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CAFR FY 2000-01COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2001 �o"�SCHERZ� A� U 135 P« ToTo CITY OF SCHERTZ, TEXAS CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2001 This page intentionally left blank CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2001 TABLE OF CONTENTS INTRODUCTORY SECTION PAGE TABLE OF CONTENTS LETTER OF TRANSMITTAL 1 CITY OFFICIALS iv ORGANIZATIONAL CHART xii CERTIFICATE OF ACHIEVEMENT xiii xiv FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT ........................................................................ ............................... 1 GENERAL PURPOSE FINANCIAL STATEMENTS .................................................... ............................... 3 COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS ........................................................................... ............................... 4 COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENTUNITS ................................................................................................... ............................... 8 COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL, SPECIAL REVENUE, AND DEBT SERVICEFUND TYPES ............................................................................................. ............................... 10 COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES ................ ............................... COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES ......................... 13 NOTES TO FINANCIAL STATEMENTS .................................................................. ............................... 15 COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTSAND SCHEDULES ............................................................................. ............................... 38 GOVERNMENTAL FUND TYPES GENERAL FUND ....................... ............................................. ............................... COMPARATIVE BALANCE SHEETS ................................ ............................... SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL .................... ............................... SCHEDULE OF REVENUES COMPARED TO BUDGET . ............................... SCHEDULE OF CURRENT EXPENDITURES COMPARED TO BUDGET.... i ..... ............................... 39 ..... ............................... 40 ...... ............................... 41 ...... ............................... 42 ...... ............................... 43 CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2001 TABLE OF CONTENTS (CONTINUED) FINANCIAL SECTION (CONTINUED) SPECIALREVENUE FUNDS ....................................................................................... ............................... 44 COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS ......................... ............................... 45 COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND - BALANCES..................... ................. ............................... ........................................... ............................... 47 PARK SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL .............................. ............................... 49 RECYCLING SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL .................... ............................... 50 HOTEL OCCUPANCY TAX SPECIAL REVENUE FUND - STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL .................... 51 DEBTSERVICE FUND ................................................................................................. ............................... 52 COMPARATIVEBALANCE SHEETS ...................................................................... ............................... 53 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL ..................................................... ............................... 54 CAPITALPROJECTS FUND ........... ................................. ............................... ............. ............................... 55 COMPARATIVEBALANCE SHEETS ...................................................................... ............................... 56 COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES ANDCHANGES IN FUND BALANCE ................................................................... ............................... 57 PROPRIETARY FUND TYPE ENTERPRISE FUNDS .................. .............. ............................... 58 .................................... ............................... COMBININGBALANCE SHEET .............................................................................. ............................... 59 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGESIN RETAINED EARNINGS ................................................................... ............................... 61 COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARYFUND TYPES ................................................................................ ............................... 62 GENERALFIXED ASSETS .................. .................................................................... ............................... 64 COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE ....... ............................... 65 SCHEDULE OF GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY ..............................• 66 DISCRETELY PRESENTED COMPONENT UNITS .................................................. ............................... 68 COMBININGBALANCE SHEET .............................................................................. ............................... 69 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES INFUND BALANCE ................................................................................................. ............................... 70 ii CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2001 TABLE OF CONTENTS (CONTINUED) STATISTICAL SECTION GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION - LAST TEN FISCAL YEARS...... 72 GENERAL GOVERNMENTAL REVENUES BY SOURCE - LAST TEN FISCAL YEARS ................... 73 PROPERTY TAX LEVIES AND COLLECTIONS - LAST TEN FISCAL YEARS .... ............................... 74 ASSESSED AND TAXABLE VALUE OF PROPERTY - LAST TEN FISCAL YEARS .......................... 76 PROPERTY TAX RATES - ALL OVERLAPPING GOVERNMENTS - LAST TEN FISCAL YEARS.. 77 RATIO OF NET GENERAL BONDED DEBT TO TAXABLE VALUE AND NET GENERAL BONDED DEBT PER CAPITA - LAST TEN FISCAL YEARS ................................ ............................... 78 COMPUTATION OF DIRECT AND OVERLAPPING DEBT .................................... ............................... 79 LEGALDEBT MARGIN ............................................................................................... ............................... 80 RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES - LAST TEN FISCAL YEARS .... 81 REVENUE BOND COVERAGE - UTILITY SYSTEM BONDS - LAST TEN FISCAL YEARS ............ 82 WATERWORKS AND SEWER SYSTEM FUNDS - REVENUE BOND REQUIREMENTS AND RESTRICTEDFUNDS ................................................................................................ ............................... 84 DEMOGRAPHICSTATISTICS ................................................................................... ............................... 85 PROPERTY VALUE AND NEW CONSTRUCTION - LAST TEN FISCAL YEARS .............................. 86 PRINCIPALTAXPAYERS ............................................................................................ ............................... 88 MISCELLANEOUS STATISTICS ................................................................................ ............................... 89 HISTORICAL TREND INFORMATION FOR AGENT MULTIPLE - EMPLOYER PUBLIC EMPLOYEE RETIREMENT SYSTEM ....................................................... ............................... 91 REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ...................................................... ............................... 92 iii This page intentionally left blank February 1, 2002 1400 SCHERTZ PARKWAY P.O DRAWER I SCHERTZ, TEXAS 78154-0890 AC (210) 658 -3510 FAX (210) 659-3204 Email: dncashwellir(&cischertz.ts.us. To the Citizens of the City of Schertz, Texas: DEWEY P. CASHWELL, JR. CITY MANAGER The comprehensive annual financial report (CAFR) of the City of Schertz, Texas, (the City) for the year ending September 30, 2001 is submitted herewith. Responsibility for both the accuracy of the presentation including all disclosures rests with the City. The data, as presented, is accurate to the best of our ability in all material aspects. The report is presented in a manner designed to set forth the financial position of the City and provide a review of various funds. We have attempted to provide all disclosures necessary to enable the reader to gain maximum understanding of the City's financial activity. The accompanying CAFR is presented in the following three (3) sections: 1. Introduction -- Includes this letter of transmittal, Organization Chart, comments regarding economic conditions and outlook, major occurrences of fiscal year 2000 -2001, and major initiatives for fiscal year 2001 -02. 2. Financial — This section consists of: the independent auditor's report, general purpose financial statements including combined balance sheets and combined statements of revenues, expenditures, and changes in fund balance, notes to financial statements, and individual fund statements and account groups with supplemental statements. Within information contained in this section is a review of the accounting system and controls, and includes commentary thereto. 3. Statistical — This section includes selected financial and demographic information, generally presented on a multi -year basis. No Single Audit Reports were required for this audit period because the City did not meet the $300,000 threshold, as required by The Single Audit Act, for issuance of this report. This report includes all funds and account groups of the City of Schertz. The City provides a full range of services including: police, emergency medical transportation, and fire protection; water and sewer services; waste collection; code enforcement; comprehensive planning; street maintenance and recreational activities as well as economic development efforts. While the Schertz Public Library is an operating department of city government, the Library Board serves as an advisory board and maintains a small amount of funds, derived from private sources, as a means to fund specific improvements /additions to the library outside City resources. The Schertz Development Foundation is a separate nonprofit corporation organized and operated 1v for the charitable purpose of assisting the City of Schertz, Texas, to develop and implement plans for economic development in our City. The library, economic development corporation, and the foundation are reported as component units, discretely presented. The Schertz Volunteer Fire Department Board does not meet the criteria for inclusion in the reporting entity, and accordingly, is excluded from this report. ECONOMIC CONDITION & OUTLOOK The city is located near the center of the San Antonio Standard Statistical Metropolitan Area (SMSA) that continues to rank as one of the strongest business and tourism economies in the Southwest United States. The economic conditions and outlook for Schertz are very strong. Statistical data for fiscal year 2000 -2001 included new housing starts of 268, compared to 332 for 1999 -2000, and 520 for 1998 -1999. Total building permit values were $70,912,183 for 2000 -2001, compared to $61,864,013 for 1999 -2000, and $76,501,638 in 1998 -1999. The strength of current economic conditions is further exemplified by unemployment figures that continue at historically low levels of under 3 %. The City of Schertz is one of the fastest growing and most economically dynamic communities in the Austin/ San Antonio Corridor, a region that continues to be one of the fastest growing in the nation. With that growth comes an ever - expanding labor pool, well in excess of 750,000 at this point, but labor shortages for certain employment segments remains a challenge. The near term outlook remains extremely positive. Schertz continues to be a major community of choice for residential development, due to important factors which include a strong local economy, a competitive tax rate, an excellent quality of life, steadily improving infrastructure, well planned growth, sound political leadership and effective planning efforts. In addition to residential activity, the city's industrial and business growth has continued at a steady pace, with the addition of significant industrial and commercial business this year. CURRENT YEAR PROJECTS The city's reputation for quality of life and visionary leadership, along with its excellent strategic location, continue to make it a target for developers and site selection professionals. The continuing availability of land for residential, commercial and industrial development has resulted in significant new construction this year. In support of this activity we have seen the near completion of the FM 78 project, begun in January 2000, the beginning of expansion and widening of the Schertz Parkway, continued annual street repairing and maintenance, addition of new water lines on FM 1518 and Lower Seguin Road and continued water system construction in conjunction with the city's new water supply arriving from the Carrizo Aquifer in late summer of 2002. The Schertz Parkway project, on hold for several years, should be completed in summer of 2003, and the Schertz- Seguin Water Project is seeing steady progress toward completion. MAJOR EVENTS Fiscal year 2000 -2001 has been, by any standard, a remarkable year for the City of Schertz. With the continued driving forces of our expanding economy and increasing population the city is not only being impacted by these forces, it is responding to them in ways that will assure both excellent municipal services and a high quality of life for its residents. Evidence of economic growth has been demonstrated in residential, commercial and industrial sectors. In the residential arena, new homes are now being completed and sold in the newest, and certainly one of the finest of the city's subdivisions, Jonas Woods. Homes there are already selling well in advance of their grand opening, and there will ultimately be well in excess of 300 new homes there. In addition, the Forest Ridge subdivision, which sold out its homes this year, is already moving ahead on its next phase of development. u In fact, every subdivision in the city with remaining capacity to expand is moving forward on plans for more construction. One of the most remarkable occurrences for the city this year in terms of residential growth was the annexation of the Northcliffe and Scenic Hills subdivision to the north of the city. In addition to the approximately 800 homes and common property brought into the city, including a golf course and other amenities, there is strong additional development in this area that will ultimately produce upwards of 900 new residential properties. The city's population also increased by some 2,100 persons as a result of this very welcome annexation. It is estimated that the city will see an increase in ad valorem revenues alone from the existing tax base in this area of nearly $300,000 in the first year. In summary, the city currently has more than 2,400 home sites either master planned or platted, nearly 240 lots available for construction and more than 100 homes actively under construction. New business growth has also been strong. In addition to more than 20 new commercial business establishments the city has also seen the opening of Block Distributing, one of the largest wholesalers of wine and spirits in the Southwest. Block's new 377,000 square foot building is valued at more that $15 million and houses inventory in excess of $25 million. Block's new facility is located in the city's increasingly successful Tri County Business and Industrial Park, which also saw the construction by Embray Partners of 232,000 square feet of new space in two buildings that are now available for lease. As noted, the community has responded to these new developments and future planned activity in several important ways. The transportation network, in order to support more traffic, has seen the near completion of the FM 78 corridor, an $8.3 million state - funded project that has provided for expansion to four lanes of traffic and an important new bridge