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CAFR FY 2014-2015CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2015 OFFICIALS ISSUING REPORT John C. Kessel City Manager Juan F. Santoya, Jr. Director of Finance I rz/,� �N CITY OA 1, CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS SEPTEMBER 30, 2015 PAGE INTRODUCTORY SECTION .......................................................................................................... i LETTER OF TRANSMITTAL .......................................................................................................................... ii CITYOFFICIALS ............................................................................................................................................. x ORGANIZATIONALCHART ........................................................................................................................ xi CERTIFICATE OF ACHIEVEMENT ............................................................................................................ xii FINANCIAL SECTION MANAGEMENTS DISCUSSION AND ANALYSIS ...................................................................................... 5 BASIC FINANCIAL STATEMENTS ............................................................................................................ 14 STATEMENT OF NET POSITION ................................................................................................................ 15 STATEMENT OF ACTIVITIES ..................................................................................................................... 17 BALANCE SHEET - GOVERNMENTAL FUNDS ...................................................................................... 19 RECONCILIATION OF BALANCE SHEET ................................................................................................. 21 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTALFUNDS ....................................................................................................................... 22 RECONCILIATION OF THE STATEMENT OF REVENUES, GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES ......................................................................................................... 24 STATEMENT OF NET POSITION - PROPRIETARY FUNDS ................................................................... 25 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS ............................................................................................................................. 27 STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS ..................................................................... 28 101401101wel off, .'V4011"ONWO ��Jlll REQUIRED SUPPLEMENTARY INFORMATION ..................................................................................... 59 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND ...................................................................................... 60 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ECONOMIC DEVELOPMENT CORPORATION .................................... 62 NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ................................................................................................. 63 SCHEDULE OF CHANGES - NET PENSION LIABILITY AND RELATED RATIOS ......................... 64 SCHEDULE OF CITY CONTRIBUTIONS ................................................................................................ 65 RETIREE HEALTH INSURANCE PLAN - ANALYSIS OF FUNDING PROGRESS ............................. 66 SUPPLEMENTARY INFORMATION ........................................................................................................... 67 COMPARATIVE BALANCE SHEETS - GENERAL FUND .................................................................... 68 COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GENERAL FUND .............................................................................................................. 69 COMPARATIVE BALANCE SHEETS - ECONOMIC DEVELOPMENT CORPORATION ..................70 i CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS SEPTEMBER 30, 2015 FINANCIAL SECTION (Continued) PAGE COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ECONOMIC DEVELOPMENT CORPORATION ................................................ COMPARATIVE BALANCE SHEETS - DEBT SERVICE FUND ........................................................... SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - DEBT SERVICE FUND ................................................................................ COMPARATIVE BALANCE SHEETS - CAPITAL PROJECTS FUND .................................................. COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - CAPITAL PROJECTS FUND ............................................................................................ COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS .................................... COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — NONMAJOR GOVERNMENTAL FUNDS .................................................................... SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL - HOTEL OCCUPANCY FUND ....................................................................................... SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - PARK FUND .................................................................................................. SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - TREE MITIGATION FUND ......................................................................... SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - POLICE FORFEITURES FUND ................................................................... SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - LIBRARY ADVISORY BOARD .................................................................. SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - HISTORICAL COMMITTEE FUND ............................................................ SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL - PARKS AND RECREATION FOUNDATION ............................................ STATISTICAL SECTION NET POSITION, BY COMPONENT ..................................................................................... CHANGE IN NET POSITION ................................................................................................ FUND BALANCES - GOVERNMENTAL FUNDS .............................................................. CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS ...................................... TAX REVENUE 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 TAX PAYERS .............................................................................. PROPERTY TAX LEVIES AND COLLECTIONS ............................................................... TAXABLE ASSESSED VALUE ............................................................................................ RATIOS OF OUTSTANDING DEBT BY TYPE .................................................................. RATIOS OF GENERAL BONDED DEBT OUTSTANDING ............................................... DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT ........................ DEBT MARGIN INFORMATION ......................................................................................... PLEDGED REVENUE COVERAGE ..................................................................................... DEMOGRAPHIC AND ECONOMIC STATISTICS ............................................................. ii 71 72 73 74 75 76 78 80 81 82 83 84 85 86 .88 .90 .94 .96 .98 .99 100 101 102 103 104 105 106 108 109 110 ill 112 CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS SEPTEMBER 30, 2015 STATISTICAL SECTION (Continued) PAGE TOP TEN PRINCIPAL EMPLOYERS ...................................................................................................... 113 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION ....................114 OPERATING INDICATORS BY FUNCTION/PROGRAM .................................................................... 115 CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM ............................................................... 117 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 A UDITING STANDARDS ................... ............................120 iii I rz/,� �N CITY OA 1, INTRODUCTORY SECTION iv March 1.1, 2016 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, 2015. 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, 2015, 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, 2015, 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 ° 210.819.1000 schermcom V 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 32.21 square miles with a population of 37,865 in 2015. 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 November 30, 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, EMS services, the construction and maintenance of streets, recreational facilities, cultural events, water and sewer services. The annual budget and five -year forecast serve as the foundation for the City of Schertz's financial planning and control. All city departments 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 the proposed budget to the council for review before August 1 st. The council then holds public hearings and community meetings on the proposed budget and to adopt a final budget by September 30th. The fiscal year for Schertz is from October 1 through September 30. 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 60 -63 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. Local economy. The City of Schertz enjoys a favorable economic environment and leading indicators point to continued growth. In December 2015, the unemployment rate was 2.9 %. Within a 15 mile radius, the labor market includes a workforce of approximately 530,000 well trained workers and this number is expected to increase in the next several years as the region continues to experience population and business growth. Schertz is located in the San Antonio -New Braunfels Metropolitan Area which has an estimated employment of 1.1 million people as of December 2015. Schertz' own estimated employment for the same time period is 17,361 which is 0.53% higher than the year prior. 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. Vi In the last few years, five Fortune 100 companies have made major investments in Schertz. These five companies include General Electric, Caterpillar, Amazon.com, SYSCO and FedEx. 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 worldwide capabilities in the liquefied natural gas industry. 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. SYSCO completed their 630,000 square foot distribution facility in January 2012 and employs 810 full -time staff. This is a regional distribution center for SYSCO. FedEx Ground completed a 202,000 square foot facility which will be used to serve the San Antonio region. In addition, Titan Industrial Park, an award winning project through San Antonio Business Journal, completed its first phase in 2015. The space was 82% leased upon completion and the second phase has already begun. 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. Long -term financial planning. The community approved bond propositions in November 2010 for quality of life projects which included an aquatics facility, improvements to the baseball fields and soccer fields, building a new animal adoption facility, and improvements to Main Street. The only remaining projects are the aquatics facility and Main Street improvements. Design work was completed for the aquatic facility and is scheduled to break ground in 2016 while the Main Street improvements continue to be developed. In November 2015, the City placed 2 bond propositions before the voters totaling $15 million. $7 million was for FM road ways which the City will partner with the Texas Department of Transportation, who will provide matching funds, and $8 million for a new Fire Station located in the southern portion of Schertz. Current Year Budget Initiatives. In FY 201.4 -15, the City's main initiatives that had a major budget impact were in capital purchases, new hires, and employee compensation. The City budgeted for vehicle replacements, 1/3 of the Firefighters' Self Contained Breathing Apparatus, and building repairs. New capital equipment was purchased through a $3 million tax note in early 2015 for public works and emergency medical services. Also authorized were 2 seasonal park workers, a new accountant, 2 mechanics, and a building maintenance worker. The City budget for compensation increases over $500,000 that included 2% merit raise to eligible employees and a market adjustment based on a salary survey. 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. vii 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. 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 1.21 years. The average yield on the investment portfolio was .26 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 2015, . 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 is a member city of the Texas Municipal Retirement System, referred to as TMRS. TMRS is one of the leading public pension funds in the nation. 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, 2014. This was the 30th 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. viii 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, �40 John C. Kessel. City Manager ix CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR MICHAEL CARPENTER. MAYOR PRO -TEM JIM FOWLER CITY COUNCIL GRUMPY AZZOZ CEDRIC EDWARDS, SR. Im• a w I i t•]► _i__Mfwl CITY MANAGER JOAN C. KESSEL DIRECTOR OF FINANCE JUAN F. SANTOYA, JR. CITY ATTORNEY CHARLES ZECH, DENTON, NAVARRO, ROCHA, BERNAL, HYDE & ZECH, P.C. Z21T"• _t•1.7•C•l _?4 TI` 11YZM[f �� /_ril•l•. /_ \`►�F:�:1_F.Y.Y•7• /_Ill f.`� � x CITY OF SCHERTZ ORGANIZATIONAL CHART 00. 0 0, N"R K�7 *Appointed by City Council xi Government Finance Officers Association IMMIM -won Presented to City of Schertz For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2014 Executive Director/CEO xii I rz/,� �N CITY OA 1, FINANCIAL SECTION strARE tOLDERS Nancy 1.. Vaughan, CPA Deborah I°. Fraser, CPA Phil S. Vaughan, CPA To the Honorable Mayor and Members of the City Council City of Schertz, Texas e z� z t 1 �,. Vaughan& Associates, IBC: Report on the Financial Statements Certified Public Accountants 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, 2015, 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 West Byrd blvd., Suite 101 . Universal Cit f, Te es 781=18 Phone: 210 - 658 -622 Fax 210-659-7611 .Email: vaughan avac a.coni wwiv.avacpa.co 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, 2015, 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. Emphasis of Matter As discussed in Note IS to the financial statements, in October 2014, the City adopted a new accounting guidance from the Governmental Accounting Standards Board Statement No. 68 related to accounting for pensions. This resulted in a restatement of the prior year balances. Our opinion is not modified with respect to the matter. 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, schedule of changes in net pension liabilities and related ratios and the schedule of contributions, 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 the schedule of changes in net pension liabilities and related ratios and the schedule of contributions 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 changes in net pension liabilities and related ratios and the schedule of contributions 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 March 11, 2016 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. 1"�' , /""� Armstrong, Vaughan & Associates, P.C. March 11, 2016 N 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, 2015. 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 $157 million (net position). Of this amount, $16 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 $16.8 million. A significant portion of this increase, 58 %, 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 $31.1 million, an increase of $3.7 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 $8 million which is 39.6% 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 $245 thousand in tax notes in the governmental activities and $1.88 million in tax notes for water and sewer improvements. 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) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary infonnation 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 5 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 govermnent -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 fund 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 fiends. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fund 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 government -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. 