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CAFR FY 2018-2019CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019 Col :4!![— L��7i;*1J ►`LdU4101:4 James M. Browne City Manager James Walters Director of Finance THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS FOR THE YEAR ENDED SEPTEMBER 30, 2019 TABLE OF CONTENTS INTRODUCTORY SECTION Page Number Letterof Transmittal ...................................................................... ............................... i - iv CityOfficials .................................................................................. ............................... v OrganizationalChart ...................................................................... ............................... vi Certificate of Achievement .............................................................. ............................... vii FINANCIAL SECTION Independent Auditor's Report .......................................................... ............................... 1 - 3 Management Discussion and Analysis ............................................... ............................... 4- 12 Basic Financial Statements Government -Wide Financial Statements: Statement of Net Position .......................................................... ............................... 13- 14 Statement of Activities .............................................................. ............................... 15- 16 Fund Financial Statements: Governmental Funds BalanceSheet ....................................................................... ............................... 17- 18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................ ............................... 19 Statement of Revenues, Expenditures, and Changes in Fund Balances .................................................. ............................... 20-21 Reconciliation of Revenues, Expenditures and Changes In Fund Balances - Governmental Funds to the Statement of Activities ....................................................... ............................... 22 Proprietary Funds Statement of Net Position ....................................................... ............................... 23-26 Statement of Revenues, Expenses, and Changes in Fund Net Position .............................................. ............................... 27-28 Statement of Cash Flows ........................................................ ............................... 29-32 Notes to the Financial Statements .............................................. ............................... 33- 59 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - General Fund - Budget and Actua|------------------ 60-63 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Economic Development Corporation - Budget and Actual ....................... 64-65 NotestoBudgetarySchedu|es ----------------------------. 66 Schedule of Changes in Net Pension Schedule of Pension Contributions ................................................................................ 69-70 Schedule of Changes -TMRS Other Post-Employment Benefit Schedule of Changes - City Retiree Health Other Post -Employment Combining and Individual Fund Statements and Schedules Comparative Schedules ofRevenues, Expenditures, and Changes in Comparative Balance Sheets - Economic Development Corporation ----------- 75 Comparative Schedules of Revenues, Expenditures, and Changes in Fund Balance - Economic Development Corporation ................................................. 76 Comparative Balance Sheets - Debt Service Fund ....... -------.......................... 77 Schedule nf Revenues, Expenditures, and Changes Comparative Schedules of Revenues, Expenditures, and Changes in Fund Ba|ance - CapiLa| ProjectsFund -----------------------. 81 Combining Balance Sheet -Nonmajor Governmental Funds ............................................ 82-83 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - NonmajorGovernmenta| Funds------------.. 84-85 Schedule of Revenues, Expenditures, and Changes Schedule of Revenues, Expenditures, and Changes Schedule of Revenues, Expenditures, and Changes Schedule of Revenues, Expenditures, and Changes Schedule of Revenues, Expenditures, and Changes Schedule of Revenues, Expenditures, and Changes in Fund Balance StateForfeitureyFund ---------------------.. 95 Schedule ofRevenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Library Advisory Board Fund ........................... 06-07 Schedule ofRevenues, Expenditures and Changes in Fund Balance - Budget and Actual - Historical Committee Fund---------- 98-99 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Capital Recovery Roadways ......................................................... 100 STATISTICAL SECTION Net Position by Component .............................................................................. 1 101-10Z Change in Net Position ---------------------------- 2 103- 106 Fund Balances of Governmental Funds --------------------' 3 107- 108 Changes in Fund Balances, Governmental Funds----------------. 4 109- 110 Tax Revenue by Source - Governmental Funds----------------' 5 111 - 112 Total Water and Sewer Consumption and Rates----------------.. 6 113 Principal Water and Sewer Consumers ............................................................... 7 114- 115 Direct and Overlapping Property Tax Rates ........................................................ 8 116 Principal PropertyTaxpayers -------------------------. g 117- 118 PropertyTaxLevesandCoUections ---------------------- 10 119 Taxable Assessed Value ................................ ----------.................... 11 120- 121 Ratios of Outstanding Debt by Type ---------------------- 12 122- 123 Ratios of General Bonded Debt Outstanding------------------. 13 124 DinectandOvedappngGovernnnenta|ActivibesDebt -------------- 14 125 DebtMarginInfonnaUon ---------------------------. 15 126 P|edgedRevonuoCoverage --------------------- ----- 16 127 DemographioandEconunohcStatsbcs ---------------------. 17 128 Top Ten Principal Employers ................................ ----------.............. 18 120 FuU-Urno Equivalent City Governmental Employers by Function---------. 10 130- 131 Operating Indicators by Fundion/Pnzgnam------------------- 20 132- 135 Capital Asset Statistics by Funcbon/Program------------------ 21 136- 137 COMPLIANCE SECTION Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based onan Audit ofFinancial Statements Performed in Accordance with INTRODUCTORY SECTION THIS PAGE LEFT BLANK INTENTIONALLY February 1, 2020 To the Honorable Mayor, City Council, and the Citizens 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, 2019. 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 Pattillo, Brown & Hill, LLP 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, 2019, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Schertz's financial statements for the fiscal year ended September 30, 2019, are fairly presented in conformity with U.S. GAAP. The independent auditor's report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD &A and should be read in conjunction with it. The City of Schertz's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Schertz, incorporated in 1958, is located in the central part of Texas, which is considered to be a top growth area in the state, and one of the top growth areas in the country. The City of Schertz currently occupies a land area of 32.21 square miles with a population of 41,057 in 2018 according to the US Census Bureau. 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 seven at -large councilmembers. The City Council is responsible for establishing public policy on City matters by the passage of appropriate ordinances and resolutions. The City Manager is responsible for overseeing the day -to -day operations of the government, implementing policy established by City Council, and for appointing the heads of the various departments. The council is elected on a non - partisan basis. Council members serve three -year staggered terms, with two council members elected every three years and then three council members elected the final three years in the cycle. The mayor is elected to serve a three -year term. The City of Schertz provides a full range of services, including police and fire protection, EMS services, library services, the construction and maintenance of streets, recreational facilities, cultural events, and water and sewer services. The annual budget and five -year forecast serve as the foundation for the City of Schertz's financial planning and control. All city departments are required to submit requests for appropriation to the City Manager by June of each year. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents the proposed budget to the council for review in early August. The council then holds public hearings and community meetings on the proposed budget and to adopt a final budget by September 30th. The fiscal year for Schertz is from October 1 through September 30. The appropriated budget is prepared by each department (e.g. police). The City Manager may make transfers of appropriations within a department. The City Manager may make transfers between departments and funds with City Council approval. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented in the required supplementary information, as listed in the table of contents. 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. Economic growth in Schertz remained strong in 2019. The Federal Reserve Bank of Dallas reported that the San Antonio Business -Cycle Index, of which Schertz data is incorporated, grew 3.2% year over year for September 2019. This increase in the Index shows this region is still in a state of economic expansion. As of October 2019, the unemployment rate for Texas was 3.3% and several metro areas including Austin, Dallas -Fort Worth, and San Antonio, are below the state average. Schertz in particular had an unemployment rate of 2.9 percent during this time. The City of Schertz realized a 1.4% decrease year- over -year in sales tax collections during the fiscal year. One time Sales Tax contributions generated from the construction sector lead the increase in FY 2017 -18 for 16.8% and Schertz was able to nearly maintain that level of generation from sales taxes generated in other sectors. Revenue generated from these sources can fluctuate year by year with the amount of high value projects. During the 2019 calendar year, Schertz saw a diverse range of new product added to its real estate market. These projects spanned from commercial developments and retail space to a hotel and a major entertainment venue. The largest commercial, industrial project completed this year includes Tri County Crossing Buildings 1 (96,978 sf) and 2 (I 06,424 sf), both located at 17750 Lookout Road. These buildings are 2 of 5 planned Tri County Crossing buildings being developed by EastGroup Properties. Staybridge Suites opened a 97 room, extended stay hotel on the comer of Schertz Parkway and Interstate 35, adding over 71,000 sf of space to Schertz' lodging footprint. EVO Entertainment's opened their 73,330 sf, state -of- the -art theater to the public in Quarter 1. Ryder Truck completed work on an expansion of their existing facility located at 9993 Doerr Lane, adding 19,226 sf of space to their Schertz location. According to 2019 Quarter 4 data provided by the City of Schertz Economic Development Corporation, the Schertz market has an industrial vacancy rate of 8.2 %, down from the previous quarter's 9.4 %. Average asking rates for the industrial sector stood at $5.59 NNN, a decrease of $0.02 from the third quarter of 2019. Long -term financial planning. The community approved bond propositions in November 2010 for quality of life projects which included an aquatics facility, improvements to the baseball fields and soccer fields, building a new animal adoption facility, and improvements to Main Street. The only remaining project are the Main Street improvements. fu In November 2015, the City placed 2 bond propositions before the voters totaling $15 million. $7 million was for FM roadways which the City will partner with the Texas Department of Transportation, who will provide matching funds, and $8 million for a new Fire Station located in the southern portion of Schertz. $2 million for the FM roadways have been issued and sent to the Texas Department of Transportation for improvements on FM 1103 as of July 2018. In June 2018, the second $4 million was issued for the Fire Station to begin construction. Currently the Fire Station is estimated to be completed in 2019. Current Year Budget Initiatives. In FY 2018 -19, the City's main initiatives that had a major budget impact were the implementation of the fourth and final year recommendation of the Classification and Compensation Study to bring the wages up to a more competitive level, a new Classification and Compensation Study to determine our new market position, a Staff Study to evaluate department efficiencies and personnel placement, and add 9 new positions. In addition, the General Fund will transfer $4 million from reserves into the capital project fund for road, sidewalk, and drainage improvements. The new personnel will be decided by a staffing study results in January 2020. Financial Information: Internal Control. Management is responsible for establishing and maintaining internal controls designed to ensure that assets of the City are protected from loss, theft or misuse and to provide adequate accounting information compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles for local governments as prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA). The internal control system is designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of an internal control should not exceed the benefits derived from the internal control. The City utilizes financial accounting software which is designed with a system of internal controls. These controls are continually being reevaluated to provide reasonable, but not absolute, assurances. Budget Controls. The City also utilizes budgetary controls. Legally expenditures cannot exceed the appropriated amount. The objective of these budgetary controls is to ensure compliance with the adopted budget approved by the City Council as mandated by the city charter and state law. The levels of budgetary control are established at the line -item basis and at the fund level. Staff believes these controls help monitor and direct approved expenditures to a level within the budget parameters which directly results in a strong financial performance. Financial Results. Assets and fund balances continue to grow as the City grows and financial results remain strong. While additional debt was issued during the year, Staff closely monitors and plans the amount of issuance to keep steady debt ratios per capita, per revenue, and per operations tax rate to the debt tax rate. Examples of these ratios can be found in the Statistical Section. A more detailed summary of the City's Financial Performance is available in the Management Discussion and Analysis. Independent Audit. Every year an independent audit is performed of the general ledger, accounts, financial records, and transactions of all city departments. The audit is completed by an independent certified public accounting firm selected by the City Council. The City is in compliance with this requirement and the independent auditor's report by Pattillo, Brown & Hill, LLP. Certified Public Accountants, has been included in this report. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Schertz for its comprehensive annual financial report for the fiscal year ended September 30, 2018. This was the 34th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. FIT 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 will be submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. In conclusion, we would have none of the success we have enjoyed without the assistance of each and every staff member, as well as the support and strategic direction from the Mayor and the City Council during the strategic planning, pre- budget, and budget approval process. Respectfully submitted, p� P James M. Browne City Manager iv James P. Walters Finance Director CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR MICHAEL CARPENTER MAYOR PRO -TEM TIM BROWN CITY COUNCIL RALPH GUTIERREZ MARK E. DAVIS SCOTTLARSON CEDRIC EDWARDS, SR. DAVID SCAGLIOLA ALLISON HEYWARD CITY MANAGER JAMES M. BROWNE DIRECTOR OF FINANCE JAMES WALTERS CITY ATTORNEY CHARLES ZECH, DENTON, NAVARRO, ROCHA, BERNAL & ZECH, P.C. v CITY OF SCHERTZ ORGANIZATIONAL FY 2019-20 *Appointed by City Council vi Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Schertz Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2018 04xjt� F Aw;a Vii THIS PAGE LEFT BLANK INTENTIONALLY FINANCIAL SECTION THIS PAGE LEFT BLANK INTENTIONALLY INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Schertz, Texas Report on the Financial Statements ATTILL. „ BROWN & HILL, L.L.P.. 401 'Nest State Kgh ;.Yay 6 Waco Texas 76710 254.772.4901 pbhcpaxom We have audited the accompanying financial statements of the governmental activities, the business - type activities, each major fund, and the aggregate remaining fund information of City of Schertz, Texas, as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the City of Schertz, Texas' basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements The City of Schertz's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Schertz- Seguin Local Government Corporation or the Cibolo Valley Local Government Corporation, which collectively represent 8.3 percent 10.0 percent, respectively, of the assets and net position of the Water and Sewer Fund, and 8.0 percent and 9.9 percent, respectively, of the assets and net position of the business -type activities. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Schertz - Seguin Local Government Corporation and Cibolo Valley Local Government Corporation, is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 1 OFFICE LOCATIONS TEXAS Waco i Temple i Hillsboro Houston AlCPA NEWMEXICO Albuquerque GAQC Member Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of September 30, 2019, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Report on Summarized Comparative Information The City of Schertz, Texas' fiscal year 2018 financial statements were previously audited by another auditor, and an unmodified audit opinion was expressed on those audited financial statements in a report dated March 19, 2019. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2018 is consistent, in all material respects, with the audited financial statements from which it has been derived. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Schertz, Texas' basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 2 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 18, 2020, on our consideration of the 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Schertz, Texas' internal control over financial reporting and compliance. Waco, Texas March 18, 2020 3 THIS PAGE LEFT BLANK INTENTIONALLY MANAGEMENT'S DISCUSSION AND ANALYSIS THIS PAGE LEFT BLANK INTENTIONALLY MANAGEMENT'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, 2019. 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 and deferred outflows of the City of Schertz exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $235,636,559 (net position). Of this amount, $36,174,725 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. The City's total net position increased by $22,258,565. The primary reason for this increase was due to a prior period adjustment in the business -type activities recognizing the City's equity interest in joint ventures. Of the remaining increase, a significant portion, 30.4 %, 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 $56,834,378, an increase of $857,191 in comparison with the prior year. The primary cause of this increase was an increase of $1.7 million in property tax revenues compared to the prior year. This increase in revenue was caused by an increase in assessed values due to the City's continued population growth. At the end of the fiscal year, the combined total of the General Fund assigned and unassigned fund balances was $10,119,933 which is 35.94% of the general fund expenditures not including capital outlay. The fund balance policy is to reserve at least a 26% balance. During the fiscal year, the City issued $16,065,000 in general obligation bonds and certificates of obligation, of which $6.2 million is allocated to the proprietary funds. The debt was issued primarily to fund certain capital projects and to refund existing obligations with a present value savings. 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 position presents information on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Schertz is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Schertz that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Schertz include general government, public safety, streets and parks, health, and culture and recreation. The business -type activities of the City of Schertz include a water and sewer department and an emergency medical services department. 4 Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Schertz, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. The funds of the City of Schertz can be divided into two categories: governmental and proprietary. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government - wide financial statements, governmental fund financial statements focus on near term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental 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 thirteen individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the debt service fund, the economic development corporation and the capital projects fund, all of which are considered to be major funds. Data from the other seven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. Proprietary funds. The City of Schertz maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Schertz uses enterprise funds to account for its water and sewer department and for its emergency medical services department. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewer department and for the emergency medical services department, both of which are considered to be major funds of the City of Schertz. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City's general fund budgetary schedule. The City of Schertz adopts an annual appropriated budget for its general fund. