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CAFR FY 2005-06CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT � 45CHERpZ? ti U F35 I -I( To Tvis FISCAL YEAR ENDED SEPTEMBER 30, 2006 u CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2006 OFFICIALS ISSUING REPORT Don E. Taylor City Manager Juan F. Santoya Director of Finance (This Page Intentionally Left Blank) u I I CONTENTS INTRODUCTORY SECTION PAGE NUMBER Letter of Transmittal Ix City Officials xv Organizational Chart xvi 2005 Certificate of Achievement xvii FINANCIAL SECTION Independent Auditor's Report 3 Management's Discussion and Analysis 7 Basic Financial Statements 38 Statement of Net Assets 24 Statement of Activities 27 Balance Sheet - Governmental Funds 28 Reconciliation of Balance Sheet - Governmental 56 Funds to Statement of Net Assets 29 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 30 Reconciliation of Change in Fund Balances - Governmental Funds to Change in Net Assets - Governmental Activities 31 Statement of Net Assets - Proprietary Funds 32 Statement of Revenues, Expenses, and Changes In Fund Net Assets - Proprietary Funds 34 Statement of Cash Flows - Proprietary Funds 35 Notes to Basic Financial Statements 38 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General Fund 56 Notes to Required Supplementary Information 58 CONTENTS PAGE TABLE NUMBER Combining And Individual Fund Statements and Schedules Nonmajor Governmental Funds (Special Revenue Funds) Combining Balance Sheet 62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 64 Park Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual 66 Recycling Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual 67 Hotel Occupancy Tax Special Revenue Fund - Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual 68 Debt Service Fund - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual 69 Discretely Presented Component Units Combining Statement of Net Assets 72 Combining Statement of Activities 73 STATISTICAL SECTION Net Assets, by Component, Last Four Fiscal Years 1 77 Change in Net Assets, Last Four Fiscal Years 2 78 Fund Balances, Governmental Funds, Last Ten Fiscal Years 3 80 Changes in Fund Balances, Governmental Funds, Last Ten Fiscal. Years 4 82 Assessed Value and Estimated Actual Value of Taxable Property, Last Ten Fiscal Years 5 84 Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years 6 85 iv CONTENTS PAG E TABLE NUMBER Principal Property Taxpayers, Current Year and Nine Years Ago 7 86 Property Tax Levies and Collections, Last Ten Fiscal Years 8 87 Ratios of Outstanding Debt by Type, Last Ten Fiscal Years 9 89 Ratios of General Bonded Debt Outstanding, Last Ten Fiscal Years 10 90 Direct and Overlapping Governmental Activities Debt, as of September 30, 2006 11 91 Debt Margin Information, Last Ten Fiscal Years 12 93 Pledged Revenue Coverage, Last Ten Fiscal Years 13 94 Demographic and Economic Statistics - Last Ten Fiscal Years 14 95 Principal Employers, Current Year 15 96 Full -Time Equivalent City Employees by Function /Program Last Five Fiscal Years 16 97 Operating Indicators by Function /Program, Last Ten Fiscal Years 17 98 Capital Asset Statistics by Function /Program, Last Ten Fiscal Years 18 99 Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 101 LVA (This Page Intentionally Left Blank) vi 11 u INTRODUCTORY SECTION vii (This Page Intentionally Left Blank) viii C 1 April 24, 2007 1400 SCHERTZ PARKWAY SCHERTZ, TEXAS 78154 -0890 (210) 658 -7477, EXT 1111 FAX (210) 659 -3204 DON E. TAYLOR CITY MANAGER 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, 2006. 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 Thompson, Williams, Biediger, Kastor and Young, 1,.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, 2006, 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 Schertz T E X A S Corridor to the Future ' IX 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, 2006, 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. U.S. 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 (MD8sA). 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. 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 28 square miles and serves a population of 31,452. 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 the city council, and for appointing the heads of the various departments. The council is elected on a non - partisan basis. Council members serve two -year staggered terms, with two council members elected every two years. The mayor is elected to serve a two -year term. The mayor and all five council members are elected at large. The City of Schertz provides a full range of services including police and fire protection, the construction and maintenance of streets, recreational activities, cultural events, water and sewer services, and EMS services. X 1 1 1 The annual budget serves as the foundation for the City of Schertz's financial planning and control. All departments of the City of Schertz are required to submit requests for appropriation to the city manager in June of each year. The city manager uses these requests as the starting point for developing a proposed budget. The city manager then presents this proposed budget to the council for review prior to August 1. The council then holds public hearings on the proposed budget and to adopt a final budget by no later than September 30, the close of the City of Schertz's fiscal year. The appropriated budget is prepared by department, e.g., police. Department heads may make transfers of appropriations within a department. Transfers of appropriations between departments, however, require a special approval of the city council. 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 56 through 58 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 currently enjoys a favorable economic environment and local indicators point to continued stability. The region has a growing manufacturing and industrial base that adds to the relative stability of the unemployment rate. Major industries with headquarters or divisions located within the government's boundaries or in close proximity include Republic Beverage, Wal -Mart, Federal Express, Valero, HEB, and Schertz - Cibolo- Universal City Independent School District. The region has a labor force of approximately 800,000 which is anticipated to grow at a rate of 2.3 percent each year for the next several years. Meanwhile, there continues to be a trend toward steady residential growth. Long -term financial planning. The city council plans to issue certificates of obligation in the amount of $9,915,000. These funds are going to be used for the following: a. $6,600,000 for the construction, acquiring, purchasing, renovating, equipping, enlarging and improving the City's utility system. b. $1,300,000 for constructing street, curb and sidewalk improvements (including utility repair, replacement and relocation) and drainage. C. $665,000 for the purchase of vehicles and equipment for the City's public works department. d. $500,000 for the purchase of EMS vehicles and equipment. e. $850,000 for the purchase of City -wide communication equipment. XI Cash management policies and practices. Cash temporarily idle during the year was invested through state local investment pools. These funds are essentially liquid. The average yield on investments is about 4.633 percent. Active involvement in other investment vehicles was limited due to extremely competitive pool rates. Risk Management. During 2006, the City continued a risk management program for worker's compensation. Various control techniques, including employee accident prevention training, have been implemented during the year to minimize accident - related losses. Third -party coverage is currently maintained for individual worker's compensation claims and all other potential losses. Additional information on the City of Schertz's risk management activity can be found in the notes to the financial statements. Pension benefits. The City of Schertz sponsors an agent multiple- employer defined benefit pension plan for its employees. Each year, an independent actuary engaged by the pension plan calculates the amount of the annual contribution the City of Schertz must make to the pension plan to ensure that 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. 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, Texas for its comprehensive annual financial report for the fiscal year ended September 30, 2005. This was the 18th 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 in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to 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. xii 1 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, Don E. Taylor Juan F. San a City Manager Finance Dire or W (This Page Intentionally Left Blank) xiv CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR CITY COUNCIL CITY MANAGER DIRECTOR OF FINANCE HONORABLE HAL BALDWIN MICHAEL CARPENTER MAYOR PRO -TEM REGINNA AGEE JIM FOWLER DAVID SCAGLIOLA TONY WILENCHIK DON E. TAYLOR JUAN F. SANTOYA INDEPENDENT AUDITORS Thompson, Williams, Biediger, Kastor & Young, L.C. San Antonio, Texas xv I CITY ATTORNEY I POLICE F ANIMAL CONTROL PURCHASING MAYOR AND CITY COUNCIL PROSECUTING CITY MANAGER (CM) ATTORNEY 71 r EXECUTIVE ADMINISTRATIVE ASSISTANT RECORDS MANAGEMENT — EMS FIRE COURT SUPPORT GENERAL SERVICES ASSISTANT CITY MANAGER PUBLIC WORKS DRAINAGE WATERISWR STREETS FLEET SVS RISK MANAGER PUBLIC INFORMATION OFFICER COMMUNITY SERVICES =PARKS LIBRARY As of 15 Sep 2005 MUNICIPAL COURT JUDGE I CITY SECRETARY F WARRANT SERVICES OFFICER ' BAILIFF ' HUMAN Schertz Economic Dev FINANCE RESOURCES Corp (4-B CORP) PLANNING & ZONING INFORMATION TECHNOLOGY BUSINESS OFFICE INSPECTIONS/ CODE ENFORCEMENT of Certificate Achievement 1 for Excellence In Financial Reporting p g Presented to City of Schertz Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2005 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. 1 µas are, IH President Executive Director xvii (This Page Intentionally Left Blank) u fl xviii I a 0 1 FINANCIAL SECTION L 1 (This Page Intentionally Left Blank) 2 ' Thom on , Williams, ' Biediger, SAN ANTONIO, TEXAS 78224) -5.508 SAN NAA'. LOOPEXA SUITE -55 Kastor CERTIFIED PUBLIC ACCOUNTANTS 1- 210/.341 -2581 FAX 210/541 -2588 cpas @twbky.com � MEMBERS AMERICAN INSTITUTE OF Youn CERTIFIED PUBLIC ACCOUNTANTS g , LC, Independent Auditor's Report To the Honorable Mayor and ' Members of the City Council City of Schertz, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of and for the year ' ended September 30, 2006, which collectively comprise the City's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City of Schertz, Texas', management. Our responsibility is to express an opinion on these financial ' statements based on our audit. ' We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ' financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. ' 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of September 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. ' In accordance with Government Auditing Standards, we have also issued our report dated February 6, 2007 on our consideration of City of Schertz, Texas' internal control over financial ' reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that ' testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. THOMPSON. WILLIAMS, BIEDIGER. Iv \STOR W YOUNG, L.C. (This Page Intentionally Left Blank) 4 1 The management's discussion and analysis and budgetary comparison information on pages I7 through 21 and 56 through 58, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. IOur audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Schertz, Texas, basic financial statements. The introductory I section, combining and individual nonmajor fund financial statements, other schedules, and statistical tables 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 and other schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them. V Certified Public Accountants ' San Antonio, Texas IFebruary 6, 2007 1 5 (This Page Intentionally Left Blank) I !7 7 i1 6 1 IMANAGEMENT'S 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, 2006. 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 $73,821,886 (net assets). Of this amount, $18,638,756 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. The City's total net assets increased by $13,573,764. Approximately 62% increase 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 $24,132,213, an increase of $12,871,003 in comparison with the prior year. The key factor in this increase was issuance of general obligation bonds for construction projects. At the end of the current fiscal year, unreserved fund balance for the general fund was $7,202,709, or 65.4% of total general fund expenditures, including capital outlay. The City's total debt increased by $13,903,855 during the current fiscal year. The key factor in ' this increase was the issuance of general obligation bonds in the amount of $15,000,000. 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 information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private - sector business. The statement.of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Schertz is improving or deteriorating. ' The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported 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). 