continued) Litigation 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. 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; 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, worker's compensation, real and personal property, mobile equipment, and errors and omissions liability. TML is a multi - employer group that provides for a combination of risk sharing among pool participants and stop loss coverage. Contributions are set annually by the provider. Liability by the City is generally limited to the contributed amounts. Annual contributions for the year ended September 30, 2013 were $393,834 for property and casualty and workers compensation coverage. There were no significant increases or decreases in coverage from fiscal year 2012. NOTE 13 - SUBSEQUENT EVENTS In October 2013, the City issued general obligation refunding bonds series 2013 for a principal amount of $2,160,000. The bonds mature serially through 2025 and bear interest at 2.58 %. The bonds were issued to advance refund the 2005 Revenue Bonds of $2,070,000 on the call date of February 1, 2014. The refunding resulted in a total savings of $155,573 with a present value of $133,020. Also in October 2013, the City issued certificates of obligation series 2013 . for a principal amount of $4,965,000. The bonds mature serially through 2033 and have interest rates ranging from 2.0 % -4.0 %. The bonds were issued to fund improvements to the utility system. L►[�Illl�f[��:i[�li��i[� � � � l�l.`Illl�i�l��ll In a prior year, the City charged the incorrect amount for parkland dedication fees (recorded in a nonmajor special revenue fund). The error was discovered this year and the overcharges were refunded in the amount of $189,650. A prior period adjustment was recorded to correct prior year overstated revenues which affected both nonmajor governmental beginning fund balance and governmental activities beginning net position. NOTE 15 — RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In June 2012, the GASB issued Statement 68, Accounting and Financial Reporting for Pensions — an Amendment of GASB Statement 27. The statement improves information provided by governments for defined benefit retirement plans. The Statement is effective for fiscal years beginning after June 15, 2014. Management is currently evaluating the impact of the adoption of this statement on the City's financial statements and it may be significant. 52 rr REQUIRED SUPPLEMENTARY INFORMATION 53 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 Public Safety. Police Department 5,311,412 5,344,249 5,341,470 Variance With Fire Department 2,918,186 2,921,465 2013 Final Budget - Inspection Budgeted Amounts Actual Positive 9,539 Original Final Amounts (Negative) REVENUES Total Public Safety 9,303,545 9,339,661 9,289,856 Taxes $ 14,707,325 $ 14,707,325 $ 15,411,501 $ 704,176 Permits and Fees 1,122,040 1,287,040 1,398,781 1.11,741 Service Fees 3,102,615 3,102,615 3,205,265 1.02,650 Fines and Fees 2,054,508 2,054,508 1,870,825 (1.83,683) Intergovernmental 362,202 375,502 464,979 89,477 Investment Earnings 19,500 19,500 10,244 (9,256) Miscellaneous 505,950 505,950 584,214 78,264 TOTAL REVENUES 21,874,140 22,052,440 22,945,809 893,369 EXPENDITURES General Government: Council 76,556 88,171 84,546 3,625 City Manager 968,030 968,030 984,926 (16,896) Municipal Court 416,603 416,603 347,707 68,896 31.1 Customer Relations 110,303 110,303 105,075 5,228 Planning & Zoning 185,883 185,883 161,738 24,145 Legal 360,000 360,000 511,331 (151,331) General Services 1,204,690 1,014,909 966,015 48,894 City Secretary 185,106 185,106 161,039 24,067 Nondepartmental 1,296, 550 1,217,119 1,028,692 188,427 Community & Media Relations 322,753 322,753 274,729 48,024 Records Management 62,104 62,104 60,879 1,225 Schertz Magazine 443,665 443,665 417,930 25,735 Engineering 316,206 303,370 204,717 98,653 Geographic Information Systems 135,381 135,381 132,157 3,224 Citizens Assistance 52,000 52,000 52,000 - Speeial Events 1.26,150 1.26,150 104,215 21,935 Total General Government 6,261,980 5,991,547 5,597,696 393,851 Public Safety. Police Department 5,311,412 5,344,249 5,341,470 2,779 Fire Department 2,918,186 2,921,465 2,920,922 543 Inspection 455,328 455,328 445,789 9,539 Marshal Service 618,619 618,619 581,675 36,944 Total Public Safety 9,303,545 9,339,661 9,289,856 49,805 Public Environment: Streets 1,012,199 1,012,199 951,528 60,671 Total Public Environment $ 1,01.2,199 $ 1,01.2,199 $ 951,528 $ 60,671 El CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (CONTINUED) YEAR ENDED SEPTEMBER 30, 2013 EXPENDITURES (Continued) Parks and Recreation: Parks Pools Community /Civic Center Total Parks and Recreation Cultural: Library Total Cultural Health: Animal Control Total Health Administration: Information Technology Human Resources Finance Purchasing & Asset Management Building Maintenance Fleet Service Total Administration TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING Budgeted Amounts Original Final 2013 Actual Amounts Variance With Final Budget - Positive (Negative) $ 810,315 $ 810,315 $ 796,899 $ 13,416 254,503 254,503 226,370 28,133 163,394 163,394 136,160 27,234 1,228,21.2 11228121.2 1,159,429 68,783 855,105 855,105 8301149 24,956 855,105 855,105 8301149 24,956 391,348 391,348 341,961 49,387 391,348 391,348 341,961 49,387 976,51.8 989,354 907,835 81,519 409,548 409,548 365,935 43,613 465,396 465,396 456,025 9,371 257,711 257,711 255,325 2,386 - 189,781 148,680 41,101 447,628 492,628 463,328 29,300 2,556,801 2,804,418 2,597,128 207,290 21,609,190 21,622,490 20,767,747 8541743 264,950 429,950 2,178,062 1,748,112 151,250 151,250 61,226 (90,024) (60,150) (225,150) (198,899) 26,251 91,100 (73,900) (137,673) (63,773) 356,050 356,050 2,040,389 1,684,339 3,976,817 3,976,817 3,976,817 - FUND BALANCE - ENDING $ 4,332,867 $ 4,332,867 $ 6,017,206 $ 1,684,339 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION ECONOMIC DEVELOPMENT CORPORATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2013 REVENUES Taxes Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Debt Service: Principal Interest TOTAL EXPENDITURES Budgeted Amounts Original Final 2013 Actual Amounts Variance With Final Budget - Positive (Negative) $ 2,820,260 $ 2,820,260 $ 3,215,620 $ 395,360 12,450 12,450 8,821 (3,629) 5,000 5,000 - (5,000) 2,837,710 2,837,710 3,224,441 386,731 1,876,865 1,927,775 770,739 1,157,036 390,000 390,000 390,000 - 38,504 38,504 38,504 - 2,305,369 2,356,279 1,199,243 1,157,036 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 532,341 481,431 2,025,198 1,543,767 OTHER FINANCING SOURCES (USES) Transfers Out TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING (369,075) (369,075) (369,075) (369,075) (369,075) (369,075) 163,266 112,356 1,656,123 1,543,767 4,486,085 4,486,085 4,486,085 $ 4,649,351 $ 4,598,441 $ 6,142,208 $ 1,543,767 w CITY OF SCHERTZ, TEXAS NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL SEPTEMBER 30, 2013 Budgetary Information — The budget is prepared in accordance with accounting principles generally accepted in the United States of America. The City maintains strict budgetary controls. The objective of these controls is to ensure compliance with legal provision embodied in the annual appropriated budget approved by the City Council and as such is a good management control device. Annual budgets are adopted for the general fund; debt service fund; hotel motel tax, park fund, tree mitigation; police forfeiture fund, library advisory board fund, and the historical committee fund. Project - length financial plans are adopted for capital projects funds. Of these budgets, only the General Fund, Debt Service and Economic Development Corporation are legally adopted. Budgetary preparation and control is exercised at the department level. Actual expenditures may not legally exceed appropriations at the fund level. The City did not exceed the budgeted expenditures in any funds with legally adopted budgets during 2013. The City does not use encumbrances. m CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION TEXAS MUNICIPAL RETIREMENT SYSTEM ANALYSIS OF FUNDING PROGRESS LAST NINE CALENDAR YEARS * As of December 31 of the preceding year, the date of the actuarial valuation * * Assets are stated cost as of December 31 of the preceding year. M UNFUNDED ACTUARIAL UNFUNDED ACCRUED ACTUARIAL ACTUARIAL FUNDING ACTUARIAL CALENDAR VALUE OF ACCRUED RATIO ACCRUED YEAR ASSETS" LIABILITY* (1)/(2) LIABILITY 2012 $ 26,273,784 $ 38,771,665 67.8% $1.2,497,881. 