The URL can be used to link to this page

CAFR FY 1997-98COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 � EP T2A 'op -35� 1 -1( Q. \�R TO'I'L CITY OF SCHERTZ, TEXAS MAYOR CITY COUNCIL CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 1998 CITY OFFICIALS HONORABLE HAROLD D. BALDWIN KENNETH GREENWALD MAYOR PRO -TEN (MAY 1, 1998 TO NOVEMBER 1, 1998) TIMOTHY SWINNEY MAYOR PRO -TEM (DECEMBER 1, 1997 TO MAY 1, 1998) NORMAN AGEE, SR. JOE POTEMPA PIA JARMAN CITY MANAGER KERRY R. SWEATT COMPTROLLER L. J. COTT INDEPENDENT AUDITORS Thompson, Williams, Biediger, Kastor a Young, L.C. San Antonio, Texas OFFICIALS ISSUING REPORT Kerry R. Sweatt City Manager L. J. Cott Comptroller P (This Page Intentionally Left Blank) ii C O N T E N T S INTRODUCTORY SECTION PAGE NUMBER Letter of Transmittal ix Organization Chart xvii Certificate of Achievement xviii FINANCIAL SECTION Independent Auditorts Report 3 General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups and Discretely Presented Component Units g Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and Discretely Presented Component Units 11 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - General and Debt Service Fund Type 13 Combined Statement of Revenues, Expenses, and Changes in Retained Earnings - All Proprietary Fund Types 15 Combined Statement of Cash Flows - All Proprietary Fund Types 16 Notes to Financial Statements 18 Combining, Individual Fund and Account Group Statements and Schedules General Fund Comparative Balance Sheets 39 Comparative Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 40 Schedule of Revenues Compared to Budget 41 Schedule of Expenditures Compared to Budget 42 iii C O N T E N T S Special Revenue Funds PAGE TABLE NUMBER Combining Balance Sheet 44 Combining Statement of Revenue, Expenditures and Changes in Fund Balances 46 Debt Service Fund Comparative Balance Sheets 51 Comparative Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 52 Capital Projects Funds Comparative Balance Sheets 55 Comparative Statements of Revenue, Expenditures, and Changes in Fund Balances 56 Enterprise Funds Combining Balance Sheet 58 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings 60 Combining Statement of Cash Flows - All Proprietary Fund Types 61 General Fixed Assets Schedules of General Fixed Assets - By Source 65 Schedules of General Fixed Assets - By Function and Activity 66 Discretely Presented Component Units Combining Balance Sheet 71 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 72 iv C O N T E N T S STATISTICAL INFORMATION General Governmental Expenditures by Function General Government Revenues by Source Property Tax Levies and Collections Assessed and Estimated Actual Value of Property Property Tax Rates - Direct and Overlapping Governments Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Bonded Debt Per Capita Computation of Direct and Overlapping Debt Legal Debt Margin Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Expenditures - Last Ten Fiscal Years Water and Sewer Fund Revenue Bond Coverage Waterworks and Sewer System Fund Revenue Bond Requirements and Restricted Funds Demographic Statistics - Last Ten Fiscal Years Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years Principal Taxpayers Miscellaneous Statistics GENERALLY ACCEPTED GOVERNMENTAL AUDITING STANDARD REPORT Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards v PAGE TABLE NUMBER 1 74 2 75 3 77 4 78 5 79 6 80 7 81 8 82 9 83 10 85 11 86 12 87 13 89 14 90 15 91 95 (This Page Intentionally Left Blank) vi INTRODUCTORY SECTION vii (This Page Intentionally Left Blank) viii SGHERp2 04 J�C, U F� % �n 1 -35 1 -10 1400 SCHERTZ PARKWAY - P.O. DRAWER I SCHERTZ, TEXAS 78154 -0890 ro T AC (210) 658 -7477 FAX (210) 659 -3204 December 31, 1998 To the Citizens of the City of Schertz, Texas The comprehensive annual financial report (CAFR) of the City of Schertz, Texas, (The City) for the year ending September 30, 1998 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, Table of Organization, comments regarding economic conditions and outlook, major occurrences of fiscal year 1997 -98, and major initiatives for fiscal year 1998 -99. 2. Financial - This section consists of: the independent auditors' report, general purpose financial statements including combined balance sheets and combined statements of revenue and 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. 4. Generally Accepted Governmental Auditing Standards Reports - This section consists of the one (1) report as required by the Yellow Book. 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 ix (This Page Intentionally Left Blank) city resources. The Schertz Development Foundation is a separate nonprofit corporation organized and operated for the charitable purpose of assisting the city of Schertz, Texas, to develop and implement plans for economic viability to the City. The Schertz Economic Development Corporation was created to promote 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 AND OUTLOOK The City is located near the center of the San Antonio standard statistical metropolitan area which continues to rank as one of the highest tourist attraction areas in the Southwest. The economic condition and outlook of the area continues to improve and statistical data for fiscal year 1997 -98 economic indicators include: Housing starts were 537 for 1997 -98 as compared to 524 for 1996 -97 and 460 for the 1995 -96 fiscal year. Total permits were valued at $60,529,530 for 1997 -98 compared to $57,591,942 for 1996 -97 and $48,959,088 for 1995 -96. The current economic condition in the area and region remains strong. Year- end unemployment figures for Guadalupe County remain steady at about 3 %. The City of Schertz is at the southern end of the Austin /San Antonio corridor which rates in the top 10 of the fastest growing regions in the country. The City of Schertz can draw from a labor pool of over 700,000. As of yet, we see no evidence of difficulties in employers finding productive workers. The near -term outlook remains very positive. Commercial inquiries remain high, and the size and scope reflect the strength of the local labor market as well as the economic viability of this area to absorb high levels of growth. The long- term outlook is also positive as this region in general and the City of Schertz in particular should remain strong because of the fundamental strengths of the area: good work force; competitive taxes; excellent quality of life; transportation infrastructure; space for growth; political stability; and continual forward planning in both the near term and long term. Barring major changes in the national economy, we expect these growth patterns to continue. CURRENT YEAR PROJECTS Recent new developments as well as enhancement of existing businesses shows a renewed enthusiasm, and the attitude that "nothing breeds success like success" seems to effect relocation and growth activity for our area. A positive outlook is shared by all involved in the community's Economic Development Commission activities. The City is currently working with several substantial prospects to relocate to the area. We continue to receive an ever larger number of inquiries which is another positive economic sign. One of the major strengths of the City is an abundance of land available for development along the San Antonio /Austin corridor of IH -35 and similarly available land for development along the corridor between Houston /San Antonio of IH -10. Development of an alternative water supply with the City of Seguin continues to be one of the major activities for the next several years. MAJOR EVENTS The major event of 1997 -98 continues to be that of growth; however, we now see the beginnings of a more balanced growth pattern between retail, industrial, and residential. We have had 468 new residential lots platted during the past twelve xi months. Ashley Place, Dove Meadows Forrest Ridge, Carolina Crossing, and Arroyo Verde subdivisions continue to expand and experience high market acceptance. Dove Meadows and Ashley Place Subdivisions added to the growth and platting of Woodland Oaks Units 5B and 6B, Carolina Crossing Units 2 and 3, Forest Ridge Unit 2, Berry Creek Unit 2, and Greenshire Units 7 and 8, indicate our growth projects should be revised. The history of Schertz home building growth patterns usually peak in a period of 3 to 5 years; however, this current strong home building pattern shows no indication of slowing down. To further illustrate this, since the 1990 -93 time period when 368 new homes were built in the original subdivisions of Woodland Oaks and Savannah Square filling the empty lots from the 1980'x, we have had an unprecedented sustained growth that will exceed 2,200 new homes and with new subdivisions about to come on line, this number could well exceed 3,000 new homes sometime early in the year 2000/2001 time frame. While our community does not have a single large industrial employer, we are benefiting from a substantial increase in commercial construction. Collectively, the distribution type companies in our area employ a high number of personnel. Page 90, Table 14, reflects principal taxpayers for the year ending September 30, 1998 and Table 15, page 91, indicates volume and value of total building permits for 1998. Existing retail development was enhanced by the long awaited 82,500 square foot H.E.B. main store. In addition, the H.E.B. complex has also built a 12,500 square foot strip center that is substantially leased. This complex still has the capacity to expand another 12,500 feet in strip center retail as well as two pad sites equaling about 20,000 square feet. The Randolph- Brooks Federal Credit Union and State Bank have been completed as well as the Schertz Bank on Schertz Parkway and I -35. The opening of the Security Capital Building was also of major importance to the City. The leasing of the Security Capital Building was closely watched by the industrial community both in terms of industrial space absorption rates as well as the viability of the area to attract clients. Full leasing of the building within six months is a major plus. The announcement of the relocation and construction of Lone Star Pet Supply, Interplastic, and AER are other major accomplishments in the economic development arena. MAJOR INITIATIVES During the coming year we believe the City will continue to benefit from a positive outlook and the groundwork in place. In.December, 1997, the City issued 4.9 million dollars of general obligation bonds pursuant to an August, 1997 election. Bonds for police, fire, and EMS building construction and specific library building improvements, rated A2 sold at an average effective interest rate of 4.8233 %. The August, 1997 election included approval of an additional 1/2 cent sales tax levy to provide debt service for specific capital improvements including those emergency service building projects. Construction on the three emergency services buildings is processing and remodel work to the library will begin soon. FINANCIAL INFORMATION The Cityfs accounting records for general governmental 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 CityFs utilities and other enterprises are maintained on the accrual basis of accounting. xii In developing and altering 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, 1998. General Governmental Functions: Revenues which include General, Special Revenue, Debt Service, and Capital Projects for general governmental function totaled $5,434,095 in 1998, an increase of 26.42% from 1997. Taxes produced 58.32% of general revenues compared to 62.77% last year. The amount of revenues from various sources and the increase /decrease from last year are shown in the following tabulation: PERCENT INCREASE OF (DECREASE) AMOUNT TOTAL FROM 1997 Taxes (Property, Sales, Etc.) $3,168,926 58.32% $ 470,751 Licenses and Permits 610,943 11.24 64,784 Charges for Services 472,366 8.69 19,476 Fines and Forfeitures 343,943 6.33 12,699 Other Revenues 837,917 15.42 567,786 $5,434,095 100.00% $1,135,496 xiii Expenditures. For general governmental purposes, expenditures totaled $5,147,638, an increase of 36.06% from 1997. Changes in levels of expenditures for major functions of the City over the preceding year are shown in the following tabulation: $5,147,638 $100.00% $1,364,216 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 SAFES have increased. Other major fluctuations include: an increase in construction permits and related items due to an increase in total construction. 