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CAFR FY 1995-96COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996 � REJ? p2.A U 1-35 , I -1[ a pndj CITY OF SCHERTZ, TEXAS MAYOR CITY COUNCIL CITY OF SCHERTZ, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 1996 CITY OFFICIALS HONORABLE HAROLD D. BALDWIN KENNETH GREENWALD MAYOR PRO -TEM (November 21, 1995 to May 21, 1996) TIMOTHY SWINNEY MAYOR PRO -TEM (May, 1995 to November 21, 1995) EARL SAWYER JOE POTEMPA CHARLES MCDONALD MAYOR PRO -TEM (May 21, 1996 to November 5, 1996) CITY MANAGER KERRY R. SWEATT INDEPENDENT AUDITORS Thompson, Williams, Biediger, Kastor & Young, L.C. San Antonio, Texas OFFICIALS ISSUING REPORT Kerry R. Sweatt City Manager i (This Page Intentionally Left Blank) ii C O N T E N T S PAGE NUMBER INTRODUCTORY SECTION Letter of Transmittal ix Organization Chart xvii GFOA Certificate of Achievement xviii FINANCIAL SECTION Independent Auditor's Report 3 General Purpose Financial Statements Combined Balance Sheet - All Fund Types and Account Groups and Discretely Presented Component Unit 8 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types 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 43 Comparative Schedules of Revenues, Expenditures, and Changes in Fund Balances (GAAP Basis) - Budget and Actual 44 Schedule of Revenues Compared to Budget 45 Schedule of Expenditures Compared to Budget (GAAP Basis) 46 iii C O N T E N T S PAGE TABLE NUMBER Special Revenue Funds Combining Balance Sheet 48 Combining Statement of Revenue, Expenditures and Changes in Fund Balances 49 Debt Service Fund Comparative Balance Sheets 52 Comparative Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 53 Capital Projects Funds Comparative Balance Sheets 57 Comparative Statements of Revenue, Expenditures, and Changes in Fund Balances 58 Enterprise Funds Combining Balance Sheet 60 Combining Statement of Revenues, Expenses, and Changes in Retained Earnings 62 Combining Statement of Cash Flows All Proprietary Fund Types 63 General Fixed Assets Schedules of General Fixed Assets - By Source 67 Schedules of General Fixed Assets - By Function and Activity 68 STATISTICAL INFORMATION General Governmental Expenditures by Function 1 72 General Government Revenues by Source 2 73 Property Tax Levies and Collections 3 75 Assessed and Estimated Actual Value of Property 4 77 iv C O N T E N T S PAGE TABLE NUMBER Property Tax Rates - Direct and Overlapping Governments 5 78 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Bonded Debt Per Capita 6 79 Computation of Direct and Overlapping Debt 7 80 Legal Debt Margin 8 81 Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Expenditures - Last Ten Fiscal Years 9 83 Water and Sewer Fund Revenue Bond Coverage 10 84 Waterworks and Sewer System Fund Revenue Bond Requirements and Restricted Funds 11 85 Demographic Statistics - Last Ten Fiscal Years 12 87 Property Value, Construction, and Bank Deposits - Last Ten Fiscal Years 13 89 Principal Taxpayers 14 90 Miscellaneous Statistics 15 92 SINGLE AUDIT REPORTS Independent Auditor "s Report on Schedule of Federal Financial Assistance 95 Schedule of Federal Financial Assistance 97 Notes to Schedule of Federal Financial Assistance 98 Independent Auditorfs Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards 99 Independent Auditorfs Report on Compliance Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards 103 v C O N 11 N T S PAGE TABLE NUMBER Independent Auditor "s Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs 105 Independent Auditor's Report on Compliance with the General Requirements Applicable to Federal Financial Assistance Programs 109 Independent Auditor "s Report on Compliance with Specific Requirements Applicable to Nonmajor Federal Financial Assistance Program Transactions vi 111 INTRODUCTORY SECTION vii (This Page Intentionally Left Blank) viii 1400 SCHERTZ PARKWAY P. O. DRAWER I SCHERTZ, TEXAS 78154 -0890 AC (210) 658 -3510 KERRY R. SWEATT FAX (210) 659 -3204 CITY MANAGER April 19, 1997 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, 1996 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 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 1995 -96, and major initiatives for fiscal year 1996 -97. 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. 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 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 1995 -96 economic indicators include: Housing starts were 460 for 1995 -96 as compared to 126 for the previous year. Total permits were valued at $48,959,088 for 1995 -96 compared to $21,150,682 for last year. The current economic condition in the area and region remains positive. Area unemployment continues to fall as area businesses expand and new businesses open. Another sign of good economic fortune is the continual expansion of our tax base. While some increases are from increased valuation, the majority was due to growth in both the residential and commercial sectors. The continued growth in sales tax revenues is a further indication of local economic strength. The economic outlook for Schertz and the surrounding area remains favorable. Commercial inquiries continue at a heavy pace, and the size and scope of the projects reflect a growing maturity and sophistication in our service area. The size of the projects "on the ground" show the willingness to invest in Schertz is very strong. We believe this trend is likely to continue for at least the next two years, provided the national economy remains stable. 