2011 22,377,323 35,296,880 63.4% 12,919,557 2010 18,696,437 31,792,634 58.8% 13,096,197 2009 13,946,029 25,584,067 54.5% 11,638,038 2008 11,216,663 22,068,312 50.8% 10,851,649 2007 8,811,205 1.9,057,935 46.2% 10,246,730 2006 7,290,175 11,798,002 61.8% 4,507,827 2005 6,042,437 9,003,970 67.1% 2,961,533 2004 5,122,816 7,950,619 64.4% 2,827,803 * As of December 31 of the preceding year, the date of the actuarial valuation * * Assets are stated cost as of December 31 of the preceding year. M UNFUNDED ACTUARIAL ACCRUED LIABILITY AS A ANNUAL PERCENTAGE COVERED OF COVERED PAYROLL PAYROLL $ 1.3,853,458 90.2% 13,125,349 98.4% 12,612,346 103.8% 12,321,349 94.5% 11,626,232 93.3% 10,047,726 102.0% 8,478,634 53.2% 7,662,928 38.6% 6,144,053 46.0% SUPPLEMENTARY INFORMATION • Comparative Statements • General Fund • Economic Development Corporation • Debt Service Fund • Capital Projects Fund Combining and Comparative Individual Fund Statements - Nonmajor Governmental Funds • Hotel Occupancy - will account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. • Tree Mitigation Fund - will account for revenues from permits, grants and donations to preserve and replace trees in the City. • Park Fund - will account for revenues from developers' fees (in lieu of park land dedication), grants, and donations and is designed to monitor and manage improvement of park system. • Police Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies. • Library Advisory Board — to account for certain fees generated at the library to be used by the Board for general improvements to the Library. • Historical Committee Fund - will account for funds received for the preservation of the history of the city. • Parks and Recreation Foundation — to account for revenues from events, fundraisers and donations to improve and maintain City parks. W CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS GENERAL FUND SEPTEMBER 30, 2013 AND 2012 •1 2013 2012 . ASSETS Cash and Cash Equivalents $ 604,120 $ 767,416 Investments 4,884,186 2,573,411 Receivables (net of allowances): Taxes 1,640,179 1,529,976 Accounts and Other 1,986,71.5 2,063,204 Due from Other Funds 467,407 379,566 Inventory 50,768 63,556 Restricted Cash 9,063 358,029 TOTAL ASSETS $ 9,642,438 $ 7,735,158 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable $ 931,146 $ 868,897 Accrued Salaries and Benefits 353,809 645,523 Customer Deposits 33,916 28,350 Due to Other Governments 231,399 256,769 Unearned Revenue 47,386 52,507 Total Liabilities 1,597,656 1,852,046 Deferred Inflows of Resources: Unavailable Revenue 2,027,576 1,906,295 Fund Balance: Nonspendable: Inventory 50,768 63,556 Restricted for: Police and Public Safety 101,303 28,280 Municipal Court 646,422 581,217 PEG Capital Fees 456,175 409,870 Assigned for: Property Replacement 456,034 322,656 Special Events 99,770 92,555 Unassigned 4,206,734 2,478,683 Total Fund Balance 6,017,206 3,976,817 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE $ 9,642,438 $ 7,735,158 •1 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012 EXPENDITURES Current: General Government 2013 2012 REVENUES 9,113,840 8,654,249 Taxes $ 15,41.1,501 $ 13,868,652 Permits and Fees 1,398,781 1,146,301 Service Fees 3,205,265 2,699,448 Fines and Fees 1,870,825 1,979,678 Intergovernmental 464,979 466,864 Investment Earnings 10,244 19,309 Miscellaneous 584,214 749,016 TOTAL REVENUES 22,945,809 20,929,268 EXPENDITURES Current: General Government 5,552,1.50 5,367,322 Public Safety 9,113,840 8,654,249 Public Environment 951,528 976,327 Parks and Recreation 1,1.20,724 1,118,465 Cultural 830,149 821,351 Health 341,961 346,318 Administration 2,597,128 2,349,598 Capital Outlay 221,562 454,811 Debt Service: Principal 37,792 36,998 Interest and Fiscal Charges 913 1,707 Other Debt Costs - 100 TOTAL EXPENDITURES 20,767,747 20,127,246 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,178,062 802,022 OTHER FINANCING SOURCES (USES) Transfers In 61,226 38,250 Transfers Out (198,899) (66,655) TOTAL OTHER FINANCING SOURCES (USES) (137,673) (28,405) Net Change in Fund Balance 2,040,389 773,617 Fund Balance at Beginning of Year 3,976,81.7 3,203,200 Fund Balance at End of Year $ 6,017,206 $ 3,976,817 61 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2013 AND 2012 ASSETS Cash and Cash Equivalents Investments Receivables (net of allowances): Taxes Accounts and Other Note Receivable TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable Accrued Salaries and Benefits Total Liabilities Fund Balance: Nonspendable: Note Receivable Restricted for: Economic Development Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 62 2013 2012 $ 318,397 $ 194,866 5,152,452 3,714,103 569,259 507,237 1,197 1,197 120,080 120,080 $ 6,161,385 $ 4,537,483 $ 11,034 $ 45,332 8,143 6,066 19,177 51,398 120,080 120,080 6,022,128 4,366,005 6,142,208 4,486,085 $ 6,161,385 $ 4,537,483 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE ECONOMIC DEVELOPMENT CORPORATION FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012 REVENUES Taxes Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Debt Service: Principal Interest and Fiscal Charges TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year 63 2013 $ 3,215,620 8,821 3,224,441 770,739 2012 $ 2,659,194 9,195 16,848 2,685,237 918,928 390,000 380,000 38,504 48,329 1,199,243 1,347,257 2,025,1.98 1,337,980 (369,075) (366,825) (369,075) (366,825) 1,656,123 971,155 4,486,085 3,514,930 $ 6,1427208 $ 4,486,085 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2013 AND 2012 ASSETS Receivables (net of allowances): Taxes Due from Other Funds Restricted: Cash and Cash Equivalents Investments TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: Accounts Payable Accrued Interest Payable Total Liabilities Deferred Inflows of Resources: Unavailable Revenue Fund Balance: Restricted for: Debt Service Total Fund Balance TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE a 2013 2012 . $ 71,174 $ 63,989 - 116,144 118,850 929 398,749 132,312 $ 588,773 $ 313,374 $ 400 $ - - 28,135 400 28,135 71,174 57,565 517,1.99 227,674 517,199 227,674 $ 588,773 $ 313,374 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL DEBT SERVICE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) m Variance with 2013 Final Budget- 2012 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Property Taxes $ 5,087,646 $ 5,087,646 $ 5,051,475 $ (36,171) $ 4,306,882 Investment Earnings 12,550 12,550 2,012 (10,538) 23,902 TOTAL REVENUES 5,100,196 5,100,196 5,053,487 (46,709) 4,330,784 EXPENDITURES Debt Service: Principal 2,789,534 2,789,534 2,789,533 1 2,287,900 Interest and Fiscal Charges 2,372,402 2,372,402 2,341,754 30,648 2,261,524 Bond Issue Costs - - 1,750 (1,750) 84,340 TOTAL EXPENDITURES 5,161,936 5,161,936 5,133,037 28,899 4,633,764 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (61,740) (61,740) (79,550) (17,810) (302,980) OTHER FINANCING SOURCES Transfers In 424,075 424,075 369,075 (55,000) 366,825 Proceeds from Refunding Bonds - - - - 6,745,000 Payments to Refunding Escrow Agent - - - - (6,698,421) TOTAL OTHER FINANCING SOURCES 424,075 424,075 369,075 (55,000) 413,404 Net Change in Fund Balance 362,335 362,335 289,525 (72,810) 110,424 FUND BALANCE, BEGINNING 227,674 227,674 227,674 - 117,250 FUND BALANCE, ENDING $ 590,009 $ 590,009 $ 517,199 $ (72,810) $ 227,674 m CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS CAPITAL PROJECTS FUND SEPTEMBER 30, 201.3 AND 2012 ASSETS Receivables (net of allowances): Accounts and Other Prepaid Items Restricted Assets: Cash and Cash Equivalents Investments TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable Due to Other Funds Total Liabilities Fund Balance: Nonspendable: Prepaid Items Restricted for: Capital Improvement Committed for: Capital Improvement Assigned for: Capital Improvement Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 2013 2012 $ 73,895 46,425 754,443 - 259,881 409,375 16,797,740 17,891,149 $ 17,885,959 $ 18,346,949 $ 664,745 $ 85,880 795,804 912,928 1,460,549 998,808 754,443 15,360,800 165,000 17,104,595 145,167 243,546 16,425,410 17,348,141 $ 17,885,959 $ 18,346,949 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL PROJECTS FUND FOR THE YEARS ENDED SEPTEMBER 30, 2013 AND 2012 REVENUES Intergovernmental Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Capital Outlay Debt Service: Bond Issue Costs TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Issuances of Debt Premium on Debt Issued Transfers In TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year MN 2013 2012 $ 