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 fiend. 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 $157 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 (9 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $16 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 Note — The year 2014 has not been restated for GASB Statement No. 68 adopted October 1, 2014. in Governmental Activities Business -Type Activities Total 2015 2014 2015 2014 2015 2014 Current and Other Assets $ 35,838,626 $ 32,058,111 $ 25,354,617 $ 22,393,677 $ 61,193,243 $ 54,451,788 Capital Assets 114,639,271 111,550,067 69,019,208 64,553,475 183,658,479 176,103,542 Total Assets 150,477,897 143,608,178 94,373,825 86,947,152 244,851,722 230,555,330 Deferred Outflows 2,510,327 969,012 637,418 146,807 3,147,745 1,115,819 Current Liabilities 7,139,217 7,021,924 4,631,940 4,011,930 11,771,157 11,033,854 Long -Term Liabilities 62,661,129 55,747,628 16,485,531 12,956,604 79,146,660 68,704,232 Total Liabilities 69,800,346 62,769,552 21,117,471 16,968,534 90,917,817 79,738,086 Deferred Inflows 78,341 - 24,645 - 102,986 - Net Investment in Capital Assets 68,125,738 62,792,671 59,625,205 53,674,437 127,750,943 116,467,108 Restricted 13,343,280 10,401,728 - - 13,343,280 10,401,728 Unrestricted 1,640,519 8,613,239 14,243,922 16,450,988 15,884,441 25,064,227 Total Net Position $ 83,109,537 $ 81,807,638 $ 73,869,127 $ 70,125,425 $ 156,978,664 $ 151,933,063 Note — The year 2014 has not been restated for GASB Statement No. 68 adopted October 1, 2014. in The government's net position increased by $16.8 million during the current fiscal year. Fifty -eight 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 Revenues: Program Revenues: Charges for Services Operating Contributions Capital Contributions General Revenues Property Taxes Other Taxes Investment Earnings Miscellaneous Total Revenues Governmental Activities 2015 2014 Business -Type Activities Total 2015 2014 2015 2014 $ 5,589,948 $ 5,771,078 $ 25,115,495 $ 23,681,625 $ 30,705,443 $ 29,452,703 336,252 220,264 - - 336,252 220,264 5,509,530 5,756,456 4,158,552 2,809,110 9,668,082 8,565,566 14,139,037 12,794,172 - - 14,139,037 12,794,172 13,186,298 13,219,062 - - 13,186,298 13,219,062 56,820 43,243 47,728 31,810 104,548 75,053 197,881 180,316 344,731 609,003 542,612 789,319 39,015,766 37,984,591 29,666,506 27,131,548 68,682,272 65,116,139 Expenses: General Government 6,443,227 6,958,530 - - 6,443,227 6,958,530 Public Safety 10,836,712 10,025,703 10,836,712 10,025,703 Public Environment 3,876,644 3,740,538 3,876,644 3,740,538 Parks and Recreation 2,164,604 1,807,136 2,164,604 1,807,136 Cultural 892,194 870,159 892,194 870,159 Health 470,468 407,114 470,468 407,114 Administration 1,845,877 1,942,312 1,845,877 1,942,312 Interest and Other Fees 2,226,635 2,352,856 2,226,635 2,352,856 Water and Sewer - - 18,440,959 17,762,116 18,440,959 17,762,116 EMS 4,719,526 4,268,125 4,719,526 4,268,125 Total Expenses 28,756,361 28,104,348 23,160,485 22,030,241 51,916,846 50,134,589 INCREASE. IN NET POSITION BEFORE TRANSFERS 10,259,405 9,880,243 6,506,021 5,101,307 16,765,426 14,981,550 Transfers (42,235) (50,000) 42,235 50,000 CHANGE IN NET POSITION $ 10,217,170 $ 9,830,243 $ 6,548,256 $ 5,151,307 $ 16,765,426 $ 14,981,550 Note — The year 2014 has not been restated for GASB Statement No. 68 adopted October 1, 2014 as the information is unavailable. $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 TOTAL REVENUES - GOVERNMENT -WIDE Charges for Operating Capital Grants Property Taxes Other Taxes Unrestricted Miscellaneous Services Grants and and Investment Contributions Contributions Earnings 8 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 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 Sales and Use Tax, 38% Tax, 51 Business -Type Activities Business -Type activities accounted for 39.3% of the growth in the net position of the City of Schertz. Of this increase, 64% 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. 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $(5,000,000) 2015 2014 Water and Sewer Utilities EMS 10 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 $31.1 million. Of this total amount, $7.3 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 $7.3 million, while total fund balance was $9.6 million, an increase of $1.9 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 36.3% of total general fund expenditures, not including capital. The debt service fund has a total fund balance of $0.9 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 $0.2 million. The capital projects fund has a total fund balance of $8.9 million, a decrease of $.7 million. No new governmental bonds were issued this year, so the activity in the capital projects fund is primarily the expenditures of prior bond issuances. The City did issue Tax Notes of $245 thousand. 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 $15.2 million and those for the Schertz EMS fund amounted to $(.6) million. General Fund Budgetary Highlights The General Fund expenditures were $1.9 million less than the $22.8 million budget. This was the result of cost savings across most of the General Fund. Revenues were lower by $26 thousand than budgeted. Overall, the fund balance increased by $1.5 million higher than budgeted. The original budget was amended during the year to decrease total expenditures by 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, 2015, amounts to $184 million (net of accumulated depreciation). Developers contributed $8.6 million in infrastructure 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 $67.8 million. The related principal and interest payment for the bonds are backed by 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 2015 2014 2015 2014 2015 2014 Land $ 7,499,108 $ 7,445,117 $ 1,354,138 $ 1,276,852 $ 8,853,246 $ 8,721,969 Water Rights - - 70,245 70,245 70,245 70,245 Buildings and Improvements 39,307,995 39,116,202 4,660,001 4,660,001 43,967,996 43,776,203 Machinery, Equipment, and Vehicles 8,407,375 8,126,722 4,470,642 3,640,274 12,878,017 11,766,996 Infrastructure 94,102,513 87,983,067 82,119,240 77,985,687 176,221,753 165,968,754 Construction in Progress 5,880,125 4,995,655 2,964,135 1,651,694 8,844,260 6,647,349 Accumulated Depreciation (40,557,845) (36,152,696) (26,619,193) (24,722,278) (67,177,038) (60,874,974) TOTALS $ 114,639,271 $ 111,514,067 $ 69,019,208 $ 64,562,475 $ 183,658,479 $ 176,076,542 Long -Term Debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $67.8 million. The related principal and interest payment for the bonds are backed by 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 2015 2014 2015 2014 2015 2014 General Obligation Bonds $ 52,300,000 $ 55,300,000 $ 3,485,000 $ 3,960,000 $ 55,785,000 $ 59,260,000 Certificates of Obligation 277,801 543,934 8,837,200 9,436,066 9,115,001 9,980,000 Tax Notes and Leases 1,210,000 1,585,000 1,640,000 65,000 2,850,000 1,650,000 TOTALS $ 53,787,801 $ 57,428,934 $13,962,200 $13,461,066 $ 67,750,001 $ 70,890,000 12 Economic Factors and Next Year's Budgets and Rates At the end of the last fiscal year, the assigned and unassigned fund balance in the general fund increased to $8.0 million. The City of Schertz has not appropriated any portion of this amount for spending in the 2016 fiscal year budget. The intention is to build up the assigned and unassigned fund balance to 3 to 6 months of operating expenses. Each year the City updates its five -year budgeting forecast and has implemented a long term debt model to assist management in making informed financial decisions that will impact the community now and in the future. 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 I rz/,� �N CITY OA 1, BASIC FINANCIAL STATEMENTS 14 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2015 ASSETS Current Assets: Cash and Cash Equivalents Investments Receivables (net of allowances) Taxes Accounts and Other Accrued Interest Income Prepaid Expenses Inventories Internal Balances Total Current Assets Noncurrent Assets: Restricted Assets: Cash and Cash Equivalents Investments Capital Assets: Land Water Rights Buildings and Improvements Equipment and Vehicles Infrastructure Construction in Progress Accumulated Depreciation Total Noncurrent Assets TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Debt Refundings Deferred Pension Related Outflows TOTAL DEFERRED OUTFLOWS OF RESOURCES Primary Government Governmental Business -Type Activities Activities Total $ 2,687,815 28,1.89,639 2,571,225 2,054,270 1,983 1.6,000 101,084 (254,966) 35,367,050 471,576 7,499,108 39,307,995 8,407,375 94,102,513 5,880,125 (40,557,845) 115,1.1.0,847 150,477,897 $ 1,21.6,648 4,192,991. 3,552,280 5,863 351,950 207,510 254,966 9,782,208 2,162,967 13,409,442 1,354,138 70,245 4,660,001 4,470,642 82,119,240 2,964,1.35 (26,619,193) 84,591,617 94,373,825 $ 3,904,463 32,382,630 2,571,225 5,606,550 7,846 367,950 308,594 45,149,258 2,634,543 13,409,442 8,853,246 70,245 43,967,996 1.2,878,017 1.76,221,753 8,844,260 (67,177,038) 199,702,464 244,851,722 890,548 1.27,870 1,018,41.8 1,619,779 509,548 2,129,327 $ 2,510,327 See Accompanying notes to basic financial statements, 15 $ 637,418 $ 3,147,745 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION (CONTINUED) SEPTEMBER 30, 2015 Noncurrent Liabilities: Compensated Absences 747,605 Primary Government 954,905 Net Other Post - Employment Benefit Payable Governmental Business -Type 430,580 Net Pension Liability Activities Activities Total LIABILITIES 51,076,145 12,868,823 63,944,968 Current Liabilities: 62,661,129 16,485,531 79,146,660 Accounts Payable $ 1,878,393 $ 1,973,143 $ 3,851,536 Accrued Liabilities 445,687 150,096 595,783 Due to Other Governments 162,714 - 162,714 Unearned Revenue 42,418 416,939 459,357 Accrued Interest Payable 451,375 68,044 519,419 Compensated Absences 186,901 51,825 238,726 Customer Deposits 58,450 522,596 581,046 Current Portion of Long -Term Debt 3,913,279 1,449,297 5,362,576 Total Current Liabilities 7,139,217 4,631,940 11,771,157 Noncurrent Liabilities: Compensated Absences 747,605 207,300 954,905 Net Other Post - Employment Benefit Payable 327,390 103,190 430,580 Net Pension Liability 10,509,989 3,306,218 13,816,207 Long -Term Debt 51,076,145 12,868,823 63,944,968 Total Noncurrent Liabilities 62,661,129 16,485,531 79,146,660 TOTAL LIABILITIES 69,800,346 21,117,471 90,917,817 DEFERRED INFLOWS OF RESOURCES Deferred Pension Related Inflows 78,341 24,645 102,986 NET POSITION Net Investment In Capital Assets 68,125,738 59,625,205 127,750,943 Restricted For: Police and Municipal Court 1,177,895 - 1,177,895 PEG Capital Fees 509,535 - 509,535 Tourism Development 848,969 - 848,969 Economic Development 9,541,457 - 9,541,457 Parks and Tree Mitigation 672,700 - 672,700 Debt Service 454,993 - 454,993 Scholarships and Other Purposes 137,731 - 137,731 Unrestricted 1,640,519 14,243,922 15,884,441 TOTAL NET POSITION $ 83,109,537 $ 73,869,127 $ 156,978,664 See Accompanying notes to basic financial statements, 16 CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2015 Program Revenues Operating Capital Charges for Grants and Grants and Functions and Programs Expenses Services Contributions Contributions Primary Government: Governmental Activities: General Government Public Safety Public Environment Parks and Recreation Cultural Health Administration Interest 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 $ 6,443,227 $ 1,840,547 $ 144,076 $ 5,498,973 10,836,712 2,603,476 82,726 - 3,876,644 - - - 2,164,604 794,003 93,632 - 892,194 325,178 3,628 - 470,468 26,744 12,190 10,557 1,845,877 - - - 2,226,635 - - - 28,756,361 5,589,948 336,252 5,509,530 18,440,959 20,700,369 - 4,158,552 4,719,526 4,415,126 - - 23,160,485 25,115,495 - 4,158,552 $ 51,916,846 $ 30,705,443 $ 336,252 $ 9,668,082 See Accompanying notes to basic financial statements, 17 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -Type Activities Activities Total $ 1,040,369 - $ 1,040,369 (8,150, 510) - (8,150,510) (3,876,644) - (3,876,644) (1,276,969) - (1,276,969) (563,388) - (563,388) (420,977) 47,728 (420,977) (1,845,877) 344,731 (1,845,877) (2,226,635) 392,459 (2,226,635) (17,320,631) (42,235) (17,320,631) $ 6,417,962 6,417,962 6,548,256 (304,400) (304,400) 70,125,425 6,113,562 6,113,562 (17,320,631) 6,113,562 (11,207,069) 14,139,037 - 14,139,037 10,315,125 - 10,315,125 2,263,783 - 2,263,783 563,734 - 563,734 43,656 - 43,656 56,820 47,728 104,548 197,881 344,731 542,612 27,580,036 392,459 27,972,495 (42,235) 42,235 - 10,217,170 6,548,256 16,765,426 81,807,638 70,125,425 151,933,063 (8,915,271) (2,804,554) (11,719,825) $ 83,109,537 $ 73,869,127 $ 156,978,664 IN CITY OF SCHERTZ, TEXAS BALANCE SHEET — GOVERNMENTAL FUNDS SEPTEMBER 30, 2015 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 13,547,426 $ 9,698,171 $ 906,368 See Accompanying notes to basic financial statements. 19 General Capital Debt Fund Projects Service ASSETS Cash and Cash Equivalents $ 268,784 $ 919,471 $ 50,741 Investments 8,796,303 8,773,689 796,437 Receivables (net of allowances) Taxes 1,860,970 - 59,190 Accounts and Other 2,048,709 51011 - Inventory 101,084 - - Prepaid Items - - - Restricted Assets: Cash and Cash Equivalents 471,576 - - TOTAL ASSETS $ 13,547,426 $ 9,698,171 $ 906,368 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable $ 913,100 $ 772,675 $ - Accrued Salaries and Benefits 437,755 - - Customer Deposits 58,450 - - Due to Other Governments 162,714 - - Due to Other Funds 254,057 909 - Unearned Revenues 42,418 - - Total Liabilities 1,868,494 773,584 - Deferred Inflows of Resources: Unavailable Revenues 2,062,445 - 59,190 Fund Balances: Nonspendable: Inventory 101,084 - - Prepaid Items - - - Restricted for: Police and Public Safety 189,464 - - Municipal Court 683,558 - - PEG Capital Fees 509,535 - - Capital Improvement - 8,924,587 - Debt Service - - 847,178 Tourism Development - - - Parks and Tree Mitigation - - - Historical Committee and Library - - - Economic Development - - - Scholarships 60,944 - - Assigned for: Property Replacement 785,005 - - Special Events 6,657 - - Unassigned 7,280,240 - - Total Fund Balances 9,616,487 8,924,587 847,178 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 13,547,426 $ 9,698,171 $ 906,368 See Accompanying notes to basic financial statements. 19 Economic Nonmajor Total Development Governmental Governmental Corporation Funds Funds $ 595,001 $ 853,818 $ 2,687,815 8,635,228 1,187,982 28,189,639 611,869 39,195 2,571,224 1,983 550 2,056,253 - - 101,084 - 16,000 16,000 - - 471,576 $ 9,844,081 $ 2,097,545 $ 36,093,591 $ 14,402 $ 178,216 $ 1,878,393 7,932 - 445,687 - - 58,450 - - 162,714 - - 254,966 - - 42,418 22,334 178,216 2,842,628 - - 2,121,635 - - 101,084 - 16,000 16,000 - 304,873 494,337 - - 683,558 - - 509,535 - - 8,924,587 - - 847,178 - 848,969 848,969 - 672,700 672,700 - 76,787 76,787 9,821,747 - 9,821,747 - - 60,944 - - 785,005 - - 6,657 - - 7,280,240 9,821,747 1,919,329 31,129,328 $ 9,844,081 $ 2,097,545 $ 36,093,591 m1 I rz/,� �N CITY OA 1, CITY OF SCHERTZ, TEXAS RECONCILIATION OF BALANCE SHEET SEPTEMBER 30, 2015 TOTAL FUND BALANCE - TOTAL GOVERNMENTAL FUNDS $ 31,129,328 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. 114,639,271 Other long -term assets are not available to pay for current - period expenditures and, therefore, are not recognized as revenue in the funds. 2,121,636 The governmental funds report other post - employment benefit contributions as expenditures when they become due and payable. However, in the statement of activities differences between other post- employment benefit contributions and actuarially determined costs are reported as an obligation. (327,390) 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 (53,787,801) Unamortized Premiums, Discounts, Losses on Refundings (219,580) Capital Lease Payable (91,495) Accrued Interest Payable (451,375) Compensated Absences (934,506) (55,484,757) Net Pension Liabilities (and related deferred inflows and outflows of resources) do not consume current financial resources are not reported in governmental funds: Net Pension Liability (1.0,509,989) Pension Related Deferred Outflows 1,619,779 Pension Related Deferred Inflows (78,341) (8,968,551) TOTAL NET POSITION - GOVERNMENTAL ACTIVITIES $ 83,109,537 See accompanying notes to basic financial statements. 21 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 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) Issuance of Debt Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balances at Beginning of Year Fund Balances at End of Year General Fund Capital Projects Debt Service Fund $ 17,926,685 $ - $ 5,415,059 1,447,814 - - 1,609,917 - - 1,498,887 - - 233,959 159,648 - 24,369 13,723 2,575 571,416 6,000 - 23,313,047 179,371 5,417,634 5,187,335 - - 10,037,830 - - 952,663 - - 1,182,906 - - 795,436 - - 404,008 - - 1,638,429 - - 637,800 1,650,298 - 31,875 - 3,471,133 8,341 - 2,088,796 - 4,842 3,150 20,876,623 1,655,140 5,563,079 2,436,424 (1,475,769) (145,445) 245,000 569,147 (541,971) (45,537) 367,188 (541,971) 768,610 367,188 1,894,453 (707,159) 221,743 7,722,034 9,631,746 625,435 $ 9,616,487 $ 8,924,587 $ 847,178 See accompanying notes to basic financial statements. 