over the Cibolo Creek. Now in its final stage, this project should be finished by June of 2002. Another very significant transportation project was begun this year, the Schertz Parkway Expansion. This important gateway to our community, begun in the late 1980's, is now under construction. The $4.5 million parkway project, funded entirely by bonds issued by the City, will provide for improvements that will include expansion from two lanes to four, a landscaped median, and decorative light fixtures throughout its course. The Parkway Project will also include a decorative sidewalk and a hiking/biking/jogging trail. Completion is expected by summer of 2003. Utilities to support our growth also saw advancement this year. The Schertz - Seguin Local Government Corporation issued $41 million in revenue bonds and began construction of a 37.5 mile water line that will bring a 50 -year, drought resistant supply of water to the community by summer of 2002. Both the Parkway and the Waterline project benefited greatly from the fact that the city, for the first time in its history, went to the bond market with an A+ rating from Standard and Poors. Only the top 20 percent of municipalities in Texas can claim such a rating. The A+ rating resulted in the City realizing a lower interest rate in the bond market and for three major projects initiated during 2001. The first was a $41 million revenue bond issued with the City of Seguin to bring a 50 -year supply of water from the Carizzo Aquifer in Gonzales County to residents in both cities. This innovative water project is the first of its kind in Texas and sets the precedence for future cooperative efforts with our sister cities. The second bond issuance was to prepare City's water system to receive the new water supply from the cooperative effort with the City of Seguin in the development of the Schertz- Seguin Local Government Corporation. Public Works Department has been heavily involved in retaining easements and overseeing construction of a $5.5 million revenue bond project to build a 1.5 million - gallon storage tank and needed pipelines to receive this new water supply arriving from the Carizzo Aquifer. Our third bond project was an investment of $4.5 million in certificate of obligation bonds to fund a four -lane lighted expansion of the avenue that bears the City's name (Schertz Parkway). vi Organizational and service related responses from the city have also been forthcoming and comprehensive. These have included the hiring of an active new City Manager who has placed a strong emphasis on strategic planning and sound investment practices. This year the City completed a Comprehensive Land Use Plan that involved a high degree of participation with the community and its leadership. Crafted to be a living document this plan will serve as a key to community success and achievement for many years to come. Further planning accomplishments were achieved through the City Council's newly initiated Strategic Planning efforts. With the assistance of staff and professional facilitation, Council participated in two planning sessions this year, setting priorities, goals, objectives and action steps to address what they believe are the highest priority policy issues facing the city. Council has made a firm commitment to continue this process. In keeping with a strong customer service orientation and sound fiscal practices, city staff has established plans to pull together virtually all fiscal operations under one roof, under the direction of the newly titled Director of Finance. In response to prior audit management letter recommendations and the need to improve customer service, operational effectiveness and security practices, all utility billing and financial operations will soon be housed in the City Administration Building. This will be accomplished through the rearrangement of the physical space for personnel and the installation of modular office systems. This consolidation should be complete by April of 2002. Substantial turnover in key City personnel has made the past year very demanding in terms of recruitment of talent to fill several management positions. In addition to installing a new City Manager, the City has seen the retirement of a long term Fire Chief, replacement of the Emergency Medical Services (EMS) Director, the departure of the Chief of Police, and establishment of the positions of Public Information Officer, Economic Development Director, Leisure Services Director, and Information Technology Coordinator. At this date the Fire Chief, Public Information Officer, Economic Development Director and Information Technology Coordinator have been filled. The process is underway to fill the Police Chief and Leisure Services positions. In spite of the impact of all this change the City has continued to achieve impressive results in a number of important areas. These have included major improvements in information technology, interlocal agreements for emergency services, improved library services and operating hours, fire safety achievement awards, enhancement of EMS operations, and enhancement of revenues in several areas. In addition, city leadership and staff have worked together with the community to bring to reality a new Library Playscape project that will see final construction in March of 2002. In summary, it's been a very exciting, productive and busy year for the City of Schertz, its leadership and staff. INITIATIVES FOR THE FUTURE FISCAL YEAR 2001 -2002 is already living up to be even more dynamic than last year. On the horizon are important improvements in technology, organizational structure, transportation, infrastructure, and recreation elements. With regard to the last item, the City Council plans to take a bond package to the voters this year that will provide for several items related to Leisure Services. These may include such things as a new Community Center, a new swimming pool, and acquisition of land for sports and leisure activities. Enhancements in service capability and the ability to deliver utilities to our customers, especially in the newly annexed areas, will also be high priorities. The City of Schertz, with each passing year, is clearly establishing itself in a leadership role among the cities of the Austin -San Antonio corridor, and proving itself to be able to meet all the challenges this role implies. Vii FINANCIAL INFORMATION The City's accounting records for general government operations are maintained on a modified accrual basis, with revenues being recognized when they become both measurable and available and expenditures being recognized when the services or goods are received and the liabilities are incurred. Accounting records for the City's utilities and other enterprises are maintained on the accrual basis of accounting. In developing the City's accounting systems, consideration has been given to the adequacy of internal accounting controls. Internal accounting controls have been designed to provide reasonable assurance regarding: • The safeguarding of assets against loss from unauthorized use of disposition and, • The reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: • The cost of a control should not exceed the benefits likely to be derived and, • The evaluation of costs and benefits required estimates and judgments by management. All internal control evaluations occur within the above framework. The City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary control is maintained by the use of purchase order procedures that require encumbrance of the estimated purchase amounts prior to the release of purchase orders to vendors. Open encumbrances, if any, are reported as reservations of fund balance at September 30, 2001. General Governmental Functions: Revenues include general, special revenue, debt service, and capital projects for general governmental function totaled $7,036,604 in 2001, an increase of 6.7% from 2000. Taxes produced 63.8% of general revenues compared to 62.7% last year. The amount of revenues from various sources and the increase /decrease from last year are shown in the following tabulation: $ 7,036,604 100.0% $ 443,104 Viii Percent Increase of (Decrease) Amount Total From 2000 Taxes (Property, Sales, Etc.) $ 4,452,964 63.3% $ 364,473 Licenses and Permits 620,652 8.8% (110,836) Charges for Services 659,145 9.4% 32,681 Fines and Forfeitures 749,201 10.6% 304,870 Other Revenues 554,642 7.9% (148,084) $ 7,036,604 100.0% $ 443,104 Viii Expenditures: For general governmental purposes, expenditures totaled $7,751,364, an increase of 2.47% from 2000. Changes in levels of expenditures for major functions of the City over the preceding year are shown in the following tabulations: $ 7,751,364 100.0% $ 183,763 As reflected in the financial statements, general fund revenues including sales tax as well as ad valorem taxes have generally increased. Through cooperative agreements with Guadalupe County, specific intergovernmental payments for services such as library, fire, and EMS have increased. General fund expenditures have increased in a number of areas including overall personnel costs resulting from step increases and related items. We believe overall realignments in budget accounts more correctly reflect actual cost centers by activity and function than in years prior. General obligation bonded debt data for the City of Schertz at the end of 2001 fiscal year was as follows: Ratio of Debt to Assessed Value (100 %) of Present Debt Amount Market Per Capita Net General Obligation Bonded Debt (Principal) $ 9,888,800 1.35% $ 449.49 Standard & Poor's General Obligation Bonds A+ Revenue Bonds A+ lx Percent Increase of (Decrease) Function Amount Total From 2000 General Government $ 1,792,396 23.1% $ 233,746 Public Safety 2,561,055 33.0% 348,131 Streets and Parks 627,110 8.1% (166,590) Health Services 175,048 2.3% 19,234 Recreation 270,437 3.5% 10,589 Management Services 98,683 1.3% 15,410 Capital Outlay 1,688,451 21.8% (147,010) Debt Service 538,184 6.9% (129,747) $ 7,751,364 100.0% $ 183,763 As reflected in the financial statements, general fund revenues including sales tax as well as ad valorem taxes have generally increased. Through cooperative agreements with Guadalupe County, specific intergovernmental payments for services such as library, fire, and EMS have increased. General fund expenditures have increased in a number of areas including overall personnel costs resulting from step increases and related items. We believe overall realignments in budget accounts more correctly reflect actual cost centers by activity and function than in years prior. General obligation bonded debt data for the City of Schertz at the end of 2001 fiscal year was as follows: Ratio of Debt to Assessed Value (100 %) of Present Debt Amount Market Per Capita Net General Obligation Bonded Debt (Principal) $ 9,888,800 1.35% $ 449.49 Standard & Poor's General Obligation Bonds A+ Revenue Bonds A+ lx Property Taxes: Current tax collections are 98.8% of the tax levy. This is the eighteenth consecutive year in which current property tax collections have exceeded 97.0 %. The ratio of total collections (current and delinquent) to the current tax levy was 100.4 %. Allocations of property tax levy by purpose for 2001 and the preceding two fiscal years are as follows (amounts per $100 assessed value): Purpose 2001 2000 1999 General Fund General Obligation Debt 0.3147% 0.3152% 0.0258% 0.0304% 0.3169% 0.0375% 0.3405% 0.3456% 0.3544% Cash Management: Cash temporarily idle during the year was invested in short-term time deposits and investment pools. The interest earned on such deposits during the year was $628,031, an increase of $40,046 interest compared to earnings during 2000. This increase was due to more funds being invested in investment pools. Bank deposits and certificates of deposit are secured by FDIC insurance and governmental securities pledged by Schertz Bank and Trust and held in safekeeping by Frost Bank. General Fixed Assets: The general fixed assets of the City are those fixed assets used in performance of general governmental functions and exclude the fixed assets of enterprise funds. As of September 30, 2001, the general fixed assets of the City amounted to $22,566,808. This amount represents the current cost, or an estimate of the original cost of the assets. Depreciation of general fixed assets is not generally recognized in the City's accounting system. The City is self - insured on physical damage to specific vehicles. In order to provide coverage for this, risk funds are designated within the general fund with a balance of $368,263 at September 30, 2001 and an allocation within the reserve of $368,263. Water and Sewer System: Comparative data for the past two fiscal years is presented below: 2001 2000 Total Operating Revenue $ 4,260,109 $ 3,958,054 Operating Income (Gross Revenues Less Operating Expenses) 672,212 759,358 Net Revenues (Operating Income Plus Depreciation Less Solid Waste Revenues) 1,032,098 1,117,644 Average Annual Bonded Debt Requirements 434,171 147,747 City of Schertz Emergency Services: During the fiscal year ended September 30, 2001, Emergency Services operations revenues increased 53.3% and operating expenses were increased by 23.7 %. This activity is fully dependent on income fees generated from services rendered and the contracted cities' support to cover operations costs. This year there was an operating income before depreciation of $208,793. Other Information Awards: 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 for its comprehensive annual financial report for the fiscal year ended September 30, 2000. The Certificate of Achievement is the highest form of recognition for excellence in state and local government finance reporting. x In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The City of Schertz has received a Certificate of Achievement for the last 13 consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. The City Council has selected the firm Armstrong, Vaughan & Associates, P. C., of Universal City, Texas, to perform the independent audit for the fiscal year 2000 -2001. We find the background experience and interest of the firm will assure the accomplishment of the audit function in an outstanding manner and will provide educational training opportunities for our staff. Acknowledgements: I want to extend my thanks to the Mayor and members of the City Council for their interest and support in planning and conducting the financial operations of the City in an effective and efficient manner. Mr. Vijay Jain of our staff and Ms. Nancy Vaughan, along with other representatives of the audit firm Armstrong, Vaughan & Associates, P. C., have provided a high degree of expertise and assistance for the preparation of the report. I wish to express my personal thanks and appreciation to everyone involved in the audit process for their help. Respectfully Submitted, Dewey P. Cashwell, Jr. City Manager xi CITY OF SCHERTZ, TEXAS CITY OFFICIALS MAYOR HONORABLE HAL BALDWIN CITY COUNCIL REGINA AGEE KENNETH GREENWALD NORMA HEAD MAYOR PRO -TEM BILLY PITS (JULY 11, 2001) JOE POTEMPA (OCTOBER 1, 2000 TO JULY 11, 2000) TIM SWINNEY (MAY 9, 200 1) GLYN D. WILLIAMS MAYOR PRO -TEM (OCTOBER 1, 2000 TO MAY 9, 200 1) CITY MANAGER DEWEY P. CASHWELL, JR. DIRECTOR OF FINANCE VIJAY JAIN INDEPENDENT AUDITORS Armstrong, Vaughan & Assoc., P.C. Universal City, Texas OFFICIALS ISSUING REPORT Dewey P. Cashwell, Jr. City Manager Vijay Jain Director of Finance xu This page intentionally left blank QA U O O N O 0 .Q 10 ,ov�Aa Q, N %0 .-. ,-» .-. D\ M p 2 tg o q ` a+ O S SC rA re ni aU Nov U a cn o. 1 Cn IS N N �A -ANN N L1¢�av�Ua vow °33rn xiii U a� 8W W v H r� a+ W) N Certificate of Achievement for Excellence in Financial Reporting Presented to City of Schertz, Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2000 A Certificate of Achievement for Excellence in financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. aow � ident C� YZ*Executiv rector xiv FINANCIAL SECTION This page intentionally left blank ARMSTRONG, VAUGHAN & ASSOC., P.C. .................................................................... ............................... CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and Members of the City Council City of Schertz, Texas We have audited the accompanying general - purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 2001, as listed in the table of contents. These general - purpose financial statements are the responsibility of the City of Schertz, Texas', management. Our responsibility is to express an opinion on these general - purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general - purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general - purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general - purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Schertz, Texas, as of September 30, 2001, and the results of its operations and cash flows of its proprietary fund types for the year then ended in conformity with auditing standards generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated December 19, 2001, on our consideration of the City of Schertz, Texas', internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was performed for the purpose of forming an opinion on the general - purpose financial statements of the City of Schertz, Texas, taken as a whole. The combining and individual fund and account group financial statements for the year ended September 30, 2001, and supplementary schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general- purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit of the general - purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general - purpose financial statements taken as a whole. 