27,353 $ 45,084 31,572 5,867 7,500 143,942 66,425 194,893 - 195,833 2,931,207 760,324 30,000 172,481 2,961,207 1,128,638 (2,894,782) (933,745) 1,635,000 7,625,000 - 175,473 337,051 100,000 1,972,051 7,900,473 (922,731) 6,966,728 17,348,1.41 10,381,413 $ 16,425,410 $ 17,348,141 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2013 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net of Allowance Taxes Other Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Due to Other Funds Total Liabilities Fund Balance Restricted for: Tourism Development Tree Mitigation Parks Police Forfeiture Library Historical Committee Total Fund Balances Special Revenue Funds Hotel Occupancy Park Tree Fund Fund Mitigation $ 11.4,009 $ 7,1.14 $ 60,411 298,903 1.65,353 97,248 80,726 - - $ 493,638 $ 1.72,467 $ 157,659 $ 3,388 $ 8,444 20,000 160,000 23,388 168,444 TOTAL LIABILITIES AND FUND BALANCE $ 493,638 $ 172,467 $ 157,659 • Special Revenue Funds Police Library Parks & Historical Forfeitures Advisory Recreation Committee Fund Board Foundation Fund Totals $ 56,919 $ 23,278 $ 109,433 $ 9,562 $ 380,726 338,668 44,812 - - 944,984 - - - - 80,726 3,640 - 3,640 - - 20,000 - 20,000 $ 395,587 $ 68,090 $ 133,073 $ 9,562 $ 1,430,076 $ - $ 98 $ 449 $ - $ 12,379 - - - 180,000 98 449 - 192,379 - - 470,250 - - 157,659 - - 132,624 - 136,647 395,587 - - - 395,587 - 67,992 - - 67,992 - - - 9,562 9,562 395,587 67,992 132,624 9,562 1,237,697 $ 395,587 $ 68,090 $ 133,073 $ 9,562 $ 1,430,076 •• CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2013 REVENUES Occupancy Tax Permits and Fees Service Fees Fines and Fees Intergovernmental Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Parks and Recreation Cultural Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balances, Beginning Prior Period Adjustment Fund Balances, Ending Special Revenue Funds Hotel Occupancy Park Tree Fund Fund Mitigation $ 503,267 $ - $ - - 192,000 1.9,173 512 225 - - - 1,842 503,779 192,225 21,015 342,864 - - - 10,594 57,730 - - 23,226 342,864 10,594 80,956 160,915 181,631 (59,941) (81,226) (138,884) - (81,226) (138,884) - 79,689 42,747 (59,941) 390,561 150,926 217,600 - (189,650) - $ 470,250 $ 4,023 $ 1.57,659 NE - 899 343,763 - 223,281 - 291,605 10,446 - - 10,446 - 101,402 - 124,628 10,446 324,683 899 770,442 57,469 12,150 (30,275) (737) 321,212 20,000 732 20,732 - - (220,110) - - 20,000 732 (199,378) 57,469 1.2,150 (10,275) (5) 121,834 338,118 55,842 142,899 9,567 1,305,51.3 - - - - (189,650) $ 395,587 $ 67,992 $ 132,624 $ 9,562 $ 1,237,697 71 Special Revenue Funds Police Library Parks & Historical Forfeitures Advisory Recreation Committee Fund Board Foundation Fund Totals - $ - $ - $ - $ 503,267 - - - - 211,173 - 20,772 176,776 - 197,548 56,919 - - - 56,919 550 60 117 - 11464 - 1,764 117,515 162 121,283 57,469 22,596 294,408 162 1,091,654 - 899 343,763 - 223,281 - 291,605 10,446 - - 10,446 - 101,402 - 124,628 10,446 324,683 899 770,442 57,469 12,150 (30,275) (737) 321,212 20,000 732 20,732 - - (220,110) - - 20,000 732 (199,378) 57,469 1.2,150 (10,275) (5) 121,834 338,118 55,842 142,899 9,567 1,305,51.3 - - - - (189,650) $ 395,587 $ 67,992 $ 132,624 $ 9,562 $ 1,237,697 71 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL HOTEL OCCUPANCY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) REVENUES Occupancy Tax Investment Earnings TOTAL REVENUES EXPENDITURES Current: General Government Capital Outlay TOTAL EXPENDITURES Variance with 2013 Final Budget- 2012 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 492,417 $ 492,417 $ 503,267 $ 10,850 $ 470,290 300 300 512 212 421 492,717 492,717 503,779 11,062 470,711 382,695 392,695 342,864 49,831 324,417 8,000 8,000 - 81000 - 390,695 400,695 342,864 57,831 324,417 Excess (Deficiency) of Revenues Over (Under) Expenses 102,022 92,022 160,915 68,893 146,294 OTHER FINANCING SOURCES (USES) Transfers Out (91,250) (91,250) (81,226) 10,024 (57,250) TOTAL OTHER FINANCING SOURCES (USES) (91,250) (91,250) (81,226) 10,024 (57,250) Net Change in Fund Balance 10,772 772 79,689 78,917 89,044 FUND BALANCE, BEGINNING 390,561 390,561 390,561 - 301,517 FUND BALANCE, ENDING -$---401 ,333 $ 391,333 $ 470,250 $ 78,917 $ 390,561 72 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL PARK FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) REVENUES Licenses and Permits Investment Earnings TOTAL REVENUES EXPENDITURES Current: Parks and Recreation Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING USES Transfers Out TOTAL OTHER FINANCING Net Change in Fund Balance FUND BALANCE, BEGINNING Budgeted Amounts Original Final Variance with 2013 Final Budget- Actual Positive Amounts (Negative) 2012* Actual $ 150,000 $ 150,000 $ 192,000 $ 42,000 $ 148,025 300 300 225 (75) 656 150,300 150,300 192,225 41,925 148,681 - 189,650 10,594 (10,594) 92,089 107,600 107,600 - 107,600 23,416 107,600 297,250 10,594 97,006 115,505 42,700 (146,950) 181,631 (55,081) 33,176 (138,884) (138,884) 138,884 (100,000) - (138,884) (138,884) 138,884 (100,000) 42,700 (285,834) 42,747 83,803 (66,824) (38,724) (38,724) (38,724) - 28,100 FUND BALANCE, ENDING $ 3,976 $ (324,558) _$__4,023 $ 83,803 $ (38,724) *2012 has been restated to reflect the results of a prior period adjustment. See Note 14. 73 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL TREE MITIGATION FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) REVENUES Licenses and Permits Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: Parks and Recreation Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures Budgeted Amounts Original Final 2013 Actual Amounts Variance with Final Budget- 2012 Positive Actual (Negative) Amounts $ 150,000 $ 150,000 $ 19,173 $ (130,827) $ 69,135 300 300 - (300) - - - 1,842 1,842 - 150,300 150,300 21,015 (129,285) 69,135 - 189,650 57,730 (57,730) 5,634 107,600 107,600 23,226 84,374 19,900 107,600 297,250 80,956 26,644 25,534 FUND BALANCE, ENDING 42,700 (146,950) (59,941) (155,929) 43,601 OTHER FINANCING USES Transfers Out - (138,884) - - - TOTAL OTHER FINANCING - (138,884) - - - Net Change in Fund Balance 42,700 (285,834) (59,941) (155,929) 43,601. FUND BALANCE, BEGINNING 217,600 217,600 217,600 - 173,999 FUND BALANCE, ENDING $ 260,300 $ (68,234) $ 157,659 $ (155,929) $ 217,600 m CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL POLICE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) EXPENDITURES Current: Public Safety 20,000 20,000 - Variance with 36,600 Capital Outlay 20,000 2013 Final Budget- 2012 TOTAL EXPENDITURES Budgeted Amounts Actual Positive Actual Net Change in Fund Balance Original Final Amounts (Negative) Amounts REVENUES 338,118 338,118 338,1.18 - 390,795 Fines and Fees $ 40,400 $ 40,400 $ 56,919 $ 16,519 $ 47,935 Investment Earnings - - 550 550 796 TOTAL REVENUES 40,400 40,400 57,469 17,069 48,731 EXPENDITURES Current: Public Safety 20,000 20,000 - 20,000 36,600 Capital Outlay 20,000 20,000 - 20,000 64,808 TOTAL EXPENDITURES 40,000 40,000 - 40,000 101,408 Net Change in Fund Balance 400 400 57,469 57,069 (52,677) FUND BALANCE, BEGINNING 338,118 338,118 338,1.18 - 390,795 FUND BALANCE, ENDING $ 338,518 $ 338,518 $ 395,587 $ 57,069 $ 338,118 w CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL LIBRARY ADVISORY BOARD FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) EXPENDITURES Current: Cultural 20,400 20,400 Variance with 9,954 1.1,730 Capital Outlay 2013 Final Budget- 2012 - Budgeted Amounts Actual Positive Actual 10,446 Original Final Amounts (Negative) Amounts REVENUES 12,150 (9,818) 5,169 FUND BALANCE, BEGINNING Service Fees $ 22,400 $ 22,400 $ 20,772 $ (1,628) $ 21,515 Investment Earnings 60 60 60 - 84 Miscellaneous - - 1,764 1,764 1,050 TOTAL REVENUES 22,460 22,460 22,596 136 22,649 EXPENDITURES Current: Cultural 20,400 20,400 10,446 9,954 1.1,730 Capital Outlay - - - - 5,750 TOTAL EXPENDITURES 20,400 20,400 10,446 9,954 17,480 Net Change in Fund Balance 2,060 2,060 12,150 (9,818) 5,169 FUND BALANCE, BEGINNING 55,842 55,842 55,842 - 50,673 FUND BALANCE, ENDING $ 57,902 $ 57,902 $ 67,992 $ (9,818) $ 55,842 m CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL HISTORICAL COMMITTEE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) 2013 Budgeted Amounts Actual Original Final Amounts REVENUES Sale of Merchandise $ 500 $ 500 $ 162 TOTAL REVENUES 500 500 162 Variance with Final Budget- 2012 Positive Actual (Negative) Amounts $ (338) $ 391 (338) 391 EXPENDITURES Current General Government 5,650 5,650 899 4,751 3,149 TOTAL EXPENDITURES 5,650 5,650 899 4,751 3,149 