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. The economic development corporation also adopts an annual budget, and a comparison schedule for it also is provided in the required supplementary information. The combining statements referred to earlier in connection with non -major governmental funds are presented immediately following the required supplementary information. Government -wide Financial Analysis As noted earlier, net position may serve overtime as a useful indicator of a government's financial position. In the case of the City of Schertz, assets exceeded liabilities by $235,636,559 at the close of the most recent fiscal year. The largest portion of the City's total net position (67 %) reflects its net investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding, plus bond proceeds that have not yet been signed. The City of Schertz uses these capital assets to provide services to citizens; consequently, these assets are not available for operational type of future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's total net position (17.5 %) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $36,174,725, may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Schertz is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. City of Schertz's Net Position Government -Wide Governmental Business -Type Activities Activities Total 2019 2018 2019 2018 2019 2018 Current and other assets $ 62,483,126 $ 58,907,201 $ 55,115,512 $ 43,350,389 $ 117,598,638 $ 102,257,590 Capital assets 143,800,297 139,558,325 86,809,556 78,668,459 230,609,853 218,226,784 Total assets 206,283,423 198,465,526 141,925,068 122,018,848 348,208,491 320,484,374 Deferred outflows of resources 5,026,512 2,896,350 1,307,526 732,459 6,334,038 3,628,809 Current liabilities 8,595,801 7,846,103 4,792,951 5,190,642 13,388,752 13,036,745 Long -term liabilities 81,400,396 77,074,678 23,649,513 18,905,255 105,049,909 95,979,933 Total liabilities 89,996,197 84,920,781 28,442,464 24,095,897 118,438,661 109,016,678 Deferred inflows of resources 434,900 1,431,927 32,409 286,584 467,309 1,718,511 Net position: Net investment in capital assets 89,869,766 89,266,885 68,271,075 64,871,629 158,140,841 154,138,514 Restricted 28,088,355 23,391,047 13,232,638 12,626,526 41,320,993 36,017,573 Unrestricted 2,920,717 2,351,236 33,254,008 20,870,671 36,174,725 23,221,907 Total net position $ 120,878,838 $ 115,009,168 $ 114,757,721 $ 98,368,826 $ 235,636,559 $ 213,377,994 6 The government's net position increased by $22,258,565 during the current fiscal year. 30% of this increase represents capital contributions from developers. The following table indicates changes in net position for governmental and business -type activities followed by graphs displaying total revenues and expenses by type: Revenues: Program revenues: Charges for services Operating grants & contributions Capital contributions General revenues: Property taxes Othertaxes Investment earnings Miscellaneous Total revenues Expenses: General government Public safety Public environment Parks and recreation Cultural Health Administration Interest and other fees Water and sewer EMS Total expenses Increase in net position before transfers Transfers Change in net position Net position - beginning of year Prior period adjustment Net position - end of year City of Schertz's Changes in Net Position Government -Wide Governmental Business -Type Activities Activities Total 2019 2018 2019 2018 2019 2018 $ 5,080,958 $ 6,100,438 $ 33,930,093 $ 33,191,796 $ 39,011,051 $ 39,292,234 692,042 776,942 - - 692,042 776,942 1,319,793 4,744,489 1,975,524 3,132,348 3,295,317 7,876,837 19,151,005 17,018,950 - - 19,151,005 17,018,950 15,439,226 15,625,556 - - 15,439,226 15,625,556 1,470,258 909,985 855,216 532,367 2,325,474 1,442,352 984,257 283,496 267,788 453,374 1,252,045 736,870 44,137,539 45,459,856 37,028,621 37,309,885 81,166,160 82,769,741 6,534,013 7,421,918 - - 6,534,013 7,421,918 15,448,886 13,899,278 15,448,886 13,899,278 5,495,192 4,930,723 5,495,192 4,930,723 3,022,278 2,707,292 3,022,278 2,707,292 1,119,650 1,042,085 1,119,650 1,042,085 516,890 724,780 516,890 724,780 3,853,255 3,067,983 3,853,255 3,067,983 2,196,180 2,125,687 - - 2,196,180 2,125,687 - - 25,608,390 23,579,854 25,608,390 23,579,854 - 6,529,631 6,110,407 6,529,631 6,110,407 38,186,344 35,919,746 32,138,021 29,690,261 70,324,365 65,610,007 5,951,195 9,540,110 4,890,600 7,619,624 10,841,795 17,159,734 ( 81,525} 19,186 81,525 ( 19,186) - - 5,869,670 9,559,296 4,972,125 7,600,438 10,841,795 17,159,734 115,009,168 106,647,921 98,368,826 91,142,326 213,377,994 197,790,247 ( 1,198,049) 11,416,770 ( 373,938) 11,416,770 ( 1,571,987) $ 120,878,838 $ 115,009,168 $_114,75=7 721 $ 98,368,826 $ 235,636,559 $ 213,377,994 0 TOTAL REVENUES - GOVERNMENT -WIDE $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Charges for Operating Capital Grants Property Other Taxes Unrestricted Miscellaneous Services Grants and and Taxes Investment Contributions Contributions Earnings - 2019 e 2018 TOTAL EXPENSES - GOVERNMENT -WIDE General Public Safety Public Parks and Cultural Health Administration Interest and Government Environment Recreation Other Fees -2019 uu 2018 8 Sales 34 GENERAL REVENUE BY SOURCE — GOVERNMENTAL ACTIVITIES Business -Type Activities Property Tax 52% Business -Type activities accounted for 74% of the growth in the net position of the City of Schertz. Of this increase, 12% is the result of capital contributions from developers. For the most part, increases in expenses closely paralleled inflation and the change in revenues was primarily related to fluctuations in capital contributions from developers. TOTAL REVENUES AND EXPENSES — BUSINESS -TYPE ACTIVITIES $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 2019 2018 -Revenues NExpenses z $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 BUSINESS -TYPE REVENUES AND EXPENSES Water and Sewer Utilities EMS Revenues 9Nonoperating Revenues WCapital Contributions and Transfers Expenses Financial Analysis of the Government's Funds As noted earlier, the City of Schertz uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $56,834,378. Of this total amount, $9,228,612 constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is non - spendable, restricted, or assigned to indicate that it is not available for new spending because it has already been committed to pay debt service, for capital improvement projects, and other assigned purposes. The general fund is the chief operating fund of the City of Schertz. At the end of the current fiscal year, unassigned fund balance of the general fund was $9,228,612, while total fund balance was $17,539,029, an increase of $1,908,576 from the prior year. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 35.9% of total general fund expenditures, not including capital. The debt service fund has a total fund balance of $1,002,226, all of which is restricted for the payment of debt service. The net decrease in fund balance during the current year in the debt service fund was $97,632. This decrease was due to a current loss on refunding bonds. Overtime, however, the refunding is expected to result in a present value savings. The capital projects fund has a total fund balance of $13,114,310, a decrease of $2,942,455. This decrease was caused by the expenditure of accumulated funds for planned capital projects. Additionally, the capital projects fund accumulated bond proceeds of $4.6 million to fund future capital projects. 10 The Economic Development Fund presents the activities of the Schertz Economic Development Corporation (the "EDC "), which promotes economic development activities using a portion of the City's sales tax revenue. At yearend, the EDC fund reported an ending fund balance of $21,777,256, which is an increase of $3,965,288 compared to the prior year. The primary cause of this change was due to the EDC expending less funds than budgeted compared to stable revenues. Proprietary funds. The City's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net position of the water and sewer fund at the end of the year amounted to $32,582,296 and those for the Schertz EMS fund amounted to $671,712, which are 130% and 10% of fund operating costs, respectively. During the fiscal year, the Water /Sewer fund issued $6.2 million of general obligation bonds and certificates of obligation to fund additional capital projects. General Fund Budgetary Highlights The General Fund expenditures were $2,286,094 less than the $30,442,235 budget. This was the result of cost savings across most of the General Fund. Revenues were higher by $2,059,821 than budgeted, primarily due to increased tax revenues over budgeted. Overall, the fund balance increased by $4,273,202 higher than budgeted. 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, 2019, amounts to $230,609,853 (net of accumulated depreciation). Developers contributed $1.9 million in infrastructure during the year. The City also has several projects in progress from voter approved bonds. Additional information on the City's capital assets can be found in the noes to the basic financial statements. Governmental Business -Type Activities Activities Total 2019 2018 2019 2018 2019 2018 Land $ 8,073,199 $ 8,069,499 $ 1,696,942 $ 1,357,539 $ 9,770,141 $ 9,427,038 Water rights - - 70,245 70,245 70,245 70,245 Buildings and improvements 46,367,441 44,494,208 5,489,184 4,695,503 51,856,625 49,189,711 Machinery, equipment, and 4,445,000 $ 2,125,000 $ 41,410,000 $ 53,610,000 Certificates of obligation - vehicles 12,958,097 12,299,312 6,007,550 5,441,459 18,965,647 17,740,771 Infrastructure 117,414,346 114,194,414 100,295,885 97,225,671 217,710,231 211,420,085 Construction in progress 21,045,668 16,640,216 9,248,439 3,391,127 30,294,107 20,031,343 Accumulated depreciation ( 62,058,454) ( 56,139,324) ( 35,998,689) ( 33,513,085) ( 98,057,143) ( 89,652,409) TOTALS $ 143,800,297 $ 139,558,325 $ 86,809,556 $ 78,668,459 $ 230,609,853 $ 218,226,784 LONG TERM DEBT At the end of the current fiscal year, the City of Schertz had total bonded debt outstanding of $82,545,120. The related principal and interest payment for the bonds are backed by an annual ad valorem tax levied against all taxable property within the City. The City of Schertz maintains a "AA +" rating from Standard and Poors. Additional information on the City's long -term debt can be found in the notes to the basic financial statements. Economic Factors and Next Year's Budgets and Rates At the end of the last fiscal year, the assigned and unassigned fund balance in the general fund increased to $9,228,612. At the end of the last fiscal year, the assigned and unassigned fund balance in the general fund increased to $15.1 million. The City of Schertz has appropriated $4 million of this amount for spending in the 2020 fiscal year budget in accordance to the City's fund balance policy. The approved tax rate remained the same at $0.5146 per $100 of valuation. Each year the City updates its five -year budgeting forecast and has implemented a long -term debt model to assist management in making informed financial decisions that will impact the community now and in the future. 11 Governmental Business -Type Activities Activities Total 2019 2018 2019 2018 2019 2018 General obligation bonds $ 36,965,000 $ 51,485,000 $ 4,445,000 $ 2,125,000 $ 41,410,000 $ 53,610,000 Certificates of obligation 16,235,000 12,940,000 12,330,000 12,815,000 28,565,000 25,755,000 Tax notes and leases 11,910,699 715,000 659,421 1,054,553 12,570,120 1,769,553 TOTALS $ 65,110,699 $ 65,140,000 $ 17,434,421 $ 15,994,553 $ 82,545,120 $ 81,134,553 Economic Factors and Next Year's Budgets and Rates At the end of the last fiscal year, the assigned and unassigned fund balance in the general fund increased to $9,228,612. At the end of the last fiscal year, the assigned and unassigned fund balance in the general fund increased to $15.1 million. The City of Schertz has appropriated $4 million of this amount for spending in the 2020 fiscal year budget in accordance to the City's fund balance policy. The approved tax rate remained the same at $0.5146 per $100 of valuation. Each year the City updates its five -year budgeting forecast and has implemented a long -term debt model to assist management in making informed financial decisions that will impact the community now and in the future. 11 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. 12 THIS PAGE LEFT BLANK INTENTIONALLY BASIC FINANCIAL STATEMENTS THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2019 ASSETS Current assets: Cash and cash equivalents Investments Receivables, net of allowances: Taxes Accounts and other Service concession arrangement receivable Accrued interest Inventories Prepaids Internal balances Total Current Assets Noncurrent assets: Restricted assets: Cash and cash equivalents Investments Service concession arrangement receivable Investment in joint venture Capital assets: Land Water rights Buildings and improvements Equipment and vehicles Infrastructure Construction in progress Accumulated depreciation Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred loss on debt refunding Deferred OPEB related outflows Deferred pension related outflows Total Deferred Outflows of Resources LIABILITIES Current liabilities: Accounts payable Accrued liabilities Retainage payable Due to other governments Unearned revenue Accrued interest payable Customer deposits Total Current Liabilities Primary Government Governmental Business -Type Activities Activities Total $ 1,872,546 $ 54,032,372 2,956,606 1,899,967 90,909 117,009 14,916 ( 16,139 60,968,186 785,708 729,232 8,073, 199 46,367,441 12,958,097 117,414,346 21,045,668 ( 62,058,454) 145,315,237 206,283,423 The accompanying notes are an integral part of these financial statements. 13 672,495 196,842 4,157,175 5,026,512 1,548,131 970,679 293,788 123,116 33,314 353,793 22,251 3,345,072 2,061,479 17,986,512 6,844,023 6,324 146,921 16.139 27,061,398 3,457,678 13,179,666 11,416,770 1,696,942 70,245 5,489,184 6,007,550 100,295,885 9,248,439 ( 35,998,689) 114,863,670 141,925,068 60,079 56,396 1,191,051 1,307,526 3, 178,814 273,077 172,373 431,104 104,803 632,780 4,792,951 $ 3,934,025 72, 018, 884 2,956,606 8,743,990 90,909 6,324 263,930 14,916 4,243,386 13,179,666 729,232 11,416,770 9,770,141 70,245 51,856,625 18,965,647 217,710,231 30, 294,107 ( 98,057,143 260,178,907 348,208,491 732,574 253,238 5,348,226 6,334,038 4,726,945 1,243,756 466,161 123,116 464,418 458,596 655,031 8,138,023 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION LIABILITIES (continued) Noncurrent liabilities: Current Portion: Compensated absences Total OPEB liability Service concession arrangement Long -term debt Long -term liabilities: Compensated absences Total OPEB liability Net pension liability Service concession arrangement Long -term debt Total Non Current liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred service concession arrangement Deferred OPEB related inflows Deferred pension related inflows Total Deferred Inflows of Resources NET POSITION Net investment in capital assets Restricted for: Police and municipal court PEG capital fees Tourism development Economic development Parks and tree mitigation Debt service Scholarships and other purposes Construction Unrestricted Total Net Position SEPTEMBER 30, 2019 Primary Government Governmental Business -Type Activities Activities Total $ 245,280 $ 56,643 55,241 4,893,565 981,119 2,117, 547 15,303,179 443,120 62,555,431 86,651,125 89,996,197 321,780 93,077 20,043 434,900 514,152 723,353 2,214,865 21,777,256 724,076 1,084,908 1,049,745 2,920,717 $ 120,878,838 The accompanying notes are an integral part of these financial statements. 14 67,228 16,229 1,961,953 268,911 606,686 4,384,430 16,344,076 23,649,513 28,442,464 26,667 5,742 32,409 68,271,075 13,232,638 33,254,008 $ 114,757,721 $ 312,508 72,872 55,241 6,855,518 1,250,030 2,724,233 19,687,609 443,120 78,899,507 110,300,638 118,438,661 321,780 119,744 25,785 467,309 514,152 723,353 2,214,865 21,777,256 724,076 1,084,908 1,049,745 13,232,638 36,174,725 $ 235,636,559 CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2019 Business -type activities: Water and sewer 25,608,390 27,333,475 - 1,975,524 EMS 6,529,631 6,596,618 - - Total Business -Type Activities 32,138,021 33,930,093 - 1,975,524 Total Primary Government $ 70,324,365 $ 39,011,051 $ 692,042 $ 3,295,317 General revenues: Taxes: Ad valorem Sales Franchise fees Hotel /motel Mixed drink Investment earnings Miscellaneous Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning Prior Period Adjustment Net Position - Ending The accompanying notes are an integral part of these financial statements. 15 Program Revenues Operating Capital Charges for Grants and Grants and Functions /Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government $ 6,534,013 $ 947,538 $ 201,117 $ - Public safety 15,448,886 3,177,329 477,907 - Public environment 5,495,192 138,920 - 1,319,793 Parks and recreation 3,022,278 484,495 - - Cultural 1,119,650 311,575 13,018 - Health 516,890 21,101 - - Administration 3,853,255 - - - Interest 2,196,180 - - - Total Governmental Activities 38,186,344 5,080,958 692,042 1,319,793 Business -type activities: Water and sewer 25,608,390 27,333,475 - 1,975,524 EMS 6,529,631 6,596,618 - - Total Business -Type Activities 32,138,021 33,930,093 - 1,975,524 Total Primary Government $ 70,324,365 $ 39,011,051 $ 692,042 $ 3,295,317 General revenues: Taxes: Ad valorem Sales Franchise fees Hotel /motel Mixed drink Investment earnings Miscellaneous Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning Prior Period Adjustment Net Position - Ending The accompanying notes are an integral part of these financial statements. 15 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business -Type Activities Activities Total $( 5,385,358) ( 11,793,650) ( 4,036,479) ( 2,537,783) ( 795,057) ( 495,789) ( 3,853,255) ( 2,196,180) ( 31,093,551) ( 31,093,551) 19,151,005 12, 506,879 2,357,150 514,679 60,518 1,470,258 984,257 81,525 36,963,221 5,869,670 115,009,168 3,700,609 66,987 3,767,596 3,767,596 855,216 267,788 81,525 1,204,529 4,972,125 98,368,826 11,416,770 $ 120,878,838 $ 114,757,721 $( 5,385,358) ( 11,793,650) ( 4,036,479) ( 2,537,783) ( 795,057) ( 495,789) ( 3,853,255) ( 2,196,180) ( 31,093,551) 66,987 3,767,596 ( 27,325,955 19,151,005 12,506,879 2,357,150 514,679 60,518 2,325,474 1,252,045 38,167,750 10,841,795 213,377,994 11,416,770 $ 235,636,559 16 CITY OF SCHERTZ, TEXAS BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30, 2019 The accompanying notes are an integral part of these financial statements. 17 General Capital Projects Debt Service Fund Fund Fund ASSETS Cash and cash equivalents $ 1,211,660 $ 34,120 $ 91,510 Investments 15,105,396 14,147,499 910,716 Receivables (net of allowances) Taxes 2,134,563 - 82,682 Accounts and other 1,775,482 52,248 - Inventory 117,009 - - Prepaids 14,916 - - Restricted assets: Cash and cash equivalents 785,708 - - Total Assets 21,144,734 14,233,867 1,084,908 LIABILITIES Accounts payable 685,560 825,769 - Accrued salaries and benefits 970,679 - - Retainage payable - 293,788 - Customer deposits 22,251 - - Due to other governments 123,116 - - Due to other funds 16,139 - - Unearned revenues 33,314 - - Total Liabilities 1,851,059 1,119,557 - DEFERRED INFLOWS OF RESOURCES Unavailable revenues 1,754,646 - 82,682 Total Deferred Inflows of Resources 1,754,646 - 82,682 FUND BALANCES Nonspendable for: Inventory 117,009 - - Prepaid items 14,916 - - Restricted for: Police and public safety /municipal court 226,093 - - Municipal court 823,451 - - PEG capital fees 723,353 - - Capital improvement - 13,114,310 - Debt service - - 1,002,226 Tourism development - - - Parks and tree mitigation - - - Historical Committee and library - - - Economic development - - - Animal control 33,408 - - Veterans 2,109 - - Scholarships 101,673 - - Committed for: Civic Center /CIED 687,779 - - Assigned for: Property replacement 891,321 - - Subsequent year's budget 4,689,305 - - Unassigned 9,228,612 - - Total Fund Balances 17,539,029 13,114,310 1,002,226 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 21,144,734 $ 14,233,867 $ 1,084,908 The accompanying notes are an integral part of these financial statements. 17 Economic Nonmajor Total Development Governmental Governmental Corporation Funds Funds $ 224,144 $ 311,112 $ 1,872,546 20,824,561 3,044,200 54,032,372 739,361 - 2,956,606 8,448 63,789 1,899,967 - - 117,009 - - 14,916 - - 785,708 21,796,514 3,419,101 61,679,124 19,258 17,544 1,548,131 - - 970,679 - - 293,788 - - 22,251 - - 123,116 - - 16,139 - - 33,314 19,258 17,544 3,007,418 1,837,328 1,837,328 117,009 14,916 - 288,059 514,152 - - 823,451 - - 723,353 - 85,453 13,199,763 - - 1,002,226 - 2,214,865 2,214,865 - 724,076 724,076 - 89,104 89,104 21,777,256 - 21,777,256 - - 33,408 - - 2,109 - - 101,673 - - 687,779 - - 891,321 - - 4,689,305 - - 9,228,612 21,777,256 3,401,557 56,834,378 $ 21,796,514 $ 3,419,101 $ 61,679,124 18 CITY OF SCHERTZ, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2019 Total Fund Balances - Governmental Funds $ 56,834,378 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. 143,800,297 Bonds payable and accrued compensated absences will not be liquidated with current financial resources and, therefore, have not been included in the fund financial statements. ( 66,337,098) Interest payable on long -term debt is accrued in the government -wide financial statements, whereas in the fund financial statements, interest expenditures are reported when due. ( 353,793) Premiums on bond issuances and deferred losses on bond refunding are recorded as other financing sources and uses when paid in the fund financial statements but are capitalized and amortized in the government -wide financial statements over the life of the bonds. Premiums ( 2,338,297) Deferred loss 672,495 Receivables from property taxes and fines and fees are not available soon enough to pay for the current period's expenditures and are, therefore, deferred in the fund financial statements. 1,837,328 Included in the items related to debt is the recognition of the City's net pension liability, total OPEB liability, and related deferred outflows and inflows of resources. Net pension liability ( 15,303,179) Deferred outflows related to pensions 4,157,175 Deferred inflows related to pensions ( 20,043) Total OPEB liability ( 2,174,190) Deferred outflows related to OPEB 196,842 Deferred inflows related to OPEB ( 93,077) Net Position of Governmental Activities $ 120,878,838 The accompanying notes are an integral part of these financial statements. 19 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 REVENUES Taxes Permits and fees Service fees Fines and fees Intergovernmental Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: General government Public safety Public environment Parks and recreation Cultural Health Administration Capital outlay Debt service: Principal Interest and fiscal charges Bond issue costs Payment to refunded bond escrow agent Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Issuance of debt Issuance of refunding debt Premiums from issuance of debt Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCES - BEGINNING FUND BALANCES - ENDING General Capital Projects Debt Service Fund Fund Fund $ 23,488,223 1,605,299 1,909,300 926,657 965,768 489,051 684.882 tcii7[i7:L]fFiiI 91,913 382,850 4 /4, / b.S $ 6,414,868 70,318 100,277 6,585,463 5,389,701 - - 13,926,364 - - 1,112,041 - - 2,350,370 - - 998,445 - - 498,871 - - 3,231,294 - - 649,055 8,308,326 - - - 4,565,000 - - 2,069,215 - 68,213 120,869 - - 5,489,912 28,156,141 8,376,539 12,244,996 1,913,039 ( 7,901,776) ( 5,659,533) ( 4,463) ( 4,463) 1,908,576 15,630,453 $ 17,539,029 The accompanying notes are an integral part of these financial statements. 20 4,620,000 303,214 117,632 ( 81,525) 4,959,321 ( 2,942,455) 16,056,765 $ 13,114,310 5,225,000 336,901 ( 97,632) 1,099,858 $ 1,002,226 Economic Nonmajor Total Development Governmental Governmental Corporation Funds Funds $ 4,172,238 452,214 196,003 4,820,455 358,810 496,357 $ 514,679 30,162 160,993 26,957 75,825 3.095 811,711 133,136 59,079 43,117 19,664 67,582 126,191 b55,lb/ 44b, /b9 $ 34,590,008 1,635,461 2,070,293 953,614 1,057,681 1,470,258 984,257 42,761,572 5,881,647 13,985,443 1,112,041 2,393,487 1,018,109 498,871 3,795,233 9,083,572 4,565,000 2,069,215 189,082 5,489,912 50,081,612 3,965,288 362,942 ( 7,320,040) 3,965,288 17,811,968 $ 21,777,256 2,871 ( 116,040) ( 113,169) 249,773 3,151,784 $ 3,401,557 4,620,000 5,225,000 640,115 120,503 ( 202,028) 10,403,590 3,083,550 53,750,828 $ 56,834,378 21 CITY OF SCHERTZ, TEXAS RECONCILIATION OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2019 Net Changes in Fund Balances - Governmental Funds $ 3,083,550 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the governmental activities statement of activities, that cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay 10,734,925 Depreciation expense ( 6,443,851) The net effect of miscellaneous transactions involving capital assets (i.e., sales, trade -ins, or donations) is to decrease net position. ( 49,102) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 55,951 Court fines 223 The issuance of long -term debt (e.g. bonds) provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas the amounts are deferred and amortized in the Statement of Activities. Issuance of debt ( 9,828,076) Repayment of principal of long -term debt 10,175,244 Amortization of: Premium on bond issuance ( 640,115) Loss on refunding ( 88,146) Current year changes in certain long -term liabilities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated Absences 925 Net pension liability ( 975,732) Total OPEB liability ( 177,698) Interest payable on long -term debt is accrued in the government -wide financial statements, whereas in the fund financial statements, interest expenditures are reported when due. 21,572 Change in Net Position of Governmental Activities $ 5,869,670 The accompanying notes are an integral part of these financial statements. 22 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2019 ASSETS Current assets: Cash and cash equivalents Investments Accounts receivable, net of allowance: Customer accounts Due from other funds Accrued interest Inventory Total Current Assets Noncurrent assets: Restricted assets: Cash and cash equivalents Investments Investment in joint ventures Capital assets: Land Water rights Buildings and improvements Machinery, equipment, and vehicles Infrastructure Construction in progress Less: accumulated depreciation Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding Deferred OPEB related outflows Deferred pension related outflows Total Deferred Outflows of Resources The accompanying notes are an integral part of these financial statements. 