The URL can be used to link to this page

24-R-34 Annual Comprehensive Financial Report FY 2022-2023RESOLUTION NO. 24-R-34 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING THE APPROVAL OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR FISCAL YEAR 2022-23. WHEREAS, the City staff of the City of Schertz (the "City") has recommended that the City Council approve the Annual Comprehensive Financial Report for Fiscal Year 2022-23 ; and WHEREAS, the Audit Committee has recommended that it is in the best interest of the City to approve the Annual Comprehensive Financial Report for Fiscal Year 2022-23; and WHEREAS, the City Council has determined that it is in the best interest of the City to approve the Annual Comprehensive Financial Report for Fiscal Year 2022-23. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby authorizes the approval of the Annual Comprehensive Financial Report for Fiscal Year 2022-23, Exhibit A. Section 2. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters resolved herein. Section 4. This Resolution shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. Section 5. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 6. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 7. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. PASSED AND ADOPTED, this Lday of 024. CITY OF SCHERTZ, TEXAS Ato-'- Rafael-&M&34ayor ATTEST: Shei a Edmonds n, City Secretary Exhibit A Annual Comprehensive Financial Report September 30, 2023 CITY OF SCHERTZ, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 " CITy 9 r * Z/ OFFICIALS ISSUING REPORT Steve Williams City Manager James Walters Director of Finance CITY OF SCHERTZ, TEXAS FOR THE YEAR ENDED SEPTEMBER 30, 2023 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 Statementof 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 Statementof Activities...................................................................................... 22 Proprietary Funds Statement of Net Position...................................................................................... 23 - 24 Statement of Revenues, Expenses, and Changes in Fund Net Position............................................................................. 25 Statement of Cash Flows....................................................................................... 26 - 27 Notes to the Financial Statements............................................................................. 28 - 54 Required Supplementary Information Schedule of Revenues, Expenditures, and Changes in Fund Balance - General Fund - Budget and Actual ...................................................... 55 - 56 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Economic Development Corporation - Budget and Actual ....................... 57 Notes to Budgetary Schedules..................................................................................... 58 Schedule of Changes in Net Pension Liability and Related Ratios....................................................................................... 59 - 60 Schedule of Employer Contributions............................................................................. 61 - 62 Schedule of Changes - TMRS Other Post -Employment Benefit Liability and Related Ratios....................................................................................... 63 Schedule of Changes - City Retiree Health Other Post -Employment Benefit Liability and Related Ratios............................................................................ 64 Combining and Individual Fund Statements and Schedules Comparative Balance Sheets - General Fund................................................................. 65 Comparative Schedules of Revenues, Expenditures, and Changes in FundBalance - General Fund................................................................................. 66 Comparative Balance Sheets - Economic Development Corporation ................................. 67 Comparative Schedules of Revenues, Expenditures, and Changes in Fund Balance - Economic Development Corporation ................................................. 68 Comparative Balance Sheets - Debt Service Fund.......................................................... 69 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Debt Service Fund ......................................... 70 Comparative Balance Sheets - Capital Projects Fund ...................................................... 71 Comparative Schedules of Revenues, Expenditures, and Changes in Fund Balance - Capital Projects Fund...................................................................... 72 Combining Balance Sheet - Nonmajor Governmental Funds ............................................ 73 - 74 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds ...................................... 75 - 76 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Hotel Occupancy Fund ................................... 77 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Park Fund ..................................................... 78 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Tree Mitigation Fund ...................................... 79 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Treasury Forfeitures Fund............................................................ 80 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Justice Forfeitures Fund............................................................... 81 Schedule of Revenues, Expenditures, and Changes in Fund Balance - State Forfeitures Fund................................................................. 82 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Library Advisory Board Fund ........................... 83 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Historical Committee Fund .............................. 84 Schedule of Revenues, Expenditures, and Changes in Fund Balance - Capital Recovery Roadways......................................................... 85 STATISTICAL SECTION Net Position by Component.............................................................................. 1 86 - 87 Changein Net Position.................................................................................... 2 88 - 91 Fund Balances of Governmental Funds.............................................................. 3 92 - 93 Changes in Fund Balances, Governmental Funds ................................................. 4 94 - 95 Tax Revenue by Source - Governmental Funds .................................................. 5 96 - 97 Total Water and Sewer Consumption and Rates .................................................. 6 98 Principal Water and Sewer Consumers............................................................... 7 99 Direct and Overlapping Property Tax Rates ........................................................ 8 100 Principal Property Taxpayers............................................................................ 9 101 Property Tax Levies and Collections.................................................................. 10 102 Taxable Assessed Value................................................................................... 11 103 - 104 Ratios of Outstanding Debt by Type.................................................................. 12 105 - 106 Ratios of General Bonded Debt Outstanding....................................................... 13 107 Direct and Overlapping Governmental Activities Debt .......................................... 14 108 Debt Margin Information.................................................................................. 15 109 Pledged Revenue Coverage.............................................................................. 16 110 Demographic and Economic Statistics................................................................ 17 111 Top Ten Principal Employers............................................................................. 18 112 Full -Time Equivalent City Governmental Employers by Function ............................ 19 113 - 114 Operating Indicators by Function/Program......................................................... 20 115 - 118 Capital Asset Statistics by Function/Program...................................................... 21 119 - 120 THIS PAGE LEFT BLANK INTENTIONALLY INTRODUCTORY SECTION COMMUNffY SERVICE SCHIERTZ OPPORTUNrrY March 19, 2024 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, 2023. 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, 2023, 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, 2023, 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 43,010 in 2022 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 1400 Schertz Parkway Schertz, Texas 78154 210.619.1000 SCHIERTZ � �� 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 301h. 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 on pages 55-56 as part of the required supplementary information. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Schertz operates. Local economy. Economic growth in Schertz remained strong in 2023. The surrounding metro area saw growth evidenced by the Federal Reserve Bank of Dallas reporting the San Antonio Business -Cycle Index increase 3.98% year over year for September 2023. This Index has normalized to its log term trend and continues to potentially indicates a continued period of economic growth for the region. As of September 2023, the unemployment rate for Texas was 3.9% and San Antonio -New Braunfels area matched at 3.9%. Schertz, as included in the San Antonio -New Braunfels MSA, had an unemployment rate of 3.6% during this time. As another indicated of economic growth, the City of Schertz realized a 10.4% increase year -over -year in sales tax collections during the fiscal year. The City's average longer term growth is 7.2% which indicates the City has maintained its previous growth from the recent years and continued its growth above historic averages. New residential construction has been slowing in the city the past few years, cutting revenue by 30.6% over last year. Despite the downward trend in new residential permits, overall new taxable value has grown by the historic average of 2.6%. Industrial development continued to push North along IH-35 across FM 3009 with Phelan -Bennet filling 169,525 sq ft of speculative warehouse distribution on Four Oaks Lane. Doerr Lane Logistics Center is complete and leased and another Cavender and Hill Project, 3009 Distribution Center will add another 112,000 square foot warehouse/distribution to the city, conveniently located off of FM 3009 near IH 35. In Northern Schertz, redevelopment, expansion, and significant speculative development characterized 2023. Caterpillar again invested in Schertz bringing the total investment to an estimated $70,000,000 and settling on 194 jobs total with two new manufacturing lines. Sysco Central Texas site continued to produce for Schertz, taking advantage of the economic development incentives to secure their 100,000 sq ft expansion of their existing facility, currently under construction. The Economic Development Corporation also took steps to secure the 1400 Schertz Parkway Schertz, Texas 78154 210.619.1000 SCHIERTZ OPP�1 RY funding for waste water infrastructure for a large portion of Schertz, on the north side of IH 35 and close to our border with New Braunfels. 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, which is currently in the planning and engineering phase. 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. The remaining $5 million for FM 1518 was issued in 2022 and all funds have been paid to the Texas Department of Transportation as in April 2023. In June 2018, the second $4 million was issued for the Fire Station to begin construction. The fire station was completed in November 2021. All funds have been spent for this bond election. In November 2021, the City placed 1 bond proposition before voters totally $15.45 million for Fire Station number 4 which passed. The funds for the new fire station were issued in 2022 and the fire engine and the land have been purchased with engineering and design for the building are underway. Current Year Budget Initiatives. For FY 2023-24, the city has made employee wages and benefits a priority. The City Council identified $3.6 million citywide to address concerns of below average compensation. $1.4 million is for an across-the-board employment cost index (ECI), $1.9 million to implement recommendations on the 3rd party classification and compensation study, and $344,700 to cover insurance premium increases. There were 5 new positions approved in the General Fund, 1 position in Water & Sewer, and 4 in EMS. The General Fund included 3 Firefighters, an Engineering Administration Assistant, and a Part Time Records Clerk. Water & Sewer was approved for a second Senior Billing Clerk and EMS was approved for 4 new EMTs. Other initiatives include $1.2 million for additional street maintenance, $675,000 for a new Vacuum Truck, $550,000 replacement of all police cameras and TASERs annually for 5 years, and career progression adjustments. 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. 1400 Schertz Parkway Schertz, Texas 76154 210.619.1000 llti SCHIERTZ COMMUNITY 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 on pages 105-110. A more detailed summary of the City's Financial Performance is available in the Management Discussion and Analysis section on page 4. 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, 2022. This was the 38th 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. 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, Steve Williams City Manager 1400 Schwtz Parkway Schertz, Texas 78154 210.619.1000 James P. Walters Finance Director Iv CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR RALPH GUTIERREZ MAYOR PRO-TEM ALLISON HEYWARD CITY COUNCIL MARK E. DAVIS MICHELLE WATSON PAULMACALUSO TIFFANY GIBSON ROBERT WESTBROOK ALLISON HEYWARD TIM BROWN CITY MANAGER STEVE WILLIAMS DIRECTOR OF FINANCE JAMES WALTERS CITY ATTORNEY CHARLES ZECH, DENTON, NAVARRO, ROCHA, BERNAL & ZECH, P.C. v City Manager Steve Williams Executive Assistant Fire Deputy City Manager Greg Rodgers Brian James Economic Engineering ngineering Planning & Development Internal Services jo!Assistant City police Manager arah Gonzalez Jim Lowerye r arRecreation Utility Billing Planning Emmu Fleet = Municipal Court Civic Center Building Inspections' Facilities Library Public Affairs Neighborhood Information Services Technology Customer Care/311 Geographic Information Human Resources Systems Public Works Streets & Drainage Water & Sewer Purchasing Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Schertz Texas For its Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2022 Executive Director/CEO vii FINANCIAL SECTION THIS PAGE LEFT BLANK INTENTIONALLY 1 v4z*Z14 -I- INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of the City Council City of Schertz, Texas Report on the Audit of the Financial Statements Opinions PATTILLO, SPOWN _ HILL, L.L P. jr . prkhgai,c4m We have audited 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 (the "City"), as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements 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, as of September 30, 2023, 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. We did not audit the financial statements of the Schertz-Seguin Local Government Corporation, which represents 9.7 percent and 11.8 percent, respectively, of the assets and net position of the Water and Sewer Fund, and 9.3 percent and 11.7 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, is based solely on the report of the other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GARS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement due date, including any currently known information that may raise substantial doubt shortly thereafter. 1 OFFICE LOCATIONS � gypA TEXAS .'"J�(7 ,_rtlr•dF t`rfisuori i Nols, 0 AICPA NEW Pw EXICt? f+.Is.,;r�,�rrl,F_ GAOC Member Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 City's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control - related matters that we identified during the audit. Report on Summarized Comparative Information We have previously audited the City of Schertz, Texas' fiscal year 2022 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated February 28, 2023. In our opinion, the summarized comparative information presented herein as of and for the year ended September 30, 2022, is consistent, in all material respects, with the audited financial statements from which it has been derived. 2 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison information, and pension and OPEB information 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. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates 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. Other Information Management is responsible for the other information included in the annual comprehensive financial report (ACFR). The other information comprises the introductory section and statistical section but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 19, 2024, 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 19, 2024 3 THIS PAGE LEFT BLANK INTENTIONALLY MANAGEMENT'S DISCUSSION AND ANALYSIS 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, 2023. 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 $345,135,343 (net position). Of this amount, $46,909,951 (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 $48,390,437. The primary reason for this increase was an increase in capital contributions of approximately $32.6 million. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $82,693,803, a decrease of ($8,490,003) in comparison with the prior year. The primary cause of this decrease was an increase in property and sales tax revenues that exceeded expenditure growth, coupled with spending of bond proceeds on capital projects. At the end of the fiscal year, the combined total of the General Fund assigned and unassigned fund balances was $15,519,596 which is 32.29% of the general fund expenditures not including capital outlay. The fund balance policy is to reserve at least a 26% balance. 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, deferred outflows, liabilities, and deferred inflows, with the difference between the former two and latter 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 fifteen 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, the capital projects fund, and the American Recovery Plan Act fund, all of which are considered to be major funds. Data from the other ten 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 two types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Schertz uses enterprise funds to account for its water and sewer department and for its emergency medical services department. The City also maintains an internal service fund to account for internal charges for medical premiums. 