22 Other Economic Nonmajor Total Development Governmental Governmental Corporation Funds Funds $ 3,442,819 $ 563,734 $ 27,348,297 - 283,488 1,731,302 - 1 87,234 1,797,151 - 35,701 1,534,588 - - 393,607 14,461 1,251 56,379 1,478 54,532 633,426 3,458,758 1,125,940 33,494,750 279,980 115,126 5,582,441 - 120,571 10,158,401 - - 952,663 - 475,291 1,658,197 - 25,710 821,146 - - 404,008 351,812 66,405 2,056,646 - 26,570 2,314,668 415,000 - 3,918,008 15,609 - 2,112,746 - - 7,992 1,062,401 829,673 29,986,916 2,396,357 296,267 3,507,834 - - 245,000 - 52,785 989,120 (367,188) (76,659) (1,031,355) (367,188) (23, 874) 202,765 2,029,169 272,393 3,710,599 7,792,578 1,646,936 27,418,729 $ 9,821,747 $ 1,919,329 $ 31,129,328 23 I rz/,� �N CITY OA 1, CITY OF SCHERTZ, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES •' b b C3 "111011IR NET CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS 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 Capital Contributions Depreciation Expense 2,409,007 5,498,973 (4,723,036) Proceeds from capital asset dispositions produce current financial resources in the fund statements, while the net gain (loss) is recognized in the Statement of Activities. This is net book value of capital assets disposed. Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. 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 resources 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 (245,000) Principal Repayments 3,918,008 Amortization of Premiums, Discounts, Losses (1,159) Governmental funds report required contributions to employee pensions as expenditures. However, in the Statement of Activities the cost of the pension is recorded based on the actuarially detennined cost of the plan. This is the amount that actuarially determined pension expense exceeded contributions. 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 (67,707) Net Other Postemployment Benefits (47,625) Accrued Interest (107,908) CHANGE IN NET POSITION - GOVERNMENTAL ACTIVITIES See accompanying notes to basic financial statements. 24 3,710,599 3,184,944 (95,740) 22,038 3,671,849 (53,280) (223,240) $ 10,217,170 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION - PROPRIETARY FUNDS SEPTEMBER 30, 2015 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 Infrastructure Construction in Progress Less: Accumulated Depreciation Total Noncurrent Assets TOTAL ASSETS Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total $ 1,216,648 $ - $ 1,216,648 4,192,991 - 4,192,991 2,305,445 1,246,835 3,552,280 385,413 - 385,413 5,863 - 5,863 350,000 1,950 351,950 47,754 159,756 207,510 8,504,114 1,408,541 9,912,655 2,162,967 - 2,162,967 12,526,310 883,132 13,409,442 1,354,138 - 1,354,138 70,245 - 70,245 4,653,501 6,500 4,660,001 2,804,323 1,666,319 4,470,642 82,119,240 - 82,119,240 2,964,135 - 2,964,135 (25,465,214) (1,153,979) (26,619,193) 83,189,645 1,401,972 84,591,617 91,693,759 2,810,513 94,504,272 Governmental Activities Internal Service Fund DEFERRED OUTFLOWS OF RESOURCES Deferred Loss on Refunding 127,870 - 127,870 - Deferred Pension Related Outflows 203,777 305,771 509,548 TOTAL DEFERRED OUTFLOWS $ 331,647 $ 305,771 $ 637,418 $ - See accompanying notes to basic financial statements. 25 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION - PROPRIETARY FUNDS (CONTINUED) SEPTEMBER 30, 2015 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 Net Other Post - Employment Benefit Payable Net Pension Liability Long -Term Debt (Net of Current Portion) Total Noncurrent Liabilities TOTAL LIABILITIES DEFERRED INFLOWS OF RESOURCES Governmental Business -Type Activities - Enterprise Funds Activities Water 14,789 Internal and Sewer Schertz Service System EMS Total Fund 347,037 59,625,205 - Unrestricted, Deficit $ 1,768,983 $ 204,160 $ 1,973,143 $ - 45,490 104,606 150,096 - 522,596 - 522,596 - 65,462 2,582 68,044 - - 130,447 130,447 - 416,911 28 416,939 - 20,566 31,259 51,825 - 1,189,756 259,541 1,449,297 - 4,029,764 732,623 4,762,387 - 82,265 125,035 207,300 - 41,1.37 62,053 103,190 - 1,322,211 1,984,007 3,306,218 - 12,056,561 812,262 1.2,868,823 - 1.3,502,174 2,983,357 1.6,485,531 - 1.7,531,938 3,715,980 21,247,918 - Deferred Pension Related Inflows 9,856 14,789 24,645 - NET POSITION Net Investment in Capital Assets 59,278,168 347,037 59,625,205 - Unrestricted, Deficit 15,205,444 (961,522) 14,243,922 - TOTAL NET POSITION $ 74,483,612 $ (614,485) $ 73,869,127 $ - 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, 2015 Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total OPERATING REVENUES Governmental A -'- :.Z*-- Intemai Service Fund Fees Charged to Users $ 20,676,850 $ 4,415,126 $ 25,091,976 $ - Charges for Premiums - - - 2,088,488 Other Charges 23,519 - 23,519 - TOTAL OPERATING REVENUES 20,700,369 4,415,126 25,115,495 2,088,488 OPERATING EXPENSES 2,566,864 Personnel Services 2,072,063 3,335,908 5,407,971 2,088,488 Contribution to Joint Ventures 1,378,081 - 1,378,081 - Water Purchase 2,982,781 - 2,982,781 - Garbage Contractor 3,883,243 - 3,883,243 - Sewage Treatment 3,104,722 - 3,104,722 - General and Administrative 2,075,569 528,276 2,603,845 - Contractual Services 135,617 123,299 258,916 - Supplies and Maintenance 284,521 480,386 764,907 - Depreciation 2,064,700 219,064 2,283,764 - TOTAL OPERATING EXPENSES 17,981,297 4,686,933 22,668,230 2,088,488 OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Investment Earnings Lease Income Miscellaneous Interest Expense Amortization and Bond Issue Costs TOTAL NONOPERATING REVENUES (EXPENSES) INCOME BEFORE CONTRIBUTIONS AND TRANSFERS Transfers In (Out) Capital Contributions CHANGE IN NET POSITION NET POSITION AT BEGINNING OF YEAR 2,719,072 (271,807) 2,447,265 46,714 1,014 47,728 140,636 - 140,636 120,104 83,991 204,095 (428,912) (14,805) (443,717) (30,750) (17,788) (48,538) (152,208) 52,412 (99,796) 2,566,864 (219,395) 2,347,469 43,703 (1,468) 42,235 4,158,552 - 4,158,552 6,769,119 68,836,080 (220,863) 1,289,345 6,548,256 70,125,425 Prior Period Adjustment (1,121,587) (1,682,967) (2,804,554) - NET POSITION AT YEAR END, (Deficit) $ 74,483,612 $ (614,485) $ 73,869,127 $ - See accompanying notes to basic financial statements. 27 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 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 Transfers from Other Funds for Projects Proceeds from Bonds Issued Bond Issuance Costs Paid Principal Paid on Long -Term Debt Net Cash Provided (Used) by Capital and Related Financing Activities Cash Flows From Investing Activities: Purchase 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 (13,859,889) (1,306,111) (15,166,000) 5,846,920 24,025 5,870,945 547,837 110,660 658,497 547,837 110,660 658,497 (2,420,901) (154,746) (2,575,647) Governmental Business -Type Activities - Enterprise Funds Activities Water 980,000 900,000 Internal and Sewer Schertz (48,538) Service System EMS Total Fund $ 21,763,703 $ 4,636,702 $ 26,400,405 $ - - - - 2,088,488 (2,056,894) (3,306,566) (5,363,460) (2,088,488) (13,859,889) (1,306,111) (15,166,000) 5,846,920 24,025 5,870,945 547,837 110,660 658,497 547,837 110,660 658,497 (2,420,901) (154,746) (2,575,647) (427,092) (12,947) (440,039) 43,703 - 43,703 980,000 900,000 1,880,000 (30,750) (17,788) (48,538) (1,194,755) (261,207) (1,455,962) (3,049,795) 453,312 (2,596,483) (3,908,253) (883,132) (4,791,385) 140,636 - 140,636 43,965 1,014 44,979 (3,723,652) (882,118) (4,605,770) (378,690) (294,121) (672,811) 1,693,211 294,121 1,987,332 2,065,094 - 2,065,094 3,758,305 294,121 4,052,426 1,216,648 - 1,216,648 - 2,162,967 - 2,162,967 - $ 3,379,615 $ - $ 3,379,615 $ - 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, 2015 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 Pension Liability and Related Inflows /Outflows Net Other Post - employment Benefit Payable Net Cash Provided (Used) by Operating Activities Noncash Capital and Related Financing Transactions: Developer Contributions of Capital Assets Business -Type Activities - Enterprise Funds Water and Sewer Schertz System EMS Total $ 2,719,072 120,104 2,064,700 $ (271,807) $ 2,447,265 83,991 204,095 219,064 2,283,764 Governmental Activities Internal Service Fund 796,188 137,557 933,745 - (350,000) - (350,000) - (6,864) (76,463) (83,327) - 341,509 (97,687) 243,822 - (9,713) 1,969 (7,744) - 35,782 - 35,782 - 111,260 28 111,288 - 11,842 5,603 17,445 - 6,703 1.0,058 16,761 - 6,337 11,712 18,049 - $ 5,846,920 $ 24,025 $ 5,870,945 $ - $ 4,158,552 $ See accompanying notes to basic financial statements. 29 NOTES TO BASIC FINANCIAL STATEMENTS we CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2015 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 held by the City 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, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Cibolo Creek Municipal Authority (CCMA) — was created in 1971 and provides regional wastewater services to the area northeast of San Antonio. The City and CCMC entered into a joint project to develop a new treatment facility that will currently only serve the City. The project will have excess capacity to serve other users in the future. The City is solely responsible for funding the project until other users need capacity. 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 fiends 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). These revenues are generally property taxes and warrants outstanding. 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. IN CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 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 fund are charges to customers for sales and services. Operating expenses for enterprise fiends 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, 2015 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 Eauivalents The City's cash and cash equivalents are considered to be cash on hand and demand deposits. Cash is reported as restricted when it has restrictions on its use narrower than the purpose of the fund in which it is reported. This can result in differences in presentation between fund statements and government -wide statements. 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. 34 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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. Deferred Inflows /Outflows of Resources A deferred outflow of resources is a consumption of net position by the government that is applicable to a future reporting period while a deferred inflow of resources is an acquisition of net position. These items are presented in separate sections following assets (deferred outflows) or liabilities (deferred inflows) on the statement of net position. 35 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) K. 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 fiends only if they have matured, for example, as a result of employee resignations and retirements. L. Pensions The net pension liability, deferred inflows, and outflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Texas Municipal Retirement System (TMRS), and additions to and deductions from TMRS's fiduciary net position have been determined on the same basis as they are reported by TMRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. M. 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, discounts, and losses on defeasance 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. Losses on defeasance are reported as deferred outflows of resources. 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. N. 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. we CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Fund Equity Continuted) 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. O. 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. P. 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. Q. 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. R. Reclassifications Certain reclassifications have been made in the presentation of the September 30, 2015 financial statements. All comparative information for prior periods has been reclassified to match the new presentation. The changes in presentation had no impact on the changes in net position or fund balance. 37 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) S. Adoption of Governmental Accounting Standards Board Statement For the year ending October 31, 2015, the City implemented GASB Statement No. 68 related to accounting for pensions. The new standard requires the City's net pension liability and related deferred inflows and outflows of resources to be recognized on the City's government -wide statements. This change required a prior period adjustment to restate prior years in accordance with the change in accounting principle. The prior period adjustment recorded represents the net pension liability at September 30, 2014. 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, 2015, 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 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, 2015, 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, 2015, 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. W Weighted Average Book Fair Maturity Value Value in Days $ 8,453,161 $ 8,453,161 46 19,940,418 19,940,418 38 1.2,183,688 12,1.83,688 62 2,117,713 2,1.1.7,713 85 3,097,092 3,097,092 692 $ 45,792,072 $ 45,792,072 92 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, 2015, 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, 2015, 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. W CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued) 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. 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, 2014, upon which the fiscal 2015 levy was based, was $3,037,267,611 (i.e., market value less exemptions). The estimated market value was $3,497,539,072, making the taxable value 89% 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, 2015, was $0.4974 per $100 of assessed value, which means that the City has a tax margin of $2.0026 for each $1.00 value and could increase its annual tax levy by approximately $60,824,321 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. 39 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 4 - RECEIVABLES Receivables as September 30, 2015 for the government's individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Governmental Funds Proprietary Funds Capital Economic Debt Nonmajor Water and Schertz General Projects Development Service Funds Sewer Fund EMS Receivables: Water & Sewer Property Taxes $ 111,704 $ $ - $ 62,968 $ - $ $ Sales Taxes 1,223,737 611,869 - - Occupancy Taxes - - - 39,195 Franchise Taxes 532,231 - - Customers 91,265 - - 2,380,240 17,068,409 Court Fines 4,809,444 - - - - Grants - 5,011 - - - Other - - 1,983 - 550 - 24,178 Gross Receivables 6,768,381 5,011 613,852 62,968 39,745 2,380,240 17,092,587 Less: Allowance for Uncollectibles 2,858,702 - - 3,778 - 74,795 15,845,752 Net Total Receivables $ 3,909,679 $ 5,011 $ 613,852 $ 59,190 $ 39,745 $ 2,305,445 $ 1,246,835 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: Unavailable General Fund Delinquent Property Taxes Receivable $ 105,001 Court Fines 1,957,444 Total General Fund 2,062,445 Debt Service Fund Delinquent Property Taxes Receivable 59,190 Total Debt Service Fund 59,190 Total Governmental Funds $ 2,121,635 NOTE 5 - INTERFUND BALANCES AND TRANSFERS The composition of interfund balances as of September 30, 2015 is as follows: Due From Due To EMS Water & Sewer General Fund Water & Sewer Capital Projects Water & Sewer General Fund Water & Sewer Amount Purpose $ 130,447 Structured loan between funds 138,926 Property tax collections for TIRZ 909 Grant Project 115,131 Allocated to Capital Projects 40 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 5 - INTERFUND BALANCES AND TRANSFERS (Continued) The following schedule briefly summarizes the City's transfer activity for the year ending September 30, 2015: Transfer From General Nonmajor Governmental Economic Development General Nonmajor Governmental Capital Projects EMS Water Transfer To Amount Purpose Nonmajor Governmental 9,285 Supplement historical committee Nonmajor Governmental 43,500 Hotel tax support of parks and recreation Debt Service 367,188 Pledge in support of debt service Capital Projects 535,988 Supplement capital projects funding Capital Projects 33,159 Supplement capital projects funding Water & Sewer 45,537 Supplement water capital projects funding General 1,468 Special Events General 1,834 Special Events Capital asset activity for the year ended September 30, 2015 was as follows: Governmental Activities: Capital Assets, Not Being Depreciated.• Land Construction in Progress Total Capital Assets Not Being Depreciated Capital Assets, Being Depreciated.