23 Business -Type Activities Enterprise Funds Water and Schertz Sewer System EMS $ 1,955,132 $ 106,347 17,369,593 616,919 3,995,689 2,848,334 - 16,139 6,324 - 85,015 61,906 23,411,753 3,649,645 3,457,678 - 13,179,666 - 11,416,770 - 1,696,942 - 70,245 - 5,489,184 - 3,195,258 2,812,292 100,295,885 - 9,248,439 - ( 34,132,122) ( 1,866,567) 113,917,945 945,725 137,329,698 4,595,370 60,079 - 19,018 37,378 401,652 789,399 480,749 826,777 Business -Type Activities Governmental Enterprise Funds Activities Total Enterprise Internal Fund Service Fund $ 2,061,479 $ - 17,986,512 - 6,844,023 - 16,139 - 6,324 - 146,921 - 27,061,398 - 3,457,678 - 13,179,666 - 11,416,770 - 1,696,942 - 70,245 - 5,489,184 - 6,007,550 - 100,295,885 - 9,248,439 - 35,998,689) - 114,863,670 - 141,925,068 - 60,079 - 56,396 - 1,191,051 - 1,307,526 - 24 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2019 LIABILITIES Current liabilities: Accounts payable Accrued liabilities Retainage payable Customer deposits Accrued interest Unearned revenue Current portion of long -term liabilities: Compensated absences Total OPEB liability Long -term debt Total Current Liabilities Noncurrent liabilities: Compensated absences Total OPEB liability Net pension liability Long -term debt Total Noncurrent Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred OPEB related inflows Deferred pension related inflows Total Deferred Outflows of Resources NET POSITION Net investment in capital assets Restricted for construction Unrestricted Total Net Position The accompanying notes are an integral part of these financial statements. 25 Business -Type Activities Enterprise Funds Water and Sewer System $ 3,137,174 69,966 172,373 632,780 101,523 431,088 23,940 5,473 1,620,000 6,194,317 95,760 204,589 1,478,539 15,971,088 17,749,976 23,944,293 8,993 1,936 10,929 68, 040, 291 13,232,638 32,582,296 $ 113,855,225 Schertz EMS $ 41,640 203,111 3,280 16 43,288 10,756 341,953 644,044 173,151 402,097 2,905,891 372,988 3,854,127 4,498,171 17,674 3,806 21,480 230,784 671,712 $ 902,496 Business -Type Activities Governmental Enterprise Funds Activities Toraa l Enterprise Internal Fund Service Fund $ 3,178,814 $ - 273,077 - 172,373 - 632,780 - 104,803 - 431,104 - 67,228 - 16,229 1,961,953 - 6,838,361 - 268,911 - 606,686 - 4,384,430 - 16,344,076 - 21,604,103 - 28,442,464 - 26,667 5,742 - 32,409 - 68,271,075 - 13,232,638 - 33,254,008 - $ 114,757,721 $ - 26 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 OPERATING REVENUES Fees charged to users Charges for premiums Other charges Miscellaneous Total Operating Revenues OPERATING EXPENSES Personnel services Contribution to joint ventures Water purchase Garbage contractor Sewage treatment General and administrative Contractual services Supplies and maintenance Depreciation Total Operating Costs Operating Income (Loss) NON - OPERATING REVENUES (EXPENSES) Investment revenue Lease revenue Interest expense Total Non - Operating Revenues (Expenses) Income Before Contributions and Transfers Capital contributions Transfers in CHANGE IN NET POSITION NET POSITION - BEGINNING PRIOR PERIOD ADJUSTMENT NET POSITION - BEGINNING, RESTATED NET POSITION - END OF YEAR The accompanying notes are an integral part of these financial statements. 27 Business -Type Activities Enterprise Funds Water and Schertz Sewer System EMS $ 27,018,506 $ 6,596,618 90,041 - 137,703 130,085 27,246,250 6,726,703 1,908,362 4,442,559 4,287,219 - 3,086,446 - 4,848,197 - 4,379,952 - 3,237,942 575,811 264,586 667,701 607,940 496,208 2,354,506 336,004 24,975,150 6,518,283 2,271,100 208,420 840,279 14,937 224,928 - ( 633,240) ( 11,348 431,967 3,589 2,703,067 212,009 1,975,524 - 81,525 - 4,760,116 212,009 97,678,339 690,487 11,416,770 - 109,095,109 690,487 $ 113,855,225 $ 902,496 Business -Type Activities Governmental Enterprise Funds Activities Total Internal Enterprise Service Funds Fund $ 33,615,124 $ - - 2,823,441 90,041 - 267,788 - 33,972,953 2,823,441 6,350,921 2,823,441 4,287,219 - 3,086,446 - 4,848,197 - 4,379,952 - 3,813,753 - 932,287 - 1,104,148 - 2,690,510 - 31,493,433 2,823,441 2,479, 520 - 855,216 - 224,928 - ( 644,588) - 435,556 - 2,915,076 - 1,975,524 - 81,525 - 4,972,125 - 98,368,826 - 11,416,770 - 109,785,596 - $ 114,757,721 $ - 28 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers and users Cash received from interfund services Cash paid to employees for services Cash paid to suppliers for goods and services Net Cash Provided By operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in Collection of cash advances from other funds Net Cash Provided By Noncapital Financing Activities CASH FLOWS FROM CAPITAL & RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets Proceeds from the issuance of debt Premium from issuance of debt Interest paid on long -term debt Principal paid on long -term debt Net Cash Used in Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Sale (purchase) of investments Payments from leases Interest and investment earnings Net Cash Provided By (Used in) Investing Activities Net (Decrease) Increase in Cash and Cash Equivalents Cash and cash equivalents at beginning of year: Cash and cash equivalents Restricted cash and cash equivalents Cash and cash equivalents at end of year Cash and cash equivalents Restricted cash and cash equivalents The accompanying notes are an integral part of these financial statements. 29 Business -Type Activities Enterprise Funds Water and Schertz Sewer System EMS $ 26,149,246 $ 6,766,373 ( 2,054,226) ( 4,360,732) ( 19,175,069) ( 1,575,204) 4,919,951 830,437 81,525 - 116,040 - 197,565 - ( 8,864,566) - 6,220,000 - 498,979 - ( 648,464) ( 11,348) ( 4,420,000) ( 360,133) ( 7,214,051) ( 371,481 11033,036 ( 559,779) 224,928 - 840,279 14,937 2,098,243 ( 544,842) 92 _* :: . 1,448,185 3,962,917 5,411,102 1,955,132 3,457,678 $ 5,412,810 192,233 192,233 106,347 $ 1U6,34/ Business -Type Activities Governmental Enterprise Funds Activities Total Internal Enterprise Service Fund $ 32,915,619 $ - - 2,823,441 ( 6,414,958) ( 2,823,441) ( 20,750,273) - 5,750,388 - 81,525 - 116,040 - 197,565 - ( 8,864,566) - 6,220,000 - 498,979 - ( 659,812) - ( 4,780,133) - ( 7,585,532) - 473,257 - 224,928 - 855,216 - 1,553,401 - ( 84,178) - 1,640,418 - 3,962,917 - 5,603,335 - 2,061,479 - 3,457,678 - $ 5,519,157 $ - 30 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation Decrease (increase) in accounts receivable Decrease (increase) in inventory Increase (decrease) in deferred pension outflows Increase (decrease) in deferred OPEB outflows Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in customer deposits Increase (decrease) in unearned revenue Increase (decrease) in compensated absences Increase (decrease) in net pension liability Increase (decrease) in deferred OPEB inflows Increase (decrease) in deferred pension inflows Increase (decrease) in total OPEB liability Net cash provided by operating activities SCHEDULE OF NON -CASH CAPITAL ACTIVITIES Developer contributions of capital assets The accompanying notes are an integral part of these financial statements. 31 Business -Type Activities Enterprise Funds Water and Schertz Sewer System EMS $ 2,271,100 $ 208,420 2,354,506 336,004 ( 1,088,390) 36,384 4,856 25,322 ( 165,109) ( 404,526) ( 5,588) ( 10,826) 1,532,357 139,194 20,091 ( 141,177) ( 8,614) 3,280 - 6 6,206 25,019 55,414 807,526 8,993 17,674 ( 67,739) ( 213,103) 1,868 1,240 $ 4,919,951 $ 830,437 1,975,524 Business -Type Activities Governmental Enterprise Funds Activities Total Internal Enterprise Service Fund $ 2,479,520 $ - 2,690,510 ( 1,052,006) 30,178 ( 569,635) ( 16,414) 1,671,551 ( 121,086) ( 5,334) 6 31,225 862,940 26,667 ( 280,842) 3,108 $ 5,750,388 $ 1,975.524 - 32 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2019 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Schertz is a municipal corporation governed by an elected mayor and five - member council. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below: A. Reporting Entity Component Units - As required by generally accepted accounting principles, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations; thus, data from these units are be combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the government -wide financial statements to emphasize it is legally separate from the government. The City reports the following component unit: 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 and appoints all board members. For financial reporting purposes, the SEDC is reported as a blended component unit due to the City having operational responsibility for the component unit, and that any debt issued by SEDC would be expected to be paid using City resources. Thus, SEDC is presented as a special revenue fund within the City's financial statements. Complete financial statements for the Schertz Economic Development Corporation may be obtained from City Hall. Joint Ventures - A joint venture is a legally separate entity that results from a contractual arrangement and that is owned, operated, or governed by two or more participating governments. The following entities meet the criteria as joint ventures. Separate financial statements for these entities may be obtained at City Hall. Schertz /Seguin Local Government Corporation - is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schertz and Seguin in acquiring, constructing, maintaining, and operating a water utility system. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. Cibolo Valley Local Government Corporation - is a public, nonprofit corporation organized July 28, 2011 to aid, assist, and act on behalf of the cities of Cibolo, Converse and Schertz in acquiring, constructing, maintaining, and operating a water utility system. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. B. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. 33 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges of customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary 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. Nonexchange revenues that are measurable but not available are recorded as unavailable revenue (a deferred inflow of resources). These revenues are generally property taxes and warrants outstanding. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Exchange revenues (payments for services) received in advance of the service being provided are recorded as unearned revenue. The City reports the following major governmental funds: The General Fund is the City's primary operating fund which accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long -term general obligation debt of governmental funds. The Capital Proiects Fund accounts for financial resources to be used for the acquisition and construction of major capital facilities and is principally financed by the sale of bonds or certificates of obligation and grants. Economic Development Corporation collects sales taxes to support business development and expansion within the City. The City reports the following major enterprise funds: The Water and Sewer System Fund accounts for the water and sewer services provided to the citizens through user charges. The EMS Fund accounts for the emergency medical services provided to the citizens of the City and other participating governments through user charges. Additionally, the City reports the following fund types: Internal Service Fund accounts for the City's group medical insurance program. 34 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. D. Cash and Cash Eauivalents The City's cash and cash equivalents are considered to be cash on hand and demand deposits. Cash is reported as restricted when it has restrictions on its use narrower than the purpose of the fund in which it is reported. This can result in differences in presentation between fund statements and government -wide statements. E. Investments The City is authorized to invest in (1) obligations of the United States or its agencies and instrumentalities; (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas of the United States; (4) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated of not less than "AA" or its equivalent; (5) certificates of deposit issued by state and national banks domiciled in Texas that are guaranteed or insured by the Federal Deposit Insurance Corporation (FDIC) or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date. In addition, the City is authorized to invest in local government investment pools. The investment pools operate in accordance with appropriate state laws and regulations and have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. Investments for the City are reported at fair value, except for the position in investment pools, which are reported at net asset value per share (which approximates fair value) even though it is calculated using the amortized cost method. The City categorized its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset's fair value: Level 1 inputs are quotes prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. F. Receivables and Pavables Activities between the funds that are representative of inter -fund 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. 35 Property taxes for the City are levied each October 1 on the taxable value as of the preceding January 1, the date a lien attaches, for all taxable real and personal property located in the City. Taxes are due by January 31 following the October 1 assessment date and become delinquent on February 1, at which time they begin accruing penalty and interest. The enforceable legal claim date for property taxes is the assessment date; therefore, the City did not record a receivable for accrual of future taxes at year end. Accordingly, no current taxes receivable are reported. Delinquent taxes have been reported in the financial statements net of the allowance for uncollectible taxes. Tax revenues are recognized as they become available. Accordingly, an amount equal to taxes not yet available has been reported as unavailable revenue (a deferred inflow of resources) at the government fund level. G. Inventories and Prepaid Items 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. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both governmental -wide and fund financial statements and in the fund financial statements are offset by a nonspendable fund balance which indicates they do not represent "available spendable resources ". H. Restricted Assets Certain proceeds from bonds, resources set aside for their repayment, and other restrictive agreements are classified as restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants and /or contractual arrangements. I. Capital Assets Capital assets, which include land, buildings and improvements, machinery, equipment, vehicles, and infrastructure assets (i.e., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. When capital assets are purchased, they are capitalized and depreciated in the government -wide financial statements and the proprietary fund statements. Capital assets are recorded as expenditures of the current period in the governmental fund financial statements. Capital assets are valued at cost where historical records are available and at an estimated cost where no records exist. Donated capital assets, donated works of art and similar items received as part of a service concession arrangement are reported at acquisition value, rather than fair value. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements to capital assets that materially extend the life of the asset or add to the value are capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during construction will not be capitalized in the governmental activities on the government -wide financial statements; however, capitalization of interest is required for business -type activities. There was no capitalized interest during the current fiscal year. Capital assets are depreciated over their useful lives on a straight -line basis as follows: Use Lives Assets (Years) Buildings and improvements 10 - 50 Machinery, equipment, and vehicles 2-20 Infrastructure 15 - 30 36 J. Deferred Inflows/ Outflows of Resources In addition to assets, the statement of financial position and /or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense /expenditure) until then. The City has the following items that qualify for reporting in this category. • Deferred charges on refunding - A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. • Pension and OPEB contributions after measurement date - These contributions are deferred and recognized in the following fiscal year. • Difference in expected and actual pension and OPEB experience - This difference is deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date. • Changes in actuarial assumptions and other inputs -This difference is deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date. In addition to liabilities, the statement of financial position and /or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has the following types of items that qualify for reporting in this category. • Unavailable revenue is reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. • Difference in projected and actual earnings on pension assets - This difference is deferred and amortized over a closed five -year period. • Difference in expected and actual pension and OPEB experience - This difference is deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date. • Changes in actuarial assumptions and other inputs - This difference is deferred and recognized overthe estimated average remaining lives of all members determined as of the measurement date. K. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits. There is no liability for unpaid accumulated sick leave since the City does not have a policy to pay any amounts when employees separate from service with the City. All vacation and compensatory time pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The general fund, water and sewer fund and the EMS fund are used to liquidate compensated absences. L. Pensions The net pension liability, deferred inflows, and outflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Texas Municipal Retirement System (TMRS), and additions to and deductions from TMRS's fiduciary net position have been determined on the same basis as they are reported by TMRS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 37 M. Other Post - Employment Benefits (OPEB) Supplemental Death Benefits Fund. For purposes of measuring the total Texas Municipal Retirement System Supplemental Death Benefit Fund (TMRS SDBF) OPEB liability, related deferred outflows and inflows of resources, and expense, City specific information about its total TMRS SDBF liability and additions to /deductions from the City's total TMRS SDBF liability have been determined on the same basis as they are reported by TMRS. The TMRS SDBF expense and deferred (inflows) /outflows of resources related to TMRS SDBF, primarily result from changes in the components of the total TMRS SDBF liability. Most changes in the total TMRS SDBF liability will be included in TMRS SDBF expense in the period of the change. For example, changes in the total TMRS SDBF liability resulting from current - period service cost, interest on the TOL, and changes of benefit terms are required to be included in TMRS SDBF expense immediately. Changes in the total TMRS SDBF liability that have not been included in TMRS SDBF expense are required to be reported as deferred outflows of resources or deferred inflows of resources related to TMRS SDBF. Retiree Health Insurance. For purposes of measuring the total OPEB liability, OPEB related deferred outflows and inflows of resources, and OPEB expense, benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Contributions are not required but are measured as payments by the City for benefits due and payable that are not reimbursed by plan assets. Information regarding the City's total OPEB liability is obtained from a report prepared by a consulting actuary, Gabriel Roeder Smith & Company. N. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. Bond premiums, discounts, and losses on defeasance are amortized over the life of the bonds using the straight line method. Bonds payable are reported net of the applicable bond premium or discount. Losses on defeasance are reported as deferred outflows of resources. Bond issuance costs are expensed as incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. O. Fund Balance Fund balances in governmental funds are classified as follows: Nonspendable - Represents amounts that cannot be spent because they are either not in spendable form (such as inventory or prepaid items) or legally required to remain intact. Restricted - Represents amounts that are constrained by external parties, constitutional provisions or enabling legislation. Committed - Represents amounts that can only be used for a specific purpose because of a formal action by the government's highest level of decision making authority: an ordinance adopted by City Council prior to the end of the fiscal year. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Assigned - Represents amounts which the City intends to use for a specific purpose but do not meet the criteria of restricted or committed. The City Council may make assignments through formal documentation in the minutes. The City Council authorized (by way of policy) the City Manager to also make assignments. The City Manager's assignments do not require formal action; however, the City Manager has not assigned any funds at this time. Unassigned - Represents the residual balance that may be spent on any other purpose of the City. Only the General Fund reports positive unassigned fund balances; if another fund were to have unassigned fund balance, it would be in the event of a deficit. 38 When an expenditure is incurred for a purpose in which multiple classifications are available, the City considers restricted balances spent first, committed second, and assigned third. P. Net Position Net position represents the difference between assets plus deferred outflows of resources less liabilities and deferred inflows of resources. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net position is reported as restricted when there are limitations imposed by creditors, grantors, or laws or regulations of other governments. Q. Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. R. 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. S. Reclassifications Certain reclassifications have been made in the presentation of the September 30, 2019 financial statements. All comparative information for prior periods has been reclassified to match the new presentation. The changes in presentation had no impact on the changes in net position or fund balance. II. DETAILED NOTES ON ALL FUNDS AND ACTIVITIES A. Cash, Cash Equivalents and Investments As of September 30, 2019, the City had the following pooled investment funds: Reported Value Investment type: LOGIC $ 18,377,749 Lone Star Investment Pool 29,184,721 Texas CLASS 30,165,581 Certificates of Deposit 4,247,482 U.S. Agency Securities 3,223,017 Total $ 85,198,550 Weighted Average Maturity (days) 49 42 41 44 424 The City's U.S. Agency Securities recurring fair value measurements as of year -end are quoted market prices (level 1 inputs) for $3,148,081 and a matrix pricing model (level 2 inputs) for $74,936. 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. 