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, as well as the internal service fund. Notes to the lnancial 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 over time as a useful indicator of a government's financial position. In the case of the City of Schertz, assets and deferred outflows exceeded liabilities and deferred inflows by $345,135,343 at the close of the most recent fiscal year. The largest portion of the City's total net position (73%) 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 spent. 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. 5 An additional portion of the City's total net position (14%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $46,909,951, 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 2023 2022 2023 2022 2023 2022 Current and other assets $ 97,512,162 $ 105,714,129 $ 64,573,716 $ 73,186,420 $ 162,085,878 $ 178,900,549 Capital assets 194,268,903 159,972,447 135,961,908 108,872,222 330,230,811 268,844,669 Total assets 291,781,065 265,686,576 200,535.624 182,058,642 492.316,689 447,745,218 Deferred outflows of resources 9,428,168 4,309,869 3,008,848 1,195,882 12,437,016 5,505 7.51 Current liabilities 18,488,692 18,382,113 9,086,822 6,911,108 27,575,514 25,293,221 Long-term liabilities 96,863,509 93,693,054 33,494,784 31�871,137 130,358,293 125,564,191 Total liabilities 115,352.201 112,075,167 42,581,606 38,782,245 157,933,807 150,857,412 Deferred inflows of resources 1,334.836 4,374.235 349,719 1,274,416 1,684,555 _ 5,648,651 Net position: Net investment in capital assets 136,442,093 109,746,340 114,831,425 94,997,863 251,273,518 204,744,203 Restricted 40,311,118 32,745,688 6,640,756 5,408,320 46,951,874 38,154,008 Unrestricted 7,768,985 11,055,015 391140,966 42,791,680 46,909,951 53,846,695 Total net position $ 184�522 196 $ 153,547,043 $ 160,613,147 $ 143,197,863 $ 345,135,343 $ 296J44,906 The government's net position increased by $48,390,437 during the current fiscal year. The primary cause for the increase was increased revenues; the City recognized approximately $32.6 million of capital contribution revenue related to dedicated infrastructure assets and also experienced sharp increases in property and sales taxes. These increases stem from the City's continued rapid population growth; continued new housing and business developments resulted in increased assessed value for property taxes and resulted in the creation of infrastructure that was dedicated to the City. The related population increases resulted in increased economic activity that increased sales tax revenues. 6 The following table indicates changes in net position for governmental and business -type activities followed by graphs displaying total revenues and expenses by type: City of Schertz's Changes in Net Position Government -Wide Governmental Business -Type Activities Activities Total 2023 2022 2023 2022 2023 2022 Revenues: Program revenues: Charges for services $ 6,267,868 $ 6,371,968 $ 41,093,604 $ 40,098,475 $ 47,361,472 $ 46,470,443 Operating grants & contributions 2,425,937 3,970,029 - - 2,425,937 3,970,029 Capital contributions 18,456,911 6,987,788 14,180,619 6,143,957 32,637,530 13,131,745 General revenues: Property taxes 25,118,429 22,495,628 - - 25,118,429 22,495,628 Other taxes 23,388,656 21,537,297 - - 23,388,656 21,537,297 Investment earnings 4,678,690 709,898 1,927,277 314,546 6,605,967 1,024,444 Miscellaneous 820,465 1,138,775 479,479 675,739 1,299,944 1,814,514 Total revenues 81,156,956 63,211,383 57,680,979 47,232,717 138,837,935 110,444,100 Expenses: General government 8,244,956 7,093,652 - - 8,244,956 7,093,652 Public safety 22,195,399 19,580,703 - 22,195,399 19,580,703 Public environment 6,188,351 8,545,834 - - 6,188,351 8,545,834 Parks and recreation 4,253,278 3,543,978 - 4,253,278 3,543,978 Cultural 1,380,793 1,168,815 - - 1,380,793 1,168,815 Administration 5,363,700 4,455,947 - - 5,363,700 4,455,947 Interest and other fees 2,555,917 2,490,474 - 2,555,917 2,490,474 Water and sewer - - 30,088,159 27,833,986 30,088,159 27,833,986 EMS - 10,176,945 8,234.500 10,176,945 8,234.500 Total expenses 50,182,394 46,879,403 40,265.104 36,068,486 90,447,498 82,947,889 Increase in net position before transfers 30,974,562 16,331,980 17,415,875 11,164,231 48,390,437 27,496,211 Transfers 591 (316,216) (591) 316,216 Change in net position 30,975,153 16,015,764 17,415,284 11,480,447 48,390,437 27,496,211 Net position - beginning of year 153,547,043 137,531,279 143,197,863 131,717,416 296,744,906 269,248,695 Net position - end of year $ 184,522,196 $153,547,043 $160,613,147 $143,197,863 $345,135,343 296 4 906 TOTAL REVENUES - GOVERNMENT -WIDE $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 I Charges for Operating Capital Grants Property Other Taxes Unrestricted Miscellaneous Services Grants and and Taxes Investment Contributions Contributions Earnings 2023 2022 FA TOTAL EXPENSES - GOVERNMENT -WIDE $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 General Government Public Safety Public Environment Parks and Cultural Administration Interest and Recreation Other Fees 2023 2022 8 GENERAL REVENUE BY SOURCE - GOVERNMENTAL ACTIVITIES Sales Tax 36% $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 Occupancy Tax Investment Earnings 2% 9% Franchise Tax 5% Miscellaneous TOTAL REVENUES AND EXPENSES - BUSINESS -TYPE ACTIVITIES 2023 2022 Revenues Expenses Property Tax 46% BUSINESS -TYPE REVENUES AND EXPENSES $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 R Water and Sewer Utilities EMS Revenues ■Nonoperating Revenues itCapital 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 $82,693,803. Of this total amount, $11,355,967 constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is non -spendable, restricted, committed, 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 $12,000,941, while total fund balance was $19,237,616, an increase of $2,170,717 from the prior year. Overall, the increase was caused by a large, budgeted transfer out for capital projects, but the fund also experienced increases in investment earnings, property, and sales tax revenues. 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 32.29% of total general fund expenditures, not including capital outlay. The debt service fund has a total fund balance of $1,113,858, 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 $750,551. This decrease was due to regular principal and interest payments on long-term debt exceeding interest and sinking property tax revenue during the year. Over time, however, the debt service fund has sufficient cash and equivalents on hand to remain liquid if tax revenues decrease. The capital projects fund has a total fund balance of $22,753,182, a decrease of $18,653,334. This was caused by using bond proceeds during the year to fund construction 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 year end, the EDC fund reported an ending fund balance of $32,995,834, which is an increase of $6,952,706 compared to the prior year. The primary cause of this change was sales tax revenue growing faster than expenditures. The American Rescue Plan Act Fund has a total fund balance of $$399,681, which consists of interest earned on the $7,816,119 received from the Coronavirus Local Fiscal Recovery Fund grant program. Amounts not spent as of year- end are presented as unearned revenue until spent in accordance with the terms of the grant agreement in future years. 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 $37,906,916 and those for the Schertz EMS fund amounted to $1,234,050, which are 130% and 12% of fund operating costs, respectively. The water and sewer fund reported an increase in net position of $17.8 million. Approximately three quarters of this increase related to revenue recognized for contributed infrastructure assets; the remaining portion of the increase was from operating income, which was consistent with the prior year. Management's intent is to accumulate operating surplus to fund construction of new water and sewer infrastructure in future years with less reliance on bonded debt. The Schertz EMS fund decreased net position by $403,518. Expenses increased by approximately $1.9 million compared to the prior year. Revenues were consistent to the prior year as a result of approximately the same number of ambulance runs in the prior year. Expenses increased primarily from increased salaries that resulted from the compensation study discussed previously. General Fund Budgetary Highlights The general fund expenditures were $2,734,590 more than the $41,488,769 budget. Overall activity in the General Fund increased during the current year as the City emerged from the COVID-19 pandemic, although the amount of growth was less than expected. Revenues were $1,379,545 more than budgeted, primarily due to increased property and sales tax revenues. Overall, ending fund balance in the general fund was $4,113,646 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, 2023, amounts to $330,230,811 (net of accumulated depreciation), including several projects in progress from voter approved bonds. Governmental Business -Type Activities Activities Tota 1 2023 2022 2023 2022 2023 2022 Land $ 15,214,261 $ 8,883,427 $ 2,415,102 $ 2,415,017 $ 17,629,363 $ 11,298,444 Water rights - - 70,245 70,245 70,245 70,245 Buildings and improvements 53,420,797 52,701,579 3,725,152 3,703,626 57,145,949 56,405,205 Machinery, equipment, and - vehicles 16,277,025 15,472,681 7,339,679 6,823,569 23,616,704 22,296,250 Infrastructure 175,473,306 136,194,073 137,700,969 115,715,584 313,174,275 251,909,657 Construction in progress 22,189,761 27,684,430 29,149,047 21,661,576 51,338,808 49,346,006 Accumulated depreciation (88,306,247) (80,963,743) (44,438.286) (41,517,395) (132,744,533 J122,481,138) TOTALS 5194.268,903 5159.972,447 113L961908 L108,872.222 1330,230811 $268,844,669 Significant capital asset activity for the year included improvements to streets and infrastructure of $66.5 million and land purchases of $6.3 million. Additional information on the City's capital assets can be found in note II.F. to the basic financial statements. 11 LONG TERM DEBT At the end of the current fiscal year, the City of Schertz had total long-term debt outstanding of $110,190,670. 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 an "AA+" rating from Standard and Poor's. Governmental Business -Type Activities Activities Total 2023 2022 2023 2022 2023 2022 _ General obligation bonds $ 50,790,000 $ 55,070,000 $ 3,525,000 $ 4,265,000 $ 54,315,000 $ 59,335,000 Certificates of obligation 24,565,000 26,135,000 22,005,000 22,845,000 46,570,000 48,980,000 Financing arrangements 81,921 109,228 245,764 327,685 327,685 436,913 Premium on bonds 5,133,058 5,501,635 2,086,300 2,217,980 7,219,358 7,719,615 Compensated absences 1,259,918 1,200,065 498.709 364,852 1,758,627 1,564.917 TOTALS $ 81,829,897 $_ 88,015,928 $ 28,360,773 $ 30,020.517 $ 110, 990,670 $_ 118,036,445 Total debt decreased compared to the prior year due to scheduled bond principal payments. Additional information on the City's long-term debt can be found in note II.G. to the basic financial statements Economic Factors and Next Year's Budgets and Rates At the end of the fiscal year, the assigned and unassigned fund balance in the general fund increased to $15.5 million from $13.6 million. There was a decrease in fund balance budgeted of $1.1 million in the original adopted budget but due to the above expected performance of investment income, commercial permits and sales taxes, the city was able to increase the fund balance instead. The City of Schertz has appropriated $2.5 million of this increase for spending in the 2024 fiscal year budget in accordance to the City's fund balance policy. These funds will be spent on street maintenance programs and front loading new operational programs. The approved tax rate decreased to $0.4572 from $0.4950 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. The City's property tax base continues to expand at around 3% per year while the long term sales taxes are growing at 7% annually. Industrial development continued to push North along IH-35 across FM 3009 with Phelan -Bennet filling 169,525 sq ft of speculative warehouse distribution on Four Oaks Lane. Doerr Lane Logistics Center is complete and leased and another Cavender and Hill Project, 3009 Distribution Center will add another 112,000 square foot warehouse/distribution to the city, conveniently located off of FM 3009 near IH 35. In Northern Schertz, redevelopment, expansion, and significant speculative development characterized 2023. Caterpillar again invested in Schertz bringing the total investment to an estimated $70,000,000 and settling on 194 jobs total with two new manufacturing lines. Sysco Central Texas site continued to produce for Schertz, taking advantage of the economic development incentives to secure their 100,000 sq ft expansion of their existing facility, currently under construction. The Economic Development Corporation also took steps to secure the funding for waste water infrastructure for a large portion of Schertz, on the north side of IH 35 and close to our border with New Braunfels. Staff will continue to watch as the economy slows down. During COVID and the great recession, property values continued to rise and no discernable impacts of foreclosures. Sales taxes have been recession resistant in Schertz due to the business types and markets however, new residential development has slowed down over the past few years. Staff is factoring this in its 5-year forecast for slower growth. Overall, the City of Schertz continues to be an extremely attractive option as a center for logistics and distribution. Accelerated by the rising demand for delivery to consumers and changes in supply chain management philosophy moving from "just in time" to "just in case,"Schertz' location along IH-35 and IH-10 corridor continues to be a strong advantage. 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 BASIC FINANCIAL STATEMENTS CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2023 ASSETS Cash and cash equivalents Investments Internal balances Receivables, net of allowances: Taxes Accounts and other Accrued interest Inventories Restricted assets: Cash and cash equivalents Service concession arrangement receivable: Due within one year Due in more than one year Investment in joint venture Capital assets: Land Water rights Buildings and improvements Equipment and vehicles Infrastructure Construction in progress Accumulated depreciation Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred loss on debt refunding Deferred OPEB related outflows Deferred pension related outflows Total Deferred Outflows of Resources Primary Government Governmental Business -Type Activities Activities Total $ 84,610,716 4,691,975 (91,499) 4,700,323 1,923,618 342,248 598,112 90,909 645,760 15,214,261 53,420,797 16,277,025 175,473,306 22,189,761 (88,306,247) 291,781.065 449,467 543,637 8,435,064 9,428,168 $ 22,402,988 1,183,797 91,499 7,717,829 6,324 225,637 13,352,366 19,593,276 2,415,102 70,245 3,725,152 7,339,679 137,700,969 29,149,047 (44,438,286j 200,535,624 6,363 181,794 2,820,691 3,008,848 $ 107,013,704 5,875,772 4,700,323 9,641,447 6,324 567,885 13,950,478 90,909 645,760 19,593,276 17,629,363 70,245 57,145,949 23,616,704 313,174,275 51,338,808 (132, 744, 533 ) 492, 316, 689 455,830 725,431 11,255,755 12,4371016 LIABILITIES Accounts payable 3,924,413 5,326,209 9,250,622 Accrued liabilities 529,285 173,298 702,583 Retainage payable 36,284 468,045 504,329 Due to other governments 31,357 - 31,357 Unearned revenue 7,260,753 495,361 7,756,114 Accrued interest payable 455,705 167,430 623,135 Customer deposits 6,652 624,849 631,501 The accompanying notes are an integral part of these financial statements. 13 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION LIABILITIES (continued) Noncurrent liabilities: Due within one year: Compensated absences Total OPEB liability Service concession arrangement Long-term debt Due in more than one year: Compensated absences Total OPEB liability Net pension liability Service concession arrangement Long-term debt 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, 2023 Governmental Activities $ 251,984 59,711 55,241 5,877,307 1,007,934 2,195,760 18,574,745 392,398 74, 692, 672 115, 352, 201 289,030 979,343 66,463 1,334,836 136,442,093 674,628 884,536 2,616,414 33,395,515 785,703 867,965 1,086,357 7,768,985 $ 184,522,196 'imary Government Business -Type Activities $ 99,742 19,967 1,711,921 398,967 734,264 6,211,410 26,150,143 42,,581,606 327,493 22,226 349,719 114,831,425 6,640,756 39,140,966 160,613,147 Total $ 351,726 79,678 55,241 7,589,228 1,406,901 2,930,024 24,786,155 392,398 100, 842 815 157,933,807 289,030 1,306,836 88,689 1,684,555 251,273,518 674,628 884,536 2,616,414 33,395,515 785,703 867,965 1,086,357 6,640,756 46,909,951 345,135,343 14 CITY OF SCHERTZ, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2023 Functions/Programs Primary government: Governmental activities: General government Public safety Public environment Parks and recreation Cultural Administration Interest Total Governmental Activities Business -type activities: Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions $ 8,244,956 $ 470,879 $ 1,683,811 $ - 22,195,399 4,067,387 734,606 - 6,188,351 661,078 - 18,456,911 4,253,278 753,302 - - 1,380,793 315,222 7,520 - 5,363,700 - - - 2,555,917 - - - 50,182,394 6,267,868 2,425,937 18,456,911 Water and sewer 30,088,159 31,589,783 EMS 10,176,945 99503,821 Total Business -Type Activities 40,265,104 41,093,604 Total Primary Government 90,447,498 $ 47,361,472 14,180,619 14,180,619 2,425,937 $32,637,530 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 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 Activities $ (6,090,266) (17,393,406) 12,929,638 (3,499,976) (1,058,051) (5,363,700) _ (2,555,917) (23,031,678) (23,031,678) 25,118,429 19,646,841 2,593,660 1,059,808 88,347 4,678,690 820,465 591 54,006,831 30,975,153 153 547,043 $ 184, 522,196 Business -Type Activities 15,682,243 (673,124' 15, 009,119 15,009,119 1,927,277 479,479 1591 2,406,165 17,415,284 143,197,863 $ 160,613,147 Total $ (6,090,266) (17,393,406) 12,929,638 (3,499,976) (1,058,051) (5,363,700) (2,555,917) (23,031,678) 15,682,243 (673,124) 15, 009,119 (8,022,559] 25,118,429 19,646,841 2,593,660 1,059,808 88,347 6,605,967 1,299,944 56.412.996 48,390,437 296, 744, 906 $ 345,135, 343 16 CITY OF SCHERTZ, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2023 General Capital Projects Debt Service Fund Fund Fund ASSETS Cash and cash equivalents $ 16,338,407 $ 23,012,099 $ 1,159,250 Investments 2,438,934 - - Receivables (net of allowances) Taxes 3,352,850 - 164,420 Accounts and other 1,840,329 - - Due from other funds 644,353 - - Inventory 342,248 - - Restricted assets: Cash and cash equivalents 598,112 - - Total Assets 25,555,233 23,012,099 1,323,670 LIABILITIES Accounts payable 3,522,925 253,110 - Accrued salaries and benefits 529,285 - - Retainage payable - 5,807 - Customer deposits 6,652 - - Due to other governments 31,357 - - Due to other funds 91,499 - - Unearned revenues 52,765 - - Total Liabilities 4,234,483 258,917 - DEFERRED INFLOWS OF RESOURCES Unavailable revenues 2,083,134 - 209,812 Total Deferred Inflows of Resources 2,083,134 - 2091812 FUND BALANCES Nonspendable for: Inventory 342,248 - - Restricted for: Police and public safety/municipal court 355,469 - - Municipal court 786,902 - - PEG capital fees 884,536 - - Capital improvement - 19,318,324 - Debt service - - 1,113,858 Tourism development - - - Parks and tree mitigation - - - Historical Committee and library - - - Economic development - - - Animal control 44,690 - - Scholarships 149,097 - - Committed for: Capital Projects - 3,434,858 - Civic Center/SIED 1,155,078 - - Assigned for: Property replacement 954,151 - - Subsequent year's budget 2,564,504 - - Unassigned 12,000,941 - - Total Fund Balances 19,237,616 22,753,182 1,113,858 Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 25,555,233 $ 23,012,099 $ 1,323,670 The accompanying notes are an integral part of these financial statements. 