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 1998 fiscal year was as follows: Net General Obligation Bonded Debt (Principal) General Obligation Bonds Revenue Bonds xiv AMOUNT $5,901 RATIO OF DEBT TO ASSESSED VALUE (100%) OF PRESENT MARKET DEBT PER CAPITA 337.20 MOODYFS INVESTORS SERVICE Baa -1 A PERCENT INCREASE OF (DECREASE) FUNCTION AMOUNT TOTAL FROM 1997 General Government $1,067,448 20.74% $ 91,416 Public Safety 1,853,782 36.01 381,248 Streets and Parks 408,461 7.93 2,748 Health Services 127,065 2.47 24,772 Recreation 260,004 5.05 33,349 Economic Development 268,770 5.22 146,492 Bond Issue Cost 53,943 1.05 53,943 Capital Outlay 673,242 13.08 504,712 Debt Service 434,923 8.45 125,536 $5,147,638 $100.00% $1,364,216 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 SAFES have increased. Other major fluctuations include: an increase in construction permits and related items due to an increase in total construction. 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 1998 fiscal year was as follows: Net General Obligation Bonded Debt (Principal) General Obligation Bonds Revenue Bonds xiv AMOUNT $5,901 RATIO OF DEBT TO ASSESSED VALUE (100%) OF PRESENT MARKET DEBT PER CAPITA 337.20 MOODYFS INVESTORS SERVICE Baa -1 A Property Taxes. Current tax collections are 97.8% of the tax levy. This is the sixteenth 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 99.0%. Allocations of property tax levy by purpose for 1998 and the preceding two fiscal years are as follows (amounts per $100 assessed value): PURPOSE General Fund General Obligation Debt 1998 1997 1996 1995 .3049 .3117 .3472 .3478 .0505 .0602 .0600 .0797 .3554 .3719 .472 .4 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 $568,186, an increase of $312,181 interest compared to earnings during 1997. 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 the performance of general governmental functions and exclude the fixed assets of Enterprise Funds. As of September 30, 1998, the general fixed assets of the City amounted to $12,557,987. This amount represents the original cost, or an estimate of the original cost of the assets. Depreciation of general fixed assets is not recognized in the City "s accounting system. Refer to Notes 1 (I) and 5 in the notes to the financial statements. The City is self- insured on physical damage to specific vehicles. In order to provide coverage for this, risk funds are designated in the General Fund with a balance of $45,000 at September 30, 1998. Water and Sewer System. During the fiscal year ended September 30, 1998, net revenues in the water -sewer system increased substantially with the adoption of an inverted block rate. Comparative data for the past two fiscal years is presented below: 1998 1997 Total Operating Revenue $3,316,900 $2,879,730 Operating Income (Gross Revenues Less Operating Expenses) 1,311,141 1,046,257 Net Revenues (Operating Income Plus Depreciation Less Solid Waste Revenues) 1,516,412 1,226,884 Average Annual Bonded Debt Requirements 219,500 During the year, $55,000 of maturing revenue bonds and $4,000 in Public Facility HUD Bond, and $25,729 of a note payable (New Braunfels Utilities) were retired in the Water and Sewer Fund. Schertz Area Facility for Emergency Services (SAFES) - During the fiscal year ended September 30, 1998, SAFES increased its revenue .62% and decreased operating expenses by .96%. SAFES is fully dependent on income fees generated from services rendered and the contracted cities' support to cover operations costs. This year xv SAFES had an operating income before depreciation of $83,875. A net charge for future uncollectible accounts of $30,734 reduced operating expenses for the current year. 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, 1997. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financing reporting. 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. seven (7) 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 of Thompson, Williams, Biediger, pastor & Young, L.C. of San Antonio, Texas, to perform the independent audit for the fiscal year 1997 -98. 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. L. J. Cott of our staff and representatives of the audit firm of Thompson, Williams, Biediger, pastor & Young, L.C. have provided a high degree of expertise and assistance for the preparation of the report and I wish to express my personal thanks and appreciation for their help. Respectively Submitted, L. J. Cott Comptroller xvi m W c m 2 U ao rn rn 0 O r- 0 III I M H c .. a d o .�c m CO c m v c U- aU ntno0°,'CO0fL. � U��;'u a w�wma r' NC; V- M V- r r r Cf r r mp a U m CL Ua� j5 o fn �U p o ` M.0 ai a� V� �° NFU :� E15 m 02 Up E-0 0: - ..Jc�a = 7QC�v� Qv N N 0 0 CL W W E E P F- U. w xvii 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, 1997 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. 3F R CUM President aaMUmw s j auo Z. Executive Director zviii FINANCIAL SECTION (This Page Intentionally Left Blank) Thompson, Williams, To the Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report We have audited the accompanying general purpose financial statements of the City of Schertz, Texas, and the combining financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1998, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Schertz, Texas, at September 30, 1998, and the results of its operations and cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Also, in our opinion, the combining financial statements referred to above present fairly, in all material respects, the financial position of each of the individual funds of the City of Schertz, Texas, at September 30, 1998, and the results of operations of such funds and the changes in individual proprietary funds for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 23, 1998 on our consideration of City of Schertz' internal control structure and a report dated December 23, 1998 on its compliance with laws and regulations. R. LARRY THOMPSON. C.P.A. / PAUL E. WILLIAMS, C.P.A. / JAMES L. BIEDIGER. JR.. C.P.A. / C. TED KASTOR. C.P.A. / CHARLIE E. YOUNG, JR.. C.P.A. H. LEE SCHWARTZMAN. C.P.A. / F. GLENN CRAVEY, C.P.A. / FRED J. TIMMONS. C.P.A. / JOHN W. GREEN, C.P.A. 3 JAMES T McCARTY. C.P.A. (RETIRED) Biediger, NORTH TOWER CERTIFIED PUBLIC ACCOUNTANTS Kasstor 800 NW LOOP 410, SUITE 30ON SAN ANTONIO, TEXAS 78216 -5611 210/341 -2581 T MEMBERS AMERICAN INSTITUTE OF FAX 210/341.2588 Young, CERTIFIED PUBLICACCOUNTANTS LC To the Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report We have audited the accompanying general purpose financial statements of the City of Schertz, Texas, and the combining financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1998, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Schertz, Texas, at September 30, 1998, and the results of its operations and cash flows of its proprietary fund types for the year then ended, in conformity with generally accepted accounting principles. Also, in our opinion, the combining financial statements referred to above present fairly, in all material respects, the financial position of each of the individual funds of the City of Schertz, Texas, at September 30, 1998, and the results of operations of such funds and the changes in individual proprietary funds for the year then ended, in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 23, 1998 on our consideration of City of Schertz' internal control structure and a report dated December 23, 1998 on its compliance with laws and regulations. R. LARRY THOMPSON. C.P.A. / PAUL E. WILLIAMS, C.P.A. / JAMES L. BIEDIGER. JR.. C.P.A. / C. TED KASTOR. C.P.A. / CHARLIE E. YOUNG, JR.. C.P.A. H. LEE SCHWARTZMAN. C.P.A. / F. GLENN CRAVEY, C.P.A. / FRED J. TIMMONS. C.P.A. / JOHN W. GREEN, C.P.A. 3 JAMES T McCARTY. C.P.A. (RETIRED) (This Page Intentionally Left Blank) Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole and on the combining financial statements. The accompanying financial information listed as supporting schedules in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements of the City of Schertz, Texas. The information in these schedules has been subjected to the auditing procedures applied in the audit of the general purpose and combining financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements of each of the respective individual funds, taken as a whole. San Antonio, Texas December 23, 1998 Certified Public Accountants (This Page Intentionally Left Blank) I GENERAL PURPOSE FINANCIAL STATEMENTS 7 b f O 01 f 0 01 .1 O ry • M n 01 ep M ry m m M N f 01 M n .1 .d fD M b N f N N b O m I O/ O ry ♦ M ►1 n °1 Of n N M M 10 n • N °1 I° Q F 01 M 01 14 ry ry N 10 ry n ry N W m b b b .4 M • f .1 .1 M M H H p m M b b d f .1 N ry n W m � C n FF M •O d0 f`I ED P N b P Y1 b ry C.1 ry ry b M o N .-I N n n a O 01 a O ry b m 10 b ry f M M .1 f QI Iq 01 O O • ry ry • ry ry b n O N W 01 CD .4 N • .1 • N .1 O el • q ry b M m 0 y H ry 1 1 1 4 1 b m m rl n M O .-1 01 M 10 b 1 f 1.1 N ry n m n M N b M f b m ry n N b OI n N b N 14 O 14 >p�I M ry ry b O N .'I N n n O OI 1'1 p l� ry b m b b ry f M M .-1 • b CD X 01 O f ry ry f ry ry b C h /••) 10 1-1 N f .1 f N a o va C; .1 1Q M 1 1 1 1 1 1 1 1 1 1 1 n M N N b 14 O O 01 O 01 01 N .1 f b ry CCC'lll R1 n o .+ � O N I W rl O ry 1 1 1 i 1 1 1 n 1 1 t 1 1 1 n lop, - °i H+ ^ n N N N •ry-I �1y N N 1 0 m m 1 1 1 1 N 1 V1 1 1 1 1 1 1 N ry m • n qp N n • ®M Wei py 14 N N e+ W O1 b 1 01 N 1 O .4 M ry n m 1 1 1 N M n 10 N M n N b /Y ►E►E►EM111111 N n N n n U PO W N W W m n .Md .Nd f •ry'1 ry % M W Ma b f .1 .4 • A m V Q a H N V� ry ry ry I b M W PJ CC • !Vi a f N ►1 N OI 1 1 1 1 1 1 1 1 I 1 1 1 N H p N a a u ao C N /0 O N -1 .-1 O . Q M M v► O1 y ry 1 N OI N f • b N ry W m f to n b .1 .i M • Q b a H V 01 • ry .1 1 01 1 1 1 1 1 1 I 1 N A b 01 O ry m !y ♦ ♦ • .1 (pW�17i M N ..I 0% 01 01 10 M N n ao V ry ry tll H ^p 1J V q 1O1 N �g N W � l • � Q �ql U N 0 � M A 4 M w Q y 1.01 ,,+ a "�� .°1 al ° 0 .°1 O Q dl o M O f� m CI > M rl N N �H{{ '^ "�•�p1 A O � Mtlywil IC a�Oo l � U q I� 0 , M {p � Pal y m v O yj j Y O 01 41 ►7 cei► "�'� �'CU l a 0 A »a Q M 0 °q A � 84 -4 w— Aa U OM � ° ° d O °Q 1 o q m p 1a 0 0 13 0 04 IN 0 • If q • .0 E .ol•i q al a01 tl oM a opp +p' q o�o .0 H W a b1 • .0 14 0 F1 M D p • • 'gy a y ■9•4 � � M 0 a 1 . c4 O W a r 14 1 • a a o p a U �f O A .1 ° 04 w4 0 �4 v W , itrF,t J m W o ppaH N►aMyqq l 1 ¢H ° qq W p U F i aw Hrl .a ue N-•1 •>aN 1 , I• ■■a .�tltlU � { �a•p +W.1 q > y p +U01 s10 l ++1 1 a�yy > F+ 1 m• ,.o 0� 1� •$ +1 ..o 1 7 .a a10 1 .••. .1 • .y O •. •.I.tl � 1 pp 1$ I>O C I 1 cp a V q1 a m � Cq 1 MW 1 •� , at Nym � tl.v dU Q�la > y•(a � p QI w4 %4 9 > p• � �e b I . pO i p ptl b 1 ,H Fp y.d tl � I I4 H M aa N - F • d A °�+ O O ni ! 0 0 s: k V n H D I 0 • O l • i i W M O ii N aM M 0 y !9W ibM ° '0 >v � . 0 -4 M 0 O 0 >.• ■ .. . . I I I I I I I I a m 1 M/ F O M wO 1 t ► .0 '1 • ♦b " a a •0qp 4 1 a U O . . F 41 0 S y w w ii + O H > > a •• 1 a •m 4, 'O• ~A E• e 0 0 a A M M .1 M m p O m a 0 A AA 0 A •• •.1 •d ►C G aAaUol oY o y► A 14 >� pC U qa a D M >9GUa AAAV P(Q V al. Ia; UM a �? a ID4 �Q 0 q W 3 N �tltl •:1 a O v 4 • /) Ul 0 nq.•1 .10000gMWO0O00 .HMO M M W Oq W W gryul Ong mo co Om M�- 100000 qry W n I .-1 �•O 1 b W m n bOOOOnMIf1OOOOO .1 W r. n n I•b1 O.M•1 b O m 01 .x•10 1b0 M w M q nu/b W Mq r.Inavvin MIf1OObM v0wn co r' N O W .� q W b M M "'1 M nln.•I M qMO W bn rydM q W W !amp .1 cl M M M .•I 4 .•1 .•1 b .-1 n q N .1 M N W M •-1 a m n an .•1 %u . .� .•1 4 n O H H 14 M M V3, CPO E'1 nOM MOM •'OOO 0 n M O 0 0 .4m0% r. n co On b q W bOOOOq.lbOOOOO q wM .1 CO W Ob W ry ry .4 N •0 m %0 C4 O q On M •10000 W.- 1MOOOOO �MIf1 M q O� .•1 M O .-1 wN M n a1M W qnM W OOM•M Mbn OU1UI m .10 O OM n n nN� W 0W. CC M On M.4 Mb bnq q.1M In M n M ry OM q q q m bIA O n♦ m m W Oq1 r' .•1M Wr'O b M M .d wM n .1 .•10 In Oqw .d 0 w M n -W do co v M .1 q • N M r ry W W H y n M H 1 1 1 I l l l l l n l l l l l l 1 n 1 1 1 1 1 1 1 •-1 1 1 11 1 b 1 b M • O O '0 y I8G M M H y .) .•1 d v H M nOry . 00000 1 MOOOOO .• 1nm n m On b q W L'I M MOn on Y1 bOOOOq 1000000 M V 4 .-1 W m pb W ry ry .-1 ry .�jO 1 fMY O .10000 W MOOOOO Wit! M q O� .1 Ifl w m .-lo .-1 ° .bd O qnM mO0U1 ♦M 10n OY1 Y1m bnb M n N OM q CAD M n M O m ./ W M O n M .•I M b q .i M •fl M .-1 .� M q q n W bin -W O qr .1 m F M M ,.4 r. .-1 M m •0 O b N M � M n .-1 .-1 M w w n .� n M W .�. ^ M .-I q w n M • n m W H ry b H i� 1 1 on 1 1 1 1 1 1 1 1 0 1 CC 1 1 1 in 1 1 1 1 I 1 1 1 jl 0 O o O 1 1 1 1 1 1 1 q O It O q p b n M M g$jFtt(lp1pp A ry H qO pq, � M m 0% q H M b V H 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 n 1 1 1 o m 1 1 1 1 1 1 1 1 1 n W n m 1 q q n M n n M M - M M N V N ry ry H 1 .•1 1 1 1 1 1 .1 1 t 1 1 1 1 1 1 I M n v • M 1^ n ry ' � 0 M q MI 0010 �OOOOM 1 1 1 0000 .11Rm n 1 W Oq 1 1 1 lid W 1100 Inn.1 b00 0 Om °000 qwq M m pap 1 1 1 1 1 1 I ry M .iOOOOm 0000 .v MM n 0%0 la $ W qn � 000 0) 00.•10 q n 0MM O W.-140 m M -.Ib q.1.1 q ...I W f4 M .1 .-I m If n ry M W M ry IV M W O .-1 H W 1 1 1 1 1 1 W O ^ n M ry J,4 1 1 1 1 1 1 I 1 W 1 g 1 1 I 1 1 I l n 1 I 1 1 1 1 1 1 1 1 1 1 I n n r N fl (♦ 5 m O q q q q A IPmJ in 44 n .1 .-1 .•1 v1 W H .4 H H n l l 1 1 1 1 1 g l l l l l l l I l b 1 1 1 1 1 1 1 n 1 1 1 1 W 1 1 W M It 1 M .4 b O O 1 '4 a ul e ' 41 q H H •! t W 3 H 10 n m n M L IA W .40 M O M q M q o M q q m % 1fl N .4 r' .4 11 .! n .1 b u M n m H H N n n H • If q • .0 E .ol•i q al a01 tl oM a opp +p' q o�o .0 H W a b1 • .0 14 0 F1 M D p • • 'gy a y ■9•4 � � M 0 a 1 . c4 O W a r 14 1 • a a o p a U �f O A .1 ° 04 w4 0 �4 v W , itrF,t J m W o ppaH N►aMyqq l 1 ¢H ° qq W p U F i aw Hrl .a ue N-•1 •>aN 1 , I• ■■a .