39 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, 2019, the City's investments in the pooled investment funds were rated AAAm by Standard & Poor's. The City has also invested in debt securities provided by the Federal Home Loan Bank, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Farm Credit Banks, and U.S Treasury Notes. As of September 30, 2019, the City's investments in debt securities were rated BBB+ by Standard & Poor's. Custodial Credit Risk - Deposits. In the case of deposits, this is the risk that in the event of a bank failure, the government's deposits may not be returned. As of September 30, 2019, the City's cash and cash equivalents (including certificates of deposit, and component unit holdings) were fully collateralized by the City's depository by a combination of pledged collateral and FDIC insurance. All collateral is held in the City's name. Custodial Credit Risk - Investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investment or collateral securities that are in the possession of an outside party. All of the government securities owned by the City are held by its agent in the City's name. Restricted Cash - Cash is restricted in the Proprietary fund for construction projects, impact fees and customer deposits. B. Property Taxes Taxes are levied on and payable as of October 1. The City has contracted with the Guadalupe County Tax Assessor - Collector to collect taxes on its behalf. Current taxes become delinquent February 1. Current year delinquent taxes not paid by July 1 are turned over to attorneys for collection action. The total taxable value as of October 1, 2018, upon which the fiscal 2019 levy was based, was $3,587,260,553 (i.e., market value less exemptions). The estimated market value was $4,707,771,574, making the taxable value 76.2% of the estimated market value. The City is permitted by the Constitution of the State of Texas to levy taxes up to $2.50 per $100 of taxable assessed valuation for all governmental purposes. Pursuant to a decision of the Attorney General of the State of Texas, up to $1.50 per $100 of assessed valuation may be used for the payment of long -term debt. The combined tax rate to finance general governmental services, including the payment of principal and interest on long -term debt for the year ended September 30, 2019, was $0.5146 per $100 of assessed value, which means that the City has a tax margin of $1.9854 for each $100 value and could increase its annual tax levy by approximately $71,221,471 based upon the present assessed valuation before the limit is reached. However, the City may not adopt a tax rate that exceeds the tax rate calculated in accordance with the Texas Property Tax Code without holding a public hearing. The Property Tax Code subjects an increase in the effective tax rate to a referendum election, if petitioned by registered voters, when the effective tax rate increase is more than eight percent (8 %) of the previous year's effective tax rate. Property taxes are recorded as receivables and unearned revenues at the time the taxes are assessed. In governmental funds, revenues are recognized as the related ad valorem taxes are collected. Additional amounts estimated to be collectible in the time to be a resource for payment of obligations incurred during the fiscal year and therefore susceptible to accrual in accordance with generally accepted accounting principles have been recognized as revenue. In the government -wide financial statements, the entire levy is recognized as revenue, net of estimated uncollectible amounts (if any), at the levy date. 40 C. Receivables Receivables as September 30, 2019 for the government's individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: D. Deferred Inflows and Outflows of Resources Governmental funds report unavailable revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of unavailable revenue and unavailable revenue reported in the governmental funds were as follows: Unavailable General Fund Delinquent property taxes receivable $ 160,520 Court fines 1,594,126 Total General Fund 1,754,646 Debt Service Fund Delinquent property taxes receivable 82,682 Total Debt Service Fund 82,682 Total Governmental Funds $ 1,837,328 Additionally, the proprietary funds and governmental activities statements of net position report various deferred outflows and inflows of resources, primarily due to pensions and OPEB, that are summarized by column. The following table presents the disaggregated amounts. Deferred outflows: Charge on refunding Related to pensions Related to OPEB - SDBF Related to OPEB - Retiree Health Plan Total deferred outflow Deferred inflows: Service concession arrangement Related to pensions Related to OPEB - SDBF Related to OPEB - Retiree Health plan Total deferred inflow Business -type Activities Governmental Water/ Activities Sewer EMS Totals $ 672,495 $ 60,079 $ - $ 732,574 4,157,175 401,652 789,399 5,348,226 92,432 8,930 17,552 118,914 104,410 10,088 19,826 134,324 $ 5,026,512 $ 480,749 $ 826,777 $ 6,334,038 $ 321,780 $ - $ - 321,780 20,043 1,936 3,806 25,785 36,258 3,503 6,885 46,646 56,819 5,490 10,789 73,098 $ 434,900 $ 10,929 $ 21,480 $ 467,309 41 Governmental Activities Business -type Activities General Economic Capital Debt Nonmajor Water and Schertz Fund Development Projects Service Funds Sewer Fund EMS Receivables: Property taxes $ 170,766 $ - $ $ 87,960 $ $ $ Sales tax 1,478,722 739,361 - Occupancy taxes - - 63,789 Franchise taxes 473,890 - Customers 2,796 - - - - 4,101,256 8,830,074 Court fines 3,916,772 - - - - Grants - - 52,248 - - Other 230,816 8,448 - - - 66,478 31,240 Gross receivables 6,273,762 747,809 52,248 87,960 63,789 4,167,734 8,861,314 Less: allowance for uncollectible accounts ( 2,378,687} - - ( 5,278) - ( 172,045} ( 6,012,980) Net receivables $ 3,895,075 $ 747,809 $ 52,248 $ 82,682 $ 63,789 $ 3,995,689 $ 2,848,334 D. Deferred Inflows and Outflows of Resources Governmental funds report unavailable revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. At the end of the current fiscal year, the various components of unavailable revenue and unavailable revenue reported in the governmental funds were as follows: Unavailable General Fund Delinquent property taxes receivable $ 160,520 Court fines 1,594,126 Total General Fund 1,754,646 Debt Service Fund Delinquent property taxes receivable 82,682 Total Debt Service Fund 82,682 Total Governmental Funds $ 1,837,328 Additionally, the proprietary funds and governmental activities statements of net position report various deferred outflows and inflows of resources, primarily due to pensions and OPEB, that are summarized by column. The following table presents the disaggregated amounts. Deferred outflows: Charge on refunding Related to pensions Related to OPEB - SDBF Related to OPEB - Retiree Health Plan Total deferred outflow Deferred inflows: Service concession arrangement Related to pensions Related to OPEB - SDBF Related to OPEB - Retiree Health plan Total deferred inflow Business -type Activities Governmental Water/ Activities Sewer EMS Totals $ 672,495 $ 60,079 $ - $ 732,574 4,157,175 401,652 789,399 5,348,226 92,432 8,930 17,552 118,914 104,410 10,088 19,826 134,324 $ 5,026,512 $ 480,749 $ 826,777 $ 6,334,038 $ 321,780 $ - $ - 321,780 20,043 1,936 3,806 25,785 36,258 3,503 6,885 46,646 56,819 5,490 10,789 73,098 $ 434,900 $ 10,929 $ 21,480 $ 467,309 41 E. Interfund Balances and Transfers The composition of interfund balances as of September 30, 2019 is as follows: Due From Due To Amount Purpose EMS General $ 16,139 Short -term pool cash loan The following schedule briefly summarizes the City's transfer activity for the year ending September 30, 2019: Transfer From Transfer To General Nonmajor governmental Capital Projects Water & Sewer Nonmajor governmental Capital Projects F. Capital Assets Amount Purpose $ 4,463 Suplement funds sources 81,525 Fund Drainage projects 116,040 Street maintenance funding Capital asset activity for the year ended September 30, 2019 was as follows: Governmental activities: Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Machinery, equipment, and vehicles Street and infrastructure Total assets being depreciated Less accumulated depreciation for: Buildings and improvements Machinery, equipment, and vehicles Street and infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Transfers/ Ending Balance Additions Retirements Balance $ 8,069,499 $ 3,700 $ - $ 8,073,199 16,640,216 8,262,907 ( 3,857,455) 21,045,668 24,709,715 8,266,607 ( 3,857,455) 29,118,867 44,494,208 2,173,159 ( 299,926) 46,367,441 12,299,312 932,682 ( 273,897) 12,958,097 114,194,414 3,219,932 - 117,414,346 170,987,934 6,325,773 ( 573,823) 176,739,884 ( 13,845,761) ( 1,567,470) 299,926 ( 15,113,305) ( 6,195,881) ( 1,171,760) 224,795 ( 7,142,846) ( 36,097,682) ( 3,704,621) - ( 39,802,303) ( 56,139,324) ( 6,443,851) 524,721 ( 62,058,454) 114,848,610 ( 118,078) ( 49,102) 114,681,430 $_139,558 325 $ 8,148,529 $( 3,906,557) $ 143,800,297 42 Beginning Transfers/ Ending Balance Additions Retirements Balance Business -type activities: General government $ Capital assets, not being depreciated: Public safety 1,062,066 Public environment Land $ 1,357,539 $ 339,488 $( 85) $ 1,696,942 Water rights 70,245 - - 70,245 Construction in progress 3,391,127 7,752,183 ( 1,894,871) 9,248,439 Total capital assets, not being Water and sewer system $ 2,354,506 depreciated 4,818,911 8,091,671 ( 1,894,956) 11,015,626 Capital assets being depreciated: Buildings and improvements 4,695,503 835,683 ( 42,002) 5,489,184 Machinery, equipment, and vehicles 5,441,459 764,497 ( 198,406) 6,007,550 Infrastructure 97,225,671 3,034,712 35,502 100,295,885 Total assets being depreciated 107,362,633 4,634,892 ( 204,906) 111,792,619 Less accumulated depreciation for: Buildings and improvements ( 2,630,010) ( 72,865) 6,500 ( 2,696,375) Machinery, equipment, and vehicle< ( 4,928,317) ( 622,400) 198,406 ( 5,352,311) Infrastructure ( 25,954,758) ( 1,995,245) - ( 27,950,003) Total accumulated depreciation ( 33,513,085) ( 2,690,510) 204,906 ( 35,998,689) Total capital assets being depreciated, net 73,849,548 1,944,382 - 75,793,930 Business -type activities capital assets, net $ 78,668,459 $ 10,036,053 $( 1,894,956) $ 86,809,556 Depreciation expense was charged to functions /programs of the primary government as follows: Governmental activities: General government $ 568,105 Public safety 1,062,066 Public environment 3,853,021 Parks and recreation 894,989 Cultural 58, 617 Administration 7,053 Total $ 6,443,851 Business -type activities: Water and sewer system $ 2,354,506 EMS 336,004 Total $ 2,690,510 G. Operating Leases The City has agreements with several telecommunication companies to place cellular towers on City water towers. The following schedule represents the future minimum lease payments. Year Ending 30 -Sep 2020 2021 2022 2023 2024 2025 -2029 43 290,528 305,054 320,307 336,322 1,522,069 $ 3,050,972 H. Lonci-Term Debt Changes in long -term debt for the year ending September 30, 2019 are as follows: Total business -type $ 16,698,302 $ 6,783,564 $( 4,839,698) $ 18,642,168 $ 2,029,181 Bonds Payable The City issues a variety of long -term debt instruments in order to acquire and /or construct major capital facilities and equipment for governmental activities. These instruments include general obligation bonds, certificates of obligation, and tax notes. These debt obligations are secured by primarily future property tax revenues. In some cases, these bonds are also secured by a pledge of net revenues from the utility system, emergency medical services and economic development sales taxes. However, the amount of the formal pledge is generally limited to $1,000. Proprietary operating revenues for the year exceeded $33.6 million and sales tax revenue was $12.5 million. Additionally, certain obligations that were marketed as private placements have been separately identified; however, the terms of these obligations are not significantly different than other obligations and do not have substantive acceleration clauses. Should the City default on these bonds, any registered owner of the obligations is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the City to make payment. In November 2018, the City issued $8,570,000 in General Obligation and Refunding Bonds, Series 2018. The proceeds were to be used within 90 days of issuance to pay off the outstanding balances of the General Obligation Refunding Bonds, Series 2009, General Obligation Refunding Bonds, Series 2010, and Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2007, in the amounts of $4,705,000, $630,000, and $2,935,000, respectively. The reacquisition price exceeded the net carrying amount of the old debt by $24,877. This amount will be amortized over the life of the refunding debt. The refunding transaction will result in an estimated present value savings of $758,899. It also provided net proceeds of $605,000 that will be used to finance additional capital projects. In August 2019, the City issued $7,495,000 in Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2019, pursuant to the constitution and general laws of the State of Texas, particularly, Subchapter C of Chapter 271 of the Texas Local Government Code, as amended, and in ordinance adopted by the City Council. The certificates constitute direct and general obligations of the City payable from ad valorem taxes levied against all payable property within the City, as well as pledged revenue of up to $1,000 of the surplus revenues from proprietary funds. The bonds and certificates were issued for the purpose of financing numerous capital projects throughout the City, primarily for the purpose of expanding and improving infrastructure. 44 Beginning Refunded/ Ending Amount Due Balance Issued Retired Balance Within One Year Governmental activities: General Obligation Bonds $ 38,795,000 $ 5,830,000 $( 7,660,000) $ 36,965,000 $ 2,350,000 Certificates of Obligation 12,940,000 4,015,000 ( 720,000) 16,235,000 1,000,000 General Obligation Bonds - Private Placement 12,690,000 - ( 1,335,000) 11,355,000 1,350,000 Tax Notes - Private Placement 715,000 - ( 185,000) 530,000 185,000 Premium from Debt 1,964,862 640,114 ( 266,679) 2,338,297 - Capital Lease 34,264 - ( 8,565) 25,699 8,565 Compensated Absences 1,227,324 231,646 ( 232,571) 1,226,399 245,280 Total governmental $ 68,366,450 $ 10,716,760 $( 10,407,815) $ 68,675,395 $ 5,138,845 Business -type activities: General Obligation Bonds $ 705,000 $ 2,740,000 $( 230,000) $ 3,215,000 $ 570,000 Certificates of Obligation 12,815,000 3,480,000 ( 3,965,000) 12,330,000 825,000 General Obligation Bonds - Private Placement 1,420,000 - ( 190,000) 1,230,000 190,000 Tax Notes - Private Placement 765,000 - ( 305,000) 460,000 310,000 Unamortized Premium 398,835 498,979 ( 26,206) 871,608 - Capital Lease 289,553 - ( 90,132) 199,421 66,953 Compensated Absences 304,914 64,585 ( 33,360) 336,139 67,228 Total business -type $ 16,698,302 $ 6,783,564 $( 4,839,698) $ 18,642,168 $ 2,029,181 Bonds Payable The City issues a variety of long -term debt instruments in order to acquire and /or construct major capital facilities and equipment for governmental activities. These instruments include general obligation bonds, certificates of obligation, and tax notes. These debt obligations are secured by primarily future property tax revenues. In some cases, these bonds are also secured by a pledge of net revenues from the utility system, emergency medical services and economic development sales taxes. However, the amount of the formal pledge is generally limited to $1,000. Proprietary operating revenues for the year exceeded $33.6 million and sales tax revenue was $12.5 million. Additionally, certain obligations that were marketed as private placements have been separately identified; however, the terms of these obligations are not significantly different than other obligations and do not have substantive acceleration clauses. Should the City default on these bonds, any registered owner of the obligations is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring the City to make payment. In November 2018, the City issued $8,570,000 in General Obligation and Refunding Bonds, Series 2018. The proceeds were to be used within 90 days of issuance to pay off the outstanding balances of the General Obligation Refunding Bonds, Series 2009, General Obligation Refunding Bonds, Series 2010, and Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2007, in the amounts of $4,705,000, $630,000, and $2,935,000, respectively. The reacquisition price exceeded the net carrying amount of the old debt by $24,877. This amount will be amortized over the life of the refunding debt. The refunding transaction will result in an estimated present value savings of $758,899. It also provided net proceeds of $605,000 that will be used to finance additional capital projects. In August 2019, the City issued $7,495,000 in Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2019, pursuant to the constitution and general laws of the State of Texas, particularly, Subchapter C of Chapter 271 of the Texas Local Government Code, as amended, and in ordinance adopted by the City Council. The certificates constitute direct and general obligations of the City payable from ad valorem taxes levied against all payable property within the City, as well as pledged revenue of up to $1,000 of the surplus revenues from proprietary funds. The bonds and certificates were issued for the purpose of financing numerous capital projects throughout the City, primarily for the purpose of expanding and improving infrastructure. 44 A summary of the terms of long -term debt outstanding at September 30, 2019, is as follows: 45 Issue Amount Maturity Rate Balance Governmental Activities General Obligation Bonds 2011 Series $ 8,250,000 2036 3.0% - 6.0% $ 6,580,000 2012 Series 7,625,000 2032 2.00% 5,440,000 2014 Series, Refunding 8,450,000 2030 2.0% -4.0% 8,000,000 2015 Series, Refunding 4,185,000 2031 2.0% - 3.25% 2,505,000 2016 Series 5,880,000 2036 2.0% -4.0% 5,055,000 2017 Series 3,935,000 2037 2.0% -4.0% 3,650,000 2018 Series, Refunding 5,830,000 2033 3.125% - 5% 5,735,000 Private Placement obligations 2007 Series GO 6,000,000 2027 4.07% 1,865,000 2011A Series GO Refunding 6,745,000 2024 2.33% 1,310,000 2018 Series GO Refunding 6,035,000 2028 2.12% 4,410,000 2015 Tax Notes 245,000 2021 1.75% 4,635,000 2015A Tax Notes 1,020,000 2023 1.54% 4,015,000 Certificates of Obligation 2016 Series A 2,375,000 2036 2.0% -4.0% 2,905,000 2016 Series B 1,475,000 2036 3.0% - 3.75% 2,965,000 2017 Series 4,935,000 2037 3.0% - 3.75% 5,485,000 2018 Series 4,845,000 2038 3.0% - 5.0% 75,000 2019 Series 4,015,000 2039 2.5% - 5% 455,000 Total Governmental Long -Term Obligations $ 65,085,000 Issue Amount Maturity Rate Balance Business -type Activities General Obligation Bonds 2011 Series, Refunding $ 2,675,000 2021 2.0% - 3.0% $ 475,000 2018 Series, Refunding 2,740,000 2026 3.125% - 5% 2,740,000 Certificates of Obligation 2013 Series 4,965,000 2033 2.0% -4.0% 3,095,000 2017 Series 540,000 2022 3.0% - 3.75% 335,000 2018 Series 5,595,000 2028 3.0% - 5.0% 5,420,000 2019 Series 3,480,000 2039 2.5% - 5% 3,480,000 Private Placement obligations 2013 Series GO Refunding 2,130,000 2025 2.58% 1,230,000 2015 Tax Notes 1,880,000 2021 1.75% 460,000 Total Business -Type Long -Term Obligations $ 17,235,000 45 Annual future debt service requirements of bonded debt as of September 30, 2019, are as follows: Governmental activities: Private Placement Debt General Obligation Bonds Certificates of Obligation Year Ended Principal Interest September 30, Principal Interest Total September 30, Principal Interest Total Principal Interest Total 1,635,720 2021 1,380,000 249,534 1,629,534 2022 1,595,000 2020 $ 2,350,000 $ 1,286,323 $ 3,636,323 $ 1,000,000 $ 547,444 $ 1,547,444 2021 2,350,000 1,199,709 3,549,709 1,035,000 510,519 1,545,519 2022 2,005,000 1,119,576 3,124,576 1,070,000 472,219 1,542,219 2023 2,090,000 1,046,890 3,136,890 1,120,000 432,319 1,552,319 2024 2,195,000 970,158 3,165,158 1,010,000 391,244 1,401,244 2025 -2029 12,625,000 3,575,784 16,200,784 3,835,000 1,467,156 5,302,156 2030 -2034 10,785,000 1,245,647 12,030,647 3,990,000 832,391 4,822,391 2035 -2039 2,565,000 97,594 2,662,594 3,175,000 198,156 3,373,156 Total $ 36,965,000 $ 10,541,681 $ 47,506,681 $ 16,235,000 $ 4,851,447 $ 21,086,447 Private Placement Debt Tax Notes Principal General Obligation Bonds Year Ended Total Principal Interest September 30, Principal Interest Total 5,397 195,397 155,000 2,387 2020 $ 1,350,000 $ 285,720 $ 1,635,720 2021 1,380,000 249,534 1,629,534 2022 1,595,000 210,303 1,805,303 2023 1,625,000 167,982 1,792,982 2024 1,640, 000 124,903 1,764,903 2025 -2029 3,765,000 184,456 3,949,456 Total $ 11,355,000 $ 1,222,898 $ 12,577,898 2030 -2034 - Business -type activities: - 3,410,000 659,356 2035 -2039 General Obligation Bonds - Tax Notes Principal Interest Total Total Principal Interest $ 185,000 $ 8,320 $ 193,320 190,000 5,397 195,397 155,000 2,387 157,387 708,700 850,000 546,104 $ 530,000 $ 16,104 $ 93,500 463,500 605,000 Certificates of Obligation 390,000 Year Ended September 30, Principal Interest Total Principal Interest 2020 $ 570,000 $ 142,288 $ 712,288 $ 825,000 $ 432,663 2021 590,000 118,700 708,700 850,000 404,675 2022 370,000 93,500 463,500 605,000 378,775 2023 390,000 74,500 464,500 510,000 356,300 2024 410,000 54,500 464,500 530,000 333,613 2025 -2029 885,000 44,625 929,625 3,025,000 1,296,088 2030 -2034 - - - 3,410,000 659,356 2035 -2039 - - - 2,575,000 157,738 Total $_3,215 000 $ 528,113 $ 3,743,113 $ 12,330,000 $ 4,019,206 Private Placement Debt General Obligation Bonds Year Ended September 30, Principal Interest Total 2020 $ 190,000 $ 29,283 $ 219,283 2021 200,000 24,252 224,252 2022 205,000 19,028 224,028 2023 205,000 13,739 218,739 2024 215,000 8,321 223,321 2025 -2029 215,000 2,774 217,774 Total $__1 230 00 $ 97,397 $ 1,327,397 46 Tax Notes Tota I $ 1,257,663 1,254,675 983,775 866,300 863,613 4,321,088 4,069,356 2,732,738 $ 16,349,206 Principal Interest Total $ 310,000 $ 8,050 $ 318,050 150,000 2,625 152,625 $___460,_000 $ 10,675 $ 470,675 Capital Leases The City enters into various lease agreements to finance machinery and equipment; they are classified as capital leases due to bargain - purchase options. Therefore, capital assets and a related capital lease obligation have been recorded at the present value of the future minimum lease payments at the inception date. The lease obligations are secured by the purchased equipment. The assets acquired through capital lease are reported in capital assets with the following accumulated depreciation at September 30, 2019: Governmental Business -type Assets: Activities Activities Equipment $ 42,825 $ 680,671 Less: accumulated depreciation 8,565) { 414,297) Total $ 34,260 $ 266,374 Future minimum lease payments are as follows: Governmental Business -type Year Ending September 30, Activities Activities 2020 $ 8,565 $ 67,313 2021 8,565 67,313 2022 8,569 65,875 Total payments 25,699 200,501 Less: amount representing interest - ( 1,080) Present value of minimum lease payments $___25,.699 $__199,.421 I. Net Pension and Total OPEB Liabilities and Expenses Amounts are aggregated into a single net pension liability and total OPEB liability, and expenses for certain columns. Below is the detail of net pension liability and total OPEB liability and expenses for governmental and business -type activities. Net pension liability Total OPEB liability: Due within one year: TMRS SDBF Retiree health plan Total due within one year Due in within more than one year: TMRS SDBF Retiree health plan Total due in more than one year Total OPEB liability Pension expense OPEB expense: TMRS SDBF Retiree Health Plan Total OPEB expense Business Governmental Water/ Activities Sewer Activities EMS Totals $ 15,303,179 $ 1,478,539 $ 2,905,891 $ 19,687,609 $ 3,026 $ 293 $ 575 $ 3,894 53,617 5,180 10,181 68,978 56,643 5,473 10,756 72,872 549,158 53,057 104,278 706,493 1,568,389 151,532 297,819 2,017,740 2,117,547 204,589 402,097 2,724,233 $ 2,174,190 $ 210,062 $ 412,853 $ 2,797,105 Business -type Activities Governmental Water/ Activities Sewer EMS Totals $ 3,442,174 $ 13,250 $ 664,506 $ 4,119,930 $ 57,836 $ 4,679 $ 8,688 $ 71,203 176,504 6,066 10,155 192,725 $ 234,340 $ 10,745 $ 18,843 $ 263,928 47 A. Retirement Plan Plan Description. The City of Schertz participates as one of 883 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the state of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple - employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the system with a six- member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS's defined benefit pension plan is a tax - qualified plan under Section 401(a) of the Internal Service Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS. Benefits Provided. TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the City- financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest. The City grants monetary credits for service rendered of a theoretical amount equal to two times what would have been contributed by the employee, with interest. Monetary credits, also known as the matching ratio, are 200% of the employee's accumulated contributions and are only payable in the form of an annuity. Beginning in 2008, the City granted an annually repeating (automatic) basis monetary credit referred to as an updated service credit (USC) which is a theoretical amount that takes into account salary increases or plan improvements. If at any time during their career an employee earns a USC, this amount remains in their account earning interest at 5% until retirement. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer match plus employer- financed monetary credits, such as USC, with interest were used to purchase an annuity. Additionally, initiated in 2008, the City provided on an annually repeating (automatic) basis cost of living adjustments (COLA) for retirees equal to a percentage of the change in the consumer price index (CPI). At the December 31, 2018 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 111 Inactive employees entitled to but not yet receiving benefits 191 Active employees 328 Total 630 Contributions. The contribution rates for employees in TMRS are either 5 %, 6 %, or 7% of employee gross earnings, and the City matching percentages are either 100 %, 150 %, or 200 %, both as adopted by the governing body of the City. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City were 16.04% and 16.01% in calendar years 2019 and 2018, respectively. The City's contributions to TMRS for the year ended September 30, 2019 were $3,129,413 and were equal to the required contributions. Net Pension Liability. The City's Net Pension Liability (NPL) was measured as of December 31, 2018, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. The net pension liability is typically liquidated through the General Fund and Enterprise Funds. 48 Actuarial Assumptions The Total Pension Liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions: Inflation 2,50% per year Overall payroll growth 3.00% per year Investment rate of return 6.75% net of pension plan investment expense, including inflation Salary increases were based on a service - related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender- distinct RP2000 Combined Health Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103 %. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender- distinct RP2000 Disabled Retiree Mortality Tables with Blue Collar adjustment are used with males rates multiplied by 109% and female rates multiplied by 103% with a 3 -year set - forward for both males and females. IN addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. Actuarial assumptions used in the December 31, 2018 valuation were based on the results of actuarial experience studies. The experience study in TMRS was for the period December 31, 2010 through December 31, 2014. Healthy post- retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long -term funding needs of TMRS. The long -term expected rate of return on pension plan investments was determined using a building -block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long -term expected rate of return by weighting the expected future rates of return by the target asset allocation percentage and by adding the expected inflation. In determining their best estimate of a recommended investment return assumption under the various alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive). The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Long -Term Expected Real Rate of Return Target Allocation (Arithmetic) U.S. Equities 17.50% 4.55% International Equity 17.50% 6.35% Core Fixed Income 10.00% 1.00% Non -Core Fixed Income 20.00% 3.90% Real Estate 10.00% 3.80% Real Return 10.00% 4.50% Absolute Return 10.00% 3.75% Private Equity 5.00% 7.50% Total 100.0% 49 Discount Rate The discount rate used to measure the Total Pension Liability was 6.75 %. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long -term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. The below schedule presents the changes in the Net Pension Liability as of December 31, 2018: Balance at 12/31/2017 Changes for the year: Service cost Interest Difference between expected and actual experience Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Netchanges Balance at 12/31/2018 Increase (Decease Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) -(b) $ 66,054,349 $ 51,419,640 $ 14,634,709 3,301,265 - 3,301,265 4,505,483 - 4,505,483 34,393 - 34,393 - 3,033,936 ( 3,033,936) - 1,326,518 ( 1,326,518) - ( 1,540,890) 1,540,890 ( 1,914,159) ( 1,914,159) - - ( 29,768) 29,768 - ( 1,555) 1,555 5.926.982 874.082 5.052.900 $ 71,981,331 $ 52,293,722 $ 19,687,609 The following presents the net pension liability of the City, calculated using the discount rate of 6.75 %, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1- percentage point lower (5.75 %) or 1- percentage point higher (7.75%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (5.75 %) (6.75 %) (7.75 %) Net pension liability $ 31,938,591 $ 19,687,609 $ 9,854,538 Pension Expense and Deferred Outflows /Inflows of Resources Related to Pensions. For the year ended September 30, 2019, the City recognized pension expense of $4,119,930. Also, as of September 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Contributions subsequent to the measurement date Total Deferred Outflows Deferred Inflows of Resources of Resources $ 413,662 $ 25,785 20,186 2,659,438 2,254,940 $ 5,348,226 $ 25,785 $2,254,940 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For the Year Ended September 30 2020 $ 995,488 2021 509,273 2022 489,003 2023 1,069,999 2024 3,738 B. Other Post - Employment Benefits The City participates in two defined - benefit other post - employment benefit (OPEB) plans: the Texas Municipal Retirement System Supplemental Death Benefits Fund (TMRS SDBF, and its own single - employer retiree health plan. Both are described in detail below. The total OPEB liabilities of both plans are typically liquidated through the General Fund and Enterprise Funds. TMRS Supplemental Death Benefits Fund Plan Description. The City voluntarily participates in a single - employer other postemployment benefit (OPEB) plan administered by TMRS. The Plan is a group -term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). The Plan is established and administered in accordance with the TMRS Act identically to the City's pension plan. SDBF includes coverage for both active and retired members, and assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75. Benefits Provided. The SDBF provides group -term life insurance to City employees who are active members in TMRS, including or not including retirees. The City Council opted into this program via an ordinance, and may terminate coverage under, and discontinue participation in, the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. Membership in the plan at December 31, 2018, the valuation and measurement date, consisted of: Inactive employees or beneficiaries currently receiving benefits 88 Inactive employees entitled to but not yet receiving benefits 59 Active employees 328 Total 475 Contributions. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation, which was 0.12% for 2019 and 0.13% for 2018, of which 0.02% represented the retiree -only portion for each year, as a percentage of annual covered payroll. The rate is equal to the cost of providing one -year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to prefund retiree term life insurance during employees' entire careers. The City's contributions to the SDBF for the years ended September 30, 2019 were $3,893 representing contributions for both active and retiree coverage, which equaled the required contributions each year. Total OPEB Liability. The Total OPEB Liability in the December 31, 2018 actuarial valuation was determined using the following actuarial assumptions and inputs: Inflation rate Actuarial cost method Discount rate Projected salary increases 51 2.5% per annum Entry age normal 3.71% 3.5% to 10.5% including inflation Administrative expenses for the SDBF are paid through the TMRS Pension Trust Fund and are wholly accounted for under the provisions of GASB Statement No. 68. Salary increases were based on a service - related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103 %. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender- distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by 109% and female rates multiplied by 103% with a 3 -year set - forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who became disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. The actuarial assumptions used in the December 31, 2018 valuation were based on the results of an actuarial experience study for the period December 31, 2010 to December 31, 2014. The SDBF program is treated as an unfunded OPEB plan because the SDBF trust covers both actives and retirees and the assets are not segregated for these groups. As such, a single discount rate of 3.71% was used to measure the total OPEB liability. Because the plan is essentially a "pay -as- you -go" plan, the single discount rate is equal to the prevailing municipal bond rate. The source of the municipal bond rate was fixed - income municipal bonds with 20 years to maturity that include only federally tax - exempt municipal bonds as reported in Fidelity Index's "20 -year Municipal GO AA Index" as of December 31, 2018. Discount Rate Sensitivity Analysis. The following schedule shows the impact of the total OPEB liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.71%) in measuring the total OPEB liability. 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (2.71 %) (3.71 %) (4.71 %) Total SDB OPEB Liability $ 857,691 $ 710,387 $ 598,784 Changes in the Total OPEB Liability. Total City's Total OPEB Liability (TOL), based on the above actuarial factors, as of December 31, 2018, the measurement and actuarial valuation date, was calculated as follows: Changes in assumptions and other inputs reflect a change in the discount rate from 3.31% to 3.71 %. 52 Total OPEB Liability Balance at 12/31/2017 $ 622,941 Changes for the year: Service cost 37,794 Interest 21,182 Difference between expected and actual experience 86,276 Changes of assumptions or other inputs ( 54,027) Benefit payments, including refunds of employee contributions ( 3,779) Net changes 87,446 Balance at 12/31/2018 $ 710,387 Changes in assumptions and other inputs reflect a change in the discount rate from 3.31% to 3.71 %. 52 OPEB Expense and Deferred Inflows and Outflows of Resources Related to OPEB. For the year ended September 30, 2019, the City recognized OPEB expense of $71,203. Also, as of September 30, 2019, the City reported deferred outflows and inflows of resources related to the TMRS OPEB from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Contributions subsequent to the measurement date Total Deferred Outflows Deferred Inflows of Resources of Resources 74,490 $ - 41,613 46,646 2,811 - $ 118,914 $ 46,646 $2,811 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the Total OPEB liability for the year ending September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to the TMRS OPEB will be recognized in OPEB expense in future periods as follows: For the Year Ended September 30 2020 $ 12,228 2021 12,228 2022 12,228 2023 12,228 2024 12,228 Thereafter 8,318 City of Schertz Retiree Health Other Post - Employment Benefit Plan In addition to the TMRS OPEB, The City administers a single employer defined benefit healthcare plan for retirees, established under legal authority of the City Charter. The City is the only employer participating in the Plan. The Plan does not issue a publicly available financial report. The City provides post - employment benefits for eligible participants enrolled in City- sponsored plans. The benefits are provided in the form of an implicit rate subsidy where the City contributes towards the retiree health premiums before achieving Medicare eligibility. While the Plan offers retiree only rates, a very small implicit liability still exists. Membership in the plan as of December 31, 2017, the valuation date, consisted of: Inactive employees or beneficiaries currently receiving benefits 6 Inactive employees entitled to but not yet receiving benefits - Active employees 313 Total 319 Current active employees must be eligible for service retirement under the Texas Municipal Retirement System. To attain this eligibility active employees must be at least age 60 with 5 years of service or have at least 20 years of employment with the City. When a regular, full -time employee retires, they are eligible to maintain their coverage in the City's group health coverage. The City does not provide an explicit subsidy for retiree medical insurance. The liability for the City is due to the implicit rate. The City made no direct contributions for monthly premiums. The retirees pay 102% of the monthly premiums which range based on the type of plan from $508 for retiree only to $1,796 for a retiree and their family. 53 The City's Retiree Health OPEB Liability (TOL) as of December 31, 2018, was calculated as follows: The actuarial valuation was performed as of December 31, 2017. Update procedures were used to roll forward the total OPEB liability to December 31, 2018. The following presents the TOL of the City, calculated using the discount rate of 3.71% as well as what the City's TOL would be if it were calculated using a discount rate that is 1- percentage point lower (2.71%) and 1- percentage point higher (4.71 %) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (2.71 %) (3.71 %) (4.71 %) Total OPEB liability - retiree health $ 2,295,355 $ 2,086,718 $ 1,897,309 The following presents what the total OPEB liability of the City would be if it were calculated using healthcare cost trend rates that are 1- percentage point lower (6% decreasing to 3.5 %) or 1- percentage point higher (8% decreasing to 5.5 %) than the current healthcare cost trends: Current Healthcare Cost 1% Decrease Trend Rate Assumption 1% Increase Total OPEB liability - retiree health $ 1,821,792 $ 2,086,718 $ 2,403,515 For the year ended September 30, 2019, the City recognized OPEB expense of $192,775. Also, as of September 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Contributions subsequent to the measurement date Total 54 Deferred Outflows Deferred Inflows of Resources of Resources $ 13,485 77,116 43,723 $ 134,324 73,098 $ 73,098 Total OPEB Liability Balance at 12/31/2017 $ 2,020,624 Changes for the year: Service cost 121,821 Interest 67,947 Difference between expected and actual experience 14,962 Changes of assumptions or other inputs ( 81,106) Benefit payments, including refunds of employee contributions ( 57,530) Other changes - Netchanges 66,094 Balance at 12/31/2018 $ 2,086,718 The actuarial valuation was performed as of December 31, 2017. Update procedures were used to roll forward the total OPEB liability to December 31, 2018. The following presents the TOL of the City, calculated using the discount rate of 3.71% as well as what the City's TOL would be if it were calculated using a discount rate that is 1- percentage point lower (2.71%) and 1- percentage point higher (4.71 %) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (2.71 %) (3.71 %) (4.71 %) Total OPEB liability - retiree health $ 2,295,355 $ 2,086,718 $ 1,897,309 The following presents what the total OPEB liability of the City would be if it were calculated using healthcare cost trend rates that are 1- percentage point lower (6% decreasing to 3.5 %) or 1- percentage point higher (8% decreasing to 5.5 %) than the current healthcare cost trends: Current Healthcare Cost 1% Decrease Trend Rate Assumption 1% Increase Total OPEB liability - retiree health $ 1,821,792 $ 2,086,718 $ 2,403,515 For the year ended September 30, 2019, the City recognized OPEB expense of $192,775. Also, as of September 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Differences between expected and actual economic experience Changes in actuarial assumptions Difference between projected and actual investment earnings Contributions subsequent to the measurement date Total 54 Deferred Outflows Deferred Inflows of Resources of Resources $ 13,485 77,116 43,723 $ 134,324 73,098 $ 73,098 $43,723 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the Total OPEB liability for the year ending September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to the City's Retiree Health OPEB will be recognized in OPEB expense as follows: For the Year Ended September 30, 2020 $ 2,957 2021 2,957 2022 2,957 2023 2,957 2024 2,957 Thereafter 2,717 C. Joint Ventures Schertz /Seguin Local Government Corporation The Schertz /Seguin Local Government Corporation is a public, nonprofit corporation organized to aid, assist, and act on behalf of the cities of Schertz and Seguin in acquiring, constructing, maintaining, and operating a water utility system. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. Payments to the corporation are generally for the purchase of water treatment and for covering the Corporation's debt service requirements; they are reflected as "operating expenses" in the water and sewer fund and totaled $7,613,665 for the year ended September 30, 2019. Separate financial statements for the Schertz /Seguin Local Government Corporation may be obtained from the City of Seguin, 210 East Gonzales Street, Seguin, Texas 78156. The City of Schertz is jointly liable, together with the City of Seguin, for operating deficits and long -term debt of the Schertz /Seguin Local Government Corporation. The Corporation had net revenue bonds outstanding in the amount of $103,281,449 (as of September 30, 2019) to provide funds to build, improve, extend, enlarge and repair the Corporation's utility system, fund a reserve, and pay the costs of bond issuance. The bond resolution pledges intergovernmental contract revenues from the cities of Schertz and Seguin (the participating governments) to bond holders. Under the intergovernmental water supply contract, the participating governments are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service from the operation of their respective utility systems. The organizing documents for the Corporation provide that, in the event of dissolution, the net assets of the Corporation will be equally divided among the Cities of Schertz and Seguin. As such, the City's net investment in the joint venture has been recorded in the Water and Sewer Fund in the amount of $10,481,944. This amount reflects the City's portion of the net position of SSLGC as of September 30, 2018, the most recent fiscal year for which information is available. Cibolo Valley Local Government Corporation The Cibolo Valley Local Government Corporation (CVLGC) is a public nonprofit corporation incorporated in March 2012 to assist and act on behalf of the cities of Schertz and Cibolo to obtain additional water sources. The participating governments have an ongoing financial responsibility to fund the operation of the corporation through either purchase of services or by subsidizing the operations. Payments to the corporation are generally for the purchase of wastewater treatment and for covering the Corporation's debt service requirements; they are reflected as "operating expenses" in the water and sewer fund and totaled $480,000 for the year ended September 30, 2019. Separate financial statements for the CVLGC may be obtained from the City of Seguin, 210 East Gonzales Street, Seguin, Texas 78156. The City of Schertz is jointly liable, together with the City of Cibolo, for operating deficits and long -term debt of CVLGC. In the event of dissolution, the net assets of the Corporation will be equally divided among the Cities of Schertz and Cibolo. As such, the City's net investment in the joint venture has been recorded in the Water and Sewer Fund in the amount of $934,826 as of September 30, 2019. PP D. Commitments and Contingencies Tax Increment Financing (the "Zone') The City is a principal in the City of Schertz Tax Increment Reinvestment Zone #2, pursuant to Chapter 311 of the Texas Tax Code. Under the terms of the Zone agreement, the City of Schertz, Bexar County, and San Antonio River Authority are funding infrastructure improvements through tax increment financing to the Sedona Development Project. At the time the Zone was created, the property tax base was "frozen" and increment taxes resulting from the increases to property tax base are being used to finance Zone improvements. The total projected cost is a combined figure of $45,000,000. Project costs of the developer will be funded up to 100% of the tax increment generated by the City of Schertz, Bexar County, and San Antonio River Authority (SARA). The City of Schertz (combined with SARA) have committed up to $32,877,000 of the total $45,000,000. The Zone has a statutory termination date of December 31, 2027. The TIRZ has collected $2,218,372 from taxing entities (net of administrative reimbursements) and remitted $2,077,316 to the developer as of September 30, 2019. 380 Agreements The Chapter 380 Incentive program, authorized by Chapter 380 of the Texas Local Government Code, enables the City of Schertz to provide grants or reimbursements from the City's general fund. To become eligible for Chapter 380 Incentives, projects must: create at least of $100 million in new real and personal property; or generate at least $35 million in gross sales that is subject to the collection of local sales and use tax. Businesses that have a 380 Incentive agreement with the City are eligible to receive a reimbursement of taxes paid for the year if they have met the requirements outlined in the agreement by a certain date each year. For the fiscal year ended September 30, 2019, the City reimbursed $861,735 in property taxes paid. Economic Development Incentive Agreements The City of Schertz Economic Development Corporation (the SEDC) negotiates economic development incentive agreement on behalf of the SEDC and the City of Schertz (the City) on an individual basis. As of September 30, 2019, the City had nine active incentive agreements. On May 2, 2017, the City and the Corporation approved the Schertz Incentive Policy which outlines the City's primary tools to attract commercial investment and promote economic development. Projects are selected on a case -by -case basis in accordance current policy and state laws at the discretion of the governing body. All incentive agreements are formalized through a performance agreement with specified terms and recapture criteria. The SEDC Incentive program, authorized by Chapters 501, 502 and 505 of the Texas Local Government Code, enables the Corporation to fund allowable projects from the collection of one -half of one percent of sales tax proceeds collected in the City of Schertz. In accordance with state law, the SEDC Incentive Policy establishes grants and loans for businesses that create Primary Jobs for the following categories: Existing Businesses (3 years of operation within City), Small Businesses (fewer than 50 full -time jobs or annual sales less than $10 million), Large Impact Businesses (Up to $100 million in taxable property), and Extra Large Businesses (over $100 million in taxable property). The City and Corporation's outstanding incentive agreement grants are as follows: City of Schertz - LGC 380.001 SEDC - LGC 501.101 SEDC - LGC 201.103 56 FY 2018 -19 Amt. Est. Remaining Grant 420,050 $ 739,754 - 539,052 - 8,434,487 Service Concession Arrangements The City entered into an agreement with Young Men's Christian Association of Greater San Antonio ( "YMCA "), under which YMCA will operate and collect user fees from the Natatorium and Outdoor Pools for the next 20 years. YMCA will pay the city $100,000 annually over the course of the arrangement to cover costs of debt service related to the facility; the present value of these installment payments is estimated to be $820,141. The City will approve the rates and services that YMCA will provide, however, YMCA will retain all revenues earned from the operation of the Natatorium. The YMCA will remit all revenues received from operating the Outdoor Pools to the City with the exception of revenues earned from YMCA specific programs. As of September 30, 2019, the Natatorium is still under construction and is reported by the City as Construction in Progress. The City reports the Outdoor Pools and related equipment as capital assets recorded at historical cost. The City reports a receivable in the amount of $820,141 on the government -wide statements at year -end pursuant to the service concession arrangement, and a liability of $498,361 for the present value of maintenance costs estimated over the life of the Service Concession arrangement. The balance of these two amounts is recorded as a deferred inflow of resources. Litigation The City is the subject of various claims and litigation that have arisen in the course of its operations. Management is of the opinion that the City's liability in these cases, if decided adversely to the City, will not have a material effect on the City's financial position. Cibolo Creek Municipal Authority The Cibolo Creek Municipal Authority (CCMA) provides sewage treatment for the area in and around the City. In Fiscal year 2014, the City entered into an agreement with CCMA to construct a sewage treatment facility in the southern portion of the City to primarily serve citizens of the City but also neighboring Cities and future development. Because the City would be the primary customer at this time, the agreement stipulates that the City will pay all future debt service on the bonds issued by CCMA to finance the project. The City is the sole member at this time, so it is responsible for 100% of the project costs. Should other members join, the City's share of the costs would be reduced. Future debt service on the CCMA bonds are as follows: Year Ended September 30, Principal Interest Total 2020 $ 160,000 $ 254,150 $ 414,150 2021 160,000 250,950 410,950 2022 165,000 247,750 412,750 2023 170,000 242,800 412,800 2024 1751000 237,700 412,700 2025 -2029 970,000 1,087,650 2,057,650 2030 -2034 1,180,000 877,450 2,057,450 2035 -2039 1,465,000 592,500 2,057,500 2040 -2044 1,830,000 225,200 2,055,200 Total $ 6,275,000 $ 4,016,150 $ 10,291,150 PI Construction Commitments The City of Schertz has entered into commitments for various projects as follows: Primary Government: Governmental Activities: Lower Seguin Road Improvements FM 78 and Main Street Fire Station 3 FM 1103 Street Improvements Building Improvements Main Street Improvements FM 1518 Street Improvements Pedestrian Routes Project Fire Station 2 & Repairs Senior Center YMCA - Bathroom Reovation Window Replacement- Recreation Center Total Governmental Commitments Business -Type Activities: Woman Hollering Waste Water Corbett Ground Storage Tank & Pumps Corbett Elevated Water Tank Trainer Hale Road Distribution Main Scenic Hills /Greenridge Oil -Water Separator E Dietz Creek De- Silting FM1103 Utility Relocation Total Business -Type Activities Total Estimated Future Commitments Risk Management Estimated Project Expended to Estimated Future Cost to City Date Commitment $ 263,598 $ 263,598 $ - 1,000,000 7,513 992,487 8,000,000 1,215,324 6,784,676 2,000,000 2,000,000 - 1,600,000 72,560 1,527,440 407,057 - 407,057 5,000,000 600,656 4,399,344 350,000 91,654 258,347 500,000 481,619 18,381 800,000 793,181 6,819 540,500 217,552 322,948 1,152,264 792,198 360,066 21,613,419 6,535,855 15,077,565 5,940,424 832,911 5,107,513 1,650,000 930 1,649,070 2,982,052 301,296 2,680,756 500,000 - 500,000 73,252 10,182 63,071 73,252 22,600 50,652 573,055 114,124 458,931 1,000,000 22,000 978,000 12,792,035 1,304,043 11,487,993 $__34,405,454 $ 7,839,898 $ 26,565,558 The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City contracts with the Texas Municipal League Intergovernmental Risk Pool, a public entity risk pool currently operating as a common risk management and insurance program providing insurance coverage in the following areas: general liability, automobile liability and physical damage, law enforcement liability, worker's compensation, real and personal property, mobile equipment, and errors and omissions liability. TML is a multi - employer group that provides for a combination of risk sharing among pool participants and stop loss coverage. Contributions are set annually by the provider. Liability by the City is generally limited to the contributed amounts. There were no significant increases or decreases in coverage from the prior year. For the past three fiscal years, no claims or settlements have exceeded deductible amounts. E. New Accountina Standards Significant new accounting standards issued by the Governmental Accounting Standards Board (GASB) not yet implemented by the City include the following: Statement No. 84, Fiduciary Activities - This Statement improves guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The focus is generally on whether a government is controlling the assets of the fiduciary activity and on the beneficiaries with whom a fiduciary relationship exists. This Statement will become effective for the City in fiscal year 2020. 