433 KITTY HAWK, SUITE 113 • UNIVERSAL CITY, TEXAS 78148 • (210) 658 -6229 • FAx (2 10) 659 -7611 • www.avacpa.com The statistical data, as listed in the table of contents herein, has been summarized from the City's records and was not subjected to the auditing procedures applied in the audit of the general- purpose financial statements of the City of Schertz, Texas. Accordingly, we do not express an opinion on such data. Arw4tranq, Vau#ha*v& AEG, P.C- Armstrong, Vaughan & Assoc., P.C. December 19, 2001 W GENERAL PURPOSE FINANCIAL STATEMENTS CITY OF SCHERTZ, TEXAS COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS SEPTEMBER 30, 2001 Governmental Fund Types Proprietary Fund Types The accompanying notes are an integral part of these statements. 4 Special Debt Capital Internal ASSETS & OTHER DEBITS General Revenue Service Projects Enterprise Service Cash and Cash Equivalents $ 3,266,936 $ 840,403 $ 134,268 $ 5,052,112 $ 2,687,485 $ 39,228 Receivables (Net of Allowances) Taxes 94,869 - 10,239 - - - Accounts 195,355 104,202 - - 1,275,013 Other - - - - 47,625 - Due From Other Funds 108,764 - 39,336 - 80,000 Due From Component Units 2,200 - - - - Inventory at Cost 15,586 - - 95,534 1,921 Prepaid Items 127,406 - - - 18,306 737 Restricted Assets: Cash and Cash Equivalents - - - - 6,590,576 - Fixed Assets (Net of Accumulated Depreciation) - - - 5,876,167 50,756 Organization Costs (Net of Accumulated Amortization) - - - 430 - Bond Issue Costs (Net of Accumulated Amortization) - - - - 131,538 - Deferred Loss on Early Retirement of Debt (Net of Accumulated Amortization) - - - - 34,546 Other Debits: Amount Available in Debt Service Fund - - - - Amount to be Provided for Retirement of General Long - Term Debt Amount to be Provided for Employee Compensated Absences and Salary Reserve - - - - - - TOTAL ASSETS AND OTHER DEBITS $ 3,811,116 $ 944,605 $ 183,843 $ 5,052,112 $ 16,837,220 $ 92,642 The accompanying notes are an integral part of these statements. 4 Account Groups Totals (Memorandum Totals General Only) (Memorandum Only) General Long -Term Primary Component Reporting Entity Fixed Assets Debt Government Units 2001 2000 12,020,432 $ 861,755 $ 12,882,187 $ 8,912,193 105,108 - 105,108 90,127 - - 1,574,570 60,840 1,635,410 1,102,897 - - 47,625 - 47,625 20,183 - 228,100 - 228,100 305,303 - - 2,200 - 2,200 50,695 - 113,041 - 113,041 110,684 - - 146,449 - 146,449 67,018 - 6,590,576 - 6,590,576 1,927,162 22,566,808 - 28,493,731 - 28,493,731 25,168,764 - - 430 - 430 477 - - 131,538 - 131,538 16,255 - - 34,546 - 34,546 43,630 - 156,200 156,200 - 156,200 105,019 - 9,557,800 9,557,800 - 9,557,800 5,366,391 - 308,979 308,979 - 308,979 358,548 �h 22,�66,80S $ 10,022,079 $ 59,511,325 $ 922,595 $ 60,433,920 $ 43,645,346 Continued 5 CITY OF SCHERTZ, TEXAS COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS AND DISCRETELY PRESENTED COMPONENT UNITS (CONTINUED) SEPTEMBER 30, 2001 The accompanying notes are an integral part of these statements. 6 Governmental Fund Types Proprietary Fund Types LIABILITIES AND EQUITY AND OTHER CREDITS Special Debt Capital Internal General Revenue Service Projects Enterprise Service Liabilities: Vouchers Payable $ 220,356 $ 2,622 $ - $ 419,350 $ 248,202 $ 4,243 Withdrawals in Excess of Deposits - - - - 15,445 Notes Payable - Current - - - 34,564 - Accrued Salaries and Benefits 71,815 - - - 26,957 1,074 Accrued Interest Payable - - 17,404 - - Bond Escrow - - - - - 20,342 921 Salary Reserve - - - - 73,063 2,323 Compensated Absences Payable - - Payable from Restricted Assets: Deposits - - - - 192,846 " Revenue Bonds - - - - 275,000 - Certificates of Obligation - - - - 60,000 - Refunding Bonds - - - - 18,000 - Public Facility Loan - - - - 5,000 - Accrued Interest - - - - 24,937 - Due to Other Funds - 55,022 - - 105,556 67,522 Due to Primary Government - - - - Deferred Revenue 94,869 - 10,239 General Obligation Bonds Payable - - " Revenue Bonds Payable (Net) - - - - 5,213,991 - Certificates of Obligation Payable - - - - 60,000 - General Obligation Refunding Bonds - - - - 193,000 - Public Facility Loan - - - - 52,000 - Note Payable (Less Current Maturities) - - - - - Total Liabilities 387,040 57,644 27,643 419,350 6,618,903 76,083 Fund Equity and Other Credits: Contributed Capital - - - 3,865,]91 63,577 Investment in General Fixed Assets Retained Earnings (Deficit) Reserved for Revenue Bond Retirement - - - - 40,000 - Reserved for Equipment Replacement - Reserved for Contingencies - - - - 972,500 Unreserved - - - 5,340,626 (47,018) Fund Balances (Deficit) Reserved for Forfeited Property 19,814 - - Reserved for Inventory and Prepaids 142,992 - - - Reserved for Municipal Court 404 - - Unreserved - Designated for: Capital Improvement - - - 4,632,762 - - General Fund Projects 2,312,332 Special Revenues - 886,961 - - - Component Units - - - " Undesignated 948,534 - 156,200 - - - Total Fund Equity (Deficit) 3,424,076 886,961 156,200 4,632,762 10,218,317 16,559 and Other Credits TOTAL LIABILITIES, FUND EQUITY AND OTHER CREDITS $ 3.8112116 $ 944,605 $ 183,843 $ 5,052,112 $ 16,837,220 $ 92,642 The accompanying notes are an integral part of these statements. 6 374,586 - - 40,000 Totals 40,000 - - 972,500 - 972,500 Account Groups (Memorandum - 5,293,608 Totals - - 19,814 General Only) - - 142,992 (Memorandum Only) General Long -Term Primary Component Reporting Entity Fixed Assets Debt Government Units 2001 2000 $ - $ - $ 894,773 $ 17 $ 894,790 $ 708,280 - - 15,445 - 15,445 - - - 34,564 - 34,564 32,106 - - 99,846 - 99,846 82,554 - - 17,404 - 17,404 - ' - - 12,500 - 51,044 72,307 - 72,307 173,824 - 257,935 333,321 - 333,321 302,396 - - 192,846 - 192,846 213,655 - - 275,000 - 275,000 35,000 - - 60,000 - 60,000 10,000 - - 18,000 - 18,000 245,890 - - 5,000 - 5,000 5,000 - - 24,937 - 24,937 11,540 - 228,100 - 228,100 305,303 - - 2,200 2,200 50,695 - - 105,108 - 105,108 90,127 - 4,935,000 4,935,000 - 4,935,000 5,125,000 - - 5,213,991 - 5,213,991 750,000 - 4,585,000 4,645,000 - 4,645,000 270,000 - 194,000 387,000 - 387,000 494,110 - - 52,000 - 52,000 57,000 - - - - 34,564 - 10,022,979 17,609,642 2,217 17,611,859 9,009,544 - - 3,928,768 - 3,928,768 3,979,102 - 22,566,808 - 22,566,808 22,566,808 19,617,100 374,586 - - 40,000 - 40,000 40,000 - - 972,500 - 972,500 972,500 - - 5,293,608 - 5,293,608 4,057,763 - - 19,814 - 19,814 19,814 - - 142,992 - 142,992 20,339 - - 404 - 404 24,103 - 4,632,762 - 4,632,762 1,087,077 - - 2,312,332 - 2,312,332 2,269,593 - - 886,961 - 886,961 659,930 - - 920,378 920,378 662,510 - 1,104,734 - 1,104,734 851,385 22,566,808 41,901,683 920,378 42,822,061 34,635,802 -L 22,566,808 $ 10,022,979 $ 59,511,325 $ 922,595 $ 6024332920 $ 43,645,346 7 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND DISCRETELY PRESENTED COMPONENT UNITS FOR THE YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) REVENUES Taxes Licenses and Permits Charges for Services Fines and Forfeits Grants Other Revenue TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Streets and Parks Health Culture and Recreation Management Services Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In Operating Transfers (Out) Operating Transfers (to) from Primary Government Operating Transfers (to) from Component Unit Proceeds of Certificates of Obligation TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues & Other Sources Over (Under) Expenditures & Other (Uses) Fund Balances - Beginning Prior Period Adjustment Fund Balances - Beginning As Adjusted Fund Balances - Ending Governmental Fund Types 1,638,648 29,587 - 124,161 2,561,055 - - - 627,110 - - - 175,048 - - - 270,437 - - - 98,683 - - - 458,031 345,545 - 884,875 257,410 - - 280,774 - 5,829,012 375,132 538,184 1,009,036 349,885 227,031 (337,361) (954,315) 388,542 - - 4,500,000 388,542 4,500,000 349,885 Special Debt Capital General Revenue Service Projects $ 4,210,792 $ 51,282 $ 190,890 $ - 612,745 7,907 - - 659,145 - - - 438,772 310,429 - - - 186,382 - 257,443 46,163 9,933 54,721 6,178,897 602,163 200,823 54,721 1,638,648 29,587 - 124,161 2,561,055 - - - 627,110 - - - 175,048 - - - 270,437 - - - 98,683 - - - 458,031 345,545 - 884,875 257,410 - - 280,774 - 5,829,012 375,132 538,184 1,009,036 349,885 227,031 (337,361) (954,315) 388,542 - - 4,500,000 388,542 4,500,000 349,885 227,031 51,181 3,545,685 3,074,191 659,930 105,019 1,087,077 659,930 105,019 1,087,077 3,074,191 $ 3,424,076 $ 886,961 $ 156,200 $ 4,632,762 The accompanying notes are an integral part of these statements. 8 Totals (388,542) (388,542) (398,710) (Memorandum - Totals 398,710 Only) - (Memorandum Only) Primary Component Reporting Entity Government Units 2001 2000 $ 4,452,964 7 688,983 $ 5,141,947 $ 4,767,652 620,652 - 620,652 731,488 659,145 - 659,145 626,464 749,201 - 749,201 444,331 186,382 - 186,382 280,026 368,260 61,547 429,807 461,627 7,036,604 750,530 7,787,134 7,311,588 1,792,396 - 1,792,396 1,558,650 2,561,055 - 2,561,055 2,212,924 627,110 - 627,110 793,700 175,048 - 175,048 155,814 270,437 2,607 273,044 264,491 98,683 3,773 102,456 89,129 1,688,451 103,764 1,792,215 1,835,461 257,410 - 257,410 365,820 280,774 - 280,774 302,111 7,751,364 110,144 7,861,508 7,578,100 (714,760) 640,386 (74,374) (266,512) - - 199,695 0 (388,542) (388,542) (398,710) 388,542 - 388,542 398,710 4,500,000 - 4,500,000 - 4,888,542 (388,542) 4,500,000 (18,691) 4,173,782 251,844 4,425,626 (285,203) 4,926,217 668,534 5,594,751 5,774,687 " - 105,267 4,926,217 668,534 5,594,751 5,879,954 $ 9,099,999 $ 920,378 $ 10,020,377 $ 5,594,751 0 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL, SPECIAL REVENUE, AND DEBT SERVICE FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30, 2001 REVENUES Taxes Licenses and Permits Charges for Services Fines and Forfeits Other Revenue TOTAL REVENUES EXPENDITURES Current: General Government Public Safety Streets and Parks Health Culture and Recreation Management Services Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) Operating Transfers In (Out) from Component Units TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balances - October 1, 2000 Fund Balances - September 30, 2001 General Fund Variance Favorable Budget Actual (Unfavorable) $ 4,075,272 $ 4,210,792 $ 135,520 588,700 612,745 24,045 668,221 659,145 (9,076) 433,850 438,772 4,922 230,550 257,443 26,893 5,996,593 6,178,897 182,304 1,721,593 1,638,648 82,945 2,672,233 2,561,055 111,178 820,081 627,110 192,971 185,591 175,048 10,543 286,963 270,437 16,526 98,755 98,683 72 503,732 458,031 45,701 6,288,948 5,829,012 459,936 (292,355) 349,885 642,240 $ (292,355) 349,885 $ 642,240 The accompanying notes are an integral part of these statements. 10 3,074,191 $ 3,424,076 Annually Budgeted Special Revenue Funds 13,615 Debt Service Funds Variance - Variance Favorable 48,000 Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ 27,500 $ 41,282 $ 13,782 $ 187,525 $ 190,890 $ 3,365 30,000 7,907 (22,093) - - _ 35,750 39,555 3,805 - 9,933 9,933 93,250 88,744 (4,506) 187,525 200,823 13,298 45,000 13,615 31,385 6,200 - 6,200 48,000 185,878 (137,878) - _ _ - - - 255,000 257,410 (2,410) - - - 272,938 280,774 (7,836) 99,200 199,493 (100,293) 527,938 538,184 (10,246) (5,950) (110,749) (104,799) (340,413) (337,361) 3,052 (4,000) - 4,000 - - _ ' - - 388,342 388,542 200 (4,000) - 4,000 388,342 388,542 200 $ (9,950) (110,749) $ (100,799) $ 47,929 51,181 $ 3,252 11 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30, 2001 (With Comparative Totals for the Year Ended September 30, 2000) OPERATING REVENUES Fees Charged to Users Reimbursements and Other TOTAL OPERATING REVENUES OPERATING EXPENSES BEFORE DEPRECIATION Personnel Services Sewage Treatment General and Administrative Contractual Services Supplies /Maintenance Bad Debts TOTAL OPERATING EXPENSES Operating Income (Loss) before Depreciation Depreciation Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest Income Interest Expense Contributions to Joint Venture Amortization of Bond Costs TOTAL NONOPERATING REVENUES (EXPENSES) Net Income (Loss) Before Operating Transfers Operating Transfers In (Out) Net Income (Loss) Add Back of Depreciation Closed to Contributed Capital Total Retained Earnings (Deficit) - October 1 Retained Earnings (Deficit) - September 30 The accompanying notes are an integral part of these statements. 12 Totals Enterprise Internal (Memorandum Only) Funds Service 2001 2000 $ 5,407,220 $ 106,469 $ 5,513,689 $ 4,665,108 209,843 - 209,843 297,858 5,617,063 106,469 5,723,532 4,962,966 1,420,341 55,782 1,476,123 1,335,253 1,281,454 - 1,281,454 820,724 392,720 - 392,720 362,956 821,985 18,031 840,016 849,132 259,602 24,602 284,204 297,628 87,486 - 87,486 32,412 4,263,588 98,415 4,362,003 3,698,105 1,353,475 8,054 1,361,529 1,264,861 511,634 3,106 514,740 522,159 841,841 4,948 846,789 742,702 358,904 701 359,605 272,498 (200,253) - (200,253) (104,012) (279,705) - (279,705) - (3,283) - (3,283) - (124,337) 701 (123,636) 168,486 717,504 5,649 723,153 911,188 - - - 18,691 717,504 5,649 723,153 929,879 138,106 - 138,106 138,106 855,610 5,649 861,259 1,067,985 5,497,516 (52,667) 5,444,849 4,376,864 $ 6,353,126 $ (47,018) $ 6,306,108 $ 5,444,849 The accompanying notes are an integral part of these statements. 12 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES FOR THE YEAR ENDED SEPTEMBER 30, 2001 (With Comparative Totals for the Year Ended September 30, 2000) CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received From Customers Cash Payments to Suppliers for Goods and Services Cash Payments to Employees for Services Cash Received For Reimbursements and Other Net Cash Provided (Used) by Operating Activities CASH FLOWS FROM NON - CAPITAL FINANCING ACTIVITIES Operating Transfers in (Out) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Revenue Bonds Acquisition and Construction of Capital Assets Principal Payments on Long -Term Debt Interest Paid on Long -Term Debt Contributed (to) from Joint Venture Net Cash Provided (Used) by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest on Investments NET INCREASE (DECREASE) IN CASH Cash and Cash Equivalents at October I Cash and Cash Equivalents at September 30 Cash Compromised of Current Assets Restricted Assets Withdrawals in Excess of Deposits Cash and Cash Equivalents - End of Year Totals Enterprise Internal (Memorandum Only) Funds Service 2001 2000 $ 4,877,978 $ 106,469 $ 4,984,447 $ 4,471,530 (2,904,373) (40,109) (2,944,482) (2,007,498) (1,437,497) (56,564) (1,494,061) (1,296,139) 209,843 - 209,843 297,858 - 745,951 9,796 755,747 1,465,751 - (206,413) - - - 18,691 5,398,250 - 5,398,250 (804,647) - (804,647) (268,720) (1,164,696) - (1,164,696) (278,002) (206,413) - (206,413) (107,236) (279,705) - (279,705) 742,798 2,942,789 - 2,942,789 88,840 358,904 701 359,605 272,498 4,047,644 10,497 4,058,141 1,845,780 5,214,972 28,731 5,243,703 3,397,923 $ 9,262,616 $ 39,228 $ 9,301,844 $ 5,243,703 $ 2,687,485 $ 39,228 $ 2,726,713 $ 3,316,541 6,590,576 - 6,590,576 1,927,162 Continued The accompanying notes are an integral part of these statements. 