7 Both of the government -wide financial statements distinguish functions of the City of Schertz that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Schertz include general government, public safety, streets and parks, health, and culture and recreation. The business -type activities of the City of Schertz include a water and sewer department and an emergency medical services department. The government -wide financial statements include not only the City of Schertz itself (known as the primary government). but also legally separate component units for which the City is financially accountable. Financial information for these component units is reported separately from the primary government. The government -wide financial statements can be found on pages 24 through 36 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Schertz, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. The funds of the City of Schertz can be divided into two categories: governmental and proprietary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near - term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be 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 funds 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 eight 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, and the capital projects fund, all of which are considered to be major funds. Data from the other five 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. The basic governmental fund financial statements can be found on pages .24 through 31 of this report. Proprietary funds. The City of Schertz maintains two different types of proprietary funds. 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 funds to account for its water and sewer department and for its emergency medical services department. T ' 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. The basic proprietary fund financial statements can be found on pages 32 through 36 of this report. 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. The notes to the financial statements can be found on pages 38 through 54 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's general fund budgetary schedule. The City of Schertz adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Required supplementary information can be found on pages 56 ' through 58 of this report. The combining statements referred to earlier in connection with non -major governmental funds are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages 62 through 69 of this report. Government -wide Financial Analysis As noted earlier, net assets 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 $73,821,886 at the close of the most recent fiscal year. I The largest portion of the City's total net assets (52 %) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City of Schertz uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The remainder of this page is left blank intentionally. 0] Current and Other Assets Capital Assets TOTAL ASSETS Long -Term Liabilities Outstanding Other Liabilities TOTAL LIABILITIES Net Assets Invested in Capital Assets, Net of Related Debt Restricted Unrestricted TOTAL NET ASSETS NET ASSETS GOVERNMENTAL BUSINESS-TYPE ACTIVITIES ACTIVITIES 2006 2005 2006 2005 $ 25,974,328 $ 12,912,816 $ 13,174,444 $ 10,021,346 46,231,571 36,279,821 31,873,405 29,286,194 TOTAL 2006 2005 $ 39,148,772 $ 22,934,162 ' 78,104,976 65,566,015 72,205,899 49,192,637 45,047,849 39,307,540 117,253,748 88,500,177 31,656,735 17,653,279 6,753,086 7,150,962 38,409,821 24,804,241 2,643,954 2,068,892 2,378,087 1,378,922 5,022,041 3,447,814 34,300,689 19,722,171 9,131,173 8,529,884 43,431,862 28,252,055 13,257,031 17,699,797 24,783,839 24,970,976 38,040,870 42,670,773 15,888,549 4,813,496 1,253,711 428,712 17,142,260 5,242,208 8,759,630 6,957,173 9,879,126 5,377,968 18,638,756 12,335,141 $ 37,905,210 $ 29,470,466 $ 35,916,676 $ 30,777,656 $ 73,821,886 $ 60,248,122 Table A -1 An additional portion of the City's total net assets (23.2 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, ($18,638,756) 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 assets, 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. There was an increase of $11,075,053 in restricted net assets reported in connection with the City's governmental activities. This increase is due to unspent bond proceeds from the current year issue of general obligation bonds. The government's net assets increased by $13,573,764 during the current fiscal year. About 62% of this increase represents capital contributions from developers. The remainder of this page is left blank intentionally. 10 The following table indicates changes in net assets for governmental and business -type activities: CHANGES IN NET ASSETS GOVERNMENTAL BUSINESS -TYPE ACTIVITIES ACTIVITIES TOTAL 2006 2005 2006 2005 2006 2005 Revenues Program Revenues Charges for Services $ 3,331,585 $ 3,383,417 $ 15,128,476 $ 12,751,791 $ 18,460,061 $ 16,135,208 Operating Grants and Contributions 1,567,164 1,789,763 - 1,567,164 1,789,763 Capital Grants and Contributions 5,382,779 3,808,133 3,148,100 2,055,366 8,530,879 5,863,499 General Revenues Property Taxes 5,705,805 4,908,108 - 5,705,805 4,908,108 Other Taxes 4,325,732 3,067,945 - 4,325,732 3,067,945 Unrestricted Investment Earnings 552,091 356,080 473,205 170,610 1,025,296 526,690 Other 112,306 83,337 195,409 177,554 307,715 260,891 Total Revenues 20,977,462 17,396,783 18,945,190 15,155,321 39,922,652 32,552,104 Expenses General Government 3,957,693 3,612,084 3,957,693 3,612,084 Public Safety 6,403,122 5,558,596 6,403,122 5,558,596 Streets and Parks 1,240,956 1,134,281 1,240,956 1,134,281 Health 231,149 221,950 231,149 221,950 Culture and Recreation 396,078 339,124 396,078 339,124 Interest and Other Fees 823,818 862,744 823,818 862,744 Water and Sewer 9,821,823 8,937,553 9,821,823 8,937,553 EMS 3,474,249 3,789,791 3,474,249 3,789,791 Total Expenses 13,052,816 11,728,779 13,296,072 12,727,344 26,348,888 24,456,123 Increase in Net Assets before Transfers 7,924,646 5,668,004 5,649,118 2,427,977 13,573,764 8,095,981 Transfers 510,098 199,123 (510,098) (199,123) - ' Change in Net Assets 8,434,744 5,867,127 5,139,020 2,228,854 13,573,764 8,095,981 Net Assets, as Previously Reported 29,470,466 24,251,491 30,777,656 27,900,650 60,248,122 52,1 52,141 ' Restatement of Net Assets - (648,1 52) 648,152 Net Assets - Beginning as Restated 29,470,466 23,603,339 30,777,656 28,548,802 60,248,122 52,1 52,141 $ 37,905,210 $ 29,470,466 $ 35,916,676 $ 30,777,656 $ 73,821,886 $ 60,248,122 NETASSETS - ENDING Table A -2 11 (This Page Intentionally Left Blank) 1 1 12 Below is a graph showing total revenues by source for the City: Total Revenues - Government -Wide 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Lmarges Tor Operating Capital Grant & Property Tax Other Taxes Unrestricted Other Services Grants & Contributions Revenues Investment Contributions Earnings ■ 2006 ■ 2005 Governmental Activities. Governmental activities accounted for 62% of the growth in the net assets of the City of Schertz. Most of this increase is the result of capital contributions from developers. For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Revenues - Governmental Activities unarges Tor Operating Capital Grant & Property Tax Other Taxes Unrestricted Other Services Grants & Contributions Revenues Investment Contributions Earnings ■ 2006 02005 13 (This Page Intentionally Left Blank) 14 1 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Expenses - Governmental Activities General Public Safety Streets & Parks Health Government ■ 2006 1020051 Business -type activities. Charges for services increased by $2,376,685. This increase was due to a water rate increase. Capital grants and contributions increased by $ 1,092,734. This increase was due to increased capital contributions from developers. Revenues - Business -Type Activities .,0,00C 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 t-narges ror Services iapitai Grant & Contributions Unrestricted Other Investment Earnings ■ 2006 ■ 2005 15 �, Culture & Interest & Other Recreation Fees ■ 2006 1020051 Business -type activities. Charges for services increased by $2,376,685. This increase was due to a water rate increase. Capital grants and contributions increased by $ 1,092,734. This increase was due to increased capital contributions from developers. Revenues - Business -Type Activities .,0,00C 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 t-narges ror Services iapitai Grant & Contributions Unrestricted Other Investment Earnings ■ 2006 ■ 2005 15 (This Page Intentionally Left Blank) 1 1 16 1 10,000,OOC 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Expenses- Business -Type Activities VVaier & Sewer EMS ■ 2006 ■ 2005 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. The remainder of this page is left blank intentionally. 17 (This Page Intentionally Left Blank) n 18 1 i Governmental funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $24,132,213. Of this total amount, $8,074,014 constitutes unreserved fund.. balance, which is available for spending at the government's discretion. The remainder of fund balances is reserved or designated 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 restricted purposes. The general fund is the chief operating fund of the City of Schertz. At the end of the current fiscal year, unreserved fund balance of the general fund was $7,202,709, while total fund balance reached $7,435,264, an increase of $2,560,046 from the prior year. The majority of this increase was from property tax and City sales tax collections. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 65.4% of total general fund expenditures, including capital, while total fund balance represents 67.5% of that same amount. The debt service fund has a total fund balance of $347,739, all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was minimal. The capital projects fund has a total fund balance of $15,1.34,814, an increase of $9,998,980. This increase was from the issuance of general obligation bonds in the amount of $15,000,000 for various construction projects. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net assets of the water and sewer fund at the end of the year amounted to $9,353,080 and those for the Schertz EMS fund amounted to $526,046. General Fund Budgetary Highlights r Differences between the original budget and the final amended budget and the final budget and actual expenditures can be briefly summarized as follows: • A donation was received for construction of a new library. The donation has not been spent yet. • The Fire Department's shortfall resulted from the increasing cost of fuel and utility costs. • The shortfall in the legal department resulted from legal work on thirty -nine (39) City Charter amendments, advertising and a bond proposition. • The shortfall in the swimming pool department resulted from the increasing cost of chemicals and utility costs. • The shortfall in the fleet services department resulted from an increase in auto parts. During the year, revenues exceeded budgetary estimates and funded the overexpenditures in various departments. 19 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, 2006, amounts to $78,104,976 (net of accumulated depreciation). Major capital asset events during the current fiscal year included the following: The City completed construction on the new Council Chambers on the property adjacent to the city hall. Construction on the City's athletic fields and civic Center are near completion. CAPITAL ASSETS (Net of Depreciation) Table A -3 Additional information on the City's capital assets can be found in Note 4 on pages 45 through 47 of this report. Long -Term debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $39,702,996. Of this amount, $32,619,996 comprises debt backed by the full faith and credit of the government. The remainder of the City's debt represents bonds secured solely by specified revenue sources, i.e., revenue bonds. OUTSTANDING DEBT GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES TOTAL GOVERNMENTAL BUSINESS -TYPE 2005 2006 2005 General Obligation Bonds ACTIVITIES ACTIVITIES TOTAL $ 4,045,000 Certificates of Obligation 2006 2005 2006 2005 2006 2005 Land $ 3,676,634 $ 3,676,634 $ 520,619 $ 301,170 $ 4,197,253 $ 3,977,804 Buildings and Improvements 7,001,252 5,830,907 30,701,277 27,590,650 37,702,529 33,421,557 Machinery, Equipment, 319,996 28,000 34,000 347,996 34,000 and Vehicles 1,585,421 1,160,814 320,710 548,198 1,906,131 1,709,012 Infrastructure 28,081,830 21,180,859 - - 28,081,830 21,180,859 Construction in Progress 5,886,434 4,430,607 330,799 846,176 6,217,233 5,276,783 TOTALS S 46.231.571 S 36.279.821 $ 31.873.405 $ 29.286.194 S 78.104.976 $ 65.566.015 Table A -3 Additional information on the City's capital assets can be found in Note 4 on pages 45 through 47 of this report. Long -Term debt. At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $39,702,996. Of this amount, $32,619,996 comprises debt backed by the full faith and credit of the government. The remainder of the City's debt represents bonds secured solely by specified revenue sources, i.e., revenue bonds. OUTSTANDING DEBT GOVERNMENTAL ACTIVITIES BUSINESS -TYPE ACTIVITIES TOTAL 2006 2005 2006 2005 2006 2005 General Obligation Bonds $ 18,740,000 $ 4,045,000 $ $ $ 18,740,000 $ 4,045,000 Certificates of Obligation 13,560,000 14,250,000 13,560,000 14,250,000 Tax Notes 160,000 160,000 Revenue Bonds - - 7,055,000 7,445,000 7,055,000 7,445,000 Other Debt 319,996 28,000 34,000 347,996 34,000 TOTALS $ 32.619.996 $ 18.455.000 $ 7.083.000 $ 7.479.000 $ 39.702.996 $ 25.934.000 Table A -4 20 ' The Y . City's total debt increased b 531 % during the current fiscal year. Y 9 The key factor in the increase is the City of Schertz issued general obligation bonds in the amount of $15,000,000 for the major capital projects. tThe City of Schertz's general fund maintains a "AA -" rating and its water and sewer fund maintains an "AA -" rating from Standard and Poor's. tAdditional information on the City's long -term debt can be found in Note 7 on pages 49 through 51 of this report. Economic Factors and Next Year's Budgets and Rates During the current fiscal year, unreserved fund balance in the general fund increased to $7,202,709. The City of Schertz has not appropriated any of this amount for spending in the 2008 fiscal year budget. It is intended that the available fund balance can be utilized to avoid the need to raise taxes or charges during the 2008 fiscal year. Water and sewer rates are expected to remain 'stable. A portion of the debt service fund balance will be used to offset the debt service ad valorem rate. 