58 Statement No. 87, Leases - This Statement will improve the accounting and financial reporting for leases by governments by requiring recognition of certain lease assets and liabilities previously classifies as operating leases. It establishes a single model for lease accounting based on the principle that leases are financing the right to use an underlying asset. Under the Statement a lessee is required to recognize a lease liability and an intangible right -to -use asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resource, enhancing the relevance and consistency of information about leasing activities. This Statement will become effective for the City in fiscal year 2021. F. Prior Period Adiustment During the fiscal year ended September 30, 2019, management determined that the City's residual interest in its two joint ventures was sufficiently measurable to recognize in the financial statements. As such, the amount of the City's 50% residual interests in the Schertz- Seguin Local Government Corporation and the Cibolo Valley Local Government Corporation, as of October 1, 2018, were recognized in the Water and Sewer System Fund, with a corresponding increase to beginning net position of $11,416,770. W THIS PAGE LEFT BLANK INTENTIONALLY REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2019 Public safety: Police department Fire department Inspection Total Public Safety Public environment: Streets Total Public Environment Parks and recreation: Parks Pools Community /Civic Center Total Parks and Recreation Cultural: Library Total Cultural 60 8,355,809 8,277,809 5,261,613 5,283,184 895,579 1,015,579 14,513,001 14,576,572 1,474,297 1,641,982 1,474,297 1,641,982 1,603,030 1,610,307 639,878 639,879 425,605 421,605 2,668,513 2,671,791 967,904 1,017,904 967,904 1,017,904 Original Final Budget Budget REVENUES Taxes $ 22,708,488 $ 22,708,488 Permits and fees 1,661,080 1,661,080 Service fees 1,717,212 1,717,212 Fines and fees 594,269 594,269 Intergovernmental 425,500 425,500 Investment earnings 235,250 270,250 Miscellaneous 617,560 632,560 Total Revenues 27,959,359 28,009,359 EXPENDITURES General government: Council 100,959 103,959 City manager 1,161,522 1,144,522 Municipal court 391,940 403,940 311 customer relations 121,957 121,957 Planning & zoning 240,266 240,266 Legal 160,000 160,000 City secretary 207,049 212,049 Nondepartmental 1,718,488 1,533,724 Public affairs 644,841 652,091 Engineering 739,220 739,220 Geographic information systems 175,311 182,311 Citizens assistance 327,666 332,666 Special events 156,510 177,708 Total General Government 6,145,729 6,004,413 Public safety: Police department Fire department Inspection Total Public Safety Public environment: Streets Total Public Environment Parks and recreation: Parks Pools Community /Civic Center Total Parks and Recreation Cultural: Library Total Cultural 60 8,355,809 8,277,809 5,261,613 5,283,184 895,579 1,015,579 14,513,001 14,576,572 1,474,297 1,641,982 1,474,297 1,641,982 1,603,030 1,610,307 639,878 639,879 425,605 421,605 2,668,513 2,671,791 967,904 1,017,904 967,904 1,017,904 Variance With Final Budget Actual Positive Amounts (Negative) $ 23,488,223 1,605,299 1,909,300 926,657 965,768 489,051 684.882 30,069,180 92,250 1,084,614 349,258 117,054 227,115 135,597 207,580 1,250,839 608,281 702,286 177,373 303,127 134,597 5,389,971 8,064,139 5,278,400 961,277 14,303,816 779,735 55,781) 192,088 332,388 540,268 218,801 52.322 2,059,821 11,709 59,908 54,682 4,903 13,151 24,403 4,469 282,885 43,810 36,934 4,938 29,539 43,111 614,442 213,670 4,784 54,302 272,756 1,300,586 341,396 1,300,586 341,396 1,482,719 127,588 567,606 72,273 322,757 98,848 2,373,082 298,709 998,445 19,459 998,445 19,459 61 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 EXPENDITURES (CONTINUED) Health: Animal control Total Health Administration: Information technology Human resources Finance Purchasing & asset management Building maintenance Fleet service Interfund charges Total Administration Total Expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 62 Original Final Budget Budget $ 500,269 $ 500,269 500,269 500,269 2,312,442 2,790,759 611,935 687,385 672,482 625,482 226,299 229,399 1,542,419 1,547,419 875,043 880,543 ( 2,731,683) ( 2,731,683) 3,508,937 4,029,304 29,778,650 30,442,235 1,819,291) ( 2,432,876) 79,000 79,000 ( 10,750) { 10,750) 68,250 68,250 ( 1,751,041) ( 2,364,626) 15,630,453 15,630,453 $ 13,879,412 $ 13,265,827 Variance With Final Budget Actual Positive Amounts (Negative) $ 498,871 $ 1,398 498,871 1,398 2,217,395 573,364 657,759 29,626 594,762 30,720 227,548 1,851 1,490,300 57,119 801,289 79,254 ( 2,697,683) ( 34,000' 3,291,370 737,934 28,156,141 2,286,094 1,913,039 4,345,915 ( 79,000) ( 4,463) 6,287 ( 4,463) ( 72,713) 1,908,576 4,273,202 15,630,453 $ 17,539,029 $ 4,273,202 63 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ECONOMIC DEVELOPMENT CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 2019 REVENUES Taxes Investment income Miscellaneous Total Revenues EXPENDITURES Current: General government Administration Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 64 Original Final Budget Budget $ 4,242,580 $ 4,242,580 258,000 258,000 4,500,580 4,500,580 5,219,670 530,074 5,749,744 1,249,164 5,219,670 530,074 5,749,744 1,249,164 17,811,968 17,811,968 $ 16,562,804 $ 16,562,804 Variance With Final Budget Actual Positive Amounts (Negative) $ 4,172,238 452,214 196,003 4,820,455 358,810 496,357 855,167 3,965,288 17,811,968 $( 70,342) 194,214 196,003 319,875 4,860,860 33,717 4,894,577 ( 4,574,702) $ 21,777,256 $( 4,574,702) 65 CITY OF SCHERTZ, TEXAS NOTES TO BUDGETARY SCHEDULES SEPTEMBER 30, 2019 Budgetary Information - The budget is prepared in accordance with accounting principles generally accepted in the United States of America. The City maintains strict budgetary controls. The objective of these controls is to ensure compliance with legal provision embodied in the annual appropriated budget approved by the City Council and as such is a good management control device. Annual budgets are adopted for the general fund; debt service fund; hotel motel tax, park fund, tree mitigation; police forfeiture fund, library advisory board fund, and the historical committee fund. Project - length financial plans are adopted for capital projects funds. Of these budgets, only the General Fund, Debt Service and Economic Development Corporation are legally adopted. Budgetary preparation and control are exercised at the department level. Actual expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year -end. For the fiscal year ended September 30, 2019, actual expenditures exceeded budgeted expenditures in the Debt Service Fund by $5,591,271. This overage was caused by the payment to refunded bond escrow agent during the year that was not reflected in the adopted budget; however, the refunding was approved by City Council. Additionally, proceeds from the issuance of refunding bonds were used to used to fund this overage and was reported as other financing sources. The Justice Forfeitures Fund had actual expenditures exceeded budgeted amounts for $79,450, existing fund balance was used to fund this overage. Encumbrance accounting, in which appropriations are recorded as budgetary expenditures, is not utilized by the City. 66 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2019 Measurement Date December 31, Total pension liability Service cost Interest on total pension liability Difference between expected and actual experience Change of assumptions Benefit payments /refunds of contributions Net Change in Total Pension Liability Total Pension Liability, Beginning Total Pension Liability, Ending (a) Plan fiduciary net position Contributions - employer Contributions - employee Net investment income Benefit payments /refunds of contributions Administrative expenses Other Net Change in Fiduciary Position Fiduciary Net Position, Beginning Fiduciary Net Position, Ending (b) Net pension liability = (a) -(b) Fiduciary Net Position as a Percentage of Total Pension Liability Covered Payroll Net Pension Liability as a Percentage of Covered Payroll 2018 2017 2016 $ 3,301,265 $ 3,073,538 $ 2,855,745 4,505,483 4,111,517 3,763,562 34,393 416,585 139,216 ( 1,914,159) ( 1,843,774) ( 1,581,272 5,926,982 5,757,866 5,177,251 66,054,349 60,296,483 55,119,232 $ 71,981,331 $ 66,054,349 $ 60,296,483 $ 3,033,936 $ 2,793,644 $ 2,627,335 1,326,518 1,232,232 1,152,864 ( 1,540,890) 5,999,805 2,602,572 ( 1,914,159) ( 1,843,774) ( 1,581,272) ( 29,768) ( 31,080) ( 29,385) ( 1,555) ( 1,575) ( 1,583) 874,082 8,149,252 4,770,531 51,419,640 43,270,388 38,499,857 $ 52,293,722 $ 51,419,640 $ 43,270,388 19,687,609 14,634,709 17,026,095 72.65% 77.84% 71.76% $ 18,896,766 $ 17,603,310 $ 16,478,620 104.19% 83.14% 103.32% Note: GASB Statement No. 68 requires 10 years of data to be provided in this schedule. As of year -end, all years are not available. Additional years will be added in the future as the information becomes available. 67 2015 2014 $ 2,724,337 $ 2,558,743 3,556,428 3,245,266 120,434 ( 122,286) 59,193 - ( 1,570,211) ( 1,068,487) 4,890,181 4,613,236 50,229,051 45,615,815 $ 55,119,232 $ 50,229,051 $ 2,542,565 $ 2,403,929 1,095,260 1,077,097 53,742 1,841,586 ( 1,570,211) ( 1,068,487) ( 32,727) ( 19,219) ( 1,616) ( 1,580) 2,087,013 4,233,326 36,412,844 32,179,518 $ 38,499,857 $ 36,412,844 16,619,375 13,816,207 69.85% 72.49% $ 15,648,114 $ 15,389,154 106.21% 89.78% 68 CITY OF SCHERTZ, TEXAS SCHEDULE OF EMPLOYER CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2019 Fiscal Year Ended September 30, 2019 2018 Actuarially determined contribution $ 3,129,413 $ 2,971,592 Contributions in relation to the actuarially determined contribution 3,129,413 2,971,592 Contribution deficiency (excess) Covered payroll 19,520,269 18,605,654 Contributions as a percentage of covered payroll 16.03% 15.97% Note: GASB Statement No. 68 requires 10 years of data to be provided in this schedule. As of year -end, all years are not available. Additional years will be added in the future as the information becomes available. NOTES TO SCHEDULE OF CONTRIBUTIONS Valuation Date: Actuarially determined contribution rates are calculated as of December 31st and become effective on January 1st, 13 months and a day later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll, closed Remaining amortization period 27 years Asset valuation method 10 year smoothed market; 15% soft corridor Inflation 2.50% Salary increases 3.50% to 10.50% including inflation Investment rate of return 6.75% Retirement age Experience -based table of rates that are specific to the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 -2014. Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB. 69 2017 2016 2015 2,756,511 $ 2,592,593 $ 2,487,856 2,756,511 2,592,593 2,487,856 17,347,849 16,175,988 15,486,735 15.89% 16.03% 16.06% 70 CITY OF SCHERTZ, TEXAS SCHEDULE OF CHANGES IN TMRS OTHER POST - EMPLOYMENT BENEFIT LIABILITY AND RELATED RATIOS FOR THE YEAR ENDED SEPTEMBER 30, 2019 Measurement Date December 31, Total OPEB liability Service cost Interest on total OPEB liability Differences in actuarial experience Change of assumptions Benefit payments Net change in total OPEB liability Total OPEB liability, beginning Total OPEB liability, ending (a) Covered - employee payroll Total OPEB liability as a percentage of covered - employee payroll 2018 $ 37,794 21,182 86,276 ( 54,027) ( 3,779) 87,446 2017 $ 29,926 20,123 57,257 ( 3,521'. 103,785 622,941 519,156 $ 710,387 $ 622,941 $ 18,896,766 $ 17,603,310 3.76% 3.54% Note: 10 years of data is required to be provided in this schedule. As of year -end, all years are not available. Additional years will be added in the future as the information becomes available. NOTES TO SCHEDULE Valuation Date: Actuarially determined contribution rates are calculated as of December 31st and become effective on January 1st, 13 months and a day later. Methods and Assumptions Used to Determine Contribution Rates: Inflation 2.50% Salary increases 3.50% to 10.50% including inflation Discount rate 3.71% (based on Fidelity's 20 -Year Municipal GO AA Index) Administrative expenses All administrative expenses are paid through the Pension Trust and accounted for under reporting requirements under GASB Statement No. 68. Mortality rates - service retirees Mortality rates - disabled retirees Other information RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB. RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% with a 3 year set - forward for both males and females. The rates are projected on a fully generational basis with scale BB to account for future mortality improvements subject to the 3% floor. No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement No. 75 to pay related benefits. 71 CITY OF SCHERTZ, TEXAS SCHEDULE OF CHANGES IN CITY RETIREE HEALTH OTHER POST - EMPLOYMENT BENEFIT LIABILITY AND RELATED RATIOS FOR THE YEAR ENDED SEPTEMBER 30, 2019 Measurement Date December 31, Total OPEB liability Service cost Interest on total OPEB liability Difference in actuarial experience Change of assumptions Benefit payments Net change in total OPEB liability Total OPEB liability, beginning Total OPEB liability, ending (a) Covered payroll Total OPEB liability as a percentage of covered payroll 2018 $ 121,821 67,947 14,962 ( 81,106) ( 57,530) 66,094 2,020,624 2017 $ 107,517 69,435 96,092 ( 42,189) 230,855 1,789,769 $ 2,086,718 $ 2,020,624 $ 18,974,951 $ 16,068,891 11.00% 12.57% Note: 10 years of data is required to be provided in this schedule. As of year -end, all years are not available. Additional years will be added in the future as the information becomes available. NOTES TO SCHEDULE Valuation Date: December 31, 2017 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Individual entry -age Discount rate 3.71% as of December 31, 2018 Inflation 2.50% Salary increases 3.50% to 10.50% including inflation Demographic assumptions Based on the experience study covering the four -year period ending December 31, 2014 as conducted for the Texas Municipal System (TMRS). Mortality For healthy retirees, the gender distinct RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB to account for future mortality improvements. Health care trend rates Initial rate of 7.5% to an ultimate rate of 4.25% after 15 years. Participation rates 30% on non - Medicare retirees Other information The discount rate changed from 3.31% as of December 31, 2017 to 3.71% as of December 31, 2018. 72 SUPPLEMENTARY INFORMATION Comparative Schedules — Governmental Funds General Fund Economic Development Corporation Debt Service Fund Capital Projects Fund Combining Statements and Individual Fund Schedules - Nonmaior Governmental Funds Hotel Occupancy Fund - will account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. 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 the City's park system. Tree Mitigation Fund - will account for revenues from permits, grants and donations to preserve and replace trees in the City. Treasury Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies within the jurisdiction of the U.S. Treasury department. Justice Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies within the jurisdiction of the US Department of Justice. State Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies within the jurisdiction of the State Forfeiture Program. Library Advisory Board - to account for certain fees generated at the library to be used by the Board for general improvements to the Library. Historical Committee Fund - will account for funds received for the preservation of the history of the City. Capital Recovery Roadways Fund - to account for a fee assessed for capital recovery on new construction. THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS GENERAL FUND SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) ASSETS Cash and cash equivalents Investments Receivables (net of allowances) Taxes Accounts and other Inventory Prepaids Restricted assets: Cash and cash equivalents Total Assets LIABILITIES Accounts payable Accrued salaries and benefits Customer deposits Due to other governments Due to other funds Unearned revenues Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenues Total Deferred Inflows of Resources FUND BALANCES Nonspendable for: Inventory Restricted for: Police and public safety /municipal court Municipal court PEG capital fees Animal control Veterans Scholarships Committed for: Civic Center /CIED Assigned for: Property replacement Subsequent year's budget Unassigned Total Fund Balances Total Liabilities, Deferred inflows of Resources, and Fund Balances Fla 2019 2018 $ 1,211,660 $ 1,391,876 15,105,396 13,202,101 2,134,563 2,136,274 1,775,482 1,682,001 117,009 94,876 14,916 - 785,708 701,922 21,144,734 19,209,050 685,560 970,679 22,251 123,116 16,139 33,314 1,851,059 892,564 742,046 52,456 143,448 16,139 35,720 1,882,373 1,754,646 1,696,224 1,754,646 1,696,224 131,925 94,876 226,093 101,842 823,451 728,350 723,353 723,353 33,408 35,660 2,109 4,796 101,673 84,989 687,779 454,376 891,321 854,198 4,689,305 2,226,359 9,228,612 10,321,654 17,539,029 15,630,453 $ 21,144,734 $ 19,209,050 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERALFUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED 2018) 74 2019 2018 REVENUES Taxes $ 23,488,223 $ 21,741,184 Permits and fees 1,605,299 2,317,534 Service fees 1,909,300 2,139,574 Fines and fees 926,657 868,875 Intergovernmental 965,768 530,122 Investment earnings 489,051 252,397 Miscellaneous 684,882 690,810 Total Revenues 30,069,180 28,540,496 EXPENDITURES Current: General government 5,389,701 5,544,155 Public safety 13,926,364 12,718,070 Public environment 1,112,041 1,136,052 Parks and recreation 2,350,370 1,672,789 Cultural 998,445 939,095 Health 498,871 628,054 Administration 3,231,294 2,478,964 Capital outlay 649,055 1,083,044 Debt service: Principal - 24,116 Interest and fiscal charges - 3,056 Total Expenditures 28,156,141 26,227,395 Excess (Deficiency) of Revenues Over Expenditures 1,913,039 2,313,101 OTHER FINANCING SOURCES (USES) Proceeds from capital lease - 42,829 Transfers in - 351,219 Transfers out ( 4,463) ( 46,314) Total Other Financing Sources (Uses) ( 4,463) 347,734 NET CHANGE IN FUND BALANCE 1,908,576 2,660,835 FUND BALANCES - BEGINNING 15,630,453 12,969,618 FUND BALANCES - ENDING $ 17,539,029 $ 15,630,453 74 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30,2019 (WITH COMPARATIVE TOTALS FOR 2018) ASSETS Cash and cash equivalents Investments Receivables, net of allowances: Taxes Accounts and other Total Assets LIABILITIES Accounts payable Total Liabilities FUND BALANCES Restricted for: Economic development Total Fund Balances Total Liabilities and Fund Balances ( 2019 $ 224,144 20,824,561 739,361 8,448 $ 21,796,514 $ 19,258 19,258 21,777,256 21,777,256 $ 21,796,514 2018 $ 397,726 16,664,835 746,350 8,448 $ 17,817,359 $ 5,391 5,391 17,811,968 17,811,968 $ 17,817,359 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE ECONOMIC DEVELOPMENT CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 2019 76 2019 2018 REVENUES Taxes $ 4,172,238 $ 4,223,053 Investment earnings 452,214 264,686 Investment earnings 196,003 - Total Revenues 4,820,455 4,487,739 EXPENDITURES Current: General government 358,810 650,753 Administration 496,357 468,670 Total Expenditures 855,167 1,119,423 Excess (Deficiency) of Revenues Over Expenditures 3,965,288 3,368,316 OTHER FINANCING SOURCES (USES) Transfers out - ( 625,769) Total Other Financing Sources (Uses) - ( 625,769) NET CHANGE IN FUND BALANCE 3,965,288 2,742,547 FUND BALANCES - BEGINNING 17,811,968 15,069,421 FUND BALANCES - ENDING $ 21,777,256 $ 17,811,968 76 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) EN 2019 2018 ASSETS Cash and cash equivalents $ 91,510 $ 27,896 Investments 910,716 1,071,962 Receivables, net of allowances: Taxes 82,682 84,934 Total Assets 1,084,908 1,184,792 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 82,682 84,934 Total Deferred Inflows of Resources 82,682 84,934 FUND BALANCES Restricted for: Debt service 1,002,226 1,099,858 Total Fund Balances 1,002,226 1,099,858 Total Deferred Inflows of Resources and Fund Balances $ 1,084,908 $ 1,184,792 EN THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE DEBT SERVICE FUND BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Property taxes Investment income Miscellaneous Total Revenue EXPENDITURES Debt service: Principal Interest and fiscal charges Bond issue costs Payment to refunded bond escrow agent Total Expenditures Excess (Deficiency) of Revenues over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Issuance of refunding debt Premiums from issuance of debt Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 2019 Original Final Actual Budget Budget Amounts — $ 6,384,000 $ 6,384,000 $ 6,414,868 56,000 56,000 70,318 100,000 100,000 100,277 6,540,000 6,540,000 6,585,463 4,260,000 4,260,000 4,565,000 2,388,725 2,388,725 2,069,215 5,000 5,000 120,869 - - 5,489,912 6,653,725 6,653,725 12,244,996 ( 113,725) ( 113,725) ( 5,659,533) ( 113,725) 1,099,858 $ 986,133 78 ( 113,725) 1,099,858 $ 986,133 5,225,000 336,901 5,561,901 ( 97,632) 1,099,858 $ 1,002,226 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $ 30,868 $ 6,148,041 14,318 61,928 277 100,000 45,463 6,309,969 ( 305,000) 10,879,623 319,510 2,096,134 ( 115,869) 80,205 ( 5,489,912) - ( 5,591,271) 13,055,962 5,636,734 ( 6,745,993) - 360,769 5,225,000 6,035,000 336,901 - 5,561,901 6,395,769 16,093 ( 350,224) 1,450,082 $ 16,093 $ 1,099,858 79 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS CAPITAL PROJECTS FUND SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) ASSETS Cash and cash equivalents Investments Accounts receivable Total Assets LIABILITIES Accounts payable Retainage payable Due to other funds Total Liabilities FUND BALANCES Restricted for: Capital improvement Total Fund Balances Total Liabilities and Fund Balance 80 2019 $ 34,120 14,147,499 52,248 $ 14,233,867 $ 825,769 293,788 13,114,310 13,114,310 $ 14,233,867 2018 $ 361,260 16,469,940 $ 16,831,200 $ 658,395 116,040 774,435 16,056,765 16,056,765 $ 16,831,200 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARTIVE TOTALS FOR THE YEAR ENDED 2018) 81 2019 2018 REVENUES Intergovernmental $ 91,913 $ 79,009 Investment earnings 382,850 282,213 Total Revenues 474,763 361,222 EXPENDITURES Capital outlay 8,308,326 6,346,147 Debt service: Bond issue costs 68,213 49,212 Total Expenditures 8,376,539 6,395,359 Excess (Deficiency) of Revenues Over Expenditures ( 7,901,776) ( 6,034,137) OTHER FINANCING SOURCES (USES) Issuance of debt 4,620,000 4,845,000 Premiums from issuance of debt 303,214 269,212 Transfers in 117,632 60,693 Transfers out ( 81,525) - Total Other Financing Sources (Uses) 4,959,321 5,174,905 NET CHANGE IN FUND BALANCE ( 2,942,455) ( 859,232) FUND BALANCES - BEGINNING 16,056,765 16,915,997 FUND BALANCES - ENDING $ 13,114,310 $ 16,056,765 81 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS ASSETS Cash and cash equivalents Investments Accounts receivable, net of allowance Total Assets LIABILITIES Accounts payable Total Liabilities FUND BALANCES Restricted for: Tourism development Tree mitigation Parks Police forfeiture Roadways Library Historical committee Total Fund Balances SEPTEMBER 30, 2019 SDecial Revenue Funds Hotel Occupancy Park Tree Treasury Fund Fund Mitigation Forfeitures $ 37,118 $ 47,745 $ 59,926 $ 28, 160 2,117,237 242,925 387,600 - 63,789 - - - $ 2,218,144 $___290,670 $ 447,526 $ 28,160 $ 3,279 $ - $ 14,120 $ - 3,279 - 14,120 - 2,214,865 - - - - - 433,406 - 290,670 - - - - 28,160 L,G1'+,000 LyU,D /U '+33,+UO zo'.Lou Total Liabilities and Fund Balances $ 2,218,144 $ 290,670 $ 447,526 $ 28,160 82 83 Capital Special Revenue Funds Projects Fund Library Historical Capital Total Nonmajor Justice State Advisory Committee Recovery Governmental Forfeitures Forfeitures Board Fund Roadways Funds $ 5,961 $ 5,109 $ 27,978 $ 13,662 $ 85,453 $ 311,112 248,829 - 47,609 - - 3,044,200 - - - - - 63,789 $ 254,790 $ 5,109 $ 75,587 $ 13,662 $ 85,453 $ 3,419,101 $ - $ - $ 145 $ - $ - $ 17,544 - - 145 - - 17,544 - - - - - 2,214,865 - - - - - 433,406 - - - - - 290,670 254,790 5,109 - - - 288,059 - - - - 85,453 85,453 - - 75,442 - - 75,442 - - - 13,662 - 13,662 254,790 5,109 75,442 13,662 85,453 3,401,557 $ 254,790 $ 5,109 $ 75,587 $ 13,662 $ 85,453 $ 3,419,101 83 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2019 REVENUES Occupancy tax Permits and fees Service fees Fines and fees Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: General government Public safety Parks and recreation Cultural Administration Capital outlay Total Expenditures Excess (Deficiency) of Revenue Over Expenditures OTHER FINANCING SOURCES (USES) Transfer in Transfer out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING FUND BALANCES - ENDING SDecial Revenue Funds Hotel ( 83,491) 1,601 694 Occupancy Park Tree Treasury Fund Fund Mitigation Forfeiture $ 2,214,865 $ 514,679 $ - $ - $ - - 11,000 19,162 - - - - 900 48,015 7,600 10,306 - 3,071 - - - 565,765 18,600 29,468 900 130,265 - - - 15,250 27,867 - 67,582 - - - - 86,841 - 206 197,847 102,091 27,867 206 367,918 ( 83,491} 1,601 694 367,918 ( 83,491) 1,601 694 1,846,947 374,161 431,805 27,466 $ 2,214,865 $ 290,670 $ 433,406 $ 28,160 84 85 Capital Special Revenue Funds Projects Fund Library Historical Capital Total Nonmajor Justice State Advisory Committee Recovery Governmental Forfeitures Forfeitures Board Fund Roadways Funds $ - $ - $ - $ - $ - $ 514,679 - - - - - 30,162 - - 21,365 708 138,920 160,993 23,509 2,548 - - - 26,957 6,600 - 1,853 - 1,451 75,825 - - 7 17 - 3,095 30,109 2,548 23,225 725 140,371 811,711 - - - 2,871 - 133,136 50,306 8,773 - - - 59,079 - - - - - 43,117 - - 19,664 - - 19,664 - - - - - 67,582 39,144 - - - - 126,191 89,450 8,773 19,664 2,871 - 448,769 ( 59,341) ( 6,225) 3,561 ( 2,146) 140,371 362,942 - - - 2,871 - 2,871 - - - - ( 116,040) ( 116,040) - - - 2,871 ( 116,040) ( 113,169) ( 59,341) ( 6,225) 3,561 725 24,331 249,773 314,131 11,334 71,881 12,937 61,122 3,151,784 $ 254,790 $ 5,109 $ 75,442 $ 13,662 $ 85,453 $ 3,401,557 85 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOTEL OCCUPANCY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Occupancy tax Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: General government Administration Capital outlay Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 86 2019 Original Final Actual Budget Budget Amounts — $ 500,000 $ 500,000 $ 514,679 28,000 28,000 48,015 - - 3,071 528,000 528,000 565,765 189,150 189,150 130,265 67,582 67,582 67,582 256,732 256,732 197,847 271,268 271,268 367,918 1,846,947 1,846,947 1,846,947 $ 2,118,215 $ 2,118,215 $ 2,214,865 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $ 14,679 $ 520,424 20,015 28,838 3,071 - 37,765 549,262 58,885 130,328 - 67,605 - 8,255 58,885 206,188 96,650 343,074 1,503,873 $ 96,650 $ 1,846,947 87 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PARK FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Licenses and permits Investment earnings Total Revenues EXPENDITURES Current: Parks and recreation Capital outlay Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING 2019 Original Final Actual Budget Budget Amounts — $ 70,000 $ 70,000 $ 11,000 7,750 7,750 7,600 77,750 77,750 18,600 15,000 85,000 100,000 ( 22,250} 374,161 25,204 151,308 176,512 ( 98,762) 374,161 15,250 86,841 102,091 ( 83,491) 374,161 FUND BALANCE - ENDING $ 351,911 $ 275,399 $ 290,670 88 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $( 59,000) $ 139,000 ( 150) 6,848 ( 59,150) 145,848 9,954 17,565 64,467 121,934 74,421 139,499 15,271 6,349 367,812 $ 15,271 $ 374,161 89 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL TREE MITITGATION FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Licenses and permits Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: Parks and recreation Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING 2019 Original Final Actual Budget Budget Amounts — $ 72,500 $ 72,500 $ 19,162 7,750 7,750 10,306 VV,LJV VV,LJV L7,'TVV 75,000 75,000 27,867 75,000 75,000 27,867 5,250 5,250 1,601 431,805 431,805 431,805 FUND BALANCE - ENDING $ 437,055 $ 437,055 $ 433,406 90 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $( 53,338) $ 100,522 2,556 - - 6,888 ( 50,782) 107,410 47,133 7,518 47,133 7,518 ( 3,649) 99,892 331,913 $( 3,649) $ 431,805 91 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TREASURY FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) REVENUES Fines and fees Investment earnings Total Revenues EXPENDITURES Capital outlay Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 92 2019 2018 $ 900 $ 13,767 206 7,349 206 7,349 694 6,451 27,466 21,015 $ 28,160 $ 27,466 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL JUSTICE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Fines and fees Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: Public safety Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 93 Original Final Budget Budget 314,131 $ 130,000 $ 130,000 $ 2,200 2,200 1,000 1,000 133,200 133,200 10,000 10,000 123,200 10,000 10,000 123,200 2019 Actual Amounts it � • . .11 50,306 39,144 89,450 ( 59,341) 123,200 123,200 ( 59,341) 314,131 314,131 314,131 $ 437,331 $ 437,331 $ 254,790 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $( 106,491) $ 167,347 4,400 4,247 ( 1,000) - ( 103,091) 171,594 ( 50,306) 10,152 ( 29,144) 141,896 ( 79,450) 152,048 ( 182,541) 19,546 ( 86,219) ( 86,219) ( 182,541) ( 66,673) . IL! $( 182,541) $ 314,131 94 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE STATE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) REVENUES Fines and fees Investment earnings Total Revenues EXPENDITURES Current: Public safety Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING M 2019 2018 $ 2,548 $ - - 64 2,548 64 8,773 - 8,773 - ( 6,225) 64 11,334 11,270 $ 5,109 $ 11,334 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPEDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LIBRARY ADVISORY BOARD FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Service fees Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: Cultural Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING M 2019 Original Final Actual Budget Budget Amounts $ 22,000 $ 22,000 $ 21,365 400 400 1,853 500 500 7 22,900 22,900 23,225 32,400 32,400 19,664 32,400 32,400 19,664 ( 9,500) ( 9,500) 3,561 71,881 71,881 71,881 $ 62,381 $ 62,381 $ 75,442 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $( 635) $ 18,863 1,453 1,207 ( 493) 1 325 20,071 12,736 16,058 12,736 16,058 13,061 4,013 0. $ 13,061 $ 71,881 97 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HISTORICAL COMMITTEE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE ACTUAL TOTALS FOR 2018) REVENUES Sale of merchandise Miscellaneous Total Revenues EXPENDITURES Current: General government Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 98 2019 Original Final Actual Budget Budget Amounts — $ 1,000 $ 1,000 $ 708 1,000 1,000 725 11,750 11,750 2,871 11,750 11,750 2,871 ( 10,750) ( 10,750) ( 2,146) 10,750 10,750 10,750 10,750 2,871 2,871 12,937 12,937 12,937 $ 12,937 $ 12,937 $ 13,662 Variance With Final Budget 2018 Positive Actual (Negative) Amounts $( 292) $ 756 17 3 ( 275) 759 8,879 1,897 8,879 1,897 8,604 ( 1,138) ( 7,879) 4,806 ( 7,879) 4,806 725 3,668 $ 725 $ 12,937 99 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL RECOVERY ROADWAYS FOR THE YEAR ENDED SEPTEMBER 30, 2019 (WITH COMPARATIVE TOTALS FOR 2018) REVENUES Service fees Investment earnings Total Revenues OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 100 2019 2018 $ 138,920 $ 60,793 1,451 329 140,371 61,122 ( 116,040) - ( 116,040) - 24,331 61,122 61,122 - $ 85,453 $ 61,122 THIS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION STATISTICAL SECTION (Unaudited) This part of the City of Schertz, Texas Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well -being have changed over time. 101 - 110 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue sources. 111 - 121 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 122- 127 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. 128- 131 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. 132- 137 CITY OF SCHERTZ, TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OFACCOUNTING) (UNAUDITED) 101 Fiscal Year 2010 2011 2012 2013 Governmental activities Net investment in capital assets $ 54,010,139 $ 55,415,600 $ 56,616,809 $ 57,543,618 Restricted 897,324 2,089,971 1,917,098 7,788,354 Unrestricted 7,548,859 7370 101 8,907,326 6,645,418 Total Governmental Activities Net Position $ 62,456,322 $ 64,875,771 $ 67,441,233 $ 71,977,390 Business-type activities Net investment in capital assets $ 50,778,490 $ 51,838,589 $ 50,161,157 $ 53,071,836 Restricted - - - - Unrestricted 4,217,098 7441 732 11,577,645 11,902,282 Total Business-Type Activities Net Position $ 54,995,588 $ 59,280,311 $ 61,738,802 $ Primary government Net investment in capital assets $ 104,788,629 $ 107,254,288 $ 106,777,966 $ 110,615,454 Restricted 897,324 2,080,971 1,917,098 7,788,354 Unrestricted 20,484,971 Total Primary Government Net Position $ 117,451,910 $ 124,156,082 $ 129,180,035 $ 136,951,508 101 TABLE 1 Fiscal Year 2014 2015 2016 2017 2018 2019 $ 62,792,671 $ 68,125,738 $ 74,237,004 $ 84,537,238 $ 89,266,885 $ 89,869,766 10,401,728 13,343,280 17,095,325 20,437,116 23,391,047 28,088,355 8,613,239 1,640,519 2,231,341 1,673,567 2,351,236 2,920,717 $ 81,807,638 $ 83,109,537 $ 93,563,670 $ 106,647,921 $ 115,009,168 $ 120,878,838 $ 53,674,437 $ 59,625,205 $ 64,210,231 $ 70,361,035 $ 64,871,629 $ 68,271,075 - - - 10,565,463 12,626,526 13,232,638 16,450,988 14,243,922 15,737,470 20,781,291 20,870,671 33,254,008 $ 70,125,425 $ 73,869,127 $ 79,947,701 $ 101,707,789 $ 98,368,826 $ 114,757,721 $ 116,467,108 $ 127,750,943 $ 138,447,235 $ 154,898,273 $ 154,138,514 $ 158,140,841 10,401,728 13,343,280 17,095,325 20,437,116 23,391,047 41,320,993 25,064,227 15,884,441 17,968,811 22,454,858 35,848,433 36,174,725 $ 151,933,063 $ 156,978,664 $ 173,511,371 $ 197,790,247 $ 213,377,994 $ 235,636,559 102 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Total Primary Government Expenses Program Revenues Governmental activities: Charges for services: General government Public safety Public environment Parks and recreation Cultural Health Operating grants and contributions Capital grants and contributions Total Governmental Activities Program Revenues Business -type activities: Charges for services: Water and sewer EMS Capital grants and contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues 42,943,907 45,092,195 46,879,433 48,752,321 1,905,600 1,495,563 Fiscal Year 2,230,800 1,986,536 2010 2011 2012 2013 Expenses 541,512 721,222 265,714 228,242 Governmental activities: 305,932 36,728 39,743 36,746 General government $ 7,892,516 $ 8,112,954 $ 7,802,092 $ 7,066,087 Public safety 7,897,298 8,390,740 9,103,676 9,567,595 Public environment 2,966,642 3,152,119 3,586,087 3,622,834 Parks and recreation 1,593,075 1,673,098 1,584,605 1,807,559 Cultural 809,323 876,339 916,967 907,676 Health 345,455 374,516 357,658 344,647 Administration 1,084,430 1,321,055 1,117,044 1,180,656 Interest and other fees 2,230,452 2,251,472 2,302,912 3,340,951 Total Governmental Activities Expenses 24,819,191 26,152,293 26,771,041 27,838,005 Business -type activities: Water and sewer 14,434,709 15,280,871 16,349,967 16,954,871 EMS 3,690,007 3,659,031 3,758,425 3,959,445 Total Business -Type Activities Expenses 18,124,716 18,939,902 20,108,392 20,914,316 Total Primary Government Expenses Program Revenues Governmental activities: Charges for services: General government Public safety Public environment Parks and recreation Cultural Health Operating grants and contributions Capital grants and contributions Total Governmental Activities Program Revenues Business -type activities: Charges for services: Water and sewer EMS Capital grants and contributions Total Business -Type Activities Program Revenues Total Primary Government Program Revenues 42,943,907 45,092,195 46,879,433 48,752,321 1,905,600 1,495,563 2,286,488 2,230,800 1,986,536 2,815,029 2,216,385 2,516,547 536,609 524,443 541,512 721,222 265,714 228,242 279,267 305,932 36,728 39,743 36,746 38,149 587,643 717,105 764,997 234,084 1,276,465 2,998,115 1,178,573 1,531,740 6,595,295 15,147,332 3,061,414 973,437 8,818,240 17,073,075 3,564,852 2,175,889 7,303,968 17,411,568 3,561,114 828,853 7,578,474 17,696,327 4,459,600 1,301,235 19,182,183 22,813,816 21,801,535 23,457,162 25,777,478 31,632,056 29,105,503 31,035,636 Net(expense)revenue: Governmental activities ( 18,223,896) ( 17,334,053) ( 19,467,073) ( 20,259,531) Business -type activities 1,057,467 3,873,914 1,693,143 2,542,846 Total Primary Government Net Expense ( 17,166,429) ( 13,460,139) ( 17,773,930) ( 17,716,685) 103 TABLE 2 Fiscal Year 2014 2015 2016 2017 2018 2019 $ 6,958,530 $ 10,025,703 3,740, 538 1,807,136 870,159 407,114 1,942,312 2,352,856 28,104, 348 17,762,116 4,268,125 22,030,241 50,134,589 6,443,227 $ 6,557,778 $ 6,253,926 $ 7,421,918 $ 6,534,013 10,836,712 12,141,968 13,061,120 13,899,278 15,448,886 3,876,644 4,147,653 4,460,540 4,930,723 5,495,192 2,164,604 2,034,964 2,859,974 2,707,292 3,022,278 892,194 954,871 1,004,747 1,042,085 1,119,650 470,468 570,204 776,494 724,780 516,890 1,845,877 1,954,276 3,052,102 3,067,983 3,853,255 2,226,635 2,240,783 2,355,714 2,125,687 2,196,180 28,756,361 30,602,497 33,824,617 35,919,746 38,186,344 10,043,483 4,744,489 1,319,793 18,440,959 20,269,111 21,346,078 23,579,854 25,608,390 4,719,526 5,004,110 6,006,178 6,110,407 6,529,631 23,160,485 25,273,221 27,352,256 29,690,261 32,138,021 25,390,713 27,099,237 27,333,475 4,533,753 51,916,846 55,875,718 61,176,873 65,610,007 70,324,365 1,974,637 1,840,547 1,507,252 874,737 1,013,698 947,538 2,536,476 2,603,476 2,415,537 4,131,548 4,104,911 3,177,329 - - - - - 138,920 917,639 794,003 788,727 544,460 640,231 484,495 309,897 325,178 326,079 330,412 313,668 311,575 32,429 26,744 30,308 29,742 27,930 21,101 220,264 336,252 342,485 552,878 776,942 692,042 5,756,456 5,509,530 6,227,664 10,043,483 4,744,489 1,319,793 11,747,798 11,435,730 11,638,052 16,507,260 11,621,869 7,092,793 19,147,872 20,700,369 22,003,794 25,390,713 27,099,237 27,333,475 4,533,753 4,415,126 5,921,223 6,366,894 6,092,559 6,596,618 2,809,110 4,158,552 2,831,126 6,111,474 3,132,348 1,975,524 26,490,735 29,274,047 30,756,143 37,869,081 36,324,144 35,905,617 38,238,533 40,709,777 42,394,195 54,376,341 47,946,013 42,998,410 ( 16,356,550) ( 17,320,631) ( 18,964,445) ( 17,317,357) ( 24,297,877) ( 31,093,551) 4,460,494 6,113,562 5,482,922 10,516,825 6,633,883 3,767,596 ( 11,896,050 ( 11,207,069) ( 13,481,523) ( 6,800,532) ( 17,663,994) ( 27,325,955) 104 General Revenues and Other Changes in Net Position Governmental activities: Taxes Ad valorem Sales Franchise fees Hotel /motel Mixed drink Bingo Investment income Miscellaneous Transfers Total Governmental Activities Business -type activities: Interest and investment earnings Miscellaneous Transfers Total Business -Type Activities Total Primary Government Change in Net Position Governmental activities Business -type activities Total Primary Government Source: City financial statements CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2010 2011 2012 2013 $ 9,715,645 $ 10,280,768 $ 11,298,204 $ 12,359,146 6,240,749 7,054,394 7,968,212 9,637,097 1,448,620 1,542,046 1,647,712 1,681,079 348,147 391,181 470,290 503,267 32,144 33,630 28,586 30,421 4,651 2,173 - - 117,776 48,235 60,265 54,270 611,510 316,840 621,560 505,268 15,421 84,235 ( 62,294) 25,140 18,534,663 19,753,502 22,032,535 24,795,688 36,824 37,950 36,409 53,089 236,173 457,094 666,645 664,521 ( 15,421} ( 84,235) 62,294 ( 25,140) 257,576 410,809 765,348 692,470 18,792,239 20,164,311 22,797,883 25,488,158 310,767 2,419,449 2,565,462 4,536,157 1,315,043 4,284,723 2,458,491 3,235,316 $ 1,625,810 $ 6,704,172 $___5,023,953 $ 7,771,473 105 TABLE 2 Fiscal Year 2014 2015 2016 2017 2018 2019 $ 12,794,172 $ 14,139,037 $ 15,131,997 $ 16,166,006 $ 17,018,950 $ 19,151,005 10,553,382 10,315,125 10,921,489 10,844,503 12,668,555 12,506,879 2,073,162 2,263,783 2,250,815 2,208,373 2,393,182 2,357,150 552,570 563,734 544,871 499,466 520,424 514,679 39,917 43,656 43,073 42,699 43,395 60,518 43,279 56,820 187,847 448,408 909,985 1,470,258 180,316 197,881 309,275 182,754 283,496 984,257 ( 50,000) ( 42,235) 29,211 9,399 19,186 ( 81,525' 26,186,798 27,537,801 29,418,578 30,401,608 33,857,173 36,963,221 31,810 47,728 102,642 211,466 532,367 855,216 609,003 344,731 522,221 475,733 453,374 267,788 50,000 42,235 ( 29,211) ( 9,399) ( 19,186) 81,525 690,813 434,694 595,652 677,800 966,555 1,204,529 26,877,611 27,972,495 30,014,230 31,079,408 34,823,728 38,167,750 9,830,248 10,217,170 10,454,133 13,084,251 9,559,296 5,869,670 5,151,307 6,548,256 6,078,574 11,194,625 7,600,438 4,972,125 $ 14,981,555 $ 16,765,426 $ 16,532,707 $ 24,278,876 $ 17,159,734 $ 10,841,795 106 CITY OF SCHERTZ, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS Committed Fund Balance: Capital improvement Total Nonspendable Fund Balance Assigned Fund Balance: Property replacement Special events Capital improvement Historical Committee Subsequent year's budget Youth activities Total Assigned Fund Balance Unassigned Fund Balance 202,341 142,465 9,940 354,746 1,372,779 202,723 93,447 162,113 9,940 MOM 1,899,105 322,656 92,555 243,546 11,090 11-1100111Tf 165,000 456,034 99,770 145, 167 700,971 4,206,734 Total Governmental Funds $ 11,191,091 $ 18,234,339 $ 27,154,580 $ 30,339,720 Source: Balance Sheets - Governmental Funds in City's CAFRs. 107 LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) 2010 2011 2012 2013 Nonspendable Fund Balance: Inventory $ 46,473 $ 43,504 $ 63,556 $ 50,768 Prepaid items - - 2,367 754,443 Note receivable 150,000 120,080 120,080 120,080 Total Nonspendable Fund Balance 196,473 163,584 186,003 925,291 Restricted Fund Balance: Police and public safety 421,265 403,799 338,118 496,890 Municipal court 402,744 459,244 527,513 646,422 PEG capital fees - 317,453 409,870 456,175 Capital improvement 3,914,323 10,219,300 17,104,595 15,360,800 Debt service 286,215 117,250 227,674 517,199 Tourism development 250,379 301,517 390,561 470,250 Tree mitigation 164,424 173,999 217,600 157,659 Parks 79,317 84,329 90,718 136,647 Historical Committee & library 200,359 231,686 65,409 77,554 Economic Development Corporation 3,548,067 3,394,850 4,366,005 6,022,128 Animal control - - - - Veterans - - - - Scholarship - - - - Total Restricted Fund Balance 9,267,093 15,703,427 23,738,063 24,341,724 Committed Fund Balance: Capital improvement Total Nonspendable Fund Balance Assigned Fund Balance: Property replacement Special events Capital improvement Historical Committee Subsequent year's budget Youth activities Total Assigned Fund Balance Unassigned Fund Balance 202,341 142,465 9,940 354,746 1,372,779 202,723 93,447 162,113 9,940 MOM 1,899,105 322,656 92,555 243,546 11,090 11-1100111Tf 165,000 456,034 99,770 145, 167 700,971 4,206,734 Total Governmental Funds $ 11,191,091 $ 18,234,339 $ 27,154,580 $ 30,339,720 Source: Balance Sheets - Governmental Funds in City's CAFRs. 107 TABLE 3 2014 2015 2016 2017 2018 2019 $ 88,518 $ 101,084 $ 107,529 $ 98,263 $ 94,876 $ 117,009 21,735 16,000 112,974 - - 14,916 110,253 117,084 220,503 98,263 94,876 131,925 529,264 494,337 555,722 514,931 454,773 514,152 628,459 683,558 714,609 728,350 728,350 823,451 489,509 509,535 577,590 638,506 723,353 723,353 9,600,028 8,924,587 11,665,693 16,915,997 16,117,887 13,199,763 625,435 847,178 1,311,577 1,450,082 1,099,858 1,002,226 501,996 848,969 1,186,062 1,503,873 1,846,947 2,214,865 359,205 331,149 340,386 331,913 431,805 433,406 304,655 341,551 441,606 367,812 374,161 290,670 78,098 76,787 75,420 77,137 84,818 89,104 7,792,578 9,821,747 12,227,179 15,069,421 17,811,968 21,777,256 - - 18,667 35,660 35,660 33,408 - - 4,985 4,796 4,796 2,109 54,176 60,944 63,048 77,458 84,989 101,673 20,963,403 22,940,342 29,182,544 37,715,936 39,799,365 41,205,436 31,718 - 342,519 454,376 454,376 687,779 31,718 - 342,519 454,376 454,376 687,779 694,916 785,005 752,503 854,198 854,198 891,321 31,177 6,657 6,743 - - - 2,226,359 4,689,305 5,587,262 7,280,240 8,509,467 9,976,169 12,548,013 9,228,612 $ 27,418,729 $ 31,129,328 $ 39,014,279 $ 49,098,942 $ 55,977,187 $ 56,834,378 108 CITY OF SCHERTZ, TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Revenues Taxes Permits and fees Service fees Fines and fees Intergovernmental Other revenue Total Revenues Expenditures Current: General government Public safety Public environment Parks and recreation Cultural Health Administration Capital outlay Debt service: Principal Interest and fiscal charges Bond issue costs Payment to refund agent Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Bond & debt issuances Refunding bond issuance Premium (discount) on bond issue Payment to refund agent Transfer in Transfer out Net Other Financing Sources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 2010 2011 2012 2013 $ 17,811,547 $ 19,309,675 $ 21,401,991 $ 24,181,863 1,160,197 1,776,292 1,363,461 1,609,954 1,492,130 1,645,489 1,547,007 1,739,387 1,655,183 1,452,610 2,027,613 1,927,744 570,386 1,216,211 1,000,413 492,332 1,161,182 603,498 969,921 767,110 23,850,625 26,003,775 28,310,406 30,718,390 6,989,561 7,164,667 7,094,834 6,311,276 7,409,720 7,885,119 8,690,849 9,113,840 816,939 846,150 976,327 951,528 1,178,455 1,195,171 1,398,692 1,412,329 872,668 937,611 845,124 840,595 331,860 360,746 346,318 341,961 1,251,368 1,506,831 1,249,557 1,289,078 11,347,876 2,956,511 1,299,843 3,277,397 1,893,086 2,371,070 2,704,898 3,217,325 2,183,852 2,066,221 2,313,510 2,381,171 20,000 244,237 254,971 31,750 34,295,385 27,534,334 27,174,923 29,168,250 ( 10,444,760) ( 1,530,559) 1,418,294 242,539 ( 227,118) 1,433,715 $( 9,011,045) 17.7% 8,206,572 283,000 348,846 ( 264,611) 8,573,807 $ 7,043,248 17.4% 1,135,483 14,370,000 175,473 ( 6,698,421) 139,635 ( 201,929) 7,784,758 $ 8,920,241 19.5% 1,550,140 1,635,000 788,084 ( 788,084) 1,635,000 $ 3,185,140 Source: Statement of Revenues, Expenditures, and Changes in Fund Balance for Governmental Funds. 