�tltlU � { �a•p +W.1 q > y p +U01 s10 l ++1 1 a�yy > F+ 1 m• ,.o 0� 1� •$ +1 ..o 1 7 .a a10 1 .••. .1 • .y O •. •.I.tl � 1 pp 1$ I>O C I 1 cp a V q1 a m � Cq 1 MW 1 •� , at Nym � tl.v dU Q�la > y•(a � p QI w4 %4 9 > p• � �e b I . pO i p ptl b 1 ,H Fp y.d tl � I I4 H M aa N - F • d A °�+ O O ni ! 0 0 s: k V n H D I 0 • O l • i i W M O ii N aM M 0 y !9W ibM ° '0 >v � . 0 -4 M 0 O 0 >.• ■ .. . . I I I I I I I I a m 1 M/ F O M wO 1 t ► .0 '1 • ♦b " a a •0qp 4 1 a U O . . F 41 0 S y w w ii + O H > > a •• 1 a •m 4, 'O• ~A E• e 0 0 a A M M .1 M m p O m a 0 A AA 0 A •• •.1 •d ►C G aAaUol oY o y► A 14 >� pC U qa a D M >9GUa AAAV P(Q V al. Ia; UM a �? a ID4 �Q 0 q W 3 N �tltl •:1 a O v 4 • /) Ul 0 m (This Page Intentionally Left Blank) 10 m m m m w w m= m == m m m mm = m =' Lp O p S M 0 0 1Id� t% o M µ H PC %1 C A M O ly p M� ro 0 fat O A R ro QA � � pppy� o � • fOf M 6 R Ft ~ M I� h� A' 00 A A H 0 d 0 No e` a bpl � O H H i ro i no e n Ir !wd p hl M H oa �pppp M kaa �N�y� waanw m � o Wa K ti1.l tf P P p t7 Rf p a p < o r�i S tlb 0 o a a w o ((0.�� pa 14 q & � ►� ►ro1 0 n A O M K 1of O N R 0 is r p H D w o a w a 00 & Ir & a f� a a FA w ips� 0 p s m 'r a& r* r* A m OO LEV 0 Pt a v R P% !p!yy p Ca M W 00 0 foi H H o e M < a pw q a iIm a & 0 R a N N N N N N N r w r r r w A J O J w W O m N N r+ J 0 m# W r g O r w w O 00 O a O J o1 N O O 01 a O r V r r r o m N oo N o r o1oJmNw NowNOU1 O O V N O O W W J + O O+ 01 m A r O N m m m O 10 w 1#0 w J V w 0 A m w A # [Us 10 1 1 r m I 1 m 01 W J f0 b n N N N N N ~y a N N N O O r m O O O W O r uA r V t O a N Vr I W 01W u0 1 t I W W A V1D 1 1 [-4 r b J N N W A N m V N O 1W b 0 r N W uV t H 1y 1 1 1 I 10 1 1 1 1 1 r ut 1 1 I b S d l7 N N N N N 1Oj r ^ N ut 4A w # N r V N O b 10 10 W ut V a + W r 10 r r r O + ut 10 ++ 1p ul 11 m 10 V b 10 r N N O r r S fO r N N N 46 N N ~ V N N J r 10 a A + r r r F V r A A A W b ao J 4A k" m m p 10 w w o 10 0 01 o r w r w w w 'y # ut 10 r m O N r r 10 O q m m N m # a ut 0 10 r 0% y r N N m I N A N v 1 0 v m I I r W 1 1 1 1 m W N N 1 1 1 1 N N N N N y m N ut ut a N r r ut w p O N r J w oaol4o N rNr A NNr +ma amwrAir M r + J m A N W m + vI J J ut A m N O N 01 W W+ J r 01 N o r ulvfAO a Jul 10 wwmoJmwJ +JwNOm r r 10 4A 10 + O r o1 %00 N b J O O+ J # O 10 10 W 10 10 N It a m A O +w0 ul wN0 +r JO Ch Ch 10rr A +N m 1 W u• m N 0 0 V m W 0 N W O+ N r N m ul J W 01 W 0% (j N r 0 J O r OI 1 1r W r o N r u, N m a W o o r a 1 r o w N N 1N r %0 A Oo J A N ul J OD m [,-Q-.j 1 N 1 W O 1 1 1 1 low-- r v0 J 0 I g F7y f6 1 8 0 N N N N N m N w + a ut r r ut w N w w m J A 10 CA r N r A N N r+ ao O J m W r 01 �► r r w m O u1 N W m of ul J J M V A N O ut A a a+ V r at 10 p 10 r J o +tAO A NfA1D wwlowJmwJ mwwNOm 1oa� m Go a% m 0100 N10ulmOrJ. wOwwwto 10 O 10 wr00 01 O NO rrNJA01m+ Nma►01rm p + 1 r w r 10 O O N w W 0 N W fA + AA r lJ m VI J w of W 01 h] N N N rA v N N 4A N N N w r r N m N ut N N ut V N r r N r r+ 1D W W W+ fA A r M~ w r m aNA r lour A wNOOJJ +rwfArlc lul� r r A OAA A 01 #ut m NbNNN 01 w +r N 0%W V m m 10 N 4A V 01 w w 0 N r W m r r O VI r w W m w r m 0 W 01 01 10 r W W r ++ 10 N J r 1 N 10 N & 01 1 V ul V O O I r N w w r N N+ r O 10 N �IrN N to a b p W O r 10 10 m I3 b N O H r (This Page Intentionally Left Blank) 12 CITY OF SCHERTL, TEXAS CO)MINED STATEXCRTT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL AND DEBT SERVICE FUND TYPE YEAR ENDED SEPTEMBER 30, 1998 REVENUES Tares Licenses and Permits Charges for Services Pines and Forfeitures Other Revenue Total Revenues EXPENDITURES Current General Goverment Public Safety Streets and Parks Health Recreation Economic Development Capital outlay Debt Service Principal Interest and Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In (Out) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses FUND BALANCES (DEFICIT) - OCTOBER 1, 1997 RESIDUAL EQUITY TRANSFERS IN (OUT) FUND BALANCES (DEFICIT) - SEPTEMBER 30, 1998 GENERAL FUND DEBT SERVICE FUND VARIANCE VARIANCE FAVORABLE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) BUDGET ACTUAL (UNFAVORABLE) ORABLE) $2,758,088 $3,015,347 $257,259 $ S 490,850 610,943 120,093 _ _ - 481,250 472,366 (8,884) 300,400 343,943 43,543 360,232 400,090 39,858 - 44,710 44,710 $4,390,620 $4,842,689 $451,969. $ -0- S 44,710 $ 44,710 $1,294,049 $1,063,835 $230,214 1,808,906 1,702,684 106,222 450,605 408,461 42,144 157,955 127,065 30,890 270,015 260,004 10,011 78,859 76,491 2,366 305,469 201,778 103,691 - 179,000 179,000 - 39,999 255,923 (215,924) $4,365,858 §3,840,318 $525,540 $ 218,999 S 434,923 $(215,924) $ 24,962 $1,002,371 $977,409 $(218,999) $(390,213) $(171,214) - (300,084) (300,084) 218,999 591,791 372,792 $� 2 $ 702,287 (see Accompanying Notes to Financial Statements) 2,038,728 (30,000) $2,7 13 $677,325 $ -0- $ 201,578 (29,591) 171.987 $ 201,578 (This Page Intentionally Left Blank) 14 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30 1997) OPERATING REVENUE Fees Charged to Users Reimbursements and Other Total Operating Revenue OPERATING EXPENSES BEFORE DEPRECIATION Personnel Services Sewage Treatment General and Administrative Contractual Services Supplies /Maintenance Bad Debts Total Operating Expenses before Depreciation Operating Income (Loss) before Depreciation and Amortization Depreciation and Amortization Operating Income (Loss) NONOPERATING REVENUES (EXPENSES) Interest Income Interest Expense Transfer In (Out) Total Nonoperating Revenues (Expenses) Net Income (Loss) RETAINED EARNINGS (DEFICIT) - OCTOBER 1 TOTALS ENTERPRISE INTERNAL (MEMORANDUM ONLY) FUNDS SERVICE 1998 1997 $3,999,657 $ 90,243 $4,089,900 76,079 275 76,354 $4,075,736 $ 90,518 $4,166,254 $ 964,145 $ 47,467 $1,011,612 503,139 - 503,139 272,800 2,655 275,455 360,430 883 361,313 255,101 49,434 304,535 30,734 - 30,734 $3,686,064 24,350 $3,710,414 $ 878,263 474,389 272,800 317,097 285,159 84,532 $2,386,349 $100,439 $2,486,788 $2,312,240 $1,689,387 $ (9,921) $1,679,466 $1,398,174 (345,403) (2,530) (347,933) (313,673) $1,343,984 $(12,451) $1,331,533 $1,084,501 $ 223,279 $ - $ 223,279 $ 179,323 (138,523) - (138,523) (138,558) 129.169 - 129,169 (40,252) $ 213,925 $ -0- $ 213,925 $ 513 $1,557,909 $(12,451) $1,545,458 $1,085,014 2,275,268 (34,771) 2,240,497 1,155,483 RETAINED EARNINGS (DEFICIT) - SEPTEMBER 30 $3,8 -3,1 $(47,222) $3,785,955 $2,240,497 (See Accompanying Notes to Financial Statements) 15 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) 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 by Operating Activities CASH FLOWS FROM NON - CAPITAL FINANCING ACTIVITIES Operating Transfers in (Out) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets Principal Payments on Long - Term Debt Interest Paid on Long -Term Debt Capital Contributed for Capital Assets Net Cash Used in Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES TOTALS ENTERPRISE INTERNAL (MEMORANDUM ONLY) FUNDS SERVICE 1998 1997 $ 4,951,592 $90,243 $ 4,181,835 $4,566,601 (2,418,410) (33,869) (2,452,279) (1,535,784) (958,137) (47,270) (1,005,407) (859,349) 76,079 275 76,354 24,350 $ 791,124 $ 9,379 $ 800,503 $2,195,818 $ 129,169 $$ -0- $ 129,169 $ (40,252) $ (855,163) $ - $ (855,163) $ (553,829) (278,729) - (278,729) (259,899) (147,049) - (147,049) (155,428) (43,461) - (43,461) 221,341 $(1,324,402) $ =0- $(1,324,402) $ (747,815) Purchase of Investment $ - $ - $ - $ 601,663 Interest on Investments 223,279 - 223,279 179,323 Net Cash Provided by Investing Activities $ 223,279 $ =0- $ 223,279 $ 780,986 Net Increase (Decrease) in Cash $ (180,830) $ 9,379 $ (171,451) $2,188,737 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 4,306,035 5,149 4,311,184 2,122,447 CASH AND CASH EQUIVALENTS - END OF YEAR Comprised of Current Assets Restricted Assets CASH AND CASH EQUIVALENTS END OF YEAR $ 4,125,205 §14,528 $ 4,139,733 $4,3 $ 1,682,654 $14,528 $ 1,697,182 $2,957,635 2,442,551 - 2,442,551 1,353,549 $ 4,125,205 $14,528 $ 4,139,733 $4,311,184 (Continued) (See Accompanying Notes to Financial Statements) 16 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30 1997) RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities Depreciation /Amortization Depreciation Attributed to Contributed Capital Provision for Uncollectible Accounts (Increase) Decrease in the Following Assets Accounts Receivable Inventory Due from Other Funds Prepaid Costs Increase (Decrease) in the Following Liabilities Vouchers Payable Due to Other Funds Accrued Vacation Customer Deposits NET CASH PROVIDED BY OPERATING ACTIVITIES TOTALS ENTERPRISE INTERNAL (MEMORANDUM ONLY) FUNDS SERVICE 1998 1997 $1,355,030 $(12,451) $1,342,579 $1,084,501 345,403 2,530 347,933 313,673 138,106 - 138,106 132,213 (49,272) - (49,272) 82,285 141,207 - 141,207 (264,812) (2,852) (61) (2,913) (25,239) ' - - 1,063,064 " - 310 64,012 (1,240,031) 6,008 33,513 $ 791,124 (See Accompanying Notes to Financial Statements) 17 441 64,453 (25,821) 18,723 (1,221,308) (214,106) 197 6,205 18,914 33,513 30,836 9,379 $ 800,503 $2,19 5 ,88 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Schertz, Texas, (the City), 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 governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. A. Financial Reporting Entity The City of Schertz is a city in which citizens elect the mayor and council members at large. The accompanying financial statements present the City's primary government and component units over which the City exercises significant influence. Significant influence or accountability is based primarily on operational or financial relationships with the City. 1. Discretely Presented Component Unit: The Schertz Development Foundation is a nonprofit corporation organized and operated for charitable purposes, including, but not limited to, assisting the City of Schertz, Texas, to develop and implement plans for economic viability for the City. The foundation board is chosen by the City Council and the executive director is employed by the City. The books and records are kept by city personnel. Annual reports of the Schertz Development Foundation for fiscal year ended September 30, 1998 are available upon request from City Hall. 2. Discretely Presented Component Unit: The Library Fund's governing board is appointed by the Schertz city Council and provides the majority of its funding. The Library provides a service to citizens outside of the City of Schertz. Annual reports of the Library Fund for fiscal year ended September 30, 1998 are available upon request from City Hall. B. Fund Accounting The City uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain City functions or activities. A fund is a separate accounting entity with a self - balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds are classified into two categories: governmental and proprietary. Each category, in turn, is divided into separate "fund types ". Governmental funds are used to account for all or most of a government's general activities, including the collection and disbursement of earmarked monies (Special Revenue Funds), the acquisition or construction of general fixed assets (Capital Projects Funds), and the servicing of general long -term debt (Debt Service Funds). The General Fund is used to account for all activities of the City not accounted for in some other fund. 18 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Fund Accounting (Continued) Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties (enterprise funds) or to other departments. C. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. All proprietary funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (i.e., net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund -type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets. The modified accrual basis of accounting is used by all governmental fund types. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes as available if they are collected within sixty (60) days after year end. A one -year availability period is used for revenue recognition for all other governmental fund revenues. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long -term debt are recorded as fund liabilities when due or when amounts have been accumulated in the Debt Service Fund for payments to be made early in the following year. Those revenues susceptible to accrual are property taxes, franchise taxes, special assessments, interest revenue, and charges for services. Licenses, fines, and permits are not susceptible to accrual because generally they are not measurable until received in cash. The accrual basis of accounting is utilized by proprietary fund types. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The City reports deferred revenue on its combined balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Delinquent taxes are reported as deferred revenue as they are not available for current use. 19 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting (Continued) Government funds include the following fund types: The general fund is the government's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The special revenue funds account for revenue sources that are legally restricted to expenditure for specific purposes (not including expendable trusts or major capital projects). The debt service fund accounts for the servicing of general long -term debt not being financed by proprietary or nonexpendable trust funds. The capital projects funds account for the acquisition of fixed assets or construction of major capital projects not being financed by proprietary or nonexpendable trust funds. Enterprise funds are used to account for those operations that are financed and operated in a manner similar to private business or where the board has decided that the determination of revenues earned, costs incurred, and /or net income is necessary for management accountability. Internal service funds account for the operations that provide services to other departments or agencies of the government, or to other governments, on a cost - reimbursement basis. Proprietary Funds - The proprietary funds consist of Water and Sewer Fund, SAFES Fund, and the Fleet Service Fund. The proprietary activities apply to all FASB statements and interpretations issued after November 30, 1989 except for those that conflict with or contradict GASB pronouncements. Account Group. The general fixed assets account group is used to account for fixed assets not accounted for in proprietary or trust funds. The general long -term debt account group is used to account for general long -term debt and certain other liabilities that are not specific liabilities of proprietary or trust funds. D. Budgets The City Charter establishes requirements for the adoption of budgets and related budgetary control. Budgetary preparation and control is exercised at the departmental level. Amendments to budget total are made only by the City Council. The city manager is authorized to amend the budget without City Council approval by transferring budget amounts between line items within a department. During the year amendments were necessary, all complied with city charter requirements. 20 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Budgets (Continued) Annual appropriated budgets are adopted for the general and debt service funds. The budgets are prepared using the modified accrual basis of accounting. All annual appropriations lapse at fiscal year end. Project - length financial plans are adopted for all capital projects funds. In addition, as part of the overall budget process, budgets are adopted for the proprietary fund; however, the City does not require a reporting as part of the comprehensive annual financial report. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting - under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation - is utilized in the governmental funds. Any encumbrances outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be honored during the subsequent year. E. Cash and Cash Equivalents Cash and cash equivalents include amounts in demand deposits, short-term certificates of deposit with a maturity date within three (3) months of the date acquired by the City, and investment pools. F. Short -Term Interfund Receivables /Pavables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other funds" or "due to other funds" on the balance sheet. Short -term interfund loans are classified as " interfund receivables /payables ". G. Inventories 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. H. 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 covenants. 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. 21 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) I. Fixed Assets General fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental funds, and the related assets are reported in the general fixed assets account group. All purchased fixed assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated fixed assets are valued at their estimated fair market value on the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets, as applicable. Public domain ( "infrastructure ") general fixed assets consisting of roads, bridges, curbs and gutters, streets and sidewalks, drainage system, and lighting systems are capitalized. Assets in the general fixed assets account group are not depreciated. Depreciation of buildings, equipment, and vehicles in the proprietary fund types is computed using the straight -line method. Interest is capitalized on proprietary fund assets acquired with tax - exempt debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. J. Compensated Absences Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it. Amounts of vested or accumulated vacation leave 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. Vested or accumulated vacation leave of proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. In accordance with the provisions of GASB Statement No. 16, "Accounting for Compensated Absences ", no liability is recorded for nonvesting accumulating rights to receive sick pay benefits. K. 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. 22 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. 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. M. Fund Equity Contributed capital is recorded in proprietary funds that have received capital grants or contributions from developers, customers, or other funds. Reserves represent those portions of fund equity not appropriate for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. N. 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. O. 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. All other interfund transactions, except quasi - external transactions and reimbursements, are reported as transfers. Nonrecurring or non- routine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. P. Cash Flows Statement For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with an original maturity of approximately ninety days or less when purchased to be cash equivalents. 23 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Memorandum Only - Total Columns Total columns on the general purpose financial 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 cash flows in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. R. Comparative Data Comparative total data for the prior year has been presented in the accompanying financial statements in order to provide an understanding of changes in the government's financial position and operations. S. 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. T. Reclassifications Certain reclassifications have been made to the 1997 comparative totals to conform to the 1998 presentation. NOTE 2: LEGAL COMPLIANCE - BUDGETS On or before July each year, all agencies of the City submit request for appropriation to the City Manager so that a budget may be prepared. The budget is prepared by fund, department, function, and activity, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. Before September 30, the proposed budget is presented to the City Council for review, modification, and approval. By state statute budgeted expenditures may not exceed budgeted revenues. Expenditures may not legally exceed budgeted appropriations at the fund level. NOTE 3: DEPOSITS WITH FINANCIAL INSTITUTIONS The City maintains demand deposit accounts, savings accounts, certificates of deposit, and investment pools that are available for the individual funds from which they are generated. The funds accounts are displayed on the combined balance sheet under the captions "Cash and Cash Equivalents." 24 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 3: DEPOSITS WITH FINANCIAL INSTITUTIONS (CONTINUED) The City's bank balances were entirely covered by federal depository insurance and collateral held in safekeeping in the City's name. Also for liquidity purposes, the City invests in certificates of deposit, Logic Investment Pool, and Lone Star Investment Pool. 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 or 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 or its successor, or secured by obligations mentioned above; and (6) fully collateralized direct repurchase agreements having a defined termination date. The City had demand deposits with a carrying value of $505,241 and bank balances of these accounts totaled $617,456. The City had temporary investments in Logic Investment Pool and Lone Star Investment Pool totaling $11,286,688. NOTE 4: RECEIVABLES Receivables at September 30, 1998 consist of the following: RECEIVABLES Taxes Account Gross Receivables Less: Allowance for Uncollectible NET TOTAL RECEIVABLES The delinquent taxes receivable account represents past years of uncollected tax levies and is also reflected as a deferred revenue of equal amount. Property taxes are levied as of October 1 on property values assessed as of January 1. Property taxes are payable on or before January 31 following the levy date without penalty or interest. Unpaid property taxes attach as an enforceable lien on property as of February 1 with penalty and interest. On July 1, unpaid taxes are forwarded for collection and are subject to additional penalties for collection expenses. 25 SPECIAL DEBT GENERAL REVENUE SERVICE ENTERPRISE TOTAL $ 95,962 $ - $15,894 $ - $111,856 51,992 16,555 - 621,925 690,472 $147,954 $16,555 $15,894 $621,925 $802,328 4,798 - 795 142,186 147,779 $143,156 $16,555 $15,099 $479,739 $654,549 The delinquent taxes receivable account represents past years of uncollected tax levies and is also reflected as a deferred revenue of equal amount. Property taxes are levied as of October 1 on property values assessed as of January 1. Property taxes are payable on or before January 31 following the levy date without penalty or interest. Unpaid property taxes attach as an enforceable lien on property as of February 1 with penalty and interest. On July 1, unpaid taxes are forwarded for collection and are subject to additional penalties for collection expenses. 25 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 5: GENERAL FIXED ASSETS The following is a summary of changes in general fixed assets: Land* Buildings Improvements Other than Buildings Vehicles Equipment BALANCES AT BALANCES AT OCTOBER 1, SEPTEMBER 30, 1997 ADDITIONS DEDUCTIONS 1998 $ 418,409 $-83,585 1,114,290 112,176 7,985,121 280,653 1,167,023 110,067 11199,902 86,761 $11,884,745 $673,242 $ - $ 501,994 1,226,466 8,265,774 1,277,090 1,286,663 $12,557,987 *Adjusted to Include Land of $10,688 in the Schertz Development Foundation NOTE 6: FIXED ASSETS - PROPRIETARY FUND TYPES The following is a summary of the property, plant, and equipment of the Proprietary Funds at September 30, 1998: Buildings Improvements Other than Buildings Machinery and Equipment Construction in Progress Accumulated Depreciation Land TOTALS ENTERPRISE INTERNAL WATER /SEWER SAFES SERVICE TOTAL $ 195,724 $ 26,656 $58,804 $ 281,184 10,359,927 7,642 1,142 10,368,711 923,848 559,481 25,198 1,508,527 - 169,858 - 169,858 $11,479,499 $763,637 $85,144 $12,328,280 6,142,271 348,653 31,699 6,522,623 $ 5,337,228 $414,984 $53,445 $ 5,805,657 160,521 - 160,521 5,497,749 $41 $53,445 $ 5,966,178 In the proprietary and internal service funds, the following useful lives are used to compute depreciation: Buildings Sewer and Water Lines Equipment 26 30 Years 50 Years 5 - 10 Years CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 7: LONG -TERM DEBT A. General Long -Term Debt The following is a summary of changes in general long -term debt for the year ended September 30, 1998: TOTAL GENERAL OBLIGATION BONDS, CERTIFICATES OF OBLIGATION, GENERAL OBLIGATION REFUNDING BONDS, AND NOTES PAYABLE $1,425,000 $4,930,000 $179,000 $6,176,000 BALANCE BALANCE OUTSTANDING OUTSTANDING OCTOBER 1, SEPTEMBER 30, 1997 ADDITIONS DEDUCTIONS 1998 Compensated Absences Payable $146,039 $70,866 $ -0- $21 27 BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, DURING YEAR SEPTEMBER 30, AMOUNT RATE 1997 ISSUED RETIRED 1998 General Obligation Bonds 1962 Series $ 301,000 3.63% $ 50,000 $ - $13,000 $ 37,000 1987 Series 445,000 6.2 - 8.3% 130,000 - 40,000 90,000 1992 Series 620,000 5.2 - 7.2% 545,000 - 25,000 520,000 1998 Series 4,930,000 4.37- 5.375`•k - 4,930,000 4,930,000 $ 725,000 $4,930,000 $78,000 $5,577,000 Certificates of Obligation 1990 Series 850,000 7 - 9.0% 330,000 -0- 55,000 275,000 General Obligation Refunding Bonds 1995 Series 447,000 3.75 - 5.00% 370,000 -0- 46,000 324,000 TOTAL GENERAL OBLIGATION BONDS, CERTIFICATES OF OBLIGATION, GENERAL OBLIGATION REFUNDING BONDS, AND NOTES PAYABLE $1,425,000 $4,930,000 $179,000 $6,176,000 BALANCE BALANCE OUTSTANDING OUTSTANDING OCTOBER 1, SEPTEMBER 30, 1997 ADDITIONS DEDUCTIONS 1998 Compensated Absences Payable $146,039 $70,866 $ -0- $21 27 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 7: LONG -TERM DEBT (CONTINUED) A. GENERAL LONG -TERM DEBT (CONTINUED) B. Proprietary Long -Term Debt The following is a summary of changes in proprietary long -term debt for the year ended September 30, 1998: Revenue Bonds 1973 Series 1987 Series Certificates of obliga- tion 1992 Series General obliga- tion Refunding Bonds 1995 Series BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1,. SEPTEMBER 30, AMOUNT RATE 1997 ISSUED RETIRED 1998 $ 165,000 5.75 - 6.10% $ 85,000 $ - $ 40,000 $ 45,000 1,020,000 6.30 - 8.30 870,000 - 15,000 855,000 $$ 955,000 $ _0_ $ 55.000 S 900,000 $ 200,000 5.00 - 7.00% $$ 1 $ -0- 10,000 $ 150.000 $1,253,000 3.75 - 5.00% $1,0 $184,000 $ 896,000 � 28 GENERAL OBLIGATION GENERAL YEAR ENDED REFUNDING OBLIGATION CERTIFICATE OF SEPTEMBER 30, BONDS BONDS OBLIGATION 1999 $ 39,755 $ 512,735 $ 77,718 2000 38,661 504,479 78,231 2001 91,265 452,635 73,519 2002 74,834 440,722 88,081 2003 48,200 463,484 - 2004 -2008 88,128 2,349,522 - Thereafter 3,872,886 TOTAL $380,843 $8,596,463 $317,549 Principal $324,000 $5,577,000 $275,000 Interest 56,843 3,019,463 42,549 TOTALS $380,843 $8,596,463 $317,549 B. Proprietary Long -Term Debt The following is a summary of changes in proprietary long -term debt for the year ended September 30, 1998: Revenue Bonds 1973 Series 1987 Series Certificates of obliga- tion 1992 Series General obliga- tion Refunding Bonds 1995 Series BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1,. SEPTEMBER 30, AMOUNT RATE 1997 ISSUED RETIRED 1998 $ 165,000 5.75 - 6.10% $ 85,000 $ - $ 40,000 $ 45,000 1,020,000 6.30 - 8.30 870,000 - 15,000 855,000 $$ 955,000 $ _0_ $ 55.000 S 900,000 $ 200,000 5.00 - 7.00% $$ 1 $ -0- 10,000 $ 150.000 $1,253,000 3.75 - 5.00% $1,0 $184,000 $ 896,000 � 28 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 7: LONG -TERM DEBT (CONTINUED) B. Proprietary Long -Term Debt (Continued) 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 water and sewer fund. The debenture agreement for water and sewer bonds require funds be available for 1 /12th the principal and 1 /6th the 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 29 BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, AMOUNT RATE 1997 ISSUED RETIRED 1998 Public Facility Loan (HUD) $ 142,000 5.00% 7 6,000 $ _0_ 4,000 $ 72,000 Note Payable $ 273,000 7.60% $ 1_ 40 $ _0_ 25,729 $ 1_ 2�4 The annual requirements to amortize all debt outstanding as of September 30, 1998 including interest payments are as follows: GENERAL OBLIGATION CERTIFICATES PUBLIC YEAR ENDED REFUNDING REVENUE OF FACILITY NOTES SEPTEMBER 30, BONDS BONDS OBLIGATION LOAN PAYABLE 1999 $ 221,953 $ 143,588 $ 18,390 $ 7,600 $ 37,212 2000 272,524 93,375 17,890 7,400 37,212 2001 271,207 90,750 17,380 7,200 37,212 2002 27,915 178,125 66,840 7,000 37,213 2003 74,863 167,500 63,480 6,800 - 2004 -2008 132,319 585,375 - 31,000 - Thereafter - - - 39,200 TOTALS $1,000,781 $1,258,713 $183,980 $106,200 $148,849 Principal $ 896,000 $ 900,000 $150,000 $ 72,000 $124,191 Interest 104,781 358,713 33,980 34,200 24,658 TOTALS $1,000,781 $1,258,713 $183,980 $106,200 $148,849 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 water and sewer fund. The debenture agreement for water and sewer bonds require funds be available for 1 /12th the principal and 1 /6th the 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 29 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 7: LONG -TERM DEBT (CONTINUED) B. Proprietary Long -Term Debt (Continued) derived from the operation of the City's combined water and sewer systems after payments of first lien revenue bonds. The public loan is payable from gross revenue derived from 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 mandated to maintain revenue reserves at least 1.5 times the average annual revenue bond debt service requirements. The City was in compliance. NOTE 8: INTERFUND ASSETS /LIABILITIES The following is a summary of amounts due from and due to primary government as of September 30, 1998: DUE FROM DUE TO OTHER FUNDS OTHER FUNDS General Fund $175,501 $ - Special Revenue Funds Park Fund 57,968 - Guadco Mud 2 20,452 - Tax Increment Financing 31,995 - Guadco Mud 1 26,832 - Police Department Forfeitures 16,799 Debt Service - 128,868 Capital Projects - 38,790 Enterprise Funds Water and Sewer System 18,900 188,982 SAFES 94,978 - Internal Service Fund 50,451 TOTALS $42 $423,890 Component Units The Library Schertz Development Foundation $ 381 $ - - 3,117 $427,007 $427,007 The following is a summary of amounts due to and due from primary government and discretely presented component units. General Fund The Library Schertz Development Foundation TOTALS 30 DUE FROM DUE TO $3,117 $ 381 381 - 3,117 $3,498 $3,498 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 9: 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, 1998, is as follows: Operating Revenues Operating Expenses, Exclusive of Depreciation and Amortization Depreciation and Amortization Operating Income Other Income (Expense) NET INCOME Total Assets Total Equity Working Capital Additions to Fixed Assets Outstanding Debt NOTE 10: CONTRIBUTED CAPITAL WATER /SEWER SAFES TOTAL $3,257,107 $758,836 $4,015,943 (1,711,388) (674,961) (2,386,349) (294,371) (39,986) (334,357) $1,251,348 $ 43,889 $1,295,237 16,064 186,815 202,879 $1,267,412 $230,704 $1,498,116 $9,839,206 $936,213: $10,775,419 $7,120,622 $844,499. $ 7,965,121 $1,432,225 $429,515 $ 1.861,740 $ 6i 48 $206,838 $ 855,163 $2,142,191 y$ __ $ 2,142,191 During the year, contributed capital increased by the following amounts: SOURCE Developers State Less: Depreciation on Contribution Totals Contributed Capital, October 1 WATER AND INTERNAL SEWER SAFES SERVICE FUND FUND FUND TOTAL $ 94,645 $ - $ - $ 94,645 (138,106) - - (138,106) $ (43,461) $ -0- $ -0- $ (43,461) 4,008,429 226,769 63,577 4,298,775 CONTRIBUTED CAPITAL, SEPTEMBER 30 $3,964,968 $226,769 $63,577 $4,255,314 31 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 11: OPERATING TRANSFERS Operating transfers are comprised as follows: General Fund Water and Sewer Fund Debt Service Fund SAFES Fund Special Revenue Funds Capital Project Funds Component Units TOTALS NOTE 12: SEGMENT INFORMATION - COMPONENT UNITS Segment Information for Component Units is as follows: IN OUT $ - $300,084 40,689 591,791 - 169,858 33,659 - - 169,858 284,677 $795,308 $795,308 Excess of Revenues Over Expenditures and Other Financing Uses 9,293 1.882 4,553 15,728 TOTAL ASSETS $ 9,293 $15,182 $85,688 $110.163 NOTE 13: DEFICIT RETAINED EARNINGS For the year ended September 30, 1998, the Internal Service Fund has a deficit retained earnings balance of $47,222. This occurred again because sufficient transfers were not made from other funds to supplement revenue in order to exceed expenditures. Transfers from other funds will be adjusted in 1999 to offset this deficit balance. 32 SCHERTZ ECONOMIC SCHERTZ DEVELOPMENT THE DEVELOPMENT CORPORATION LIBRARY FOUNDATION TOTALS Revenues $299,867 $ 5,552 $ 9,411 $314,830 Expenditures (5,897) (3,670) (4,858) (14,425) Excess of Revenues Over Expenditures $293,970 $ 1,882 $ 4,553 $300,405 Other Financing (Uses) (284,677) - - (284,677) Excess of Revenues Over Expenditures and Other Financing Uses 9,293 1.882 4,553 15,728 TOTAL ASSETS $ 9,293 $15,182 $85,688 $110.163 NOTE 13: DEFICIT RETAINED EARNINGS For the year ended September 30, 1998, the Internal Service Fund has a deficit retained earnings balance of $47,222. This occurred again because sufficient transfers were not made from other funds to supplement revenue in order to exceed expenditures. Transfers from other funds will be adjusted in 1999 to offset this deficit balance. 32 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 14: PENSION PLAN Plan Description The City provides pension benefits for all of its full -time employees through a non - traditional, joint contributory, defined benefit plan in the state -wide Texas Municipal Retirement System (TMRS), an agent multiple- employer public employee retirement system. The Texas Municipal Retirement System issues a publicly available financial report and may be obtained by writing to TMRS, Post Office Box 149153, Austin, Texas 78714 -9153. Funding Polic The contribution rate for employees is 5% and the City matching ratio is currently 1 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary annually determines the City's contribution rate. Annual Pension Cost For 1997, the City's annual pension cost of $140,886 for TMRS was equal to the City's required and actual contributions. The required contribution was determined as part of the December 31, 1997 actuarial valuation. The unit credit actuarial cost method is used for determining the City's contribution rate. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan's twenty -five (25) year amortization period. Currently, the unfunded actuarial liability is being amortized over a twenty -five (25) year amortization period. Which began in January, 1997. Trend Information Required Supplementary Information PERCENTAGE NET FISCAL YEAR ANNUAL OF APC PENSION FUNDING PENSION COST CONTRIBUTION OBLIGATION September 30, 1998 $140,886 100% $ -0- September 30, 1997 140,535 100 $ -0- September 30, 1996 91,335 100 $ -0- September 30, 1995 91,702 100 $ -0- Required Supplementary Information 33 UAAL ACTUARIAL AS A ACTUARIAL ACTUARIAL ACCRUED UNFUNDED `$ OF VALUATION VALUE OF LIABILITY AAL FUNDED COVERED COVERED DATE ASSETS (AAL) (UAAL) RATIO PAYROLL PAYROLL December 31, 1997 $951,784 $1,701,471 $749,687 55.9 % $2,669,695 28.1 % December 31, 1996 665,528 1,311,301 645,773 50.75% 2,573,705 25.09 December 31, 1995 493,745 1,049,426 555,681 47.05% 1,794,550 30.97 December 31, 1994 320,126 876,870 556,744 36.51% 1,844,503 30.18 33 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1998 NOTE 15: RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During October 1991, the City was unable to obtain insurance at a cost it considered economically justifiable. In October, 1991, the City entered into a contractual agreement 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, 1998, which can be obtained from the Texas Municipal League. NOTE 16: COMMITMENTS AND CONTINGENCIES Vehicles owned by the City that are older than four years are covered only by liability insurance. The City has designated $45,000 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, 1998. 34 COMBINING, INDIVIDUAL FUND AND ACCOUNT GROUP STATEMENTS AND SCHEDULES 35 (This Page Intentionally Left Blank) 36 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. 37 (This Page Intentionally Left Blank) 38 CITY OF SCHERTZ, TEXAS GENERAL FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1998 AND 1997 ASSETS Cash and Cash Equivalents Accounts Receivable Delinquent Taxes Receivable (Net of Allowances) Due from Other Funds Due from Component Units Inventory of Supplies, at Cost TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Due to Other Funds Deferred Revenue Total Liabilities FUND BALANCES Reserved for Forfeited Property Reserved for Inventory of Supplies Unreserved Designated for Economic Development Designated for Equipment Replacement Designated for Self- Insurance Undesignated Total Fund Balances TOTAL LIABILITIES AND FUND BALANCES (See Accompanying Notes to Financial Statements) 39 SEPTEMBER 30, 1998 1997 $2,533,399 $ 667,992 51,992 43,027 91,164 76,853 175,501 1,559,439 - 234 9,529 91018 $2,861,585 $2,356,563 $ 59,406 $ 31,100 - 109,888 91,164 176,847 $ 150,570 $ 317,835 $ 49,186 $ 44,638 9,018 9,018 18,821 18,821 16,144 16,144 45,000 45,000 2,572,846 1,905,107 $2,711,015 $2,038,728 $2,861,585 $2,356,563 CITY OF SCHERTZ, TEXAS GENERAL FUND COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 1998 EXPENDITURES Current General Government Public Safety Streets and Parks Health Recreation Economic Development Capital Outlay Debt Service Total Expenditures Excess of Revenues over Expenditures OTHER FINANCING (USES) Operating Transfers - (Out) Excess of Revenues over Expenditures and Other Financing (Uses) FUND BALANCES - OCTOBER 1 RESIDUAL EQUITY TRANSFER (OUT) FUND BALANCES - SEPTEMBER 30 $1,294,049 1,808,906 450,605 157,955 270,015 78,859 305,469 $4,365,858 $1,063,835 1,702,684 408,461 127,065 260,004 76,491 201,778 $3,840,318 $ 24,962 $1,002,371 $ 230,214 106,222 42,144 30,890 10,011 2,368 103,691 $ 525,540 $ 977,409 $ 976,032 1,472,534 397,807 102,293 226,655 67,910 139,751 47.357 $3,430,339 $ 659,190 -0- (300,084) (300,084) (226,534) $ 24,962 702,287 2,038,728 (30,000) $2,711,015 (See Accompanying Notes to Financial Statements) 40 $677,325 $ 432,656 1,689,206 (83,134) $2,038,728 1998 VARIANCE FAVORABLE 1997 BUDGET ACTUAL (UNFAVORABLE) ACTUAL REVENUES Taxes $2,758,088 $3,015,347 $ 257,259 $2,577,859 Licenses and Permits 490,850 610,943 120,093 546,159 Charges for Services 481,250 472,366 (8,884) 452,890 Fines and Forfeitures 300,400 343,943 43,543 331,244 Other Revenue 360,232 400,090 39,858 181,377 Total Revenues $4,390,820 $4,842,689 $ 451,869 $4,089,529 EXPENDITURES Current General Government Public Safety Streets and Parks Health Recreation Economic Development Capital Outlay Debt Service Total Expenditures Excess of Revenues over