13 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES (CONTINUED) FOR THE YEAR ENDED SEPTEMBER 30, 2001 (With Comparative Totals for the Year Ended September 30, 2000) RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation/Amortization Depreciation Attributed to Contributed Capital Provision for Uncollectible Accounts (Increase) Decrease in the Following Assets Accounts Receivable Inventory Prepaid Expenses Due from Other Funds Increase (Decrease) in the Following Liabilities: Vouchers Payable Due to Other Funds Accrued Vacation Accrued Salaries Salary Reserve Customer Deposit Net Cash Provided (Used) by Operating Activities $ 745,951 $ 9,796 $ 755,747 $ 1,465,751 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contribution of Equipment from Component Unit $ 87,772 $ - $ 87,772 $ 14 Totals Enterprise Internal (Memorandum Only) Funds Service 2001 2000 841,841 4,948 846,789 742,702 376,811 3,106 379,917 384,053 138,106 - 138,106 138,106 87,486 - 87,486 32,391 (616,727) - (616,727) (338,331) (6,603) - (6,603) 18,506 - (507) (507) (19,043) 83,780 - 83,780 444,058 (218,078) 3,031 (215,047) 254,088 97,300 - 97,300 (276,951) 8,654 160 8,814 1,464 3,077 8 3,085 5,748 (28,887) (950) (29,837) 31,902 (20,809) - (20,809) 47,058 $ 745,951 $ 9,796 $ 755,747 $ 1,465,751 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contribution of Equipment from Component Unit $ 87,772 $ - $ 87,772 $ 14 NOTES TO FINANCIAL STATEMENTS 15 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Schertz, Texas, have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Government Accounting Standards Board (GASB) is the accepted standard - setting body for establishing government accounting and financial reporting principles. The more significant of the government's accounting policies are described below. 1. REPORTING ENTITY In evaluating how to define the government, for financial purposes, management has considered all potential component units. The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in GASB Statement 14, "The Financial Reporting Entity ". The definition of the reporting entity is based primarily on the concept of financial accountability. A primary government is financially accountable for the organizations that make up its legal entity. It is also financially accountable for legally separate organizations if its officials appoint a voting majority of an organization's governing body and either it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government. Individual Component Unit Disclosures Discretely presented component units. The component units columns in the combined financial statements include the financial data of the component units of the City of Schertz. The component units have been included in this report because the Council appoints a voting majority to each Board of Directors, and is able to impose its will on the organizations. Following is a summary of the component units: Schertz Economic Development Corporation: A non profit corporation incorporated under the Development Corporation Act of 1979, Texas Revised Civil Statutes Annotated, Article 5.90.6, Section 4A. The Corporation is organized exclusively 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. 2. Library: The library's governing board is appointed by the City Council. The library provides services to the citizens of the City of Schertz as well as surrounding communities. The function of the Library Board is to work cooperatively with city management to provide funding and oversight for special projects of the Library. 3. Schertz Development Foundation: The Foundation was incorporated under the Texas Non - profit Corporation Act to assist the City in developing and implementing plans for economic viability for the City. The Board of Directors is appointed by the City Council and the executive director is employed by the City. IG9 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2. REPORTING ENTITY (Continued) Complete financial statements for each of the three component units may be obtained at City Hall. The following pages present condensed financial statements for each of the discretely presented component units. CONDENSED BALANCE SHEET 17 Schertz Economic Schertz Development The Development Corporation Library Foundation Total ASSETS Current Assets $ 789,667 $ 12,635 $ 120,293 $ 922,595 TOTAL ASSETS $ 789,667 $ 12,635 $ 120,293 $ 922,595 LIABILITIES Current Liabilities $ - $ 17 $ - $ 17 Due to Primary Government - - 2,200 2,200 TOTAL LIABILITIES - 17 2,200 2,217 EQUITY Fund Balance 789,667 12,618 118,093 920,378 TOTAL LIABILITIES AND EQUITY $ 789,667 $ 12,635 $ 120,293 $ 922,595 CONDENSED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Revenues $ 719,378 $ 6,498 $ 24,654 $ 750,530 Expenditures (88,718) (18,599) (2,827) (110,144) Excess of Revenues Over (Under) Expenditures 630,660 (12,101) 21,827 640,386 Transfers to Primary Government (388,542) - - (388,542) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) 242,118 (12,101) 21,827 251,844 Fund Balance - Beginning 547,549 24,719 96,266 668,534 Fund Balance - Ending $ 789,667 $ 12,618 $ 118,093 $ 920,378 17 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 1. REPORTING ENTITY (Continued) Tnint VanfiirP 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 entity meets the criteria for joint ventures: Schertz /Seguin Local Government Corporation: The 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. Separate financial statements for the Schertz/Seguin Local Government Corporation may be obtained from the City of Seguin, P.O. Box 591, Seguin, Texas 78156. Summarized financial data for the joint venture has been provided in Note K. 2. FUND ACCOUNTING The City's accounts are organized on the basis of funds and account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self - balancing accounts which are comprised of each funds' assets, liabilities, fund equity, revenues, and expenditures or expenses as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into six generic fund types and three broad fund categories as follows: Governmental Fund Types: General Fund: The General Fund accounts for the resources used to finance the fundamental operations of the City. It is the basic fund of the City and covers all activities for which a separate fund has not been established. Special Revenue Funds: These funds are used to account for specific revenue sources which are legally restricted to expenditures for specified activities. Debt Service Funds: These funds are used to account for the accumulation of resources for and the payment of principal and interest on general long -term debt of the City other than Revenue Bonds. IN CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. FUND ACCOUNTING (Continued) Governmental Fund Types (Continued): Capital Projects Funds: These funds are established to account for major capital expenditures not financed by proprietary or nonexpendable trust funds. Proprietary Fund Type: Enterprise Fund: The Enterprise Fund accounts for operations which are intended to be self - supporting through user charges. The City operates water and sewer services on this basis. Internal Service Funds: Internal service funds account for operations that provide services to other departments or agencies of the government, or to other governments, on a cost - reimbursement basis. Account Groups: The accounting and reporting treatment applied to the fixed assets and long -term liabilities associated with a fund are determined by its measurement focus. All governmental fund types are accounted for on a spending "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Property, plant, and equipment used in governmental fund type operations are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Long -term liabilities expected to be financed from governmental fund types are accounted for in the General Long -Term Debt Account Group, not in the governmental fund. The two account groups are not "funds ". They are concerned only with the measurement of financial position. They are not involved with measurement or results of operations. 19 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) BASIS OF ACCOUNTING Governmental Funds (General, Special Revenue, Debt Service and Capital Projects) are accounted for on a modified accrual basis using a current financial resources measurement focus. Revenues are recognized in the period in which they are both measurable and available and expenditures are recognized when incurred except for interest on general long -term debt which is recognized when due. Sales and property taxes are considered "measurable" when in the hands of intermediary collecting governments and are recognized as revenue at that time. Other revenues susceptible to accrual are franchise taxes, interest, and charges for services. Licenses, fines, and permits are not susceptible to accrual because generally they are not measurable until received in cash. Proprietary Funds have an economic resources measurement focus and use the full accrual method of accounting for both revenues and expenses similar to a commercial enterprise. The City has elected not to follow any pronouncements issued by the Financial Accounting Standards Board (FASB) subsequent to November 30, 1989. 4. CASH AND CASH EQUIVALENTS Cash and cash equivalents include amounts in demand deposits, interest bearing accounts and deposits in local government investment pools. The City is allowed 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 as to investment quality by a nationally recognized investment rating firm and having received a rating 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 invests in local government investment pools. For purposes of the statement of cash flows, the Enterprise Funds and Internal Service Fund considers all highly liquid investments including cash in banks, cash on hand, money market accounts, deposits in local government investment pools, and restricted cash and temporary investments to be cash equivalents. PROPERTY TAXES Property taxes are levied on January 1 of each year on all taxable property within the City. The taxes become due and payable on October 1 following the levy date and delinquent on February 1 of the subsequent year. Penalties and interest are added for payments made after the February 1 due date. The City contracts with the Guadalupe County Tax Assessor - Collector for the billing and collection of the property taxes. Taxes receivable are shown net of the related allowance for uncollectible taxes of $6,055. pill CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 5. PROPERTY TAXES (Continued) For fiscal year 2001, the assessed tax rate for the City was $3405 per $100 on an assessed valuation of $731,305,433. This is broken out as $3147 for general maintenance and operations and $.0258 for debt retirement. 6. ACCOUNTS RECEIVABLE Accounts receivable are reported net of allowances for uncollectible accounts. The allowance account represents management's estimate of uncollectible accounts based upon experience and historical trends. 7. INVENTORIES AND PREPAID ITEMS Inventories are valued at cost, which approximates market, using the first - in/first -out (FIFO) method. The costs of governmental fund -type inventories are recorded as expenditures when consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 8. RESTRICTED ASSETS Certain proceeds of Enterprise Fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond convenants. Funds are segregated to report those proceeds of revenue bond issuances that are restricted for use in construction. Funds are also segregated to provide for debt services as provided under bond indenture agreements. 9. FIXED ASSETS Fixed assets are recorded at cost or estimated historical cost if purchased or constructed. Donated fixed assets are recorded at their estimated fair value at the date of donation. Costs incurred for the purchase or construction of general fixed assets are recorded as capital outlay expenditures in the General, Special Revenue, and Capital Projects Funds. All such costs are capitalized in the General Fixed Assets Account Group. Public domain, ( "infrastructure ") general fixed assets consisting of certain improvements other than buildings, including roads, curbs, gutters, streets, and sidewalks, drainage systems, and lighting systems are capitalized. Amounts expended for property, plant, and equipment in the Enterprise Fund are capitalized in the fixed asset accounts within that fund. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. 21 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 10. DEPRECIATION Depreciation and amortization are provided for in the Enterprise Fund in amounts sufficient to relate the cost of fixed assets to operations over their estimated service lives using the straight -line method. Estimated useful lives for Enterprise Fund fixed assets are as follows: Useful Lives Fixed Asset (Years) Buildings 30 Water and sewer lines and mains 50 Equipment 5 -10 No depreciation is provided for the general fixed assets of the City. 11. SALARY RESERVE It is the policy of the City of Schertz to retain as a liability the first forty (40) hours of service for each employee. The liability is to be paid upon termination at the rate of pay in existence at that time. Amounts of salary reserve that are not expected to be liquidated with expendable available financial resources are reported in the General Long -Term Debt Account Group. No expenditure is reported for these amounts. Salary reserve of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees 12. COMPENSATED ABSENCES Vested or accumulated vacation leave and compensatory time that is expected to be liquidated with expendable available resources is reported as an expenditure and fund liability of the governmental fund that will pay for it. Amounts of vested or accumulated vacation leave and compensatory time that are not expected to be liquidated with expendable available financial resources are reported in the General Long -Term Debt Account Group. Vested or accumulated vacation leave and compensatory time of the Proprietary Funds is recorded as an expense and liability of that fund as the benefits accrue to employees. Accumulated vacation pay and compensatory time at September 30, 2001, of $73,063, $2,323 and $257,935 has been recorded in accrued liabilities of the Enterprise Fund, Internal Service Fund, and General Long -Term Debt Account Group, respectively. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits. 13. DEFERRED REVENUE Property tax revenues, are recognized when they become available. Available means when due, or past due, and receivable within the current period and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. The City recognizes property tax revenues collected within sixty (60) days after year end. 22 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 14. SHORT -TERM OBLIGATION Short-term debt, debt of less than a year duration, is recognized as a liability of the governmental fund that incurred the obligation when the intent is to liquidate the obligation from expendable available resources. 15. LONG -TERM OBLIGATION Long -term debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund for payment early in the following year. For other long -term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the general long -term debt account group. Long -term liabilities expected to be financed from proprietary fund operations are accounted for in those funds. 16. DEBT SERVICE The ad valorem tax rate is allocated each year between the General Fund and the Debt Service Fund. The full amount estimated to be required for debt service on General Obligation Debt is provided by the debt service tax, together with interest earned within the Debt Service Fund. 17. REVENUE RECOGNITION Water and sewer revenues are based on cycle billings rendered to customers on a monthly basis. Unbilled water and sewer utility service receivables are recorded at year end and are included in customer receivables. 18. FUND EQUITY The unreserved fund balances for governmental funds represent the amount available for budgeting future operations. The reserved fund balances for governmental funds represent the amount that has been legally identified for specific purposes. Designations of fund balance represent tentative management plans that are subject to change. Unreserved retained earnings for the proprietary fund represents the net assets available for future operations or distribution. Reserved retained earnings for the proprietary fund represents the net assets that have been legally identified for specific purposes. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers, or other funds. 19. BOND DISCOUNTS /ISSUANCE COSTS In governmental fund types, bond discounts and issuance costs are recognized in the current period. Bond discounts and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds using the bonds - outstanding method, which approximates the effective interest method. Bond discounts are presented as a reduction of the face amount of bonds payable whereas issuance costs are recorded as deferred charges. 23 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 20. COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. 21. INTERFUND TRANSACTIONS Quasi - external transactions are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures /expenses initially made from it that are properly applicable to another fund, are recorded as expenditures /expenses in the reimbursing fund and as reductions of expenditures /expenses in the fund that is reimbursed. 