17 Economic Development Corporation $ 29,560,533 2,253,041 1,183,053 7,949 American Rescue Plan Act Fund $ 7,723,892 33, 004, 576 _ 7,723,892 8,742 85,746 30,477 - 7,207,988 81742 7,324,211 Nonmajor Total Governmental Governmental Funds Funds $ 6,816,535 $ 84,610,716 - 4,691,975 - 4,700,323 75,340 1,923,618 - 644,353 - 342,248 - _ 598,112 6,891,875 _ 97,511,345 53,890 3,924,413 - 529,285 - 36,284 - 6,652 - 31,357 644,353 735,852 - 7,260,753 698.243 12.524.596 2,292,946 2,292,946 3421248 - - 319,159 674,628 - - - 786,902 - - - 884,536 - - 3,011,662 22,329,986 - - - 1,113,858 - - 2,616,414 2,616,414 - - 785,703 785,703 - - 105,668 105,668 32,995,834 399,681 - 33,395,515 - - - 44,690 - - - 149,097 3,434,858 1,155,078 - - 954,151 2,564,504 - - (644,974) 11,355,967 32,995,834 399,681 6,193,632 82.693.803 33,004,576 $ 7,723,892 $ 6,891875 $ 97,511,345 18 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Total Fund Balances - Governmental Funds $ 82,693,803 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. 194,268,903 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. (76,696,839) 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. (455,705) 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 (5,133,058) Deferred loss 449,467 Receivables from grants, 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. 2,292,946 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 (18,574,745) Deferred outflows related to pensions 8,435,064 Deferred inflows related to pensions (66,463) Total OPEB liability (2,255,471) Deferred outflows related to OPEB 543,637 Deferred inflows related to OPEB (W9,343) Net Position of Governmental Activities 184 522 196 The accompanying notes are an integral part of these financial statements. 19 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 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 Administration Capital outlay Debt service: Principal Interest and fiscal charges Bond issue costs Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCES - BEGINNING FUND BALANCES - ENDING General Fund $ 33,136,640 2,077,759 2,124, 689 448,805 2,319,760 1,050,211 636,278 41, 794,142 The accompanying notes are an integral part of these financial statements. 20 Capital Projects Debt Service Fund Fund 201,621 1,601,296 $ 7,710,299 105,398 181,935 7,997,632 6,943,385 - - 19,492,971 - - 1,782,809 - - 3,134,333 - - 1,277,825 - - 4,538,699 - - 1,584,157 21,307,128 - .9tS /5411/y L1,SU/,.LZU 5,850,000 2,893,986 4,200 8,748,186 3,039,963 [1%504,211) (750,554) (869,246) (869,246) 2,170,717 17.066.899 19,237,616 850,880 (3) 850,877 (18,653,334) 41,406,516 $ 22,753,182 3 3 (750,551) 1,864,409 1,113,858 Economic American Nonmajor Total Development Rescue Plan Act Governmental Governmental Corporation Fund Funds Funds $ 6,548,941 $ - $ 1,059,808 $ 48,455,688 - - 251,565 2,329,324 - - 681,595 2,806,284 - - 211,080 659,885 - 504,579 35,671 3,061,631 1,262,346 376,272 283,167 4,678,690 - - 2,252 820,465 7,811,.287 880,851 2,525,138 62, 811, 967 264,776 - 116,815 7,324,976 - - 86,793 19,579,764 - - - 1,782,809 - - 93,032 3,227,365 - - 17,123 1,294,948 593,805 - 69,915 5,202,419 - 515,788 735,021 24,142,094 - - - 5,850,000 - - - 2,893,986 - - - 4,200 858,581 515,788 1,118, 699 71, 302, 561 6,952,706 365,063 1,406,439 (8,490,594) - - 18,957 869,840 - - - (869,249) - - 18,957 591 6,952,706 365,063 1,425,396 (8,490,003) 26,043,128 34,618 4,768,236 91,_183,806 $ 32,995,834 399,681 $ 6,193,632 tj8Z693,803 21 THIS PAGE LEFT BLANK INTENTIONALLY 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, 2023 Net Changes in Fund Balances - Governmental Funds $ (8,490,003) 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 42,437,393 Depreciation expense (7,342,504) The net effect of miscellaneous transactions involving capital assets (i.e., sales, trade-ins, or donations) is to decrease net position. (798,433) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 38,302 Court fines 51,397 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. Repayment of principal of long-term debt 6,245,884 Amortization of loss on refunding (57,272) 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 (59,853) Net pension liability (970,449) Total OPEB liability (110,273) 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. 30,964 Change in Net Position of Governmental Activities 5 30,975153 The accompanying notes are an integral part of these financial statements. 22 CITY OF SCHERTZ, TEXAS STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2023 Business -Type Activities Governmental _ Enterprise Funds Activities Tota I Water and Schertz Enterprise Internal Sewer System _ EMS Fund Service Fund ASSETS Current assets: Cash and cash equivalents $ 21,699,922 $ 703,066 $ 22,402,988 $ - Investments 1,183,797 - 1,183,797 - Accounts receivable, net of allowance: Customer accounts 3,524,433 4,193,396 7,717,829 - Due from other funds 91,499 - 91,499 - Accrued interest 6,324 - 6,324 - Inventory 126,636 99,001 225,637 - Total Current Assets 26,632,611 4,995,463 31,628,074 - Noncurrent assets: Restricted assets: Cash and cash equivalents 13,352,366 - 13,352,366 - Investment in joint ventures 19,593,276 - 19,593,276 - Capital assets: Land 2,415,102 - 2,415,102 - Water rights 70,245 - 70,245 - Buildings and improvements 3,630,652 94,500 3,725,152 - Machinery, equipment, and vehicles 3,705,968 3,633,711 7,339,679 - Infrastructure 137,700,969 - 137,700,969 - Construction in progress 29,149,047 - 29,149,047 - Less: accumulated depreciation (42,241,604) (2,196,682) (4,438,286} - Total Noncurrent Assets 167,376,021 1,531,529 168,907,550 - Total Assets 194,008,632 6,526,992 200,535,624 - DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding 6,363 - 6,363 - Deferred OPEB related outflows 53,973 127,821 181,794 - Deferred pension related outflows 837,427 1,983,264 2,820,691 - Total Deferred Outflows of Resources 897,763 2,111,085 3,008,848 - The accompanying notes are an integral part of these financial statements. 23 CITY OF SCHERTZ, TEXAS 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 Inflows of Resources Net investment in capital assets Restricted for construction Unrestricted Total Net Position STATEMENT OF NET POSITION PROPRIETARY FUNDS SEPTEMBER 30, 2023 Business -Type Activities Enterprise Funds Governmental Activities Total Water and Schertz Enterprise Internal Sewer Svstem EMS Fund Service Fund $ 5,090,731 $ 235,478 $ 5,326,209 $ - 38,046 135,252 173,298 - 468,045 - 468,045 - 624,849 - 624,849 - 167,430 - 167,430 - 493,926 1,435 495,361 - 28,379 71,363 99,742 - 5,928 14,039 19,967 - 1,630,000 81.921 1,711,921 - 8,547,334 539,488 9,086,822 - 113,517 285,450 398,967 - 217,994 5161270 734,264 - 1,844,090 4,367,320 6,211,410 - 25,986,300 163.843 26,150,143 - 28,161,901 5,332,883 33,494,784 - 36,709,235 5,872,371 42,581,606 - 97,229 230,264 327,493 - 6,599 15,627 22,226 - 103,828 245,891 349,719 - 113,545,660 1,285,765 114,831,425 - 6,640,756 - 6,640,756 - 37,906,916 1,234,050 39,140,966 - 5 158,093,332 $ 2,519,815 $ 160,613,147 - 24 CITY OF SCHERTZ, TEXAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 OPERATING REVENUES Fees charged to users Charges for premiums Other charges Miscellaneous Total Operating Revenues OPERATING EXPENSES Personnel services General and administrative Contractual services Supplies and maintenance Depreciation Total Operating Costs Operating Income (Loss) NON -OPERATING REVENUES (EXPENSES) Investment revenue Rent revenue Interest expense Total Non -Operating Revenues (Expenses) Income before contributions and transfers Transfers out Capital contributions - impact fees Capital contributions - dedicated assets CHANGE IN NET POSITION NET POSITION - BEGINNING NET POSITION - END OF YEAR The accompanying notes are an integral part of these financial statements. Business -Type Activities Governmental Enterprise Funds Activities Total Internal Water and Schertz Enterprise Service Sewer System EMS Funds Fund $ 31,283,976 $ 9,503,821 $ 40,787,797 $ - - - - 4,916,591 22,365 - 22,365 - 252,624 226,855 479,479 - 31,558,965 9,730,676 41.289,641 4,916,591 3,133,344 7,495,019 10,628,363 4,916,591 3,437,318 826,089 4,263,407 - 19,339,339 725,326 20,064,665 - 484,010 684,047 1,168,057 - 2,806,641 _ 446,464 3,253,105 - 29,200,652 10,176,945 39,377,597 _ 4,916,591 2,358,313 (446,269} 1,912,044 - 1,884,526 42,751 1,927,277 - 283,442 - 283,442 - (887,507} - (887,507) - 1,280,461 42,751 1,323,212 - 3,638,774 (403,518) 3,235,256 - (591) - (591) - 1,198,349 - 1,198,349 - 12,982,270 - 12,982,270 - 17,818,802 (403,518] 17,415,284 - 140,274.530 2,923.333 143.197.863 - $ 158,093,332 $ 2,519,815 $ 160,613,147 25 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 Business -Type Activities Governmental Enterprise Funds Activities Water and Schertz Total Internal Sewer S,,stem EMS Enterprise Service Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers and users $ 31,518,539 $ 9,346,596 $ 40,865,135 $ - Cash received from interfund services - - - 4,916,591 Cash paid to employees for services (2,958,336) (6,901,662) (9,859,998) (4,916,591) Cash paid to suppliers for goods and services 522,633,252) (2,196,378] (24,829,630) Net Cash Provided By Operating Activities 5,926,951 248,556 _ 6,175,507 - CASH FLOWS FROM NON -CAPITAL FINANCING ACTIVITIES Transfers from other funds - 16,139 16,139 - Transfers to other funds (92,090) - _ (92,090) - Net Cash Used in Non -Capital Financing Activities (92,090) 16,139 (75,9511 _ CASH FLOWS FROM CAPITAL & RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (16,906,407) (454,114) (17,360,521) - Capital contributions - impact fees 1,198,349 - 1,198,349 - Interest paid on long-term debt (1,018,794) - (1,018,794) - Principal paid on long-term debt (1,580,000; (81,921) (1,661,921) Net Cash Used in Capital and Related Financing Activities 18 306 852; (536,035) (18,842,,887) - CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 1,830,795 - 1,830,795 - Payments from rentals 283,442 - 283,442 - Interest and investment earnings 1,884r526 42,751 _ 1,927,277 Net Cash Provided By (Used in) Investing Activities 3,998,763 42,751 4,041,514 - Net (Decrease) Increase in Cash and Cash Equivalents (8,473,228) (228,589) (8,701,817) - Cash and cash equivalents at beginning of year: Cash and cash equivalents 27,484,127 931,655 28,415,782 - Restricted cash and cash equivalents 16,041,389 - 16,041,389 - 43,525,516 931,655 44,457,171 - Cash and cash equivalents at end of year Cash and cash equivalents 21,699,922 703,066 22,402,988 - Restricted cash and cash equivalents 13,352,366 - 13,352,366 - 35,052,288 703,066 $ 35,755,354 $ - The accompanying notes are an integral part of these financial statements. 26 CITY OF SCHERTZ, TEXAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 Business -Type Activities Governmental Enterprise Funds _ Activities Water and Schertz Total Internal Sewer System EMS Enterprise Service Fund RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating income (loss) $ 2,358,313 $ (446,269) $ 1,912,044 $ - Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 2,806,641 446,464 3,253,105 - Change in investment in joint venture (1,412,676) - (1,412,676) - Decrease (increase) in accounts receivable (42,561) (384,403) (426,964) - Decrease (increase) in inventory (27,534) 20,315 (7,219) - Decrease (increase) in accounts receivable - 2,311 2,311 - Decrease (increase) in inventory (532,946) (1,299,635) (1,832,581) - Decrease (increase) in accounts receivable 7,949 11,273 19,222 - Increase (decrease)in accounts payable 2,067,625 16,458 2,084,083 - Increase (decrease) in accrued liabilities 16,329 - 16,329 - Increase (decrease) in customer deposits (23,458) - (23,458) - Increase (decrease) in unearned revenue 25,593 323 25,916 - Increase (decrease) in compensated absences 16,673 117,184 133,857 - Increase (decrease) in net pension liability 1,002,386 2,477,501 3,479,887 - Increase (decrease) in deferred OPEB inflows 57,175 140,312 197,487 - Increase (decrease) in deferred pension inflows (346,045) (776,139) (1,122,184) - Increase (decrease) in total OPEB liability (46,513) (77,139} (123,652) - Net cash provided by operating activities 5,926,951, $ 248,556 $ 6,175,507 $ - SCHEDULE OF NON -CASH CAPITAL ACTIVITIES Developer contributions of capital assets 12,982,270 - 12,982,270 - Total non -cash capital activities 12,982,270 $ - 12,982,270 $ 27 CITY OF SCHERTZ, TEXAS NOTES TO BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2023 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Schertz is a municipal corporation governed by an elected mayor and seven -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. Renortino Entitv 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. 28 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 Capital Projects Fund accounts for the acquisition and construction of major capital facilities financed from bond proceeds, grants, and transfers from other funds. 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 Economic Development Corporation collects sales taxes to support business development and expansion within the City. The Am ri an Rescuq Plan Act F records revenue and expenditures related to the City's COVID- 19 funding from the American Rescue Plan Act. 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: The Internal Service Fund accounts for the City's group medical insurance program. 29 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. Elimination 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 Equivalents 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. For purposes of the statement of cash flows, the City considers cash and other investments with maturities of three months or less from the date of purchase to be cash and cash equivalents. 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 Payables 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 receivables are reported net of allowances for uncollectible accounts. The allowance account represents management's estimate of uncollectible accounts based upon experience and historical trends. 30 Property taxes for the City are levied each October 1 on the taxable value as of the preceding January 1, the date a lien attaches, for all taxable real and personal property located in the City. Taxes are due by January 31 following the October 1 assessment date and become delinquent on February 1, at which time they begin accruing penalty and interest. The enforceable legal claim date for property taxes is the assessment date; therefore, the City did not record a receivable for accrual of future taxes at year end. Accordingly, no current taxes receivable are reported. Delinquent taxes have been reported in the financial statements net of the allowance for uncollectible taxes. Tax revenues are recognized as they become available. Accordingly, an amount equal to taxes not yet available has been reported as unavailable revenue (a deferred inflow of resources) at the government fund level. G. Inventories All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. 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 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. Capital assets are depreciated over their useful lives on a straight-line basis as follows: Assets Use Lives (Years Buildings and improvements 10 - 50 Machinery, equipment, and vehicles 2 - 20 Infrastructure 15 - 30 3. 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 assets 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. 31 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 assets 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. 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. 32 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. 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. 33 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. Deficit Eauity At September 30, 2023, the City has a deficit unassigned fund balance of $644,974 in the Grant Fund. This deficit is due to timing differences between expenditures and reimbursements of grant funds. S. Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds except the American rescue plan act fund, library advisory board fund, grant special revenue fund, police department forfeiture special revenue fund and the capital projects fund, which adopts project -length budgets. II. DETAILED NOTES ON ALL FUNDS AND ACTIVITIES A. Cash, Cash Equivalents and Investments As of September 30, 2023, the City had the following cash, cash equivalents and investments: Reported Weighted Average Value Maturity (days) Investment type: LOGIC $ 45,184,902 39 Lone Star Investment Pool 28,596,255 21 Texas CLASS 43,105,965 23 Certificates of Deposit 3,436,837 79 U.S. Agency Securities 2,402,680 487 Subtotal 122,726,639 Plus: depository and petty cash 4,113,315 Total cash and investments $ 126,839,954 LOGIC, Lone Star Investment Pool and Texas CLASS are recorded as cash equivalents in the financial statements. All of the pools have redemption notice periods of one day and may redeem daily. The investment pools' authorities may only impose restrictions on redemptions in the event of a general suspension of trading on major securities markets, general banking moratorium or national state of emergency that affects the pools' liquidity. Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the City's investment portfolio to highly liquid investments to meet unanticipated cash requirements, and/or to redeploy cash into other investments expected to outperform current holdings. Credit Risk. State law limits investments in certificates of deposit to guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor or the National Credit Union Share Insurance Fund, or its successor and investment pools continuously rated no lower than AAA or an equivalent rating by at least one nationally recognized rating service. The City's investment policy does not further limit its investment choices. As of September 30, 2023, 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, 2023, the City's investments in debt securities were rated BBB+ by Standard & Poor's. 34 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, 2023, 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 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, 2023, was $0.4950 per $100 of assessed value. 