Expenditures OTHER FINANCING (USES) Operating Transfers - (Out) Excess of Revenues over Expenditures and Other Financing (Uses) FUND BALANCES - OCTOBER 1 RESIDUAL EQUITY TRANSFER (OUT) FUND BALANCES - SEPTEMBER 30 $1,294,049 1,808,906 450,605 157,955 270,015 78,859 305,469 $4,365,858 $1,063,835 1,702,684 408,461 127,065 260,004 76,491 201,778 $3,840,318 $ 24,962 $1,002,371 $ 230,214 106,222 42,144 30,890 10,011 2,368 103,691 $ 525,540 $ 977,409 $ 976,032 1,472,534 397,807 102,293 226,655 67,910 139,751 47.357 $3,430,339 $ 659,190 -0- (300,084) (300,084) (226,534) $ 24,962 702,287 2,038,728 (30,000) $2,711,015 (See Accompanying Notes to Financial Statements) 40 $677,325 $ 432,656 1,689,206 (83,134) $2,038,728 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 1998 REVENUES Taxes Ad Valorem Tax Penalty City Sales Tax Utility Franchise Other Total Taxes Licenses and Permits Charges for Services Utility Administration Swimming Pool Animal Shelter Building Rental Library and Fire Other Total Charges for Services Fines and Forfeitures Other Revenue Reimbursements Proceeds from Litigation Cibolo Creek Municipal Authority Interest Sale of Merchandise Sale of Police Forfeitures Miscellaneous State and Federal Grants Total Other Revenue TOTAL REVENUES $ 300,400 $ 343,943 $ 43,543 $ 331,244 $ 25,000 1998 $ 12,056 $ 29,182 - 2,144 VARIANCE - 6,200 6,153 FAVORABLE 1997 BUDGET ACTUAL (UNFAVORABLE) ACTUAL 800 643 (157) $1,559,888 $1,582,244 $ 22,356 $1,385,099 12,000 17,527 5,527 12,622 865,000 1,069,112 204,112 876,369 307,200 342,143 34,943 294,421 14,000 4,321 (9,679) 9,348 $2,758,088 $3,015,347 $257,259 $2,577,859 $ 490,850 $ 610,943 $120,093 $ 546,159 $ 265,000 $ 265,000 $ - $ 265,000 40,250 34,511 (5,739) 29,902 16,500 21,587 5,087 20,395 10,300 13,514 3,214 10,156 108,300 108,511 211 92,497 40,900 29,243 (11,657) 34,940 $ 481,250 $ 472,366 $ (8,884) $ 452,890 $ 300,400 $ 343,943 $ 43,543 $ 331,244 $ 25,000 $ 37,056 $ 12,056 $ 29,182 - 2,144 2,144 - 6,200 6,153 (47) 5,922 54,400 110,552 56,152 50,234 800 643 (157) 15,963 - 2,100 2,100 - 64,250 20,603 (43,647) 20,915 209,582 220,839 11,257 59,161 $ 360,232 $ 400,090 39,858 $ 181,377 $4,390,820 $4,842,689 451,869 $4,089,529 (See Accompanying Notes to Financial Statements) 41 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 1998 CURRENT General Government City Council City Manager Tax 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 Recreation Swimming Pool Library Total Recreation Economic Development CAPITAL OUTLAY DEBT SERVICE Principal Interest Total Debt Service TOTAL EXPENDITURES 1998 VARIANCE FAVORABLE 1997 BUDGET ACTUAL (UNFAVORABLE) ACTUAL $ 16,915 $ 13,757 $ 3,158 $ 23,588 123,893 127,127 (3,234) 220,418 98,759 940,901 3,858 89,803 129,053 102,866 26,187 139,586 48,000 77,220 (29,220) 64,905 104,702 102,682 2,020 80,280 148,357 139,303 9,054 129,401 105,707 96,953 8,754 94,171 125,871 128,916 (3,045) - 392,792 180,110 212,682 133,880 $1,294,049 $1,063,835 $ 230,214 $ 976,032 $1,196,024 $1,125,683 $ 70,341 $1,013,453 512,153 479,383 32,770 383,274 100,729 97,618 3,111 75,807 $1,808,906 $1,702,684 $ 106,222 $1,472,534 $ 349,804 $ 319,894 $ 29,910 $ 315,911 100,801 88,567 12,234 81,896 $ 450,605 $ 408,461 $ 42,144 397,807 $ 157,955 $ 127,065 $ 30,890 $ 102,293 $ 90,475 $ 88,664 $ 1,811 $ 63,136 179,540 171,340 8,200 163,519 $ 270,015 $ 260,004 $ 10,011 $ 226,655 $ 78,859 $ 76,491 $ 2,368 $ 67,910 $ 305,469 $ 201,778 $ 103,691 $ 139,751 $ - $ - $ - $ 45,000 - - 2,357 $ -0- $ -0- $ -0- $ 47,357 $4,365,858 $3,840,318 $ 52� 5,540 $3,430,339 (See Accompanying Notes to Financial Statements) 42 SPECIAL FUNDS Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trusts or for major capital projects) that are legally restricted to expenditure for specified purposes. Park Fund - will account for revenues from developersf fees (in lieu of park land dedication), grants, and donations and designed to monitor and manage improvement of park system. Recycling Fund - will 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. Guadco MUD #2 Fund - will account for revenues received for the billing and collecting from residential and commercial customers within the district. Tax Increment Financing Fund - will account for the proceeds of designated property taxes to be used for the widening of Schertz Parkway. Hotel Occupancy Tax Fund - will account for proceeds of hotel occupancy taxes to be used strictly for those kinds of programs that promote the tourism industry. Forestry Fund - will account for funds from a state grant to be used for purchasing trees and shrubs for City parks. Guadco MUD #1 Fund - will account for revenues received for the billing and collecting from residential and commercial customers within the district. Library Grant Fund - will account for funds from a state grant to be used for purchasing computers at the library to be used for access to the internet. Police Department Forfeitures Fund - will account for revenue received from drug related cases in conjunction with other law enforcement agencies. 43 CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) ASSETS Cash and Cash Equivalents Accounts Receivable Due from Other Funds TOTAL. ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Due to Other Funds Customer Deposits Total Liabilities FUND BALANCES Unreserved Designated TOTAL LIABILITIES AND FUND BALANCES $ - $1,677 $ - $ -0- $1,677 $ -0- $ -0- 168,403 6,321 GUADCO TAX PARK RECYCLING MUD #2 INCREMENT FUND FUND FUND FINANCING $110,435 $7,998 $ - $ 87,808 - - 1,165 - 57,968 20,452 31,995 $168,403 $7,998 $21,617 $11 $ - $1,677 $ - $ -0- $1,677 $ -0- $ -0- 168,403 6,321 21,617 119,803 $168,403 $7,998 $21,617 $119,803 (See Accompanying Notes to Financial Statements) 44 HOTEL POLICE GUADCO OCCUPANCY LIBRARY MUD #1 TAX FORESTRY FUND FORFEITURES $91,062 $ - $ - - - 15,390 - - 26,832 $91,062 $ -0- $42,222 $ 1,677 $ 570 - - 16,799 16,799 758 - - - - 140 $ -0- $ -0- $ -0- $ -0- $16,799 $ 18,476 $ 1,468 91,062 - 42,222 - 590 450,018 215,764 $91,062 �- $42,222 $ $17,389 $468,494 $217,232 (See Accompanying Notes to Financial Statements) 45 POLICE LIBRARY DEPARTMENT GRANT FORFEITURES TOTALS FUND FUND 1998 1997 $ - $17,389 $314,692 $148,404 - - 16,555 2,478 - - 137,247 66,350 $-0- $17,389 $468,494 $217,232 $ 1,677 $ 570 - - 16,799 16,799 758 - - - - 140 $ -0- $ -0- $ -0- $ -0- $16,799 $ 18,476 $ 1,468 91,062 - 42,222 - 590 450,018 215,764 $91,062 �- $42,222 $ $17,389 $468,494 $217,232 (See Accompanying Notes to Financial Statements) 45 CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) REVENUES Other Grant Developer Fees Management Fees Donations Tax Revenue Sale of Recycling /Materials Interest Total Revenues General and Administrative Contractual Services Infrastructure Total Expenditures Excess (Deficit) of Revenues Over Expenditures OTHER FINANCING SOURCES Transfers In Excess (Deficit) of Revenues and Other Financing Sources Over (Under) Expenditures FUND BALANCES - OCTOBER 1 RESIDUAL EQUITY TRANSFER IN FUND BALANCES - SEPTEMBER 30 GUADCO TAX PARK RECYCLING MUD /2 INCREMENT FUND FUND FUND FINANCING 100,850 - 600 - - 15,868 2,750 $104,200 $15,868 $ 1,120 $ - - 20,128 9,826 - $ 10,946 $20,128 $ 93,254 $(4,260) $ 93,254 $(4,260) 75,149 10,581 13,319 - 115,026 2,761 $13,319 $117,787 $ -0- $13,319 $13,319 8,298 $168,403 $$ 6,321 $21,617 (See Accompanying Notes to Financial Statements) 46 $ 33 65,269 28,616 $ 93,918 $ 23,869 33,659 $ 57,528 62,275 $119,803 POLICE HOTEL GUADCO LIBRARY DEPARTMENT OCCUPANCY MUD #1 GRANT FORFEITURES TOTALS TAX FORESTRY FUND FUND FUND 1998 1997 $ - $ -0- $ - $27,128 $ - $ 27,128 $ - - - - - 100,850 38,250 - - 42,222 - - 55,541 8,298 - - - 600 - 38,553 - - - - 153,579 120,316 - - - - - 15,868 14,768 3,556 - - - 241 9,308 212 $42,109 $ -0- $42,222 $27,128 $ 241 $362,874 $181,844 $10,381 $ 127 $ - $ - $ 20 $ 11,681 $ 3,894 - - - 27,128 500 113,025 4,557 - - - - 29,131 67,573 45,917 $10,381 127 $ -0- $27,128 $ 29,651 $192,279 $54,368 $31,728 $(127) $42,222 $ - $(29,410) $170,595 $127,476 - - - - - 33,659 $31,728 $(127) $42,222 $ - $(29,410) $204,254 $127,476 59,334 127 - - - 215,764 5,154 - - - - 30,000 30,000 83,134 $91,062 $ -0- $42,222 Sim 590 $450,018 $215,764 (See Accompanying Notes to Financial Statements) 47 (This Page Intentionally Left Blank) 48 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. 49 (This Page Intentionally Left Blank) 50 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1998 AND 1997 ASSETS Cash and Cash Equivalents Delinquent Taxes Receivable (Net of Allowances) TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Due to Other Funds Deferred Revenue Ad Valorem Taxes Total Liabilities FUND BALANCES (DEFICIT) Reserved for Debt Service TOTAL LIABILITIES AND FUND BALANCES (See Accompanying Notes to Financial Statements) 51 SEPTEMBER 30, 1998 1997 $300,855 $235,013 15,099 15,671 $315,954 $250,684 $128,868 $264,604 15,099 15,671 $143,967 $280,275 171,987 (29,591) $315,954 $250,684 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 1998 REVENUES Interest Income EXPENDITURES Debt Service Bond Principal Bond Interest Fiscal Agent Fees Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES Operating Transfers In Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures FUND BALANCES (DEFICIT) - OCTOBER 1 FUND BALANCES (DEFICIT) - SEPTEMBER 30 1998 VARIANCE FAVORABLE 1997 BUDGET ACTUAL (UNFAVORABLE) ACTUAL $ 44,710 $ 44,710 $ 179,000 $ 179,000 $ - $ 170,000 39,999 251,790 (211,791) 91,486 - 4,133 (4,133) 544 $ 218,999 $ 434,923 $(215,924) $ 262,030 $(218,999) $(390,213) $(171,214) $(262,030) 218,999 591,791 $ -0- $201,578 (29,591) $171,987 (See Accompanying Notes to Financial Statements) 52 372,792 $ 201,578 266,786 $ 4,756 (34,347) $ (29,591) CAPITAL PROJECTS FUNDS 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.) 53 (This Page Intentionally Left Blank) 54 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1998 AND 1997 ASSETS Cash and Cash Equivalents LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Due to Other Funds Total Liabilities FUND BALANCES Unreserved Designated TOTAL LIABILITIES AND FUND BALANCES TOTALS 1998 1997 $4,846,221 $539,040 $ 28,003 $ - 38,790 23,458 $ 66,793 $ 23,458 4,779,428 515,582 $4,846,221 1112.LO40 (See Accompanying Notes to Financial Statements) 55 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES YEARS ENDED SEPTEMBER 30, 1998 AND 1997 REVENUES Other Interest Income other Total Revenues Bond Issue Costs General and Administrative Professional and Contractual Services Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Proceeds from Bond Issue Operating Transfers (Out) Total Other Financing Sources (Out) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Sources (Uses FUND BALANCES - BEGINNING OF YEAR FUND BALANCES - END OF YEAR TOTALS 1998 1997 $ 183,191 $ 26,939 631 287 $ 183,822 $ 27,226 $ 53,943 $ - 3,613 - 151,098 7,906 471,464 28,779 $ 680,118 $ 36,685 $ (496,296) $ (9,459) $4,930,000 $ - (169,858) - $4,760,142 $ -0- $4,263,846 $ (9,459) 515,582 525,041 $4,779,428 $51 (See Accompanying Notes to Financial Statements) 56 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. 