22. BUDGETS An operating budget is adopted each fiscal year for the general fund, hotel/motel tax (special revenue) fund, park (special revenue) fund, recycling (special revenue) fund and debt service fund. Annual budgets are not legally required for the other special revenue funds. For capital projects funds, total estimated revenues and other financing sources and estimated expenditures are approved at the inception of each project. Accordingly, no comparison of budget to actual is presented in the annual financial statements for these funds. In addition, as part of the overall budget process, budgets are adopted for the proprietary funds, however, the City does not require a reporting as part of the comprehensive annual financial report. The budget is adopted on the same basis of accounting as described in note A 3. Budgetary preparation and control is exercised at the departmental level. The City Manager is authorized to transfer budget amounts between line items within a department; however, any transfer or supplemental appropriation that amends the total expenditures of a department or total budget requires City Council approval. During the year, the City made various departmental and line item transfers to the budget for the general fund; which had the following effect: General Fund: Revenues Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Total Original Budget 10/1/00 $ 5,736,913 5,971,408 Final Amended Budget $ 5,996,593 6,288,948 Net Change 259,680 317,540 $ (234,495) $ (291355) $ (57,860) Expenditures exceeded budgeted appropriations in the following funds for the year ended September 30, 2001: Budgeted Actual Variance Appropriations Expenditures (Unfavorable) Park Special Revenue Fund $ 54,200 $ 185,878 $ (131,678) Debt Service Fund $ 527,938 $ 538,184 $ (10,246) 24 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 22. BUDGETS (Continued) All appropriations lapse at the end of each year. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditures of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. Encumbrances lapse at year end and do not constitute expenditures or liabilities because the commitments must be reappropriated and honored during the subsequent year. 23. BUDGET /GAAP RECONCILIATION The following schedule reconciles the amounts on the Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual to the amounts on the Combined Statement of Revenues, Expenditures and Changes in Fund Balances: Total columns on these statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation, as interfund eliminations have not been made in the aggregation of this information. 25. USE OF 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 25 Special Revenue Fund Balances (Budget) $ 381,845 Funds Not Requiring Budgets: Tax Increment Financing Fund 122,572 1998 FEMA Fund 71,550 Library Grant Fund 1,544 Police Dept. Forfeitures Fund 309,450 FUND BALANCES (GAAP) $ 886,961 24, TOTAL COLUMNS Total columns on these statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation, as interfund eliminations have not been made in the aggregation of this information. 25. USE OF 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 25 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE B -- DEPOSITS WITH FINANCIAL INSTITUTIONS Deposits consist of demand deposit accounts and interest- bearing accounts and are carried at cost. There are three categories of credit risk that apply to the government's bank balance: 1. Insured or collateralized with securities held by the City or by the City's agent in the City's name. 2. Collateralized with securities held by the pledging financial institution's trust department or the City's agent in the City's name. 3. Uncollateralized. Balances held in each category are as follows: Primary Government Component Units Book Bank Book Bank Balance Balance Balance Balance Insured (FDIC) Uninsured: Collateral held by City's Agent in City's Name Total Cash in Banks The book balance is made up as follows: Petty Cash Cash in Banks Total Collateralized/Insured Deposits Investments with Local Government Investment Pools Total $ 124,271 $ 124,271 $ - $ - 1,293,111 1,616,070 5,204 5,204 $ 1,417,382 $ 1,740,341 $ 5,204 $ 5,204 The City held investments in the following local government investment pools: Primary Component Government Units $ 200 $ - 1,417,182 5,204 1,417,382 5,204 17,178,181 856,551 $18,595,563 $ 861,755 Primary Component Government Units Local Government Investment Cooperative (LOGIC) $ 3,102,957 $ 92,967 MBIA Municipal Investors Service Corporation 9,821,071 763,584 Lone Star Investment Pool 4,254,153 Total $17,178,181 $ 856,551 All three investment pools have regulatory oversight from the Texas Public Funds Investment Act Sec. 2256.0016. The fair value of the City's position in each pool is the same as the value of the pool shares. 26 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE B -- DEPOSITS WITH FINANCIAL INSTITUTIONS (Continued) The City is authorized to make direct investments in U.S. Government, federal agency and instrumentality obligations; certificates of deposit, and local government investment pools. Investments represented by specific identifiable investment securities are classified as to credit risk by the three (3) categories described below: Category 1 - Insured, or registered, or securities held by the City or its agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent, but not in the City's name. As of September 30, 2001, no securities were held that would be subject to credit risk as defined above. NOTE C -- CHANGES IN FIXED ASSETS Activity for general fixed assets capitalized by the City is summarized below: Land Buildings Improvements Other Than Buildings Vehicles Equipment Balance Transfers/ 10/1/2000 Adjustments $ 1,465,381 $ 5,599,946 Balance Additions Deletions 9/30/2001 117,740 $ (6,024) $ 1,577,097 453,498 - 6,053,444 9,779,631 - 1,914,410 (69,800) 11,624,241 862,811 - 393,708 (73,177) - 1,909,331 - 222,253 (2,900) 2,128,684 $ 19,617,100 $ - $ 3,101,609 $ (151,901) $ 22,566,808 The following is a summary of the Enterprise Fund property plant, and equipment at September 30, 2001: Enterprise Water /Sewer Safes Internal Service Total Land and Improvements $ 160,521 $ - $ - $ 160,521 Buildings 195,724 26,656 58,804 281,184 Improvements Other than Buildings 11,592,056 7,642 1,142 11,600,840 Machinery, Equipment, and Vehicles 1,194,478 712,880 30,964 1,938,322 13,142,779 747,178 90,910 13,980,867 Less Accumulated Depreciation (7,547,097) (466,693) (40,154) (8,053,944) Net Property, Plant, and Equipment $ 5,595,682 $ 280,485 $ 50,756 $ 5,926,923 27 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE D -- LONG -TERM DEBT The City had the following changes in long -term debt outstanding for the year ended September 30, 2001: Balance Balance Outstanding Outstanding Original Interest October 1, September 30, Amount Rates 2000 Issued Retired 2001 General Long -Term Debt General Obligation Bonds 1962 Series $ 301,000 3.63% $ 10,000 $ - $ 10,000 $ - 1992 Series 620,000 5.2 -7.2% 470,000 - 25,000 445,000 1998 Series 4,930,000 4.37 - 5.375% 4,645,000 - 155,000 4,490,000 1995 Refunding Bonds 447,000 3.75 -5.00% 196,410 - 2,410 194,000 5,321,410 - 192,410 5,129,000 Certificates of Obligation 1990 Series 850,000 7.0 -9.0% 150,000 - 65,000 85,000 2001 Series 4,500,000 4.1 -6.0% - 4,500,000 - 4,500,000 Total General Obligation Debt 1,253,000 3.75 -5.0 5,471,410 4,500,000 257,410 9,714,000 Compensated Absences Payable 235,824 22,111 - 257,935 Salary Reserve 142,000 5.00% 122,724 - 71,680 51,044 Total General Long -Term Debt 273,000 7.60% $ 5,829,958 $ 4,522,111 $ 329,090 $ 10,022,979 Proprietary Fund Debt Revenue Bonds: 1987 Series 1,020,000 6.3 -8.3% $ 785,000 $ - $ 785,000 $ - 2001 Series 5,550,000 3.4 -5.2% - 5,550,000 - 5,550,000 Less Unamortized Discounts and Loss on Defeasance - (71,482) (10,473) (61,009) 785,000 5,478,518 774,527 5,488,991 Certificate of Obligation: 1992 Series 200,000 5.0 -7.0% 130,000 - 10,000 120,000 General Obligation Bonds: 1995 Refunding Bonds 1,253,000 3.75 -5.0 543,590 - 332,590 211,000 Other Debt: Public Facility Loan (HUD) 142,000 5.00% 62,000 - 5,000 57,000 Note Payable 273,000 7.60% 66,670 - 32,106 34,564 Total Proprietary Fund Debt $ 1,587,260 $ 5,478,518 $ 1,154,223 $ 5,911,555 28 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE D -- LONG -TERM DEBT (Continued) Debt Service Requirements The following are summaries of debt service requirements to maturity for long -term bonds, certificates, and notes for the General Long -Term and Proprietary Fund Debt: SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY FOR GENERAL LONG -TERM DEBT Year Ending September 30, 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Average annual requirements Principal $ 467,000 403,000 413,000 436,000 465,000 485,000 480,000 430,000 455,000 480,000 510,000 535,000 565,000 595,000 630,000 665,000 695,000 320,000 335,000 350,000 Interest Total 481,657 455,904 431,343 405,661 379,536 349,998 319,864 292,008 270,653 250,474 228,921 205,887 181,396 155,317 127,513 97,839 66,391 42,250 25,875 o �cn $ 9,714,000 $ 4,777,237 29 $ 948,657 858,904 844,343 841,661 844,536 834,998 799,864 722,008 725,653 730,474 738,921 740,887 746,396 750,317 757,513 762,839 761,391 362,250 360,875 358,750 $ 14,491,237 $ 724,562 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE D -- LONG -TERM DEBT (Continued) SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY FOR PROPRIETARY FUND DEBT Year Ending ' September 30, Principal Interest Total 2002 $ 392,564 $ 268,515 $ 661,079 2003 417,000 250,855 667,855 2004 432,000 233,864 665,864 2005 449,000 216,990 665,990 2006 295,000 200,510 495,510 2007 300,000 188,950 488,950 2008 300,000 176,900 476,900 2009 310,000 164,481 474,481 2010 225,000 148,981 373,981 2011 235,000 139,271 374,271 2012 245,000 128,901 373,901 2013 252,000 117,731 369,731 2014 265,000 106,006 371,006 2015 280,000 93,419 373,419 2016 290,000 79,839 369,839 2017 295,000 65,339 360,339 2018 230,000 50,589 280,589 2019 240,000 39,089 279,089 2020 255,000 26,849 281,849 2021 265,000 13,780 278,780 $ 5,972,564 $ 2,710,859 $ 8,683,423 Average annual requirements $ 434,171 Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, public facility loan (HUD), and a note payable. General obligation bonds are direct obligations of the City for which its full faith and credit are pledged, and are payable from taxes levied on all taxable property located within the City. Revenue bonds are generally payable from pledged revenues generated by the water and sewer fund. The debenture agreement for water and sewer bonds require funds be available for 1 /12th the principal and 1 /6th interest requirements of the next fiscal year. Certificates of obligation are payable from a levy of ad valorem taxes upon all taxable property within the City, and are further payable from certain net revenues derived from the operation of the City's combined water and sewer systems after operations of the water and sewer systems and has equal status with first lien revenue bonds. The note payable is payable from revenues generated by the water and sewer fund. The City is required to accumulate a Reserve Fund in an amount equal to the average annual principal and interest on the Revenue Bonds. The City has purchased a surety bond through MBIA Insurance Corporation to fund the required reserve amount. 30 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE D -- LONG -TERM DEBT (Continued) Advance Refunding. The City issued $5,550,000 of revenue bonds to provide resources to improve and enlarge the existing utility system, and to discharge and refund outstanding revenue debt. $823,250 of the proceeds of the new issue were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments on $785,000 of refunded debt. As a result, the refunded bonds are considered to be defeased and the liability has been removed from the long -term debt of the Water and Sewer Fund. The advance refunding was undertaken to reduce total debt service payments over the next twenty years by $85,370 and resulted in an economic gain of $10,934. The reacquisition price exceeded the net carrying amount of the old debt by $54,505. This amount is being netted against the new debt and amortized over the old debt's life, which is shorter than the life of the new debt. NOTE E -- RETIREMENT PLAN Texas Municipal Retirement Fund: Plan Description The City provides pension benefits for all of its full -time employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), one of over 745 administered by TMRS, an agent multiple- employer public employee retirement system. TMRS issues a publicly available financial report that includes financial statements and required supplementary information for TMRS. That report may be obtained by writing to Texas Municipal Retirement System, P.O. Box 149153, Austin, Texas 78714. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City - financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent (100 %, 150 %, or 200 %) of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer - financed monetary credits with interest were used to purchase an annuity. Members can retire at age 60 and above with 10 or more years of service or with 25 years of service, regardless of age. A member is vested after 10 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. 31 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE E -- RETIREMENT PLAN (Continued) Texas Municipal Retirement Fund: (Continued) Contributions (Continued) The contribution rate for the employees is 5 %, and the City matching percent is currently 1.5 to 1, both as adopted by the governing body of the City. Under the State law governing TMRS, the City contribution rate is annually determined by the actuary. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's 25 -year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Contributions are made monthly by both the employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one -year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect (i.e., December 31, 2000 valuation is effective for rates beginning January 2002). For 2000, the City's annual pension cost of $301,447 was equal to the City's required and actual contributions. The actuarial assumptions included (a) 8% investment rate of return, (b) no projected salary increases, (c) no inflation component and (d) the amortization period is open. The actuarial value of TMRS assets was determined based on market- related values. Schedule of Actuarial Liabilities and Funding Progress Actuarial Valuation Date 12/31/00 Actuarial Value of Assets $ 2,268,986 Actuarial Accrued Liability $ 3,638,045 Percentage Funded 62.4% Unfunded (Overfunded) Actuarial Accrued Liability (UAAL) $ 1,369,059 Annual Covered Payroll $ 3,866,975 UAAL as a Percentage of Covered Payroll 35.4% 32 12/31/99 12/31/98 $ 1,734,692 $ 3,076,611 56.4% $ 1,341,919 $ 3,349,515 40.1% $ 2,434,873 $ 1,296,918 53.3% $ 1,137,955 $ 3,158,499 36.0% CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE F -- INTERFUND RECEIVABLES AND PAYABLES Interfund balances as of September 30, 2001 consisted of the following receivables and payables: Due From Due To PRIMARY GOVERNMENT Other Funds Other Funds General Fund Special Revenue Funds: Police Department Forfeitures FEMA Fund Proprietary Funds: Water and Sewer Enterprise Fund Fleet Services Internal Service Fund Special Revenue Funds Police Department Forfeitures: General 1998 FEMA Water and Sewer Enterprise Fund General Fund Debt Service Fund Water and Sewer Enterprise Fund Enterprise Fund Water and Sewer Enterprise Fund General Schertz EMS Enterprise Fund 1998 FEMA (Special Revenue) Fund Debt Service Fund Schertz EMS Enterprise Fund Water and Sewer Enterprise Fund Internal Service Fund General TOTAL INTERFUND RECEIVABLES AND PAYABLES 33 $ 9,372 $ - 25,650 - 6,220 - 67,522 - 108,764 - 9,372 - 20,000 - 25,650 - 55,022 39,336 - 39,336 - - 6,220 60,000 - 20,000 - - 39,336 - 60,000 80,000 105,556 - 67,522 $ 228,100 $ 228,100 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE F -- INTERFUND RECEIVABLES AND PAYABLES (Continued) Due From COMPONENT UNITS Other Funds General Fund Schertz Development Foundation $ 2,200 Schertz Development Foundation General Fund TOTALS NOTE G -- OPERATING TRANSFERS Primary Government and Component Unit Debt Service Fund Schertz Economic Development Corporation TOTALS NOTE H -- CONTRIBUTED CAPITAL Changes to contributed capital during the year are as follows: Water And Sewer Contribution of Equipment Depreciation of Contributed Assets Contributed Capital - October 1 CONTRIBUTED CAPITAL - SEPTEMBER 30 Due To Other Funds - 2,200 $ 2,200 $ 2,200 $ 388,542 $ - - 388,542 $ 388,542 $ 388,542 Internal Safes Service Fund Fund Total $ - $ 87,772 (138,106) - $ - $ 87,772 (138,106) 63,577 $ 3,979,102 $ 3,550,650 $ 314,541 $ 63,577 $ 3,928,768 34 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE I -- SEGMENT INFORMATION — ENTERPRISE FUNDS The City has two (2) enterprise operations which provide water /sewer and emergency ambulance services. Segment information for the twelve month period ended September 30, 2001, is as follows: Operating Revenues Operating Expenses, Exclusive of Depreciation and Amortization Depreciation Operating Income Other Income (Expense) Operating Transfers In (Out) Net Income Total Assets Total Equity Working Capital Additions to Fixed Assets Outstanding Debt NOTE J -- RISK MANAGEMENT Water /Sewer Schertz EMS Total $ 4,260,109 $ 1,356,954 $ 5,617,063 The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; 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, workers compensation, real and personal property, mobile equipment, and errors and omissions liability. The agreement for formation of the Texas Municipal League Intergovernmental Risk pool provides that the pool will be self - sustaining through member premiums and will be adjusted annually through an experience modifier. The City continues to carry commercial insurance for all other risks of loss including public official bond, employee dishonesty blanket bond, and underground tank pollution liability. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three (3) fiscal years. The pooling agreement requires the pool to be self - sustaining. It is not possible to estimate the amount of any losses for which the City might be liable. The Texas Municipal League Intergovernmental Risk Pool has published its own financial report for the year ended September 30, 2001, which can be obtained from the Texas Municipal League. 35 (3,115,427) (1,148,161) (4,263,588) (472,470) (39,164) (511,634) 672,212 169,629 841,841 (131,252) 6,915 (124,337) $ 540,960 $ 176,544 $ 717,504 $ 15,867,963 $ 969,257 $ 16,837,220 $ 9,378,072 $ 840,245 $ 10,218,317 $ 3,120,074 $ 559,760 $ 3,679,834 $ 804,647 $ 87,772 $ 892,419 $ 5,972,564 $ - $ 5,972,564 The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; 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, workers compensation, real and personal property, mobile equipment, and errors and omissions liability. The agreement for formation of the Texas Municipal League Intergovernmental Risk pool provides that the pool will be self - sustaining through member premiums and will be adjusted annually through an experience modifier. The City continues to carry commercial insurance for all other risks of loss including public official bond, employee dishonesty blanket bond, and underground tank pollution liability. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three (3) fiscal years. The pooling agreement requires the pool to be self - sustaining. It is not possible to estimate the amount of any losses for which the City might be liable. The Texas Municipal League Intergovernmental Risk Pool has published its own financial report for the year ended September 30, 2001, which can be obtained from the Texas Municipal League. 35 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE J -- RISK MANAGEMENT (CONT.) Vehicles owned by the City that are older than four (4) years are covered by liability insurance only. The City has elected to supplement this coverage by designating $368,263 of general fund equity in the event it is needed. To date no claims have been made on this reserve and none exists as of September 30, 2001. NOTE K -- COMMITMENTS AND CONTINGENCIES Schertz /Seguin Local Government Corporation 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 (See Note Al). Following is a summary of financial data as reported in the Corporation's audited fmancial statements dated September 30, 2001: ASSETS: Current Assets $ 31,935,248 Restricted Cash and Investments 2,130,704 Projects in Progress 12,173,513 Land 4,956,294 Other Assets 2,601,863 TOTAL ASSETS $ 53,797,622 LIABILITIES & RETAINED EARNINGS Current Liabilities $ 3,246,326 Bonds Payable (Less Maturities and Net of Unamortized Discount) 50,391,303 TOTAL LIABILITIES 53,637,629 Retained Earnings 159,993 TOTAL LIABILITIES & RETAINED EARNINGS $ 53,797,622 The Corporation has issued revenue bonds in the amount of $51,040,000 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 bondholders. Under the intergovernmental water supply contract, the participating governments are unconditionally obligated to pay their respective shares of annual contract revenue bond debt service as operating expenses from their respective utility systems. Contributions to the Corporation are reflected as "Nonoperating Expenses" in the Water and Sewer Enterprise Fund and totaled $279,205 for the year ended September 30, 2001. 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. 36 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 2001 NOTE L -- DEFICIT RETAINED EARNINGS For the year ended September 30, 2001, the Internal Service Fund has a deficit retained earnings balance of $47,018. The deficit has occurred over several years as a result of insufficient transfers from user funds to meet expenses of the fleet services provided by the Internal Service Fund. The City plans to adjust transfers from other funds to offset deficits. 37 This page intentionally left blank COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES W, This page intentionally left blank GENERAL FUND The General Fund accounts for the resources used to finance the fundamental operations of the City. It is the basic fund of the City and covers all activities for which a separate fund has not been established. 39 This page intentionally left blank CITY OF SCHERTZ, TEXAS GENERAL FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2001 AND 2000 ASSETS Cash and Cash Equivalents Delinquent Taxes Receivable (Net of Allowances of $6,055 and $4,750) Accounts Receivable Due from Other Funds Due from Component Unit Inventory of Supplies, at Cost Prepaid Items TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Vouchers Payable Accrued Salaries and Benefits Bond Escrow Due to Other Funds Deferred Revenue Total Liabilities Fund Balance Reserved for Forfeited Property Reserved for Inventory of Supplies and Prepaid Items Reserved for Municipal Court Unreserved: Designated for Economic Development Designated for Equipment Replacement Designated for Self- Insurance Designated for A/C Replacement Designated for Vehicle Replacement Designated for Contingencies Designated for Police Building Undesignated Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 40 September 30, $ 3,266,936 94,869 195,355 108,764 2,200 15,586 $ 2,988,694 81,041 233,609 130,440 50,695 14,315 $ 220,356 $ 226,350 71,815 57,608 - 12,500 95,079 19,814 19,814 142,992 14,315 404 24,103 18,821 18,821 242,857 231,472 368,263 350,000 73,653 70,000 188,093 178,655 1,420,000 1,420,000 645 645 948,534 746,366 3,424,076 3,074,191 $ 3,811,116 $ 3,546,769 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2000) 41 2001 2000 Variance Favorable REVENUES Budget Actual (Unfavorable) Actual Taxes $ 4,075,272 $ 4,210,792 $ 135,520 $ 3,843,413 Licenses and Permits 588,700 612,745 24,045 587,565 Charges for Services 668,221 659,145 (9,076) 626,464 Fines and Forfeits 433,850 438,772 4,922 435,574 Grants - - - 17,558 Other Revenue 230,550 257,443 26,893 273,185 TOTAL REVENUES 5,996,593 6,178,897 182,304 5,783,759 EXPENDITURES Current General Government 1,721,593 1,638,648 82,945 1,452,638 Public Safety 2,672,233 2,561,055 111,178 2,172,342 Streets and Parks 820,081 627,110 192,971 671,725 Health 185,591 175,048 10,543 155,814 Culture and Recreation 286,963 270,437 16,526 253,008 Management Services 98,755 98,683 72 83,273 Capital Outlay 503,732 458,031 45,701 669,579 TOTAL EXPENDITURES 6,288,948 5,829,012 459,936 5,458,379 Excess (Deficiency) of Revenues Over (Under) Expenditures (292,355) 349,885 642,240 325,380 OTHER FINANCING SOURCES (USES) Operating Transfers (Out) - - - (1,083) Operating Transfers (to) from Component Unit - - - 10,606 TOTAL OTHER FINANCING SOURCES (USES) - - - 9,523 Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) $ (292,355) 349,885 $ 642,240 334,903 Fund Balance - October 1 3,074,191 2,642,767 Prior Period Adjustment - 96,521 Fund Balance - September 30 $ 3,4242076 $ 3,074,191 41 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2000) 42 Variance Favorable REVENUES Budget Actual (Unfavorable) Actual Taxes: Ad Valorem $ 2,301,572 $ 2,301,097 $ (475) $ 1,988,552 Tax Penalty 17,500 23,376 5,876 26,244 City Sales Tax 1,227,300 1,381,199 153,899 1,361,537 Utility Franchise 524,400 500,514 (23,886) 459,495 Other 4,500 4,606 106 7,585 Total Taxes 4,075,272 4,210,792 135,520 3,843,413 Licenses and Permits 588,700 612,745 24,045 587,565 Charges for Services: Utility Administration 387,220 387,220 - 362,956 Swimming Pool 36,385 36,154 (231) 30,335 Animal Shelter 76,885 76,037 (848) 79,282 Building Rental 11,250 10,861 (389) 13,217 Library and Fire 145,731 143,829 (1,902) 133,965 Other 10,750 5,044 (5,706) 6,709 Total Charges for Service 668,221 659,145 (9,076) 626,464 Fines and Forfeitures 433,850 438,772 4,922 435,574 Grants - - - 17,558 Other Revenue: Reimbursements 2,500 2,987 487 17,402 Proceeds from Litigation - - - 30,217 Cibolo Creek Municipal Authority 6,250 4,297 (1,953) 6,169 Interest 195,000 179,608 (15,392) 199,990 Sale of Merchandise /Assets 5,500 18,979 13,479 588 Miscellaneous 21,300 51,572 30,272 18,819 Total Other Revenue 230,550 257,443 26,893 273,185 TOTAL REVENUES $ 5,996,593 $ 6,178,897 $ 182,304 $ 5,783,759 42 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF CURRENT EXPENDITURES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2000) CURRENT General Government City Council City Manager Business Office Planning and Zoning Legal Municipal Court Municipal Building General Administration Finance Other - Unclassified Total General Government Public Safety Police Department Fire Department Inspection Total Public Safety Streets and Parks Streets Parks Total Streets and Parks Health Animal Control Culture and Recreation Swimming Pool Library Total Culture and Recreation Management Services Capital Outlay TOTAL EXPENDITURES 2,672,233 690,876 2,561,055 511,716 185,591 175,048 111,178 2,172,342 179,160 571,690 10,543 155,814 85,137 2001 7,613 2000 201,826 192,913 Variance 187,306 286,963 270,437 Favorable 253,008 Budget Actual (Unfavorable) Actual 83,273 503,732 458,031 $ 32,725 $ 33,270 $ (545) $ 15,144 163,757 167,093 (3,336) 228,752 252,627 243,121 9,506 217,362 230,610 257,678 (27,068) 132,319 173,597 169,757 3,840 82,990 182,127 170,799 11,328 148,575 208,147 200,173 7,974 182,055 93,169 86,336 6,833 78,217 145,226 145,678 (452) 130,643 239,608 164,743 74,865 236,581 1,721,593 1,638,648 82,945 1,452,638 1,634,968 1,555,156 79,812 1,373,654 858,236 827,545 30,691 644,210 179,029 178,354 675 154,478 2,672,233 690,876 2,561,055 511,716 185,591 175,048 111,178 2,172,342 179,160 571,690 10,543 155,814 85,137 77,524 7,613 65,702 201,826 192,913 8,913 187,306 286,963 270,437 16,526 253,008 98,755 98,683 72 83,273 503,732 458,031 45,701 669,579 $ 6,288,948 $ 5,829,012 $ 459,936 $ 5,458,379 43 SPECIAL REVENUE FUNDS Special Revenue funds account for the proceeds of specific revenues (other than expendable trusts or for major capital projects) that are legally restricted to expenditure for specified purposes. Park Fund - to account for revenues from developers' fees (in lieu of park land dedication), grants, and donations and designed to monitor and manage improvement of park system. Recycling Fund - to account for revenues received from the recycling fee on all residential water bills and the sale of recyclable material and used to buy down solid waste collection costs. Tax Increment Financing Fund — to account for the proceeds of designated property taxes to be used for the widening of Schertz Parkway. 1998 FEMA Fund — to account for the funds received from the Federal Emergency Management Association which are used to repair damages incurred in the flood of 1998. Hotel Occupancy Tax Fund — to account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. Library Grant Fund — to account for funds from a state grant to be used for purchasing computers at the library to be used for access to the internet. Police Department Forfeitures Fund - to account for revenue received from drug related cases in conjunction with other law enforcement agencies. 44 CITY OF SCHERTZ COMBINING BALANCE SHEET SPECIAL REVENUE FUNDS SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) ASSETS Cash and Cash Equivalents Accounts Receivable Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Due to Other Funds Total Liabilities Fund Balance Unreserved Designated TOTAL LIABILITIES AND FUND BALANCE 45 Tax Park Recycling Increment $ 136,220 $ 43,640 $ 122,572 $ 122,572 $ 43,640 $ 136,220 $ - $ 1,677 $ - 1,677 - .. A , $ 136,220 $ 43,640 $ 122,572 Police Hotel Library Department 1998 Occupancy Grant Forfeitures TT7 % 9 A m �. Totals 2001 2000 $ 13,923 $ 203,662 $ 1,544 $ 318,842 $ 840,403 $ 663,799 104,202 - - - 104,202 36,419 - - - - 11,083 $ 118,125 $ 203,662 $ 1,544 $ 318,842 $ 944,605 $ 711,301 $ 925 $ 20 $ 2,622 $ 4,680 9,372 55,022 46,691 9,392 57,644 51,371 71,550 203,662 1,544 3091,450 886,961 659,930 $ 118,125 $ 203,662 $ 1,544 $ 318,842 $ 944,605 $ 711,301 46 CITY OF SCHERTZ COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND - BALANCES, SPECIAL REVENUE FUNDS YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) REVENUES Other Taxes Developer Fees Property Forfeitures Grants Sale of Recycling Materials Interest TOTAL REVENUES EXPENDITURES General and Administrative Streets and Parks Contractual Services Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers (Out) Total Expenditures Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October 1 Fund Balances - September 30 Tax Park Recycling Increment Fund Fund Financing $ - $ - $ 10,000 7,907 - - 21,298 - .., ..n-. [ AG7 m — , nn am 111 7no N 1 Gil 1Z7 47 - 9,915 11,153 185,878 - - 185,878 9,915 11,153 nnn A 'Nnn (167,688) 11,383 4,299 303,908 30,580 118,273 $ 136,220 $ 41,963 $ 122,572 Police Hotel Library Department 1998 Occupancy Grant Forfeitures Totals FEMA Tax Fund Fund 2001 2000 $ - $ 41,282 $ - $ - $ 51,282 $ 46,466 - - - - 7,907 143,923 310,429 310,429 8,757 106,125 - 80,257 - 186,382 262,468 - - - - 21,298 30,256 282 7,974 - 874 24,865 26,584 - 3,700 - 800 4,500 5,649 - - - - - 121,975 - - - 4,019 25,087 21,486 53,659 - 91,160 14,848 345,545 225,097 53,659 3,700 91,160 19,667 375,132 374,207 52,748 45,556 (10,903) 291,636 227,031 144,247 1,083 (18,691) (17,608) 52,748 45,556 (10,903) 291,636 227,031 126,639 18,802 158,106 12,447 17,814 659,930 533,291 $ 71,550 $ 203,662 7-1,544 $ 309,450 $ 886,961 $ 659,930 48 CITY OF SCHERTZ, TEXAS PARK SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 2000) REVENUES Developer Fees Interest Income TOTAL REVENUES EXPENDITURES Contractual Services Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures Fund Balance - October 1 Fund Balance - September 30 6,200 - 6,200 48,000 185,878 (137,878) 54,200 185,878 (131,678) $ (19,450) (167,688) $ (148,238) !L, 108 107,214 196,694 $ 303,908 Variance 2001 Favorable 2000 Budget Actual (Unfavorable) Actual $ 30,000 $ 7,907 $ (22,093) $ 143,923 4,750 10,283 5,533 9,627 34,750 18,190 (16,560) 153,550 6,200 - 6,200 48,000 185,878 (137,878) 54,200 185,878 (131,678) $ (19,450) (167,688) $ (148,238) !L, 108 107,214 196,694 $ 303,908 CITY OF SCHERTZ RECYCLING SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 2000) Variance 2001 Favorable 2000 REVENUES Sale of Recycling Materials $ 25,000 $ 21,298 $ (3,702) $ 30,256 TOTAL REVENUES 25,000 EXPENDITURES Contractual Services 21,000 TOTAL EXPENDITURES 21,000 Excess (Deficiency) of Revenues Over (Under) Expenditures 4,000 OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) (4,000) TOTAL OTHER FINANCING SOURCES (USES) (4,000) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) $ - Fund Balance - October 1 Fund Balance - September 30 50 21,298 (3,702) 30,256 9,915 11,085 19,770 9,915 11,085 19,770 11,383 7,383 10,486 4,000 (18,691) 4,000 (18,691) 11,383 $ 11,383 30,580 $ 41,963 (8,205) $ 30,580 CITY OF SCHERTZ HOTEL OCCUPANCY TAX SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 2000) REVENUES Occupancy Tax Interest Income TOTAL REVENUES EXPENDITURES Contractual Services TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures Fund Balance - October 1 Fund Balance - September 30 Variance 2001 Favorable Budget Actual (Unfavorable) 2000 $ 27,500 $ 41,282 $ 13,782 $ 36,466 $ 9,500 51 3,700 20,300 4,964 3,700 20,300 4,964 45,556 $ 36,056 38,572 158,106 119,534 $ 203,662 $ 158,106 DEBT SERVICE FUND This fund is used to account for the accumulation of resources for and the payment of principal, interest, and related costs on general long -term debt of the City. 52 This page intentionally left blank CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2001 AND 2000 53 SEPTEMBER 30, 2001 2000 ASSETS Cash and Cash Equivalents $ 134,268 $ 184,999 Delinquent Taxes Receivable (Net of Allowances) 10,239 9,086 Due from Other Funds 39,336 - TOTAL ASSETS $ 183,843 $ 194,085 LIABILITIES AND FUND BALANCE Liabilities Accounts Payable $ - $ 225 Accrued Interest 17,404 - Due to Other Funds - 79,755 Deferred Revenue Ad Valorem Taxes 10,239 9,086 Total Liabilities 27,643 89,066 Fund Balance Reserved for Debt Service 156,200 105,019 TOTAL LIABILITIES AND FUND BALANCE $ 183,843 $ 194,085 53 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE ACTUAL AMOUNTS FOR 2000) REVENUES Taxes Interest Income TOTAL REVENUES EXPENDITURES Debt Service Bond Principal Bond Interest Fiscal Agent Fees TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers from Component Unit TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October 1 Fund Balance - September 30 Variance 2001 Favorable 2000 Budget Actual (Unfavorable) Actual $ 187,525 $ 190,890 $ 3,365 $ 198,612 187,525 200,823 255,000 257,410 271,154 278,461 527,938 538,184 (340,413) (337,361) 388,342 $ 47,929 54 13,298 214,402 (2,410) 365,820 (7,307) 278,098 (10,246) 667,931 3,052 (453,529) 388,542 200 388,104 388,542 200 388,104 51,181 $ 3,252 (65,425) $ 156,200 $ 105,019 CAPITAL PROJECTS FUND The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary fund types.) 