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 3.5% 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. C. Receivables Receivables as September 30, 2023 for the government's individual majorfunds and nonmajorfunds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Property taxes Sales tax Occupancy taxes Franchise taxes Customers Court fines Other Gross receivables Less: allowance for uncollectible accounts Net receivables Governmental Activities General Economic Fund Development $ 360,851 $ - 2,366,106 1,183,053 622,754 4,193,913 - 165 �240 7,949 7,708,864 1,191,002 Debt Service $ 174,915 $ Business -type Activities Nonmajor Water and Schertz Funds Sewer Fund EMS 75,340 174,915 75,340 3,610,656 11,773,966 3,610,656 11,773,966 (2,515,685) - (10,495) - (86,223(7,580,570 4 5,193,179 $ 1,191,002 $ 164,420 $ 75,340 1 3,524,433 4,193,396 35 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: General Fund Delinquent property taxes receivable Court fines Total General Fund Debt Service Fund Delinquent property taxes receivable Total Debt Service Fund Unavailable $ 376,210 1.706, 924 2.083.134 209,812 209,812 Total Governmental Funds $ 2,292,946 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 $ 449,467 $ 6,363 $ - $ 455,830 8,435,064 837,427 1,983,264 11,255,755 173,543 17,230 40,803 231,576 370,094 36,743 87,018 493,855 $ 9,428,168 $ 897,763 $ 2111,085 $ 12,437,016 $ 289,030 $ - $ - 289,030 66,463 6,599 15,627 88,689 347,248 34,475 81,645 463,368 632,095 62,754 148,619 843,468 $ 1,334,836 $ 103,828 $ 245,891. $ 1,684,555 E. Interfund Balances and Transfers The composition of interfund balances as of September 30, 2023, is as follows: Due From Due To Amount Purpose Nonmajor Governmental General $ 644,353 Short-term pool cash loan The following schedule briefly summarizes the City's transfer activity for the year ending September 30, 2023: Transfer From Transfer To Amount Purpose General Nonmajor governmental $ 18,957 Suplement funds sources General Capital Projects 850,204 Funding for various capital projects Capital Projects Debt Service 3 Suplement funds sources General Capital Projects 85 Suplement funds sources Water and Sewer System Capital Projects 591 Suplerrent funds sources 36 F. Capital Assets Capital asset activity for the year ended September 30, 2023 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 Business -type activities: Capital assets, not being depreciated: Land Water rights Construction in progress Total capital assets, not being depreciated Capital assets being depreciated: Buildings and improvements Machinery, equipment, and vehicles Infrastructure Total assets being depreciated Less accumulated depreciation for: Buildings and improvements Machinery, equipment, and vehicles Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net Beginning Reclassifications/ Ending Balance Additions Retirements Balance $ 8,883,427 $ 6,330,834 $ - $ 15,214,261 27,684,430 19,536,469 (25,031,138) 22,189,761 _ 36,567,857 25,867,303 031138 37,404,022 52,701,579 764,218 (45,000) 53,420,797 15,472,681 1,133,948 (329,604) 16,277,025 136,194,073 39,703,062 (423,829) 175,473,306 204,368,333 41,601,228 (798,433) _ 245,171,128 (20,061,052) (1,688,963) - (21,750,015) (9,287,505) (1,268,419) - (10,555,924) (51,615,186) (4,385,1221 - _ (56,000,308) (80,963,743} (7,342,504) - I __(88,306,247) 123,404,590 34,258,724 (798,433) 156,864,881 $ 159,972,447 1 60,126,027 $ (25,829,571) $ 194,268,903 Beginning Reclassifications/ Ending Balance Additions Retirements Balance $ 2,415,017 $ 85 $ - $ 2,415,102 70,245 - - 70,245 21,661,576 17,775,847 (10,288,376) 29,149,047 24,146,838 17,775,932 (10,288,376) _ 31,634,394 3,703,626 21,526 - 3,725,152 6,823,569 892,452 (376,342) 7,339,679 115,715,584 21,985,385 - _ 137,700,969 126,242,779 22,899,363 (376,342) _ 148,765,800 (1,279,892) (157,670) - (1,437,562) (5,990,529) (728,555) 315,511 (6,403,573) (34,246,974] (2,350,177) - (36,597,151) (41,517,395) (3,236,402) 315,511 _ (44,438,286) 849725,384 19,662,961 (60,831) _ 104,327,514 $ 108,872,222 $ 37,438,893 $ (10.349,207) $ 135 961,908 37 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 767,874 Public safety 1,183,347 Public environment 4,367,641 Parks and recreation 969,608 Cultural 46,324 Administration 7,710 Total 7,342.,504 Business -type activities: Water and sewer system $ 2,792,230 EMS 444172 Total $ 3,236,402 Total Depreciation $ 10,578,906 G. Long -Term Debt 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 primarily by 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 $50.4 million and sales tax revenue was $18.5 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. Changes in long-term debt for the year ending September 30, 2023 are as follows: Governmental activities: General Obligation Bonds Certificates of Obligation General Obligation Bonds - Private Placement Premium from Debt Financing Arrangement Compensated Absences Total governmental Business -type activities: General Obligation Bonds Certificates of Obligation General Obligation Bonds - Private Placement Unamortized Premium Financing Arrangement Compensated Absences Total business -type Beginning Refunded/ Ending Amount Due Balance Issued Retired Balance Within One Year $ 49,375,000 $ - $ (3,330,000) $ 46,045,000 $ 3,415,000 26,135,000 - (1,570,000) 24,565,000 1,455,000 5,695,000 - (950,000) 4,745,000 980,000 5,501,635 - (368,577) 5,133,058 - 109,228 - (27,307) 81,921 27,307 1,200,065 539,879 _ _ _ _ (480,026) 1,259,918 251,984 $ 88,015,928 $ 539,879 $ (6,725,910) $ 81,829,897 $ 6,129,291 $ 3,630,000 $ - $ (535,000) $ 3,095,000 $ 560,000 22,845,000 - (840,000) 22,005,000 855,000 635,000 - (205,000) 430,000 215,000 2,217,980 - (131,680) 2,086,300 - 327,685 - (81,921) 245,764 81,921 364,852 279,798 (145,941j 498 709 99,743 4 30,020,517 $ 279,792 $ (1,939,542) $ 28,360,773 3 1,811,664 38 Prior Year Refunding of Debt The City defeased certain outstanding bonds by placing proceeds of new bonds in irrevocable trusts to provide for all future debt service payments. Accordingly, the respective trust accounts and liability for the defeased bonds are not included in the City's financial statements. As of September 30, 2023, the City does not have bonds considered defeased and outstanding. A summary of the terms of long-term debt outstanding at September 30, 2023, is as follows: Governmental Activities General Obligation Bonds 2014 Series, Refunding 2015 Series, Refunding 2016 Series 2017 Series 2018 Series, Refunding 2020 Series, Refunding 2021 Series, Refunding 2022 Series Private Placement obligations 2007 Series GO 2018 Series GO Refunding Certificates of Obligation 2016 Series A 2016 Series B 2017 Series 2018 Series 2019 Series 2022 Series 2022 Series A Total Governmental Long -Term Obligations Business-tvoe Activities General Obligation Bonds 2018 Series, Refunding 2021 Series, Refunding Certificates of Obligation 2018 Series 2019 Series 2022 Series 2022 Series A Private Placement obligations 2013 Series GO Refunding Issue Amount Maturity Rate Balance 8,450,000 2030 2.0% - 4.0% 6,275,000 4,185,000 2031 2.0% - 3.25% 1,140,000 5,880,000 2036 2.0% - 4.0% 4,095,000 3,935,000 2037 2.0% - 4.0% 3,000,000 5,830,000 2033 3.125% - 5% 4,235,000 7,555,000 2036 1.5% - 4% 5,660,000 4,070,000 2033 2% - 4% 3,720,000 18,535,000 2042 4% - 5% 17,920,000 6,000,000 2027 4.07% 1,570,000 6,035,000 2028 2.12% 3,175,000 2,375,000 2036 2.0% - 4.0% 1,095,000 1,475,000 2036 3.0% - 3.75% 1,065,000 4,935,000 2037 3.0% - 3.75% 3,205,000 4,845,000 2038 3.0% - 5.0% 3,675,000 4,015,000 2039 2.5% - 5% 2,970,000 4,740,000 2042 2% - 5% 4,565,000 8,265,000 2042 4% - 5% 7,990,000 $ 75,355,000 Issue Amount Maturity Rate Balance 2,740,000 2026 3.125% -5% $ 1,295,000 1,945,000 2033 2% - 3% 1,800,000 5,595,000 2028 3.00/b - 5.00/b 4,620,000 3,480,000 2039 2.5% - 5% 2,960,000 4,650,000 2042 2% - 5% 4,500,000 10,265,000 2042 1.5% - 5% 9,925,000 2,130,000 2025 2.58% 430,000 Total Business -Type Long -Term Obligations $ 25, 530, 000 39 Annual future debt service requirements of bonded debt as of September 30, 2023, are as follows: Governmental activities: General Oblication Bonds Year Ended September 30, Principal Interest Total 2024 $ 3,415,000 $ 1,651,112 $ 5,066,112 2025 2,845,000 1,523,238 4,368,238 2026 2,970,000 1,404,163 4,374,163 2027 3,090,000 1,280,663 4,370,663 2028 3,510,000 1,150,263 4,660,263 2029-2033 16,460,000 3,846,984 20,306,984 2034-2038 8,655,000 1,717,388 10,372,388 2039-2042 5,100,000 418,000 5,518,000 Total $ 46,045,000 $ 12,991,810 $ 59,036,810 Private Placement Debt General Obligation Bonds Year Ended September 30, Principal Interest Total 2024 $ 980,000 $ 117,214 $ 1,097,214 2025 1,010,000 88,758 1,098,758 2026 1,035,000 59,428 1,094,428 2027 1,060,000 29,274 1,089,274 2028 660,000 _ 6,996 666,996 Total $ 4,745,000 $ 301,670 $ 5,046,670 Business -type activities: Certificates of Obli ation Principal Interest Total $ 1,455,000 $ 899,619 $ 2,354,619 1,375,000 838,219 2,213,219 1,310,000 780,719 2,090,719 1,195,000 727,356 1,922,356 1,235,000 675,456 1,910,456 7,015,000 2,569,272 9,584,272 7,600,000 1,199,806 8,799,806 3,380,000 233,088 3,613,088 $ 24,565,000 $ 7,923,535 $ 32,488,535 General Obligation Bonds Certificates of Obligation Year Ended September 30, Principal Interest Total Principal Interest Total 2024 $ 560,000 $ 106,150 $ 666,150 $ 855,000 $ 846,313 $ 1,701,313 2025 595,000 78,825 673,825 890,000 803,813 1,693,813 2026 615,000 50,200 665,200 945,000 759,138 1,704,138 2027 175,000 32,150 207,150 985,000 712,263 1,697,263 2028 180,000 25,950 205,950 1,035,000 664,463 1,699,463 2029-2033 970,000 51,875 1,021,875 5,915,000 2,574,931 8,489,931 2034-2038 - - - 7,160,000 1,327,738 8,487,738 2039-2042 - - - 4,220,000 286,269 4,506,269 Total $ 3,095,000 $ 345,150 $ 3,440,150 $ 22,005,000 $ 7,974,926 $ 29,979,926 Private Placement Debt General Obligation Bonds Year Ended September 30, Principal Interest Total 2024 $ 215,000 $ 8,321 $ 223,321 2025 215,000 2,774 217,774 Total $ 430,000 $ 11,095 $ 441,095 40 Financing Arrangements The City enters into various agreements to finance machinery and equipment; they are classified as financing arrangements due to the title of the financed assets transferring to the City. Therefore, capital assets and a related financing arrangement obligation have been recorded at the present value of the future minimum payments at the inception date. This private placement debt is secured by the purchased equipment. Future minimum payments on the financing arrangements are as follows: Governmental Activities Business -type Activities Year Ended September 30. Principal Interest 2024 $ 27,307 $ 819 2025 27,307 819 2026 27.307 819 Total $ 81.921 $ 2A57 Total Principal Interest Total $ 28,126 $ 81,921 $ 2,458 $ 84,379 28,126 81,921 2,458 84,379 28,126 81,922 2,458 84,38 $ 84,378 $ 245,764 $ 7,374 $ 253,138 H. 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 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 -type Activities Governmental Water/ Activities Sewer EMS Totals $ 18, 574, 745 $ 1,844,090 $ 4, 367, 320 $ 24, 786,155 $ 11,458 $ 1,138 $ 2,694 $ 15,290 48,253 4,790 11,345 _4,388 59,711 5,928 14,039 79,678 561,041 55,699 1,634,719 162,295 2,195,760 217,994 $ 2,255,471 $ 223,922 131,913 748,653 384,357 2,181, 371 516,27 _ 2,930,024 $ 530,309 $ 3,009,702 Business -type Activities Governmental Water/ Activities Sewer EMS Totals $ 970,449 $ 123,395 $ 401,727 $ 1,495,571 23,471 4,551 19,120 47,142 86,802 14,060 55,326 156,188 $ 110,273 $ 18,611 $ 74,446 $ 2031330 41 III. OTHER INFORMATION A. Retirement Plan Plan Description. The City of Schertz participates as one of 901 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 annual comprehensive financial report (ACFR) 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, 2022 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 145 Inactive employees entitled to but not yet receiving benefits 294 Active employees 379 Total 818 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 16.36% and 16.40% in calendar years 2022 and 2023, respectively. The City's contributions to TMRS for the year ended September 30, 2023 were $4,349,322 and were equal to the required contributions. Net Pension Liability. The City's Net Pension Liability (NPL) was measured as of December 31, 2022, 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. 42 Actuarial Assumptions The Total Pension Liability in the December 31, 2022, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50% per year Overall payroll growth 2.75% per year Investment rate of return 6.75% net of pension plan investment expense, including inflation Salary increases are based on a service -related table. Mortality rates for active members are based on the PUB(1O) mortality tables with the Public Safety table used for males and the General Employee table used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender -distinct 2019 Municipal Retirees of Texas mortality tables. The rates for actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale UMP to account for future mortality improvements. For disabled annuitants, the same mortality tables for healthy retirees is used with a 4-year set -forward for males and a 3-year set -forward for females. In addition, a 3.5% and 3.0% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females. The rates are projected on a fully generational basis by Scale UMP to account for future mortality improvements subject to the floor. The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014, to December 31, 2018. They were adopted in 2019 and first used in the December 31, 2019, actuarial valuation. The post -retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. In conjunction with these changes first used in the December 31, 2013, valuation, the System adopted the Entry Age Normal actuarial cost method and a one-time change to the amortization policy. 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 weighing the expected future real rates of return by the target asset allocation percentage and by adding 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) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time (aggressive). Long -Term Expected Real Rate of Return Asset Class Target Allocation (Arithmetic) Global Equity 35.00% 7.70% Core fixed income 6.00% 4.90% Non -core fixed income 20.00% 8.70% Other Public and Private Mar 12.00% 8.10% Real estate 12.00% 5.80% Hedge Funds 5.00% 6.90% Private Equity 10.00% 11.80% Total 100.0% 43 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, 2022: Balance at 12/31/2021 Changes for the year: Service cost Interest Difference between expected and actual experience Change in assumptions Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Netchanges Balance at 12/31/2022 Increase (Decease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (ba a - b $ 92,926,641 $ 81,459,290 $ 11,467,351 4,576,714 - 6,323,215 - 2,387,281 (3,075,473) 10,211,737 4,133,310 1,783,798 (5,958,648) (3,075,473) (51,455) 61,401 (3,107,067) 4,576,714 6,323,215 2,387,281 (4,133,310) (1,783,798) 5,958,648 51,455 (61,401) 13,318,804 $ 103,138,378 $ 78,352,223 24,786,155 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%) 116.75%) 7.75%) Net pension liability $ 41,973,780 $ 24,786,155 $ 10,942,330 Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions. For the year ended September 30, 2023, the City recognized pension expense of $5,793,266. Also, as of September 30, 2023, 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 $ 2,516,875 $ 88,689 60,695 - 5,398,546 3,279,639 $ 11,255,755 $ 88,689 44 $3,279,639 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, 2024. 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, 2024 $ 1,119, 319 2025 2,004,523 2026 2,132,376 2027 2,631,209 B. Other Post-Emnlovment 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. Payments from this fund are similar to group -term life insurance benefits, and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings for the 12-month period preceding the month of death). The death benefit for retirees is considered an other employment benefit and is a fixed amount of $7,500. Membership in the plan at December 31, 2022, the valuation and measurement date, consisted of: Inactive employees or beneficiaries currently receiving benefits 113 Inactive employees entitled to but not yet receiving benefits 78 Active employees 379 Total 570 45 Contributions. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation, which was 0.22% for 2023 and 0.14% for 2022, of which 0.06% 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 year ended September 30, 2023, were $15,299 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, 2022 actuarial valuation was determined using the following actuarial assumptions and inputs: Measurement year ended December 31, Inflation rate Discount rate Actuarial cost method Projected salary increases Administrative expenses Mortality Rates - Service Retirees Mortality Rates - Disabled Retirees 2022 2.50% per annum 4.05% Entry Age Normal Method 3.50% to 11.5% including inflation All administrative expenses are paid through the Pension Trust and accounted for under reporting requirements under GASB Statement No. 68. 2019 Municipal Retirees of Texas Mortality Tables. The rates are projeted on a fully generational bases with scale UMP. 2019 Municipal Retirees of Texas Mortality Tables with a 4 year set forward for males and a 3 year set -forward for females. In addition, a 3.5% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis by scale UMP to account for future mortality improvements subject to the floor. Changes in assumptions reflect the annual change in the municipal bond rate. The actuarial assumptions used in the December 31, 2022, valuation were based on the results of an actuarial experience study forthe period December 31, 2014 to December 31, 2018. Discount Rate. 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 4.05% 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, 2022. 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 (4.05%) in measuring the total OPEB liability. 1% Decrease in Discount Rate (3.05%) Discount Rate 4.05%) Total SDB OPEB Liability $ 937,388 $ 763,943 1% Increase in Discount Rate 4 5.05%] 631,700 46 Changes in the Total OPEB Liability. Total City's Total OPEB Liability (TOL), based on the above actuarial factors, as of December 31, 2022, the measurement and actuarial valuation date, was calculated as follows: Total OPEB Liability Balance at 12/31/2021 $ 1,153,668 Changes for the year: Service cost 73,900 Interest 21,768 Difference between expected and actual experience (7,347) Changes of assumptions or other inputs (462,756) Benefit payments, including refunds of employee contributions (15,290) Netchanges (389,725) Balance at 12/31/2022 7�943 Changes in assumptions and other inputs reflect a change in the discount rate from 1.84% to 4.05%. OPEB Expense and Deferred Inflows and Outflows of Resources Related to OPEB. For the year ended September 30, 2023, the City recognized OPEB expense of $70,745. Also, as of September 30, 2023, 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 Deferred Outflows of Resources 27,345 $ 192,069 12.162 Deferred Inflows of Resources 53,924 409,444 Total $ 231,576 $ 463,368 $12,162 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, 2024. 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, 2024 $ (24,920) 2025 (30,239) 2026 (36,365) 2027 (45,188) 2028 (66,457) Thereafter (40,785) 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. 