109 21.6% 2014 2015 2016 2017 2018 $ 26,021,730 $ 27,348,297 $ 28,865,727 $ 29,720,578 $ 32,632,702 $ 1,805,047 1,731,302 1,493,336 2,540,045 2,557,056 1,763,964 1,797,151 1,789,321 2,132,299 2,159,193 1,750,311 1,534,588 1,441,474 1,217,621 1,049,989 221,769 393,607 401,494 397,073 609,131 671,731 689,805 1,741,436 1,897,153 1,761,285 32,234,552 33,494,750 35,732,788 37,904,769 40,769,356 TABLE 4 raw, 34, 590,008 1,635,461 2,070,293 953,614 1,057,681 2,454,515 42,761,572 5,981,439 5,582,441 5,657,998 5,394,918 6,327,133 5,881,647 9,409,894 10,158,401 11,048,767 11,870,636 12,728,222 13,985,443 1,012,607 952,663 1,007,326 1,128,979 1,136,052 1,112,041 1,338,232 1,658,197 1,528,356 1,885,915 1,697,872 2,393,487 815,691 821,146 869,162 921,870 955,153 1,018,109 394,918 404,008 480,175 672,934 628,054 498,871 2,270,041 2,056,646 2,015,573 2,912,855 3,015,239 3,795,233 8,000,467 2,314,668 10,192,398 5,492,196 7,708,625 9,083,572 3,695,597 3,918,008 4,040,975 4,473,174 4,744,116 4,565,000 2,108,610 2,112,746 1,896,911 2,113,679 2,099,190 2,069,215 165,650 7,992 449,358 214,280 129,417 189,082 - - - - - 5,489,912 35,193,146 29,986,916 39,186,999 37,081,436 41,169,073 50,081,612 ( 2,958,594) 3,507,834 ( 3,454,211) 823,333 ( 399,717) ( 7,320,040) 8,583,715 245,000 10,750,000 8,870,000 4,887,829 4,620,000 - - 4,185,000 - 6,035,000 5,225,000 686,137 - 590,432 381,931 269,212 640,115 ( 9,182,250) - ( 4,215,482) - ( 6,159,623) - 1,243,833 989,120 863,583 438,803 777,487 120,503 ( 1,293,832) ( 1,031,355) ( 834,371) ( 429,404) ( 758,302) ( 202,028) 37,603 202,765 11,339,162 9,261,330 5,051,603 10,403,590 $( 2,920,991) $ 3,710,599 $ 7,884,951 $ 10,084,663 $ 4,651,886 $ 3,083,550 21.3% 21.3% 20.5% 20.4% 22.2% 17.3% 110 CITY OF SCHERTZ, TEXAS GOVERNMENTAL FUNDS TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Property Sales & Use Franchise Mixed Year Tax Tax Tax Beverage 2010 $ 9,737,236 $ 6,240,749 $ 1,448,620 $ 32,144 2011 10,286,251 7,054,394 1,542,046 33,630 2012 11,287,191 7,968,212 1,647,712 28,586 2013 12,329,999 9,637,097 1,681,079 30,421 2014 12,802,668 10,553,382 2,073,162 39,917 2015 14,161,999 10,315,125 2,263,783 43,553 2016 15,105,480 10,921,489 2,250,815 43,072 2017 16,125,537 10,844,503 2,208,373 42,668 2018 17,007,148 12,668,555 2,393,182 43,384 2019 19,150,782 12,506,879 2,357,150 60,518 111 TABLE 5 Hotel Bingo Occupancy Total $ 4,651 $ 348,147 $ 17,811,547 2,173 391,181 19,309,675 - 470,290 21,401,991 - 503,267 24,181,863 31 552,570 26,021,730 103 563,734 27,348,297 1 544,870 28,865,727 31 499,466 29,720,578 11 520,424 32,632,704 24 514,679 34,590,032 112 Fiscal Year Ended September 30, 2019 2018 2017 2016 2015 2014 3013 3012 3011 3010 CITY OF SCHERTZ, TEXAS TOTAL WATER AND SEWER CONSUMPTION AND RATES LAST TEN FISCAL YEARS Total Water & Sewer Consumption (In Gallons) 1,622,930,500 1,583,312/400 1,583,462,300 1,509,250,000 1,472,948,300 1,543,351,600 1,550,039,700 1,604,952,300 1,676,323,900 1,231,376,600 113 � Water& Sewer Base Rate ]I15 3E61 34.]5 30.11 26.54 24.38 22.69 22.60 22.60 22.60 TABLE 6 Wate&Sewer Initial Rate Per 1.000 Gallons � 6.84 6.53 6.21 5.73 E43 5.17 4.84 4.84 4.75 4.75 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS PRINCIPAL WATER AND SEWER CONSUMERS CURRENT YEAR AND NINE YEARS AGO TAXPAYERS Caterpillar Inc. Beck Readymix Concrete Sycamore Creek Apartments SA WFR Partners, LLC IPT San Antonio Logistics CTR Sebastian Apartments Val Verde 6561 Sysco / Cooling Tower Legacy Oaks Apartments Pecan Grove TXLLC Wal -Mart Supermarket #3391 spk Sedona Master Community, INC Lowe's Home Improvement Warehouse CCMA TOTAL 2019 Total Percentage of Water Total City Consumption Water (In Gallons) Rank Consumption 21,614,000 1 1.33% 13,419,600 2 0.83% 6,462,900 3 0.40% 6,623,900 4 0.41% 5,633,200 5 0.35% 4,893,200 6 0.30% 4,426,700 7 0.27% 4,763,400 8 0.29% 4,106,200 9 0.25% 4,880,500 10 0.30% 76,823,600 Total City Water Consumption 1,622,930,500 114 4.73% 2010 TABLE 7 Total Percentage of Water Total City Consumption Water (In Gallons) Rank Consumption 7,879,600 1 0.64% 3,979,100 8 032% 6,701,600 3 0.54% 4,793,700 5 0.39% 4,228,800 7 0.34% 5,321,100 4 0.43% 7,368,700 2 0.60% 4,674,900 6 0.38% 3,646,600 9 0.30% 3,318,900 10 0.27% 51,913,000 4.22% 1,231,376,600 115 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) TABLE 8 116 City Direct Rates Overlapping School Districts Schertz- Cibolo- Fiscal Basic Debt Universal Corral Year Rate Service Total City ISO ISD 2019 0.3497 0.1649 0.5146 1.4900 1.3200 2018 0.3248 0.1662 0.4910 1.4900 1.3900 2017 0.3168 0.1743 0.4911 1.4700 1.3900 2016 0.3159 0.1752 0.4911 1.4900 1.3900 2015 0.3164 0.1810 0.4974 1.4900 1.3900 2014 0.3010 0.1964 0.4974 1.4900 1.4300 2013 0.2993 0.2006 0.4999 1.4600 1.4300 2012 0.2993 0.1850 0.4843 1.4350 1.4300 2011 0.2993 0.1500 0.4493 1.4350 1.3700 2010 0.2842 0.1500 0.4342 1.4200 1.3100 Overlapping Counties Bexar Comal Guadalupe Community Fiscal Hospital River College Year County District Authority District County County 2019 0.2774 0.2762 0.0186 0.1492 0.2952 0.3319 2018 0.2928 0.2762 0.0173 0.1492 0.3078 0.3799 2017 0.2928 0.2762 0.0173 0.1492 0.2928 0.3851 2016 0.2929 0.2762 0.0173 0.1492 0.2929 0.3851 2015 0.2929 0.2762 0.0178 0.1492 0.2929 0.3941 2014 0.2782 0.2762 0.0174 0.1492 0.2782 0.3999 2013 0.3052 0.2762 0.0174 0.1416 0.3504 0.4036 2012 0.3269 0.2762 0.0167 0.1416 0.3340 0.4036 2011 0.3269 0.2662 0.0160 0.1359 0.3130 0.3999 2010 0.3269 0.2610 0.0160 0.1359 0.3080 0.3895 116 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY OF TAX PAYERS CURRENT YEAR AND NINE YEARS AGO TOTALS $ 553,843,220 TOTAL TAXABLE ASSESSED VALUE $ 3,900,769,022 117 14.20% 2019 Percentage of Total City Taxable Taxable Assessed Assessed Taxpayer Value Rank Value Caterpillar Inc. $ 127,829,440 1 3.28% SYSCO San Antonio, Inc. 108,437,649 2 2.78% US Real Estate, LP 60,564,813 3 1.55% Republic Beverage Co. Distribution 56,088,100 4 1.44% Colfin 2018 -3 Industrial Owner 44,527,470 5 1.14% Shell US Gas & Power LLC 37,942,000 6 0.97% Amazon.com KYDC LLC 36,498,147 7 0.94% GE Oil & Gas LLC 28,301,316 8 0.73% Amazon Com Services Inc 27,545,385 9 0.71% SA WFR Partners LLC 26,108,900 10 0.67% Lack Properties Inc. San Antonio MTA LP Eye Care Centers of America Inc. Aoh- Vantage at Schertz LLC Wal -Mart Real Estate Business Trust Sprint Spectrum LP H.E.B Grocery Co. EM Limited Partnership Mid Cities 35 Partners LTD TOTALS $ 553,843,220 TOTAL TAXABLE ASSESSED VALUE $ 3,900,769,022 117 14.20% 2010 Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value 44,558,524 1 2.30% 22,970,530 2 1.19% 22,115,750 3 1.14% 16,572,315 4 0.86% 16,560,000 5 0.86% 14,529,843 6 0.75% 12,051,870 7 0.62% 11,876,268 8 0.61% 10,992,086 9 0.57% 10,607,005 10 0.55% $ 182,834,191 $ 1,933,159,122 9.46% 118 TABLE 9 CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) TABLE 10 119 Collected Within Total Collections Fiscal Year Taxes Levied Fiscal Year of Levy Collections In To Date Ended for the % of Subsequent % of September 30, Fiscal Year Amount Levy Years Amount Levy 2019 $ 19,922,568 $ 19,825,244 99.51% $ - 19,825,244 99.51% 2018 18,010,824 17,899,825 99.38% 85,062 17,984,887 99.86% 2017 17,356,822 17,241,556 99.34% 72,675 17,314,231 99.75% 2016 16,238,180 16,160,248 99.52% 57,835 16,218,083 99.88% 2015 14,793,867 14,738,760 99.63% 44,730 14,783,490 99.93% 2014 13,383,759 13,297,258 99.35% 68,412 13,365,670 99.86% 2013 12,536,540 12,455,336 99.35% 71,432 12,526,768 99.92% 2012 11,239,572 11,159,974 99.29% 71,740 11,231,714 99.93% 2011 9,978,430 9,895,240 99.17% 74,770 9,970,010 99.92% 2010 9,639,945 9,559,899 99.17% 74,503 9,634,402 99.94% 119 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS TAXABLE ASSESSED VALUE LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Taxable Ended Value Residential Commercial September 30, January 1, Property Property 2019 2018 $ 2,860,333,982 $ 1,401,636,211 2018 2017 2,049,067,806 2,344,365,139 2017 2016 1,895,085,016 2,269,590,522 2016 2015 1,702,601,947 2,087,223,204 2015 2014 1,568,651,309 1,793,803,709 2014 2013 1,445,731,509 1,540,565,195 2013 2012 1,383,423,359 1,396,349,905 2012 2011 1,337,223,390 1,233,687,039 2011 2010 1,272,970,256 1,253,600,729 2010 2009 1,234,950,439 1,237,284,878 *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal and Guadalupe County Appraisal Districts. 120 TABLE 11 121 Total Taxable Total Tax - Exempt Other Assessed Direct Property Property Value* Tax Rate $ (621,773,006) $ 260,571,835 $ 3,900,769,022 0.5146 (757,265,921) 146,860,809 3,647,504,903 0.4911 (649,173,041) 132,002,406 3,375,850,131 0.4911 (544,328,535) 130,353,515 3,037,267,611 0.4974 (460,271,461) 135,084,054 2,752,562,574 0.4974 (340,747,650) 107,013,520 2,600,365,551 0.4999 (285,245,142) 105,837,429 2,411,270,623 0.4843 (262,591,896) 102,952,090 2,363,893,708 0.4493 (280,015,063) 117,337,786 2,342,355,490 0.4342 (251,217,268) 121,337,441 1,933,159,122 0.4090 121 CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities 122 General Certificates Certificates Fiscal Obligation of Tax Capital Revenue of Year Bonds Obligation Notes Lease Bonds Obligation 2019 $ 48,320,000 $ 16,235,000 $ 530,000 $ 25,699 $ - $ 12,330,000 2018 52,752,896 13,636,966 7151000 34,264 - 13,211,178 2017 56,613,614 9,011,415 1,230,000 25,147 - 8,174,779 2016 56,352,272 4,057,189 1,740,000 58,321 - 8,331,966 2015 53,410,128 277,801 1,210,000 91,495 - 8,946,153 2014 56,487,433 543,934 1,585,000 123,370 - 9,561,204 2013 58,693,750 801,767 2,155,000 22,398 2,215,000 5,048,233 2012 60,878,759 1,581,300 190,000 60,190 2,342,656 5,383,700 2011 48,035,253 8,615,077 250,000 97,188 2,476,681 5,704,200 2010 37,804,450 12,404,034 310,000 133,408 5,436,773 6,149,350 122 TABLE 12 Business -Type Activities Public General Total Percent Facility Obligation Capital Tax Primary of Gross Per Loan Bonds Lease Notes Government Income Capita $ - $ 4,445,000 $ 199,421 $ 460,000 $ 82,545,120 5.60% 1,968 - 2,127,657 289,553 765,000 83,532,514 5.98% 2,028 - 2,533,626 92,721 1,065,000 75,076,605 6.22% 1,996 - 3,014,595 162,262 1,360,000 75,076,605 639% 1,979 - 3,490,564 231,803 1,640,000 69,297,944 5.99% 1,830 - 3,966,533 347,705 65,000 72,680,179 6.35% 1,992 - 2,127,502 - 130,000 71,193,650 6.50% 1,982 - 2,413,471 - 190,000 73,040,076 8.15% 2,117 - 2,684,440 - 250,000 68,112,839 8.01% 2,031 - - - 310,000 62,548,015 7.07% 1,923 123 CITY OF SCHERTZ, TEXAS TABLE 13 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS General Bonded Debt Outstanding Percentage of General Certificates Amounts Actual Taxable Fiscal Obligation of Available for Value of Per Year Bonds Obligation Debt Service Total Property Capita 2019 $ 52,765,000 $ 16,235,000 $( 1,084,908) $ 67,915,092 1.74% 1,649 2018 54,880,553 13,636,966 ( 809,427) 67,708,092 1.86% 1,716 2017 59,147,240 9,011,415 ( 517,199) 67,641,456 2.00% 1,783 2016 59,366,867 4,057,189 ( 227,674) 63,196,382 2.08% 1,669 2015 56,900,692 277,801 ( 117,250) 57,061,243 2.07% 1,564 2014 60,453,966 543,934 ( 286,215) 60,711,685 2.33% 1,690 2013 60,821,252 801,767 ( 444,369) 61,178,650 2.54% 1,773 2012 63,292,230 1,581,300 ( 429,289) 64,444,241 2.73% 1,921 2011 50,719,693 8,615,077 ( 556,884) 58,777,886 2.51% 1,807 2010 37,804,450 12,404,034 ( 347,739) 49,860,745 2.58% 1,585 124 CITY OF SCHERTZ, TEXAS DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT CURRENT YEAR Estimated Debt Percentage Governmental Unit Outstanding Applicable* Debt repaid with property taxes: TABLE 14 Estimated Share of Overlapping Debt Alamo CCD $ 479,445,000 0.29% $ 1,390,391 Bexar County 1,271,192,300 0.29% 3,686,458 Bexar County Hospital District 876,814,000 0.29% 2,542,761 Comal County 122,864,914 4.84% 5,946,662 Comal ISO 767,165,107 4.92% 37,744,523 Guadalupe County 13,655,000 20.26% 2,766,503 Schertz - Cibolo- Universal ISD 415,664,359 48.79% 202,802,640 Subtotal, Overlapping Debt City Governmental Activities Direct Debt TOTAL NET OVERLAPPING DEBT 256,879,937 67,104,862 $ 323,984,799 NOTES: The overlapping debt was received from the Municipal Advisory Council of Texas. Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Overlapping debt is the proportionate share of the debts of local jurisdictions located wholly or in part within the limits of the City of Shertz. This schedule is intended to demonstrate the total debt that the City of Shertz property tax payers will be expected to repay. The amount of debt applicable to the City of Schertz is computed by (a) determining what portion of total assessed value of the overlapping jurisdiction lies within the limits of the City and (b) applying this percentage to the total governmental activities debt of the overlapping jurisdiction. 125 Assessed Value, 2018 Tax Roll Debt Limit - Texas statues do not provide a legal debt limit for cities; however, through accepted practice a practical "economic" debt limit is considered to be 10% of the assessed value. Amount of Applicable Debt: General Bonded Debt Less Debt Service Net Position DEBT MARGIN Total Net Debt as a Percentage of Debt Margin CITY OF SCHERTZ, TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS TABLE 15 $ 3,900,769,022 $ 390,076,902 $ 67,104,862 ( 1,084,908) 66,019,954 $ 324,056,948 20.37% 126 Fiscal Year 2016 2017 2018 Assessed Value $ 3,375,850,131 $ 3,647,504,903 $ 3,783,027,833 Debt Limit 337,585,013 364,750,490 378,302,783 Total Net Debt Applicable to Limit 61,181,169 65,792,916 66,329,699 Total Debt Margin $ 276,403,844 $ 298,957,574 $ 311,973,084 2013 2014 2015 Assessed Value $ 2,600,365,551 $ 2,752,562,574 $ 3,037,267,611 Debt Limit 260,036,555 275,256,257 303,726,761 Total Net Debt Applicable to Limit 60,499,568 56,803,499 53,424,303 Total Debt Margin $ 199,536,987 $ 218,452,758 $ 250,302,458 2010 2011 2012 Assessed Value $ 2,363,893,708 $ 2,411,270,623 $ 2,600,365,551 Debt Limit 236,389,371 241,127,062 260,036,555 Total Net Debt Applicable to Limit 55,298,550 60,973,626 60,499,568 Total Debt Margin $ 181,090,821 $ 180,153,436 $ 199,536,987 126 CITY OF SCHERTZ, TEXAS PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Water Revenue Bonds TABLE 16 Net Utility Less: Fiscal Service Operating Year Charges Expenses Interest Coverage 4,623,264 2019 $ 27,246,250 $ 22,622,986 $ 2018 27,099,237 20,802,263 2017 25,390,713 18,697,162 2016 22,003,794 17,603,487 2015 20,700,369 15,916,597 2014 19,147,872 15,246,653 2013 17,696,327 14,553,274 2012 17,411,568 14,185,126 2011 16, 843,780 13, 229,037 2010 14,993,648 12, 399, 880 TABLE 16 Net Debt Service Available Revenue Principal Interest Coverage 4,623,264 $ 1,845,132 $ 561,880 1.92 6,296,974 1,671,134 391,609 3.05 6,693,551 1,554,541 368,390 3.48 4,400,307 1,441,741 417,346 2.37 4,783,772 1,448,407 428,912 2.55 3,901,219 1,010,500 426,100 2.72 3,143,053 728,800 359,680 2.89 3,226,442 697,100 396,968 2.95 3,614,743 577,824 409,801 3.66 2,593,768 615,400 502,629 3.74 NOTE: Details regarding the City's outstanding debt can be found in the notes to the basic financial statements. Operating expenses do not include the depreciation, interest, or amortization expenses. 127 CITY OF SCHERTZ, TEXAS TABLE 17 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Sources: Population, personal income, median age and education level informaiton provided by City Economic Development Corporation. School enrollment provided by Schertz- Cibolo- Universal City Independent School District. Unemployment data provided by Texas Workforce Commission. 128 Per Education Capita Level in Fiscal Personal Personal Median Years of School Unemployment Year Population Income Income Age Schooling Enrollment Rate 2019 41,948 1,473,255,708 35,121 38.0 16.2 15,925 2.7% 2018 41,182 1,396,481,620 33,910 37.3 15.9 15,817 3.2% 2017 39,453 1,266,046,770 32,090 37.2 15.9 15,497 3.8% 2016 37,938 1,175,319,240 30,980 36.9 15.8 15,460 3.4% 2015 37,865 1,157,835,970 30,578 36.1 15.6 15,009 3.2% 2014 36,477 1,144,465,875 31,375 36.9 15.4 14,515 5.1% 2013 35,929 1,095,331,494 30,486 37.1 15.4 14,058 5.5% 2012 34,499 895,739,206 25,964 36.8 15.4 13,016 5.6% 2011 33,544 850,069,800 25,342 37.8 15.4 12,533 5.7% 2010 32,523 885,015,876 27,212 34.4 15.4 12,330 5.1% 2009 31,465 913,919,790 27,923 36.5 13.9 11,700 5.0% Sources: Population, personal income, median age and education level informaiton provided by City Economic Development Corporation. School enrollment provided by Schertz- Cibolo- Universal City Independent School District. Unemployment data provided by Texas Workforce Commission. 128 CITY OF SCHERTZ, TEXAS TOP TEN PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO TABLE 18 Source: City Economic Development Corporation 129 2019 2010 Percentage Percentage of Total City of Total City Employer Employees Employment Employees Employment Schertz/Cibolo/US ISD 1,992 10.93% 1,615 11.71% Amazon 900 4.94% Sysco 806 4.42% Visionworks 593 3.25% FedEx Groung 580 3.18% The Brandt Companies, LLC 537 2.95% H.E.B Grocery Co. 500 2.74% 300 2.17% Republic National Distributing Company 413 2.27% City of Schertz 392 2.15% 320 2.32% FedEx Freight 325 1.78% Wal -Mart Stores - 350 2.54% EyeCare Centers of America - 321 2.33% Block 220 1.59% Valero 200 1.45% Theis Distributing Co. 125 0.91% Federal Express Freight 120 0.87% Manco - 120 0.87% TOTAL 7,038 38.61% 3,691 26.76% Source: City Economic Development Corporation 129 CITY OF SCHERTZ, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BYFUNCTION LAST TEN FISCAL YEARS Full-Time | | of September 30 Function 2010 2011 2012 2013 General Government City Manager 6 6 7 7 Court Support - - - - Municipal Court 5 5 6 6 Customer Relations 4 5 5 5 Planning and Zoning 4 4 3 3 General Services 14 15 15 13 City Secretary 2 2 2 2 Public Affairs 3 3 4 4 Records Management 1 1 1 1 3chertzMagazine - 2 2 2 Engineer 2 2 4 3 GIS Z 2 Z 2 Information Technology 3 4 4 6 Human Resources 4 4 4 4 Finance 6 6 6 6 Purchasing 5 5 5 4 Fleet Service 3 4 4 4 Building Maintenance - - - 2 Facility Services - - - - Public Safety Police 65 65 70 75 Fine 32 32 32 33 Inspections 6 7 7 7 Marshal Services 5 O D 8 Health Animal Control 6 6 6 6 Environmental Health - - - - Parks and Culture Parks 8 g g g Pools - - - - Event Facilities 2 1 1 1 Library 14 14 14 14 Public Environment Streets 13 14 14 14 Public Yorks Public Works 5 4 4 6 Business Office 10 10 10 10 Water and Sewer 16 17 17 16 Drainage 7 7 7 8 EMS 34 34 35 35 Economic Development 4 3 4 4 TOTAL 290 299 311 318 TABLE 19 Full -Time Equivalent Employees as of September 30, 2014 2015 2016 2017 2018 2019 6 6 5 5 5 5 6 6 6 6 6 4 5 5 5 5 5 3 3 3 4 4 4 3 13 13 - - - - 2 2 2 2 2 2 4 4 4 4 5 5 1 1 1 1 - - 2 2 2 2 - - 3 3 7 7 7 7 2 2 2 2 2 2 6 6 6 7 8 8 4 4 5 5 5 5 6 8 8 8 8 7 3 3 3 3 3 3 4 6 6 6 6 7 2 3 - - - - - - 16 16 17 10 75 75 78 81 86 86 33 33 36 39 45 45 8 9 8 8 11 12 8 8 8 5 - - 7 7 8 8 7 7 - - 3 3 4 4 9 9 9 10 12 11 1 1 1 1 1 5 14 14 14 14 15 14 14 14 14 14 14 14 6 6 4 4 4 4 10 10 10 10 10 9 16 16 16 16 19 19 8 8 6 6 8 8 36 37 39 41 45 45 4 4 4 4 4 4 320 327 339 346 366 357 131 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS 132 Fiscal Year Function 2010 2011 2012 2013 General Government Building Permits Issued 4,806 4,950 2,643 3,054 Schertz Tales Number of Magazines Printed 144,000 168,000 168,000 168,000 Police CFS 37,269 26,205 19,434 19,894 Arrests 790 762 666 800 Traffic Violations 19,259 13,231 20,881 19,335 Accidents 1,606 1,575 1,665 1,960 Fire Number of Rescue /Other Responses 1,671 1,657 1,799 2,046 Number of Fire Responses 76 110 74 108 Number of Inspections 425 616 429 332 Number of Training Classes Conducted 107 142 168 132 Number of Pre -Plan Inspections 642 536 714 729 EMS Requests for Transport 7,281 7,443 7,545 8,391 Actual Transports 4,575 4,801 4,766 5,451 EMT Students 80 85 79 116 Marshal Service Warrants Issued 5,444 4,141 2,888 3,344 Warrants Cleared 4,023 3,985 4,118 4,687 Food Establishment Permits 129 118 123 127 Food Establishment Inspection 202 244 180 281 Foster /Adoption Inspections 27 18 14 24 Parks Facility Reservations 719 237 234 258 Community and Civic Centers Civic Center 594 354 325 444 Community Center Rentals 635 666 816 735 North Community Center Rentals - 241 307 288 132 TABLE 20 133 Fiscal Year 2014 2015 2016 2017 2018 2019 2,869 3,087 5,919 4,800 5,251 4,748 180,000 180,000 180,000 180,000 180,000 180,000 19,067 36,138 39,064 34,428 45,190 41,327 776 595 603 423 624 603 15,077 12,306 8,960 8,001 11,359 12,541 1,823 2,040 2,119 2,057 2,244 2,304 1,759 2,167 2,327 2,758 3055 3804 110 99 67 86 161 100 252 698 440 519 562 528 125 150 460 340 600 804 735 980 867 922 788 865 8,840 9,286 9,723 9,956 10,059 10,759 5,713 6,118 6,123 6,201 6,165 6,738 87 84 89 90 90 90 2,354 3,798 2,587 2,816 1,598 2,036 3,781 3,691 3,492 2,822 2,022 1,834 82 135 145 201 181 55 218 136 153 13 211 96 16 22 21 21 18 8 301 275 240 251 248 241 458 478 483 590 516 441 437 455 370 455 381 326 244 209 185 230 235 188 133 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS 134 Fiscal Year Function 2010 2011 2012 2013 Animal Services Number of Animals Handled 2,021 1,802 1,463 1,326 Number of Adoptions 249 257 291 362 Number of Return to Owners 279 313 149 231 Number of Transfers 451 300 312 301 Library Annual Circulation 392,528 414,074 410,312 404,691 Library Visits 257,235 254,934 256,349 254,633 Library Program Attendance 10,610 13,767 16,035 12,581 Registered Users 24,628 28,589 30,475 31,658 Water New Connections 509 439 271 168 Water Main Breaks 25 76 52 38 Total Consumption 12,313,766 16,763,239 16,131,415 15,500,413 (Thousands of Gallons) Daily Average Consumption (Thousands of Gallons) 33,736 45,927 44,196 42,466 Peak Daily Consumption (Thousands of Gallons) 7,040 11,000 9,290 9,483 Total Customers 10,134 12,234 12,557 12,757 Average Use Per Connection 5,054 5,725 5,517 5,905 Sewer Total Customers 9,499 10,907 10,988 11,456 Facilities Maintenance Number of Buildings Maintained 19 19 19 19 Square Footage 166,591 166,591 166,591 166,591 134 TABLE 20 Fiscal Year 2014 2015 2016 2017 2018 2019 1,218 1,304 1,313 1,283 926 1157 309 357 410 348 319 366 222 213 205 228 218 233 316 296 316 326 297 227 395,998 394,766 399,622 385,206 414,790 447,379 253,237 259,413 255,109 235,428 258,695 237,821 15,048 13,825 15,282 16,814 16,945 18,412 30,759 31,138 30,702 31,432 30,806 33,104 235 369 213 303 235 300 45 45 45 45 50 52 15,497,071 14,757,134 16,097,931 15,222,373 15,833,124 17,602,330 42,458 40,431 43,942 41,705 43,378 48225 10,089 8,385 10,985 11,000 9,083 11094 13,324 13,570 13,877 14,124 14678 16,434 5,467 5,135 5,352 5,244 5294 4587 11,578 11,413 12,282 12,398 12866 12853 19 21 21 21 25 26 166,591 234,202 234,202 234,202 245,218 257,218 135 CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS 8YFUNCTION/PROGRAM LAST TEN FISCAL YEARS 136 Fiscal Year Function 2010 2011 2012 2013 Police Stations 1 1 1 1 Patrol Units 40 42 42 42 Fire Stations 2 2 2 Z Training Facility - - - - Fire Vehicles 13 13 13 13 EMS Ambulances 6 6 6 7 Marshal Service Vehicles 7 8 8 7 Streets Streets, Paved (Mi|es) 125 132 134 137 Streets, Unpaved (Mi|es) 7 5 5 5 Parks and Recreation Parko - Oeve|oped 12 17 17 13 Parks - Undeve|oped 4 4 4 8 Playground 19 15 15 16 Swimming Pools Z 2 2 2 Baby Pools Z 2 2 2 Baseba||/SofLba||Diamonds 12 0 0 12 Soccer Fields 12 12 12 12 Community Centers 4 4 4 4 Animal Control Control Vehicle 3 3 3 3 Library Facility 1 1 1 1 Volumes inCollection 71,929 73,904 81,468 86,221 Water Number ofReservoirs - - - - Number of Pump Stations 5 5 5 5 Water Mains (Mi|es) 190 192 192 197 Sewer Sanitary Sewers (Mi|eu) 78 84 85 87 Storm Sewers (Mi|es) Q 10 10 11 Facilities Maintenance Vehicles 5 5 4 5 Generators 3 3 3 3 136 TABLE 21 Fiscal Year 2014 2015 2016 2017 2018 2019 1 1 1 1 1 1 42 48 50 64 69 68 2 2 2 2 3 3 - - - - - 0 15 16 16 16 18 19 7 9 9 8 8 9 7 7 7 7 7 7 141 149 153 159 153 165.4 5 5 5 5 5 5 13 14 15 20 21 21 8 9 10 4 4 4 16 18 19 19 19 20 2 2 2 4 4 4 2 2 2 2 2 2 12 15 15 15 15 15 12 12 12 12 12 12 4 4 4 4 4 4 3 3 4 3 4 4 1 1 1 1 1 1 100,478 113,085 97,412 107,382 110,266 150,972 - - - - 0 0 5 5 5 5 5 5 199 210 211 221 225 228 90 96 98 110 113 116 11 12 12 12 13.6 13.8 5 6 6 6 11 it 3 4 4 4 7 10 137 COMPLIANCE SECTION THIS PAGE LEFT BLANK INTENTIONALLY ATTILLO, BROWN & HILL, L.L.P. 401 Ale t ante Highway n Waco, Texas 767171 254.772.4901 pbhc aa.com INDEPENDENT AUDITOR'S 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 Honorable Mayor and Members of City Council City of Schertz, Texas We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Schertz, Texas, as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the City of Schertz, Texas' basic financial statements, and have issued our report thereon dated March 18, 2020. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Schertz, Texas' internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Schertz, Texas' internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Schertz, Texas' internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 138 OFFICE LOCATIONS TEXAS 1 Waco Temple Hillsboro r Houston AICP NEWMEXICO I Albuquerque rque OAQC Member Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Schertz, Texas' financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Waco, Texas March 18, 2020 139