55 This page intentionally left blank CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 2001 AND 2000 ASSETS Cash and Cash Equivalents Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCE Liabilities Accounts Payable Due to Other Funds Total Liabilities Fund Balances Unreserved Designated for Borgfeld Road Designated Total Fund Balance TOTAL LIABILITIES AND FUND BALANCE 01 TOTALS 2001 2000 $ 5,052,112 $ 1,104,573 $ 5,052,112 $ 1,104,573 $ 419,350 $ 9,496 - 8,000 419,350 17,496 30,228 - 4,602,534 1,087,077 4,632,762 1,087,077 $ 5,052,112 $ 1,104,573 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE YEAR ENDED SEPTEMBER 30, 2001 AND 2000 REVENUES Other Interest Income TOTAL REVENUES EXPENDITURES Bond Issuance Costs Professional and Contractual Services Capital Outlay TOTAL EXPENDITURES Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds of Certificates of Obligation TOTAL OTHER FINANCING SOURCES (USES) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balance - October 1 Fund Balance - September 30 57 TOTALS 2001 2000 $ 54,721 $ 76,885 54,721 76,885 57,915 - 66,246 126,299 884,875 940,785 1,009,036 1,067,084 (954,315) (990,199) 4,500,000 - 4,500,000 - 3,545,685 (990,199) 1,087,077 2,077,276 $ 4,632,762 $ 1,087,077 PROPRIETARY FUND TYPE ENTERPRISE FUNDS Enterprise Funds are established to account for operations that are financed and operated in a manner similar to private business enterprises — where the intent of the governing body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City operates the Water and Sewer System and the Schertz Area Facility for Emergency Services (SAFES) on this basis. M This page intentionally left blank CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) Continued Will WATER AND SEWER SCHERTZ TOTALS SYSTEM EMS 2001 2000 ASSETS Current Assets: Cash and Cash Equivalents $ 2,675,998 $ 11,487 $ 2,687,485 $ 3,287,811 Accounts Receivable (Net of Allowances of $11,640 and $124,068 respectively) 623,278 651,735 1,275,013 773,213 Accounts Receivable - Other 47,625 - 47,625 20,183 Due from Other Funds 80,000 - 80,000 163,780 Inventory of Supplies, at Cost 80,130 15,404 95,534 88,931 Prepaid Expenses 8,160 10,146 18,306 18,306 Total Current Assets 3,515,191 688,772 4,203,963 4,352,224 Restricted Assets: Cash and Cash Equivalents 6,590,576 - 6,590,576 1,927,162 Fixed Assets: Land and Improvements 160,521 - 160,521 160,521 Buildings 195,724 26,656 222,380 222,380 Improvements Other than Buildings 11,592,056 7,642 11,599,698 10,971,649 Machinery, Equipment, and Vehicles 1,194,478 712,880 1,907,358 1,645,408 13,142,779 747,178 13,889,957 12,999,958 Less: Accumulated Depreciation (7,547,097) (466,693) (8,013,790) (7,502,156) Total Fixed Assets 5,595,682 280,485 5,876,167 5,497,802 Other Assets: Organizational Costs (Net of Accumulated Amortization of $1,471 and $1,423 for 2001 and 2000) 430 - 430 477 Bond Issuance Costs (Net of Accumulated Amortization of $3,235 and $18,755 for 2001 and 2000) 131,538 - 131,538 16,255 Deferred Loss on Early Retirement of Debt (Net of Accumulated Amortization of $59,429 and $50,345 for 2001 and 2000) 34,546 - 34,546 43,630 Total Other Assets 166,514 - 166,514 60,362 TOTAL ASSETS $ 15,867,963 $ 969,257 $ 16,837,220 $ 11,837,550 Continued Will CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING BALANCE SHEET (CONTINUED) SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) LIABILITIES AND EQUITY Current Liabilities: Vouchers Payable Withdrawals in Excess of Deposits Note Payable - Current Maturity Due to Other Funds Accrued Salaries and Benefits Salary Reserve Compensated Absences Payable Total Current Liabilities Current Liabilities Payable From Restricted Assets Customer Deposits Revenue Bonds Certificates of Obligation Refunding Bonds Public Facility Loan Accrued Interest Total Current Liabilities Payable From Restricted Assets Noncurrent Liabilities: Revenue Bonds Payable (Net of Unamortized Discounts) Certificate of Obligation Payable Refunding Bonds Public Facility Loan Note Payable Total Noncurrent Liabilities TOTAL LIABILITIES EQUITY Contributed Capital Retained Earnings - Reserved: Revenue Bond Retirement Equipment Replacement Contingencies Unreserved TOTAL EQUITY TOTAL LIABILITIES AND EQUITY WATER AND - 192,846 213,655 275,000 SEWER SCHERTZ TOTALS - 60,000 SYSTEM EMS 2001 2000 $ 244,486 $ 3,716 $ 248,202 $ 466,280 - 15,445 15,445 - 34,564 - 34,564 32,106 45,556 60,000 105,556 8,256 12,773 14,184 26,957 23,880 9,843 10,499 20,342 49,229 47,895 25,168 73,063 64,409 395,117 129,012 524,129 644,160 192,846 - 192,846 213,655 275,000 - 275,000 35,000 60,000 - 60,000 10,000 18,000 - 18,000 245,890 5,000 - 5,000 5,000 24,937 - 24,937 11,540 575,783 - 575,783 521,085 5,213,991 - 5,213,991 750,000 60,000 - 60,000 120,000 191,000 - 193,000 297,700 52,000 - 52,000 57,000 - - - 34,564 5,518,991 - 5,518,991 1,259,264 6,489,891 129,012 6,618,903 2,424,509 3,550,650 314,541 3,865,191 3,915,525 - - - 374,586 40,000 - 40,000 40,000 750,000 222,500 972,500 972,500 5,037,422 303,204 5,340,626 4,110,430 9,378,072 840,245 10,218,317 9,413,041 $ 15,867,963 $ 969,257 $ 16,837,220 $ 11,837,550 .1 CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) WATER AND Operating Income (Loss) Before Depreciation and Amortization SEWER SCHERTZ TOTALS 1,249,117 Depreciation and Amortization SYSTEM EMS 2001 2000 OPERATING REVENUES 672,212 169,629 841,841 729,776 Fees Charged to Users $ 4,053,755 $ 1,353,465 $ 5,407,220 $ 4,545,439 Reimbursements and Other 206,354 3,489 209,843 297,858 TOTAL OPERATING REVENUES 4,260,109 1,356,954 5,617,063 4,843,297 OPERATING EXPENSES (279,705) - (279,705) _ Personnel Services 670,790 749,551 1,420,341 1,275,661 Sewage Treatment 1,281,454 - 1,281,454 820,724 General and Administrative 380,914 11,806 392,720 362,956 Contractual Services 638,910 183,075 821,985 833,446 Supplies /Maintenance 139,331 120,271 259,602 268,981 Bad Debts 4,028 83,458 87,486 32,412 TOTAL OPERATING EXPENSES BEFORE DEPRECIATION 3.115.427 1.148.161 4.263.588 3.594.180 Operating Income (Loss) Before Depreciation and Amortization 1,144,682 208,793 1,353,475 1,249,117 Depreciation and Amortization 472,470 39,164 511,634 519,341 OPERATING INCOME (LOSS) 672,212 169,629 841,841 729,776 NONOPERATING REVENUES (EXPENSES) Interest Income 351,989 6,915 358,904 271,680 Interest Expenses (200,253) - (200,253) (104,012) Contributions to Joint Venture (279,705) - (279,705) _ Amortization of Bond Costs (3,283) - (3,283) - TOTAL NONOPERATING REVENUE (EXPENSES) (131,252) 6,915 (124,337) 167,668 NET INCOME (LOSS) BEFORE OPERATING TRANSFERS 540,960 176,544 717,504 Operating Transfers In (Out) - - - NET INCOME (LOSS) 540,960 176,544 717,504 Add Back of Depreciation Closed to 897,444 916,135 Contributed Capital 138,106 - 138,106 138,106 TOTAL 679,066 1767544 855,610 1,054,241 Retained Earnings - October 1 5,148,356 349,160 5,497,516 4,443,275 Retained Earnings - September 30 $ 5,827,422 $ 525,704 $ 6,353,126 $ 5,497,516 61 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS — ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received From Customers Cash Payments to Suppliers for Goods and Services Cash Payments to Employees for Services Cash Received From Reimbursements and Other NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfers In (Out) to /from Other Funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVTIIES: Proceeds from Revenue Bonds Acquisition and Construction of Capital Assets Principal Payments on Long -Term Debt Interest Paid on Long -Term Debt Contributions (to) from Joint Venture NET CASH PROVIDED (USED) BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Interest on Investments NET INCREASE (DECREASE) IN CASH WATER AND - (804,647) (262,955) (1,164,696) SEWER SCHERTZ TOTALS SYSTEM EMS 2001 2000 $ 3,939,797 $ 938,181 $ 4,877,978 $ 4,351,861 (2,564,406) (339,967) (2,904,373) (1,959,916) (672,582) (764,915) (1,437,497) (1,236,780) 206,354 3,489 209,843 297,858 909,163 (163,212) 745,951 1,453,023 5,398,250 - 18,691 5,398,250 - (804,647) - (804,647) (262,955) (1,164,696) - (1,164,696) (278,002) (206,413) - (206,413) (107,236) (279,705) - (279,705) 742,798 4,203,941 (156,297) 4,047,644 1,837,999 CASH AND EQUIVALENTS AT BEGINNING OF YEAR 5,062,633 152,339 5,214,972 3,376,973 CASH AND EQUIVALENTS AT END OF YEAR $ 9,266,574 $ (3,958) $ 9,262,616 $ 5,214,972 62 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES (CONTINUED) YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FROM SEPTEMBER 30, 2000) WATER AND 63 SEWER SCHERTZ TOTALS SYSTEM EMS 2001 2000 Comprised of: Current Assets $ 2,675,998 $ 11,487 $ 2,687,485 $ 3,287,810 Restricted Assets 6,590,576 - 6,590,576 1,927,162 Withdrawals in Excess of Deposits - (15,445) (15,445) 1,927,162 CASH AND CASH EQUIVALENTS END OF YEAR $ 9,266,574 $ (3,958) $ 9,262,616 $ 5,214,972 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING INCOME: Operating Income (Loss) $ 672,212 $ 169,629 $ 841,841 $ 729,776 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities Depreciation/Amortization 337,647 39,164 376,811 381,235 Depreciation Attributed to Contributed Capital 138,106 - 138,106 138,106 Provision for Uncollectible Accounts 4,028 83,458 87,486 32,391 (Increase) Decrease in the Following Assets: Accounts Receivable (117,985) (498,742) (616,727) (338,331) Inventory (11,260) 4,657 (6,603) 18,506 Prepaid Expenses - - - (18,306) Due from Other Funds 83,780 - 83,780 444,058 Increase (Decrease) in the Following Liabilities: Vouchers Payable (220,320) 2,242 (218,078) 252,876 Due to Other Funds 45,556 51,744 97,300 (273,227) Accrued Vacation 8,751 (97) 8,654 2,442 Accrued Salaries and Benefits 1,473 1,604 3,077 5,545 Salary Reserve (12,016) (16,871) (28,887) 30,894 Customer Deposits (20,809) - (20,809) 47,058 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 909,163 $ (163,212) $ 745,951 $ 1,453,023 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Contribution of Ambulance from Component Unit $ - $ 87,772 $ 87,772 $ - 63 This page intentionally left blank GENERAL FIXED ASSETS This account group is established to account for the fixed assets owned by the City exclusive of those relating to Proprietary Fund operations. Expenditure transactions to acquire general fixed assets occur in the General Fund. :� This page intentionally left blank CITY OF SCHERTZ, TEXAS COMPARATIVE SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE SEPTEMBER 30, 2001 AND 2000 GENERAL FIXED ASSETS Land Buildings Improvements Other than Buildings Vehicles Equipment TOTALS INVESTMENT IN GENERAL FIXED ASSETS BY SOURCE General Fund Capital Projects General Obligation Bonds Certificates of Obligation Time Warrants Contractual Obligations Grant Contributed Special Revenue - Development Foundation Component Unit TOTALS 65 SEPTEMBER 30, 2001 $ 1,577,097 6,053,444 11,624,241 1,183,342 2,1.28,684 2000 $ 1,465,381 5,599,946 9,779,631 862,811 1,909,331 $ 22,566,808 $ 19,617,100 $ 3,764,437 $ 3,506,087 7,927,677 7,115,735 182,686 182,686 317,005 317,005 113,614 113,614 782,700 640,984 9,462,400 7,724,700 10,504 10,504 5,785 5,785 $ 22,566,808 $ 19,617,100 CITY OF SCHERTZ, TEXAS SCHEDULE OF GENERAL FIXED ASSETS — BY FUNCTION AND ACTIVITY YEAR ENDED SEPTEMBER 30, 2001 General Government Public Safety Police Fire EMS Inspection Streets and Park Streets Pool Parks Health Animal Control Library Economic Development Foundation TOTALS Balance October 1, Adjustments/ 2000 Transfers Additions $ 2,069,756 $ - $ 53,403 1 Balance September 30, Deductions 2001 (50) $ 2,123,109 2,234,295 - 372,447 (73,177) 2,533,565 1,894,069 - 350,883 (2,850) 2,242,102 1,032,215 - 96,184 - 1,128,399 29,500 - - - 29,500 9,807,448 - 1,737,700 (69,800) 11,475,348 600,000 - 1,795 - 601,795 1,071,722 - 295,195 - 1,366,917 226,621 - 34,312 - 260,933 643,064 - 159,690 - 802,754 8,410 - - (6,024) 2,386 $19,617,100 $ - $ 3,101,609 $ (151,901) $ 22,566,808 .. COMPONENTS TO GENERAL FIXED ASSETS Improvements Other Than Land Buildings Buildings Vehicles Equipment $ 314,258 $ 1,082,741 $ - $ 75,664 $ 650,446 41,793 1,764,832 - 332,359 394,581 41,793 1,398,597 - 440,723 360,989 41,793 1,065,522 - - 21,084 - - - 20,460 9,040 304,669 - 10,618,109 217,767 334,803 - - 600,000 - 1,795 774,600 186,472 251,132 49,090 105,623 23,161 124,320 30,000 47,279 36,173 35,030 430,960 125,000 - 211,764 - - - - 2,386 $ 1,577,097 $ 6,053,444 $ 11,624,241 $ 1,183,342 $ 2,128,684 67 This page intentionally left blank DISCRETELY PRESENTED COMPONENT UNITS Discretely presented component units consist of separate entities whose governing bodies are not substantively the same as the governing body of the primary government. The discretely presented component units also provide services to areas other than the primary government. 68 This page intentionally left blank CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING BALANCE SHEET SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 2000) ASSETS Cash and Cash Equivalents Accounts Receivable Inventory TOTAL ASSETS LIABILITIES & FUND BALANCE Liabilities Accounts Payable Due to Primary Government Total Liabilities Fund Balances Reserved for Inventory Unreserved Designated Total Fund Balance TOTAL LIABILITIES & FUND BALANCE Schertz Economic Schertz Development The Development Corporation Library Foundation Totals 2001 2000 $ 728,827 $ 12,635 $ 120,293 $ 861,755 $ 653,586 60,840 - - 60,840 59,656 - - - - 6,024 $ 789,667 $ 12,635 $ 120,293 $ 922,595 $ 719,266 $ - $ 17 $ - $ - 2,200 17 2,200 17 $ 37 2,217 50,732 - - - _ 6,024 789,667 12,618 118,093 920,378 662,510 789,667 12,618 118,093 920,378 668,534 $ 789,667 $ 12,635 $ 120,293 $ 922,595 $ 719,266 we CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED SEPTEMBER 30, 2001 (WITH COMPARATIVE TOTALS FOR 2000) REVENUES Taxes Other Net Sales Donations Interest TOTAL REVENUES EXPENDITURES Current Culture and Recreation Economic Development Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers to Primary Government Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) Fund Balances - October 1 Prior Period Adjustment Fund Balances - September 30 Schertz Economic Schertz Development The Development Totals Corporation Library Foundation 2001 2000 $ 688,983 $ - $ - 3,445 - 2,421 30,395 632 - $ 688,983 $ 679,161 19,231 22,676 10,286 - 2,421 5,451 24,654 750,530 718,088 - 2,607 - 2,607 4,643 946 - 2,827 3,773 5,856 87,772 15,992 - 103,764 - 88,718 18,599 2,827 110,144 10,499 630,660 (12,101) 21,827 640,386 707,589 (388,542) - - (388,542) (398,710) (388,542) - - (388,542) (398,710) 242,118 (12,101) 21,827 251,844 308,879 547,549 24,719 96,266 668,534 350,909 - - - - 8,746 $ 789,667 $ 12,618 $ 118,093 $ 920,378 $ 668,534 70 STATISTICAL SECTION 71 CITY OF SCHERTZ, TEXAS GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS TABLE 1 Fiscal General Public Streets Total Period Government Safety And Parks Health Other Expenditures* 1992 $ 689,082 $ 843,582 $ 352,093 $ 66,646 $ 393,138 $ 2,344,541 1993 741,305 924,222 373,213 75,441 479,836 2,594,017 1994 744,801 978,121 308,126 80,494 645,063 2,756,605 1995 813,789 1,059,331 349,659 80,324 633,582 2,936,685 1996 886,090 1,174,371 304,722 85,685 1,510,303 3,961,171 1997 976,032 1,472,534 397,807 102,293 798,071 3,746,737 1998 1,063,835 1,702,684 408,461 127,065 1,165,475 4,467,520 1999 1,306,500 2,023,379 806,029 142,287 2,142,364 6,420,559 2000 1,479,496 2,172,619 793,700 155,814 1,898,888 6,500,517 2001 1,668,235 2,561,055 627,110 175,048 1,710,880 6,742,328 * Includes General, Special Revenue, and Debt Service Funds. 