47 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, 2022, the valuation date, consisted of: Inactive employees or beneficiaries currently receiving benefits 9 Inactive employees entitled to but not yet receiving benefits - Active employees 314 Total 323 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 100% of the monthly premiums which range based on the type of plan from $582 for retiree only to $2,056 for a retiree and their family. The City's Retiree Health OPEB Liability (TOL) as of December 31, 2022, was calculated as follows: Total OPEB Liability Balance at 12/31/2021 $ 2,532,303 Changes for the year: Service cost 230,479 Interest 48,122 Difference between expected and actual experience (4,764) Changes of assumptions or other inputs (495,992) Benefit payments, including refunds of employee contributions i,64,389 Net changes (286, 544 1. Balance at 12/31/2022 S 2,245.759 The actuarial valuation was performed as of December 31, 2021. Changes of assumptions reflect a change in the discount rate from 1.84% as of December 31, 2021 to 4.05% as of December 31, 2022, revised TMRS demographic assumptions, and updates to both the health care trend and participation assumptions. The following presents the TOL of the City, calculated using the discount rate of 4.05% as well as what the City's TOL would be if it were calculated using a discount rate that is 1-percentage point lower (3.05%) and 1-percentage point higher (5.05%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate t 3.05%, 4.05%! 5.05%:1 Total OPEB liability - retiree health $ 2,458,112 $ 2,245,759 $ 2,053,109 48 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 or 1-percentage point higher than the current healthcare cost trends: Current Healthcare Cost 1% Decrease Trend Rate Assumption 1% Increase Total OPEB liability - retiree health $ 1,974,182 $ 2,245,759 $ 2,568,257 For the year ended September 30, 2023, the City recognized OPEB expense of $234,324. Also, as of September 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources _of Resources Differences between expected and actual economic experience $ 117,049 $ 205,267 Changes in actuarial assumptions 311,224 638,201 Contributions subsequent to the measurement date 65.582 - Total $ 493,855 $ 843,468 $65,582 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, 2024. 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, 2024 $ (44,278) 2025 (44,278) 2026 (44,278) 2027 (44,278) 2028 (52,557) Thereafter (185,526) C. Joint Ventures SchertrlSeguin 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 4,128,161 for the year ended September 30, 2023. 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 $154,757,663 (as of September 30, 2022, the most recent year for which information is available) 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 $18,725,100. This amount reflects the City's portion of the net position of SSLGC as of September 30, 2022, 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 organized to aid, assist, and act on behalf of the cities of Schertz and Cibolo 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 $300,000 for the year ended September 30, 2023. Separate financial statements for the CVLGC may be obtained from the City of Schertz, 1400 Schertz Parkway, Schertz, Texas 78154. 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 $868,176 as of September 30, 2022. 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 $32,186,700 of the total $45,000,000. The Zone has a statutory termination date of December 31, 2027. The TIRZ has collected $5,309,333 from taxing entities (net of administrative reimbursements) and remitted $4,100,000 to the developer as of September 30, 2023. 5o 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, 2023, the City did not reimburse any property taxes paid under the terms of a Chapter 380 agreement. 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, 2023, 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: FY 2022-23 Amt. Est. Remaining Grant SEDC - LGC 501.101 $ 71,944 $ 509,704 SEDC - LGC 501.103 50,000 13,028,000 Service Concession Arrangement 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 $736,669. 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, 2023, 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 $736,669 on the government -wide statements at year-end pursuant to the service concession arrangement, and a liability of $392,398 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. 51 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 forthe 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 commitments to CCMA are as follows: Year Ended September 30, 2024 2025 2026 2027 2028 2029-2033 2034-2038 2039-2043 2044 Total $ 715,050 714,050 710,850 717,200 712,650 3,569,100 3,567,950 3,571,600 712,400 $ 14,990,850 52 Construction Commitments The City of Schertz has entered into commitments for various projects as follows: Primary Government: Estimated Project Expended to Estimated Future _ Cost to City Date Commitment Governmental Activities: FM 78 and Main Street $ 3,283,216 $ 1,237,979 $ 2,045,237 FM 2252 Water Relocation 275,000 235,844 39,156 SCADA Upgrade 189,000 18,725 170,275 Lookout Rd Signalization 60,000 42,233 17,767 Lookout Rd Reconstruction 330,000 222,959 107,041 Fire Station 4 762,168 755,952 6,216 Badge Access Upgrade 65,639 44,280 21,359 Great N Trail 2 160,000 56,911 103,089 Energy Efficient Projects 1,264,323 14,323 1,250,000 Total Governmental Commitments 6,389,346 2,629,206 3,760,140 Business -Type Activities: Woman Hollering WasteWater 13,252,837 10,864,028 2,388,809 E Live Oak Pump Additions 1,603,509 1,602,509 1,000 Corbett Ground Storage 8,673,060 1,305,635 7,367,425 Riata Lift Station Relocation 143,000 131,541 11,459 E Live Oak -IH35 24" Line 1,806,076 1,330,233 475,843 FM1518 Utility Relocation 2,128,920 1,789,828 339,092 Loop Lines Project 1 200,000 121,265 78,735 Total Business -Type Activities 27,807,402 17,145,039 10,662,363 Total Estimated Future Commitments $ 34,196,748 $ 19,774,245 14,422,503 Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The City contracts with the Texas Municipal League Intergovernmental Risk Pool, a public entity risk pool currently operating as a common risk management and insurance program providing insurance coverage in the following areas: general liability, automobile liability and physical damage, law enforcement liability, worker's compensation, real and personal property, mobile equipment, and errors and omissions liability. TML is a multi -employer group that provides for a combination of risk sharing among pool participants and stop loss coverage. Contributions are set annually by the provider. Liability by the City is generally limited to the contributed amounts. 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 Accounting Guidance Significant new accounting guidance issued by the Governmental Accounting Standards Board (GASB) not yet implemented by the City include the following: The Government Accounting Standards Board (GASB) has amended the existing standards regarding capitalization thresholds for assets. The amended guidance for the capitalization threshold comes from GASB Implementation Guide 2021-1, Question 5.1. Capitalization policies adopted by governments include many considerations such as finding an appropriate balance between ensuring that all significant capital assets, collectively, are capitalized and minimizing the cost of recordkeeping for capital assets. A government should capitalize assets whose individual acquisition costs are less than the threshold for an individual asset if those assets in the aggregate are significant. Computers, classroom furniture and library books are examples of asset types that may not meet a capitalization policy on an individual basis yet could be significantly collectively. In this example, if the $150,000 aggregate amount (100 computers costing $1,500 each) is significant, the government should capitalize the computers. The amended guidance is effective for reporting periods beginning after June 15, 2023, and the impact has not yet been determined. 53 GASB Statement No. 99, Omnibus 2022 - The objective of this Statement is to correct practice issues identified during implementation and application of certain GASB Statements and financial reporting for financial guarantees. There are various effective dates 1.) upon issuance 2.) fiscal years beginning after June 15, 2022, and 3.) fiscal years beginning after June 15, 2023. GASB Statement No. 100, Accounting Changes and Error Corrections —an amendment of GASB Statement No. 62 - The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This Statement will become effective for reporting periods beginning after June 15, 2023, and the impact has not yet been determined. GASB Statement No. 101, Compensated Absences - The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. This Statement will become effective for reporting periods beginning after December 15, 2023, and the impact has not yet been determined. 54 THIS PAGE LEFT BLANK INTENTIONALLY REQUIRED SUPPLEMENTARY INFORMATION CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 Variance With Final Budget Original Final Actual Positive Budget Budget Amounts (Negative) REVENUES Taxes $ 33,237,400 $ 33,237,400 $ 33,136,640 $ (100,760) Permits and fees 1,763,420 1,763,420 2,077,759 314,339 Service fees 1,896,334 1,896,334 2,124,689 228,355 Fines and fees 694,450 694,450 448,805 (245,645) Intergovernmental 1,934,268 1,934,268 2,319,760 385,492 Investment earnings 275,000 275,000 1,050,211 775,211 Miscellaneous 613,725 613,725 636,278 22,553 Total Revenues 40,_414,597 40,414,597 41,794,142 1,379,545 EXPENDITURES General government: Council 133,870 133,870 119,967 13,903 City manager 1,379,658 1,379,658 1,217,444 162,214 Municipal court 416,604 416,702 414,254 2,448 311 customer relations 121,062 121,062 130,382 (9,320) Planning & zoning 376,096 376,096 339,307 36,789 Legal 137,200 137,200 69,233 67,967 City secretary 233,574 265,574 199,001 66,573 Nondepartmental 2,846,352 2,846,352 2,522,461 323,891 Public affairs 662,484 662,484 612,060 50,424 Engineering 1,263,845 1,263,845 1,065,116 198,729 Citizens assistance 339,806 339,806 288,081 51,725 Special events _ 24,000 24,000 47,750 (23,750) Total General Government 7,934,551 7,966,649 7,025,056 941,593 Public safety: Police department 12,279,644 12,279,644 11,422,254 857,390 Fire department 7,653,804 7,653,804 7,756,540 (102,736) Inspection 1,271,297 1,271,297 1,141,246 130,051 Total Public Safety 21,204,745 21,204,745 20,320,040 884 705 Public environment: Streets 2,587,507 2,587,507 2,278,233 309,274 Total Public Environment 2,587.507 2,587,507 2,278,233 309,274 Parks and recreation: Parks 2,312,157 2,312,157 2,064,222 247,935 Pools 580,824 580,824 562,063 18,761 Community/Civic Center 466,985 466,985 523,587 (56,602) Total Parks and Recreation 3,359,966 3,359,966 3,149,872 210,094 Cultural: Library 1,292,795 1,292,795 1,277,825 14,970. Total Cultural 1,292,795 1,292,795 1,277,825 14,970 55 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 EXPENDITURES (CONTINUED) Administration: Information technology Human resources Finance Purchasing & asset management Building maintenance Fleet service Interfund charges Total Administration Total Expenditures Excess of revenues over expenditures Original Final Budget Budget Variance With Final Budget Actual Positive Amounts _ (Negative) 3,063,097 3,063,097 21884,167 178,930 768,340 768,340 750,341 17,999 755,468 755,468 729,239 26,229 295,370 295,370 282,934 12,436 1,956,575 1,956,575 21000,292 (43,717) 1,351,130 1,351,130 1,212,819 138,311 (3,112,873) (3,112,873) (3,156,639) 43,766 5,077,107 5,077,107 4,703,153 373,954 41,456,671 41488,769 38,754,179 _ 2,734,590 (1,042,074) (1,074,172) 3,039,963 4,114,135 OTHER FINANCING SOURCES (USES) Transfers in 9,000 9,000 - (9,000) Transfers out (877,757) (877,757) 869 246 8,511 Total Other Financing Sources (Uses) (868,757) (868,757) (869,246) i489: NET CHANGE IN FUND BALANCE (1,910,831) (1,942,929) 2,170,717 4,113,646 FUND BALANCE - BEGINNING 17,066,899 17,066,899 17,066,899 - FUND BALANCE - ENDING $ 15,156,068 $ 15,123,970 19.237,616 5 4,113,646 56 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, 2023 Variance With Final Budget Original Final Actual Positive Budget Budget Amounts ;Negative) REVENUES Taxes $ 6,548,000 $ 6,548,000 $ 6,548,941 $ 941 Investment income 182,000 182,000 1,262,346 1,080,346 Total Revenues 6,730,000 _ 6,730,000 7,811,287 1,081,287 EXPENDITURES Current: General government 3,687,439 3,685,798 264,776 3,421,022 Administration 613,521 615,162 593,805 21,357 Total Expenditures 4,300,960 4,300,960 858,581 3,442,379 OTHER FINANCING SOURCES (USES) Transfers out (5,750,000] 5,750,000} - 5,750,000 Total Other Financing Sources (Uses) (5,750,000) (5,750,000) - 5,750,000 NET CHANGE IN FUND BALANCE (.3,320,960) (3,320,960] 6,952,706 10,273,666 FUND BALANCE - BEGINNING 26,043,128 26,043,128 26,043,128 - FUND BALANCE - ENDING $ 22,722,168 $ 22,722,168 $ 32,995,834 $ 10,273,666 57 CITY OF SCHERTZ, TEXAS NOTES TO BUDGETARY SCHEDULES SEPTEMBER 30, 2023 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, economic development corporation fund, hotel occupancy tax fund, 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. 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, 2023, actual expenditures did not exceed budgeted expenditures at the fund level for any of the City's funds. Encumbrance accounting, in which appropriations are recorded as budgetary expenditures, is not utilized by the City. 58 CITY OF SCHERTZ, TEXAS SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2023 Measurement Date December 31, 2022 2021 2020 Total pension liability Service cost $ 4,576,714 $ 4,211,795 $ 3,761,994 Interest on total pension liability 6,323,215 5,766,957 5,326,206 Difference between expected and actual experience 2,387,281 1,060,260 (154,592) Change of assumptions - - - Benefit payments/refunds of contributions (3,075,473) (2,885,733) (2,372,023} Net Change in Total Pension Liability 10,211,737 8,153,279 6,561,585 Total Pension Liability, Beginning 92,926,641 84,773,362 78,211,777 Total Pension Liability, Ending (a) $ 103,138,378 $ 92,926,641 84,773,362 Plan fiduciary net position Contributions - employer $ 4,133,310 $ 3,831,461 $ 3,327,434 Contributions - employee 1,783,798 1,643,398 1,474,466 Net investment income (5,958,648) 9,113,755 4,760,749 Benefit payments/refunds of contributions (3,075,473) (2,885,733) (2,372,023) Administrative expenses (51,455) (42,101) (30,767) Other 619401 288 Z1,200j Net Change in Fiduciary Position (3,107,067) 11,661,068 7,158,659 Fiduciary Net Position, Beginning 81,459,290 69,798,222 62,639,563 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 78,352,223 81,459,290 69,798,222 $ 24,786,155 S 11-467 351 14,975,140 75.97% 87.66% 82.34% $ 25,497,946 $ 23,477,118 $ 21,063,794 97.21% 48.84% 71.09% 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. 59 2019 2018 2017 2016 2015 2014 $ 3,421,878 $ 3,301,265 $ 3,073,538 $ 2,855,745 $ 2,724,337 $ 2,558,743 4,898,478 4,505,483 4,111,517 3,763,562 3,556,428 3,245,266 (108,478) 34,393 416,585 139,216 120,434 (122,286) 263,015 - - - 59,193 - �2,244,447) (1,914,159) t1,843,771) (1,581,272) (1,570,211) (1,068,487 6,230,446 5,926,982 5,757,866 5,177,251 4,890,181 4,613,236 71,981-331 66,05,1,349 60,296,483 55,119,232 50,229,051 45,615 815 78,211,777 $ 71,981,331 $ 66,054,349 $ 60,296,483 55,119,232 $ 509229,051 $ 3,163,340 $ 3,033,936 $ 2,793,644 $ 2,627,335 $ 2,542,565 $ 2,403,929 1,380,585 1,326,518 1,232,232 1,152,864 1,095,260 1,077,097 8,093,416 (1,540,890) 5,999,805 2,602,572 53,742 1,841,586 (2,244,447) (1,914,159) (1,843,774) (1,581,272) (1,570,211) (1,068,487) (45,681) (29,768) (31,080) (29,385) (32,727) (19,219) (1,373 (1,554 (1,575 f 1,583; i 1.616) (1,58 10,345,840 874,083 8,149,252 4,770,531 2,087,013 4,233,326 52,293,723 51,419,640 43,270,388 38,499,857 36,412,844 32.179,518 62,639,563 52,293,723 51,419,640 43,270,388 38,499,857 36,412,844 $ 15 572,214 $ 19,687,608 $ 14,634,709 $ 17 026,095 16,619,375 $ 13,816,207 80.09% 72.65% 77.84% 71.76% 69.85% 72.49% $ 19,722,641 $ 18,896,766 $ 17,603,310 $ 16,478,620 $ 15,648,114 $ 15,389,154 78.96% 104.19% 83.14% 103.32% 106.21% 89.78% 60 CITY OF SCHERTZ, TEXAS SCHEDULE OF EMPLOYER CONTRIBUTIONS TEXAS MUNICIPAL RETIREMENT SYSTEM FOR THE YEAR ENDED SEPTEMBER 30, 2023 Fiscal Year Ended September 30, Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deficiency (excess) Covered payroll Contributions as a percentage of covered payroll 2023 2022 $ 4,349,322 $ 4,245,872 2021 $ 3,700,948 4,349,322 4,245,872 _ 3,700,948 26,535,541 16.39% 26,163, 046 16.23% 22,879,083 16.18% 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 23 Years Asset valuation method 10 year smoothed market; 12% soft corridor Inflation 2.5% Salary increases 3.50% to 11.50% 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 2019 valuation pursuant to an experience study of the period 2014-2018. Mortality Post -retirement: 2019 Municpal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Pre -retirement: PUB(10) mortality tables, with the Public Safety table used for males and the General Employee table used for females. The rates are projected on a fully generational basis with scale UMP. 61 2020 2019 2018 2017 2016 $ 3,235,479 $ 3,129,413 $ 2,971,592 $ 2,756,511 $ 2,592,593 $ 3,235,479 3,129,413 2,971,592 2,756,511 2,592,593 20,401,412 15.86% 19,520,269 16.03% 18, 605, 654 15.97% 17,347,849 15.89% 16,175,988 16.03% 2015 2,487,856 2,487, 856 15,486,735 16.06% 62 CITY OF SCHERTZ, TEXAS SCHEDULE OF CHANGES IN TMRS OTHER POST -EMPLOYMENT BENEFIT LIABILITY AND RELATED RATIOS FOR THE YEAR ENDED SEPTEMBER 30, 2023 Measurement Date December 31, 2022 2021 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 $ 73,900 $ 70,429 $ 21,768 21,248 (7,347) (1,360) (462,756) 42,012 (15,290] (111,739, (389,725) 120,590 1,153,668 1,033,078 2020 2019 2018 2017 50,554 $ 33,528 $ 37,794 $ 29,926 22,915 26,904 21,182 20,123 (4,382) (105,282) 86,276 - 158,118 148,494 (54,027) 57,257 4,213, (3 945j (3,779) (3,521) 222,992 99,699 87,446 103,785 819,086 710,387 622,941 _ 519 156 5 _ 763.943 5 1,153,668 $ 1,033,078 s 810,086 s 710,387 622.941 $ 25,497,946 $ 23,477,118 $ 21,063,794 $ 19,722,641 $ 18,896,766 $ 17,603,310 Total OPEB liability as a percentage of covered -employee payroll 3.00% 4.91% 4.90% 4.11% 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 11.50% including inflation Discount rate 4.05% 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 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Mortality rates - disabled retirees 2019 Municipal Retirees of Texas Mortality Tables with a 4 year setforward for males and a 3 year set -forward for females. In addition, a 3.50% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis by Scale UMP to account for future mortality improvements subject to the 3% floor. Other information No assets are accumulated in a trust that meets the criteria in paragraph 4 of Statement No. 75 to pay related benefits. 