• Buildings and Improvements Machinery, Equipment, and Vehicles Streets and Infrastructure Total Capital Assets Being Depreciated Accumulated Depreciation: Buildings and Improvements Machinery, Equipment, and Vehicles Streets and Infrastructure Total Accumulated Depreciation Total Capital Assets Being Depreciated, Net Governmental Activities Capital Assets, Net Beginning Ending Balance Increases Deletions Transfers Balance $ 7,445,117 $ 53,991 $ - $ - $ 7,499,108 4,995,655 1,614,840 - (730,370) 5,880,125 12,440,772 1,668,831 - (730,370) 13,379,233 39,116,202 172,485 19,308 39,307,995 8,162,722 567,691 (487,822) 164,784 8,407,375 87,983,067 5,498,973 620,473 94,102,513 135,261,991 6,239,149 (487,822) 804,565 141,817,883 (8,520,615) (1,116,475) - - (9,637,090) (4,504,912) (698,674) 392,082 (74,195) (4,885,699) (23,127,169) (2,907,887) - - (26,035,056) (36,152,696) (4,723,036) 392,082 (74,195) (40,557,845) 99,109,295 1,516,113 (95,740) 730,370 101,260,038 $ 111,550,067 $ 3,184,944 $ (95,740) $ $ 114,639,271 41 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 6 - CAPITAL ASSETS (Continued) Capital asset activity for the year ended September 30, 2015 was as follows: Beginning Business -Type Activities: Capital Assets, Not Being Depreciated Land Water Rights Construction in Progress Total Assets Not Being Depreciated Capital Assets, Being Depreciated: Buildings and Improvements Machinery, Equipment, and Vehicles Infrastructure Total Capital Assets Being Depreciated Accumulated Depreciation: Increases $ 1,267,852 $ 86,286 70,245 - 1,651,694 1,312,441 2,989,791 1,398,727 Deletions Transfers Ending $ 1,354,138 70,245 2,964,135 4,388,518 4,660,001 - 4,660,001 3,640,274 1,217,217 (287,834) (99,015) 4,470,642 77,985,687 4,133,553 82,119,240 86,285,962 5,350,770 (287,834) (99,015) 91,249,883 Buildings and Improvements (1,704,915) (260,871) - - (1,965,786) Machinery, Equipment, and Vehicles (2,308,510) (420,317) 287,834 99,015 (2,341,978) Infrastructure (20,708,853) (1,602,576) - - (22,311,429) Total Accumulated Depreciation (24,722,278) (2,283,764) 287,834 99,015 (26,619,193) Total Capital Assets Being Depreciated, Net 61,563,684 3,067,006 - - 64,630,690 Business -Type Activities Capital Assets, Net $ 64,553,475 $ 4,465,733 $ - $ $ 69,019,208 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental Activities: General Government Public Safety Public Environment Parks and Recreation Cultural Health Administration Total Depreciation Expense - Governmental Activities Business -Type Activities: Water and Sewer System EMS Total Depreciation Expense - Business Type Activities 42 $ 662,849 579,941 2,916,280 423,201 59,933 65,315 15,517 $ 4,723,036 $ 2,064,700 219,064 $ 2,283,764 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 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 2016 $ 220,285 2017 229,096 2018 238,260 2019 250,173 2020 262,681 $ 1,200,495 NOTE 8 - CAPITAL LEASE In 2014, the City entered into two lease agreements qualifying as capital leases for accounting purposes based on a bargain purchase option. Therefore, capital assets and a related capital lease obligation has been recorded at the present value of the future minimum lease payments at the inception date. The assets acquired through capital lease are reported in capital assets with the following accumulated depreciation at September 30, 2015: Assets: Equipment Less Accumulated Depreciation Total Future minimum lease payments are as follows: Year Ending September 30, 2016 2017 2018 2019 Total Payments Less: Amount Representing Interest Present Value of Minimum Lease Payments Governmental Business -type Activities Activities $ 133,715 (13,372) $ 120,343 Governmental Activities $ 36,230 36,230 24,153 96,61.3 (5,1.18) $ 91,495 $ 347,705 (136,911) $ 210,794 Business -type Activities $ 69,541. 69,541 69,541. 23,180 231,803 $ 231,803 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 primarily future property tax revenues. In some cases, these bonds are also secured by a pledge of net revenues from the utility system, emergency medical services and economic development sales taxes. However, the amount of the formal pledge is generally limited to $1,000. 43 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 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, 2015, follows: 44 Issue Amount Maturity Rate Balance Primary Government General Obligation Bonds 2006 Series $ 15,000,000 2031 4.0%-5.25% $ 4,530,000 2007 Series 6,000,000 2027 4.07% 4,040,000 2008 Series 9,900,000 2028 4.13% 7,410,000 2009 Series 9,500,000 2033 2.0%-5.50% 6,555,000 2010 Series, Refunding 2,865,000 2021 2.0%-4.0% 1,775,000 2011 Series 8,250,000 2036 3.0%-6.0% 7,530,000 201 IA Series, Refunding 6,745,000 2024 2.33% 5,310,000 2012 Series 7,625,000 2032 2.00% 6,750,000 2014 Series, Refunding 8,450,000 2030 2.0 % -4.0% 8,400,000 Tax Notes 2010 Notes 1,270,000 2015 1.2%-2.55% - 2013 Notes 835,000 2018 0.7%-1.7% 510,000 2013A Notes 800,000 2018 1.30% 485,000 2015 Notes 245,000 2021 1.75% 215,000 Certificates of Obligation 2007 Series CIB 2 438,900 2016 4.01% 52,800 2007 Series CIB 4 569,500 2016 4.01% 70,001. 2007 Series CIB 5 1,300,000 2016 4.01% 155,000 Total Governmental Long -Term Obligations $ 53,787,801 44 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 9 - LONG -TERM DEBT (Continued) Business -Type Activities General Obligation Refunding Bonds Issue Amount Maturity Rate Balance Primary Government (Continued) 6,533 - (969) 5,564 969 General Obligation Bonds 9,436,066 - (598,866) 8,837,200 617,200 2011 Series, Refunding $ 2,675,000 2021 2.0%-3.0% $ 1,530,000 2013 Series, Refunding 2,130,000 2025 2.58% 1,955,000 Certificates of Obligation 301,344 - (69,541) 231,803 69,541 2007 Series CIB 1 6,600,000 2026 4.01% 4,275,000 2007 Series CIB 2 226,100 2016 4.01% 27,200 2007 Series CIB 4 280,500 2016 4.01% 35,000 2013 Series 4,965,000 2033 2.0 % -4.0% 4,500,000 Tax Notes 2015 Notes 1,880,000 2021 1.75% 1,640,000 Total Business -Type Long -Term Obligations $ 13,962,200 Changes in long -term debt for the year ending September 30, 2015 are as follows: Balance Balance Due Within 9/30/2014 Additions Reductions 9/30/2015 One Year Governmental Activities: General Obligation Bonds $ 38,890,000 $ - $ (2,075,000) $ 36,815,000 $ 2,180,000 Unamortized Premium 463,270 - (24,232) 439,038 24,232 General Obligation Refunding Bonds 16,410,000 - (925,000) 15,485,000 980,000 Unamortized Premium 724,163 - (53,073) 671,090 53,073 Certificates of Obligation 543,934 - (271,133) 277,801 277,800 Tax Notes 1,585,000 245,000 (620,000) 1,210,000 365,000 Capital Lease 123,370 - (31,875) 91,495 33,174 Compensated Absences 866,799 237,621 (171,914) 932,506 186,901 Total Governmental Activities $ 59,606,536 $ 482,621 $ (4,172,227) $ 55,921,930 $ 4,100,180 Business -Type Activities General Obligation Refunding Bonds $ 3,960,000 $ - $ (475,000) $ 3,485,000 $ 475,000 Unamortized Premium 6,533 - (969) 5,564 969 Certificates of Obligation 9,436,066 - (598,866) 8,837,200 617,200 Unamortized Premium 125,140 - (6,587) 118,553 6,587 Tax Notes 65,000 1,880,000 (305,000) 1,640,000 280,000 Capital Lease 301,344 - (69,541) 231,803 69,541 Compensated Absences Payable 241,680 62,699 (45,254) 259,125 51,825 Total Business- Type Activities $ 14,135,763 $ 1,942,699 $ (1,501,217) $ 14,577,245 $ 1,501,122 45 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 9 - LONG -TERM DEBT (Continued) Annual debt service requirements of bonded debt as of September 30, 2015, are as follows: Plan Description The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the state of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple- employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the system with a six - member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS retirement system 46 Governmental Activities September 30, Principal Interest Total 2016 $ 3,647,800 $ 1,950,750 7 5,598,550 2017 3,795,001 1,833,836 5,628,837 2018 3,755,000 1,714,671 5,469,671 2019 3,180,000 1,599,183 4,779,183 2020 3,305,000 1,484,330 4,789,330 2021 -2025 15,890,000 5,673,836 21,563,836 2026 -2030 13,505,000 2,899,241 16,404,241 2031 -2035 6,155,000 643,206 6,798,206 2036 -2037 555,000 13,875 568,875 Total $ 53,787,801 $ 1.7,812,928 $ 71,600,729 Business -Type Activities September 30, Principal Interest Total 2016 $ 1,372,200 $ 421,827 $ 1,794,027 2017 1,485,000 385,036 1,870,036 2018 1,435,000 348,296 1,783,296 2019 1,475,000 311,233 1,786,233 2020 1,51.0,000 271,502 1,781,502 2021 -2025 4,590,000 824,031 5,414,031 2026 -2030 1,425,000 250,91.0 1,675,910 2031 -2035 670,000 40,800 710,800 Total $ 13,962,200 $ 2,853,635 $ 16,815,835 Plan Description The City participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the state of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple- employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the system with a six - member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS retirement system 46 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) Texas Municipal Retirement System (Continued) Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the City - financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest. At the December 31, 2014 valuation and measurement date, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits Inactive Employees Entitled to but Not Yet Receiving Benefits Active employees Contributions 2013 2014 58 67 124 133 306 302 488 502 The contribution rates for employees in TMRS are either 5 %, 6 %, or 7% of employee gross earnings, and the City matching percentages are either 100 %, 150 %, or 200 %, both as adopted by the governing body of the City. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. For the year ending September 30, 2015, . employees for the City were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City were 10.72% and 11.08% in calendar years 2014 and 2015, respectively. The City's contributions to TMRS for the year ended September 30, 2015 were $2,487,856. Net Pension Liability The City's Net Pension Liability (NPL) was measured as of December 31, 2014, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. 47 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) Texas Municipal Retirement System (Continued) Actuarial Assumptions The Total Pension Liability in the December 31, 2014 actuarial valuation was determined using the following actuarial assumptions: Inflation 3.00% per year Overall Payroll Growth 3.5% to 12% per year Investment Rate of Return* 7.00% * Presented net of pension plan investment expense, including inflation Salary increases were based on a service - related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender - distinct RP2000 Combined Health Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103 %. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender - distinct RP2000 Disabled Retiree Mortality Table is used with slight adjustments. Actuarial assumptions used in the December 31, 2014 valuation were based on the results of actuarial experience studies. The experience study in TMRS was for the period January 1, 2006 through December 31, 2009, first used in the December 31, 2010 valuation. Healthy post - retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2014 valuation. The long -term expected rate of return on pension plan investments is 7.0 %. The pension plan's policy in regard to the allocation of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short -term and long -term funding needs of TMRS. The long -term expected rate of return on pension plan investments was determined using a building -block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long -term expected rate of return by weighting the expected future rates of return by the target asset allocation percentage and by adding the expected inflation. CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) Texas Municipal Retirement System (Continued) Actuarial Assumptions (Continued) The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Domestic Equity International Equity Core Fixed Income Non -Core Fixed Income Real Return Real Estate Absolute Return Private Equity Discount Rate Target Allocation 17.50% 17.50% 30.00% 10.00% 5.00% 10.00% 5.00% 5.00% 100.00% Long -Term Expected Real Rate of Return (Arithmetic) 4.80% 6.05% 1.50% 3.50% 1.75% 5.25% 4.25% 8.50% The discount rate used to measure the Total Pension Liability was 7 %. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long -term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. 49 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) Texas Municipal Retirement System (Continued) Changes in the Net Pension Liability The below schedule presents the changes in the Net Pension Liability as of December 31, 2014: Balance at December 31, 2013 Changes for the year: Service Cost Interest Change of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Changes Net Changes Balance at December 31, 2014 Total Pension Plan Fiduciary Net Pension Liability Net Position Liability $ 45,615,815 $ 32,179,518 7 13,436,297 2,558,743 - 2,558,743 3,245,266 - 3,245,266 (122,286) - (122,286) 2,403,929 (2,403,929) 1,077,097 (1,077,097) 1,841,586 (1,841,586) (1,068,487) (1,068,487) - (19,219) 19,219 - (1,580) 1,580 4,613,236 4,233,326 379,910 $ 50,229,051 $ 36,412,844 $ 13,816207 Plan Fiduciary Net Position as a Percentage of Total Pension Liability Covered Employee Payroll $ Net Pension Liability as a Percentage of Covered Payroll 2013 2014 70.54% 72.49% 14,356,845 $ 15,389,154 93.59% 89.48% The following presents the net pension liability of the City, calculated using the discount rate of 7.0 %, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower (6.0 %) or 1- percentage point higher (8.0 %) than the current rate: Net Pension. Liability Discount Rate 6% $ 22,622,838 50 Discount Rate Discount Rate 7% 8% $ 13,816,207 $ 6,726,407 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) Texas Municipal Retirement System (Continued) Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in a separately- issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. Pension Expense and Deferred Outflows /Inflows of Resources Related to Pensions For the year ended September 30, 2015, the City recognized pension expense of $2,523,069. Also as of September 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between Expected and Actual Economic Experience Changes in Actuarial Assumptions Differences Between Projected and Actual Investment Earnings Contributions Subsequent to the Measurement Date Deferred Outflows of Resources 328,784 Deferred Inflows of Resources 1,800,543 - $ 2,129,327 $ 1.02,986 Deferred outflows of resources in the amount of $1,800,543 is related to pensions resulting from contributions subsequent to the measurement date, and will be recognized as a reduction of the net pension liability for the plan year ending December 31, 2015. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For the Year ended December 31, 2015 $ 62,986 2016 62,986 2017 62,986 2018 62,986 2019 (19,300) Thereafter (6,846) $ 225,798 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. 51 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 10 - RETIREMENT PLAN (Continued) C. Other Post - Employment Benefits (Continued) The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12 -month period preceding the month of death); retired employees are insured for $7,500; this coverage is an "other postemployment benefit," or OPEB. 