57 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) (See Accompanying Notes to Financial Statements) 58 WATER AND SEWER TOTALS SYSTEM SAFES 1998 1997 ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 1,410,410 $272,244 $ 1,682,654 $ 2,952,486 Accounts Receivable (Net of Allowances) 342,358 137,381 479,739 571,675 Due from Other Funds 18,900 94,978 113,878 - Inventory of Supplies, at Cost 98,934 16,626 115,560 112,708 -Total Current Assets $ 1,870,602 $521,229 $ 2,391,831 $ 3,636,869 RESTRICTED ASSETS Cash and Cash Equivalents $ 2,442,551 $ -0- $ 2,442,551 $ 1,353,549 FIXED ASSETS Land and Improvements $ 160,521 $ - $ 160,521 $ 160,521 Buildings 195,724 26,656 222,380 222,380 Improvements Other than Buildings 10,359,927 7,642 10,367,569 9,937,675 Machinery, Equipment, and Vehicles 923,848 559,481 1,483,329 1,227,918 Construction in Progress 169,858 169,858 Totals $11,640,020 $763,637 $12,403,657 $11,548,494 Less: Accumulated Depreciation 6,142,271 348,653 6,490,924 6,022,623 Total Fixed Assets $ 5,497,749 $414,984 $ 5,912,733 $ 5,525,871 OTHER ASSETS Organizational Costs (Net of Accumulated Amortization of $1,328 and $1,280 for 1998 and 1997) $ 572 $ - $ 572 $ 620 Bond Issue Costs (Net of Accumulated Amortization of $11,253 and $7,138 for 1998 and 1997) 23,757 - 23,757 27,872 Deferred Loss on Early Retirement of Debt (Net of Accumulated Amortization of $30,207 and $19,161 for 1998 and 1997) 63,768 63,768 74,814 Total Other Assets $ 88,097 $ -0- $ 88,097 $ 103,306 TOTAL ASSETS $ 9,898,999 93� ,213 $10,835,212 $10,619,595 (See Accompanying Notes to Financial Statements) 58 LIABILITIES AND EQUITY CURRENT LIABILITIES Vouchers Payable Note Payable Due to Other Funds 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 (Less Current Maturities) Certificate of Obligation Payable (Less Current Maturities) Refunding Bonds (Less Current Maturities) Public Facility Loan Note Payable (Less Current Maturities) Total Noncurrent Liabilities Total Liabilities EQUITY Contributed Capital Retained Earnings Reserved for Revenue Bond Retirement Reserved for Equipment Replacement and Capital Improvements Unreserved Total Equity TOTAL LIABILITIES AND EQUITY WATER AND SEWER TOTALS SYSTEM SAFES 1998 1997 $ 129,441 $ 70,069 $ 199,510 $ 255,283 27,700 - 27,700 25,729 188,982 - 188,982 1,195,352 32,461 21,645 54,106 48,098 $ 378,584 $ 91,714 $ 470,298 $ 1,524,462 $ 208,164 $ - $ 208,164 $ 174,651 80,000 - 80,000 55,000 10,000 - 10,000 10,000 185,000 - 185,000 184,000 4,000 - 4,000 4,000 17,345 - 17,_345 14,825 $ 504,509 $ -0- $ 504,509 $ 442,476 $ 820,000 $ - $ 820,000 $ 900,000 140,000 - 140,000 150,000 711,000 - 711,000 896,000 68,000 - 68,000 72,000 96,491 - 96,491 124,191 $1,835,491 $ -0- $ 1,835,491 $ 2,142,191 $2,718,584 $ 91,714 $ 2,810,298 $ 4,109,129 $3,964,968 $226,769 $ 4,191,737 $ 4,235,198 412,488 - 412,488 382,368 40,000 - 40,000 40,000 2,762,959 617,730 3,380,689 1,852,900 $7,180,415 $844,499 $ 8,024,914 $ 6,510,466 $9,899 $936,213 $10,835,212 $10,619,595 (See Accompanying Notes to Financial Statements) 59 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) 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 before Depreciation Operating Income before Depreciation and Amortization Depreciation and Amortization Operating Income NONOPERATING REVENUES (EXPENSES) Interest Income Interest Expenses Transfers In (Out) Total Nonoperating Revenues (Expenses) Net Income RETAINED EARNINGS AT BEGINNING OF YEAR RETAINED EARNINGS AT END OF YEAR WATER AND TOTALS SEWER SYSTEM SAFES 1998 1997 $3,240,986 $758,671 $3,999,657 $3,609,525 75,914 165 76,079 24,350 $3,316,900 $758,836 $4,075,736 $3,633,875 $ 511,254 $452,891 $ 964,145 $ 849,168 503,139 - 503,139 474,389 265,000 7,800 272,800 272,800 283,105 77,325 360,430 307,427 148,890 106,211 255,101 249,458 - 30.734 30.734 84.532 $1,711,388 $674,961 $2,386,349 $2,237,774 $1,605,512 $ 83,875 $1,689,387 $1,396,101 (305,417) (39,986) (345,403) (310,915) $1,300,095 $ 43,889 $1,343,984 $1,085,186 $ 206,322 $ 16,957 $ 223,279 $ 179,323 (138,523) - (138,523) (138,558) (40,689) 169,858 129,169 (40,252) $ 27,110 $186,815 $ 213,925 $ 513 $1,327,205 $230,704 $1,557,909 $1,085,699 1,888,242 387,026 2,275,268 1,189,569 $3,215,447 $617,730 $3,833,177 $2,275,268 (See Accompanying Notes to Financial Statements) 60 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) 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 out to Other Funds CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets Principal Payments on Long -Term Debt Interest Paid on Long -Term Debt Capital Contributed for Capital Assets Net Cash Used in Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Investment Interest on Investments Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR Comprised of Current Assets Restricted Assets CASH AND CASH EQUIVALENTS - END OF YEAR WATER AND TOTALS SEWER SYSTEM SAFES 1998 1997 $ 3,280,564 (2,036,238) (506,017) 75,914 $ 814,223 $ 811,028 $ 4,091,592 (382,172) (2,418,410) (452,120) (958,137) 165 76,079 $ (23,099) $ 791,124 $4,490,000 (1,492,558) (831,033) 24,350 $2,190,759 $ (40,689) $ 169,858 $ 129,169 $ (40,252) $ (648,325) $(206,838) $ (855,163) $ (553,829) (278,729) - (278,729) (259,899) (147,049) - (147,049) (155,428) (43,461) - (43,461) 221,341 $(1,117,564) $(206,838) $(1,324,402) $ (747,815) $ - $ - $ - $ 601,663 206,322 16,957 223,279 179,323 $ 206,322 $ 16,957 $ 223,279 $ 780,986 $ (137,708) $ (43,122) $ (180,830) $2,183,678 3,990,669 315,366 4,306,035 2,122,357 $ 3,852,961 $$ 272,244 $ 4,125,205 $4,306,035 $ 1,410,410 $ 272,244 $ 1,682,654 $2,952,486 2,442,551 - 2,442,551 1,353,549 $ 3,852,961 $ 272,244 $ 4,125,205 $4,306 (Continued) (See Accompanying Notes to Financial Statements) 61 CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING INCOME Operating Income Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities Depreciation /Amortization Depreciation Attributed to Contributed Capital Provision for Uncollectible Accounts (Increase) Decrease in the Following Assets Accounts Receivable Inventory Due from Other Funds Increase (Decrease) in the Following Liabilities Vouchers Payable Due to Other Funds Accrued Vacation Customers Deposits NET CASH PROVIDED BY OPERATING ACTIVITIES WATER AND TOTALS SEWER SYSTEM SAFES 1998 1997 $1,311,141 $ 43,889 $1,355,030 $1,075,117 305,417 39,986 345,403 453,197 138,106 - 138,106 - 1,969 (51,241) (49,272) 82,285 37,609 103,598 141,207 (264,812) (2,852) - (2,852) (26,199) - - - 1,063,002 (5,287) 69,299 64,012 (25,821) (1,010,630) (229,401) (1,240,031) (214,981) 5,237 771 6,008 18,135 33,513 33,513 30,836 $$ 814,223 $(23,099) $ 791,124 $2,190,759 (See Accompanying Notes to Financial Statements) 62 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. 63 (This Page Intentionally Left Blank) 64 CITY OF SCHERTZ, TEXAS SCHEDULES OF GENERAL FIXED ASSETS - BY SOURCE 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 M SEPTEMBER 30, 1998 1997 $ 501,994 $ 418,409 1,226,466 1,114,290 8,265,774 7,985,121 1,277,090 1,158,583 1,286,663 1,208,342 $12,557,987 $11,884,745 $ 2,862,871 $ 2,661,093 1,818,233 182,686 317,005 113,614 180,984 7,066,305 10,504 5,785 $12,557,987 1,346,769 182,686 317,005 113,614 180,984 7,066,305 10,504 5,785 $11,884,745 CITY OF SCHERTZ, TEXAS SCHEDULES OF GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY YEAR ENDED SEPTEMBER 30, 1998 66 BALANCE BALANCE OCTOBER 1, SEPTEMBER 30, 1997 ADDITIONS DEDUCTIONS 1998 General Government $ 971,028 $ 64,066 $ - $ 1,035,094 Public Safety Police 579,606 190,642 - 770,248 Fire 884,213 151,380 - 1,035,593 Inspection 27,210 - - 27,210 Street and Park Street 7,601,552 260,410 - 7,861,962 Pool 543,300 - - 543,300 Parks 696,849 - - 696,849 Health Animal Control 266,965 4,950 - 271,915 Library 301,132 1,794 - 302,926 Economic Development Foundation 12,890 - - 12,890 TOTALS $11,884,745 $673.242 0- $12,557,987 66 COMPONENTS OF GENERAL FIXED ASSETS IMPROVEMENTS OTHER THAN LAND BUILDINGS BUILDINGS VEHICLES EQUIPMENT $ 58,718 $ 623,236 $ 77,089 $ 6,676 $ 269,375 41,793 56,088 7,646 499,023 165,698 53,792 121,088 13,317 545,100 302,296 - - 139 18,031 9,040 108,333 400 7,329,277 145,109 278,843 - - 530,309 - 12,991 182,662 195,159 202,906 26,865 89,257 23,161 106,071 70,224 36,286 36,173 23,031 124,424 34,867 - 120,604 10,504 - - - 2,386 $501,994, $1,226,466 $8,265,774 $1,277,090 $1,286,663 67 (This Page Intentionally Left Blank) 68 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. 69 (This Page Intentionally Left Blank) 70 CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING BALANCE SHEET SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30 1997) (See Accompanying Notes to Financial Statements) 71 SCHERTZ ECONOMIC SCHERTZ DEVELOPMENT THE DEVELOPMENT TOTALS CORPORATION LIBRARY FOUNDATION 1998 1997 ASSETS Cash and Cash Equivalents $9,293 $14,801 $85,688 $109,782 $91,552 Due from Other Funds - 381 - 381 TOTAL ASSETS 1$9,293 $15,182 $85,688 $110,163 $91,552 LIABILITIES AND FUND BALANCES LIABILITIES Due to Primary Government $ - $ - $ - $ $ 234 Due to Other Funds - - 3,117 3,117 Total Liabilities $ -0- $ -0- $ 3,117 $ 3,117 $ 234 FUND BALANCES Unreserved Designated 9,293 15,182 82,571 107,0461 91,318 TOTAL LIABILITIES AND FUND BALANCES $9,293 $15,182 $85,688 $110,163 $91,552 (See Accompanying Notes to Financial Statements) 71 CITY OF SCHERTZ, TEXAS DISCRETELY PRESENTED COMPONENT UNITS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 1998 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1997) (See Accompanying Notes to Financial Statements) 72 SCHERTZ ECONOMIC SCHERTZ DEVELOPMENT THE DEVELOPMENT TOTALS CORPORATION LIBRARY FOUNDATION 1998 1997 REVENUES Taxes $ 299,660 $ - $ - $ 299,660 $ - Other Donations - 5,072 400 5,472 5,328 Reimbursements - - 5,365 5,365 36,079 Interest 207 480 3,646 4,333 3,006 Total Revenues S 299,867 $ 5,552 9,411 $ 314,830 $44,413 EXPENDITURES Current Recreation $ - $ 3,670 $ - $ 3,670 $ 2,707 Economic Development 5,897 - 4,858 10,755 10,186 Total Expenditures $ 5,897 $ 3,670 $ 4,858 S 14,425 $12,893 Excess of Revenues Over Expenditures $ 293,970 $ 1,882 $ 4,553 $ 300,405 $31,520 OTHER FINANCING (USES) Transfers Out (284,677) - - (284,677) - Excess of Revenues Over Expenditures and Other Financing (Uses) $ 9,293 $ 1,882 $ 4,553 $ 15,728 $31,520 FUND BALANCES - OCTOBER 1 13,300 78,018 91,318 59,798 FUND BALANCES SEPTEMBER 30 $$ 9,293 $15,182 S82,571 S107.046 $91,318 (See Accompanying Notes to Financial Statements) 72 STATISTICAL INFORMATION 73 CITY OF SCHERTZ, TEXAS GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION TABLE 1 FISCAL GENERAL PUBLIC STREETS TOTAL (1) YEAR GOVERNMENT SAFETY AND PARKS HEALTH OTHER EXPENDITURES 1989 $934,517 $582,673 $289,539 $50,243 $189,199 '$2,046,171 1990 654,009 796,823 327,797 56,150 339,241 2,174,020 1991 659,815 836,031 342,974 65,816 436,419 2,341,055 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 (1) Includes General, Special Revenue and Debt Service Funds 74 CITY OF SCHERTZ, TEXAS GENERAL GOVERNMENT REVENUES BY SOURCE TABLE 2 *Includes General, Special Revenue and Debt Service Funds * *Reclassification Among These Categories Performed in 1991 75 LICENSES CHARGES FINES FISCAL AND FOR AND YEAR TAXES PERMITS SERVICES FORFEITURES OTHER TOTAL* 1989 $1,360,611 $53,045 $31,235 $145,830 $305,348 $1,896,069 1990 1,540,027 42,194 72,781 217,311 305,977 2,178,290 1991 1,746,053 43,826 276,508 201,512 ** 156,737 2,424,636 ** 1992 1,811,941 53,316 326,184 221,856 113,261 2,526,558 1993 1,895,333 173,310 327,434 196,200 112,248 2,704,525 1994 2,109,202 145,229 343,731 195,964 195,320 2,989,446 1995 2,285,735 134,391 353,050 209,719 340,232 3,323,127 1996 2,389,765 394,841 375,767 317,403 244,638 3,722,414 1997 2,698,175 546,159 452,890 331,244 242,905 4,271,373 1998 3,168,926 610,943 472,366 343,943 654,095 5,250,273 *Includes General, Special Revenue and Debt Service Funds * *Reclassification Among These Categories Performed in 1991 75 (This Page Intentionally Left Blank) 76 1 H ��++ W O w E> L v m r4 co at o O OOl m a o+ r� ao Ln E E H X k W E E A C9 O N �D M tD .-4 V w W n N a V r- :) W N .-d M CD W .-I CD M Co ► ► ► ► E z a �o YD ao V! LA .-� .-a D► n ..i tq H E to co n ao Co � W O A w ow y� `� > O E4 H E+ W n o 0 a %0 In , n %0 0 E+ O a H a W H a a o a a a a a n a a a a a a k 1.4 a E E A 0 4 E O E-1 E U W PC z M .a n v a* N a in n M M O M tD Co a O E H a O M ► Ln ► CD ► N ► 1n .4 C4 x E w O ^ v Go M ^' M O o n 0 M o 10 Ln ► M o ► co O E a o •-4 N M M v Ln H E-4 E u M). ► ► ► ► A W a C w E x E U w H v N n o�+ rn r A D E a M a a o M tD CO co N .D a E pr z W v a n M a n v M M co a0 w w w a0 U H A U W > W a O E �� dP a+ a w w v co �D 0 o M v Ln n M co E E H a Ln v r: U H dO p u a a a a a a a a a o W U a O a (/] z O n M N N Ln v %0 O O a M w O a n at 1A a E O a n M In co Ln N at v N H . ► ► ► ► ► ► ► ► W X E Ln V' Ln a M N O N a ► Ln a U r+ %D n co a a v Co %D a E w n co a o o .-t N M M in ID a O vil U a N O co Co co a a M O co co O x %0 M Ln a N O O Ln 10 O E > O E W co N N N n O ao ► O n a O O .-4 N M M V• t0 .-4 .-1 r 4 .-1 a co O a .4 a N a M a v a to a at n a CD a a a a a a a a a a as a I-4 -4 .