72 Fiscal Period 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 CITY OF SCHERTZ, TEXAS GENERAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS TABLE 2 Charges Licenses and for Fines and Taxes Permits Services Forfeits Other Total $ 1,811,941 $ 1,895,333 2,109,202 2,285,735 2,389,765 2,698,175 3,168,926 3,768,037 4,088,491 4,452,964 53,316 $ 326,184 $ 221,856 $ 113,261 $ 2,526,558 173,310 327,434 196,200 112,248 2,704,525 145,229 343,731 195,964 195,320 2,989,446 134,391 353,050 209,719 340,232 3,323,127 394,841 375,767 317,403 244,638 3,722,414 546,159 452,890 331,244 242,905 4,271,373 610,943 472,366 343,943 654,095 5,250,273 680,316 558,904 379,584 1,100,315 6,487,156 731,488 626,464 444,331 625,841 6,516,615 620,652 659,145 749,201 499,921 6,981,883 *Includes General, Special Revenue, and Debt Service Funds. 73 CITY OF SCHERTZ, TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Fiscal Total Current Tax Year Tax Levy Collections September 30, 1992 $ 1,042,914 $ 1,014,564 September 30, 1993 1,102,209 1,083,800 September 30, 1994 1,212,063 1,192,569 September 30, 1995 1,337,010 1,290,283 September 30, 1996 1,360,548 1,342,990 September 30, 1997 1,408,699 1,384,497 September 30, 1998 1,600,008 1,565,295 September 30, 1999 1,892,640 1,869,557 September 30, 2000 2,198,381 2,153,542 September 30, 2001 2,490,095 2,459,900 74 Percent of Current Levy Collected Delinquent Collections 97.0% $ 98.3% 98.4% 96.5% 98.7% 98.3% 97.8% 98.8% 98.0% 98.8% 19,995 17,037 14,634 13,280 13,194 18,639 18,922 42,720 43,622 39,687 TABLE 3 Total Tax Collections $ 1,034,559 1,100,837 1,207,203 1,303,563 1,356,184 1,403,136 1,584,217 1,912,277 2,197,164 2,499,587 Ratio of Total Tax Collections to Total Tax Levy Outstanding Delinquent Taxes Ratio of Delinquent Taxes to Total Tax Levy 99.0% $ 84,843 8.1% 99.9% 85,876 7.8% 99.6% 71,161 5.9% 97.5% 81,404 6.1% 99.7% 89,860 6.6% 99.6% 97,394 6.9% 99.0% 111,856 7.0% 102.3% 106,230 5.6% 99.9% 95,438 4.3% 100.4% 111,817 4.5% 75 CITY OF SCHERTZ, TEXAS ASSESSED AND TAXABLE VALUE OF PROPERTY LAST TEN FISCAL YEARS Assessment Assessed Percentage Valuations 76 100% $268,170,123 100% 259,038,486 100% 258,766,426 100% 312,676,505 100% 334,122,763 100% 378,784,051 100% 450,199,212 100% 534,039,183 100% 636,157,284 100% 731,305,433 TABLE 4 Tax Tax Rate Levy 3889% $ 1,042,914 4255% 1,102,209 4684% 1,212,063 4275% 1,337,010 4072% 1,360,548 3719% 1,408,699 3554% 1,600,008 3544% 1,892,640 3456% 2,198,381 3405% 2,490,095 Fiscal Estimated Levy Year Actual Year Ended Values 1991 09 -30 -92 $269,351,284 1992 09 -30 -93 256,861,608 1993 09 -30 -94 264,286,116 1994 09 -30 -95 362,247,758 1995 09 -30 -96 346,130,091 1996 09 -30 -97 369,917,233 1997 09 -30 -98 452,163,752 1998 09 -30 -99 545,742,286 1999 09 -30 -00 636,157,284 2000 09 -30 -01 731,305,433 Assessment Assessed Percentage Valuations 76 100% $268,170,123 100% 259,038,486 100% 258,766,426 100% 312,676,505 100% 334,122,763 100% 378,784,051 100% 450,199,212 100% 534,039,183 100% 636,157,284 100% 731,305,433 TABLE 4 Tax Tax Rate Levy 3889% $ 1,042,914 4255% 1,102,209 4684% 1,212,063 4275% 1,337,010 4072% 1,360,548 3719% 1,408,699 3554% 1,600,008 3544% 1,892,640 3456% 2,198,381 3405% 2,490,095 CITY OF SCHERTZ, TEXAS PROPERTY TAX RATES - ALL OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TABLE 5 City School County County Road 100% 100% 100% 100% Assessment Assessment Assessment Assessment Year ** Rate* Rate* Rate Rate 1992 .3889 1993 .4255 1994 .4684 1995 .4275 1996 .4072 1997 .3719 1998 .3554 1999 .3544 2000 .3455 2001 .3405 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 1.2051 .2720 .0850 1.4777 .3599 .0850 1.4499 .3036 .0950 1.3095 .2995 .0867 1.3712 .3018 .0833 1.4089 .2997 .0758 1.4299 .3040 .0730 1.6923 .3192 .0600 1.4945 .3417 .0582 1.6267 .3193 .0630 77 CITY OF SCBERTZ, TEXAS RATIO OF NET GENERAL BONDED DEBT TO TAXABLE VALUE AND NET GENERAL BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Fiscal Year September 30, 1992 September 30, 1993 September 30, 1994 September 30, 1995 September 30, 1996 September 30, 1997 September 30, 1998 September 30, 1999 September 30, 2000 September 30, 2001 *Based on Preliminary 1990 Census. The estimate has been challenged by the City. 78 41 Ratio Net Net General General Bonded Debt Bonded Estimated Assessed Debt 59.80 11,500 $268,170,123 $ 687,715 12,000 259,038,486 1,190,645 12,500 258,766,426 1,132,129 13,500 312,676,405 1,056,611 14,500 334,122,763 1,215,000 15,000 378,784,051 1,095,000 17,500 450,199,212 5,901,000 18,000 534,039,183 5,622,230 18,694 636,157,284 5,321,410 22,000 731,305,433 5,129,000 *Based on Preliminary 1990 Census. The estimate has been challenged by the City. 78 41 Ratio Net of Net General Bonded Debt Bonded Debt To Assessed Per Capita .26 59.80 .46 99.22 .43 90.57 .34 78.27 .36 83.79 .29 73.00 1.31 337.20 1.05 312.35 .84 284.66 .70 233.14 CITY OF SCHERTZ, TEXAS COMPUTATION OF DIRECT AND OVERLAPPING DEBT YEAR ENDED SEPTEMBER 30, 2001 *Source of Data - Texas Municipal Reports, City of Schertz, November 2001 Compiled and Published by Municipal Advisory Council of Texas 79 Direct And Net Estimated Estimated Bonded Percent Overlapping Debt Applicable Bonded Debt *Bexar County $ 132,923,917 1.63% $ 2,166,660 *Comal County 6,121,875 1.99% 121,825 *Comal Independent School District 140,548,179 0.12% 168,658 *Guadalupe County 15,025,000 20.37% 3,060,593 *Schertz- Cibolo- Universal City 63,414,497 51.88% 32,899,441 Independent School District *San Antonio, RA 61,105,000 1.63% 996,012 *Alamo Community College District 44,250,565 1.63% 721,284 Total Net Overlapping Debt 40,134,472 City of Schertz 9,888,800 100.00% 9,888,800 TOTAL DIRECT AND OVERLAPPING DEBT (6.84% OF ASSESSED VALUE - $2,273.79 PER CAPITA) $ 50,023,272 *Source of Data - Texas Municipal Reports, City of Schertz, November 2001 Compiled and Published by Municipal Advisory Council of Texas 79 CITY OF SCHERTZ, TEXAS LEGAL DEBT MARGIN YEAR ENDED SEPTEMBER 30, 2001 TABLE 8 Texas municipalities are not bound by and direct constitutional or statutory maximums as to the amount of general obligation bonds which may be issued; however, all local bonds must be submitted to and approved by the State Attorney General. It is the established practice of the Attorney General not to approve a prospective bond issue if it will result in the levy of a tax for bonded debt of over $1.00 for cities under 5,000 population or $1.50 for cities over 5,000 population. 11 -H CITY OF SCHERTZ, TEXAS RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL FUND EXPENDITURES LAST TF,N FISCAL YEARS Fiscal Year Principal September 30, 1992 $ 46,000 $ September 30, 1993 57,000 September 30, 1994 58,000 September 30, 1995 85,000 September 30, 1996 341,000 September 30, 1997 120,000 September 30, 1998 124,000 September 30, 1999 278,770 September 30, 2000 300,820 September 30, 2001 192,410 fl�K * Includes General, Special Revenue, and Debt Service Funds M Ratio of Debt Debt Service to Service General Interest Total Expenditures* Expenditures 46,084 $ 92,084 $ 2,344,541 4.0% 42,830 99,830 2,594,017 3.9% 97,493 155,493 2,756,605 5.6% 74,139 159,139 2,936,945 5.4% 87,098 428,098 3,961,171 10.8% 65,540 185,540 31746,737 5.0% 58,916 182,916 4,467,520 4.1% 303,468 582,238 6,420,559 11.0% 286,435 587,225 6,500,517 9.0% 269,942 462,352 6,742,328 6.9% * Includes General, Special Revenue, and Debt Service Funds M CITY OF SCHERTZ, TEXAS REVENUE BOND COVERAGE — UTILITY SYSTEM BONDS LAST TEN FISCAL YEARS TABLE 10 82 Total Operating Operating Expenses Income Fiscal Operating Before Before Year Revenues Depreciation Depreciation September 30, 1992 $ 1,487,049 $ 1,203,574 $ 283,475 September 30, 1993 1,617,768 1,387,165 230,603 September 30, 1994 1,997,654 1,206,670 790,984 September 30, 1995 1,967,127 1,292,499 674,628 September 30, 1996 2,390,600 1,325,796 1,064,804 September 30, 1997 2,879,730 1,556,271 1,323,459 September 30, 1998 3,316,900 1,711,388 1,605,512 September 30, 1999 3,250,589 2,145,249 1,105,340 September 30, 2000 3,958,054 2,717,774 1,240,280 September 30, 2001 4,260,109 3,115,427 1,144,682 82 M. Number of Debt Service Requirements Customers Principal Interest Total Coverage Water Sewer $ 80,000 $ 134,473 $ 214,473 1.32:1 3,859 3,177 90,000 128,672 218,672 1.06:1 4,074 3,377 95,000 122,106 217,106 3.64:1 4,231 3,488 100,000 115,028 215,028 3.13:1 4,282 3,584 445,000 92,080 537,080 1.98:1 4,877 4,031 55,000 70,578 125,578 10.54:1 5,641 4,622 55,000 67,013 122,013 13.16:1 6,914 5,767 80,000 63,588 143,588 7.70:1 7,351 6,226 35,000 58,375 93,375 13.28:1 6,837 5,814 35,000 55,750 90,750 12.61:1 7,103 6,185 M. CITY OF SCHERTZ, TEXAS WATERWORKS AND SEWER SYSTEM FUNDS REVENUE BOND REQUIREMENTS YEAR ENDED SEPTEMBER 30, 2001 UTILITY SYSTEM REVENUE BONDS, SERIES 2001 Principal Payment, Due September 1, 2002 Interest Payment, Due March 1, 2002 Total Requirements TABLE 11 Annual Requirement Principal/ At Semi - Annual September 30, Interest Basis 2001 $ 275,000 1/12 th $ 22,917 123,131 1/6 th 20,522 The City was in compliance with revenue bond requirements as of September 30, 2001. RESERVE FUND REQUIREMENTS $ 43,439 The City is required to make monthly deposits sufficient to meet the total reserve fund requirement within sixty (60) months of the closing date for the 2001 issue. The City has purchased a surety bond through MBIA Insurance Corporation to meet the reserve fund requirement. 84 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS TABLE 12 F:R Level In Per Years Of Capita Median Formal School Unemployment Fiscal Population Income Age Education Enrollment Rate in % Year (1) (2) (1) (1) (4) (3) 1992 12,000 Est. $ 13,500 33 14 4,619 4.0% 1993 12,000 Est. 13,500 32 14 4,700 3.9 1994 12,500 Est. 13,600 32 14 4,576 3.9 1995 13,500 Est. 13,600 32 14 4,678 3.9 1996 14,500 Est. 13,600 32 14 4,841 3.9 1997 15,000 Est. 13,600 33 14 5,136 3.9 1998 17,500 Est. 16,500 32.6 14.6 5,951 3.9 1999 18,000 Est. 16,500 32.6 14.6 5,777 3.9 2000 18,694 Est. 31,768 35.1 14.6 6,186 2.4 2001 22,000 Est. 36,478 35.1 14.6 6,440 2.4 Source: (1) 2000 Bureau of the Census Department of Planning, University of Texas (2) Department of Economics, University of Texas United States Department of Labor (Information not Available for Odd Years) (3) Texas Workforce Commission (4) Texas Education Agency District Performance Report F:R Sources: CITY OF SCHERTZ, TEXAS PROPERTY VALUE AND NEW CONSTRUCTION LAST TEN FISCAL YEARS M. TABLE 13 Residential Construction Commercial Number Value Construction 4,140,140 245 Number Value 1992 11 $ 664,016 1993 9 235,825 1994 21 4,868,688 1995 31 4,271,904 1996 25 14,758,928 1997 32 10,587,644 1998 22 17,173,013 1999 27 14,396,374 2000 21 13,1 69,373 2001 20 29,559,090 City Building Inspection Records City Tax Records S. W. T. Research Center Schertz State Bank Surety Southwest State Bank & Trust M. TABLE 13 Residential Construction Number Value 50 $ 4,140,140 245 22,537,308 92 8,323,846 126 12,815,060 468 48,959,088 524 57,591,942 537 60,529,538 520 58,783,734 353 43,092,362 268 36,711,105 Property Value* Commercial Residential Nontaxable $ 30,327,586 $ 178,353,991 $ 5,086,170 31,626,493 182,817,263 5,360,890 33,775,788 216,454,372 5,374,948 54,009,275 246,501,668 5,607,897 40,363,499 246,223,426 8,557,521 52,420,249 333,173,109 10,448,019 71,693,462 395,802,747 10,898,210 258,298,378 354,485,210 22,672,637 324,331,981 403,920,536 31,850,206 353,891,071 440,964,561 34,354,559 * Estimated Actual Value Et37 CITY OF SCHERTZ, TEXAS PRINCIPAL TAXPAYERS YEAR ENDED SEPTEMBER 30, 2001 TABLE 14 88 2000 Percentage Of Assessed Total Assessed Principal Taxpayers Type of Business Valuation Valuation 1. H E Butt Grocery Co Grocery Sales $ 9,411,683 1.29% 2. S.P. Richards Co. Banking 6,688,440 .91 3. C & W Ranches, LTD Real Estate 6,035,578 .83 4. Sycamore Apartments LTD Apartment Complex 5,003,434 .68 5. Negley Paint Co. Industrial 4,537,971 .62 6. PSPI, Inc. Machine Fabricating 4,444,176 .61 7. AER Manufacturing Industrial 4,339,966 .59 8. Guadalupe Valley Electric Utility 3,821,936 .52 9. CMH Parks Real Estate 3,779,516 .52 10. INTSEL Steel Group Industrial 3,901,986 .57 Other Assessed Properties 679,340,747 92.86 TOTAL ASSESSMENTS $ 731,305,433 100.00% 88 CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 2001 Date of Incorporation: Date of First Charter Adopted: Date Present Charted Adopted: Form of Government: Year 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 Miles of Highways, Streets, and Alleys Streets and Highways, Paved Streets, Unpaved Alleys Sidewalks Miles of Sewer: Storm Sanitary Building Permits: Year 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 Permits Issued 2,754 3,716 3,690 3,767 3,373 2,559 2,066 2,771 2,167 873 :• TABLE 15 December, 1958 April, 1974 Amended May, 1997 Council- Manager Square Miles 24.18 24.18 24.15 24.15 24.15 24.15 24.15 24.15 24.15 24.15 100.42 Miles 6.78 Miles 3.44 Miles 16.95 Miles 3.59 Miles 51.07 Miles Value Of Buildinss $70,912,183 61,864,013 76,501,638 82,800,348 71,741,172 64,267,503 21,150,682 18,917,416 27,705,848 6,702,848 Continued CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS (CONTINUED) SEPTEMBER 30, 2001 Fire Protection: Number of Stations Number of Employees (Full and Part-Time) Number of Volunteers Recreation: Parks Playgrounds Other Recreational Facilities: Baseball Fields Baseball Practice Fields Softball Fields Large Pavilion Small Pavilion Picnic Tables: Uncovered Restrooms: Male Female Concessions Stands Community Center City Employees: September 30, 2001 Elections: Number of Registered Voters Number of Votes in: Last Municipal Election Percentage of Registered Voters Voting in: Last Municipal Election Source: Municipal Election Records Population: Census Population Count 2001 (Estimate) 2000 (Estimate) 1999 (Estimate) 1998 (Estimate) 1997 (Estimate) 1990 1980 1970 1960 1950 M TABLE 15 1 21 5 7 117 3 3 2 10,000 Square Feet Covered 600 Square Feet Covered 50 171 12,391 445 3.9% 22,000 18,694 18,000 17,500 15,000 10,597 7,260 4,061 2,281 1,200 CITY OF SCHERTZ, TEXAS HISTORICAL TREND INFORMATION FOR AGENT MULTIPLE - EMPLOYER PUBLIC EMPLOYEE RETIREMENT SYSTEM LAST SEVEN FISCAL YEARS TABLE 16 UAAL Net Assets As a As a Percentage Calendar Percentage of of Covered Year PBO Payroll Employer Contributions As a Percentage 1994 36.51% 30.18% 4.97% 1995 47.05% 30.97% 5.09% 1996 50.75% 25.09% 5.46% 1997 55.94% 28.08% 5.28% 1998 53.26% 36.03% 7.20% 1999 56.40% 40.10% 7.55% 2000 62.40% 35.40% 7.80% Legend: PBO: Pension Benefit Obligation UAAL: Unfunded Actuarial Accrued Liability Information is being developed prospectively. 91 ARMSTRONG, VAUGHAN & ASSOC., P.C. .................................................................... ............................... CERTIFIED PUBLIC ACCOUNTANTS REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING STANDARDS The Honorable Mayor and Members of the City Council City of Schertz, Texas We have audited the financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 2001, and have issued our report thereon dated December 19, 2001. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City of Schertz, Texas, general- purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material affect on the determination of the financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Compliance Over Financial Reporting In planning and performing our audit, we considered the City of Schertz, Texas, control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general- purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over fmancial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of the City of Schertz in a separate letter dated December 19, 2001. 92 433 KITTY HAWK, SUITE 113 • UNIVERSAL CITY, TEXAS 78148 • (210) 658 -6229 • FAX (210) 659 -7611 • www.avacps.com This report is intended for the information and use of management, others within the organization, and City Council and is not intended to be and should not be used by anyone other than these specified parties. A rm&tro-n,cg; V au Rail E- Awxl , P. C. Armstrong, Vaughan & Assoc., P.C. December 19, 2001 93 This page intentionally left blank