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 2015, 2014, and 2013 . were $21,681 $20,81.5, and $21,251, respectively, which equaled the required contributions each year. NOTE 11 — RETIREE HEALTH INSURANCE PLAN A. Plan Description The City provides an other post - employment benefit to eligible retirees of the City whereby they can stay on the City's health insurance plan by paying the full premium. B. Contributions The City's annual other post - employment benefits (OPEB) cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of accrual that, if paid on an ongoing basis, is projected to cover the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excesses) over a period not to exceed thirty years. The City's annual OPEB cost for the fiscal year ending September 30, 2015 is as follows: Annual Required Contribution Interest on OPEB obligation Adjustment to ARC Annual OPEB cost Contributions Increase in net OPEB obligation Beginning Net OPEB Obligation Ending Net OPEB Obligation 52 $ 79,728 16,421 (14,990) 81,159 (15,485) 65,674 364,906 $ 430,580 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 11— RETIREE HEALTH INSURANCE PLAN (Continued) B. Contributions (Continued) The City's annual OPEB cost, the amount contributed by the employer, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year ending September 30, 2015 and the preceding two fiscal years were as follows: September 30, _ 2015 $ 2014 2013 Cost Contributions 79,728 $ 15,485 79,512 13,645 77,014 13,248 Contributed Obligation 19% $ 430,580 17% 364,906 17% 63,766 The Projected Unit Credit Cost Method is used to calculate the actuarial required contribution (ARC) for the City's retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The actuarial cost method then provides for a systematic funding for these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and the City's employees to that point. Actuarial calculations reflect a long -term perspective and employ methods and assumptions that are designed to reduce short -term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Inflation Rate 3.0% Investment Rate of Return 4.5 %, net of expenses Actuarial Cost Method Projected Unit of Credit Amortization Method Level as a percent of payroll Amortization Period 30 -year open period Payroll Growth 3.0% Medical Trend Initial rate of 7.25 %, declining to an ultimate rate of 4.5% after 11 years Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status and the annual required contributions of the City's retiree health care plan are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The funded status as of December 31, 2014, the most recent actuarial valuation date, is as follows: Actuarial Actuarial Value Valuation Date of Assets 12/31/2013 S - Actuarial UAAL as a Accrued Unfunded Percentage of Liability (AAL) Funded Ratio AAL (UAAL) Covered Payroll Covered Payroll S 493,114 0.0% S 493,114 $ 14,356,845 3.4% 53 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 11— RETIREE HEALTH INSURANCE PLAN (Continued) B. Contributions (Continued) 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-tenu volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of finding 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. NOTE 12 - 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 fund and totaled $1,1.78,081 for the year ended September 30, 2015. Separate financial statements for the Schertz /Seguin Local Government Corporation 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, 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, 2014: ASSETS: Current Assets $ 11,752,482 Restricted Cash and Cash Equivalents 8,866,401 Property, Plant & Equipment (net) 86,142,663 Other Assets 279,607 TOTAL ASSETS 107,041,153 Deferred Charges on Refunding 1,801,852 LIABILITIES: Current Liabilities 5,861,643 Revenue Bonds (Less Current Maturities) 97,459,784 TOTAL LIABILITIES 103,321,427 NET POSITION: Net Investment in Capital Assets (5,182,814) Restricted 3,699,577 Unrestricted 7,004,815 TOTAL NET POSITION $ 5,521,578 54 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 12 - JOINT VENTURES (Continued) Schertz /Seguin Local Government Corporation (Continued) The Corporation had revenue bonds outstanding in the amount of $101,176,000 (as of September 30, 2014) 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. 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, 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 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, 2014: ASSETS: Current Assets $ 596,709 TOTAL ASSETS 596,709 LIABILITIES: Current Liabilities 64,872 TOTAL LIABILITIES 64,872 NET POSITION: Unrestricted 531,837 TOTAL NET POSITION $ 531,837 Cibolo Creek Municipal Authority Cibolo Creek Municipal Authority (CCMA) provides sewage treatment for the area in and around the City. CCMA has agreed to construct a sewage treatment facility in the southern portion of the City to primarily serve citizens of the City but also neighboring Cities and future development. Because the City would be the primary customer at this time, the City agreed to enter into a regional wastewater treatment contract in September 2014. . CCMA will issue bonds to finance the project and the City has agreed to make payments to CCMA to cover operation expenses, maintenance expenses, and debt service. The City is the sole member at this time, so it is responsible for 100% of the project costs. Should other members join, the City's share of the costs would be reduced. 55 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 12 - JOINT VENTURES (Continued) Ciholo Creek Municipal Authority (Continued) In September 2014, CCMA issued bonds for the project in the amount of $6,950,000 with debt service requirements as follows: Fiscal Year Ending September 30, Principal Interest Total 2016 $ 145,000 $ 266,150 $ 411,150 2017 150,000 263,250 413,250 2018 150,000 260,250 410,250 2019 155,000 257,250 412,250 2020 -2024 830,000 1,233,350 2,063,350 2025 -2029 970,000 1,087,650 2,057,650 2030 -2034 1,180,000 877,450 2,057,450 2035 -2039 1,465,000 592,500 2,057,500 2040 -2044 1,830,000 225,200 2,055,200 $ 6,875,000 $ 5,063,050 $ 11,938,050 NOTE 13 - 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 31.1 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 $505,736 from taxing entities (net of administrative reimbursements) and remitted $50,376 to the developer as of September 30, 2015. 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 teens of the 380 agreements expire, the tax base of the City will be increased to include these new businesses. 56 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 13 - COMMITMENTS AND CONTINGENCIES (Continued) Construction Commitments The City of Schertz has entered into commitments for various projects as follows: Primary Government: Governmental Activities: Lower Seguin Road Improvements Natatorium Project Soccer Fields Improvements FM 78 and Main Street Total Governmental Commitments Business -Type Activities: S. W.W. Treatment Plant Town Creek Sewer Project - Phase III East Live Oak Water Plan Upgrades SE Quad Elevated Tank Aviation Heights Waterline Replacement Northcliffe Waterline Upgrades Waterline at Maske Rd-FM 1518 Commercial Place Project Total Business -Type Activities Total Estimated Future Commitments Litigation Estimated Project Expended to Estimated Future Cost to City Date Commitment $ 541,841 $ 274,777 $ 267,064 6,160,500 700,352 5,460,148 4,347,128 4,206,856 140,272 1,000,000 20,430 979,570 12,049,469 5,202,415 6,847,054 ': 111 998,006 245,000 200,552 400,000 730,064 367,735 2,135,723 9,062,080 $ 21,111,549 223,811 816,575 121,850 50,273 32,481 700,664 354,477 1,783,485 4,083,616 9,286,031 3,761,1.89 181,431 123,150 150,279 367,519 29,400 13,258 352,238 4,978,464 $ 11,825,518 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, 2015 were $372,559 for property and casualty and workers compensation coverage. There were no significant increases or decreases in coverage from fiscal year 2014. 57 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2015 NOTE 14 - DEFICIT NET POSITION The EMS currently has a deficit net positon. The City plans to remedy this deficit with a review of expenditures as well as an increase in fees from participants. I -g[e711 ommalawlug nandwrings Subsequent to year end the city issued the City of Schertz, Texas General Obligation. Refunding Bonds, Series, 2015 . to refund the Texas General Obligation Bonds, Series 2006. A contract for approximately $8.5 million was signed with Byrne Construction and Marmon Mok for the construction of an Aquatic Center. The City had a general election November 2015 . in which several propositions passed: Issuance of $7 million general obligation bonds for streets, bridges and sidewalk improvements; issuance of $8 million general obligation bonds for public facility station and a new fire department. Additionally there were several propositions which involved the following charter changes: The number of Council members will increase from 5 to 7 members; and the Mayor and Council Members terms will be increased from 2 to 3 years. NOTE 16 — RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS GASB issued Statement 72, Fair Value Measurement and Application, Statement No. 73, Accounting and Financial reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASV Statements 67 and 68, Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, and Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. When they become effective, application of these standards may restate portions of these financial statements. W-* I rz/,� �N CITY OA 1, REQUIRED SUPPLEMENTARY INFORMATION 59 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL FUND YEAR ENDED SEPTEMBER 30, 2015 Variance With Public Safety: Police Department 5,763,594 5,929,865 2015 . Final Budget - Fire Department Budgeted Amounts Actual Positive 193,027 Original Final Amounts (Negative) REVENUES Marshal Service 658,671 672,382 626,825 Taxes $ 17,961,184 $ 17,995,576 $ 17,926,685 $ (68,891) Permits and Fees 1,267,032 1,267,032 1,447,81.4 180,782 Service Fees 1,510,014 1,510,014 1,609,91.7 99,903 Fines and Fees 1,810,394 1,810,394 1,498,887 (311,507) Intergovernmental 206,800 206,800 233,959 27,159 Investment Earnings 6,625 6,625 24,369 17,744 Miscellaneous 530,250 542,750 571.,416 28,666 TOTAL REVENUES 23,292,299 23,339,191 23,313,047 (26,144) EXPENDITURES General Government: Council 87,675 87,675 74,71.2 12,963 City Manager 866,125 868,199 879,510 (11,311) Municipal Court 476,313 476,313 324,771 151,542 311 Customer Relations 114,691 114,691 107,296 7,395 Planning & Zoning 157,827 157,827 1.52,815 5,012 Legal 360,000 360,000 1.90,560 169,440 General Services 993,988 1,006,129 999,500 6,629 City Secretary 187,617 187,617 1.75,560 12,057 Nondepartmental 1,922,942 1,558,834 1,163,485 395,349 Community & Media Relations 308,220 308,220 270,054 38,166 Records Management 63,256 64,324 61,470 2,854 Schertz Magazine 404,608 404,608 379,929 24,679 Engineering 336,768 241,268 220,533 20,735 Geographic Information Systems 154,795 154,795 1.49,613 5,182 Citizens Assistance 86,678 86,678 41,678 45,000 Special Events 142,950 142,950 75,804 67,146 Total General Government 6,664,453 6,220,128 5,267,290 952,838 Public Safety: Police Department 5,763,594 5,929,865 5,861,1.01 68,764 Fire Department 3,472,877 3,568,001 3,374,974 193,027 Inspection 584,812 595,846 560,278 35,568 Marshal Service 658,671 672,382 626,825 45,557 Total Public Safety 10,479,954 10,766,094 10,423,178 342,916 Public Environment: Streets 1,049,510 1,015,164 978,649 36,515 Total Public Environment $ 1,049,510 $ 1,015,164 $ 978,649 $ 36,515 ,1 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL) GENERAL FUND (CONTINUED YEAR ENDED SEPTEMBER 30, 2015 Variance With Administration: Information Technology 1,625,529 1,627,328 2015 . Final Budget - Human Resources Budgeted Amounts Actual Positive 15,541 Original Final Amounts (Negative) EXPENDITURES (Continued) Purchasing & Asset Management 273,468 273,468 223,501 Parks and Recreation: Building Maintenance 267,599 296,225 266,959 Parks $ 954,781 $ 891,979 $ 855,323 $ 36,656 Pools 253,078 253,078 228,254 24,824 Community /Civic Center 155,801 155,801 137,913 17,888 Senior Center 46,390 46,390 61,426 (15,036) Total Parks and Recreation 1,410,050 1,347,248 1,282,916 64,332 Cultural: OVER (UNDER) EXPENDITURES 260,003 531,803 2,436,424 Library 842,473 842,473 795,436 47,037 Total Cultural 842,473 842,473 795,436 47,037 Health: Animal Control 503,260 503,260 404,008 99,252 Total Health 503,260 503,260 404,008 99,252 Administration: Information Technology 1,625,529 1,627,328 1,429,255 198,073 Human Resources 423,683 423,683 408,142 15,541 Finance 536,120 536,120 506,947 29,173 Purchasing & Asset Management 273,468 273,468 223,501 49,967 Building Maintenance 267,599 296,225 266,959 29,266 Fleet Service 648,702 648,702 578,564 70,138 Interfund Charges (1,692,505) (1,692,505) (1,688,222) (4,283) Total Administration 2,082,596 2,113,021 1,725,146 387,875 TOTAL EXPENDITURES 23,032,296 22,807,388 20,876,623 1,930,765 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 260,003 531,803 2,436,424 1,904,621 OTHER FINANCING SOURCES (USES) Transfers In 262,802 358,802 1.48,682 (210,120) Transfers Out (213,850) (583,650) (690,653) (107,003) TOTAL OTHER FINANCING SOURCES (USES) 48,952 (224,848) (541,971) (317,123) NET CHANGE IN FUND BALANCE 308,955 306,955 1,894,453 1,587,498 FUND BALANCE - BEGINNING 7,722,034 7,722,034 7,722,034 - FUND BALANCE - ENDING $ 8,030,989 $ 8,028,989 $ 9,616,487 $ 1,587,498 N CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL ECONOMIC DEVELOPMENT CORPORATION YEAR ENDED SEPTEMBER 30, 2015 REVENUES Taxes Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Administration Debt Service: Principal Interest 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 - BEGINNING FUND BALANCE - ENDING Budgeted Amounts Original Final 2015 . Actual Amounts Variance With Final Budget - Positive (Negative) $ 3,682,057 $ 3,682,057 $ 3,442,819 $ (239,238) 10,200 10,200 14,461 4,261 - - 1,478 1,478 3,692,257 3,692,257 3,458,758 (233,499) 1,156,900 1,156,900 279,980 876,920 1,069,114 1,069,114 351.,812 717,302 415,000 415,000 415,000 - 15,608 15,608 1.5,609 (1) 2,656,622 2,656,622 1,062,401 11594,221 1,035,635 1,035,635 2,396,357 1,360,722 (367,188) (367,188) (367,188) - (367,188) (367,188) (367,1.88) - 668,447 668,447 2,029,169 1,360,722 7,792,578 7,792,578 7,792,578 - S 8,461,025 $ 8,461,025 $ 9,821,747 $ 1,360,722 M CITY OF SCHERTZ, TEXAS NOTES TO SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL SEPTEMBER 30, 2015 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 2015. The City does not use encumbrances. 63 CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES — NET PENSION LIABILITY AND RELATED RATIOS LAST YEAR Total Pension Liability 2014 Service Cost $ 2,558,743 Interest (on the Total Pension Liability) 3,245,266 Changes of Benefit Terms - Difference between Expected and Actual Experience (122,286) Change of Assumptions - Benefit Payments, Including Refunds of (1,580) Employee Contributions (1,068,487) Net Change in Total Pension. Liability 4,613,236 Total Pension Liability - Beginning 45,615,815 Total Pension Liability - Ending $ 50,229,051 Plan Fiduciary Net Position 2014 Contributions - Employer $ 2,403,929 Contributions - Employee 1,077,097 Net Investment Income 1,841,586 Benefit Payments, Including Refunds of Employee Contributions (1,068,487) Administrative Expense (19,219) Other (1,580) Net Change in Plan Fiduciary Net Position 4,233,326 Plan Fiduciary Net Postion - Beginning 32,179,518 Net Pension Liability - Ending $ 36,412,844 Net Pension Liability - Ending $ 13,816,207 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 72.49% Covered Employee Payroll $ 15,389,154 Net Pension Liability as a Percentage of Covered Employee Payroll 89.78% CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY CONTRIBUTIONS LAST FISCAL YEAR Schedule of Contributions: 2014 Actuarially Determined Contribution $ 2,487,856 Contributions in Relation to the Actuarially Determined Contribution 2,487,856 Contribution Deficiency (Excess) $ - Covered Employee Payroll $ 15,486,735 Contributions as a Percentage of Covered Employee Payroll 16.06% Valuation Date: Actuarially determined contribution rates are calculated as of December 31 and become effective in January, thirteen (13) months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 30 Years Asset Valuation Method 10 Year Smoothed Market; 15% Soft Corridor Inflation 3.00% Salary Increases 3.50% to 12.00% Including Inflation Investment Rate of Return 7.00% Retirement Age Experience -based table of rates that are specific to the City's plan of benefits. Last updated for the 2010 valuation pursuant to an experience study of the period 2005 - 2009. Mortality RP2000 Combined Mortality Table with blue Collar Adjustment with male rates multiplied by 109% and femal rates multiplied by 1.03% and projected on a fully generational basis with scale BB. M CITY OF SCHERTZ, TEXAS REQUIRED SUPPLEMENTARY INFORMATION RETIREE HEALTH INSURANCE PLAN ANALYSIS OF FUNDING PROGRESS LAST CALENDAR YEAR The actuarial valuation conducted as of December 31, 2013 was the first for the plan Me UNFUNDED ACTUARIAL ACCRUED LIABILITY AS A PERCENTAGE OF COVERED PAYROLL (b -a) /d 3.4% UNFUNDED ACTUARIAL ACTUARIAL ACTUARIAL ANNUAL ACTUARIAL VALUE OF ACCRUED ACCRUED FUNDING COVERED VALUATION ASSETS LIABILITY* LIABILITY RATIO PAYROLL DATE (a) (b) (b -a) (a/b) (d) 12/31/2013 $ - $ 493,114 $ 493,114 0.0% $ 14,356,845 The actuarial valuation conducted as of December 31, 2013 was the first for the plan Me UNFUNDED ACTUARIAL ACCRUED LIABILITY AS A PERCENTAGE OF COVERED PAYROLL (b -a) /d 3.4% 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. M CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS GENERAL FUND SEPTEMBER 30, 2015 AND 2014 :: 2015 2014 ASSETS Cash and Cash Equivalents $ 268,784 $ 734,684 Investments 8,796,303 6,895,148 Receivables (net of allowances): Taxes 1,860,970 1,725,512 Accounts and Other 2,048,709 1,987,843 Inventory 101,084 88,518 Prepaid Items - 8,1.33 Restricted Cash 471,576 425,864 TOTAL ASSETS $ 13,547,426 $ 11,865,702 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts Payable $ 913,100 $ 1,241,009 Accrued Salaries and Benefits 437,755 456,962 Customer Deposits 58,450 42,51.3 Due to Other Governments 162,714 205,303 Due to Other Funds 254,057 138,926 Unearned Revenue 42,418 28,285 Total Liabilities 1,868,494 2,112,998 Deferred Inflows of Resources: Unavailable Revenue 2,062,445 2,030,670 