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,150) (5,150) (737) 4,413 (2,758) OTHER FINANCING SOURCES (USES) Transfers In 5,150 5,150 732 (4,418) 2,385 TOTAL OTHER FINANCING SOURCES (USES) 5,150 5,150 732 (4,418) 2,385 Net Change in Fund Balance - - (5) (5) (373) FUND BALANCE, BEGINNING 9,567 9,567 9,567 - 9,940 FUND BALANCE, ENDING $ 9,567 $ 9,567 $ 9,562 $ (5) $ 9,567 M CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL PARKS AND RECREATION FOUNDATION FOR THE YEAR ENDED SEPTEMBER 30, 2013 (WITH COMPARATIVE ACTUAL TOTALS FOR 2012) OTHER FINANCING SOURCES (USES) Transfers In 20,000 20,000 20,000 - 20,000 TOTAL OTHER FINANCING SOURCES (USES) 20,000 20,000 20,000 - 20,000 Net Change in Fund Balance 48,613 48,613 (10,275) Variance with FUND BALANCE, BEGINNING 142,899 142,899 142,899 2013 Final Budget- 2012 FUND BALANCE, ENDING Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Charges and Fees at Events $ 255,775 $ 255,775 $ 176,776 $ (78,999) $ 124,696 Investment Earnings 40 40 117 77 39 Miscellaneous Income and Donations 44,560 44,560 117,515 72,955 101,023 TOTAL REVENUES 300,375 300,375 294,408 (5,967) 225,758 EXPENDITURES Current Parks and Recreation 271,762 271,762 223,281 48,481 159,088 Capital Outlay - - 101,402 (101,402) - TOTAL EXPENDITURES 271,762 271,762 324,683 (52,921) 159,088 Excess (Deficiency) of Revenues Over (Under) Expenditures 28,613 28,613 (30,275) (58,888) 66,670 OTHER FINANCING SOURCES (USES) Transfers In 20,000 20,000 20,000 - 20,000 TOTAL OTHER FINANCING SOURCES (USES) 20,000 20,000 20,000 - 20,000 Net Change in Fund Balance 48,613 48,613 (10,275) (58,888) 86,670 FUND BALANCE, BEGINNING 142,899 142,899 142,899 - 56,229 FUND BALANCE, ENDING $ 191,512 $ 191,512 $ 132,624 $ (58,888) $ 142,899 M STATISTICAL SECTION This part of the City of Schertz's annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Financial Trends (Tables I through 4) Net Position by Component Change in Net Position Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds These schedules contain trend information to help reader understand how the City's financial performance and well -being have changed over time. Revenue Capacity (Tables 5 through 12) Tax Revenues by Source, Governmental Funds Total Water and Sewer Consumption and Rates Principal Water and Sewer Consumers Assessed Value and Estimated Actual Value of Taxable Property Direct and Overlapping Property Tax Rates Principal Property Taxpayers Property Tax Levies and Collections Taxable Assessed Value These schedules contain information to help readers assess the factors affecting the City's ability to generate its property and sales tax. Debt Capacity (Tables 13 through 17) Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Debt Margin Information Pledged Revenue Coverage These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the, future. Demographic and Economic Information (Tables 18 through 19) Demographic and Economic Statistics Principal Employers These schedules offer demographic and economic indicators to help the reader understand how the City's financial activities take place and to help make comparisons over time and with other governments. Operating Information (Tables 20 throug22) Full -time Equivalent City Government Employees by Function Operating Indicators by Function /Program Capital Asset Statistics by Function/Program These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. W CITY OF SCHERTZ, TEXAS NET POSITION, BY COMPONENT LAST TEN FISCAL YEARS Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position Business -Type Activities Net Investment in Capital Assets Restricted Unrestricted Total Business -Type Activities Net Position Primary Government Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position Fiscal Year 2004* 2005* 2006* 2007* $ 16,228,1.34 $ 1.7,699,797 $ 13,257,031 $ 32,932,355 7,037,607 4,813,496 15,888,549 663,973 1,955,306 8,014,574 10,373,267 13,763,070 $ 25,221,047 $ 30,527,867 $ 39,518,847 $ 47,359,398 $ 22,901,982 $ 24,970,976 $ 24,783,839 $ 18,788,933 1,010,662 428,712 1,253,711 1,995,213 3,988,006 5,377,968 9,879,126 23,658,181 $ 27,900,650 $ 30,777,656 $ 35,91.6,676 $ 44,442,327 $ 39,130,116 $ 42,670,773 $ 38,040,870 $ 51,721,288 8,048,269 5,242,208 17,142,260 2,659,186 5,943,312 1.3,392,542 20,252,393 37,421,251 $ 53,121,697 $ 61,305,523 $ 75,435,523 $ 91,801,725 *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). .E TABLE 1 Fiscal Year 2008* 2009* 2010* 2011* 2012* 2013 $ 47,327,175 $ 57,324,482 $ 54,010,139 $ 55,415,699 $ 56,616,809 $ 57,543,618 1,058,514 1,170,786 897,324 2,089,971 1,917,098 7,788,354 1.1,029,326 3,650,287 7,548,859 7,370,101 8,907,326 6,645,418 $ 59,415,015 $ 62,145,555 $ 62,456,322 $ 64,875,771 $ 67,441,233 $ 71,977,390 $ 41,350,184 $ 50,047,301 $ 50,778,490 $ 51,838,589 $ 50,161,157 $ 53,071,836 10,286,447 3,633,244 4,217,098 7,441,722 11,577,645 11,902,282 $ 51,636,631 $ 53,680,545 $ 54,995,588 $ 59,280,311 $ 61,738,802 $ 64,974,118 $ 88,677,359 $ 107,371,783 $ 104,788,629 $ 107,254,288 $ 106,777,966 $ 110,615,454 1,058,51.4 1,170,786 897,324 2,089,971 1,917,098 7,788,354 21,315,773 7,283,531 11,765,957 14,811,823 20,484,971 18,547,700 $ 111,051,646 $ 115,826,100 $ 117,451,910 $ 124,156,082 $ 129,180,035 $ 136,951,508 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS Business -Type Activities Fiscal Year 2005* $ 3,707,036 5,558,596 782,654 351,627 341,957 221,950 955,757 862,744 1.2,782,321 2006* $ 3,982,768 6,403,122 856,260 384,696 400,630 231,149 1,047,206 823,818 1.4,129,649 2007* $ 5,808,552 5,920,046 1,864,450 944,529 454,662 272,730 1,482,780 1,420,086 18,167,835 Water and Sewer 2004* Expenses 9,821,823 Governmental Activities EMS General Government $ 2,897,606 Public Safety 4,586,498 Public Environment 703,180 Parks and Recreation 317,681 Cultural 313,094 Health 192,506 Administration 760,347 Interest and Other Fees 707,090 Total Governmental Activities Expenses 1.0,478,002 Business -Type Activities Fiscal Year 2005* $ 3,707,036 5,558,596 782,654 351,627 341,957 221,950 955,757 862,744 1.2,782,321 2006* $ 3,982,768 6,403,122 856,260 384,696 400,630 231,149 1,047,206 823,818 1.4,129,649 2007* $ 5,808,552 5,920,046 1,864,450 944,529 454,662 272,730 1,482,780 1,420,086 18,167,835 Water and Sewer 8,302,505 8,937,553 9,821,823 9,502,039 EMS 2,509,858 3,789,791 3,474,249 5,114,911 Total Business -Type Activities 10,812,363 12,727,344 13,296,072 14,616,950 Total Primary Government Expenses $ 21,290,365 $ 25,509,665 $ 27,425,721 $ 32,784,785 Program Revenues Governmental Activities Charges for Service: General Government Public Safety Parks and Recreation Cultural Health Administration Operating Grants and Contributions Capital Grants and Contributions Total Governmental Aactivities Program Revenues Business -Type Activities Charges for Service: Water and Sewer EMS Capital Grants and Contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues $ 967,261 1,118,241 203,579 184,457 36,095 414,541 2,281,524 2,153,213 $ 1,102,665 1,475,61.8 141,523 148,1.90 44,611 472,571 1,794,486 3,808,133 $ 917,099 1,684,786 143,254 151,028 44,178 393,043 1,573,944 5,382,779 $ 1,096,229 1,307,295 1.96,436 21.0,417 33,148 936,955 497,219 5,789,432 7,358,911 8,987,797 10,290,111 10,067,131 7,534,841 9,308,362 11,223,658 13,007,618 1,723,611 3,443,429 3,904,818 5,017,343 1,045,334 2,055,366 3,148,100 2,755,376 10,303,786 $ 17,662,697 14,807,157 $ 23,794,954 1.8,276,576 $ 28,566,687 20,780,337 $ 30,847,468 *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). Fiscal Year 2008* 2009* 2010* 2011* 201.2* 2013 . $ 7,093,762 $ 7,987,977 $ 7,892,516 $ 8,112,954 $ 7,802,092 $ 7,283,947 7,227,406 7,755,056 7,897,298 8,390,740 9,103,676 9,600,762 2,300,425 2,740,755 2,966,642 3,152,119 3,586,087 3,622,834 1,184,866 1,193,525 1,593,075 1,673,098 1,584,605 1,807,559 492,991 769,928 809,323 876,339 916,967 907,676 330,736 377,125 345,455 374,516 357,658 344,647 1,947,507 1,742,573 2,1.12,308 2,387,518 2,415,696 2,136,625 1,984,1.51 1,818,984 2,230,452 2,251,472 2,302,912 3,340,951 22,561,844 24,385,923 25,847,069 27,218,756 28,069,693 29,045,001 9,258,821 1.2,379,584 1.3,568,065 14,434,709 15,280,871 1.6,349,967 1.6,954,871. 