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. 21 u (This Page Intentionally Left Blank) 22 J I11 J BASIC FINANCIAL STATEMENTS J 23 ASSETS CURRENT ASSETS CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE COMPONENT ACTIVITIES ACTIVITIES TOTAL UNITS Cash and Cash Equivalents $ 149,247 $ 132,194 $ 281,441 $ 199,754 Investments 24,469,950 1,303,733 25,773,683 1,320,426 Receivables: 550,504 - Capital Assets: Delinquent Taxes, Net of Land 3,676,634 520,619 4,197,253 - Allowance for Uncollectible 9,601,261 41,671,941 51,273,202 - Machinery, Equipment, and Accounts 149,694 - 149,694 2,950,858 Accounts and Other 1,067,901 2,129,532 3,197,433 137,839 Inventories 16,706 74,439 91,145 - Capital Lease Receivable - 54,299 54,299 Total Capital Assets Deferred Charges 15,264 10,327 25,591 46,511,536 Investments - Restricted - 9,024,982 9,024,982 . 45,047,849 Internal Balances (174,399) 174,399 - - Total Current Assets 25,694,363 12,903,905 38,598,268 1,658,019 NONCURRENT ASSETS Capital Lease Receivable - 116,047 116,047 Deferred Charges 279,965 154,492 434,457 Total 279,965 270,539 550,504 - Capital Assets: Land 3,676,634 520,619 4,197,253 - Buildings and Improvements 9,601,261 41,671,941 51,273,202 - Machinery, Equipment, and - Vehicles 2,950,858 2,501,556 5,452,414 - Infrastructure 34,285,644 - 34,285,644 - Construction in Progress 5,886,434 330,799 6,21 7,233 - Accumulated Depreciation (10,169,260) (13,151,510) (23,320,770) - Total Capital Assets 46,231,571 31,873,405 78,104,976 - TotalNoncurrentAssets 46,511,536 32,143,944 78,655,480 - TOTAL ASSETS 72,205,899 45,047,849 117,2 53,748 1,658,019 (The Accompanying Notes are an Integral Part of these Financial Statements) 24 CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS 1 SEPTEMBER 30.2006 LIABILITIES CURRENT LIABILITIES PAYABLE FROM 1 UNRESTRICTED ASSETS Accounts Payable and Accrued Liabilities Compensated Absences and Salary Reserves Accrued Interest Payable Current Portion of Long -Term Debt ' Total Current Liabilities Payable from Unrestricted Assets CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS Customer Deposits I Accrued Interest Payable Current Portion of Long -Term Debt Total Current Liabilities Payable from Restricted Assets tTotal Current Liabilities NONCURRENT LIABILITIES Long -Term Debt Compensated Absences and Salary Reserves ' Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Construction Debt Service Tree Mitigation LEOSE Technology Court Security Unrestricted TOTAL NET ASSETS PRIMARY GOVERNMENT GOVERNMENTAL BUSINESS -TYPE COMPONENT ACTIVITIES ACTIVITIES TOTAL UNITS $ 766,408 $ 1- ;597,472 $ 2,363,880 $ 44,382 139,935 38,594 178,529 - 246,676 - 246,676 1,490,935 - 1,490,935 2,643,954 1,636,066 4,280,020 44,382 2.643,954 289,757 289,757 37,087 37,087 - 415,177 415,177 10,505 742,021 742,021 - 2,378,087 5,022,041 44,382 31,236,929 6,637,302 37,874,231 419,806 115,784 535,590 31,656,735 6,753,086 38,409,821 - 34,300,689 9,1 31,173 43,431,862 44,382 13,257,031 24,783,839 38,040,870 14,981,870 - 14,981,870 347,739 1,253,711 1,601,450 343,091 - 343,091 10,505 - 10,505 - 130,956 - 130,956 - 74,388 - 74,388 - 8.759.630 9,879,126 18,638,756 1,613,637 $ 37,905,210 $ 351916,676 $ 7318211 886 $ 1,613,637 (The Accompanying Notes are an Integral Part of these Financial Statements) 25 (This Page Intentionally Left Blank) 26 � =M r r r m m m m MI M Ir r rr rr r Ir rr r CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2006 (The Accompanying Notes are an Integral Part of these Financial Statements) NET (EXPENSE) REVENUE AND CHANGES IN NET ASSETS PROGRAM REVENUES PRIMARY GOVERNMENT CHARGES OPERATING CAPITAL BUSINESS - FOR GRANTS AND GRANTS AND GOVERNMENTAL TYPE COMPONENT FUNCTIONS /PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES TOTAL UNITS Primary Government Governmental Activities General Government S 3,957,693 S 1,310,142 S 547,886 S S (2,099,665) S S (2,099,665) Public Safety 6,403,122 1,684,786 9,705 (4,708,631) (4,708,631) Streets and Parks 1,240,956 143,254 - 5,382,779 4,285,077 4,285,077 Health 231,149 44,178 - - (186,971) (186,971) Culture and Recreation 396,078 149,225 1,009,573 762,720 762,720 Interest and Other Fees 823,818 - (823,818) (823,818) Total Governmental Activities 13,052,816 3,331,585 1,567,164 5,382,779 (2,771,288) - (2,771.288) Business -Type Activities 9,821,823 11,223,658 3,148,100 4,549,935 4,549,935 Water and Sewer 430,569 430,569 EMS 3,474 249 3,904,818 Total Business -Type Activities 13,296,072 15,128,476 3,148,100 4,980,504 4,980,504 Total Primary Government S 26,348,888 S 18,460,061 S 1,567,164 $ 8,530,879 (2,771,288) 4,980,504 2,209,216 Component Units $ 1,076,833 S 1,803 $ 6,780 S S (1,068,250) General Revenues Taxes Ad Valorem 5,705,805 5,705,805 Sales 3,136,970 3,136,970 1,567,990 Utility Franchise 961,462 961,462 - Hotel /Motel 202,108 202,108 Bingo 5,124 5,124 Mixed Drink 20,068 - 20,068 - Unrestricted Investment Earnings 552,091 473,205 1,025,296 56,496 Miscellaneous 112,306 195,409 307,715 - Transfers between Governmental Activities and Business-Type Activities 510,098 (510,098) - Total General Revenues and Transfers 11 206,032 158,516 11,364,548 1,624,486 8,434,744 5,139,020 13,573,764 556,236 Change in Net Assets 29,470,466 30,777,656 60,248,122 1,057,401 Net Assets - Beginning S 37,905,210 S 35,916,676 S 73,821,886 S 1,613,637 NETASSETS - ENDING (The Accompanying Notes are an Integral Part of these Financial Statements) ASSETS Cash and Cash Equivalents Investments Receivables: Taxes, Net Accounts and Other Due from Other Funds I nventory TOTAL ASSETS LIABILITIES Accounts Payable Accrued Salaries and Benefits Accrued Interest Payable Due to Other Funds Deferred Revenue Total Liabilities FUND BALANCES Reserved for: Inventory Debt Service Tree Mitigation LEOSE Technology Court Security Unreserved - Designated for: Capital Improvement Unreserved, Reported in: General Fund Special Revenue Funds Total Fund Balances CITY OF SCHERTZ, TEXAS BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2006 MAJOR FUNDS OTHER TOTAL DEBT CAPITAL GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE PROJECTS FUNDS FUNDS $ 1,050 $ 23,591 $ - $ 124,606 $ 149,247 7,455,276 419,532 15,516,026 1,079,116 24,469,950 117,221 32,473 - - 149,694 1,049,656 - - 18,245 1,067,901 124,455 - 43,382 7,609 175,446 16,706 - - - 16,706 $ 8,764,364 $ 475,596 $ 15,559,408 $ 1,229,576 $ 26,028,944 $ 448,406 $ - $ 82,358 $ 228,073 - - - 95,384 - - - 342,236 652,621 32,473 1,329,100 127,857 424,594 7,571 $ 538,335 228,073 - 95,384 7,609 349,845 - 685,094 15,180 1,896,731 16,706 - - - 16,706 - 347,739 - - 347,739 - - - 343,091 343,091 10,505 - - - 10,505 130,956 - - - 130,956 74,388 - - - 74,388 - - 15,134,814 - 15,134,814 7,202,709 - - - 7,202,709 - - - 871,305 871,305 7,435,264 347,739 15,134,814 1,214,396 24,132,213 TOTAL LIABILITIES AND FUND BALANCES $ 8,764,364 $ 475,596 $ 15,559,408 $ 1,229,576 $ 26,028,944 (The Accompanying Notes are an Integral Part of these Financial Statements) 28 CITY OF SCHERTZ, TEXAS RECONCILIATION OF BALANCE SHEET GOVERNMENTAL FUNDS TO STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 1 TOTAL FUND BALANCES- GOVERNMENTAL FUNDS $ 24,132,213 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. 46,231,571 fCertain receivables are not available, and therefore, are deferred in governmental funds. 535,400 Certain receivables will be collected this year, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the funds. 149,694 Long -term liabilities, including bonds payable and capital leases, are 1 not due and payable in the current period and therefore are not reported as liabilities in the funds: t (The Accompanying Notes are an Integral Part of these Financial Statements) 29 Bonds Payable (32,300,000) 1 Capital Leases (319,996) Issuance Premium (to be Amortized as Interest Expense) (123,057) Issuance Discount (to be Amortized as Interest Expense) 15,189 Deferred Charge for Issuance Cost (to be Amortized as Interest Expense) 295,229 Accrued Interest Payable (151,292) Compensated Absences and Salary Reserves (559,741) TOTAL NET ASSETS - GOVERNMENTAL ACTIVITIES $ 37,905,210 t (The Accompanying Notes are an Integral Part of these Financial Statements) 29 REVENUES Taxes Licenses and Permits Charges for Services Fines and Forfeitures G rants Other Revenue Total Revenues EXPENDITURES Current General Government Public Safety Streets and Parks Health Culture and Recreation 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 Bonds Premium on Bond Issue Capital Lease Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES - BEGINNING MAJOR FUNDS DEBT CAPITAL GENERAL SERVICE PROJECTS OTHER GOVERNMENTAL FUNDS TOTAL GOVERNMENTAL FUNDS $8,441,541 $1,943,615 $ - $ 202,108 $ 10,587,264 1,389,475 86,144 1,475,619 1,820,940 - - - 1,820,940 1 ,043,875 - 113,605 1,157,480 9,705 - - 9,573 19,278 524,101 27,048 85,603 73,828 710,580 13,229,637 1,970,663 85,603 485,258 15,771,161 3,704,432 11,214 102,132 3,817,778 5,020,684 - - 5,020,684 1,162,541 - - - 1,162,541 216,655 - - 216,655 384,127 - - 384,127 520,648 - 5,471,439 135,648 6,127,735 - 1,155,000 - - 1,155,000 - 803,664 - 803,664 - 165,125 - 165,125 11 ,009,087 1,958,664 5,647,778 237,780 1 8,853,309 2,220,550 11,999 (5,562,175) 247,478 (3,082,148) - - 15,000,000 - 15,000,000 - 123,057 - 123,057 319,996 - - - 319,996 19,500 72,000 438,098 - 529,598 - - - (19,500) (19,500) 339,496 72,000 15,561,155 (19,500) 15,953,151 2,560,046 83,999 9,998,980 227,978 12,871,003 4,875,218 263,740 5,135,834 986,418 11,261,210 FUND BALANCES - ENDING $7,435,264 $ 347,739 $15,134,814 $ 1,214,396 $ 24,132,213 (The Accompanying Notes are an Integral Part of these Financial Statements) 30 ' CITY OF SCHERTZ, TEXAS RECONCILIATION OF CHANGE IN FUND BALANCES - GOVERNMENTAL FUNDS TO 1 CHANGE IN NET ASSETS - GOVERNMENTAL ACTIVITIES SEPTEMBER 30, 2006 1 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $12,871,003 ' 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. Capital Outlay 6,127,735 Depreciation Expense (1,555,545) Revenues and contributed assets in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 5,203,082 Certain long -term liabilities (compensated absences and ' salary reserves) are accrued at the government -wide level but not at the fund level. This is the current year change in those liabilities, reported as expense in the statement of activities. (68,449) Bonds and capital leases provide current financial resources to governmental funds, but issuing debt increases long -term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but reduces long -term liabilities in the statement of net assets. Also, governmental funds report the effect of issuance costs, premiums and discounts when the debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. issuance of General Obligation Bonds (15,000,000) ' Capital Lease (319,996) General Obligation Bond Payments 305,000 Certificates of Obligation Payments 690,000 Tax Note Payment 160,000 Bond Issue Costs 156,049 Premium (123,057) Discount (893) Interest Expense (10,185) CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $ 8,434,744 (The Accompanying Notes are an Integral Part of these Financial Statements) 31 ASSETS CURRENT ASSETS Cash and Cash Equivalents Investments Accounts Receivable Due from Other Funds Inventory Investments - Restricted Assets Capital Lease Receivable Deferred Charges Total Current Assets NONCURRENT ASSETS Capital Lease Receivable Deferred Charges Total s Capital Assets: Land Buildings and Improvements Machinery, Equipment, and Vehicles Construction in Progress Totals Accumulated Depreciation Total Capital Assets Total Noncurrent Assets TOTAL ASSETS CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2006 BUSINESS -TYPE ACTIVITIES- ENTERPRISE FUNDS WATER AND SEWER SCHERTZ SYSTEM EMS TOTAL $ 122,685 $ 9,509 $ 132,194 1,303,733 - 1,303,733 1,610,499 519,033 2,129,532 148,299 107,982 256,281 36,121 38,318 74,439 9,024,982 - 9,024,982 54,299 54,299 10,327 - 10,327 12,310,945 674,842 12,985,787 116,047 - 116,047 154,492 154,492 270,539 270,539 520,619 520,619 41,671;941 41 ,671,941 1,481,856 1,019,700 2,501,556 330,799 - 330,799 44,005,215 1,019,700 45,024,915 (12,303,762) (847,748) (13,151,510) 31,701,45.3 171,952 31,873,405 31,971,992 171,952 32,143,944 $ 44,282,937 $ 846,794 $45,129,731 (The Accompanying Notes are an Integral Part of these Financial Statements) 32 n 1 CITY OF SCHERTZ, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2006 LIABILITIES CURRENT LIABILITIES PAYABLE FROM UNRESTRICTED ASSETS Accounts Payable and Accrued Liabilities Due to Other Funds Compensated Absences and Salary Reserves Total Current Liabilities Payable from Unrestricted Assets CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS Customer Deposits Revenue Bonds Public Facility Loan Accrued Interest Total Current Liabilities Payable from Restricted Assets Total Current Liabilities NONCURRENT LIABILITIES Revenue Bonds Payable Public Facility Loan Compensated Absences and Salary Reserves 1 Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt ' Restricted for Debt Service Unrestricted ITOTAL NET ASSETS BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER SCHERTZ SYSTEM EMS TOTAL $ 1,538,389 $ 59,083 $ 1,597,472 43,382 38,500 81,882 25,791 12,803 38,594 1,607,562 110,386 1,717,948 289,757 - 289,757 409,025 - 409,025 7,000 - 7,000 37,087 - 37,087 742,869 742,869 2,350,431 110,386 2,460,817 6,615,454 - 6,615,454 21,000 - 21,000 77,374 38,410 115,784 6,713,828 38,410 6,752,238 9,064,259 148,796 9,213,055 24,611,887 171,952 24,783,839 1,253,711 - 1,253,711 9,353,080 526,046 9,879,126 $ 35,218,678 $ 697,998 $35,916,676 1 (The Accompanying Notes are an Integral Part of these Financial Statements) 33 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2006 OPERATING REVENUES Fees