Fund Balance: Nonspendable: Inventory 101,084 88,518 Prepaid Items - 8,133 Restricted for: Police and Public Safety 189,464 139,884 Municipal Court 683,558 628,459 PEG Capital Fees 509,535 489,509 Scholarships 60,944 54,176 Assigned for: Property Replacement 785,005 694,916 Special Events 6,657 85,353 Unassigned 7,280,240 5,533,086 Total Fund Balance 9,616,487 7,722,034 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE $ 13,547,426 $ 11,865,702 :: CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 EXPENDITURES Current: General Government 2015 2014 REVENUES 10,037,830 9,398,845 Taxes $ 17,926,685 $ 16,652,245 Permits and Fees 1,447,814 1,365,624 Service Fees 1,609,917 1,592,851 Fines and Fees 1,498,887 1,712,562 Intergovernmental 233,959 218,081. Investment Earnings 24,369 13,655 Miscellaneous 571,416 547,51.5 TOTAL REVENUES 23,313,047 22,102,533 EXPENDITURES Current: General Government 5,187,335 5,232,687 Public Safety 10,037,830 9,398,845 Public Environment 952,663 1,012,607 Parks and Recreation 1,182,906 1,099,359 Cultural 795,436 794,434 Health 404,008 394,918 Administration 1,638,429 1,604,827 Capital Outlay 637,800 383,264 Debt Service: Principal 31,875 34,376 Interest and Fiscal Charges 8,341 579 TOTAL EXPENDITURES 20,876,623 19,955,896 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,436,424 2,146,637 OTHER FINANCING SOURCES (USES) Lease Proceeds - 133,715 Transfers In - 89,41.6 Transfers Out (541,971) (664,944) TOTAL OTHER FINANCING SOURCES (USES) (541,971) (441,813) Net Change in Fund Balance 1,894,453 1,704,824 Fund Balance at Beginning of Year 7,722,034 6,017,21.0 Fund Balance at End of Year $ 9,616,487 $ 7,722,034 M CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2015 AND 2014 ASSETS Cash and Cash Equivalents Investments Receivables (net of allowances): Taxes Accounts and Other TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable Accrued Salaries and Benefits Total Liabilities Fund Balance: Restricted for: Economic Development Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 70 2015 2014 $ 595,001 $ 293,205 8,635,228 6,961,045 611,869 567,202 1,983 1,888 $ 9,844,081 $ 7,823,340 $ 14,402 $ 9,658 7,932 21,104 22,334 30,762 9,821,747 7,792,578 9,821,747 7,792,578 $ 9,844,081 $ 7,823,340 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE ECONOMIC DEVELOPMENT CORPORATION FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 REVENUES Taxes Investment Earnings Miscellaneous Revenue TOTAL REVENUES EXPENDITURES Current: General Government Administration 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 71 2015 2014 $ 3,442,819 $ 3,521,338 14,461 9,599 1,478 - 3,458,758 3,530,937 279,980 565,322 351,812 519,831. 415,000 400,000 15,609 27,671 1,062,401 1,512,824 2,396,357 2,018,1.1.3 (367,188) (367,743) (367,188) (367,743) 2,029,169 1,650,370 7,792,578 6,142,208 $ 9,821,747 $ 7,792,578 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2015 AND 2014 ASSETS Cash and Cash Equivalents Investments Receivables (net of allowances): Taxes TOTAL ASSETS LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCE Liabilities: 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 72 2015 2014 $ 50,741 $ 34,988 796,437 624,1.89 59,190 68,928 $ 906,368 $ 728,105 $ 33,742 33,742 59,190 68,928 847,178 625,435 847,178 625,435 $ 906,368 $ 728,105 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) REVENUES Property Taxes Investment Earnings TOTAL REVENUES EXPENDITURES Debt Service: Principal Interest and Fiscal Charges Bond Issue Costs TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES Transfers In Issuance of Debt Premiums from Refunding Bonds TOTAL OTHER FINANCING SOURCES Net Change in Fund Balance FUND BALANCE, BEGINNING FUND BALANCE, ENDING Variance with 2015 Final Budget- 2014 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 5,338,513 $ 5,338,513 $ 5,415,059 $ 76,546 $ 5,295,577 1,575 1,575 2,575 1,000 1,477 5,340,088 5,340,088 5,417,634 77,546 5,297,054 3,441,134 3,441,134 3,471,133 (29,999) 12,445,083 2,120,572 2,120,572 2,088,796 31,776 2,080,360 74,451 74,451 3,150 71,301 165,650 5,636,157 5,636,157 5,563,079 73,078 14,691,093 (296,069) (296,069) (145,445) 150,624 (9,394,039) 367,188 367,188 367,188 - 366,138 - - - - 8,450,000 - - - - 686,137 367,188 367,188 367,188 - 9,502,275 71,119 71,119 221,743 150,624 108,236 625,435 625,435 625,435 - 517,199 $ 696,554 $ 696,554 $ 847,178 $ 150,624 $ 625,435 73 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS CAPITAL PROJECTS FUND SEPTEMBER 30, 2015 AND 2014 ASSETS Cash and Cash Equivalents Investments Receivables (net of allowances): Accounts and Other TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities: Accounts Payable Due to Other Funds Total Liabilities Fund Balance: Restricted for Capital Improvement Committed for Capital Improvement Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 74 2015 2014 . $ 919,471 $ 1,084,721 8,773,689 9,792,513 5,011 - $ 9,698,171 $ 10,877,234 $ 772,675 $ 469,483 909 776,005 773,584 1,245,488 8,924,587 9,600,028 - 31,71.8 8,924,587 9,631,746 $ 9,698,171 $ 10,877,234 CITY OF SCHERTZ, TEXAS COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL PROJECTS FUND FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014 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 Transfers In Transfers Out TOTAL OTHER FINANCING SOURCES (USES) Net Change in Fund Balance Fund Balance at Beginning of Year Fund Balance at End of Year 75 2015 2014 $ 159,648 $ 3,688 13,723 17,429 6,000 - 179,371 21,117 - 46,542 1,650,298 7,530,597 4,842 - 1,655,140 7,577,139 (1,475,769) (7,556,022) 245,000 - 569,147 762,358 (45,537) - 768,610 762,358 (707,159) (6,793,664) 9,631,746 16,425,410 $ 8,924,587 $ 9,631,746 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2015 ASSETS Cash and Cash Equivalents Investments Accounts Receivable, Net of Allowance Taxes Other Prepaid Items TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Total Liabilities Fund Balance Nonspendable Prepaids Restricted for: Tourism Development Tree Mitigation Parks Police Forfeiture Library Historical Committee Total Fund Balances TOTAL LIABILITIES AND FUND BALANCE Special Revenue Funds Hotel Occupancy Park Tree Fund Fund Mitigation $ 316,858 $ 232,771 $ 81,677 499,702 1,357 397,656 39,195 - - 16,000 - - $ 871,755 $ 234,1.28 $ 479,333 $ 6,786 $ - $ 148,1.84 6,786 - 148,184 16,000 - - 848,969 - - - - 331,149 234,128 - 864,969 234,1.28 331,149 $ 871,755 $ 234,128 $ 479,333 76 Special Revenue Funds Police Library Parks & Historical Forfeitures Advisory Recreation Committee Fund Board Foundation Fund Totals $ 76,624 $ 30,034 $ 105,721 $ 10,133 $ 853,818 244,353 44,914 - - 1,187,982 - - - - 39,195 550 - 550 - - - - 16,000 $ 320,977 $ 74,948 $ 106,271 $ 10,133 $ 2,097,545 $ 1.6,104 $ 8,165 $ (1,152) $ 129 $ 178,216 16,104 8,165 (1,152) 129 178,21.6 16,000 - 848,969 - - 331,149 - - 107,423 - 341,551 304,873 - - - 304,873 - 66,783 - - 66,783 - - - 10,004 10,004 304,873 66,783 1.07,423 10,004 1,919,329 $ 320,977 $ 74,948 $ 106,271 $ 10,133 $ 2,097,545 77 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 REVENUES Occupancy Tax Permits and Fees Service Fees Fines and Fees Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Parks and Recreation Cultural Administration 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 Special Revenue Funds Hotel Occupancy Park Tree Fund Fund Mitigation $ 563,734 $ - $ - - 92,000 191,488 648 107 - JV '+,JO/- 7G, 1. V / 171,7/-O 105,106 - - 6,038 219,984 66,405 - - - 10,930 - 171,51.1 16,968 219,984 392,871 75,139 (28,056) (43,500) (33,159) - (43,500) (33,159) - 349,371 41,980 (28,056) 515,598 192,148 359,205 Fund Balances, Ending $ 864,969 $ 234,128 $ 331,149 W:3 Special Revenue Funds Police Library Parks & Historical Forfeitures Advisory Recreation Committee Fund Board Foundation Fund Totals $ - $ - $ - $ - $ 563,734 - 283,488 22,064 165,170 - 187,234 35,701 - - - 35,701 363 74 59 - 1,251 - 1,824 51,096 1,172 54,532 36,064 23,962 216,325 1,172 1,1.25,940 - - - 10,020 115,126 120,571 - - - 120,571 - - 249,269 - 475,291 25,710 - - 25,710 - - - - 66,405 - - 15,640 - 26,570 1.20,571 25,710 264,909 1.0,020 829,673 (84,507) (1,748) (48,584) (8,848) 296,267 - - 43,500 9,285 52,785 - - (76,659) - - 43,500 9,285 (23,874) (84,507) (1,748) (5,084) 437 272,393 389,380 68,531 112,507 9,567 1,646,936 $ 304,873 $ 66,783 $ 1.07,423 $ 1.0,004 $ 1,919,329 79 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) . Excess (Deficiency) of Revenues Over (Under) Expenses 302,623 302,623 392,871 90,248 273,264 OTHER FINANCING SOURCES (USES) Transfers Out (60,000) (60,000) (43,500) 16,500 (227,916) TOTAL OTHER FINANCING SOURCES (USES) (60,000) (60,000) (43,500) 16,500 (227,916) Net Change in Fund Balance FUND BALANCE, BEGINNING FUND BALANCE, ENDING 242,623 242,623 349,371 106,748 45,348 515,598 515,598 51.5,598 - 470,250 $ 758,221 $ 758,221 $ 864,969 $ 106,748 $ 515,598 :i Variance with 2015 Final Budget- 2014 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Occupancy Tax $ 544,753 $ 544,753 $ 563,734 $ 18,981 $ 552,570 Investment Earnings 600 600 648 48 390 TOTAL REVENUES 545,353 545,353 564,382 19,029 552,960 EXPENDITURES Current: General Government 176,325 176,325 105,1.06 71,219 134,311 Administration 66,405 66,405 66,405 - 145,385 TOTAL EXPENDITURES 242,730 242,730 171,51.1 71,219 279,696 Excess (Deficiency) of Revenues Over (Under) Expenses 302,623 302,623 392,871 90,248 273,264 OTHER FINANCING SOURCES (USES) Transfers Out (60,000) (60,000) (43,500) 16,500 (227,916) TOTAL OTHER FINANCING SOURCES (USES) (60,000) (60,000) (43,500) 16,500 (227,916) Net Change in Fund Balance FUND BALANCE, BEGINNING FUND BALANCE, ENDING 242,623 242,623 349,371 106,748 45,348 515,598 515,598 51.5,598 - 470,250 $ 758,221 $ 758,221 $ 864,969 $ 106,748 $ 515,598 :i CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL PARK FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) OTHER FINANCING USES Transfers Out - (32,405) (33,159) 33,159 - Variance with (32,405) (33,159) 33,159 - 2015 Final Budget- 2014 . 41,980 Budgeted Amounts Actual Positive Actual FUND BALANCE, ENDING $ 232,148 Original Final Amounts (Negative) Amounts REVENUES Licenses and Permits $ 100,000 $ 100,000 $ 92,000 $ (8,000) $ 198,150 Investment Earnings - - 107 107 34 Miscellaneous - - - - 2,781 TOTAL REVENUES 100,000 100,000 92,107 (7,893) 200,965 EXPENDITURES Current: Parks and Recreation - - 6,038 (6,038) 12,840 Capital Outlay 60,000 60,000 10,930 49,070 - TOTAL EXPENDITURES 60,000 60,000 16,968 43,032 12,840 Excess (Deficiency) of Revenues Over (Under) Expenditures 40,000 40,000 75,139 35,139 188,125 OTHER FINANCING USES Transfers Out - (32,405) (33,159) 33,159 - TOTAL OTHER FINANCING - (32,405) (33,159) 33,159 - Net Change in Fund Balance 40,000 7,595 41,980 68,298 188,125 FUND BALANCE, BEGINNING 192,148 192,148 192,1.48 - 4,023 FUND BALANCE, ENDING $ 232,148 $ 199,743 $ 234,128 $ 68,298 $ 192,148 L-2 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) EXPENDITURES Current: Parks and Recreation 116,125 212,939 21.9,984 (103,859) 39,956 TOTAL EXPENDITURES 116,125 212,939 219,984 (103,859) 39,956 Net Change in Fund Balance (79,915) (176,729) Variance with 201,546 FUND BALANCE, BEGINNING 359,205 2015 Final Budget- 2014 . FUND BALANCE, ENDING Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Licenses and Permits $ 36,000 $ 36,000 $ 191,488 $ 155,488 $ 241,273 Miscellaneous 210 210 440 230 229 TOTAL REVENUES 36,210 36,210 191,928 155,718 241,502 EXPENDITURES Current: Parks and Recreation 116,125 212,939 21.9,984 (103,859) 39,956 TOTAL EXPENDITURES 116,125 212,939 219,984 (103,859) 39,956 Net Change in Fund Balance (79,915) (176,729) (28,056) 148,673 201,546 FUND BALANCE, BEGINNING 359,205 359,205 359,205 - 157,659 FUND BALANCE, ENDING $ 279,290 $ 182,476 $ 331,149 $ 148,673 $ 359,205 EN 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) . REVENUES Fines and Fees Investment Earnings TOTAL REVENUES EXPENDITURES Current: Public Safety TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER SOURCES (USES) Transfers Out TOTAL OTHER SOURCES 75,000 75,000 120,571 (45,571) 11,049 75,000 75,000 120,571 (45,571) 11,049 (38,400) (38,400) (84,507) (46,107) 27,022 Net Change in Fund Balance (38,400) (38,400) (84,507) (33,229) - (33,229) (46,107) (6,207) FUND BALANCE, BEGINNING 389,380 Variance with 389,380 - 395,587 2015 Final Budget- 2014 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 36,200 $ 36,200 $ 35,701 $ (499) $ 37,749 400 400 363 (37) 322 36,600 36,600 36,064 (536) 38,071 75,000 75,000 120,571 (45,571) 11,049 75,000 75,000 120,571 (45,571) 11,049 (38,400) (38,400) (84,507) (46,107) 27,022 Net Change in Fund Balance (38,400) (38,400) (84,507) (33,229) - (33,229) (46,107) (6,207) FUND BALANCE, BEGINNING 389,380 389,380 389,380 - 395,587 FUND BALANCE, ENDING $ 350,980 $ 350,980 $ 304,873 $ (46,107) $ 389,380 L-M 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) REVENUES Service Fees Investment Earnings Miscellaneous TOTAL REVENUES EXPENDITURES Current: Cultural TOTAL EXPENDITURES Net Change in Fund Balance Variance with 2014 Actual $ 21,686 58 30,000 30,000 2015 Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) $ 21,000 $ 21,000 $ 22,064 $ 1,064 60 60 74 14 2,000 2,000 1,824 (176) 23,060 23,060 23,962 902 2014 Actual $ 21,686 58 30,000 30,000 25,71.0 4,290 21,257 30,000 30,000 25,71.0 4,290 21,257 (6,940) (6,940) (1,748) 5,192 538 FUND BALANCE, BEGINNING 68,531 68,531 68,531 - 67,993 FUND BALANCE, ENDING $ 61,591 $ 61,591 $ 66,783 $ 5,192 $ 68,531 84 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) REVENUES Sale of Merchandise TOTAL REVENUES EXPENDITURES Current General Government TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In 10,850 10,850 9,285 (1,565) 2,421 TOTAL OTHER FINANCING SOURCES (USES) 10,850 10,850 9,285 (1,565) 2,421 Net Change in Fund Balance - - 437 437 5 FUND BALANCE, BEGINNING 9,567 9,567 Variance with - 9,562 FUND BALANCE, ENDING $ 9,567 $ 2015 Final Budget- 2014 Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts $ 250 $ 250 $ 1,172 $ 922 $ 161 250 250 1,172 922 161 11,100 11,100 10,020 1,080 2,577 11,100 11,100 10,020 1,080 2,577 (10,850) (10,850) (8,848) 2,002 (2,416) OTHER FINANCING SOURCES (USES) Transfers In 10,850 10,850 9,285 (1,565) 2,421 TOTAL OTHER FINANCING SOURCES (USES) 10,850 10,850 9,285 (1,565) 2,421 Net Change in Fund Balance - - 437 437 5 FUND BALANCE, BEGINNING 9,567 9,567 9,567 - 9,562 FUND BALANCE, ENDING $ 9,567 $ 9,567 $ 10,004 $ 437 $ 9,567 85 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, 2015 (WITH COMPARATIVE ACTUAL TOTALS FOR 2014) OTHER FINANCING SOURCES (USES) Transfers In 23,500 23,500 43,500 20,000 23,500 TOTAL OTHER FINANCING SOURCES (USES) 23,500 23,500 43,500 20,000 23,500 Net Change in Fund Balance 6,950 6,950 (5,084) (12,034) Variance with FUND BALANCE, BEGINNING 112,507 112,507 112,507 - 2015 Final Budget- 2014 FUND BALANCE, ENDING Budgeted Amounts Actual Positive Actual Original Final Amounts (Negative) Amounts REVENUES Charges and Fees at Events $ 246,500 $ 246,500 $ 165,170 $ (81,330) $ 149,427 Investment Earnings 50 50 59 9 48 Miscellaneous Income and Donations 34,800 34,800 51,096 16,296 77,979 TOTAL REVENUES 281,350 281,350 216,325 (65,025) 227,454 EXPENDITURES Current Parks and Recreation 297,900 297,900 249,269 48,631 184,465 Capital Outlay - - 15,640 (15,640) 86,606 TOTAL EXPENDITURES 297,900 297,900 264,909 32,991 271,071 Excess (Deficiency) of Revenues Over (Under) Expenditures (16,550) (16,550) (48,584) (32,034) (43,617) OTHER FINANCING SOURCES (USES) Transfers In 23,500 23,500 43,500 20,000 23,500 TOTAL OTHER FINANCING SOURCES (USES) 23,500 23,500 43,500 20,000 23,500 Net Change in Fund Balance 6,950 6,950 (5,084) (12,034) (20,117) FUND BALANCE, BEGINNING 112,507 112,507 112,507 - 132,624 FUND BALANCE, ENDING $ 119,457 $ 119,457 $ 107,423 $ (12,034) _$__112507 86 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 S 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 through 22) 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. M 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 2006 2007 2008 2009 $ 13,257,031 $ 32,932,355 $ 47,327,175 $ 57,324,482 15,888,549 663,973 1,058,514 1,170,786 10,373,267 13,763,070 11,029,326 3,650,287 $ 39,518,847 $ 47,359,398 $ 59,415,015 $ 62,145,555 $ 24,783,839 $ 18,788,933 $ 41,350,184 $ 50,047,301 . 1,253,711 1,995,213 - - 9,879,126 23,658,181 10,286,447 3,633,244 $ 35,916,676 $ 44,442,327 $ 51,636,631 $ 53,680,545 $ 38,040,870 $ 51,721,288 $ 88,677,359 $ 107,371,783 17,142,260 2,659,186 1,058,514 1,170,786 20,252,393 37,421,251 21,315,773 7,283,531 $ 75,435,523 $ 91,801,725 $ 111,051,646 $ 115,826,]00 *Note — GASB Statement No. 68 has been prospectively implemented in year -end 2015. .. TABLE 1 Fiscal Year 2010 . 