2,976,112 3,365,544 3,690,007 3,659,031 3,758,425 3,959,445 15,355,696 16,933,609 18,124,716 18,939,902 20,108,392 20,914,316 $ 37,917,540 $ 41,319,532 $ 43,971,785 $ 46,158,658 $ 48,178,085 $ 49,959,317 $ 1,601,472 $ 1,893,779 $ 2,033,232 $ 1,665,784 $ 2,429,114 $ 2,230,800 1,643,635 1,481,004 1,986,536 2,81.5,029 2,216,385 2,516,547 155,168 273,917 536,609 524,443 541,512 721,222 219,749 219,029 265,714 228,242 279,267 305,932 41,390 33,930 36,728 39,743 36,746 38,149 479,31.3 834,489 900,246 896,242 1,156,026 1,311,272 595,401 1,044,884 587,643 717,105 764,997 603,159 12,595,635 3,023,377 1,276,465 2,998,115 1,178,573 1,531,740 17,331,763 8,804,409 7,623,173 9,884,703 8,602,620 9,258,821 1.3,620,440 1.4,668,137 15,1.47,332 17,073,075 1.7,411,568 1.7,696,327 3,150,428 2,889,518 3,061,414 3,564,852 3,561,114 4,459,600 5,190,039 2,241,726 973,437 2,175,889 828,853 1,301,235 21,960,907 1.9,799,381 19,1.82,183 22,81.3,816 21,801,535 23,457,1.62 $ 39,292,670 $ 28,603,790 $ 26,805,356 $ 32,698,519 $ 30,404,155 $ 32,715,983 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION (CONTINUED) LAST TEN FISCAL YEARS Fiscal Year 2004* 2005* 2006* 2007* Net (Expenses) Revenue Governmental Activities $ (3,119,091) $ (3,794,524) $ (3,839,538) $ (8,100,704) Business -Type Activities (508,577) 2,079,813 4,980,504 6,163,387 Total Primary Government Net Expenses $ (3,627,668) $ (1,714,711) $ 1,140,966 $ (1,937,317) Governmental Revenues and Other Changes in Net Position Governmental Activities Taxes: Ad Valorem Sales Franchise Fees Hotel /Motel Mixed Drink Bingo Unrestricted Investment Earnings Miscellaneous Transfers Total Governmental Activities Business -Type Activities Interest and Investment Earnings Miscellaneous Transfers Total Business -Type Activities Total Primary Government Changes In Net Position Government Activities Business -Type Activities Total Primary Government $ 4,410,567 $ 4,908,108 $ 5,705,805 $ 7,309,127 2,554,857 3,340,475 4,704,960 6,026,675 659,847 786,298 961,462 1,004,116 37,688 42,982 202,108 259,176 5,064 6,437 20,068 29,451 4,749 4,946 5,124 6,781 123,029 377,790 608,587 1,606,976 58,770 83,337 112,306 923,574 584,733 199,123 510,098 (1,224,621) 8,439,304 9,749,496 12,830,518 15,941,255 61,025 170,610 473,205 976,595 447,943 177,554 195,409 161,048 (584,733) (199,123) (510,098) 1,224,621 (75,765) 149,041 158,516 2,362,264 $ 8,363,539 $ 9,898,537 $ 12,989,034 $ 18,303,519 $ 5,320,213 $ 5,954,972 $ 8,990,980 $ 7,840,551 (584,342) 2,228,854 5,139,020 8,525,651 $ 4,735,871 $ 8,183,826 $ 14,130,000 $ 16,366,202 *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). ., TABLE 2 (Continued) Fiscal Year 2008* 2009* 2010* 2011* 201.2* 2013 . $ (5,230,081) $ (15,581,514) $ (18,223,896) $ (17,334,053) $ (19,467,073) $ (19,786,180) 6,605,211 2,865,772 1,057,467 3,873,914 1,693,143 2,542,846 $ 1,375,130 $ (12,715,742) $ (17,166,429) $ (13,460,139) $ (17,773,930) $ (17,243,334) $ 7,841,928 $ 8,980,102 $ 9,715,645 $ 10,280,768 $ 1.1,298,204 $ 12,359,146 6,175,759 6,017,782 6,240,749 7,054,394 7,968,212 9,637,097 1,240,642 1,462,199 1,448,620 1,542,046 1,647,712 1,681,079 273,558 305,073 348,147 391,181 470,290 503,267 32,364 31,790 32,144 33,630 28,586 30,421 4,751 5,105 4,651 2,173 - - 1,310,310 364,648 117,776 48,235 60,265 54,270 293,763 84,748 611,510 316,840 621,560 505,342 - 1 1,060,607 15,421 84,235 (62,294) (448,285) 17,173,075 18,312,054 18,534,663 19,753,502 22,032,535 24,322,337 522,595 128,233 36,824 37,950 36,409 53,089 179,121 11.0,516 236,173 457,094 666,645 664,521 - (1,060,607) (1.5,421) (84,235) 62,294 (25,140) 701,71.6 (821,858) 257,576 410,809 765,348 692,470 $ 17,874,791 $ 17,490,196 $ 18,792,239 $ 20,164,311 $ 22,797,883 $ 25,014,807 $ 11,942,994 $ 2,730,540 $ 310,767 $ 2,419,449 $ 2,565,462 $ 4,536,157 7,306,927 2,043,914 1,315,043 4,284,723 2,458,491 3,235,316 $ 19,249,921 $ 4,774,454 $ 1,625,810 $ 6,704,172 $ 5,023,953 $ 7,771,473 CITY OF SCHERTZ, TEXAS FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Nonspendable Fund Balance: Inventory Prepaid Items Note Receivable Total Nonspendable Fund Balance Restricted Fund Balance: Police and Public Safety Municipal Court PEG Capital Fees Capital Improvement Debt Service Tourism Development Tree Mitigation Parks Historical Committee & Library Economic Development Corporation Tax Increment Financing Total Restricted Fund Balance Committed Fund Balance: Capital Improvement Total Assigned Fund Balance Assigned Fund Balance: Property Replacement Special Events Capital Improvement Recycling Historical Committee Youth Activities Total Assigned Fund Balance Unassigned Fund Balance Total Governmental Funds Fiscal Year 2004* 2005* 2006* $ 7,464 $ 10,571 $ 16,706 58,087 - - 2007* $ 67,333 65,551 10,571 1.6,706 67,333 325,181 327,21.2 304,378 352,791 - - 205,344 191,663 8,144,795 5,135,834 15,134,814 17,612,092 247,293 263,740 347,739 556,884 290,688 187,953 378,823 470,743 167,064 326,267 343,091 271,071 182,527 236,400 286,072 180,223 20,789 25,317 36,261 46,784 849,497 930,697 1,450,801 2,014,135 88,829 - - - 1.0,316,663 7,433,420 18,487,323 21,696,386 - - - 579,708 - - - 127,500 6,774 10,009 12,733 6,780 6,774 10,009 1.2,733 713,988 4,319,428 4,864,647 7,202,709 8,876,682 $ 14,708,416 $ 12,318,647 $ 25,719,471 $ 31,354,389 *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). 86 TABLE 3 Fiscal Year $ 46,014 $ 44,217 $ 46,473 $ 43,504 $ 63,556 $ 50,768 - - - - 2,367 754,443 - - 1.50,000 120,080 120,080 120,080 46,014 44,217 1.96,473 163,584 186,003 925,291. 394,122 355,451 421,265 403,799 338,118 496,890 269,961 332,117 402,744 459,244 527,513 646,422 - - - 317,453 409,870 456,175 16,416,440 14,342,553 3,914,323 10,219,300 17,104,595 15,360,800 429,289 444,369 286,215 117,250 227,674 517,199 502,883 180,710 250,379 301,517 390,561 470,250 271,071 191,834 164,424 173,999 217,600 157,659 169,529 120,501 79,317 84,329 90,718 136,647 68,207 163,661 200,359 231,686 65,409 77,554 2,331,951 2,543,010 3,548,067 3,394,850 4,366,005 6,022,128 20,853,453 18,674,206 9,267,093 15,703,427 23,738,063 24,341,724 - - - - - 165,000 - - - - - 165,000 400,247 201,850 202,341 202,723 322,656 456,034 88,778 62,263 142,465 93,447 92,555 99,770 - - - 162,113 243,546 145,167 1.4,748 - - - - - - 1.0,149 9,940 9,940 - - - - - - 11,090 - 503,773 274,262 354,746 468,223 669,847 700,971 5,269,890 1,209,451 1,372,779 1,899,105 2,560,667 4,206,734 $ 26,673,130 $ 20,202,136 $ 11,191,091 $ 18,234,339 $ 27,154,580 $ 30,339,720 CITY OF SCHERTZ, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS EXPENDITURES Current: General Government 2,159,218 Fiscal Year 3,047,800 5,108,598 Public Safety 2004* 2005* 2006* 2007* REVENUES 452,612 500,880 558,020 655,930 Taxes $ 8,173,590 $ 9,682,628 $ 12,1.22,079 $ 15,093,799 Permits and Fees 852,577 1,421,575 1,475,619 1,062,054 Service Fees 796,846 874,047 1,822,743 1,815,786 Fines and Fees 842,322 915,704 1,157,480 1,397,101 Intergovernmental 1,711,172 961,514 26,058 267,420 Other Revenue 498,972 681,1.40 767,075 2,51.0,021 TOTAL REVENUES 12,875,479 14,536,608 17,371,054 22,146,181 EXPENDITURES Current: General Government 2,159,218 2,920,576 3,047,800 5,108,598 Public Safety 3,833,243 4,542,384 5,020,684 5,665,671 Public Environment 452,612 500,880 558,020 655,930 Parks and Recreation 492,090 542,621 604,521 843,870 Cultural 301,260 328,331 388,679 443,455 Health 181,074 208,499 216,655 263,918 Administration 852,769 1,048,905 1,290,154 1,586,889 Capital Outlay 3,827,879 4,360,483 6,127,735 5,504,679 Debt Service: Principal 1,233,000 1,236,000 1,499,270 1,586,092 Interest and Fiscal Charges 772,751 885,838 799,738 1,380,444 Bond Issue Costs 111,802 - 165,125 63,969 TOTAL EXPENDITURES 14,217,698 16,574,517 19,718,381 23,103,515 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,342,219) (2,037,909) (2,347,327) (957,334) OTHER FINANCING SOURCES (USES) Proceeds from Bonds & Debt Issuances 7,750,000 - 15,319,996 8,306,805 Premium (Discount) on Bond Issue (17,869) - 1.23,057 - Payment to Refund Agent - - - - Transfers In 2,275,896 583,126 529,598 354,150 Transfers (Out) (2,072,352) (934,986) (224,500) (2,068,703) TOTAL OTHER FINANCING SOURCES (USES) 7,935,675 (351,860) 15,748,151 6,592,252 NET CHANGE IN FUND BALANCE $ 6,593,456 $ (2,389,7691 $ 13,400,824 $ 5,634,918 Debt Service as a percentage of Noneapital Expenditures 20.4% 17.4% 18.1% 15.9% *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). l Fiscal Year 2008* 2009* 2010* 2011* 2012* 2013 $ 15,583,058 $ 16,786,590 $ 17,811,547 $ 1.9,309,675 $ 21,401,991 $ 24,181,863 992,953 822,105 1, 160, 197 1,776,292 1,363,461 1,609,954 1,601,510 1,981,770 2,520,007 2,711,952 2,845,659 3,402,813 1,387,677 1,51.7,821 1,655,183 1,452,610 2,027,613 1,927,744 4,376,072 1,444,966 570,386 1,216,211 1,000,413 492,332 1,864,877 1,066,097 1,161,182 603,498 969,921 767,110 25,806,147 23,619,349 24,878,502 27,070,238 29,609,058 32,381,816 