Charged to Users Reimbursements Other Total Operating Revenue OPERATING EXPENSES Personnel Services Sewage Treatment General and Administrative Contractual Services Supplies /Maintenance Bad Debts Depreciation Total Operating Expenses Operating Income NONOPERATING REVENUES (EXPENSES) Investment Income Interest. Expense Contributions to Joint Venture Amortization of Bond Costs Total Non - Operating Revenues (Expenses) Income before Transfers and Capital Contributions TRANSFERS OUT CAPITAL CONTRIBUTIONS Change in Net Assets NET ASSETS - BEGINNING TOTAL NET ASSETS- ENDING BUSINESS -TYPE ACTIVITIES-ENTERPRISE FUNDS WATER AND SEWER SCHERTZ SYSTEM EMS TOTAL $ 11,223,658 $ 3,904,818 $ 15,128,476 53,203 - 53,203 13,015 129,191 142,206 11,289,876 4,034,009 15,323,885 1,279,509 1,384,647 2,664,156 3,516,920 - 3,516,920 1,821,588 183,685 2,005,273 144,360 61,290 205,650 192,623 216,362 408,985 - 1,541,515 1,541,515 957,320 86,750 1,044,070 7,912,320 3,474,249 11,386,569 3,377,556 559,760 3,937,316 473,205 - 473,205 (328,721) (328,721) (1,559,547) (1,559,547) (21,235) (21,235) (1,436,298) - (1,436,298) 1,941,258 559,760 2,501,018 (438,098) (72,000) (510,098) 1 3,148,100 - 3,148,100 4,651,260 487,760 5,139,020 30,567,418 210,238 30,777,656 $ 352218,678 $ 697,998 $ 35,916,676 (The Accompanying Notes are an Integral Part of these Financial Statements) 34 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers Cash Received from Other Funds Cash Payments to Suppliers for Goods and Services Cash Payments to Employees for Services Cash Payments to Other Funds Cash Received for Reimbursements and Other Net Cash Provided by Operating Activities CASH FLOWS FROM NON- CAPITAL FINANCING ' ACTIVITIES Transfers Out Capital Contributed to Joint Venture Net Cash Used in Non - Capital Financing Activities n CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets Proceeds from Disposal of Capital Assets Principal Payments on Long -Term Debt Interest Paid on Long -Term Debt Net Cash Provided by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments Sale of Investments Purchase of Investments Net Cash Used in Investing Activities Net Increase (Decrease) in Cash CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS WATER AND SEWER SCHERTZ SYSTEM EMS TOTAL $10,818,131 $ 3,578,960 $ 14,397,091 106,470 - 106,470 (4,765,798) (2,030,888) (6,796,686) (1,262,901) (1,350,712) (2,613,613) - (324,251) (324,251) 66,218 129,191 195,409 4,962,120 2,300 4,964,420 (438,098) (72,000) (510,098) (1,559,547) - (1,559,547) (1,997,645) (72,000) (2,069,645) (529,908) (18,000) (547,908) 97,209 97,209 (390,000) - (390,000) (315,326) - (315,326) (1,235,234) 79,209 (1,156,025) 473,205 - 473,205 1,409,937 - 1,409,937 (3,528,789) - (3,528,789) (1,645,647 - (1,645,647) 83,594 9,509 93,103 39,091 - 39,091 $ 122,685 $ 9,509 $ 132,194 (The Accompanying Notes are an Integral Part of these Financial Statements) (Continued) 35 CITY OF SCHERTZ TEXAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2006 BUSINESS -TYPE ACTIVITIES - ENTERPRISE FUNDS ' WATER AND SEWER SCHERTZ SYSTEM EMS TOTAL , RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation Gain on Sale of Capital Asset (Increase) Decrease in the Following Assets Accounts Receivable Inventory Due from Other Funds Increase (Decrease) in the Following Liabilities Accounts Payable and Accrued Liabilities Due to Other Funds Compensated Absences Customer Deposits NET CASH PROVIDED BY OPERATING ACTIVITIES NONCASH OPERATING. CAPITAL AND RELATED FINANCING ACTIVITIES Contributions of Capital Assets from Developers Amortization of Loss on Defeasance Amortization of Bond Issuance Costs Amortization of Bond Discount $ 3,377,556 $ 559,760 $ 3,937,316 1 957,320 86,750 1,044,070 - (32,481) (32,481) (490,826) (293,377) (784,203) 46,748 3,767 50,515 106,470 (107,982) (1,512) 905,824 (4,330) 901,494 (216,269) (216,269) 16,606 6,462 23,068 42,422 - 42,422 $ 41962,120 $ 2,300 $ 4,964,420 $ 3,148,100 $ $ 3,148,100 $ 9,084 $ - $ 9,084 $ 10,327 $ $ 10,327 $ 1,824 $ $ 1,824 (The Accompanying Notes are an Integral Part of these Financial Statements) 36 C' NOTES TO BASIC FINANCIAL STATEMENTS 1 37 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Schertz is a municipal corporation governed by an elected mayor and five - member council. The accompanying financial statements present the City and its discretely presented component units, entities for which the City is considered to be financially accountable. The discretely presented component units are reported in a separate column in the government - wide financial statements to emphasize that they are legally separate from the City. Discretely presented component units - The component units' column in the government - wide financial statements includes the financial data of the component units of the City of Schertz, Texas. The component units are presented as governmental fund types. Following is a summary of the component units: 1. 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. 2. Library - The library provides services to the citizens of the City of Schertz as well as surrounding communities. The function of the library board is to work cooperatively with City management to provide funding and oversight for special projects of the library. All projects must be approved by the city council. The library's governing board is appointed by the city council. Schertz Development Foundation - The foundation developing and implementing plans for economic directors is appointed by the city council and the City. The City is financially accountable for the approves the foundation's budget. was organized to assist the City in viability for the City. The board of executive director is employed by the foundation because the city council Complete financial statements for each of the individual component units may be obtained at City Hall located at 1400 Schertz Parkway, Schertz, Texas 78154. 1 B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the 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. Likewise, the primary government is reported separately from legally separate component units for which the primary government is ' financially accountable. 38 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1 • SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government -Wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges of customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as 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. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property and sales taxes, utility franchises, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The general fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. � 39 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus Basis of Accounting and Financial Statement Presentation (Continued) 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 projects 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. The government reports the following major proprietary funds: The water and sewer fund accounts for the water and sewer services provided to the citizens through user charges. The EMS fund accounts for the ambulance services provided to the citizens of the City and other participating governments through user charges. Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB). Governments also have the option of following subsequent private - sector for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private- sector guidance. As a general rule the effect of interfund activity has been eliminated from the government -wide financial statements. Exceptions to this 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 funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 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. .R CITY OF SCHERTZ, TEXAS ' NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1: ,SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Cash and Cash Equivalents ' The City's cash and cash equivalents are considered to be cash on hand and demand deposits. E. Investments ' The City is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas of the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated of not less than "AA" or its equivalent; (5) certificates of deposit issued by state and national banks domiciled in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation (FDIC) or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date. In addition, the City is authorized ' to invest in local government investment pools. The investment pools operate in accordance with appropriate state laws and regulations and have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. The fair value of the City's position in each pool is the same as the fair value of the pool shares. F. Receivables and Payables Activity 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 deferred revenue at the government fund level. ' G. Inventories ' All inventories are valued at cost using the first -in /first -out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 41 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, 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. 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 assets 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: ASSETS YEARS Buildings and Improvements 10- 50 Machinery, Equipment, and Vehicles 2-20 Infrastructure 15 - 30 GV CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 1 • SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Compensated Absences and Salary Reserve 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. In addition, it is the policy of the City to retain as a liability the first forty (40) hours of service for each employee. The liability is to be paid upon termination at the rate of pay in existence at' that time. All vacation, compensatory time, and salary reserve pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. K. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, losses on defeasance,. as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount and losses on defeasance. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. L. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. M. 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. 43 l CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 2: CASH CASH EQUIVALENTS, AND INVESTMENTS Custodial Credit Risk - Cash and Cash Equivalents - Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned to it. As of September 30, 2006, $826,535 of the City's bank balance of $926,535 was not covered by depository insurance (FDIC). Per the City's policy, these deposits were collateralized by securities held by the pledging financial institution with a market value of $1,255,606 at September 30, 2006. As of September 30, 2006, the City had the following pooled investment funds: WEIGHTED AVERAGE INVESTMENT TYPE FAIR VALUE MATURITY (YEARS) Lone Star Investment Pool LOGIC MBIA Municipal Investors TOTAL Portfolio Weighted Average Maturity $ 10,328,715 22,971,301 1,498.649 $ 34,798,665 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, 2006, the City's investments in the pooled investment funds were rated AAA by Standard & Poor's. 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. NOTE 3: RECEIVABLES The following is a summary of the gross delinquent taxes receivable and the allowances for uncollectible taxes: Delinquent Taxes General Fund Debt Service Fund UNCOLLECTIBLE NET TAXES TAXES TAXES $ 124,703 $ 7,482 $ 117,221 34,546 2,073 32,473 S 159,249 S 9,555 $ 149,694 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 3: RECEIVABLES (CONTINUED) Other receivables as of year end for the City's individual major funds and other governmental funds, including the applicable allowances for uncollectible accounts are as follows: ICapital asset activity for the year ended September 30, 2006 was as follows: Primary Government Governmental Activities Capital Assets, not being Depreciated Land Construction in Progress I Total Capital Assets, not being Depreciated P, 0 BEGINNING BALANCE INCREASE DECREASE ENDING BALANCE $ 3,676,634 $ - $ - $ 3,676,634 4,430,607 5,471,439 (4,01 5,612) 5,886,434 8,107,241 5,471,439 (4,01 5,612) 9,563,068 The remainder of this page is left blank intentionally. 45 Other receivables as of year end for the City's individual major funds and other governmental funds, including the applicable allowances for uncollectible accounts are as follows: OTHER GOVERNMENTAL WATER AND GENERAL FUNDS SEWER EMS TOTAL Fines and Forfeitures $ 1,070,800 $ $ $ $ 1,070,800 Sales Tax 279,855 _ _ 279,855 Utility Franchise 230,172 230,172 Hotel Occupancy Tax - 18,245 18,245 Accounts - Customers 945,453 1,005,475 1,950,928 Schertz- Seguin Local Government Corporation 645,956 645,956 Other 4,229 33,051 2,381 39,661 Gross Receivables 1,585,056 18,245 1,624,460 1,007,856 4,235,617 Less: Allowance (535,400) (13,961) (488,823) (1,038,184 NET TOTAL RECEIVABLES $ 1,049,656 $ 18,245 $ 1,610,499 $ 519,033 $ 3,197,433 NOTE 4: CAPITAL ASSETS ICapital asset activity for the year ended September 30, 2006 was as follows: Primary Government Governmental Activities Capital Assets, not being Depreciated Land Construction in Progress I Total Capital Assets, not being Depreciated P, 0 BEGINNING BALANCE INCREASE DECREASE ENDING BALANCE $ 3,676,634 $ - $ - $ 3,676,634 4,430,607 5,471,439 (4,01 5,612) 5,886,434 8,107,241 5,471,439 (4,01 5,612) 9,563,068 The remainder of this page is left blank intentionally. 