-1 ri 14 .4 1-1 -4 w i4 o M 0 M 0 M 0 M 0 M 0 0 0 0 0 M M M M M a H k k k $4 a a a a a a a a a 4) 4) w w w w w CITY OF SCHERTZ, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY TABLE 4 78 FISCAL ESTIMATED LEVY YEAR ACTUAL ASSESSMENT ASSESSED TAX TAX YEAR ENDED VALUES PERCENTAGE VALUATIONS RATE LEVY 1989 09 -30 -89 $284,253,725 100% $290,606,339 .2576% $ 748,602 1990 09 -30 -90 376,676,293 100 287,272,356 .3183 914,388 1991 09 -30 -91 340,903,727 100 272,593,690 .3689 1,005,598 1992 09 -30 -92 269,351,284 100 268,170,123 .3889 1,042,914 1993 09 -30 -93 256,861,608 100 259,038,486 .4255 1,102,209 1994 09 -30 -94 264,286,116 100 258,766,426 .4684 1,212,063 1995 09 -30 -95 362,247,758 100 312,676,505 .4275 1,337,010 1996 09 -30 -96 346,130,091 100 334,122,763 .4072 1,360,548 1997 09 -30 -97 396,917,233 100 378,784,051 .3719 1,408,699 1998 09 -30 -98 452,163,752 100 450,199,212 .3554 1,600,008 78 CITY OF SCHERTZ TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS TABLE 5 79 COUNTY YEAR ** CITY SCHOOL COUNTY ROAD 100% 100% 100% 100% ASSESSMENT ASSESSMENT ASSESSMENT ASSESSMENT RATE* RATE* RATE RATE 1989 .2576 % .8882 % .1522% .0950% 1990 .3183 1.00561 .1418 .0977 1991 .3689 1.20513 .2720 .0850 1992 .3889 1.4777 .3599 .0850 1993 .4255 1.4499 .3036 .0950 1994 .4684 1.3095 .2995 .0867 1995 .4275 1.3712 .3018 .0833 1996 .4072 1.4089 .2997 .0758 1997 .3554 1.4299 .3040 .0730 1998 .3544 1.6923 .3192 .0600 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 79 CITY OF SCHERTZ, TEXAS RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE AND NET GENERAL BONDED DEBT PER CAPITA TABLE 6 *Based on Preliminary 1990 Census. This estimate has been challenged by the City. * *Includes General Bonded Debt Issued During Current Year 80 NET RATIO GENERAL OF NET BONDED BONDED DEBT DEBT PER FISCAL YEAR ESTIMATED ASSESSED NET GENERAL TO ASSESSED CAPITA September 30, 1989 12,580 $290,606,339 $755,115 .26 $60.03 September 30, 1990 10,681* 287,272,356 732,510 .25 68.58 September 30, 1991 10,900 272,593,690 715,300 .26 65.62 September 30, 1992 11,500 .268,170,123 687,715 .26 59.80 September 30, 1993 12,000 259,038,486 1,190,649 ** .46 99.22 September 30, 1994 12,500 258,766,426 1,132,128 .43 90.57 September 30, 1995 13,500 312,676,505 1,056,611 .34 78.27 September 30, 1996 14,500 334,122,763 1,215,000 .36 83.79 September 30, 1997 15,000 378,784,051 1,095,000 .29 73.00 September 30, 1998 17,500 450,199,212 5,901,000 1.31 337.20 *Based on Preliminary 1990 Census. This estimate has been challenged by the City. * *Includes General Bonded Debt Issued During Current Year 80 CITY OF SCHERTZ, TEXAS COMPUTATION OF DIRECT AND OVERLAPPING DEBT YEAR ENDED SEPTEMBER 30, 1998 *Bezar County *Corral County * Comal Independent School District *Guadalupe County *Schertz - Cibolo- Universal City Independent School District *Alamo Community College District Total Net Overlapping Debt *City of Schertz TOTAL DIRECT AND OVERLAPPING DEBT (3.98% OF ASSESSED VALUE - $1,163.03 PER CAPITA) *Source of Data - Texas Municipal Reports, City of Schertz, November, 1998 Compiled and Published by Municipal Advisory Council of Texas 81 TABLE 7 $17,445,424 DIRECT AND NET ESTIMATED ESTIMATED BONDED PERCENT OVERLAPPING DEBT APPLICABLE BONDED DEBT $137,517,269 .02% $ 27,503 3,366,449 .09 3,030 57,339,148 .12 68,807 2,435,000 14.75 359,163 20,449,015 51.88 10,608,949 58,835,000 .02 11.767 $11,079,219 8,665,680 100.00 6,366,205 $17,445,424 CITY OF SCHERTZ, TEXAS LEGAL DEBT MARGIN YEAR ENDED SEPTEMBER 30, 1998 TABLE 8 Texas municipalities are not bound by any 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 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. 82 *Includes General, Special Revenue, and Debt Service Funds 83 CITY OF SCHERTZ, TEXAS RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL EXPENDITURES LAST TEN FISCAL YEARS TABLE 9 PERCENT OF DEBT DEBT SERVICE TO SERVICE GENERAL FISCAL YEAR PRINCIPAL INTEREST TOTAL EXPENDITURES* EXPENDITURES September 30, 1989 $ 39,000 $54,758 $93,758 $2,046,171 4.3% September 30, 1990 45,000 52,049 97,049 2,174,020 4.5 September 30, 1991 45,000 49,067 94,067 2,341,055 4.0 September 30, 1992 46,000 46,084 92,084 2,344,541 4.0 September 30, 1993 57,000 42,830 99,830 2,594,017 3.9 September 30, 1994 58,000 97,493 155,493 2,756,605 5.6 September 30, 1995 85,000 74,139 159,139 2,936,945 5.4 September 30, 1996 341,000 87,098 428,098 3,961,171 10.81 September 30, 1997 120,000 65,540 185,540 3,746,737 4.95 September 30, 1998 124,000 58,916 182,916 4,467,520 4.09 *Includes General, Special Revenue, and Debt Service Funds 83 (This Page Intentionally Left Blank) 84 Ln Go 0 %0 ao %D n n ao V rt N n rt a O N 0 n n ao co M N %D W 1 01 o O rl M V Ln O lD n w w a7 3 a O a ra N M cn% M M M M .0 ,r, W E W 0 E r4 0% V rl N n rl V w a .n ..a Ln Ln n M ao n V .4 O O W ao n n co O N N Co %C Oh 3 M M M M V V V V in �D W « « « r. N %D M O �a rl a1 1n rl U M M ri O M rl P4 M O M M N %D 0o O w M V 0o N n n O N CO r% .-4 at 1n V V 1D rl O O to O O u1 In N V a0 n Ln n Ln N E 01 m N r4 .-1 rl rl M N N M M N N N N N Ln rl rl E M O M M N 0 CD O co M D] V aD N n n O N w n rl w a a in V v co rt o o Ln o w m w n n a V ao N Ln N o n U E-E E4 �D •V M M N N rl a n %D z N N rl rl rl rl rl > a H w w m a 0 0 O O 0 0 0 0 O o q W E D a o 0 0 0 o O o O 0 0 y C� W 0 H ► ► . ► ► ► ► ► ► ► W 5 as W W U co ao M O o Ln O in u, Ln E w A a z N M co co 0% of o V in Ln > a a � a E 3 W W M q O U' rl O as to M V 0o V O1 N a0 z W E4 H a PC co O1 co v rl 01 n V co tD co 01 N 1D o Ln rl G, w E O O H co V to ► o a o U w U M O Ln M O o V V M in W z z W W m n n co M 01 n %D N O H m %D V M N N n �D O M 1D WWO W ~ 3 a A U yr z 0 o V0 in V in o a %D .-4 co C7 �: H 01 n M n %D n Ch a1 n co Z w w E N O O1 Ln 1-4 %D V n N M H va a PC . . . . . . . . ► ► E-E z O H to n ON M n �D N Ln w .4 E rA w U V CO M o ao 0 M N LM .4 O 04 W W O O rl N M N N M Ln n W w W r4 rl rl P4 .4 rl rl rl rl ri O w yr A .a V V o► co V n o 0 0 C9 n Ln LO V %D Ln N O M O z W N Ln co o %D n D► EE z a n Ln n n n n o ch %D w N in rt co .4 m %D 0% n rl > n Ln Ln V %0 0% 01 M OD M w w pa a rt r4 r4 .-4 ri r4 .-1 N N M O vs 0% 0 rl N M V Ln 0 n aD aD 0% 0% at 01 m a1 M Q1 at a► a at at a a o► (71 ch a► .a 14 .a -4 rr rt ra ra A z o 0 0 0 0 0 0 0 0 0 W M M M M M M M M M M a w 14 N ►, $4 w N ►� IDA 0 04 04 dal 0 0 0 da'i d 0 d da'i w w w w w w w w w w Ln Go CITY OF SCHERTZ, TEXAS WATERWORKS AND SEWER SYSTEM FUND REVENUE BOND REQUIREMENTS AND RESTRICTED FUNDS YEAR ENDED SEPTEMBER 30, 1998 UTILITY SYSTEM REVENUE BONDS, SERIES 1973: Principal Payment, Due September 1, 1999 Interest Payment, Due March 1, 1999 UTILITY SYSTEM REVENUE BONDS, SERIES 1987: Principal Payment, Due September 1, 1999 Interest Payment, Due March 1, 1999 Total Requirements CASH - RESTRICTED OVER (UNDER) REQUIREMENTS RESERVE FUND REQUIREMENT ANNUAL PRINCIPAL/ SEMI - ANNUAL INTEREST $45,000 1,294 35,000 30,500 TABLE 11 REQUIREMENT AT SEPTEMBER 30, BASIS 1998 1 /12th $ 3,750 1 /6th 216 1 /12th 2,917 1 /6th 5,083 $11,966 26,418 $14,452 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 1987 issue. City monthly deposits through September 30, 1998 met these requirements. 1 ;,,1 Time Average Annual Principal and Interest Requirement (Annual $134,569) Cash and Cash Equivalents FUNDS AVAILABLE OVER (UNDER) REQUIREMENT 86 $201,854 412,488 $210,634 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS TABLE 12 Source: (1) 1990 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 Employment Commission (4) Schertz - Cibolo- Universal City Independent School District 87 LEVEL IN PER YEARS OF CAPITA MEDIAN FORMAL SCHOOL UNEMPLOYMENT FISCAL POPULATION INCOME AGE EDUCATION ENROLLMENT RATE IN % YEAR (1) (2) (3) (3) (4) (3) 1989 12,580 Est. $ 8,300 41 12 3,980 7.3% 1990 10,597 Act. 9,600 42 12 4,175 4.6 1991 10,900 Est. 13,436 35 14 4,309 6.3 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. 15,000 33 14 5,136 3.9 1998 17,500 Est. 16,500 32.6 14.6 5,951 3.9 Source: (1) 1990 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 Employment Commission (4) Schertz - Cibolo- Universal City Independent School District 87 (This Page Intentionally Left Blank) 88 77 W E N E a w W U W w O >4 E H U w a oa E W a d W H >4 H a m d O U a w W H A w zMz4 z a E as H i H H W v1 w z m rl b rl ro U d b m 8 v�l eo W e R o U r v Ln o 0 0o r .-4 0% o W N r N r eT v 0% N re 14 a tD o v r+ w N cc Ln o N O O 01 to z O tD o o tD o v r r ao ego r Ln to C ,� 0► F3 z dRi O a Ln O r d cn IV rl o M ern %DD Ln qF ODD E .4 to (n co ► to en E E to z v v N en to to to co 0 0 O o m N 1-4 V• to tD W A I z v} ,ri +1 O to d tD to Go eD O O rt rf N ao eD 01 r re N r tD o, tD r YD N o o d �D r o C% N M %0 v r4 r A E to OD v cif r v 1-1 M cn N z en N Ln en ra Ln O N r O W r-i N cn en co v to N .4 m N co N r to .4 N ro b M w E U 5 -1 H N en r O N tD tD 10 M to fA O O r r OD .-e v v en 0% W N N H re rl N N N m m �a - +I O 0 (d w I to N co t0 cn co to O1 01 N a eh to co co M co r o► v tD d O to rl to v r N v N v E W U co r co r tD to er cn Cl eh :4 r N 0► N N r O tD N O1 7 r to r4 en t0 r O crf v t0 ► v O N O rt en v O N rl 1 U to en en eh rf to v to r k U U w w 0) N W tq E m cn r v N O m tD .-e o H 0% m re O to N v en DD O ca eh cn v N OD M to O fn O O . . . . ► . . . ► . Ge N to v v r eh r v eD v W O at .4 r CO %D r \D 1D to A re ct r 0 v M re en r co A4 N re N re cn N to r en r Z t0 m tD %0 %0 %D co co to N ey v� N 00 H H W v1 w z m rl b rl ro U d b m 8 v�l eo W e R o U a r O co O co %0 O co N CD m W E rl N en v O v %0 00 v M r H N N v rl en co O O 01 to z O U N r4 V LM D .a co r o r cn to C ,� 0► F3 z dRi O a Ln O r v cn N rl to m N Rdi o v en .4 to (n co of to en E E to M N v N co N ao r o o m N 1-4 V• to tD W A ,ri +1 O to d tD H H W v1 w z m rl b rl ro U d b m 8 v�l eo W e R o U a m W E N r cn O N N tD m v r H tD eh en to z O U N r4 V LM tn O m z a a �+ o m ,ri +1 O to d tD to Go v Do v eh yJ O O t0 re N eD O N v .� U W o to to O aD tD m 01 t0 0 U z A O a ao ao 0o v to ao -4 co r en m A q m �j H d > r v Do 01 M t0 en t0 r to co r g to U 0 4J H U 01 4D N co N r to .4 N ro b M w E U 5 -1 o r b� O 0 m 3 WH h q U m JJ tl ti - +I O 0 (d w �° a w z o U U W ,-I N W ed E W N N i .4 0% -e rl to N N M E i) Dr N rl re N cn N 7 N w jl 0 H vd U :5 iJ U U w w 0) N tq U O► O rl N eh V' to t0 r O id co at Ot Oh 0% 01 m O► 0% Ch D 0% at 01 m (A m 0% 0% 01 0% O re rl .-1 .-1 re re .-c re re rc 0) eT co CITY OF SCHERTZ, TEXAS PRINCIPAL TAXPAYERS YEAR ENDED SEPTEMBER 30, 1998 TABLE 14 90 1997 PERCENTAGE OF ASSESSED TOTAL ASSESSED PRINCIPAL TAXPAYERS TYPE OF BUSINESS VALUATION VALUATION 1. H.E.B. Grocery Co. Grocery Sales $ 9,271,352 1.56% 2. Eric W. White Real Estate 6,216,564 1.04 3. PSPI, Inc. Machine Fabricating 4,093,326 0.69 4. Garden Ridge Pottery Mercantile 3,902,412 0.66 5. Negley Paint Co., Inc. Industrial 3,469,115. 0.58 6. Sycamore Creek Partners Apartments 3,386,434 0.57 7. Guadalupe Valley Electric Utility 2,957,918 0.50 8. Intel Southwest 3,366,521 0.57 9. Corridor Properties, Ltd. 2,957,356 0.50 10. Bridgestone Firestone, Inc.. 2,386,860 0.40 $ 42,007,858 7.07% Other Assessed Properties 553,735,333 92.93 TOTAL ASSESSMENTS $595,743,191 10� 0.00% 90 CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 1998 TABLE 15 Date of Incorporation: December, 1958 Date First Charter Adopted: April, 1974 Date Present Charter Adopted: Amended March, 1989 Form of Government: Council- Manager YEAR SQUARE MILES 1998 24.15 1 997 24.15 1996 • 24.15 1995 24.15 1 994 24.15 1993 24.15 1 992 24.15 1991 23.75 1 990 23.75 1989 22.42 Miles of Highways, Streets and Alleys 392 Streets and Highways, Paved 94.62 Miles Streets, Unpaved 6.78 Miles Alleys 3.44 Miles Sidewalks 16.95 Miles Miles of Sewer: Storm 2.18 Miles Sanitary 41.04 Miles Building Permits: (Continued) 91 VALUE OF YEAR PERMITS ISSUED BUILDINGS 1998 3,767 $82,800,348 1997 3,373 71,741,172 1996 2,559 64,267,503 1995 2,066 21,150,682 1994 2,771 18,917,416 1993 2,167 25,705,848 1992 873 6,702,823 1991 545 7,667,699 1990 392 6,652,769 1989 407 6,762,584 (Continued) 91 CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 1998 TABLE 15 Fire Protection: Number of Stations 1 Number of Employees (Full and Part-Time) 10 Number of Volunteers 30 Recreation: Parks 7 Playgrounds 65 Other Recreational Facilities: 17,500 Baseball Fields 3 Softball Fields 2 Large Pavilion 10,000 Square Feet Covered Small Pavilion 600 Square Feet Covered Picnic Tables: 2,281 Uncovered 50 Restrooms: 600 Male 6 Female 6 Concessions Stands 1 Community Center 1 City Employees: September 30, 1998 _ Elections: Number of Registered Voters 9,682 Number of Votes in: Last Municipal Election 701 Percentage of Registered Voters Voting in: Last Municipal Election 8.0% Source: Municipal Election Records Population: Census Population Count 1998 (Estimate) 17,500 1997 15,000 1990 10,597 1980 7,260 1970 4,061 1960 2,281 1950 1,200 1940 600 92 GENERALLY ACCEPTED GOVER__NMENTAL AUDITING STANDARD REPORT 93 (This Page Intentionally Left Blank) 94 NORTH TOWER 800 N.W. LOOP 410, SUITE 3WN SAN ANTONIO, TEXAS 78216 -5611 210/341.2581 FAX 210/341.2588 The Honorable Mayor and Members of the City Council City of Schertz, Texas Thompson, Williams, Biediger, K for Young, L.C. CERTIFIED PUBLIC ACCOUNTANTS MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER'FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the general purpose financial statements of City of Schertz, Texas, as of and for the year ended September 30, 1998, and have issued our report thereon dated December 23, 1998. We conducted our audit in accordance with generally accepted auditing 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 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 effect on the determination of financial statement amounts. However, providing an opinion on compliance with the 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 Control Over Financial Reporting In planning and performing our audit, we considered 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 financial 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 R. LARRY THOMPSON, C.P.A. / PAUL E. WILLIAMS. C.P.A. / JAMES L. BIEDIGER, JR., C.P.A. / C. TED KASTOR. C.PA. / CHARLIE E. YOUNG, JR.. C.P.A. H. LEE SCHWARTZMAN. C.P.A. / F. GLENN CRAVEY. C.PA. / FRED J. TIMMONS, C.P.A. / JOHN W GREEN, C.P.A. 95 JAMES T. McCARTY. C.P.A. (RETIRED) (This Page Intentionally Left Blank) 96 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS (CONTINUED) 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. This report is intended for the information of the audit committee, management, and federal awarding agencies and pass - through entities. However, this report is a matter of public record and its distribution is not limited. San Antonio, Texas December 23, 1998 0)�Ov" LU2��. ,oy� Certified Public Accountants 97