6,335,932 6,985,247 7,172,693 7,390,320 7,293,445 6,666,652 6,638,352 7,235,501 7,409,720 7,885,119 8,690,849 9,113,840 745,307 884,158 816,939 846,150 976,327 951,528 800,079 869,166 1,178, 455 1,195,171 1,398,692 1,412,329 667,995 821,048 872,668 937,61.1 845,124 840,595 295,156 348,448 331,860 360,746 346,318 341,961 1,949,871 1,729,732 2,096,113 2,347,641 2,349,598 2,597,128 19,189,505 14,963,950 11,347,876 2,956,511 1,299,843 3,277,397 2,025,043 4,816,928 1,893,086 2,371,070 2,704,898 3,217,325 1,617,876 1,987,384 2,183,852 2,066,221 2,313,510 2,381,171 122,290 191,066 20,000 244,237 254,971 31,750 40,387,406 40,832,628 35,323,262 28,600,797 28,473,575 30,831,676 (14,581,259) (17,213,279) (10,444,760) (1,530,559) 1,135,483 1,550,140 9,900,000 9,681,678 1,418,294 8,206,572 14,370,000 1,635,000 - - - 283,000 175,473 - - - - - (6,698,421) - 593,294 2,778,593 242,539 348,846 139,635 788,084 (593,294) (1,717,986) (227,118) (264,611) (201,929) (788,084) 9,900,000 10,742,285 1,433,715 8,573,807 7,784,758 1,635,000 $ (4,681,259) $ (6,470,994) $ (9,011,045) $ 7,043,248 $ 8,920,241 $ 3,185,140 14.8% 25.8% 17.0% 1.7.6% 1.9.5% 20.4% .. Fiscal Year 2013 2012* 2011* 2010* 2009* 2008* 2007* 2006* 2005* 2004* CITY OF SCHERTZ, TEXAS TAX REVENUE BY SOURCE - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Pronert $ 12,329,999 11,287,191 10,286,251 9,737,236 8,964,642 7,855,984 7,767,600 6,261,532 5,501,490 4,911,385 Sales & Use Franchise $ 9,637,097 7,968,212 7,054,394 6,240,749 6,017,781 6,175,759 6,026,675 4,671,785 3,340,475 2,554,857 $ 1,681,079 1,647,712 1,542,046 1,448,620 1,462,199 1,240,642 1,004,116 961,462 786,298 659,847 Mixed Hotel Beverage Bingo Occupancy $ 30,421 $ - $ 503,267 28,586 - 470,290 33,630 2,173 391,181 32,144 4,651 348,147 31,790 5,105 305,073 32,364 4,751 273,558 29,451 6,781 259,176 20,068 5,124 202,108 6,437 4,946 42,982 5,064 4,749 37,688 Total $ 24,181,863 21,401,991 19,309,675 17,811,547 16,786,590 15,583,058 15,093,799 12,122,079 9,682,628 8,173,590 *Prior periods have been restated to reflect the results of a change in reporting entity (note 1) and a prior period adjustment (note 14). •E CITY OF SCHERTZ, TEXAS TOTAL WATER AND SEWER CONSUMPTION AND RATES LAST TEN FISCAL YEARS Fiscal Year Ended September 30, 2013 2012 2011 2010 . 2009 2008 2007 2006 2005 2004 Total Water & Sewer Consumption (In Gallons) 1,550,039,700 1,604,952,300 ,676,323,900 1,231,376,600 1,511,567,900 855,779,200 614,508,100 714,230,400 528,766,500 489,400,300 91 Water & Sewer Base Rate 18.94 18.94 18.94 18.94 18.94 15.94 15.94 15.94 15.94 13.70 Water & Sewer Initial Rate Per 1,000 Gallons $ 2.34 2.34 2.34 2.25 2.16 1.92 1.72 1.69 1.52 1.47 CITY OF SCHERTZ, TEXAS PRINCIPAL WATER AND SEWER CONSUMERS CURRENT YEAR AND NINE YEARS AGO 92 2013 2004 Total Percentage of Total Percentage of Water Total City Water Total City Consumption Water Consumption Water Consumers (in Gallons) Rank Consumption (in Gallons) Rank Consumption SYSCO 22,215,400 1 1.43% City of Schertz (Soccer Field) 12,973,600 2 0.83% Waterford Ridge Apts. 12,147,300 3 0.78% Sycamore Creek Apts. 10,617,700 4 0.68% Beck Readymix Concrete 9,346,500 5 0.60% The Oaks at Green Valley 8,695,600 6 0.56% Marshall Shredding Company 7,826,400 7 0.50% Pecan Grove TX LLC 7,176,800 8 0.46% Wal -Mart Supercenters 7,105,000 9 0.46% Lions Fut Ball Club 6,796,700 10 0.44% Diamond Shamrock #1017 1,898,700 1 0.20% Denny's #6771 1,697,700 2 0.18% Atrium Inn 11518,300 3 0.16% Taco Cabana #160 1,221,100 4 0.13% Randolph Brooks FCU 743,700 5 0.08% Taco Bell KFC Pizza Hut 719,100 6 0.08% Keebler Company 325,200 7 0.03% Russell Bush 96,900 8 0.01% HEB 78,100 9 0.01% North American Composites 51,300 10 0.01% TOTAL 104,901,000 6.74% 8,350,100 0.89% Total City Water Consumption 1,556,882,600 940,023,600 92 CITY OF SCHERTZ, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Fiscal Year Ended September 30, 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Total Taxable Assessed Value Total Direct Tax Rate 2,600,365,551 0.4999 2,411,270,623 0.4843 2,363,893,708 0.4493 2,342,355,490 0.4342 2,230,825,045 0.4090 2,221,073,744 0.4090 1,893,240,916 0.4317 1,621,059,759 0.3977 1,444,991,860 0.3760 1,274,995,741 0.3825 Source: Bexar, Comal and Guadalupe County Appraisal Districts NOTES: Property in the City of Schertz is reassessed every year at estimated actual value. For this reason, assessed value is equal to estimated actual value. Tax rates are per $100 of assessed value. Total taxable assessed value is before any applicable fi°eeze adjustments. 93 Source NOTE: CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) Overlapping Counties Bexar Comal Guadalupe Fiscal Hospital River Year County District Authority Community College District County County 2013 . City Direct Rates 0.2762 Overlapping School Districts 0.3504 0.4036 2012 0.3269 Schertz - 0.01.74 0.1.416 0.3504 0.4036 2011 Cibolo- 0.2762 Fiscal Basic Debt 0.3999 Universal Coma] Year Rate Service Total City ISD ISD 0.3269 2013 0.2993 0.2006 0.4999 1.4600 1.4300 2012 0.2993 0.1850 0.4843 1.4350 1.4300 2011 0.2993 0.1500 0.4493 1.4350 1.3700 2010 0.2842 0.1.500 0.4342 1.4200 1.3100 2009 0.2590 0.1500 0.4090 1.3850 1.31.00 2008 0.2590 0.1.500 0.4090 1.3150 1.3100 2007 0.2805 0.1512 0.431.7 1.61.00 1.6400 2006 0.3005 0.0972 0.3977 1.7200 1.8000 2005 0.2888 0.0872 0.3760 1.7400 1.8200 2004 0.2946 0.0879 0.3825 1.7800 1.8300 Overlapping Counties Bexar Comal Guadalupe Fiscal Hospital River Year County District Authority Community College District County County 2013 . 0.3269 0.2762 0.01.74 0.1492 0.3504 0.4036 2012 0.3269 0.2762 0.01.74 0.1.416 0.3504 0.4036 2011 0.3269 0.2762 0.01.67 0.1416 0.3340 0.3999 2010 0.3269 0.2662 0.0160 0.1359 0.3130 0.3895 2009 0.3269 0.2610 0.0160 0.1359 0.3080 0.3895 2008 0.3269 0.2374 0.0160 0.1346 0.3180 0.3895 2007 0.3269 0.2439 0.0160 0.1371 0.3152 0.4031 2006 0.3312 0.2439 0.0164 0.1071 0.3537 0.4031 2005 0.3312 0.2439 0.0164 0.1.071 0.3337 0.4031. 2004 0.3337 0.2439 0.0164 0.1071 0.3337 0.4131 Bexar, Comal and Guadalupe County Tax Offices Overlapping rates are those of local and county governments that apply within the City of Schertz. Not all overlapping rates apply to all City of Schertz property owners. •, Taxnaver Republic Beverage Co. Distribution SYSCO San Antonio, Inc. Capital Group Companies, Inc San Antonio MTA LP Caterpillar Inc. SC Schertz LLC Visionworks Salof Properties 11 LLC Wal -Mart Real Estate Business Trust H.E.Butt Grocery Co. Atlantic Financial Group LTD C & W Ranches LTD Sycamore Apartment LTD AER Manufacturing Inc. PSP Industries Negley Paint Co. Inc. Guadalupe Valley Electric CO -OP TOTALS CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO 2013 Taxable Assessed Value Rank $ 47,821,320 1 44,955,071 2 41,515,938 3 23,026,185 4 19,098,384 5 16,900,000 6 14,471,578 7 14,300,000 8 13,137,327 9 11,682,083 10 $ 246,907,886 Percentage of Total City Taxable Assessed Value 1.84% 1.73% 1.60% 0.89% 0.73% 0.65% 0.56% 0.55% 0.51% TOTAL TAXABLE ASSESSED VALUE $ 2,600,365,551 Source: Bexar, Comal and Guadalupe County Appraisal Districts m 2004 Taxable Assessed Value Rank $ 38,036,450 1 11,629,298 0.45% 9,133,046 8,388,569 6,353,858 6,237,853 4,647,167 4,251,280 3,918,861 3,826,930 9.50% $ 96,423,312 $ 1,274,995,741 I 3 4 5 6 7 8 9 10 Percentage of Total City Taxable Assessed Value 2.98% 0.91% 0.72% 0.66% 0.50% 0.49% 0.36% 0.33% 0.31% 0.30% 7.56% CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Source: Guadalupe County Tax Office m Total Collections Collected Within Fiscal Year Taxes Levied Fiscal Year of Levy Ended for the Levy % of September 30, Fiscal Year Amount Levy 99.29% 2013 $ 12,536,540 $ 12,455,336 99.35% 2012 11,239,572 11,159,974 99.29% 2011 9,978,430 9,895,240 99.17% 2010 9,639,945 9,559,899 99.1.7% 2009 8,800,927 8,703,978 98.90% 2008 7,793,405 7,71.1,714 98.95% 2007 7,048,818 6,957,827 98.71% 2006 5,645,611 5,576,559 98.78% 2005 4,858,508 4,796,062 98.71% 2004 4,360,470 4,252,349 97.52% Source: Guadalupe County Tax Office m Total Collections Collections In To Date Subsequent % of Years Amount Levy $ - $ 12,455,336 99.35% 51,696 11,159,974 99.29% 64,869 9,895,240 99.17% 63,1.34 9,623,033 99.82% 85,023 8,789,001 99.86% 73,859 7,785,573 99.90% 80,283 7,038,110 99.85% 63,383 5,639,942 99.90% 58,415 4,854,477 99.92% 104,430 4,356,779 99.92% CITY OF SCHERTZ, TEXAS TAXABLE ASSESSED VALUE LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Taxable Total Taxable Total Ended Value Residential Commercial Tax - Exempt Other Assessed Direct September 