45 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 4: CAPITAL ASSETS (CONTINUED) Primary Government Capital Assets, being Depreciated Buildings and Improvements Machinery, Equipment, and Vehicles Infrastructure Total Capital Assets being Depreciated Less Accumulated Depreciation for Buildings and Improvements Machinery, Equipment, and Vehicles Infrastructure Total Accumulated Depreciation Total Capital Assets, being Depreciated - Net GOVERNMENTAL ACTIVITIES CAPITAL ASSETS - NET Business -Type 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 Total Capital Assets, being Depreciated Accumulated Depreciation for Buildings and Improvements Machinery, Equipment, and Vehicles Total Accumulated Depreciation Total Capital Assets, being Depreciated - Net BUSINESS -TYPE ACTIVITIES CAPITAL ASSETS - NET BEGINNING BALANCE INCREASE DECREASE ENDING BALANCE $ 8,195,784 $ 1,405,477 $ $ 9,601,261 2,216,174 734,684 - 2,950,858 26,374,337 7,91 1,307 34,285,644 36,786,295 10,051,468 - 46,837,763 (2,364,877) (235,132) (2,600,009) (1,055,360) (310;077) - (1,365,437) (5,193,478) (1,010,336) - (6,203,814) (8,613,715) (1,555,545) (10,169,260) 28,172,580 8,495,923 36,668,503 $ 36,279,821 $ 13,967,362 $ (4,01 5,612) $ 462231,571 $ 301,170 $ 219,449 $ - $ 520,619 846,176 259,863 (775,240) 330,799 1,147,346 479,312 (775,240) 851,418 37,748,601 3,923,340 41,671,941 2,562,417 68,596 (129,457) 2,501,556 40,311,018 3,991,936 (129,457) 44,173,497 (10,157,951) (812,713) - (10,970,664) (2,014,219) (231,357) 64,730 (2,1 80,846) (12,172,170) (1,044,070) 64,730 (13,151,510) 28,138,848 2,947,866 (64,727) 31,021,987 $ 29,286,194 $ 3,427,178 $ (839,967) $ 31,873,405 0 . CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 4: CAPITAL ASSETS (CONTINUED) Depreciation expense was charged to functions /programs of the primary government as follows: IGovernmental Activities General government $ 120,857 Public Safety 1,339,054 Streets and Parks 72,608 Culture and Recreation 13,445 Health 9,581 TOTAL DEPRECIATION EXPENSE - GOVERNMENTAL ACTIVITIES $ 1,555,545 Business -type Activities 47 Water and Sewer $ 957,320 EMS 86,750 TOTAL DEPRECIATION EXPENSE - BUSINESS -TYPE ACTIVITIES $ 1,044,070 NOTE 5: INTERFUND BALANCES AND TRANSFERS In the fund financial statements, interfund receivables and payables consist primarily of items related to eliminating deficit cash balances in the funds pooled cash account. The com p osition of interfund balances as of September 30, 2006, is as follows: INTERFUND BALANCES RECEIVABLE FUND PAYABLE FUND AMOUNT General Fund Capital Projects $124,455 Capital Projects Water and Sewer $ 43,382 Other Governmental Funds Other Governmental Funds $ 7,609 Water and Sewer EMS $ 38,500 Water and Sewer Capital Projects $109,799 EMS Capital Projects $107,982 Balances between governmental funds and enterprise funds are eliminated in the government -wide financial statements. 47 Total Minimum Lease Payments to be Received Less Amounts Representing Executory and Uncollectibles Net Minimum Lease Payments Receivable Less Unearned Income NET INVESTMENT. IN DIRECT FINANCING LEASES $ 185,893 185,893 (15,547) $ 170,346 At September 30, 2006, minimum lease payments for each of the three (3) succeeding fiscal years are as follows: FISCAL YEAR 2007 $ 54,299 2008 56,742 2009 59,305 $ 170,346 There are no estimated residual values or contingent rentals related to the leased property. 48 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 5: INTERFUND BALANCES AND TRANSFERS (CONTINUED) INTERFUND TRANSFERS TRANSFER IN GENERAL DEBT CAPITAL FUND SERVICE PROJECTS TOTAL TRANSFER OUT Other Governmental Funds $ 19,500 $ - $ - $ 19,500 Water and Sewer - - 438,098 438,098 EMS 72,000 - 72,000 TOTALS $ 19,500 $ 72,000 $ 438,098 $ 529,598 The transfer of $438,098 from the water and sewer fund to the capital projects fund was to reimburse the fund for various projects. The remaining transfers are the result of normal transactions between funds. NOTE 6: CAPITAL LEASE RECEIVABLE During 2004 the City entered into a capital lease /purchase agreement for the sale of various water wells, water well motors and pumps, water storage tanks and all connecting lines, valves and pipes, to another local government entity. This lease was classified as direct financing lease. The following lists the components of the net investment in the lease as of September 30, 2006: Total Minimum Lease Payments to be Received Less Amounts Representing Executory and Uncollectibles Net Minimum Lease Payments Receivable Less Unearned Income NET INVESTMENT. IN DIRECT FINANCING LEASES $ 185,893 185,893 (15,547) $ 170,346 At September 30, 2006, minimum lease payments for each of the three (3) succeeding fiscal years are as follows: FISCAL YEAR 2007 $ 54,299 2008 56,742 2009 59,305 $ 170,346 There are no estimated residual values or contingent rentals related to the leased property. 48 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 7: LONG -TERM DEBT The City had the following changes in long -term debt outstanding for the year ended September 30, 2006: BALANCE BALANCE AMOUNTS 1� OUTSTANDING OUTSTANDING DUE ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, IN ONE AMOUNT RATES 2005 ISSUED RETIRED 2006 YEAR S 620,000 Governmental Activities $ 270,000 General Obligation Bonds $ 100,000 $ 1992 Series $ 100,000 1998 Series 4.37 -5.375 2006 Series - Premium 3,570,000 Total Bonds 15,000,000 Certificates of Oblioation 142,000 5.0 34.000 2001 Series 28,000 2003 Series 475,000 2004 Series $ 7,437,571 $ Discount 123,057 Total Certificates 123,057 of Obligation Tax Notes 4,045,000 2001 Notes 305,000 Capital Lease - Fire Truck OUTSTANDING OUTSTANDING DUE ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, IN ONE AMOUNT RATES 2005 ISSUED RETIRED 2006 YEAR S 620,000 TOTAL GOVERNMENTAL $ 270,000 ACTIVITIES $ 100,000 $ Business -Type Activities $ 100,000 Revenue Bonds 4.37 -5.375 2001 Series - 2005 Series 3,570,000 Unamortized Discounts 15,000,000 And Loss on Defeasance 142,000 5.0 34.000 Total Revenue Bonds 28,000 Other Debt 475,000 Public Facility Loan (HUD) $ 7,437,571 $ TOTAL BUSINESS -TYPE 123,057 ACTIVITIES OUTSTANDING OUTSTANDING DUE ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, IN ONE AMOUNT RATES 2005 ISSUED RETIRED 2006 YEAR S 620,000 5.2 -7.2% $ 270,000 $ $ 100,000 $ 170,000 $ 100,000 4,930,000 4.37 -5.375 3,775,000 - 205,000 3,570,000 215,000 15,000,000 4.0 -5.25 142,000 5.0 34.000 15,000,000 28,000 15,000,000 475,000 $ 7,437,571 $ - 123,057 $ 415,177 123,057 4,922 4,045,000 15,123,057 305,000 18,863,057 794,922 4,500,000 4.1 -6.0 3,950,000 160,000 3,790,000 170,000 3,360,000 2.0 -3.9 2,710,000 250,000 2,460,000 200,000 7,750,000 4.0 -4.7 7,590,000 280,000 7,310,000 225,000 (16.083) (894) (15,189) (893) 14,233,917 689,106 13,544,811 594,107 750,000 2.9 -4.0 160,000 - 160.,000 319,996 4.6 - 319,996 319,996 101,906 $ 18,438,917 $1 5,443,053 $1,1 54,106 $ 32,727,864 $1,490,935 5,550,000 3.4 -5.2 $ 4,245,000 $ $ 290,000 $ 3,955,000 $ 295,000 3,200,000 3 -4.0 3,200,000 100,000 3,100,000 115,000 (41.429) (10,908) (30,521) (1,823) 7,403,571 379,092 7,024,479 408,177 142,000 5.0 34.000 6,000 28,000 7,000 $ 7,437,571 $ $ 385,092 $ 7,052,479 $ 415,177 49 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 7: LONG -TERM DEBT (CONTINUED) Annual debt service requirements as of September 30, 2006, are as follows: FICC'AI YEAR GOVERNMENTAL ACTIVITIES PRINCIPAL INTEREST TOTAL BUSINESS -TYPE ACTIVITIES PRINCIPAL INTEREST TOTAL 2007 $ 1,486,906 $ 1,455,493 $ 2,942,399 $ 417,000 $ 310,269 $ 727,269 2008 1,631,593 1,384,302 3,01 5,895 422,000 294,594 716,594 2009 1,146,497 1,320,424 2,466,921 432,000 278,250 710,250 2010 1,060,000 1,270,340 2,330,340 352,000 258,438 610,438 2011 995,000 1,227,283 2,222,283 360,000 244,002 604,002 2012 -2016 6,780,000 5,370,694 12,150,694 2,060,000 970,534 3,030,534 2017-2021 7,895,000 3,722,861 1 1,61 7,861 2,180,000 451,144 2,631,144 2022 -2026 6,255,000 1,991 ,300 8,246,300 860,000 76,343 936,343 2027 -2031 5,370,000 647,081 6,017,081 - $32,619,996 $18,389,778 $51,009,774 $7,083,000 $2,883,574 $9,966,574 During the year, the City issued $15,000,000 of general obligation bonds, with the payment of the related principal and interest to be made from an annual ad valorem tax levied against all taxable property within the City. The bonds were issued to provide funds for various construction projects. In the government -wide financial statements, bond issuance costs are deferred and amortized over the life of the bonds. Bond issuance costs are reported as deferred charges. Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, tax notes, and a public facility loan. General obligation bonds, certificates of obligation, and tax notes are direct obligations of the City for which its full faith and credit are pledged, and are payable from taxes levied on all taxable property located within the City. Revenue bonds are generally payable from pledged revenues generated by the water and sewer fund. The debenture agreement for water and sewer bonds require that funds be available for 1/1 2t' of the principal and 1 /6th of the interest requirements of the next fiscal year. The City is required to accumulate a reserve fund in an amount equal to the average principal and interest on the revenue bonds. The City has purchased a surety bond through MBIA Insurance Corporation to fund the required reserve amount. There are no amounts outstanding at the end of the current fiscal year related to bonds that were considered defeased. Compensated Absences and Salary Reserves Changes in compensated absences and salary reserves for the year ended September 30, 2006, were as follows: 50 1 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 7: LONG -TERM DEBT (CONTINUED) Balance at October 1, 2005 Additions Deletions GOVERNMENTAL BUSINESS -TYPE ACTIVITIES ACTIVITIES $491,292 $131,310 191,272 55,896 (122,823) (32,828) BALANCES AT SEPTEMBER 30, 2006 $ 559,741 1 4 7 Of these balances $139,935 is due in the current year in governmental activities and $38,594 is due in the current year in business -type activities. Compensated absences and salary reserves are paid from the fund responsible for the employee's compensation. Claims and judgments are generally liquidated by the general fund. NOTE 8: RETIREMENT PLAN Plan Description The City provides pension benefits for all of its full -time employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), one of 811 currently administered by TMRS, an agent multiple- employer public employee 1 retirement system. TMRS issues a publicly available financial report that includes financial statements and required supplementary information for TMRS. That report may be obtained by writing to Texas Municipal Retirement System, Post Office Box 149153, Austin, Texas 78714. Benefits Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City- financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100 %, 150 %, or 200 %) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three (3) years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer- financed monetary credits with interest were used to purchase an annuity. Members can retire at age 60 and above with 5 or more years of service or with 20 years of service, regardless of age. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. 51 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 8: RETIREMENT PLAN (CONTINUED) Contributions The contribution rate for the employees is 5 %, and the City matching percent is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the City contribution rate is annually determined by the actuary. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined level percent of payroll necessary to satisfy the obligation of the City to each employee at the time his /her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 25 -year open amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Contributions are made monthly by both the employees and the City. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one -year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect (i.e., December 31, 2005 valuation is effective for rates beginning .January 2007). The actuarial assumptions included (a) 7% investment rate of return, (b) no projected salary increases, (c) 3.5% inflation and (d) no cost of living adjustments. The asset valuation method was determined based on amortized cost. Schedule of Actuarial Liabilities and Funding Progress Actuarial Value of Assets Actuarial Accrued Liability Percentage Funded Unfunded (Overfunded) Actuarial Accrued Liability (UAAL) Annual Covered Payroll UAAL as a Percentage of Covered Payroll ACTUARIAL VALUATION DATE DECEMBER 31, DECEMBER 31, DECEMBER 31, 2005 2004 2003 . $6,042,437 $5,122,816 $4,313,616 9,003,970 7,950,619 6,163,929 67.1% 64.4% 70.0% 2,961,533 2,827,803 1,850,313 7,662,928 6,144,053 5,985,459 38.6% 46.0% 30.9% TREND INFORMATION FOR THE RETIREMENT PLAN FOR THE EMPLOYEES OF CITY OF SCHERTZ FISCAL ANNUAL PERCENTAGE OF NET PENSION YEAR ENDING PENSION COST (APC) APC CONTRIBUTED OBLIGATION September 30, 2006 $734,436 100% - September 30, 2005 573,969 100 - September 30, 2004 418,770 100 - 52 CITY OF SCHERTZ TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 9: 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. The agreement for formation of the Texas Municipal League Intergovernmental Risk Pool provides that the pool will be self sustaining through member premiums and will be adjusted annually through an experience modifier. The City continues to carry commercial insurance for all other risks of loss including public official bond, employee dishonesty blanket bond, and underground tank pollution liability. Settled claims resulting from these risks have not exceeded coverage for each of the past three (3) years. The pooling agreement requires the pool to be self- sustaining. It is not possible to estimate the amount of any losses for which the City might be liable. The Texas Municipal League Intergovernmental Risk Pool has published its own financial report for the year ended September 30, 2006, which can be obtained from the Texas Municipal League. NOTE 10: CONTINGENT LIABILITIES Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects 1 such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of management the resolution of these matters will not have a material adverse effect on the financial condition of the City. NOTE 11: JOINT