63 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, 2023 Measurement Date December 31, 2022 2021 2020 2019 2018 Total OPEB liability Service cost $ 230,479 $ 161,830 $ 141,084 $ 125,648 $ 121,821 Interest on total OPEB liability 48,122 50,064 60,561 78,646 67,947 Difference in actuarial experience (4,764) 134,106 4,341 (343,086) 14,962 Change of assumptions (495,992) (191,684) 161,146 275,398 (81,106) Benefit payments . 64,389) (88.569_) (64.499) (59,401) (57,530) Net change in total OPEB liability (286,544) 65,747 302,633 77,205 66,094 Total OPEB liability, beginning 2,532,303 2,466,556 2,163,923 2,086,718 2,020,624 Total OPEB liability, ending (a) $ 2,245,759 2,532,303 $ 2,466,556 $ 2,163,923 $ 2,086,718 Covered payroll Total OPEB liability as a percentage of covered payroll $ 25,255,936 $ 23,290,477 $ 20,870,983 $ 19,521,924 $ 18,974,951 8.89% 10.87% 11.82% 11.08% 11.00% 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, 2021 Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method Individual entry -age Discount rate 4.05% as of December 31, 2021 Inflation 2.50% Salary increases 3.50% to 11.50% including inflation Demographic assumptions Based on the experience study covering the four-year period ending December 31, 2018 as conducted for the Texas Municipal Retirement System (TMRS). Mortality For healthy retirees, the gender -distinct 2019 Municipal Retirees of Texas mortality tables are used. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP tables to account for future mortality improvements. Health care trend rates Initial rate of 7.00% declining to an ultimate rate of 4.15% after 13 years. Participation rates For all non -Medicare retirees, 30% if retiring from age 50 to 59, and 35% if retiring from age 60 to 64. Other information The discount rate changed from 1.84% as of December 31, 2021 to 4.05% as of December 31, 2022. 64 THIS PAGE LEFT BLANK INTENTIONALLY SUPPLEMENTARY INFORMATION Comparative Sche les — Governmental Funds General Fund Economic Development Corporation Debt Service Fund Capital Projects Fund American Recovery Program Act Fund Combining Statements and Individual Fund Schedules - Nonma'ar Governmental Fund 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. Grant Fund - will account for revenue and expenditures related to federal and state grant programs. 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. CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS GENERAL FUND SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) ASSETS Cash and cash equivalents Investments Receivables (net of allowances) Taxes Accounts and other Due from other funds Inventory Prepaid items 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 Prepaid items Restricted for: Police and public safety/municipal court Municipal court PEG capital fees Animal control 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 2023 $ 16,338,407 2,438,934 3,352,850 1,840,329 644,353 342,248 598,112 25, 555,233 3,522,925 529,285 6,652 31,357 91,499 52,765 4,234,483 2,083,134 2,083,134 342,248 355,469 786,902 884,536 44,690 149,097 1,155,078 954,151 2,564,504 12, 000, 941 19,237,616 25,555,233 2022 $ 12,128,331 2,404,552 3,174, 973 2,128,452 648,630 154,096 28,090 869,564 21,536,688 1,752,626 431,088 105,891 83,060 16,139 50,078 2,4381882 2,030,907 2,030,907 154,096 28,090 302,725 812,283 967,885 42,825 134,632 1,021,594 909,889 446,341 12,246 539 17,066,899 21, 536, 688 65 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED 2022) 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 Administration Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCES - BEGINNING FUND BALANCES - ENDING 2023 $ 33,136,640 2,077,759 2,124,689 448,805 2,319,760 1,050,211 636,278 41, 794,142 6,943,385 19,492,971 1,782,809 3,134,333 1,277,825 4,538,699 1,584,157 38, 754,179 3,039,963 (869,246) (869,_ 246) 2,170,717 174066,899 $ 19,237,616 2022 $ 29,892,435 2,204,543 2,134,517 657,480 1,730,576 90,883 613,268 37,323,702 6,051,339 18,243,849 1,766,558 2,567,764 1,144, 684 3,991,262 646,563 34,412,019 2,911,683 37,853 (2,361,204) (2,323,351) 588,332 16, 478, 567 $ 17,0661899 66 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS ECONOMIC DEVELOPMENT CORPORATION SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) ASSETS Cash and cash equivalents Investments Receivables, net of allowances: Taxes Accounts and other Prepaid items Total Assets LIABILITIES Accounts payable Total Liabilities FUND BALANCES Restricted for: Economic development Total Fund Balances Total Liabilities and Fund Balances 2023 $ 29,560,533 2,253,041 1,183,053 7,949 8242 8,742 32,995,834 32, 995, 834 $_ 33,004R576 2022 $ 22,721,336 2,227,105 1,101,960 7,949 16,212 16.217 26, 043,128 26,043,128 $_ 26,059,340 67 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE ECONOMIC DEVELOPMENT CORPORATION FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR THE YEAR ENDED 2022) REVENUES Taxes Investment earnings Total Revenues EXPENDITURES Current: General government Administration Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers out Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCE FUND BALANCES - BEGINNING FUND BALANCES - ENDING 2023 $ 6,548,941 1,262,346 7,811,287 264,776 593,805 858,581 6,952,706 6,952,706 26,043,128 32,995,834 2022 $ 6,025,703 201,279 6,226,982 218,302 531,783 750,085 5,476,897 (1,240,000) (1,240,000) 4,236,897 21, 806,231 � _ 26, 043,128 68 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS DEBT SERVICE FUND SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) 2023 2022 ASSETS Cash and cash equivalents $ 1,159,250 $ 1,864,408 Receivables, net of allowances. Taxes 164,420 172,341 Total Assets 1,323,670 _ 2,036,749 DEFERRED INFLOWS OF RESOURCES Unavailable revenues 209,812 172,340 Total Deferred Inflows of Resources _ 209,812 172,340 FUND BALANCES Restricted for: Debt service 1,113,858 1,8641409 Total Fund Balances 1,113,858 1,864,409 Total Deferred Inflows of Resources and Fund Balances $ 1,323,670 $_ 2,036,749 69 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, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) Variance With 2023 Final Budget 2022 Original Final Actual Positive Actual Budget Budget Amounts (Negative) Amounts REVENUES Property taxes $ 7,696,355 $ 7,696,355 $ 7,710,299 $ 13,944 $ 7,182,900 Investment income 75,750 75,750 105,398 29,648 143,428 Miscellaneous 100,000 100,000 181,935 81,935 75,000 Total Revenue 7 8�105 7 8�105 7,997,632 125,527 7,401,328 EXPENDITURES Debt service: Principal 6,888,900 6,888,900 5,850,000 1,038,900 4,805,000 Interest and fiscal charges 1,713,348 1,713,348 2,893,986 (1,180,638) 1,779,157 Bond issue costs _-- 84,000 _ 84,000 4,200 79,800 90,626 Total Expenditures 8,686,248 8,686,248 86,248 8,748,186 _ (61,938) 6 674,783 Excess (Deficiency) of Revenues over Expenditures (814,143) (814,143) (750,554) 187,465 726,545 OTHER FINANCING SOURCES (USES) Issuance of refunding debt - - - - 4,070,000 Premium on issuance of debt - - - - 421,632 Payment to refunding escrow agent - - - - (4,443,881) Transfers in - 3 3 2,737 Total Other Financing Sources (Uses) - - 3 3 50,488 NET CHANGE IN FUND BALANCE (814,143) (814,143) (750,551) 63,592 777,033 FUND BALANCE - BEGINNING 1,864,409 1,864,409 1,864,409, - 1,087,376 FUND BALANCE - ENDING 1,050,266 12050,266 9: 1,113,858 63,592 1 864,409 70 CITY OF SCHERTZ, TEXAS COMPARATIVE BALANCE SHEETS CAPITAL PROJECTS FUND SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) ASSETS 2023 Cash and cash equivalents $ 23,012,099 Total Assets 23,012,099 LIABILITIES Accounts payable 253,110 Retainage payable 5,807 Total Liabilities 258,917 FUND BALANCES Restricted for: Capital improvement 19,318,324 Committed for: Capital projects 3,434,858 Total Fund Balances 22,753,182 Total Liabilities and Fund Balance $ 23,012,099 2022 42,594,424 42, 594, 424 906,624 281.284 1,187, 908 35,863,370 51543,146 41,406, 516 $_ 42,594,424 71 CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL PROJECTS FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARTIVE TOTALS FOR THE YEAR ENDED 2022) 2023 2022 REVENUES Intergovernmental $ 201,621 $ - Investment earnings 1,601,296 196,624 Miscellaneous - 450,000 Total Revenues 1,802,917 646,624 EXPENDITURES Capital outlay 21,307,128 9,544,074 Debt service: Bond issue costs - 468,285 Total Expenditures 21,307,128 10,012,359 Excess (Deficiency) of Revenues Over Expenditures (19,504,211) (9,365,735) OTHER FINANCING SOURCES (USES) Issuance of debt - 31,540,000 Premium on issuance of debt - 2,778,912 Transfers in 850,880 3,285,112 Transfers out 3 (2,73Z) Total Other Financing Sources (Uses) 850,877 37,601,287 NET CHANGE IN FUND BALANCE (18,653,334) 28,235,552 FUND BALANCES - BEGINNING 41,406,516 13,170,964 FUND BALANCES - ENDING 22,753j182 $ 41,406,516 72 CITY OF SCHERTZ, TEXAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2023 Special Revenue Funds Hotel Occupancy Park Tree Treasury Fund Fund Mitigation Forfeitures ASSETS Cash and cash equivalents $ 2,542,360 $ 89,126 $ 748,523 $ 5,404 Accounts receivable, net of allowance 75,247 - - - Total Assets 2,617,607 89,126 748,523 _ 5,404 LIABILITIES Accounts payable 1,193 2,116 49,830 - Due to other funds - - - Total Liabilities 1,193 2,116 491830 - FUND BALANCES Restricted for: Tourism development 2,616,414 - - - Parks and tree mitigation - 87,010 698,693 - Police forfeiture - - - 5,404 Roadways - - - - Historical Committee and library - - - Unassigned - - - - Total Fund Balances 2,616,414 87,010 698,693 5,404 Total Liabilities and Fund Balances $ 2,617,607 $ 89,126 $ 748.523 �k 5,404 73 Capital Special Revenue Funds Projects Fund Library Historical Capital Total Nonmajor Justice State Grant Advisory Committee Recovery Governmental Forfeitures Forfeitures Fund Board Fund Roadways Funds $ 239,435 $ 74,320 $ - $ 76,365 $ 29,340 $ 3,011,662 $ 6,816,535 - - - - 93 - 5,340 239,435 74,320 - 76365 29,433 3,0114662 6,891,875 - - 621 130 - - 53,890 - - 644,353 - - - 644,353 - - 644,974 130 - - 698,243 2,616,414 785,703 239,435 74,320 - - - - 319,159 - - - - - 3,011,662 3,011,662 - - 76,235 29,433 - 105,668 - - (644,974) - - - (644,974) 239,435 74,320 (644,974) 76,235 29,433 3,011,662 6,193.632 239,435 74,320 $ - — 76,365 $ 29,433 1 3,011,662 $ 6,891;875 74 CITY OF SCHERTZ, TEXAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 REVENUES Occupancy tax Permits and fees Service fees Fines and fees Intergovernmental 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 Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES FUND BALANCES - BEGINNING FUND BALANCES - ENDING Special Revenue Funds Hotel Occupancy Park Tree Treasury Fund Fund Mitigation Forfeiture $ 1,059,808 $ - $ - $ - - 203,500 48,065 - 92,825 9,057 35,600 - 107,656 - - - - 93,032 - 69,915 - - - 5,266 387,068 - - 182,837 387,068 93,032 - 969,796 (174,511) (9,367] - 969,796 (174,511) (9,367) - 1,646,618 261,521 708,060 _ 5,404 2,616,414 87,010 698,693 $ 5,404 75 Capital Special Revenue Funds Projects Fund Library Historical Capital Total Nonmajor Justice State Grant Advisory Committee Recovery Governmental Forfeitures Forfeitures Fund Board Fund Roadways Funds $ - $ - $ - $ - $ - $ - $ 1,059,808 - - - - - - 251,565 - - - 20,318 199 661,078 681,595 141,539 69,541 - - - - 211,080 - - 35,671 - - - 35,671 8,305 - - 3,463 - 133,917 283,167 - - - 8 _ 2,244 - 2,252 149,844 69,541 35,671 23,789 �2,443 794,995 2�,525 ,138 - - - - 9,159 - 116,815 44,982 - 41,811 - - - 86,793 - - - - - - 93,032 - - - 17,123 - - 17,123 - - - 69,915 - - - - - 342,687 735 ,021 44,982 - 41,811 17,123 9,159 342,687 1,118,699 104,862 69,541 (6,140) 6,666 (6,716) 452,308 1,406,439 9,796 - 9,161 - 18,957 - - 9,796 - 9,161 - 18 957 104,862 69,541 3,656 _ 6,666 2,445 452,308 _ 1,425,396 134,573 _ 4,779 (648,630) 69,569 26,988 2,559,354 4,768,236 239,435 $ 74,320 $ (644,974) $ 76,235 29,433 $ 3,011,662 $ 6,.193,632 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, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) Variance With 2023 Final Budget 2022 Original Final Actual Positive Actual Budget Budget Amounts (Negative) Amounts REVENUES Occupancy tax $ 640,000 $ 640,000 $ 1,059,808 $ 419,808 $ 804,132 Investment earnings 8,500 8,500 _ 92,825 84,325 14,583 Total Revenues 648,500 648,500 1,152,633 504,133 818 715 EXPENDITURES Current: General government 197,700 197,700 107,656 90,044 242,875 Administration 69,915 69,915 69,915 - 74,443 Capital outlay 5,300 5,300 5,266 34 1,156,495 Total Expenditures 272,915 272,915 182,837 _ 90,078 1,473,813 NET CHANGE IN FUND BALANCE 37.5.585 375,585 969,796 594,211 (655,098) FUND BALANCE - BEGINNING 1,646,618 1,646,618 1,646,618 - 2,301,716 FUND BALANCE - ENDING $ 2,022,203 $ 2,022,203 $ 2,616,414 $ 594,211 $ 1,646,618 77 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL PARK FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) Variance With 2023 Final Budget 2022 Original Final Actual Positive Actual Budget Budget Amounts (Negative) Amounts REVENUES Licenses and permits $ 318,000 $ 318,000 $ 203,500 $ (114,500) $ - Investment earnings 1,025 1,025 9,057 8,032 _ 2,194 Total Revenues 319,025 _ 319,025 212,557 (106,468) 2,194 EXPENDITURES Current: Parks and recreation 25,000 25,000 - 25,000 10,040 Capital outlay 362,068 362,068 387,068 (25,000] 17,650 Total Expenditures 387,068 387,068 387,068 - 27,690 NET CHANGE IN FUND BALANCE (68,043) _ (68,043) (174,511) (106,468) _ (25,496) FUND BALANCE - BEGINNING 261,521 2614521 261,521 - 287,017 FUND BALANCE - ENDING c, 193,478 193-478 $ 87,010 $ (106,468 $ 261,521 78 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, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) Variance With 2023 Final Budget 2022 Original Final Actual Positive Actual Budget Budget Amounts (Negative) Amounts REVENUES Licenses and permits $ 70,000 $ 70,000 $ 48,065 $ (21,935) $ 136,950 Investment earnings 1,400 1,400 35,600 34.200 5,324 Total Revenues 71,400 71,400 83,665 12,265 142,274 EXPENDITURES Current: Parks and recreation 70,000 70,000 93,032 (23,032] 82,110 Total Expenditures 701,000 70,000 93,032 (23,032) 82,110 NET CHANGE IN FUND BALANCE 1,400 1,400 (9,367) C10,767] 60,164 FUND BALANCE - BEGINNING 708,060 708,060 708,060 - 647,896 FUND BALANCE - ENDING $ 709,460 $ 709,460 $ 698,693 $ (10,767) 708,060 79 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TREASURY FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) REVENUES Fines and fees Total Revenues EXPENDITURES Capital outlay Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 2023 2022 $ - $ 50,840 50,840 - _ 77,996 77,996 (27,156) 5,404 32,560 1 5,404 5 404 80 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE JUSTICE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) REVENUES Fines and fees Investment earnings Total Revenues EXPENDITURES Current: Public safety Capital outlay Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 2023 $ 141,539 8,305 149,844 44,982 44,982 104,862 134,573 2022 $ 46,238 9,273 9,273 371749 96,824 $ 239,435 $ 134,573 81 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE STATE FORFEITURES FUND FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) REVENUES Fines and fees Total Revenues EXPENDITURES Current: Public safety Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 2023 2022 $ 69,541 $ 69,541 - 69,541 41.779 _ 4,779 $ 74,320 $ 4,779 82 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPEDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LIBRARY ADVISORY BOARD REVENUES Service fees Investment earnings Miscellaneous Total Revenues EXPENDITURES Current: Cultural Total Expenditures NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) Original Final Budget Budget $ 17,000 $ 17,000 $ 35 35 17,035 17,035 Variance With 2023 Final Budget 2022 Actual Positive Actual Amounts (Negative) Amounts 20,318 $ 3,318 $ 18,292 3,463 3,428 546 8 8 507 23,789 6,754 19,345 22,200 22,200 17,123 5,077 14,340 22,200 22,200 17,123 5,077 14,340 (5,165) (5165) 6,666 11,831 5,005 69569 _ 69,569 69,569 - 64,564 1 64,404 1 64,404 S 76,235 $ 11,831 $ 69,569 83 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, 2023 (WITH COMPARATIVE ACTUAL TOTALS FOR 2022) REVENUES Sale of merchandise Miscellaneous Total Revenues EXPENDITURES Current: General government Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Variance With 2023 Final Budget 2022 Original Final Actual Positive Actual Budget Budget Amounts (Negative) Amounts $ 1,000 $ 1,000 $ 199 $ (801) $ 1,943 _ - - 2,244 2,244 - 1,000 1,000 2,443 1,443 1,943 11,750 11,750 9,159 2,591 3,116 11,750 11,750 9,159 2,591 3,116 (10,750) (10,750) (6,716) 4,034 1173 Transfers in 10,750 10,750 9,161 (1,589) 13,863 Total Other Financing Sources (Uses) 10,750 10,750 9,161 (1,589) 13,863 NET CHANGE IN FUND BALANCE - - 2,445 2,445 12,690 FUND BALANCE - BEGINNING 26,988 269988 26,988 - 14,298 FUND BALANCE - ENDING $ 26,988 $ 26,988 $ 29,433 $ 2,445 $ 26,988 84 CITY OF SCHERTZ, TEXAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE CAPITAL RECOVERY ROADWAYS FOR THE YEAR ENDED SEPTEMBER 30, 2023 (WITH COMPARATIVE TOTALS FOR 2022) 2023 2022 REVENUES Service fees $ 661,078 $ 798,955 Investment earnings 133,917 19,878 Total Revenues 794,995 818,833 EXPENDITURES Capital outlay 342,687 _ 60,519 Total Expenditures 342,687 _ 60,519 NET CHANGE IN FUND BALANCE FUND BALANCE - BEGINNING FUND BALANCE - ENDING 452,308 758,314 2,559,354 1,801,040 $ 3,011,662 $ 2,559,354 85 STATISTICAL SECTION THIS PAGE LEFT BLANK INTENTIONALLY STATISTICAL SECTION (Unaudited) This part of the City of Schertz, Texas Annual Comprehensive 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. 86 - 95 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue sources. 96 - 104 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. 105 - 110 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. 111 - 114 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. 115 - 120 Governmental activities Net investment in capital assets Restricted Unrestricted Total Governmental Activities Net Position Business -type activities Net investment in capital assets Restricted Unrestricted Total Business -Type Activities Net Position Primary government CITY OF SCHERTZ, TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2014 2015 2016 2017 $ 62,792,671 $ 68,125,738 $ 74,237,004 $ 84,537,238 10,401,728 13,343,280 17,095,325 20,437,116 8,613,239 1,640,519 2.231.341 1.673.567 $ 81,807,638 $ 83,1099,537 $ 93�563,670 L 106.,647,921 $ 53,674,437 $ 59,625,205 $ 64,210,231 $ 70,361,035 - - - 10,565,463 16,450,988 _ 14,243,922 15,737,470 20,781,291 1_ 70,125,425 $ 73,869,127 $ 79,947,701 L 101,707,789 Net investment in capital assets $ 116,467,108 $ 127,750,943 $ 138,447,235 $ 154,898,273 Restricted 10,401,728 13,343,280 17,095,325 20,437,116 Unrestricted 25,064,227 15,884,441 17,968,811 _ 22,454,858 Total Primary Government Net Position s 151,933,063 $ 156,978,664 $ 173,511,371 197,790,247 86 TABLE 1 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 89,266,885 $ 89,869,766 $ 88,959,102 $ 98,444,714 $ 109,746,340 $ 136,442,093 23,391,047 28,088,355 28,664,438 28,342,438 32,745,688 40,311,118 2,351,236 2,920,717 4,157,801 _ 10,744,127 11,055,015 7,768,985 115,009168 $ 120,878,838 $ 121,781,341 $ 1371531,279 153,547,043 $ 184,522,196 $ 64,871,629 $ 68,271,075 $ 75,969,319 $ 83,941,882 $ 94,997,863 $ 114,831,425 12,626,526 13,232,638 15,071,599 5,408,320 5,408,320 6,640,756 20, 870, 671 33, 254, 008 30, 570, 717 39,406,798 42, 791, 680 39,140, 966 98,368,826 114,757,721 $ 121,611,635 $ 128,757,000 $ 143,197,863 $ 160(613,147 $ 154,138,514 $ 158,140,841 $ 164,928,421 $ 182,386,596 $ 204,744,203 $ 251,273,518 23,391,047 41,320,993 43,736,037 33,750,758 38,154,008 46,951,874 35,848,433 36,174,725 _ 34,728,518 50,150 2 53,846,695 46,909,951 $ 213,377,994 $. 