30, January 1, Property Property Property Property Value* Tax Rate 2013 2012 $ 1,383,423,359 $ 1,396,349,905 $ (285,245,142) $ 105,837,429 $ 2,600,365,551 0.4999 2012 2011 1,337,223,390 1,233,687,039 (262,591,896) 102,952,090 2,411,270,623 0.4843 2011 2010 1,272,970,256 1,253,600,729 (280,015,063) 117,337,786 2,363,893,708 0.4493 2010 2009 1,234,950,439 1,237,284,878 (251,217,268) 121,337,441 2,342,355,490 0.4342 2009 2008 1,169,845,869 1,191,387,341 (248,544,582) 118,136,417 2,230,825,045 0.4090 2008 2007 1,096,587,777 1,276,925,393 (345,068,394) 192,628,968 2,221,073,744 0.4090 2007 2006 990,263,111 1,033,634,277 (271,404,640) 140,748,168 1,893,240,916 0.4317 2006 2005 901,544,236 810,987,398 (182,861,671) 91,389,796 1,621,059,759 0.3977 2005 2004 820,916,373 713,003,107 (173,247,011) 84,319,391 1,444,991,860 0.3760 2004 2003 787,725,539 571,086,845 (159,338,766) 75,522,123 1,274,995,741 0.3825 *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal, and Guadalupe County Appraisal Districts. .m CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities NOTES: a Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. b. See Table 18 for personal income and population data for the City. These ratios are calculated using personal income and population for the prior calendar year. •• General Certificates Fiscal Obligation of Tax Capital Year Bonds Obligation Notes Lease 2013 $ 58,060,000 $ 801,767 $ 2,155,000 $ 22,398 2012 . 60,205,000 1,581,300 190,000 60,190 2011 47,505,000 8,625,800 250,000 97,188 2010 37,530,000 12,415,650 310,000 133,408 2009 38,485,000 13,338,850 - - 2008 32,790,000 14,243,700 - 107,078 2007 23,950,000 15,232,893 - 215,854 2006 18,740,000 13,560,000 - 319,996 2005 4,045,000 14,250,000 160,000 - 2004 4,456,000 14,785,000 450,000 - NOTES: a Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. b. See Table 18 for personal income and population data for the City. These ratios are calculated using personal income and population for the prior calendar year. •• TABLE 13 •• Business -Type Activities Certificates Public General Total Percent Revenue of Facility Obligation Tax Primary of Gross *Per Bonds Obligation Loan Bonds Notes Government Income Capita $ 2,215,000 $ 5,048,233 $ - $ 2,120,000 $ 130,000 $ 70,552,398 6.57% 2,004 2,355,000 5,383,700 - 2,405,000 190,000 72,370,190 8.08% 2,098 2,490,000 5,704,200 - 2,675,000 250,000 67,597,188 7.95% 2,015 5,460,000 6,149,350 - - 310,000 62,308,408 7.28% 1,916 5,805,000 6,571,150 7,000 - - 64,207,000 7.03% 2,041 6,230,000 6,976,300 14,000 - - 60,361,078 7.19% 1,883 6,645,000 7,237,107 21,000 - - 53,301,854 6.02% 1,677 7,055,000 - 28,000 - - 39,702,996 4.82% 1,262 7,445,000 - 34,000 - - 25,934,000 3.70% 968 4,625,000 - 40,000 64,000 - 24,420,000 3.52% 923 •• CITY OF SCHERTZ, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Percentage of General Bonded Debt Outstanding Value of General Certificates Capita 2.35% Fiscal Obligation of Tax 1,681 Year Bonds Obligation Notes Total 2013 $ 58,060,000 $ 801,767 $2,155,000 $ 61,016,767 2012 44,715,000 7,910,800 190,000 52,815,800 2011 47,505,000 8,625,800 250,000 56,380,800 2010 37,530,000 12,41.5,650 310,000 50,255,650 2009 38,485,000 13,338,850 - 51,823,850 2008 32,790,000 14,243,700 - 47,033,700 2007 23,950,000 15,232,893 - 39,182,893 2006 18,740,000 13,560,000 - 32,300,000 2005 4,045,000 14,250,000 1.60,000 18,455,000 2004 4,456,000 14,785,000 450,000 19,691,000 Percentage of Actual Taxable Value of Per Property Capita 2.35% 1,733 2.19% 1,531 2.39% 1,681 2.15% 1,545 2.32% 1,647 2.12% 1,467 2.07% 1,233 1.99% 1,027 1.28% 689 1.54% 744 NOTE: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. See Table 8 for the City's property tax value data. City population data can be found in Table 18. 100 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT CURRENT YEAR TABLE 15 Estimated Estimated Share of Debt Percentage Overlapping Governmental Unit Outstanding Applicable* Debt Debt repaid with property taxes: Alamo CCD $ 506,301,257 0.15% $ 759,452 Bexar County 1,023,238,620 0.15% 1,534,858 Bexar County Hospital District 721,615,000 0.15% 1,082,423 Comal County 59,095,100 3.23% 1,908,772 ComalISD 492,921,213 2.84% 13,998,962 Guadalupe County 19,181,414 18.63% 3,573,497 San Antonio River Authority 27,630,000 0.14% 38,682 Schertz- Cibolo- Universal lSD 287,979,356 52.85% 152,197,089 Subtotal, Overlapping Debt City Governmental Activities Direct Debt TOTAL NET OVERLAPPING DEBT 175,093,735 61,016,767 $ 236,110,502 NOTES: The overlapping debt was received from the Municipal Advisory Council of Texas. Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. 101 CITY OF SCHERTZ, TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Assessed Value, 2012 Tax Roll Debt Limit - Texas statues do not provide a legal debt limit for cities; however, through accepted practice a practical "economic" debt limit is considered to be 10% of the assessed value. Amount of Applicable Debt: General Bonded Debt Less Debt Service Fund Balance I� a :�:Zt3i►I Total Net Debt as a Percentage of Debt Margin $ 2,600,365,551 $ 260,036,555 $ 61,01.6,767 (517,199) 60,499,568 $ 199,536,987 30.32% 102 Fiscal Year 2010 2011 2012 Assessed Value $ 2,342,355,490 $ 2,363,893,708 $ 2,411,270,623 Debt Limit $ 234,235,549 $ 236,389,371 $ 241,127,062 Total Net Debt Applicable to Limit 48,819,435 55,298,550 60,973,626 Total Debt Margin $ 185,416,114 $ 1.81,090,821 $ 180,153,436 2007 2008 2009 Assessed Value $ 1,893,240,91.6 $ 2,221,073,744 $ 2,230,825,045 Debt Limit $ 1.89,324,092 $ 222,107,374 $ 223,082,505 Total Net Debt Applicable to Limit 23,488,500 45,466,903 50,414,481 Total Debt Margin $ 165,835,592 $ 176,640,471 $ 172,668,024 2004 2005 2006 Assessed Value $ 1,024,412,810 $ 1,444,991,860 $ 1,621,059,759 Debt Limit $ 102,441,281 $ 144,499,186 $ 162,105,976 Total Net Debt Applicable to Limit 4,208,707 3,781,530 18,392,261 Total Debt Margin $ 98,232,574 $ 140,717,656 $ 143,713,715 102 CITY OF SCHERTZ, TEXAS PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS NOTE: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include depreciation, interest, amortization or joint venture expenses. 103 Water Revenue Bonds Utility Less: Net Debt Service Fiscal Service Operating Available Year Charges Expenses Revenue Principal Interest Coverage 2013 $ 17,696,327 $ 14,553,274 $ 3,143,053 $ 728,800 $ 359,680 2.89 2012 17,411,568 1.4,185,126 3,226,442 697,100 396,968 2.95 2011 16,843,780 13,229,037 3,614,743 577,824 409,801 3.66 2010 14,993,648 12,399,880 2,593,768 615,400 502,629 3.74 2009 14,533,390 9,973,940 4,559,450 685,400 534,634 3.74 2008 13,620,440 9,040,264 4,580,176 665,400 558,569 4.86 2007 13,476,288 7,896,319 5,579,969 645,800 501,397 5.82 2006 11,289,876 6,955,000 4,334,876 390,000 354,965 5.47 2005 9,381,042 6,136,390 3,244,652 380,000 213,290 3.26 2004 7,583,136 5,653,184 1,929,952 365,000 226,795 5.50 NOTE: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include depreciation, interest, amortization or joint venture expenses. 103 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Sources: Population, personal income, median age and education level information provided by City Economic Development Corporation. School enrollment provided by Schertz- Cibolo - Universal City Independent School District. Unemployment data provided by the Texas Workforce Commission. 104 Education Per Capita Level In Personal Personal Median Years of School Unemployment Year Population Income Income Age Schooling Enrollment Rate 2013 35,201 $ 1,073,137,686 $ 30,486 37.1 15.4 14,058 5.1% 2012 34,499 895,739,206 25,964 36.8 15.4 13,01.6 5.5% 2011 33,544 850,069,800 25,342 37.8 15.4 12,533 5.6% 2010 32,523 856,236,720 26,327 34.4 15.4 12,330 5.7% 2009 31,465 913,919,790 29,046 36.5 13.9 11,700 5.1% 2008 32,057 839,701,058 26,194 35.1 14.0 10,991 5.0% 2007 31,788 885,836,196 27,867 36.3 14.0 9,470 4.0% 2006 31,452 823,539,168 26,184 36.1 18.0 8,380 4.4% 2005 26,780 701,207,520 26,184 35.1 15.9 7,712 3.6% 2004 26,463 692,907,192 26,184 32.7 15.0 7,257 4.1% Sources: Population, personal income, median age and education level information provided by City Economic Development Corporation. School enrollment provided by Schertz- Cibolo - Universal City Independent School District. Unemployment data provided by the Texas Workforce Commission. 