2011 2012 2013 2014 2015* $ 54,010,139 $ 55,415,699 $ 56,616,809 $ 57,543,618 $ 62,792,671 $ 68,125,738 897,324 2,089,971 1,91.7,098 7,788,354 10,401,728 13,343,280 7,548,859 7,370,101 8,907,326 6,645,418 8,613,239 1,640,519 $ 62,456,322 $ 64,875,771 $ 67,441,233 $ 71,977,390 $ 81,807,638 $ 83,109,537 $ 50,778,490 $ 51,838,589 $ 50,161,1.57 $ 53,071,836 $ 53,674,437 $ 59,625,205 4,217,098 7,441,722 11,577,645 11,902,282 16,450,988 14,243,922 $ 54,995,588 $ 59,280,31.1 $ 61,738,802 $ 64,974,118 $ 70,125,425 $ 73,869,127 $ 1.04,788,629 $ 107,254,288 $ 106,777,966 $ 11.0,615,454 $ 11.6,467,108 $ 127,750,943 897,324 2,089,971 1,91.7,098 7,788,354 10,401,728 13,343,280 11,765,957 14,811,823 20,484,971 18,547,700 25,064,227 15,884,441. $ 117,451,910 $ 124,156,082 $ 129,180,035 $ 136,951,508 $ 151,933,063 $ 156,978,664 .. CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS Fiscal Year 2006 2007 2008 2009 Expenses Governmental Activities General Government $ 3,982,768 Public Safety 6,403,122 Public Environment 856,260 Parks and Recreation 384,696 Cultural 400,630 Health 231,1.49 Administration 547,206 Interest and Other Fees 823,81.8 Total Governmental Activities Expenses 13,629,649 Business -Type Activities $ 5,808,552 5,920,046 1,864,450 944,529 454,662 272,730 897,628 1,420,086 1.7,582,683 $ 7,093,762 7,227,406 2,300,425 1,1.84,866 492,991 330,736 1,364,194 1,984,151 21,978,531 $ 7,987,977 7,755,056 2,740,755 1,193,525 769,928 377,125 734,584 1,818,984 23,377,934 Water and Sewer 9,821,823 9,502,039 1.2,379,584 13,568,065 EMS 3,474,249 5,114,911 2,976,112 3,365,544 Total Business -Type Activities 13,296,072 1.4,616,950 1.5,355,696 16,933,609 Total Primary Government Expenses $ 26,925,721 $ 32,199,633 $ 37,334,227 $ 40,311,543 Program Revenues Governmental Activities Charges for Service: General Government Public Safety Parks and Recreation Cultural Health 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 $ 810,142 1,684,786 143,254 1.51,028 44,1.78 1,573,944 5,382,779 $ 1,448,032 1,307,295 196,436 210,41.7 33,1.48 497,219 5,789,432 $ 1,497,472 1,643,635 155,168 219,749 41,390 595,401 1.2,595,635 $ 1,720,279 1,481,004 273,917 219,029 33,930 1,044,884 3,023,377 9,790,111 9,481,979 16,748,450 7,796,420 11,223,658 13,007,618 13,620,440 14,668,1.37 3,904,818 5,017,343 3,150,428 2,889,518 3,148,1.00 2,755,376 5,1.90,039 2,241,726 18,276,576 $ 28,066,687 20,780,337 $ 30,262,316 21,960,907 $ 38,709,357 *Note — GASB Statement No. 68 has been prospectively implemented in year -end 2015. HE 19,799,381. $ 27,595,801. Fiscal Year 2010 2011 2012 2013 2014 $ 7,892,516 7,897,298 2,966,642 1,593,075 809,323 345,455 1,084,430 2,230,452 24,819,191 14,434,709 3,690,007 1.8,124,716 $ 42,943,907 TABLE 2 2015 $ 8,112,954 $ 7,802,092 $ 7,066,087 $ 6,958,530 $ 6,443,227 8,390,740 9,1.03,676 9,567,595 10,025,703 10,836,712 3,152,119 3,586,087 3,622,834 3,740,538 3,876,644 1,673,098 1,584,605 1,807,559 1,807,1.36 2,164,604 876,339 916,967 907,676 870,1.59 892,1.94 374,51.6 357,658 344,647 407,1.14 470,468 1,321,055 1,1.1.7,044 1,180,656 1,942,312 1,845,877 2,251,472 2,302,912 3,340,951 2,352,856 2,226,635 26,152,293 26,771,041 27,838,005 28,104,348 28,756,361 15,280, 871 16,349,967 16,954,871 17,762,116 1.8,440,959 3,659,031 3,758,425 3,959,445 4,268,1.25 4,719,526 1.8,939,902 20,108,392 20,914,316 22,030,241 23,160,485 $ 45,092,195 $ 46,879,433 $ 48,752,321 $ 50,134,589 $ 51,916,846 $ 1,905,600 $ 1,495,563 $ 2,286,488 $ 2,230,800 $ 1,974,637 $ 1,840,547 1,986,536 2,815,029 2,21.6,385 2,516,547 2,536,476 2,603,476 536,609 524,443 541,512 721,222 917,639 794,003 265,714 228,242 279,267 305,932 309,897 325,1.78 36,728 39,743 36,746 38,149 32,429 26,744 587,643 717,105 764,997 234,084 220,264 336,252 1,276,465 2,998,115 1,1.78,573 1,531,740 5,756,456 5,509,530 6,595,295 8,818,240 7,303,968 7,578,474 11,747,798 11,435,730 15,147,332 3,061,414 973,437 19,182,183 $ 25,777,478 1.7,073,075 3,564,852 2,175,889 22,813,816 $ 31,632,056 17,411,568 17,696,327 1.9,147,872 20,700,369 3,561,114 4,459,600 4,533,753 4,415,126 828,853 1,301,235 2,809,110 4,158,552 21,801,535 23,457,162 26,490,735 29,274,047 $ 29,105,503 $ 31,035,636 $ 38,238,533 $ 40,709,777 91 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION (CONTINUED) LAST TEN FISCAL YEARS Fiscal Year 2006 2007 2008 2009 Net (Expenses) Revenue Governmental Activities $ (3,839,538) $ (8,100,704) $ (5,230,081) $ (15,581,51.4) Business -Type Activities 4,980,504 6,163,387 6,605,211 2,865,772 Total Primary Government Net Expenses $ 1,140,966 $ (1,937,317) $ 1,375,130 $ (12,715,742) 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 $ 5,705,805 $ 7,309,127 $ 7,841,928 $ 8,980,102 4,704,960 6,026,675 6,1.75,759 6,017,782 961,462 1,004,116 1,240,642 1,462,199 202,108 259,1.76 273,558 305,073 20,068 29,451 32,364 31,790 5,1.24 6,781 4,751 5,105 608,587 1,606,976 1,31.0,310 364,648 1.12,306 923,574 293,763 84,748 510,098 (1,224,621) - 1,060,607 12,830,518 1.5,941,255 1.7,173,075 18,312,054 473,205 976,595 522,595 128,233 195,409 161,048 179,121 110,516 (510,098) 1,224,621 - (1,060,607) 158,51.6 2,362,264 701,716 (821,858) $ 12,989,034 $ 18,303 519 $ 1.7,874,791 $ 17,490,196 $ 8,990,980 $ 7,840,551 $ 11,942,994 $ 2,730,540 5,139,020 8,525,651 7,306,927 2,043,914 $ 14,130,000 $ 1.6,366,202 $ 1.9,249,921 $ 4,774,454 92 TABLE 2 (Continued) Fiscal Year 2010 2011 2012 2013 2014 2015 $ (18,223,896) $ (17,334,053) $ (19,467,073) $ (20,259,531) $ (16,356,550) $ (17,320,631) 1,057,467 3,873,914 1,693,143 2,542,846 4,460,494 6,113,562 $ (17,166,429) $ (13,460,139) $ (17,773,930) $ (17,716,685) $ (11,896,056) $ (11,207,069) $ 9,715,645 $ 10,280,768 $ 11,298,204 $ 12,359,146 $ 1.2,794,172 $ 14,139,037 6,240,749 7,054,394 7,968,212 9,637,097 10,553,382 10,315,125 1,448,620 1,542,046 1,647,712 1,681,079 2,073,1.62 2,263,783 348,1.47 391,1.81 470,290 503,267 552,570 563,734 32,1.44 33,630 28,586 30,421 39,91.7 43,656 4,651 2,173 - - - - 1.17,776 48,235 60,265 54,270 43,729 56,820 611,510 316,840 621,560 505,268 180,316 197,881. 15,421 84,235 (62,294) 25,140 (50,000) (42,235) 1.8,534,663 1.9,753,502 22,032,535 24,795,688 26,187,248 27,537,801 36,824 37,950 36,409 53,089 31,810 47,728 236,1.73 457,094 666,645 664,521 609,003 344,731 (15,421) (84,235) 62,294 (25,140) 50,000 42,235 257,576 410,809 765,348 692,470 690,813 434,694 $ 1.8,792,239 $ 20,164,311 $ 22,797,883 $ 25,488,158 $ 26,878,061 $ 27,972,495 $ 310,767 $ 2,419,449 $ 2,565,462 $ 4,536,157 $ 9,830,698 $ 1.0,217,170 1,315,043 4,284,723 2,458,491 3,235,316 5,151,307 6,548,256 $ 1,625,810 $ 6,704,172 $ 5,023,953 $ 7,771,473 $ 1.4,982,005 $ 1.6,765,426 93 CITY OF SCHERTZ, TEXAS FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS 94 Fiscal Year 2006 2007 2008 2009 Nonspendable Fund Balance: Inventory $ 16,706 $ 67,333 $ 46,014 $ 44,217 Prepaid Items - - - - Note Receivable - - - - Total Nonspendable Fund Balance 16,706 67,333 46,014 44,217 Restricted Fund Balance: Police and Public Safety 304,378 352,791 394,122 355,451 Municipal Court 205,344 1.91,663 269,961 332,117 PEG Capital Fees - - - - Capital Improvement 15,134,81.4 17,612,092 16,41.6,440 14,342,553 Debt Service 347,739 556,884 429,289 444,369 Tourism Development 378,823 470,743 502,883 180,710 Tree Mitigation 343,091 271,071 271,071 1.91,834 Parks 286,072 1.80,223 169,529 120,501 Historical Committee & Library 36,261 46,784 68,207 1.63,661 Economic Development Corporation 1,450,801 2,014,135 2,331,951 2,543,010 Scholarships - - - - Total Restricted Fund Balance 18,487,323 21,696,386 20,853,453 18,674,206 Committed Fund Balance: Capital Improvement - - - - Total Assigned Fund Balance - - - - Assigned Fund Balance: Property Replacement - 579,708 400,247 201,850 Special Events - 127,500 88,778 62,263 Capital Improvement - - - - Recycling 12,733 6,780 14,748 - Historical Committee - - - 1.0,149 Youth Activities - - - - Total Assigned Fund Balance 1.2,733 713,988 503,773 274,262 Unassigned Fund Balance 7,202,709 8,876,682 5,269,890 1,209,451 Total Governmental Funds $ 25,719,471 $ 31,354,389 $ 26,673,130 $ 20,202,136 94 TABLE 3 Fiscal Year 2010 2011 2012 . 2013 2014 2015 $ 46,473 $ 43,504 $ 63,556 $ 50,768 $ 88,518 $ 101,084 - - 2,367 754,443 21,735 1.6,000 150,000 120,080 1.20,080 120,080 - - 196,473 1.63,584 1.86,003 925,291 110,253 1.1.7,084 421,265 403,799 338,118 496,890 529,264 494,337 402,744 459,244 527,513 646,422 628,459 683,558 - 31.7,453 409,870 456,175 489,509 509,535 3,914,323 10,219,300 17,104,595 15,360,800 9,600,028 8,924,587 286,215 1.1.7,250 227,674 517,1.99 625,435 847,178 250,379 301,517 390,561 470,250 501,996 848,969 164,424 1.73,999 217,600 157,659 359,205 331,149 79,317 84,329 90,71.8 136,647 304,655 341,551 200,359 231,686 65,409 77,554 78,098 76,787 3,548,067 3,394,850 4,366,005 6,022,128 7,792,578 9,821,747 - - - - 54,176 60,944 9,267,093 15,703,427 23,738,063 24,341,724 20,963,403 22,940,342 - - - 165,000 31,718 - - - - 165,000 31,718 - 202,341 202,723 322,656 456,034 694,916 785,005 142,465 93,447 92,555 99,770 31,177 6,657 - 1.62,113 243,546 145,167 - - 9,940 9,940 - - - - - - 11,090 - - - 354,746 468,223 669,847 700,971 726,093 791,662 1,372,779 1,899,105 2,560,667 4,206,734 5,587,262 7,280,240 $ 11,191,091 $ 18,234,339 $ 27,154,580 $ 30,339,720 $ 27,418,729 $ 31,129,328 95 CITY OF SCHERTZ, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS REVENUES Taxes Permits and Fees Service Fees Fines and Fees Intergovernmental Other Revenue 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) Bonds & Debt Issuances Premium (Discount) on Bond Issue Payment to Refund Agent Transfers In Transfers (Out) TOTAL OTHER FINANCING SOURCES (USES) NET CHANGE IN FUND BALANCE Debt Service as a percentage of Noncapital Expenditures Fiscal Year 2006 2007 2008 2009 $ 12,122,079 $ 15,093,799 $ 15,583,058 $ 16,786,590 1,475,619 1,062,054 992,953 822,105 1,322,743 1,230,634 1,01.8,197 973,781 1,1 57,480 1,397, 101 1,387,677 1,517,821 26,058 267,420 4,376,072 1,444,966 767,075 2,510,021 1,864,877 1,066,097 16,871,054 21,561,029 25,222,834 22,611,360 2,934,800 4,994,598 6,1.84,705 6,765,315 5,020,684 5,665,671 6,638,352 7,235,501 558,020 655,930 745,307 884,158 604,521 843,870 800,079 869,166 388,679 443,455 667,995 821,048 216,655 263,918 295,156 348,448 903,154 1,115,737 1,51.7,785 941,675 6,127,735 5,504,679 1.9,1.89,505 14,963,950 1,499,270 1,586,092 2,025,043 4,816,928 799,738 1,380,444 1,617,876 1,987,384 165,125 63,969 122,290 191,066 19,218,381 22,518,363 39,804,093 39,824,639 (2,347,327) (957,334) (14,581,259) (17,213,279) 15,319,996 8,306,805 9,900,000 9,681,678 123,057 - - - 529,598 354,150 593,294 2,778,593 (224,500) (2,068,703) (593,294) (1,717,986) 15,748,151 6,592,252 9,900,000 10,742,285 $ 13,400,824 $ 5,634,918 $ (4,681,259) $ (6,470,994) 17.6% 16.1% 14.6% 26.1% 96 Fiscal Year 2010 . 2011 2012 2013 2014 2015 $ 17,811,547 $ 19,309,675 $ 21,401,991 $ 24,181,863 $ 26,021,730 $ 27,348,297 1,160,197 1,776,292 1,363,461 1,609,954 1,805,047 1,731,302 1,492,130 1,645,489 1,547,007 1,739,387 1,763,964 1,797,151 1,655,183 1,452,610 2,027,613 1,927,744 1,750,311 1,534,588 570,386 1,216,211 1,000,413 492,332 221,769 393,607 1,161,182 603,498 969,921 767,110 671,731 689,805 23,850,625 26,003,775 28,310,406 30,718,390 32,234,552 33,494,750 6,989,561 7,164,667 7,094,834 6,311,276 5,981,439 5,582,441 7,409,720 7,885,119 8,690,849 9,113,840 9,409,894 1.0,158,401 816,939 846,1.50 976,327 951,528 1,012,607 952,663 1,178,455 1,195,171 1,398,692 1,412,329 1,338,232 1,658,197 872,668 937,61.1 845,124 840,595 815,691 821,1.46 331,860 360,746 346,318 341,961 394,918 404,008 1,251,368 1,506,831 1,249,557 1,289,078 2,270,041 2,056,646 11,347,876 2,956,511 1,299,843 3,277,397 8,000,467 2,314,668 1,893,086 2,371,070 2,704,898 3,217,325 3,695,597 3,918,008 2,183,852 2,066,221 2,313,510 2,381,171 2,108,610 2,112,746 20,000 244,237 254,971 31,750 165,650 7,992 34,295,385 27,534,334 27,174,923 29,168,250 35,193,146 29,986,916 (10,444,760) (1,530,559) 1,135,483 1,550,140 (2,958,594) 3,507,834 1,418,294 8,206,572 14,370,000 1,635,000 8,583,715 245,000 - 283,000 175,473 - 686,137 - - - (6,698,421) - (9,182,250) - 242,539 348,846 139,635 788,084 1,243,833 989,120 (227,118) (264,611) (201,929) (788,084) (1,293,832) (1,031,355) 1,433,715 8,573,807 7,784,758 1,635,000 37,603 202,765 $ (9,011,045) $ 7,043,248 $ 8,920,241 $ 3,185,140 $ (2,920,991) $ 3,710,599 17.7% 17.4% 19.5% 21.6% 21.3% 21.9% 97 CITY OF SCHERTZ, TEXAS TAX REVENUE BY SOURCE — GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Fiscal Mixed Hotel Total Year Property Sales & Use Franchise Beverage Bingo Occupancy Revenue 2015 $ 14,161,999 $ 10,31.5,125 $ 2,263,783 $ 43,553 $ 103 $ 563,734 $ 27,348,297 2014 12,802,668 10,553,382 2,073,162 39,917 31 552,570 26,021,730 2013 12,329,999 9,637,097 1,681,079 30,421 - 503,267 24,181,863 2012 11,287,191 7,968,212 1,647,712 28,586 - 470,290 21,401,991 2011 10,286,251 7,054,394 1,542,046 33,630 2,1.73 391,181 19,309,675 2010 9,737,236 6,240,749 1,448,620 32,144 4,651 348,147 17,811,547 2009 8,964,642 6,017,781 1,462,199 31,790 5,105 305,073 16,786,590 2008 7,855,984 6,175,759 1,240,642 32,364 4,751 273,558 15,583,058 2007 7,767,600 6,026,675 1,004,116 29,451 6,781 259,176 15,093,799 2006 6,261,532 4,671,785 961,462 20,068 5,124 202,108 12,122,079 .. CITY OF SCHERTZ, TEXAS TOTAL WATER AND SEWER CONSUMPTION AND RATES LAST TEN FISCAL YEARS Fiscal Year Ended September 30, 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Total Water & Sewer Consumption (In Gallons) 1,477,570,300 1,549,888,700 1,550,039,700 1,604,952,300 1,676,323,900 1,231,376,600 1,511,567,900 855,779,200 614,508,100 714,230,400 99 Water & Sewer Base Rate 19.71 1932 18.94 18.94 18.94 18.94 18.94 15.94 15.94 15.94 Water & Sewer Initial Rate Per 1,000 Gallons $ 2.43 2.39 2.34 2.34 2.34 2.25 2.16 1.92 1.72 1.69 Consumers Caterpillar Inc. Schertz1518 Beck Readymix Sycamore Creek Apartments SYSCO Big Time Management Properties Sebastian Apartments Pecan Grove TX LLC City of Schertz (Ball Park) Caterpillar Inc. Wal -mart Supercenter Sprint PCS Manco Structures LTD Val Verde H2 Auto Inc. Diamond Shamrock The Oak at Green Valley Republic Beverage Company TOTAL Total City Water Consumption CITY OF SCHERTZ, TEXAS PRINCIPAL WATER AND SEWER CONSUMERS CURRENT YEAR AND NINE YEARS AGO 2015 2006 Total Percentage of Total Percentage of Water Total City Water Total City Consumption Water Consumption Water (in Gallons) Rank Consumption (in Gallons) Rank Consumption 15,705,500 1 1.01% 11,373,500 2 0.73% 9,916,200 3 0.64% 4,930,800 1 0.88% 9,908,400 4 0.64% 8,754,100 5 0.56% 8,497,800 6 0.55% 8,002,100 7 0.52% 7,717,900 8 0.50% 2,176,000 3 0.39% 7,271,400 9 0.47% 6,426,400 10 0.41% 3,052,600 2 0.54% 2,073,200 4 0.37% 1,812,600 5 0.32% 1,787,900 6 0.32% 1,623,700 7 0.29% 1,542,400 8 0.27% 1,365,300 9 0.24% 1,340,800 10 0.24% 93,573,300 6.03% 21,705,300 3.85% 1,552,387,300 563,511,000 100 CITY OF SCHERTZ, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Fiscal Year Ended September 30 Total Taxable Assessed Value Total Direct Tax Rate 2015 . $ 3,037,267,611 0.4974 2014 2,752,562,574 0.4974 2013 . 2,600,365,551 0.4999 2012 2,411,270,623 0.4843 2011 2,363,893,708 0.4493 2010 2,342,355,490 0.4342 2009 2,230,825,045 0.4090 2008 2,221,073,744 0.4090 2007 1,893,240,916 0.431.7 2006 1,621,059,759 0.3977 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 freeze adjustments. 101 Source NOTE. Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Fiscal Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) City Direct Rates Overlapping School Districts Schertz - Cibolo- Basic Debt Universal Coma] Rate Service Total City ISD ISD 0.301.0 0.1964 0.4974 1.4900 1.3900 0.3010 0.1964 0.4974 1.4900 1.4300 0.2993 0.2006 0.4999 1.4600 1.4300 0.2993 0.1850 0.4843 1.4350 1.4300 0.2993 0.1500 0.4493 1.4350 1.3700 0.2842 0.1500 0.4342 1.4200 1.3100 0.2590 0.1500 0.4090 1.3850 1.3100 0.2590 0.1500 0.4090 1.3150 1.3100 0.2805 0.1512 0.4317 1.6100 1.6400 0.3005 0.0972 0.3977 1.7200 1.8000 County 0.31.45 0.3269 0.3269 0.3269 0.3269 0.3269 0.3269 0.3269 0.3269 0.3312 Hospital District 0.2762 0.2762 0.2762 0.2762 0.2762 0.2662 0.261.0 0.2374 0.2439 0.2439 Overlapping Counties Bexar Coma] Guadalupe River Authority 0.0175 0.0178 0.0174 0.0174 0.0167 0.0160 0.0160 0.0160 0.0160 0.0164 Bexar; Comal and Guadalupe County Tax Offices Community College District 0.1492 0.1492 0.1492 0.1416 0.1416 0.1359 0.1359 0.1346 0.1371 0.1071 Countv 0.3429 0.3504 0.3504 0.3504 0.3340 0.3130 0.3080 0.3180 0.3152 0.3537 County 0.3941 0.3999 0.4036 0.4036 0.3999 0.3895 0.3895 0.3895 0.4031 0.4031 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. 102 Taxnaver Caterpillar Inc. SYSCO San Antonio, Inc. Republic Beverage Co. Distribution San Antonio MTA LP GE Oil & Gas Inc. Visionary Properties Wal -Mart Real Estate Business Trust H.E.Butt Grocery Co. EM Limited Partnership Case Cameron LLC Block Distributing, Inc. Sprint Spectrum, LP Verde Tri County, LTD Eye Care Centers of America, Inc. Prologis North American Properties Atlantic Financial Group LTD Wal -Mart Real Estate Business Trust Legacy Oaks Apartments, Ltd. TOTALS CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND NINE YEARS AGO $ 406,729,858 TOTAL TAXABLE ASSESSED VALUE $ 3,037,267,611 Source: Bexar, Comal and Guadalupe County Appraisal Districts 103 ►Io . Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value $ 28,007,240 1 9,793,856 6 19,686,530 13,846,660 12,570,214 11,081,946 8,1 57,730 8,072,983 7,897,206 7,693,601 13.39% $ 126,807,966 $1,621,059,759 2 3 4 5 7 8 9 10 1.73% 0.60% 1.21% 0.85% 0.78% 0.68% 0.50% 0.50% 0.49% 0.47% 7.82% Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value $ 157,733,450 1 5.19% 100,587,449 2 3.31% 48,082,040 3 1.58% 23,253,974 4 0.77% 19,500,000 5 0.64% 18,058,140 6 0.59% 12,459,300 7 0.41% 11,301,240 8 0.37% 9,875,405 9 0.33% 5,878,860 10 0.19% $ 406,729,858 TOTAL TAXABLE ASSESSED VALUE $ 3,037,267,611 Source: Bexar, Comal and Guadalupe County Appraisal Districts 103 ►Io . Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value $ 28,007,240 1 9,793,856 6 19,686,530 13,846,660 12,570,214 11,081,946 8,1 57,730 8,072,983 7,897,206 7,693,601 13.39% $ 126,807,966 $1,621,059,759 2 3 4 5 7 8 9 10 1.73% 0.60% 1.21% 0.85% 0.78% 0.68% 0.50% 0.50% 0.49% 0.47% 7.82% CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Source: Guadalupe County Tax Office 104 Collected Within Total Collections Fiscal Year Taxes Levied Fiscal Year of Levy Collections In To Date Ended for the % of Subsequent % of September 30, Fiscal Year Amount Levy Years Amount Levy 2015 $ 14,793,867 $ 14,738,760 99.63% $ - $ 14,738,760 99.63% 2014 13,383,759 13,297,258 99.35% 40,404 13,337,662 99.66% 2013 12,536,540 12,455,336 99.35% 32,527 12,487,863 99.61% 2012 11,239,572 11,159,974 99.29% 74,228 11,234,202 99.95% 2011 9,978,430 9,895,240 99.17% 74,023 9,969,263 99.91% 2010 9,639,945 9,559,899 99.17% 70,336 9,630,235 99.90% 2009 8,800,927 8,703,978 98.90% 87,668 8,791,646 99.89% 2008 7,793,405 7,711,714 98.95% 74,754 7,786,468 99.91% 2007 7,048,818 6,957,827 98.71% 81,415 7,039,242 99.86% 2006 5,645,611 5,576,559 98.78% 63,882 5,640,441 99.91% Source: Guadalupe County Tax Office 104 CITY OF SCHERTZ, TEXAS TAXABLE ASSESSED VALUE LAST TEN FISCAL YEARS (UNAUDITED) *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal, and Guadalupe County Appraisal Districts. 1" TABLE 12 Fiscal Year Taxable Total Taxable Total Ended Value Residential Commercial Tax - Exempt Other Assessed Direct September 30, January I, Property Property Property Property Value* Tax Rate 2015 2014 $ 1,568,651,309 $ 1,793,803,709 $ (460,271,461) $ 135,084,054 $ 3,037,267,611 0.4974 2014 2013 1,445,731,509 1,540,565,195 (340,747,650) 107,013,520 2,752,562,574 0.4974 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 *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal, and Guadalupe County Appraisal Districts. 1" CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS 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. 106 Govermnental Activities General Certificates Certificates Fiscal Obligation of Tax Capital Revenue of Year Bonds Obligation Notes Lease Bonds Obligation 2015 $ 52,300,000 $ 277,801 $ 1,210,000 $ 91,495 $ - $ 8,837,200 2014 55,300,000 543,934 1,585,000 123,370 - 9,436,066 2013 58,060,000 801,767 2,155,000 22,398 2,215,000 5,048,233 2012 60,205,000 1,581,300 190,000 60,190 2,355,000 5,383,700 2011 47,505,000 8,625,800 250,000 97,188 2,490,000 5,704,200 2010 37,530,000 12,415,650 310,000 133,408 5,460,000 6,149,350 2009 38,485,000 13,338,850 - - 5,805,000 6,571,150 2008 32,790,000 14,243,700 - 107,078 6,230,000 6,976,300 2007 23,950,000 15,232,893 - 215,854 6,645,000 7,237,107 2006 18,740,000 13,560,000 - 319,996 7,055,000 - 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. 106 Business -Type Activities 5.88% 1,798 6.24% 1,956 6.44% 1,964 8.08% Public General 2,015 7.04% Total Facility Obligation Capital Tax Primary Loan Bonds Lease Notes Government $ - $ 3,485,000 $ 231,803 $ 1,640,000 $ 68,073,299 - 3,960,000 347,705 65,000 71,361,075 - 2,120,000 - 130,000 70,552,398 - 2,405,000 - 190,000 72,370,190 - 2,675,000 - 250,000 67,597,188 - - - 310,000 62,308,408 7,000 - - - 64,207,000 14,000 - - - 60,361,078 21,000 - - - 53,301,854 28,000 - - - 39,702,996 107 TABLE 13 Percent of Gross Income Per Capita 5.88% 1,798 6.24% 1,956 6.44% 1,964 8.08% 2,098 7.95% 2,015 7.04% 1,916 7.03% 2,041 7.19% 1,883 6.02% 1,677 1.56% 1,262 CITY OF SCHERTZ, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Percentage of General Bonded Debt Outstanding Value of Per Property Capita General Certificates Available in 1,517 Fiscal Obligation of Debt Service 2.36% Year Bonds Obligation Funds Total 2.09% 2015 $ 52,300,000 $ 277,801 $ (454,993) $ 52,122,808 2014 55,300,000 543,934 (517,199) 55,326,735 2013 58,060,000 801,767 (227,674) 58,634,093 2012 60,205,000 1,581,300 (117,250) 61,669,050 2011 47,505,000 8,625,800 (286,215) 55,844,585 2010 37,530,000 12,415,650 (444,369) 49,501,281 2009 38,485,000 13,338,850 (429,289) 51,394,561 2008 32,790,000 14,243,700 (556,884) 46,476,816 2007 23,950,000 15,232,893 (347,739) 38,835,154 2006 1.8,740,000 13,560,000 (263,740) 32,036,260 Percentage of Actual Taxable Value of Per Property Capita 1.72% 1,377 2.01% 1,517 2.25% 1,632 2.56% 1,788 2.36% 1,665 2.11% 1,522 2.30% 1,633 2.09% 1,450 2.05% 1,222 1.98% 1,019 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. 108 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT CURRENT YEAR Governmental Unit Debt repaid with property taxes: Debt Outstanding Estimated Percentage Applicable* TABLE 15 Estimated Share of Overlapping Debt Alamo CCD $ 450,384,988 0.19% $ 855,731 Bexar County 1,163,579,737 0.19% 2,210,802 Bexar County Hospital District 702,750,441 0.19% 1,335,226 Coma] County 48,492,694 4.45% 2,157,925 ComalISD 596,231,727 2.60% 15,502,025 Guadalupe County 10,900,000 21.31% 2,322,790 Schertz- Cibolo - Universal ISD 296,953,303 50.56% 150,139,589 Subtotal, Overlapping Debt City Governmental Activities Direct Debt TOTAL NET OVERLAPPING DEBT 174,524,088 53,879,296 $ 228,403,384 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. 109 CITY OF SCHERTZ, TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Assessed Value, 2014 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 Net Position DEBT MARGIN Total Net Debt as a Percentage of Debt Margin $ 3,037,267,611 $ 303,726,761 $ 53,879,296 (454,993) 53,424,303 $ 250,302,458 21.34% 110 Fiscal Year 2012 2013 2014 Assessed Value $ 2,411,270,623 $ 2,600,365,551 $ 2,752,562,574 Debt Limit $ 241,127,062 $ 260,036,555 $ 275,256,257 Total Net Debt Applicable to Limit 60,973,626 60,499,568 56,803,499 Total Debt Margin $ 180,153,436 $ 199,536,987 $ 218,452,758 2009 2010 2011 Assessed Value $ 2,230,825,045 $ 2,342,355,490 $ 2,363,893,708 Debt Limit $ 223,082,505 $ 234,235,549 $ 236,389,371 Total Net Debt Applicable to Limit 50,414,481 48,819,435 55,298,550 Total Debt Margin $ 172,668,024 $ 185,416,114 $ 181,090,821 2006 2007 2008 Assessed Value $ 1,621,059,759 $ 1,893,240,916 $ 2,221,073,744 Debt Limit $ 162,105,976 $ 189,324,092 $ 222,107,374 Total Net Debt Applicable to Limit 18,392,261 23,488,500 45,466,903 Total Debt Margin $ 143,713,715 $ 165,835,592 $ 176,640,471 110 CITY OF SCHERTZ, TEXAS PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS TABLE 17 Water Revenue Bonds 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. 111 Utility Less: Net Debt Service Fiscal Service Operating Available Year Charges Expenses Revenue Principal Interest Coverage 2015 $ 20,700,369 $ 15,916,597 $ 4,783,772 $ 1,448,407 $ 428,912 2.55 2014 19,147,872 15,246,653 3,901,219 1,010,500 426,100 2.72 2013 17,696,327 14,553,274 3,143,053 728,800 359,680 2.89 2012 17,411,568 14,185,126 3,226,442 697,1.00 396,968 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 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. 111 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 Texas Workforce Commission. 112 TABLE 18 Education Per Capita Level in Personal Personal Median Years of School Unemployment Year Population Income Income Age Schooling Enrollment Rate 2015 37,865 $1,157,835,970 $ 30,578 36.1 15.6 15,009 2.9% 2014 36,477 1,144,465,875 31,375 36.9 15.4 14,515 3.2% 2013 35,929 1,095,331,494 30,486 37.1 15.4 14,058 5.1% 2012 34,499 895,739,206 25,964 36.8 15.4 13,016 5.5% 2011 33,544 850,069,800 25,342 37.8 15.4 12,533 5.6% 2010 32,523 885,015,876 27,21.2 34.4 15.4 12,330 5.7% 2009 31,465 91.3,919,790 27,923 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 2,543,051,460 80,855 36.1 18.0 8,380 4.4% 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 Texas Workforce Commission. 112 CITY OF SCHERTZ, TEXAS TOP TEN PRINCIPAL EMPLOYERS CURRENT YEAR AND EIGHT YEARS AGO Source: City Economic Development Corporation Note: Principal employer information is not available prior to 2007 113 2015 2007 Percentage Percentage of Total City of Total City Employer Employees Employment Employees Employment Schertz /Cibolo /UC ISD 1,810 10.46% 1,300 9.47% Amazon.com 1,073 6.20% Sysco Central Texas 837 4.84% GE Oil & Gas 600 3.47% Brandt Engineering 437 2.53% HVHC 400 2.31% Republic Beverage Company 382 2.21% 100 0.73% HEB Grocery CO 350 2.02% 220 1.60% City of Schertz 341 1.97% 232 1.69% Wal -Mart Stores 323 1.87% 420 3.06% FedEx Ground 205 1.18% 165 1.20% Valero Diamond Distribution 167 1.22% Metro Ambulance LP 110 0.80% Manco 100 0.73% Lowe's 83 0.60% TOTAL 6,758 39.06% 2,897 21.10% Source: City Economic Development Corporation Note: Principal employer information is not available prior to 2007 113 I rz/,� �N CITY OA 1, CITY OF SCHERTZ, TEXAS FULL -TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Source: City Adopted Budgets Note: Full -time equivalent is based on the schedule hours of positions to a 40 hour work week. 114 Full -Time Equivalent Employees as of September 30. Function 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Government City Manager 3 4 6 7 6 6 7 7 6 6 Court Support 4 4 0 0 0 0 0 0 0 0 Municipal Court 3.5 5 6 4 5 5 5 6 6 6 Customer Relations 0 2 4 4 4 4.5 4.5 4.5 4.5 4.5 Planning and Zoning 3 4 5 4 4 4 3 3 3 3 General Services 6.5 9 9 9.5 115 14.7 14.7 12.7 12.7 12.7 City Secretary 2 2 2 2 2 2 2 2 2 2 Public Affairs 1 2 3 3 3 3 4 4 4 4 Records Management 2 2 3 3 1 1 1 1 1 1 Schertz Magazine 0 0 0 0 0 2 2 2 2 2 Engineer 0 1 3 1 2 2 4 3 3 3 GIS 0 0 0 2 2 2 2 2 2 2 Infonnation Technology 3 3 3 3 3 4 4 6 6 6 Human Resources 2 2 3 3 4 4 4 4 4 4 Finance 5 5 6 6 6 6 6 6 7 8 Purchasing 0 1 2 2 5 5 5 5 4 3 Fleet Service 3 3 3 3 3 4 4 4 6 6 Building Maintenance 0 0 0 0 0 0 0 2 3 3 Public Safety Police 58.7 63.6 68.6 64.6 64.6 64.6 69.7 74.7 74.9 752 Fire 32 32 32 32 32 32 32 32 33 36 Inspections 6 8 8 7 6 7 7 7 9 9 Marshal Services 0 0 0 5 5 8 8 8 8 8 Health Animal Control 5 5 6 6 6 6 6 6 7 7 Parks and Culture Parks 7 8 8 8 8 9 9 9 9 9 Pools 12.5 12.5 0 0 0 0 0 0 0 0 Event Facilities 0 1 1 1 1 2 1 1 1 1 Library 9.5 9.5 10.5 11 115 13.5 14 14 14 14 Public Environment Streets 11 11 13 13 13 14 14 14 14 14 Public Works Public Works 6 6 6 6 5 4 4 6 6 6 Business Office 10 9 10 10 10 10 10 10 10 10 Water and Sewer 12 14 14 16 16 17 17 16 16 16 Drainage 5 5 6 7 7 7 7 8 8 8 EMS 22 23.5 30 34 34 34 35 35 36 37 Economic Development 3 3 3 4 4 3 4 4 4 4 TOTAL 237.7 260.1 2741 281.1 288.6 300.3 309.9 3189 326.1 330.4 Source: City Adopted Budgets Note: Full -time equivalent is based on the schedule hours of positions to a 40 hour work week. 114 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTIONTROGRAM LAST TEN FISCAL YEARS 115 Fiscal Year Function 2006 2007 2008 2009 2010 General Government Bin l ding Perm its Issued 9,948 5,811 2,869 5,181 4,806 Sehertz Tales Number of Magazines printed - 72,000 108,000 120,000 144,000 Police CFS 16,642 25,478 37,829 36,319 37,269 Arrests 526 608 719 873 790 Traffic Violations 10,487 13,461 18,820 20,452 19,259 Accidents 1,192 1,484 1,475 1,491 1,606 Fire Number of Rescue /Other Responses 1,216 1,459 978 1,536 1,671 Number of Fire Responses 129 103 141 135 76 Number of Inspections 356 302 461 447 425 Number of Training Classes Conducted 136 694 595 264 107 Number of Pre -Plan Inspections 452 642 EMS Requests for Transport 5,171 6,256 6,619 7,061 7,281 Actual Transports 2,937 3,634 4,193 4,341 4,575 EMT Students - 45 73 80 80 Marshal Service Warrants Issued - - 5,974 5,444 Warrants Cleared - - 3,836 4,023 Food Establishment Permits - - - 134 129 Food Establishment Inspection - 209 202 Foster /Adoption Inspections - - - 34 27 Parks Facility Reservations 416 516 983 671 719 Community and Civic Centers Civic Center - - - 484 594 Community Center Rentals - - - 635 North Community Center Rentals - - - - Animal Services Number of Animals Handled - - - 1,804 2,021 Number of Adoptions - 255 249 Number of Return to Owners - - 252 279 Number of Transfers - - - 415 451 Library Annual Circulation 276,873 292,909 278,826 263,131 392,528 Library Visits 181,603 179,630 175,435 188,118 257,235 Library Program Attendance 5,064 6,680 7,444 10,499 10,610 Registered Users 19,342 19,595 23,327 20,360 24,628 Water New Connections 532 91 1,474 446 509 Water Main Breaks 46 29 72 72 25 Total Consumption (thousands of gallons) 13,322,380 11,535,927 14,460,239 15,115,679 12,313,766 Daily Average Consumption (thousands of gallons) 37,007 31,606 39,617 38,550 33,736 Peak Daily Consumption (thousands of gallons) 10,540 5,379 5,804 7,520 7,040 Total Customers 10,118 10,598 10,900 10,198 10,134 Average Use Per Connection 7,060 1,089 6,378 6,913 5,054 Sewer Total Customers 8,990 9,391 6,378 9,974 9,499 Facilities Maintenance Number of Buildings Maintained 12 14 16 19 19 Square Footage 111,642 127,589 135,091 166,591 166,591 Source: Various City Departments. Prior year information for some functions is not available. 115 1,802 1,463 Fiscal Year 1,218 1,304 2011 2012 2013 2014 2015 4,950 2,643 3,054 2,869 3,087 168,000 168,000 168,000 180,000 180,000 26,205 19,434 19,894 19,067 36,138 762 666 800 776 595 1 3,231 20,881 19,335 15,077 12,306 1,575 1,665 1,960 1,823 2,040 1,657 1,799 2,046 1,759 2,167 110 74 108 110 99 616 429 332 252 698 142 168 132 125 150 536 714 729 735 980 7,443 7,545 8,391 8,840 9,286 4,801 4,766 5,451 5,713 6,118 85 79 116 87 84 4,141 2,888 3,344 2,354 3,798 3,985 4,118 4,687 3,781 3,691 118 123 127 82 135 244 180 281 218 136 18 14 24 16 22 237 234 258 301 275 354 325 444 458 478 666 816 735 437 455 241 307 288 244 209 1,802 1,463 1,326 1,218 1,304 257 291 362 309 357 313 149 231 222 213 300 312 301 316 296 414,074 410,312 404,691 395,998 394,766 254,934 256,349 254,633 253,237 259,413 13,767 16,035 12,581 15,048 13,825 28,589 30,475 31,658 30,759 31,138 439 271 168 235 369 76 52 38 45 45 16,763,239 16,131,415 15,500,413 15,497,071 14,757,134 45,927 44,196 42,466 42,458 40,431 11,000 9,290 9,483 10,089 8,385 12,234 12,557 12,757 13,324 13,570 5,725 5,517 5,905 5,467 5,135 10,907 10,988 11,456 11,578 11,413 19 19 19 19 21 166,591 166,591 166,591 166,591 234,202 116 CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS BY FUNCTIONTROGRAM LAST TEN FISCAL YEARS Source: Various City Departments 117 Fiscal Year Function 2006 2007 2008 2009 2010 . Police Stations 1 1 1 1 1 Patrol Units 34 33 33 38 40 Fire Stations 2 2 2 2 2 Training Facility 1 1 1 - - Fire Vehicles 12 12 14 13 13 EMS Ambulances 6 6 6 6 6 Marshal Service Vehicles - - - 5 7 Streets Streeets, paved (miles) 102 107 122 124 125 Streets, unpaved (miles) 9 9 7 7 7 Parks and Recreation Parks - Developed 7 7 7 11 12 Parks - Undeveloped 4 4 4 4 4 Playground 20 20 20 20 19 Swimming Pools 1 1 2 2 2 Baby Pools 1 1 2 2 2 Baseball/Softball Diamonds 12 12 12 12 12 Soccer Fields - - - 12 12 Cormnunity Centers 1 1 2 2 4 Animal Control Control Vehicle 2 3 3 3 3 Libras Facility 1 1 1 1 1 Volumes in Collection 52,818 56,282 60,650 64,400 71,929 Water Number of Reservoirs 1 - - - - Number of Pump Stations 1 2 - 5 5 Water Mains (Miles) 171 177 182 188 190 Sewer Sanitary Sewers (Miles) 54 59 71 78 78 Storm Sewers (Miles) 4 6 8 9 9 Facilities Maintenance Vehicles 4 4 4 5 5 Generators 3 3 3 3 3 Source: Various City Departments 117 TABLE 22 Fiscal Year 2011 . 2012 2013 2014 2015 1 1 1 1 1 42 42 42 42 48 2 2 2 2 2 13 13 13 15 16 6 6 7 7 9 8 8 7 7 7 132 134 137 141 149 5 5 5 5 5 17 17 13 13 14 4 4 8 8 9 1.5 15 1.6 16 18 2 2 2 2 2 2 2 2 2 2 9 9 12 12 15 12 12 12 12 12 4 4 4 4 4 3 3 3 3 3 1 1 1 1 1 73,904 81,468 86,221 100,478 113,085 5 5 5 5 5 192 192 197 199 210 84 85 87 90 96 10 10 11 11 12 5 4 5 5 6 3 3 3 3 4 118 I rz/,� �N CITY OA 1, COMPLIANCE SECTION 11.9 SHAREHOLDERS Nancy L Vaughan, CPA Armstrong, ughan 1' s Ci to r PC Deborah E Fraser, CPA Certified Public Accountants Phil S. Vaughan, CPA 1 011 3 01 W 0191 U 0 U V _ 01301141011wl 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 infonnation of City of Schertz as of and for the year ended September 30, 2015, 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 March 11, 2016. 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 West Byrd blvd., Suite 101 - Universal City" Te es 781=18 Phone; 210 - 658 -622 Fax 210-659-7611 - Email: vaughan avac a.coni wwivavacpaxorn 120 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 March 11, 2016. 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. March 11, 2016 121 rr