235,636,559 $2243 392,976 266,288,279 $ 296,744,906 $ 345,135,343 87 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Expenses Governmental activities: General government Public safety Public environment Parks and recreation Cultural Health Administration Interest and other fees Total Governmental Activities Expenses Fiscal Year 2014 2015 2016 2017 $ 6,958,530 $ 6,443,227 10,025,703 10,836,712 3,740,538 3,876,644 1,807,136 2,164,604 870,159 892,194 407,114 470,468 1,942,312 1,845,877 2,352,856 2.226.635 28,1049348 28,756,361 $ 6,557,778 $ 6,253,926 12,141, 968 13, 061,120 4,147,653 4,460,540 2,034,964 2,859,974 954,871 1,004,747 570,204 776,494 1,954,276 3,052,102 2,240,783 2.355.714 30,602,497 _ 33,824,617 Business -type activities: Water and sewer 17,762,116 18,440,959 20,269,111 21,346,078 EMS 4,268,125 4,719,526 5,004,110 6,006,178 Total Business -Type Activities Expenses 22,0301241 23,160,485 25,273,221 279352,256 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 50,134,589 51,916,846 55,875,718 _ 61,176,873 1,974,637 1,840,547 2,536,476 2,603,476 917,639 794,003 309,897 325,178 32,429 26,744 220,264 336,252 5,756,456 5,509,530 11, 747, 798 11,435, 730 1,507,252 874,737 2,415,537 4,131,548 788,727 544,460 326,079 330,412 30,308 29,742 342,485 552,878 6,227,664 10,043, 483 11,638,052 16, 507, 260 19,147,872 20,700,369 22,003,794 25,390,713 4,533,753 4,415,126 5,921,223 6,366,894 2,809,110 _ 4,158,552 2,831,126 6,111,474 26,490,735 29,274,047 30,756,143 37,869,081 _ 38,238,533 40,709,777 42,394,195 54,376,341 Net (expense) revenue: Governmental activities (16,356,550) (17,320,631) (18,964,445) (17,317,357) Business -type activities 4,460,494 6,113,562 5,482,922 10.516 825 Total Primary Government Net Expense (11,896,056) (11,207,069) (13,481,523) (6,800,532) 88 TABLE 2 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 7,421,918 $ 6,534,013 $ 10,310,363 $ 7,298,193 $ 7,093,652 $ 8,244,956 13,899,278 15,448,886 16,575,191 19,008,871 19,580,703 22,195,399 4,930,723 5,495,192 8,825,099 5,364,408 8,545,834 6,188,351 2,707,292 3,022,278 3,012,134 3,395,458 3,543,978 4,253,278 1,042, 085 1,119, 650 1,089, 564 1,087, 975 1,168, 815 1,380,793 724,780 516,890 596,288 - - - 3,067,983 3,853,255 3,419,407 4,360,229 4,455,947 5,363,700 2,125,687 2,196,180 2,028,065 1,797,520 2,490,474 2,555,917 35,919,746 38,186,344 45,856,111 42,312,654 46,879,403 50,182,394 23,579,854 25,608,390 24,349,219 25,280,964 27,833,986 30,088,159 6,110,407 6,529,631 _ _6,051,296 7,784,670 8,234,500 10,176,945 29,690,261 32,138,021 30,400,515 33,065,634 36,068,486 404265,104 65,610,007 70,324,365 76,256,626 75,378,288 82,947,889 90,447,498 1,013,698 947,538 836,246 651,211 686,470 470,879 4,104,911 3,177,329 3,276,129 3,079,945 3,922,957 4,067,387 - 138,920 850,201 902,712 798,955 661,078 640,231 484,495 331,174 528,886 652,727 753,302 313,668 311,575 299,944 285,792 310,859 315,222 27,930 21,101 26,304 - - - 776,942 692,042 2,113,673 1,925,939 3,970,029 2,425,937 4,744,489 1,319,793 531,096 7,959 576 6,987,788 18,456,911 11,621,869 7,092,793 8,264,767 15,334,061 17,329,785 27,150,716 27,099,237 27,333,475 29,709,279 27,724,929 30,677,566 31,589,783 6,092,559 6,596,618 6,114,891 7,709,027 9,420,909 9,503,821 3,132,348 1,975,524 292,408 6,935,191 6,143,957 14,180,619 36,324,144 35,905,617 36,116,578 42,369,147 46,242,432 55,274,223 47,946,013 42,998,410 44,381,345 57,703,208 63,572,217 82,424,939 (24,297,877) (31,093,551) (37,591,344) (26,978,593) (29,549,618) (23,031,678) 6,633,883 3,767,596 5,716,063 9,303,513 10,173,946 15,009,119 (17,663,994) (27,325,955) (31,875,281) (17,675,080) (19,375,672) (8,022,559) 89 CITY OF SCHERTZ, TEXAS CHANGE IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2014 2015 2016 2017 General Revenues and Other Changes in Net Position Governmental activities: Taxes Ad valorem $ 12,794,172 $ 14,139,037 $ 15,131,997 $ 16,166,006 Sales 10,553,382 10,315,125 10,921,489 10,844,503 Franchise fees 2,073,162 2,263,783 2,250,815 2,208,373 Hotel/motel 552,570 563,734 544,871 499,466 Mixed drink 39,917 43,656 43,073 42,699 Investment income 43,279 56,820 187,847 448,408 Miscellaneous 180,316 197,881 309,275 182,754 Transfers (50,000) (42,235) 29,211 9,399 Total Governmental Activities 26,186,798 27,537,801 29,418,578 30,401,608 Business -type activities: Interest and investment earnings 31,810 47,728 102,642 211,466 Miscellaneous 609,003 344,731 522,221 475,733 Transfers 50,000 _ 42,235 (29,211) (9,399) Total Business -Type Activities 690,813 434,694 595,652 677,800 Total Primary Government 26,877,611 27,972,495 30,014,230 31,079,408 Change in Net Position Governmental activities 9,830,248 10,217,170 10,454,133 13,084,251 Business -type activities 5,151,307 _ 6,548,256 6,078,574 11,194,625 Total Primary Government 14,981,555 $ 16,765,426 $ 16,532,707 $ 24,278,876 Source: City financial statements 90 TABLE 2 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 17,018,950 $ 19,151,005 $ 19,844,912 $ 21,463,804 $ 22,495,628 $ 25,118,429 12,668,555 12, 506,879 14,432,152 16,838,731 18,075,733 19,646,841 2,393,182 2,357,150 2,305,225 2,305,108 2,574,041 2,593,660 520,424 514,679 268,946 518,921 804,132 1,059,808 43,395 60,518 70,139 68,730 83,391 88,347 909,985 1,470,258 804,674 104,613 709,898 4,678,690 283,496 984,257 767,779 1,408,270 1,138,775 820,465 19,186 (81,525) - - (316,216} - 33,857,173 36,963,221 38,493,827 42,708,177 45.565,382 54,006,240 532,367 855,216 431,555 68,354 314,546 1,927,277 453,374 267,788 706,296 754,268 675,739 479,479 (19,186} 81,525 - - 316,216 - 966,555 _ 1,204,529 1,137,851 822,622 1,306,501 _ 2,406,756 34,823,728 38,167,750 39,631,678 43,530�799 46,871,883 56,412,996 9,559,296 5,869,670 902,503 15,729,584 16,015,764 30,975,153 7,600,438 4,972,125 6,853,914 10,126,135 11,480,447 17,415,284 $ 17,159,734 $ 10,841,795 $ 7,756,417 $ 25,855,719 $_ 27,496,211 $ 48,390,437 91 CITY OF SCHERTZ, TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2014 2015 2016 2017 General fund Non -spendable $ 110,253 $ 117,084 $ 220,503 $ 98,263 Restricted 1,701,408 1,748,374 1,929,636 1,994,905 Committed - - - - Assigned 694,916 785,005 752,503 854,198 Unassigned 5,587,262 7,280,240 8,509,467 9,976,169 Total general fund $ 8,093,839 $ 9,930,703 $ 11,412,109 $ 12,923,535 All other governmental funds Restricted $ 19,261,995 $ 21,191,968 $ 27,252,908 $ 35,721,031 Committed 31,718 - 342,519 454,376 Assigned 31,177 6,657 6,743 - Unassigned - - _ - - Total all other governmental funds $ 19,324,890 $ 21,198,625 $ 27,602,170 $ 36,175,407 Source: Balance Sheets - Governmental Funds in City's ACFRs. 92 TABLE 3 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 94,876 $ 131,925 $ 114,787 $ 162,463 $ 182,186 $ 342,248 2,027,125 2,196,037 1,996,357 2,151,411 2,260,350 2,220,694 - - 687,780 907,676 1,021,594 1,155,078 3,080,557 5,580,626 1,972,479 1,501,398 1,356,230 3,518,655 12,548,013 9,228,612 12,197,575 11,755,619 12,246,539 _ 12,000i941 17 750,571 $ 17,137,200 $ 16(968,978 $ 16t478�567 $ 17,066,899 $ 19,237,616 $ 37,772,240 $ 39,009,399 $ 32,024,252 $ 33,329,710 $ 69,222,391 $ 60,666,303 454,376 687,779 4,071,942 7,985,798 5,543,146 3,434,858 _ _ - (2,071,518) C675,043) (648,630) (644,974) $ 38,226,616 $ 39,697,178 $ 34,024,676 $ 40,640,465 $ 74,116,907 63,456 187 93 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 Fiscal Year 2014 2015 2016 2017 $ 26,021,730 $ 27,348,297 $ 28,865,727 $ 29,720,578 1,805,047 1,731,302 1,493,336 2,540,045 1,763,964 1,797,151 1,789,321 2,132,299 1,750,311 1,534,588 1,441,474 1,217,621 221,769 393,607 401,494 397,073 671,731 689,805 _ 1,741,436 1,897,153 32,234,552 33,494,750 35,732,788 37,904,769 5,981,439 5,582,441 5,657,998 5,394,918 9,409,894 10,158,401 11, 048, 767 11, 870, 636 1,012,607 952,663 1,007,326 1,128,979 1,338,232 1,658,197 1,528,356 1,885,915 815,691 821,146 869,162 921,870 394,918 404,008 480,175 672,934 2,270,041 2,056,646 2,015,573 2,912,855 8,000,467 2,314,668 10,192,398 5,492,196 3,695,597 3,918,008 4,040,975 4,473,174 2,108,610 2,112,746 1,896,911 2,113,679 165,650 7,992 449,358 214,280 35,193,146 29,986,916 _ 39,186,999 37,081,436 (2,958,594) 3,507,834 (3,454,211) 823,333 8,583,715 245,000 10,750,000 8,870,000 - - 4,185,000 - 686,137 - 590,432 381,931 (9,182,250) - (4,215,482) - 1,243,833 989,120 863,583 438,803 (1,293,832) (1,031,355} (834,371) (429,404) 37,603 202.765 11,339.162 9.261,330 $ (2,920,991) $ 3,710,599 $ 7,884,951 $ 10,084,663 21.3% 21.3% 20.5% 20.4% Source: Statement of Revenues, Expenditures, and Changes in Fund Balance for Governmental Funds. 94 TABLE 4 Fiscal Year 2018 2019 2020 2021 2022 2023 $ 32,632,702 $ 34,590,008 $ 36,802,913 $ 41,150,087 $ 43,905,170 $ 48,455,688 2,557,056 1,635,461 1,807,264 1,812,895 2,341,493 2,329,324 2,159,193 2,070,293 2,583,598 2,540,995 2,953,707 2,806,284 1,049,989 953,614 880,657 643,482 754,558 659,885 609,131 1,057,681 951,604 4,582,874 4,247,523 3,061,631 1,761,285 2,454,515 1,572,473 1,512,883 1,848,673 5,499,155 401769,356 42,,761,572 44,598,509 52,243,216 56,051,124 62,811,967 6,327,133 5,881,647 10,364,369 6,580,915 6,515,632 7,324,976 12,728,222 13,985,443 15,366,593 18,107,418 19,098,373 19,579,764 1,136,052 1,112,041 1,270,894 1,382,185 1,766,558 1,782,809 1,697,872 2,393,487 2,102,083 2,534,679 2,659,914 3,227,365 955,153 1,018,109 1,044,891 1,059,984 1,159,024 1,294,948 628,054 498,871 589,616 - - - 3,015,239 3,795,233 3,353,634 4,459,223 4,597,488 5,202,419 7,708,625 9,083,572 9,276,886 5,215,256 13,096,740 24,142,094 4,744,116 4,565,000 4,929,544 4,955,000 4,805,000 5,850,000 2,099,190 2,069,215 2,136,523 1,801,467 1,779,157 2,893,986 129,417 189,082 4,200 140,140 558,911 4,200 - 5,489,912 - - - - 41,169,073 50,081,612 50,439,233. 46,236,267 56,036,797 71302,561 (399,717) (7,320,040) (5,840,724) 6,006,949 14,327 (8,490,594) 4,887,829 4,620,000 - 136,535 31,540,000 - 6,035,000 5,225,000 - 7,555,000 4,070,000 - 269,212 640,115 - 629,992 3,200,544 - (6,159,623) - - (8,223,452) (4,443,881) - 777,487 120,503 4,500,169 6,395,386 3,339,565 869,840 (758,302) (202,028) (4,500,169; ;6,375,9_12j (3,655,781) (869,249) 5,051,603 10,403,590 - 118,429 34,050,447 591 $ 4,651,886 $ 3,083,550 $ (5,840,724) $ 6,125,378 $ 34,064,774 $ (8,490,003) 22.2% 17.3% 16.2% 19.9% 17.1% 30.3% 95 CITY OF SCHERTZ, TEXAS Fiscal Year GOVERNMENTAL FUNDS TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Property Sales & Use Franchise Tax Tax Tax Mixed Beverace 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 2020 19,726,451 14,432,152 2,305,225 70,139 2021 21,418,597 16,838,731 2,305,108 68,730 2022 22,367,873 18,075,733 2,574,041 83,391 2023 25,067,032 19,646,841 2,593,660 88,347 96 TABLE 5 Hotel Bingo Occupancy $ 31 $ 552,570 103 563,734 1 544,870 31 499,466 11 520,424 24 514,679 24 268,946 24 518,921 24 804,132 - 1,059,808 $ Total 26,021,730 27, 348, 297 28,865,727 29,720,578 32,632,704 34,590,032 36,802,937 41,150,111 43,905,194 48,455,688 97 CITY OF SCHERTZ, TEXAS TABLE 6 TOTAL WATER AND SEWER CONSUMPTION AND RATES Fiscal Year Ended September 30, 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Source: Schertz Utility System LAST TEN FISCAL YEARS Total Water & Sewer Consumption (In Gallons) 2,363,742,000 1,700,418,300 1,629,336,300 1,982,664,200 1,622,930,500 1,583,312,400 1,583,462,300 1,509,250,000 1,472,948,300 1,543,351,600 Water & Sewer Base Rate 40.85 39.04 38.15 38.15 37.15 35.61 34.35 30.11 26.54 24.38 Water & Sewer Initial Rate Per 1,000 Gallons 8.13 7.79 6.97 6.97 6.84 6.53 6.21 5.73 5.43 5.17 98 CITY OF SCHERTZ, TEXAS TABLE 7 PRINCIPAL WATER AND SEWER CONSUMERS LAST TEN FISCAL YEARS 2023 2014 Percentage Percentage Total of Tota I of Water Total City Water Total City Consumption Water Consumption Water TAXPAYERS (In Gallons) Rank Consumption (In Gallons) Rank Consumption City of Selma 312,077,500 1 13.20% Scenic Hills Lawn Care 15,758,800 2 0.67% WHC Schertz Apts, LLC 14,287,200 3 0.60% City of Cibolo 12,822,500 4 0.54% Crossvine Master Community 12,051,600 5 0.51% Pecan Grove 9,768,200 6 0.41% 7,725,100 8 0.50% Sycamore Creek Apartments 8,581,900 7 0.36% 10,869,700 3 0.70% ComalISD 7,150,300 8 0.30% APG Texas iLP 6,158,400 9 0.26% City of Schertz (Soccor Field) 6,095,200 10 0.26% SYSCO 23,384,500 1 1.52% Caterpillar 20,741,100 2 1.34% Waterford Ridge Apartments 9,537,700 4 0.62% Beck Readymix 9,366,900 5 0.61% Ray D. Corbett Jr High School 8,695,600 6 0.56% Big Time Management 8,200,700 7 0.53% Val Verde 6,301,600 9 0.41% YMCA/Splash Pad 5,281,200 10 0.34% TOTAL 404,751,600 17.12% 110.104,100 7.13% Total City Water Consumption 2.363.742.000 1.543.351.600 Source: Schertz Utility System 99 CITY OF SCHERTZ, TEXAS TABLE 8 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) City Direct Rates Fiscal Basic Debt Year Rate Service Total 2023 0.3470 0.1480 0.4950 2022 0.3517 0.1604 0.5121 2021 0.3470 0.1651 0.5121 2020 0.3496 0.1650 0.5146 2019 0.3497 0.1649 0.5146 2018 0.3248 0.1662 0.4910 2017 0.3168 0.1743 0.4911 2016 0.3159 0.1752 0.4911 2015 0.3164 0.1810 0.4974 2014 0.3010 0.1964 0.4974 2013 0.2993 0.2006 0.4999 Overlanoina School Districts Schertz- Cibolo- Universal Comal City ISD ISD 1.3246 1.2746 1.3950 1.2920 1.4106 1.2757 1.4200 1.3200 1.4900 1.3200 1.4900 1.3900 1.4700 1.3900 1.4900 1.3900 1.4900 1.3900 1.4900 1.4300 1.4600 1.4300 Overlacoina Counties Community Fiscal Bexar Hospital River College Comal Guadalupe Year County District Authority District County County 2023 0.2624 0.2762 0.0184 0.1492 0.2847 0.3439 2022 0.2763 0.2762 0.0186 0.1492 0.3140 0.3799 2021 0.2624 0.2762 0.0186 0.1492 0.3224 0.3854 2020 0.2774 0.2762 0.0186 0.1492 0.3224 0.3319 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 Source: Guadalupe, Bexar, and Comal Appraisal Districts 100 CITY OF SCHERTZ, TEXAS PRINCIPAL PROPERTY OF TAX PAYERS CURRENT YEAR AND NINE YEARS AGO Taxnaver SYSCO Central Texas Sun Life Assurance Company of Canada Caterpillar Inc. Rebublic Beverage Company Amazon Corn Services Inc HGIT Schertz Parkway LP Eastgroup Properties LP DG Industrial Portfolio II Property Owner LF WHC Schertz Apts LLC QR AMZ 1150 Schwab RD LLC Capital Group Companies Inc. San Antonio MTA LP SC Schertz LLC GE Oil & Gas Inc. Wal-Mart Real Estate Business Trust H.E.Butt Grocery Co. EM Limited Partnership Totals Total Taxable Assessed Value 2023 Taxable Assessed Value Rank Percentage of Total City Taxable Assessed Value $ 140,910,461 1 2.09% 103,976,267 2 1.54% 100,507,470 3 1.49% 68,123,480 4 1.01% 62,136,947 5 0.92% 59,349,999 6 0.88% 48,116,511 7 0.71% 29,719,290 8 0.44% 28,500,000 9 0.42% 22,222,590 10 0.33% TABLE 9 2014 Percentage of Total City Taxable Taxable Assessed Assessed Value Rank Value $ 95,931,063 2 3.49% 105,162,397 1 3.82% 46,370,700 3 1.68% 37,581,105 4 1,37% 22,907,035 5 0.83% 16,240,300 6 0.59% 16,011,420 7 0.58% 13,239,871 8 0.48% 11,650,124 9 0.42% 9,922,009 10 0.36% $ 663,563,015 9.84% $ 375,016,024 13.62% $ 6,740,344,392 *Source: Guadalupe, Bexar, and Comal Appraisal Districts $ 2,752,562,574 101 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS TABLE 10 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Ended September 30, Taxes Levied for the Fiscal Year Collected Within Fiscal Year of Levy % of Amount _ Levy, Collections In Subsequent Years 2023 $ 26,144,518 $ 25,757,953 98.52% $ - 2022 22,951,478 22,775,565 99.23% 137,846 2021 22,011,090 21,787,625 98.98% 42,135 2020 20,854,329 20,758,493 99.54% 83,627 2019 19,922,568 19,825,244 99.51% 87,805 2018 18,010,824 17,899,825 99.38% 74,548 2017 17,356,822 17,241,556 99.34% 74,294 2016 16,238,180 16,160,248 99.52% 59,072 2015 14,793,867 14,738,760 99.63% 45,615 2014 13,383,759 13,297,258 99.35% 68,652 Total Collections To Date % of Amount Levy $ 25,924,108 99.16% 22,788,154 99.29% 21,829,760 99.18% 20,842,120 99.94% 19,913,049 99.95% 17,974,373 99.80% 17,314,231 99.75% 16,218,083 99.88% 14,783,490 99.93% 13,365,670 99.86% 102 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 2023 2022 $ 4,734,929,478 $ 2,047,253,554 2022 2021 3,618,134,708 1,317,486,482 2021 2020 3,060,963,760 1,505,592,717 2020 2019 3,004,686,341 1,613,615,732 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 *Taxable Assessed Value is before any applicable freeze adjustments. Source: Bexar, Comal and Guadalupe County Appraisal Districts. 103 TABLE 11 Total Taxable Total Tax -Exempt Other Assessed Direct PrODerty Property Value* Tax Rate $ (784,132,143) $ 742,293,503 $ 6,740,344,392 0.4950 (961,929,765) 232,196,469 4,205,887,894 0.5121 (716,028,336) 276,109,231 4,126,637,372 0.5121 (716,028,336) 250,185,870 4,152,459,607 0.5146 (621,773,006) 260,571,835 3,900,769,022 0.5146 (757,265,921) 146,860,809 3,783,027,833 0.4911 (649,173,041) 132,002,406 3,647,504,903 0.4911 (544,328,535) 130,353,515 3,375,850,131 0.4974 (460,271,461) 135,084,054 3,037,267,611 0.4974 (340,747,650) 107,013,520 2,752,562,574 0.4999 104 CITY OF SCHERTZ, TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Governmental Activities Business -Tyre Activities R General Certificates Certificates General Fiscal Obligation of Tax Financing of Obligation Year Bonds Obligation Notes Arrangement Obligation Bonds 2023 $ 54,504,618 $ 25,983,440 $ - $ 113,779 $ 23,529,237 $ 4,087,062 2022 58,837,302 27,869,333 - 109,228 24,216,388 5,111,592 2021 40,390,000 14,200,000 155,000 136,535 10,655,000 2,895,000 2020 44,620,000 15,415,000 345,000 25,695 11,200,000 3,685,000 2019 48,320,000 16,235,000 530,000 25,699 12,330,000 4,445,000 2018 52,752,896 13,636,966 715,000 34,264 13,211,178 2,127,657 2017 56,613,614 9,011,415 1,230,000 25,147 8,174,779 2,533,626 2016 56,352,272 4,057,189 1,740,000 58,321 8,331,966 3,014,595 2015 53,410,128 277,801 1,210,000 91,495 8,946,153 3,490,564 2014 56,487,433 543,934 1,585,000 123,370 9,561,204 3,966,533 105 TABLE 12 Business -Type Activities Financing Arrannement Tax Notes Total Primary Government $ 410,877 $ - $ 108,629,013 327,685 - 116,471,528 475,121 - 68,906,656 134,662 150,000 75,575,357 199,421 460,000 82,545,120 289,553 765,000 83,532,514 92,721 1,065,000 78,746,302 162,262 1,360,000 75,076,605 231,803 1,640,000 69,297,944 347,705 65,000 72,680,179 Percent of Gross Income 5.82% 5.24% 4.25% 4.50% 5.60% 5.98% 6.22% 6.39% 5.99% 6.35% Per Cacita $ 2,526 2,034 1,619 1,769 1,932 2,028 1,996 1,979 1,830 1,992 106 CITY OF SCHERTZ, TEXAS RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS TABLE 13 Fiscal Year General Obligation Bonds General Bonded Debt Outstanding Less: Certificates Amounts of Available for Obligation Debt Service Total Percentage of Actual Taxable Value of Property Per Capita 2023 $ 58,591,680 $ 49,512,677 $ (867,965) $ 107,236,392 1.59% $ 2,493 2022 63,948,894 52,085,721 (1,550,080) 114,484,535 2.72% 2,581 2021 43,285,000 24,855,000 (934,899) 67,205,101 1.63% 1,558 2020 46,223,908 15,801,473 (1,051,874) 60,973,507 1.47% 1,481 2019 54,687,960 16,834,029 (1,084,908) 70,437,081 1.81% 1,785 2018 54,880,553 13,636,966 (809,427) 67,708,092 1.86% 1,785 2017 59,147,240 9,011,415 (924,989) 67,233,666 1.99% 1,776 2016 59,366,867 4,057,189 (813,306) 62,610,750 2.06% 1,716 2015 56,900,692 277,801 (847,178) 56,331,315 2.05% 1,568 2014 60,453,966 543,934 (517,199) 60,480,701 2.33% 1,753 107 CITY OF SCHERTZ, TEXAS TABLE 14 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Governmental Unit Debt repaid with property taxes: CURRENT YEAR Estimated Debt Percentage Outstanding Applicable* Estimated Share of Overlapping Debt Alamo CCD $ 809,962,090 0.38% $ 3,077,856 Bexar County 2,207,225,000 0.38% 8,387,455 Bexar County Hospital District 1,168,200,000 0.38% 4,439,160 Comal County 121,175,000 3.59% 4,350,183 Comal ISD 1,049,362,848 3.98% 41,764,641 East Central ISD 101,935,155 3.34% 3,404,634 Guadalupe County 13,145,000 18.29% 2,404,221 Judson ISD 552,986,085 0.03% 165,896 Schertz-Cibolo-Un!versa l ISD 374,839,507 46.55% 174,487,790 Subtotal, Overlapping Debt City Governmental Activities Direct Debt TOTAL NET OVERLAPPING DEBT 242,481,835 80,601,837 ti> 323, 083, 672 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. 