VENTURE Schertz /Seguin Local Government Corporation The corporation was created to aid, assist, and act o acquiring, constructing, maintaining, and operating jointly liable, together with the City of Seguin, for Schertz /Seguin Local Government Corporation. The refunding bonds in the amount of $59,540,000 t enlarge, and repair the corporation's utility system issuance. As of September 30, 2006, $49,940,000 n behalf of the cities of Schertz and Seguin in a water utility system. The City of Schertz is operating deficits and long -term debt of the corporation has issued revenue and revenue o provide funds to build, improve, extend, fund a reserve, and pay the costs of bond remained outstanding on the bonds and the 53 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 NOTE 11: IOINT VENTURE (CONTINUED) Schertz /Seguin Local Government Corporation (Continued) corporation has accumulated approximately $1,133,362 in unrestricted net assets. The bond resolution pledges intergovernmental contract revenues from the cities of Schertz and Seguin. Under the intergovernmental water supply contract, the cities are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service as expenses from their respective utility systems. Contributions to the corporation are reflected as "nonoperating expenses" in the water and sewer fund and totaled $1,559,547 for the year ended September 30, 2006. Separate- financial statements for the Schertz /Seguin Local Government Corporation may be obtained from the City of Seguin, Texas 78156. NOTE 12: DISCRETELY PRESENTED COMPONENT UNITS INFORMATION Condensed Statement Of Net Assets Total Assets Total Liabilities TOTAL NET ASSETS, UNRESTRICTED Condensed Statement Of Activities Total Expenses Program Revenues Charges for Services Operating Grants and Contributions Net Program (Expense) Revenue General Revenues Sales Tax Unrestricted Investment Earnings Total General Revenues Change in Net Assets Net Assets, Beginning NET ASSETS, ENDING SCHERTZ ECONOMIC SCHERTZ DEVELOPMENT THE DEVELOPMENT CORPORATION LIBRARY FOUNDATION TOTAL $ 1,521,528 $ 30,020 $ 106,471 $ 1,658,019 44,348 34 - 44,382 $ 1;477,180 $ 29,986 $ 106,471 $ 1,613,637 $ 1,072,281 $ 4,552 $ $ 1,076,833 - 1,803 - 1,803 - 6,780 - 6,780 (1,072,281) 4,031 (1,068,250) 1,567,990 - 1,567,990 50,810 1,340 4,346 56,496 1,61 8,800 1,340 4,346 1,624,486 546,519 5,371 4,346 556,236 930,661 24,615 102,125 1,057,401 $ 1,477,180 $ 29,986 $ 106,471 $ 1,613,637 54 REQUIRED SUPPLEMENTARY INFORMATION 1 [l 55 Charges for Services Administration CITY OF SCHERTZ, TEXAS 407,519 408,792 1,273 Swimming Pool GENERAL FUND 54,500 27,265 (27,235) SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES:: 28,020 30,020 BUDGET AND ACTUAL 14,158 Building Rental 12,000 12,500 YEAR ENDED SEPTEMBER 30, 2006 8,858 Library and Fire 307,456 1,307,469 1,314,593 7,124 Other VARIANCE 5,150 4,754 (396) Total Charges for Services WITH FINAL 1,817,158 1,820,940 3,782 Fines and Forfeitures BUDGET 1,022,995 ORIGINAL FINAL Grants POSITIVE 56,200 BUDGET BUDGET ACTUAL (NEGATIVE) REVENUES 330,931 (7,475) Planning and Zoning 269,805 Taxes 264,318 5,487 Legal 187,500 Ad Valorem $ 4,087,325 $ 4,087,325 $ 4,279,328 $ 192,003 Tax Penalty 25,000 25,000 38,589 13,589 City Sales Tax 2,300,000 2,800,000 3,136,970 336,970 Utility Franchise 740,000 869,000 961,462 92,462 Other 10,700 13,700 25,192 11,492 Total Taxes 7,163,025 7,795,025 8,441,541 646,516 Licenses and Permits 1,001,400 1,140,250 1,389,475 249,225 Charges for Services Administration 407,519 407,519 408,792 1,273 Swimming Pool 54,500 54,500 27,265 (27,235) Animal Shelter 28,020 30,020 44,178 14,158 Building Rental 12,000 12,500 21,358 8,858 Library and Fire 307,456 1,307,469 1,314,593 7,124 Other 5,150 5,150 4,754 (396) Total Charges for Services 814,645 1,817,158 1,820,940 3,782 Fines and Forfeitures 1,018,250 1,022,995 1,043,875 20,880 Grants 24,600 56,200 9,705 9,705 Other Revenue Interest 146,000 209,000 389,441 180,441 Sale of Merchandise 10,030 10,000 659 (9,341) Miscellaneous 132,100 132,100 134,001 1,901 Total Other Revenue 288,130 351,100 524,101 173,001 Total Revenues 10,285,450 12,126,528 13,229,637 1,103,109 EXPENDITURES Current General Government City Council 24,600 56,200 46,360 9,840 City Manager 323,456 323,456 330,931 (7,475) Planning and Zoning 269,805 269,805 264,318 5,487 Legal 187,500 187,500 244,446 (56,946) Municipal Court 394,772 401,240 419,079 (17,839) (continued) 56 1 0 i 1 1 1 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2006 EXPENDITURES (CONTINUED) Current (Continued) General Government (Continued) Facility Maintenance City Secretary Finance Information Technology Human Resources Records Management Fleet Services Special Events Public Information Other - Unclassified Total General Government Public Safety Police Department Fire Department Inspection Total Public Safety Streets and Parks Streets Parks Total Streets and Parks Health Animal Control Culture and Recreation Library APITAL OUTLAY Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Capital Lease Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE AT OCTOBER 1. 2005 FUND BALANCE AT SEPTEMBER 30, 2006 S 7,435,264 57 VARIANCE WITH FINAL BUDGET ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) $ 391,976 S 469,191 $ 430,227 $ 38,964 112,316 113,216 120,279 (7,063) 254,923 260,442 238,092 22,350 429,981 429,981 391,953 38,028 150,549 150,549 125,699 24,850 102,871 105,853 111,483 (5,630) 207,864 217,864 231,811 (13,947) 43,900 48,400 31,131 17,269 82,602 83,202 70,785 12,417 607,068 649,768 647,838 1,930 3,584,183 3,766,667 3,704,432 62,235 2,940,405 2,940,405 2,851,191 89,214 1,741,043 1,766,183 1,828,872 (62,689) 350,438 350,438 340,621 9,817 5,031,886 5,057,026 5,020,684 36,342 649,965 649,965 575,035 74,930 574,738 592,066 587,506 4,560 1,224, 703 1,242,031 1,162, 541 79,490 229,388 231,988 216,655 15,333 388,152 388,152 384,127 4,025 162,105 302,105 520,648 (218,543) 10,620,417 10,987,969 11,009,087 (21,118) (334,967) 1,138,559 2,220,550 1,081,991 42,000 46,500 19,500 (27,000) 319,996 319,996 42,000 46,500 339,496 292,996 $ (292,967) S 1,185,059 2,560,046 S 1,374,987 4,875,218 S 7,435,264 57 CITY OF SCHERTZ, TEXAS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2006 NOTE 1: BUDGETARY INFORMATION The budget for the general fund is adopted on a basis consistent with generally accepted accounting principles. Annual appropriations lapse at fiscal year end. The original budget for the general fund is adopted by the city council by September 30. Budgetary preparation and control is exercised at the department level. The city manager is authorized to transfer budget amounts between line items within a department; however, any transfer or supplemental appropriation that amends the total expenditures of a department or total budget requires city council approval. Both the original and final amended budget are included. NOTE 2: EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2006, expenditures exceeded appropriations in the city manager, legal, municipal court, city secretary, records management, fleet services, and fire departments and capital outlay of the general fund by $7,475, $56,946, $17,839, $7,063, $5,630, $13,947, $62,689 and $218,543, respectively. These overexpenditures were funded by greater than anticipated revenues in the general fund. F -I 1 1 t 1 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 59 (This Page Intentionally Left Blank) .E i NONMAJOR GOVERNMENTAL FUNDS Nonmajor Governmental Funds (Special Revenue Funds) are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specified purposes. r 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. Recycling Fund - will account for revenues received from the recycling fee on all residential water ibills and the sale of recyclable material and used to buy down solid waste collection costs. Hotel Occupancy Tax Fund - will account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. Library Grant Fund - will account for funds from a state grant to be used for purchasing computers at the library to be used for access to the internet. Police Department Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies. ri 61 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAIOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2006 ASSETS Cash and Cash Equivalents Investments Accounts Receivable Due from Other Funds TOTAL ASSETS LIABILITIES Accounts Payable Due to Other Funds Total Liabilities FUND BALANCES Reserved for Tree Mitigation Unreserved Total Fund Balances TOTAL LIABILITIES AND FUND BALANCE PARK RECYCLING SPECIAL REVENUE HOTEL OCCUPANCY TAX $ 60,699 $ 5,124 $ 52,508 469,564 308,070 - 18,245 - 7,609 - $ 530,263 $ 12,733 $ 378,823 $ 7,571 $ $ - 7,571 343,091 - - 179,601 12,733 378,823 522,692 12,733 378,823 $ 530,263 $ 12,733 $ 378,823 M 1 i 1 1 1 1 1 1 1 1 1 i 1 FUNDS POLICE TOTAL LIBRARY DEPARTMENT OTHER GRANT FORFEITURES GOVERNMENTAL FUND FUND FUNDS $ 6,275 $ - $ 124,606 - 301,482 1,079,1 16 - - 18,245 - 7,609 $ 6,275 $ 301,482 $ 11229,576 $ - $ - $ 7,571 - 7,609 7,609 7,609 1 5,1 80 6,275 6,275 $ 6,275 293,873 293,873 $ 301,482 343,091 871,305 1,214,396 $ 11229,576 63 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES NONMAIOR GOVERNMENTAL FUNDS YEAR ENDED SEPTEMBER 30, 2006 SPECIAL REVENUE HOTEL PARK RECYCLING OCCUPANCY FUND FUND TAX REVENUES Taxes $ - $ Developer Fees 86,144 Grants - Property Forfeitures - - Sale of Recycling /Materials - 13,715 Miscellaneous Revenue 10,000 - Interest 22,900 - Total Revenues 119,044 13,715 EXPENDITURES General and Administrative 42,908 Contractual Services - Capital Outlay 13,986 Total Expenditures 56,894 Excess (Deficiency) of Revenues Over (Under) Expenditures 62,150 OTHER FINANCING SOURCES (USES) Transfer Out Net Change in Fund Balance 62,150 FUND BALANCES AT OCTOBER 1, 2005 460,542 FUND BALANCES AT SEPTEMBER 30, 2006 $ 522,692 10,991 $ 202,108 11,262 213,370 2,000 1,000 i v,yy i D,vvv 2,724 2,724 10,009 $ 12,733 210,370 (19,500) 190,870 187,953 $ 378,823 FUNDS POLICE TOTAL LIBRARY DEPARTMENT OTHER GRANT FORFEITURES GOVERNMENTAL FUND FUND FUNDS $ $ - $ 202,108 - - 86,144 9,573 - 9,573 - 113,605 113,605 - 13,715 - - 10,000 - 15,951 50,113 9,573 129,556 485,258 4,000 41,233 90,141 - - 11,991 - 121,662 135,648 4,000 162,895 237,780 5,573 (33,339) 247,478 - (19,500) 5,573 (33,339) 227,978 702 327,212 986,418 $ 6,275 $ 293,873 $ 1,214,396 65 REVENUES Developer Fees Tree Mitigation Miscellaneous Revenue Interest Income Total Revenues EXPENDITURES General and Administrative Capital Outlay Total Expenditures Net Change in Fund Balance FUND BALANCE AT OCTOBER 1, 2005 FUND BALANCE AT SEPTEMBER 30, 2006 460;542 $ 522,692 M. VARIANCE WITH FINAL BUDGET ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) $ 117,000 $ 117,000 $ 59,400 $ (57,600) 462,400 30,000 26,744 (3,256) - 10,000 10,000 7,000 15,000 22,900 7,900 586,400 162,000 119,044 (42,956) 100,000 100,000 42,908 57,092 58,000 58,000 13,986 44,014 158,000 158,000 56,894 101,106 $ 428,400 $ 4,000 62,150 $ 58,150 460;542 $ 522,692 M. REVENUES Sale of Recycling Materials EXPENDITURES Contractual Services Net Change in Fund Balance FUND BALANCE AT OCTOBER 1, 2005 FUND BALANCE AT SEPTEMBER 30, 2006 1 1 1 1 1 1 I 1 1 1 1 ORIGINAL VARIANCE WITH AND FINAL BUDGET FINAL POSITIVE BUDGET ACTUAL (NEGATIVE) $ 20,000 $ 13,715 (6,285) 20,000 10,991 9,009 $ - 2,724 $ . 2,724 10,009 $ 12,733 67 CITY OF SCHERTZ, TEXAS HOTEL OCCUPANCY TAX SPECIAL REVENUE FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET TO ACTUAL YEAR ENDED SEPTEMBER 30, 2006 REVENUES ' Occupancy Tax Interest Income Total Revenues EXPENDITURES General and Administrative Contractual Services Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCIAL SOURCES (USES) Transfer Out Net Change in Fund Balance FUND BALANCE AT OCTOBER 1, 2005 FUND BALANCE AT SEPTEMBER 30, 2006 187,953 $ 378,823 .: VARIANCE WITH FINAL BUDGET ORIGINAL FINAL POSITIVE BUDGET BUDGET ACTUAL (NEGATIVE) $ 37,500 $ 123,000 $ 202,108 $ 79,108 5,600 8,600 11,262 2,662 43,100 131,600 213,370 81,770 21,500 21,500 2,000 19,500 1,000 36,000 1,000 35,000 29,750 29,750 - 29,750 52,250 87,250 3,000 84,250 (9,150) 44,350 210,370 166,020 (5,600) (19,500) (13,900) $ 382750 190,870 $ 152,120 187,953 $ 378,823 .: 1 CITY OF SCHERTZ TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET TO ACTUAL YEAR ENDED SEPTEMBER 30, 2006 REVENUES Taxes Interest Income Total Revenues EXPENDITURES Debt Service Bond Principal Bond Interest Fiscal Agent Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES Transfer In Net Change in Fund Balance FUND BALANCE AT OCTOBER 1. 2005 FUND BALANCE AT SEPTEMBER 30, 2006 ORIGINAL 1,155,000 VARIANCE WITH AND 800,530 FINAL BUDGET. FINAL 3,134 POSITIVE BUDGET ACTUAL (NEGATIVE) $ 1,247,644 $1,943,615 $ 695,971 10,800 27,048 16,248 1,258,444 1,970,663 712,219 790,000 1,155,000 (365,000) 617,644 800,530 (182,886) 5,000 3,134 1,866 1,412,644 1,958,664 (546,020) (154,200) 11,999 166,199 65,750 72,000 6,250 $ (88,450) 83,999 $ 172,449 263,740 $ 347,739 .• (This Page Intentionally Left Blank) Fill L L DISCRETELY PRESENTED COMPONENT UNITS Discretely presented component units consist of separate entities whose governing bodies are not substantively the same as the governing body of the primary government. The discretely presented component units also provide services to areas other than the primary government. 