104 CITY OF SCHERTZ, TEXAS TOP TEN PRINCIPAL EMPLOYERS CURRENT YEAR AND SIX YEARS AGO Employer Employees Schertz /Cibolo/IJC ISD 900 Sysco Central Texas 650 Vision Works 550 Wal -Mart Stores 400 H.E.B. Grocery Co. 350 City of Schertz 350 Brandt Engineering 350 Republic Beverage Company 250 CST Distribution 200 Federal Express Freight 175 Valero Diamon Distribution 5.56% Metro Ambulance LP 1 Manco 2 Lowe's 4,175 2013 2007 Source: City Economic Development Corporation Note: Principal employer information is not available prior to 2007. 105 Percentage Percentage of Total City of Total City Rank Employment Employees Rank Employment 1 5.56% 1,300 1 9.47% 2 4.02% 3 3.40% 4 2.47% 420 2 3.06% 5 2.16% 220 4 1.60% 6 2.16% 232 3 1.69% 7 2.16% 8 1.55% 100 9 0.73% 9 1.24% 10 1.08% 1.65 6 1.20% 167 5 1.22% 11.0 7 0.80% 1.00 8 0.73% 83 10 0.60% 25.81% 2,897 21.11% Source: City Economic Development Corporation Note: Principal employer information is not available prior to 2007. 105 rr CITY OF SCHERTZ, TEXAS FULL -TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 106 Full -Time Equivalent Employees as of September 30, Function 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 General Government City Manager 4 4 3 4 6 7 6 6 7 7 Court Support 4 4 4 4 0 0 0 0 0 0 Municipal Court 2 2 3.5 5 6 4 5 5 5 6 Customer Relations 0 0 0 2 4 4 4 4.5 4.5 4.5 Planning and Zoning 2 2 3 4 5 4 4 4 3 3 Facility Maintenance 6 6 6.5 9 9 9.5 13.5 1.4.7 1.4.7 1.2.7 Building Maintenance 0 0 0 0 0 0 0 0 0 2 City Secretary 2 2 2 2 2 2 2 2 2 2 Public Affairs 1 1 1 2 3 3 3 3 4 4 Records Management 0 1.5 2 2 3 3 1 1 1 1 Schertz Magazine 0 0 0 0 0 0 0 2 2 2 Engineer 0 0 0 1 3 1 2 2 4 3 GIs 0 0 0 0 0 2 2 2 2 2 Information Technology 2 2 3 3 3 3 3 4 4 6 Human Resources 2 2 2 2 3 3 4 4 4 4 Finance 5 5 5 5 6 6 6 6 6 6 Purchasing 0 0 0 1 2 2 5 5 5 5 Fleet Service 2 3 3 3 3 3 3 4 4 4 Public Safety Police 48.5 50.5 58.7 63.6 68.6 64.6 64.6 64.6 69.7 74.7 Fire 30 31 32 32 32 32 32 32 32 32 Inspections 6 6 6 8 8 7 6 7 7 7 Marshal Services 0 0 0 0 0 5 5 8 8 8 Health Animal Control 5 5 5 5 6 6 6 6 6 6 Parks and Culture Parks 6 7 7 8 8 8 8 9 9 9 Pools 14.5 15 12.5 12.5 0 0 0 0 0 0 Civic and Comm. Centers 0 0 0 1 1 1 1 2 1 1 Library 8.5 8.5 9.5 9.5 10.5 11 13.5 13.5 14 14 Public Environment Streets 13 13 11 11 13 13 13 14 14 14 Public Works Public Works 6 6 6 6 6 6 5 4 4 6 Business Office 11 9 10 9 10 10 10 10 10 10 Water and Sewer 11 11 12 14 14 16 16 17 17 16 Drainage 4 4 5 5 6 7 7 7 7 8 EMS 22 22 22 23.5 30 34 34 34 35 35 Economic Development 2 2 3 3 3 4 4 3 4 4 TOTAL 219.5 224.5 237.7 260.1 274.1 281.1 288.6 300.3 309.9 318.9 Source: City Adopted Budgets 106 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTIONTROGRAM LAST TEN FISCAL YEARS 107 Fiscal Year Function 2004 2005 2006 2007 2008 General Government Building Permits Issued 3,055 3,434 9,948 5,811 2,869 Schertz Tales Number of Magazines printed - - - 72,000 108,000 Police CFS 11,875 12,770 16,642 25,478 37,829 Arrests 631 729 526 608 719 Traffic Violations 9,652 11,157 10,487 13,461 18,820 Accidents 1,127 1,169 1,192 1,484 1,475 Fire Number of Rescue /Other Responses 1,082 1,131 1,216 1,459 978 Number of Fire Responses 90 128 129 103 141 Number of Inspections 301 331 356 302 461 Number of Training Classes Conducted 213 136 136 694 595 Number of Pre -Plan Inspections EMS Requests for Transport 4,727 4,966 5,171 6,256 6,619 Actual Transports 2,712 2,767 2,937 3,634 4,193 EMT Students - - - 45 73 Marshal Service Warrants Issued - - Warrants Cleared Food Establishment Permits Food Establishment Inspection Foster /Adoption Inspections - - - - - Parks Facility Reservations 333 294 416 516 983 Community and Civic Centers Civic Center - - - - - Community Center Rentals North Community Center Rentals Animal Services Number of Animals Handled Number of Adoptions Number of Return to Owners Number of Transfers - - - - - Library Annual Circulation 238,602 257,765 276,873 292,909 278,826 Library Visits 171,811 175,976 181,603 179,630 175,435 Library Program Attendance 5,170 5,254 5,064 6,680 7,444 Registered Users 14,492 17,101 19,342 19,595 23,327 Water New Connections 425 425 532 91 1,474 Water Main Breaks 26 39 46 29 72 Total Consumption (thousands of gallons) 10,373,621 11,030,621 13,322,380 11,535,927 14,460,239 Daily Average Consumption (thousands of gallons) 28,816 30,639 37,007 31,606 39,617 Peak Daily Consumption (thousands of gallons) 6,869 6,939 10,540 5,379 5,804 Total Customers 9,389 9,673 10,118 10,598 10,900 Average Use Per Connection 6,329 5,957 7,060 1,089 6,378 Sewer Total Customers 7,887 8,664 8,990 9,391 6,378 Facilities Maintenance Number of Buildings Maintained 9 9 12 14 16 Square Footage 89,452 89,452 111,642 127,589 135,091 Source: Various City Departments. Prior year information for some functions is not available. 107 Fiscal Year 2009 2010 2011 2012 2013 5,181 4,806 4,950 2,643 3,054 120,000 144,000 168,000 168,000 168,000 36,319 37,269 26,205 19,434 19,894 873 790 762 666 800 20,452 19,259 13,231 20,881 19,335 1,491 1,606 1,575 1,665 1,960 1,536 1,671 1,657 1,799 2,046 135 76 110 74 108 447 425 616 429 332 264 107 142 168 132 452 642 536 714 729 7,061 7,281 7,443 7,545 8,391 4,341 4,575 4,801 4,766 5,451 80 80 85 79 116 5,974 5,444 4,141 2,888 3,344 3,836 4,023 3,985 4,118 4,687 134 129 118 123 127 209 202 244 180 281 34 27 18 14 24 671 719 237 234 258 484 594 354 325 444 - 635 666 816 735 - - 241 307 288 1,804 2,021 1,802 1,463 1,326 255 249 257 291 362 252 279 313 149 231 415 451 300 312 301 263,131 392,528 414,074 410,312 404,691 188,118 257,235 254,934 256,349 254,633 10,499 10,610 13,767 16,035 12,581 20,360 24,628 28,589 30,475 31,658 446 509 439 271 168 72 25 76 52 38 15,115,679 12,313,766 16,763,239 16,131,415 15,500,413 38,550 33,736 45,927 44,196 42,466 7,520 7,040 11,000 9,290 9,483 10,198 10,134 12,234 12,557 12,757 6,913 5,054 5,725 5,517 5,905 9,974 9,499 10,907 10,988 11,456 19 19 19 19 19 166,591 166,591 166,591 166,591 166,591 108 CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS BY FUNCTIONTROGRAM LAST TEN FISCAL YEARS 109 Fiscal Year Function 2004 2005 2006 2007 2008 Police Stations 1 1 1 1 1 Patrol Units 26 27 34 33 33 Fire Stations 1 2 2 2 2 Training Facility 1 1 1 1 1 Fire Vehicles 11 11 12 12 14 EMS Vehicles 6 6 6 6 6 Marshal Service Vehicles - - - - - Streets Streects, paved (miles) 102 102 102 107 122 Streets, unpaved (miles) 9 9 9 9 7 Parks and Recreation Parks - Developed 7 7 7 7 7 Parks - Undeveloped 4 4 4 4 4 Playground 20 20 20 20 20 Swimming Pools 1 1 1 1 2 Baby Pools 1 1 1 1 2 Baseball /Softball Diamonds 12 12 12 12 12 Soccer Fields - - - - - Community Centers 1 1 1 1 2 Animal Control Control Vehicle 2 2 2 3 3 Library Facility 1 1 1 1 1 Volumes in Collection 46,961 49,289 52,818 56,282 60,650 Water Number of Reservoirs 1 1 1 - - Number of Pump Stations 1 1 1 2 - Water Mains (Miles) 159 166 171 177 182 Sewer Sanitary Sewers (Miles) 54 54 54 59 71 Storm Sewers (Miles) 4 4 4 6 8 Facilities Maintenance Vehicles 4 4 4 4 4 Generators 2 3 3 3 3 Source: Various City Departments 109 Fiscal Year TABLE 22 2009 2010 2011 2012 2013 1 1 1 1 1 38 40 42 42 42 2 2 2 2 2 13 13 13 13 13 6 6 6 6 7 5 7 8 8 7 124 125 132 134 137 7 7 5 5 5 11 12 17 17 13 4 4 4 4 8 20 19 15 15 16 2 2 2 2 2 2 2 2 2 2 12 12 9 9 12 12 12 12 12 12 2 4 4 4 4 3 3 3 3 3 1 1 1 1 1 64,400 71,929 73,904 81,468 86,221 5 5 5 5 5 188 190 192 192 197 78 78 84 85 87 9 9 10 10 11 5 5 5 4 5 3 3 3 3 3 110 rr COMPLIANCE SECTION 111 INDEPENDENT AUDITOR'S REPORT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING STANDARDS To the City Council and management City of Schertz We have audited, 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, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of City of Schertz as of and for the year ended September 30, 2013, and the related notes to the financial statements, which . collectively comprise City of Schertz's basic financial statements, and have issued our report thereon dated January 20, 2014. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Schertz's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Schertz's internal control. Accordingly, we do not express an opinion on the effectiveness of City of Schertz's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 941 Nvest Byrd Blvd:; Suite 101 • Universal City, 'Pexas 78148 Phone: 210- 658 -6229 ® Fax: 210 -659 -7611 W Eniail: vaugh<3a @avacpa.com ®vtivw.avacpa earl 112 Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Schertz's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we have reported to management of City of Schertz in a separate letter dated January 20, 2014. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Armstrong, Vaughan & Associates, P.C. January 20, 2014 113 rr