108 CITY OF SCHERTZ, TEXAS DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Assessed Value, 2022 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 $ 6,740,344,392 $ 674,034,439 $ 75,468,779 (867,965) 74,600,814 599,433,625 12.45% TABLE 15 Fiscal Year 2019 2020 2021 2022 Assessed Value $ 3,900,769,022 $ 4,152,459,607 $ 4,070,815,340 $ 6,740,344,392 Debt Limit 390,076,902 415,245,961 407,081,534 674,034,439 Total Net Debt Applicable to Limit _ 66,019,954 61,318,507 53,946,636 74,600814 Total Debt Margin $ 324,056,948 s 353.927,454 $ 353,134,898 $ 599,433,625 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 652792,916 _ 66,329,699 Total Debt Margin $ 276,403,844 298,957,574 g 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 $ 250,302,458 109 Utility Fiscal Service Year Charges 2023 $ 31,283,976 $ 2022 30,876,559 2021 281030,614 2020 291735,911 2019 27,246,250 2018 27,099,237 2017 25,390,713 2016 22,003,794 2015 20,700,369 2014 19,147,872 CITY OF SCHERTZ, TEXAS TABLE 16 PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Water Revenue Bonds Less: Net Debt Service Operating Available Expenses Revenue Principal Interest Coveraoe 29,200,652 $ 2,083,324 $ 1,580,000 $ 1,017,794 0.80 24,362,098 6,514,461 1,180,000 912,019 3.11 22,231,246 5,799,368 1,856,953 515,413 2.44 24,032,772 5,703,139 1,961,953 612,643 2.22 22,622,986 4,623,264 1,845,132 561,880 1.92 20,802,263 6,296,974 1,671,134 391,609 3.05 18,697,162 6,693,551 1,554,541 368,390 3.48 17,603,487 4,400,307 1,441,741 417,346 2.37 15,916,597 4,783,772 1,448,407 428,912 2.55 15,246,653 3,901,219 1,010,500 426,100 2.72 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. 110 CITY OF SCHERTZ, TEXAS TABLE 17 Fiscal Year Population 2023 43,010 2022 44,360 2021 43,125 2020 42,734 2019 41,948 2018 41,182 2017 39,453 2016 37,938 2015 37,865 2014 36,477 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Personal Income Per Capita Personal Income Median Age_ _ Education Level in Years of Schooling School Enrollment Unemployment Rate $ 1,734,335,240 $ 40,324 _ 39.0 15.9 15,573 3.6% 1,722,143,920 38,822 37.9 15.9 15,877 3.3% 1,641,725,625 38,069 37.6 16.2 15,887 3.9% 1,680,129,944 39,316 37.4 16.2 15,675 5.1% 1,473,255,708 35,121 38.0 16.2 15,925 2.7% 1,396,481,620 33,910 37.3 15.9 15,817 3.2% 1,266,046,770 32,090 37.2 15.9 15,497 3.8% 1,175,319,240 30,980 36.9 15.8 15,460 3.4% 1,157,835,970 30,578 36.1 15.6 15,009 3.2% 1,144,465,875 31,375 36.9 15.4 14,515 5.1% 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. 111 CITY OF SCHERTZ, TEXAS TABLE 18 TOP TEN PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2023 2014 Percentage Percentage of Total City of Total City Employer Employees Employment Employees Employment Schertz-Cibolo-Universal City ISD 1,900 8.33% 1,753 10.92% Amazon 1,061 4.65% 674 4.20% Sysco Central Texas, Inc 827 3.62% 810 5.04% FedEx Ground - Doerr Lane, Schertz 700 3.07% - - Republic National Distributing Company 639 2.80% 250 1.56% Brandt Companies 527 2.31% 450 2.80% Visionworks 450 1.97% 410 2.55% City of Schertz 437 1.92% 345 2.15% Hollingsworth Logistics Group 400 1.75% - - FedEx Freight 300 1.31% - - H.E.B Grocery Co. 350 2.18% Wal-mart Stores 320 1.99% CST Distribution 305 1.90% TOTAL Source: City Economic Development Corporation 7,241 31.74% 5,667 35.29% 112 CITY OF SCHERTZ, TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Full -Time Equivalent Employees as of September 30, Function 2014 2015 2016 2017 General Government City Manager 6 6 5 5 Court Support - - - - Municipal Court 6 6 6 6 Customer Relations 5 5 5 5 Planning and Zoning 3 3 4 4 General Services 13 13 - - City Secretary 2 2 2 2 Public Affairs 4 4 4 4 Records Management 1 1 1 1 Schertz Magazine 2 2 2 2 Engineer 3 3 7 7 GIS 2 2 2 2 Information Technology 6 6 6 7 Human Resources 4 4 5 5 Finance 6 8 8 8 Purchasing 3 3 3 3 Fleet Service 4 6 6 6 Building Maintenance 2 3 - - Facility Services - - 16 16 Public Safetv Police 75 75 78 81 Fire 33 33 36 39 Inspections 8 9 8 8 Marshal Services 8 8 8 5 Health Animal Control 7 7 8 8 Environmental Health - - 3 3 Parks and Culture Parks 9 9 9 10 Pools - - - - Event Facilities 1 1 1 1 Library 14 14 14 14 Public Environment Streets 14 14 14 14 Public Works Public Works 6 6 4 4 Business Office 10 10 10 10 Water and Sewer 16 16 16 16 Drainage 8 8 6 6 EMS 36 37 39 41 Economic Development 4 4 4 _ _ 4 TOTAL 321 328 340 _ f 347 Source: City Adopted Budgets 113 TABLE 19 Full -Time Equivalent Employees as of September 30, 2018 2019 2020 2021 2022 2023 5 5 5 5 5 5 6 4 4 4 4 4 5 3 3 3 3 3 4 3 3 4 4 4 2 2 2 2 2 2 5 5 5 4 4 4 7 7 8 8 10 10 2 2 2 2 3 3 8 8 8 8 9 9 5 5 5 5 5 5 8 7 7 7 7 7 3 3 3 3 3 3 6 7 8 8 9 9 17 10 10 11 11 11 86 86 87 90 94 94 45 45 46 46 50 50 11 12 12 12 14 14 7 7 8 9 9 9 4 4 4 5 6 6 12 11 11 11 15 15 1 5 5 6 7 7 15 14 14 14 15 15 14 14 17 17 17 17 4 4 4 4 4 4 10 9 9 9 9 9 19 19 19 21 21 21 8 8 8 8 8 8 45 45 45 55 65 65 4 4 4 4 4 4 368 358 366 385 417 416 114 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function 2014 2015 2016 General Government Building Project Permits Issued 2,869 3,087 5,919 Food Establishment Permits 82 135 145 Food Establishment Inspection 218 136 153 Foster/Adoption Inspections 16 22 21 Schertz Macazine Number of Magazines printed 180,000 180,000 180,000 Police CFS 19,067 36,138 39,064 Arrests 686 595 603 Traffic Violations 15,077 12,306 8,960 Accidents 1,823 2,040 2,119 Fire Number of Rescue/Other Responses 1,759 2,167 2,327 Number of Fire Responses 110 99 67 Number of Inspections 252 698 440 Number of Training Classes Conducted 125 150 460 Number of Pre -Plan Inspections 735 980 867 EMS Requests for Transport 8,840 9,286 9,723 Actual Transports 5,713 6,118 6,123 EMT Students 87 84 89 Marshal's Office Warrants Issues 2,354 3,798 2,587 Warrants Cleared 3,781 3,691 3,492 Parks Facility Reservations 301 275 240 Community and Civic Centers Civic Center Reservations 458 478 483 Community Center Reservations 437 455 370 North Community Center Reservations 244 209 185 Animal Services Number of Animals Handled 1,218 1,304 1,313 Number of Adoptions 309 357 410 Number of Return to Owners 222 213 205 Number of Transfers 316 296 316 Library Annual Circulation 395,998 394,766 399,622 Library Visits 253,237 259,413 255,109 Library Program Attendance 15,048 13,825 15,282 Registered Users 30,759 31,138 30,702 2017 4,800 201 133 21 180,000 34,428 423 8,001 2,057 2,758 86 519 340 922 9,956 6,201 90 2,816 2,822 251 590 455 230 1,283 348 228 326 385,206 235,428 16,814 31,432 115 TABLE 20 Fiscal Year 2018 2019 2020 2021 2022 2023 5,251 4,748 2,993 4,474 4,000 3,500 181 55 189 159 173 172 211 96 209 192 142 146 18 8 10 11 5 9 180,000 180,000 187,500 189,700 191,700 192,000 45,190 41,327 57,149 29,007 32,170 30,667 624 603 527 416 326 355 11,359 12,541 8,326 6,980 6,504 5,924 2,244 2,304 1,752 2,076 2,341 2,085 3,055 3,804 3,953 4,837 4,895 4,994 161 100 108 205 232 182 562 528 500 548 547 674 600 804 763 770 632 1,032 788 865 814 848 324 320 10,059 10,759 10,713 12,251 13,520 14,495 6,165 6,738 6,549 7,444 8,332 9,154 90 90 84 123 154 136 1,598 2,036 1,738 2,095 1,708 1,083 2,022 1,834 664 1,451 1,373 4,243 248 241 75 237 294 334 516 441 293 353 354 416 381 326 193 291 299 276 235 188 92 153 197 196 926 1,157 1,015 1,070 1,125 1,217 319 366 450 329 371 419 218 233 335 284 252 279 297 227 188 152 205 202 414,790 447,379 254,643 281,659 359,272 397,156 258,695 237,821 102,297 91,291 157,428 194,260 16,945 18,412 6,524 2,541 11,357 14,700 30,806 33,104 31,296 30,291 29,612 28,734 116 CITY OF SCHERTZ, TEXAS OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function Water New Connections Water Main Breaks Total Consumption (hundreds of gallons) Daily Average Consumption (thousands of gallons) Peak Daily Consumption (thousands of gallons) Total Customers Average Use Per Connection Sewer Total Customers Facilities Maintenance Number of Buildings Maintained Square Footage Source: Various City Department Fiscal Year 2014 2015 2016 2017 235 369 213 303 45 45 45 45 15,497,071 14,757,134 16,097,931 15, 222,373 42,458 40,431 43,942 41,705 10,089 8,385 10,985 11,000 13,324 13,570 13,877 14,124 5,467 5,135 5,352 5,244 11,748 12,058 12,282 12,398 19 21 21 21 166,591 234,202 234,202 234,202 117 TABLE 20 Fiscal Year 2018 2019 2020 2021 2022 2023 235 300 357 342 291 460 50 52 65 38 64 15,833,124 17,602,330 19,766,870 16,171,200 21,606,589 23,637,420 43,378 48,225 54,155 59,377 59,190 64,760 9,083 11,094 14,011 9,160 8,429 14,678 16,434 13,683 15,861 16,228 16,037 5,294 4,587 5,600 101,955 133,143 5,156 12,866 12,853 13,112 14,128 14,295 14,334 25 26 27 26 28 24 245,218 257,218 257,218 257,218 257,218 273,970 118 Function Police Stations Police Vehicles Fire Stations Training Facility Fire Vehicles EMS Ambulances Marshal's Office Vehicles Streets Streets, paved (miles) Streets, unpaved (miles) Sidewalks (miles) Parks and Recreation Parks - Developed Parks - Undeveloped Playground Swimming Pools Baby Pools Baseball/Softball Diamonds Soccer Fields Community Centers Splash Pads Animal Services Control Vehicle Library Facility Volumes in Collection Water Number of Reservoirs Number of Pump Stations Water Mains (miles) Sewer Sanitary Sewers (miles) Storm Sewers (miles) Facilites Services Vehicles Fleet Generators Vehicles & Equipment CITY OF SCHERTZ, TEXAS CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS 2014 Fiscal Year 2015 2016 2017 1 1 1 1 42 48 50 64 2 2 2 2 15 16 16 16 7 9 9 8 7 7 7 7 141 149 153 159 5 5 5 5 13 14 15 20 8 9 10 4 16 18 19 19 2 2 2 4 2 2 2 2 12 15 15 15 12 12 12 12 4 4 4 4 3 3 4 3 1 1 1 1 100,478 113,085 97,412 107,382 5 5 5 5 199 210 213 221 90 96 98 110 11 12 12 12 5 6 6 6 3 4 4 4 NA NA NA NA Source: Various City Department Notes: No Capital Asset indicators are available for the General Government or EMS function. 119 TABLE 21 Fiscal Year 2018 2019 2020 2021 2022 2023 1 1 1 1 1 1 69 68 72 66 76 90 3 3 3 3 3 3 18 19 20 20 24 24 8 9 9 10 11 12 7 7 7 7 3 NA 153 165 165 168 172 180 5 5 5 5 5 5 21 21 21 21 21 21 4 4 4 5 5 5 19 20 21 21 36 36 4 4 4 4 3 3 2 2 2 2 1 1 15 15 15 15 15 15 12 12 12 12 12 12 4 4 4 4 4 4 2 4 4 6 6 8 8 1 1 1 1 1 1 110,266 150,972 139,447 149,965 155,715 160,533 5 5 6 7 6 6 225 228 229 231 236 246 113 116 116 120 124 133 14 14 14 15 16 17 11 11 10 8 10 9 7 10 7 8 11 11 384 352 341 376 373 420 120 THIS PAGE LEFT BLANK INTENTIONALLY CITY OF SCHERTZ, TEXAS SINGLE AUDIT REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2023 CITY OF SCHERTZ, TEXAS TABLE OF CONTENTS SEPTEMBER 30, 2023 Page Number Independent Auditor's Report on Compliance for Each Major Federal Program, and Report on Internal Control Over Compliance in Accordance with the Uniform Guidance ................................................. 1 - 3 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....................................................... 4-5 Schedule of Expenditures of Federal Awards................................................................. 6 Notes to Schedule of Expenditure of Federal Awards ...................................................... 7 Schedule of Findings and Questioned Costs................................................................... 8 Summary Schedule of Prior Audit Findings.................................................................... 9 THIS PAGE LEFT BLANK INTENTIONALLY PA1TILLO, BROWN HILL, L.L.P. ,,,t e.��Staxe► �i .. , z. ?6t INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MA30R PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCE Honorable Mayor and Members of City Council City of Schertz, Texas Report on Compliance for Each Major Federal Program We have audited the City of Schertz, Texas' (the "City") compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended September 30, 2023. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2023. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City's federal programs. 1 OPFICE LOCATIONS TES ', aca 3emrIF hill-ooro Hoisio GIN AICPA NE'9►Y'MEXIiC0 ?Its �q,..err�_�� GAQC Member Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GARS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance 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 compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 01 Report on Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, 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, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated March 19, 2024, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the 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 Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic financial statements as a whole. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Pa;k�jlo p. L,L-, ' � ) • P Waco, Texas March 19, 2024 3 THIS PAGE LEFT BLANK INTENTIONALLY PAi-rILLO, BROWN HILL, L.L.P+ 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 (the "City") as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated March 19, 2024. Our report includes a reference to other auditors who audited the financial statements of Schertz-Seguin Local Government Corporation, as described in our report on City of Schertz, Texas' financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for determining 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's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. 4 TEXAS Tr_rnf,,1t },;il>k;:;r+ ■ �r AICPA ;NEW MEXlICO Alt'.t,q,YrQ,,.. GAOC Member Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have direct and material effect on the financial statements. 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 City'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. pouwk6l S� �- Waco, Texas March 19, 2024 LL 5 CITY OF SCHERTZ, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 Federal Grantor/ Assistance Pass -Through Pass -Through Grantor/ Listing Entity Identifying Federal Program Title Number Number Expenditures U.S. Department of Justice Direct Programs: Equitable Sharing Agreement and Certification 16.922 N/A 44,982 Total Direct Programs 44,982 Total U.S. Department of Justice _ _ 44,982 U.S. Department of Transportation Passed through the Texas Department of Transportation: Highway Planning and Construction 20.205 N/A 201,621 Total Texas Department of Transportation 201,621 Total U.S. Department of Transportation 201,621 U.S. Department of Treasury Passed through the Texas Division of Emergency Management: COVID-19 - State and Local Fiscal Recovery Fund (ARP Act) 21.027 TX2511 504,579 Total Texas Division of Emergency Management 504,579 Total U.S. Department of Treasury 504,579 National Endowment for the Humanities i NEH; Passed through the Texas State Library and Archives Commission: Grants to States - Interlibrary Loan Program (ILL) 45.310 902524 7,520 Total Texas State Library and Archives Commission 7,520 Total National Endowment for the Humanities (NEH) � 7,520 U.S. Department of Health and Human Services Passed through the Texas Health and Human Services Commission: Medicaid Cluster - Ambulance Services - Uncompensated Care Costs 93.778 N/A 84,588 Total Texas Health and Human Services Commission 84,588 Total U.S. Health and Human Services Commission 84,588 U.S. Department of Homeland Security Passed through Texas Division of Emergency Management: Disaster Grants - Public Assistance 97.036 N/A _ 498,810 Total Texas Division of Emergency Management 498,810 Total U.S. Department of Homeland Security 498,810 Total Expenditures of Federal Awards $ 1,342,100 The accompanying notes are an integral part of this schedule. 6 CITY OF SCHERTZ, TEXAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED SEPTEMBER 30, 2023 1. GENERAL The accompanying schedule of expenditures of federal awards presents the activity of all applicable federal awards of the City of Schertz, Texas. The City's reporting entity is defined in Note I to the City's basic financial statements. Federal awards received directly from federal and state agencies as well as federal awards passed through other government agencies are included in the respective schedule. 2. BASIS OF ACCOUNTING The accompanying schedule of expenditures of federal awards is presented using modified accrual basis of accounting, which is described in Note I to the City's basic financial statements. 3. RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Grant expenditure reports as of September 30, 2023, which have been submitted to grantor agencies will, in some cases, differ slightly from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of year-end accruals. The reports will agree at termination of the grant as the discrepancies noted are timing differences. 4. INDIRECT COSTS The City has not elected to use the 10% de minimis indirect cost rate as allowed in the Uniform Guidance, Section 414. S. PASS -THROUGH EXPENDITURES None of the federal programs expended by the City were passed through to subrecipients. 7 CITY OF SCHERTZ, TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2023 Summary of the Auditor's Results Financial Statements: Type of auditor's report issued: Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified that are not considered a material weakness? Noncompliance material to financial statements noted? Federal Awards: Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified that are not considered a material weakness? Type of auditor's report issued on compliance for major federal programs Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Identification of major federal programs: Assistance Listing Number 21.027 The dollar threshold used to distinguish between type A and type B federal programs. Auditee qualified as low -risk auditee? Findings Relating to the Financial Statements Which are Required to be Reported in Accordance With Generally Accepted Government Auditing Standards None reported Findings and Questioned Costs for Federal Awards None reported Unmodified No None reported No No None reported Unmodified None Name of Federal Program or Cluster: COVID-19 - State and Local Fiscal Recovery Fund (ARP Act) $750,000 Yes 8 CITY OF SCHERTZ, TEXAS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE YEAR ENDED SEPTEMBER 30, 2023 None