71 CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF NET ASSETS SEPTEMBER 30, 2006 ASSETS CURRENT ASSETS Cash and Cash Equivalents Investments Accounts Receivable TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts Payable Accrued Salaries and Benefits TOTAL LIABILITIES NET ASSETS Unrestricted SCHERTZ ECONOMIC SCHERTZ DEVELOPMENT THE DEVELOPMENT CORPORATION LIBRARY FOUNDATION TOTAL $ 86,025 $ 7,258 $ 106,471 $ 199,754 1,297,664 22,762 - 1,320,426 137,839 - - 137,839 1,521,528 30,020 106,471 1,658,019 29,428 34 - 29,462 14,920 - 14,920 44,348 34 44,382 $ 1,477,180 $ 29,986 $ 106,471 $ 1,613,637 CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2006 EXPENSES Culture and Recreation Economic Development Total Expenses Program Revenues Charges for Services Operating Grants and Contributions Net Program (Expense) Revenue General Revenues Sales Tax Unrestricted Investment Earnings Total General Revenues Change in Net Assets Net Assets, Beginning NET ASSETS, ENDING SCHERTZ ECONOMIC DEVELOPMENT CORPORATION SCHERTZ THE DEVELOPMENT LIBRARY FOUNDATION TOTAL $ - $ 4,552 $ $ 4,552 1,072,281 - 1,072,281 1,072,281 4,552 1,076,833 - 1,803 1,803 - 6,780 6,780 (1,072,281 4,031 (1,068,250) 1,567,990 - - 1,567,990 50,810 1,340 4,346 56,496 1,618,800 1,340 4,346 1,624,486 546,519 5,371 4,346 556,236 930,661 24,615 102,125 1,057,401 $ 1,477,180 $ 29,986 $ 106,471 $ 1,613,637 73 (This Page Intentionally Left Blank) 74 0 f 1 1 1 1 1 i u f STATISTICAL SECTION This part of the City of Schertz's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Financial Trends These schedules contain trend information to help readers understand how the City's financial performance and well -being have changed over time. Revenue Capacity These schedules contain information to help readers assess the City's most significant local revenue source - its property tax. Debt Capacity These schedules present information to help readers 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 These schedules offer demographic and economic indicators to help readers understand the environment within which the City's financial activities take place. operating Information These schedules contain service and infrastructure data to help readers understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedules 1 through 4 5 through 8 9 through 13 14 through 15 16 through 18 Except where noted, the information in these schedules is derived from the City of Schertz comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government -wide information include information beginning that year. 75 (This Page Intentionally Left Blank) 76 CITY OF SCHERTZ, TEXAS NET ASSETS, BY COMPONENT LAST FOUR FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Governmental Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted TOTAL GOVERNMENTAL ACTIVITIES NET ASSETS Business -Type Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted TOTAL BUSINESS -TYPE ACTIVITES NET ASSETS Primary Government Invested in Capital Assets, Net of Related Debt Restricted Unrestricted TOTAL PRIMARY GOVERNMENT NET ASSETS 2006 2005 2004 TABLE 1 2003 $ 13,257,031 $ 17,699,797 $ 1.6,228,134 $ 11,380,173 15,888,549 4,813,496 7,037,607 491,313 8,759,630 6.957,173 985.750 7.448,061 $ 24,783,839 $ 24,970,976 $ 22,901,982 $ 21,806,626 1,253,711 428,712 1,010,662 1,384,083 9,879,126 5,377,968 3,988,006 5,294,283 $ 35,916,676 $ 302777,656 $ 27,900,650 $ 28,484,992 $ 38,040,870 $ 42,670,773 $ 39,130,116 $ 33,186,799 17,142,260 5,242,208 8,048,269 1,875,396 18,638,756 12,335,141 4,973,756 12,742,344 $ 73,821 ,886 $ 60,248,1 22 $ 52,1 52,141 $ 47,804,539 NOTE: Less than ten (10) years of data has been presented because this is the fourth year of implementation of GASB 34. The information will be presented on a prospective basis. 77 CITY OF SCHERTZ, TEXAS CHANGE IN NET ASSETS LAST FOUR FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) TABLE 2 2006 2005 2004 2003 EXPENSES Governmental Activities General Government Public Safety Streets and Parks Health Culture and Recreation Interest and Other Fees Total Governmental Activities Business -Type Activities Water and Sewer EMS Total Business -Type Activities Total Primary Government Expenses PROGRAM REVENUES Governmental Activities Charges for Service General Government Public Safety Streets and Parks Health Culture and Recreation Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities 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 $ 3,957,693 $ 3,612,084 $ 2,873,573 $ 2,630,450 6,403,122 5,558,596 4,586,498 3,705,722 1,240,956 1,134,281 1,019,101 1,182,993 231,149 221,950 192,506 156,927 396,078 339,124 310,013 451,215 823,818 862,744 707,090 499,011 13,052,816 11,728,779 9,688,781 8,626,318 5,382,779 3,808,133 2,153,213 - 9,821 ,823 8,937,553 8,302,505 8,300,590 3,474,249 3,789,791 2,509,858 2,248,651 13,296,072 12,727,344 10,812,363 10,549,241 26,348,888 24,456,123 20,501,144 19,175,559 1,310,142 1,575,236 1,381,802 1,461,361 1,684,786 1,475,618 1,118,241 1,033,713 143,254 141,523 203,579 34,248 44,178 44,611 36,095 117,983 149,225 146,429 180,707 155,644 1,567,164 1,789,763 2,280,629 2,788,821 5,382,779 3,808,133 2,153,213 - 10,281,528 8,981,313 7,354,266 5,591,770 11,223,658 9,308,362 7,534,841 8,135,299 3,904,818 3,443,429 1,723,611 2,014,126 3,148,100 2,055,366 1,045,334 279,913 18,276,576 14,807,1 57 10,303,786 10,429,338 28,558,104 23,788,470 17,658,052 16,021,108 78 f CITY OF SCHERTZ, TEXAS CHANGES IN NET ASSETS LAST FOUR FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Net (Expense) Revenues Governmental Activities Business -Type Activities TOTAL PRIMARY GOVERNMENT NET EXPENSES GOVERNMENTAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental Activities Taxes Ad Valorem Sales Utility Franchise Hotel /Motel Bingo Mixed Drink Unrestricted Investment Earnings Miscellaneous Transfers Total Governmental Activities Business -Type Activities Interest and Investment Earnings Miscellaneous Special Item -Gain on Sale of Capital Asset Transfers Total Business -Type Activities TOTAL PRIMARY GOVERNMENT CHANGES IN NET ASSETS Governmental Activities Business -Type Activities TOTAL PRIMARY GOVERNMENT TABLE 2 2006 2005 2004 2003 $ (2,771,288) $(2,747,466) $(2,334,515) $ (3,034,548) 4,980,504 2,079,813 (508,577) (119,903) 2,209,216 (667,653) (2,843,092) (3,154,451) 5,705,805 4,908,108 4,410,567 3,984,262 3,136,970 2,227,282 1,703,994 2,035,655 961,462 786,298 659,847 671,009 202,108 42,982 37,688 43,177 5,124 4,946 4,749 4,528 20,068 6;437 5,064 4,243 552,091 356,080 114,323 93,690 112,306 83,337 58,770 16,028 510,098 199,123 584,733 410,802 11,206,032 8,614,593 7,579,735 7,263,394 473,20.5 170,610 61,025 94,731 195,409 177,554 120,043 158,372 - - 327,900 - (510,098) (199,123) (584,733) (410,802) 158,516 149,041 (75,765) (157,699) 11,364,548 8,763,634 7,503,970 7,105,695 8,434,744 5,867,127 5,245,220 4,228,846 5,139,020 2,228,854 (584,342) (277,602) . NOTE: Less than ten (10) years of data has been presented' because this is the fourth year of Iimplementation of GASB 34. The information will be presented on a prospective basis. 79 CITY OF SCHERTZ, TEXAS FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) GENERAL FUND Reserved Unreserved TOTAL GENERAL FUND ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved, Reported In: Special Revenue Funds Debt Service Fund Capital Project Funds TOTAL ALL OTHER GOVERNMENTAL FUNDS $16,696,949 $6,385,992 $10,002,033 $2,368,712 A FISCAL 2006 2005 2004 2003 $ 232,555 $ 10,571 $ 65,551 $ 7,202,709 4,864,647 4,319,428 5,499,836 $ 7,435,264 $4,875,218 $ 4,384,979 $5,499,836 $ 690,830 $ 590,007 $ 414,357 $ 491,313 871,305 660,151 794,729 665,281 15,134,814 5,135,834 8,792,947 1,212,118 $16,696,949 $6,385,992 $10,002,033 $2,368,712 A TABLE 3 YEAR ENDED SEPTEMBER 30, 2002 2001 2000 1999 1998 1997 $ 122,355 $ 163,210 $ 58,232 $ 36,066 $ 58,715 $ 53,656 2,863,146 3,260,866 3,015,959 2,606,701 2,652,300 1,985,072 $2,985,501 $3,424,076 $3,074,191 $2,642,767 $2,711,015 $2,038,728 $ 299,074 $ 156,200 $ 105,019 $ 170,444 $ 171,987 $ - 740,647 886,961 659,930 533,291 450,018 215,764 - - - - - (29,591) 1,939,678 4,632,762 1,087,077 2,077,276 4,779,428 515,582 1 $2979,399 $ 5;675,923 $1,852,026 $21781%011 $ 5,401,433 $ 701,755 I 81 CITY OF SCHERTZ, TEXAS CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) REVENUES Taxes Licenses and Permits Charges for Services Fines and Forfeitures Grants Other Revenue Total Revenue EXPENDITURES General Government Public Safety Streets and Parks Health Culture and Recreation Economic Development Management Services 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 Issued Premium on Bond Issue Discount on Bond Issue Tax Notes Issued Capital Lease Transfers In Transfers Out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES Debt Service as a Percentage of Noncapital Expenditures 2006 2005 2004 2003 $ 10,587,264 $ 8,569,435 $ 7,322,727 $ 6,747,330 1,475,619 1,421,575 852,577 941,515 1,820,940 872,286 793,096 944,506 1,157,480 915,704 842,322 646,613 19,278 956,791 1 ,710,277 2,003,743 710,580 659,430 490,266 287,865 6,127,735 4,360,483 3,827,879 15,771,161 13,395,221 12,01 1,265 11,571,572 3,817,778 3,471,560 2,772,024 2,554,675 5,020,684 4,542,384 3,833,243 3,530,470 1,162,541 1,043,501 942,942 675,687 216,655 208,499 181,074 156,927 384,127 325,498 298,179 415,834 6,127,735 4,360,483 3,827,879 4,767,695 1,1 55,000 1,236,000 1,233,000 783,000 803,664 884,069 609,522 508,166 165,125 - 111,802 46,272 $ 1,903,648 15.4% 18.1% 18,853,309 16,071,994 13,809,665 13,438,726 (3,082,148) (2,676,773) (1,798,400) (1,867,154) 15,000,000 - 7,750,000 3,360,000 123,057 (17,869) 319,996 - 529,598 583,126 2,275,896 467,502 (19,500) (384,003) (1,691,163) (56,700) 15,953,151 199,123 8,316,864 3,770,802 $ 12,871,003 $ (2,477,650) $ 6,518,464 $ 1,903,648 15.4% 18.1% 18.5% 14.9% 82 TABLE 4 2002 2001 2000 1999 1998 1997 $ 5,305,902 $ 4,452,964 $4,088,491 $ 3,671,516 $ 3,168,926 $2,698,175 663,682 620,652 731,488 680,316 610,943 546,159 883,126 659,145 626,464 558,904 472,366 452,890 538,831 749,201 444,331 379,584 343,943 331,244 45,362 186,382 280,026 - - - 877,544 368,260 422,700 1,292,198 837,917 270,131 8,314,447 7,036,604 6,593,500 6,582,518 5,434,095 4,298,599 2,735,142 1,792,396 1,558,650 1,307,488 1,067,448 976,032 2,963,924 2,561,055 2,212,924 2,061,488 1,853,782 1,472,534 689,150 627,110 793,700 806,029 408,461 405,713 120,530 175,048 155,814 142,287 127,065 102,293 328,404 270,437 259,848 274,865 260,004 226,655 - - 279,058 268,770 122,278 98,683 83,273 - - - 4,079,385 1,688,451 1,835,461 4,244,176 673,242 168,530 937,000 257,410 365,820 338,770 179,000 215,000 511,811 280,774 302,111 326,950 255,923 94,387 - - - - 53,943 12,365,346 7,751,364 7,567,601 9,781,111 5,147,638 3,783,422 (4,050,899) (714,760) (974,101) (3,198,593) 286,457 515,177 - 4,500,000 - - 4,930,000 400,000 551,720 388,542 598,405 1,089,936 625,450 266,786 (31,156) - (218,386) (686,032) (469,942) (226,534) 920,564 4,888,542 380,019 403,904 5,085,508 40,252 $ (3,1 30,335) $ 4,173,782 $ (594,082) $ (2,794,689) $ 5,371,965 $ 555,429 17.5% 8.9% 11.7% 12.0% 9.7% 8.6% 83 CITY OF SCHERTZ, TEXAS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS TABLE 5 FISCAL YEAR ENDED SEPTEMBER 30, 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 TOTAL TAXABLE ASSESSED VALUE TOTAL DIRECT TAX RATE $ 1,397,297,729 0.3977 1,292,1 56,383 0.3760 1,139,992,1 57 0.3825 1,024,412,713 0.3825 827,142„321 0.3825 731,3051433 0.3405 636,1 57,284 0.3455 534,039,183 0.3544 450,199,212 0.3554 378,784,051 0.3719 Source: Guadalupe County Tax Office 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. CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS TABLE 6 CITY DIRECT RATES OVERLAPPING RATES SCHERTZ- CIBOLO- FISCAL BASIC DEBT UNIVERSAL GUADALUPE COUNTY YEAR RATE SERVICE CITY ISD COUNTY ROAD 2006 0.3005 % 0.0972 % 1.7200% 0.3481 % 0.0500 % 2005 0.2888 0.0872 1.7200 0.3531 0.0500 2004 0.2946 0.0879 1.7800 0.3654 0.0477 2003 0.3091 0.0734 1.7300 0.3668 0.0463 2002 0.3208 0.0617 1.7100 0.3499 0.0420 2001 0.3147 0.0258 1.6267 0.3193 0.0630 2000 0.3151 0.0304 1.4945 0.3417 0.0582 1999 0.3169 0.0375 1.6923 0.3192 0.0600 1998 0.3049 0.0505 1.4299. 0.3040 0.0730 1997 0.3117 0.0602 1.4089 0.2997 0.0758 Source: Guadalupe County Tax Office NOTE: 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. 85 TAXPAYERS Wal -Mart Stores San Antonio MTA, LP /LTD Block Distributing, Inc. Sprint Spectrum, LP H.E.B. Grocery Co. Eye Care Centers of America, Inc. Schertz Holdings Continental Homes of Texas Atlantic Financial Group, Ltd. C &W Ranches, LTD Eric W. White PSPI, Inc. Negley Paint Co., Inc. American Freightways Corp. Sycamore Creek Partners Garden Ridge Pottery Guadalupe Valley Electric Corp. Riedel Family Partners, Ltd. CMH Parks, Inc. Southwestern Bell Telephone Co. TOTAL CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO TABLE 7 Source: Guadalupe County Tax Office M. 2005 1996 PERCENTAGE OF PERCENTAGE OF TOTAL CITY TOTAL CITY TAXABLE TAXABLE TAXABLE TAXABLE ASSESSED ASSESSED ASSESSED ASSESSED VALUE RANK VALUE VALUE RANK VALUE $ 22,157,131 1 1.59% $ 22,035,190 2 1.58% 21,046,310 3 1.51% 20,561,520 4 1.47% 11,170,748 5 0.80% 11,081,946 6 0.79% 10,768,828 7 0.77% 10,596,397 8 0.76% 8,387,937 9 0.60% 8,230,078 10 0.59% - 5,720,267 1 1.51% 4,597,492 2 1.21% 3,599,250 3 0.95% 3,424,614 4 0.90% 3,359,231 5 0.89% 3,059,174 6 0.81% 2,453,730 7 0.65% 2,403,202 8 0.63% 2,289,493 9 0.60% 2,023,510 10 0.53% $ 146,036,085 10.45% $ 32,929,963 8.69% Source: Guadalupe County Tax Office M. 1 1 1 1 1 1 1 1 1 1 1 I 1 1 i 1 1 CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS Source: Guadalupe County Tax Office 87 LAST TEN FISCAL YEARS TABLE 8 FISCAL COLLECTED WITHIN THE YEAR TAXES LEVIED FISCAL YEAR OF THE LEVY COLLECTIONS TOTAL COLLECTIONS TO DATE ENDED FOR THE PERCENTAGE IN SUBSEQUENT PERCENTAGE SEPTEMBER 30, FISCAL YEAR AMOUNT OF LEVY YEARS AMOUNT OF LEVY 2006 $5,645,611 $5,576,55.9 98.78% n/a $5,576,188 98.77% 2005 4,858,508 4,796,062 98.71% 38,684 4,834,746 99.51% 2004 4,360,470 4,252,349 97.52% 81,521 4,333,870 99.39% 2003 3,918,379 3,881,204 99.05% 27,492 3,908,696 99.75% 2002 3,163,819 3,107,209 98.21% 44,396 3,151,605 99.61% 2001 2,490,095 2,459,900 98.79% 26,354 2,486,254 99.85% 2000 2,198,381 2,153,542 97.96% 41,888 2,195,430 99.87% 1999 1,892,640 1,869,557 98.78% 17,095 1,886,652 99.68% 1998 1,600,008 1,565,295 97.83% 32,574 1,597,869 99.87% 1997 1,408,699 1,384,497 98.28% 22,273 1,406,770 99.86% Source: Guadalupe County Tax Office 87 (This Page Intentionally Left Blank) : Note: a Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. b The City issued $15,000,000 of new general obligation bonds in 2006. c See Table 14 for personal income and population data for the City. These ratios are calculated using personal income and population for the prior calendar year. CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS TABLE 9 Governmental Activities a Business -type Activities a General Certificates Public Certificates Total Percentage Fiscal Obligation of Tax Capital Revenue Facility Refunding of Note Primary Government of Personal Income Per c Capita c Year Bonds b Obligations Notes Lease Bonds Loan Bonds Obligations Payable 2006 $ 18,740,000 $13,560,000 $ - $ 319,996 $ 7,055,000 $ 28,000 $ $ $ $ 39,702,996 25,934,000 1.56% 1..35% $1,262 968 2005 4,045,000 14,250,000 160,000 - 7,445,000 34,000 4,625,000 40,000 64,000 24,420,000 2.43% 923 2004 2003 4,456,000 4,844,000 14,785,000 7,600,000 450,000 730,000 4,990,000 46,000 126,000 - 18,336,000 2.01% 764 2002 5,222,000 4,375,000 1,000,000 5,275,000 52,000 193,000 60,000 120,000 34,564 16,177,000 15,686,564 1.93% 1.95% 703 713 2001 5,129,000 4,585,000 - 5,550,000 57,000 785,000 62,000 211,000 543,590 130,000 66,670 7,058,670 1.19% 378 2000 1999 5,321,410 5,622,230 150,000 215,000 820,000 67,000 741,770 140,000 96,491 7,702,491 2.59% 428 475 1998 5,901,000 275,000 900,000 72,000 896,000 150,000 160,000 124,191 149,920 8,318,191 3,845,920 2.88% 1.89% 256 1997 1,095,000 330,000 955,000 76,000 1,080,000 Note: a Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. b The City issued $15,000,000 of new general obligation bonds in 2006. c See Table 14 for personal income and population data for the City. These ratios are calculated using personal income and population for the prior calendar year. CITY OF SCHERTZ, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS TABLE 10 NOTE: Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. See Table 5 for the City's property tax value data. City population data can be found in Table 14. a GENERAL BONDED DEBT OUSTANDING PERCENTAGE OF GENERAL CERTIFICATES ACTUAL TAXABLE FISCAL OBLIGATION OF TAX VALUE OF PER YEAR BONDS OBLIGATION NOTES TOTAL PROPERTY CAPITA 2006 $ 18,740,000 $ 13,560,000 $ - $ 32,300,000 2.31% $ 1,026.96 2005 4,045,000 14,250,000 160,000 18,455,000 1.43% 689.13 2004 4,456,000 14,785,000 450,000 19,691,000 1.73% 744.10 2003 4,844,000 7,600,000 730,000 13,174,000 1.29% 548.92 2002 5,222,000 4,375,000 1,000,000 10,597,000 1.28% 460.74 2001 5,129,000 4,585,000 - 9,714,000 1.33% 441.55 2000 5,321,410 150,000 - 5,471,410 0.86% 292.68 1999 5,622,230 215,000 - 5,837,230 1.09% 324.29 1998 5,901,000 275,000 - 6,176,000 1.37% 352.91 1997 1,095,000 330,000 -. 1,425,000 0.38% 95.00 NOTE: Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. See Table 5 for the City's property tax value data. City population data can be found in Table 14. a 1 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 91 AS OF SEPTEMBER 30, 2006 TABLE 1 1 ESTIMATED 1 ESTIMATED SHARE OF DEBT PERCENTAGE OVERLAPPING GOVERNMENTAL UNIT OUTSTANDING APPLICABLE DEBT Debt Repaid with Property Taxes Bexar County $149,300,446 2.06% $ 3,075,589 Coma[ County 5,915,000 1.99% 117,709 Comal Independent School District 275,709,920 0.12% 330,852 Guadalupe County 12,320,000 20.37% 2,509,584 Schertz - Cibolo- Universal City Independent School District 210,21 5,81 3 51.88% 109,059,964 San Antonio River Authority 52,180,000 2.06% 1,074,908 Alamo Community College District 165,053,778 2.06% 3,400,108 Other Debt Bexar County Capital Leases 2,850,802 2.06 % - 58,727 Bexar County Notes Payable 4,000,000 2 06% 82,400 San Antonio River Authority Capital Leases 538,958 2.06% 11,103 Subtotal, overlapping debt 119,720,942 City governmental activities direct debt 32,619,996 TOTAL NET OVERLAPPING DEBT $152,340, 38 I NOTES: The overlapping debt was received from the Municipal Advisory Council of Texas. Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. Il 1 � 91 1 (This Page Intentionally Left Blank) 92 , Assessed Value, 2005 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: Bonded Debt - General Obligation Bonds Less Net Assets in Debt Service Fund DEBT MARGIN Total Net Debt as a Percentage of CITY OF SCHERTZ. TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS $ 1,397,297,729 $ 139,729,773 18,740,000 (347,739) 18,392,261 $ 121,337,512 Debt Margin 13.16% Assessed Value Debt Margin Total Applicable Debt, net Total Debt Margin Total Net Debt as a Percentage of Debt Margin w TABLE 12 2003 FISCAL YEAR 2002 2001 2000 1999 1998 1997 2005 2004 $1,292,156,383 $1,139,992,157 11,024,412,713 $ 827,142,321 $731,305,433 $636,157,284 $534,039,183 $450,199,212 1378,784,051 $ 129,215,638 $ 113,999,216 $ 102,441,271 $ 82,714,232 $ 73,130,543 $ 63,615,728 $ 53,403,918 5,183,556 $ 45,019,921 5,405,013 $ 37,878,405 754,591 3,781,530 4,208,707 4,520,834 4,922,926 4,972,800 $ 68,157,743 5,216,391 $ 58,399,337 $ 48,220,362 L 39,614,908 $ 37,123,814 $ 125,434,108 $ 109,790,509 $ 97,9201437 $ 77,791,306 2.93% 3.69% 4.41% 5.95% 6.80% 8.20% 9.71% 12.01% 1.99% CITY OF SCHERTZ. TEXAS PLEDGED. REVENUE COVERAGE LAST TEN FISCAL YEARS TABLE 13 NOTE: Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. Operating expenses do not include depreciation, interest, amortization or joint venture expenses. 94 WATER REVENUE BONDS UTILITY LESS: NET DEBT SERVICE FISCAL SERVICE OPERATING AVAILABLE YEAR CHARGES EXPENSES REVENUE PRINCIPAL INTEREST COVERAGE 2006 $11,289,876 $6,955,000 $4,334,876 $390,000 $354,965 5.82 2005 9,381,042 6,136,390 3,244,652 380,000 213,290 5.47 2004 7,583,136 5,653,184 1,929,952 365,000 226,795 3.26 2003 8,228,571 5,359,309 2,869,262 285,000 236,913 5.50 2002 4,663,584 3,061,327 1,602,257 275,000 246,263 3.07 2001 4,260,109 3,115,427 1,1.44,682 35,000 55,750 12.61 2000 3,958,054 2,717,774 1,240,280 35,000 58,375 13.28 1999 3,250,589 2,145,249 1,105,340 80,000 63,588 7.70 1998 3,316,900 1,711,388 1,605,512 55,000 67,013 13.16 1997 2,879,730 1,556,271 1,3.23,459 55,000 70,578 10.54 NOTE: Details regarding the City's outstanding debt can be found in Note 7 to the current financial statements. Operating expenses do not include depreciation, interest, amortization or joint venture expenses. 94 1 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS TABLE 14 PER PERSONAL YEAR POPULATION INCOME 2006 31,452 $ 2,543,051,460 2005 26,780 1,926,713,880 2004 26,463 1,005,594,000 2003 24,000 912,000,000 2002 23,000 838,994,000 2001 22,000 802,516,000 2000 18,694 593,870,992 1999 18,000 297,000,000 1998 17,500 288,750,000 1997 15,000 204,000,000 TABLE 14 PER EDUCATION CAPITA LEVEL IN PERSONAL MEDIAN YEARS OF SCHOOL UNEMPLOYMENT INCOME AGE SCHOOLING ENROLLMENT RATE $ 80,855 36.1 18.0 8,380 4.8% 71,946 35.1 15.9 7,712 4.4% 38,000 32.7 15.0 7,257 3.6% 38,000 35.1 14.6 7,245 4.1% 36,478 35.1 14.6 .6,440 2.4% 36,478 35.1 14.6 6,440 2.4% 31,768 35.1 14.6 6,186 2.4% 16,500 32.6 14.6 5,777 3.9% 16,500 32.6 14.6 5,951 3.9% 13,600 33 14.0 5,136 3.9% 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. 95 Schertz /Cibolo /UC ISD Valero Energy Federal Express Freight Cal -Tex Kraft Nabisco Home Depot Supply Wal -Mart H.E.B. Grocery Co. Lone Star Pet Supply DSI CITY OF SCHERTZ, TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR PT IM. TABLE 15 Source: City Economic Development Corporation Note: Nine year principal employer history is not available. Also, certain employers were not willing to provide total employee information. PERCENTAGE OF TOTAL CITY EMPLOYEES EMPLOYMENT 1,300 0.16250 200 0.02500 165 0.02060 BO 0.01000 39 0.00490 36 0.00450 not available not available not available not available Source: City Economic Development Corporation Note: Nine year principal employer history is not available. Also, certain employers were not willing to provide total employee information. CITY OF SCHERTZ, TEXAS FULL -TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION_ LAST TEN FISCAL YEARS TABLE 16 FULL -TIME EQUIVALENT EMPLOYEES AS OF SEPTEMBER 30 2006 2005 2� 004 2003 2002 Function /Program General Government City Manager 3 4 4 3 4 Court Support 4 4 4 3 3 Municipal Court 3.5 2 2 2 2 Planning & Zoning 3 2 2 2 3 Facility Manintenance 6.5 6 6 5 5 City Sercretary 2 2 2 2 2 Public Information 1 1 1 1 1 Records Management 2 1.5 1 - Information Technology 3 2 2 2 1 Human Resources .2 2 2 2 1 Finance 5 5 5 4 4 Fleet Service 3 3 2 2 2 Public Safety Police 62 53.5 50.5 46.5 44.5 Fire 32 31 30 24 24 Inspections 6 6 6 6 5 Health Animal Control 5 5 5 5.5 5 Parks & Culture Parks 7 7 6 5 4 Pools 12.5 15 14.5 8 7.5 Library 9.5 8.5 8.5 7 7.5 Public Environment Streets 11 12 13 9 9 Public Works Public Works 6 6 6 6 6 Business Office 9 9 11 12 11 Water and Sewer 17 15 15 14 11 EMS 32.5 32 28 27.5 27 TOTAL 247.5 234.5 226.5 198.5 189.5 Source: City Adopted Budgets NOTES: Less than 10 years of data is available. The information will be presented on a prospective basis. 97 Function /Prooram General Government Building permits issued Police CFS Arrests Traffic Violations Accidents Fire Number of rescue /other responses Number of fire responses Number of inspections Number of training classes conducted Parks Facility reservations Library Annual circulation Library visits Library program attendance Registered users Water New connections Water main breaks Total consumption (thousands of gallons) Daily average consumption (thousands of gallons) Peak daily consumption (thousands of gallons) Total customers Average use per connection Sewer Total customers CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS TABLE 17 FISCAL YEAR 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 9,948 3,434 3,055 7,119 2,812 2,754 3,716 3,690 3,767 3,373 16,642 12,770 11,875 11,089 10,743 N/A N/A N/A N/A N/A 526 729 631 670 666 N/A N/A N/A N/A N/A 10,487 11,157 9,652 9,157 8,863 N/A N/A N/A N/A N/A 1,192 1,169 1,127 875 857 N/A N/A N/A N/A N/A 1,216 1,131 1,082 929 1,058 N/A N/A N/A N/A N/A 129 128 90 89 76 N/A N/A N/A N/A N/A 356 331 301 254 202 N/A N/A N/A N/A N/A 136 136 213 186 87 N/A N/A N/A N/A N/A 416 294 333 300 178 174 205 N/A N/A N/A 276,873 257,765 238,602 225,573 183,467 131,293 123,897 120,602 120,020 113,319 181,603 175,976 171,811 162,263 142,258 99,515 .98,541 94,616 90,571 89,179 5,064 5,254 5,170 4,328 3,607 2,050 4,946 3,385 2,697 3,327 19,342 17,101 14,492 12,779 9,320 5,370 11,471 10,115 8,694 6,814 532 425 425 439 1,241 54S N/A N/A N/A N/A 46 39 26 18 21 35 54 51 59 N/A 13,322,380 11,030,621 10,373,621 10,747,349 10,177,465 10,977,327 11,097,642 N/A N/A N/A 37,007 30,639 28,816 29,854 28,271 30,492 30,827 N/A N/A N/A 10,540 6,939 6,869 6,757 5,616 6,375 5,562 N/A N/A N/A 10,118 9,673 9,389 8,045 7,311 7,103 6,837 7,351 6,914 5,641 7,060 5,957 6,329 3,565 4,682 8,942 9,606 4,951 4,696 4,795 8,990 8,664 7,887 7,261 6,511 6,185 5,814 6,226 5,767 4,622 Source: Various City Departments NOTE: Indicators are not available for the police or EMS function. CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS TABLE 18 FISCAL YEAR 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 Function /Program Police Stations 1 1 1 1 1 1 1 1 Patrol units 34 27 26 21 11 8 5 3 1 1 Fire Stations 2 2 1 1 1 1 1 1 1 1 Training facility 1 1 1 1 1 1 1 1 Fire vehicles 12 11 11 11 9 7 6 5 5 3 Streets Streets, paved (miles) 102 102 102 102 100 100 97 95 95 94 Streets, unpaved (miles) 9 9 9 9 9 7 7 7 7 7 Sidewalks (miles) 17 17 17 17 17 17 17 17 17 15 Parks & Recreation Parks 7 7 7 7 7 7 7 7 7 7 Playground 20 20 20 20 117 117 65 65 65 65 Swimming pools 1 1 1 1 Baseball /softball diamonds 12 12 12 12 8 8 5 5 5 5 Community centers 1 1 1 1 1 1 1 1 1 1 Animal Control Control vehicle 2 2 2 2 1 1 - - - - Library Facility 1 1 1 1 1 1 1 1 1 1 Volumes in collection 52,818 49,289 46,961 41,275 39,062 36,259 37,610 36,891 31,532 29,940 Water Number of reservoirs 1 1 1 - - - - - - - Number of pump stations 1 1 1 Water mains (miles) 36 30 27 27 22 19 16 12 3 3 Sewer. Sanitary sewers (miles) 54 54 54 54 54 51 48 41 41 41 ' Storm sewers (miles) 4 4 4 4 4 4 3 2 2 2 Source: Various City Departments ' NOTES: No Capital Asset indicators are available for the General Government or EMS function. 99 (This Page Intentionally Left Blank) 100 4801 N.W. LOOP 410. SUITE 725 SAN ANTONIO, TEXAS 78229 -5308 210/341 -2581 FAX 210/341.2588 cpas @twbkycom Thompson, Williams, Biediger, Kasior CT) Young, L.C. CERTIFIED PUBLIC ACCOUNTANTS MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Members of the City Council City of Schertz, Texas We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of and for the year ended September 30, 2006, which collectively comprise the City of Schertz, Texas' basic financial statements, and have issued our report thereon dated February 6, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reoortin ' In planning and performing our audit, we considered City of Schertz, Texas', internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over ' financial reporting would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned ' functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Schertz, Texas, financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with 101 THOMPSON, WILLIAMS, BIEDIGER. K.ASTOR '�Q YOUNG, L.C. (This Page Intentionally Left Blank) 102 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 that are required to be reported under ' Government Auditing Standards. However, we noted certain matters that we reported to management of the City of Schertz, Texas in a separate letter dated February 6, 2007. This report is intended solely for the information and use of the audit committee, management, city council, and federal awarding agencies and pass- through entities, and Js not intended to be and should not be used by anyone other than these specified parties. - ' 9�� J�' 1, " X, �_ - Certified Public Accountants San Antonio, Texas IFebruary 6, 2007 103 (This Page Intentionally Left Blank) 104 1