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. Four new industrial relocations were announced that total over 8 million dollars in hard capital investment. American Freightways completed its new 72 bay truck terminal at a capital cost of 3.5 million dollars. MAJOR EVENTS The major events for fiscal year 1995 -96 can be categorized into two words, growth and growth in housing construction and master planning, the City continues to grow to a point at which new platted residential lots are continuing to be platted and built at an increasing rate. By the end of the fiscal year over 515 additional residential lots had been platted. Dove Meadows Unit III, Greenshire Unit III, Woodland Oaks 5A, 6A, 10 and Ashley Place Unit II were completed. Greenshire Units IV, VI, Ashley Place Unit III, Dove Meadows Unit IV, Berry Creek Unit I and Carolina Crossing Unit I began construction. The announcement by Security Capital Investment Trust of plans to construct a 244,000 square foot distribution center in Tri- County Business Park. The estimated 6 million dollar cost represents the largest single capital investment in the history of Schertz. HEB started the final platting process for an 81,000 square foot retail store. xi MAJOR INITIATIVES During the coming year we believe the City will continue to benefit from the generally positive outlook. Renewed interest and emphasis in upgrading infrastructure and meeting the challenges of growth in service request will occupy a major portion of time. It is anticipated that a major capital improvements program addressing community needs in public safety, parks and recreation, community facilities and other areas will be discussed. We also expect further consideration will be given to the question of an additional sales tax levy for specific purposes. Overall the future for residential, commercial, and industrial growth appears to be quite high. FINANCIAL INFORMATION The City's 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 City's utilities and other enterprises are maintained on the accrual basis of accounting. 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. General Governmental Functions: Revenues which include General, Special Revenue, Debt Service, and Capital Projects for general governmental function totaled $3,785,857 in 1996, an increase of 8.38% from 1995. Taxes produced 62.99% of general revenues compared to 65.90% last year. The amount of revenues from various sources and the increase /decrease from last year are shown in the following tabulation: xii PERCENT INCREASE OF (DECREASE) AMOUNT TOTAL FROM 1995 Taxes (Property, Sales, Etc.) $2,384,706 62.99% $ 98,971 Licenses and Permits 394,841 10.43 260,450 Charges for Services 375,767 9.93 22,717 Fines and Forfeitures 317,403 8.38 107,684 Other Revenues 313,140 8.27 (172,711) $3,7,857 10% $317,111 Expenditures. For general governmental purposes, expenditures totaled $4,018,958, an increase of 8.26`k from 1995. Changes in levels of expenditures for major functions of the City over the preceding year are shown in the following tabulation: $4,018,958 100-00% $332 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 1996 fiscal year was as follows: Net General Obligation Bonded Debt (Principal) AMOUNT $1,215,000 xiii RATIO OF DEBT TO ASSESSED VALUE (100%) OF PRESENT MARKET .36 DEBT PER CAPITA $83.00 PERCENT INCREASE OF (DECREASE) FUNCTION AMOUNT TOTAL FROM 1995 General Government $ 898,599 22.36% $ 84,810 Public Safety 1,174,371 29.22 115,040 Streets and Parks 304,722 7.58 (44,937) Health Services 85,685 2.13 5,361 Recreation 156,101 3.88 (19,961) Economic Development 67,946 1.69 1,770 Capital Outlay 486,942 12.12 (358,237) Debt Service 844,592 21.02 548,247 $4,018,958 100-00% $332 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 1996 fiscal year was as follows: Net General Obligation Bonded Debt (Principal) AMOUNT $1,215,000 xiii RATIO OF DEBT TO ASSESSED VALUE (100%) OF PRESENT MARKET .36 DEBT PER CAPITA $83.00 General Obligation Bonds Revenue Bonds MOODYFS INVESTORS SERVICE Baa -1 A In October 1995, the City issued $1,700,000 of General Obligation Refunding Bonds. This refunding bond issue replaced a total of seven bond issues from the water and sewer fund and general long -term debt account group. The issuance of these bonds was given an A rating. Property Taxes. Current tax collections are 98.7% of the tax levy. This is the sixth consecutive year in which current property tax collections have exceeded 95.0 %. The ratio of total collections (current and delinquent) to the current tax levy was 99.7%. Allocations of property tax levy by purpose for 1996 and the preceding two fiscal years are as follows (amounts per $100 assessed value): PURPOSE General Fund General Obligation Debt 1996 1995 1994 .3472 .3478 .3731 .0600 .0797 .0953 .4072 .4�275 .4684 Cash Management. Cash temporarily idle during the year was invested in short- term time deposits and U. S. Treasury bills. The interest earned on such deposits during the year was $185,651, an increase of $25,552 interest compared to earnings during 1995. This increase was due to additional funds from the General Fund and Water and Sewer Fund being available. 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, 1996, the general fixed assets of the City amounted to $11,721,266. 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, 1996. Water and Sewer System. Comparative data for the past two fiscal years is presented below: Total Operating Revenue Operating Income (Gross Revenues Less Operating Expenses) Net Revenues (Operating Income Plus Depreciation Less Solid Waste Revenues) Average Annual Bonded Debt Requirements xiv 1996 1995 $2,390,600 $1,997,654 667,185 289,089 998,010 608,414 289,392 292,654 During the year, $445,000 of maturing revenue bonds and $4,000 in Public Facility HUD Bond, and $22,198 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, 1996, SAFES increased its revenue 6.3% and increased operating expenses by 15.9%. SAFES is fully dependent on income fees generated from services rendered and the contracted cities' support to cover operations costs. This year SAFES had an operating income before depreciation of $78,659. A net charge for future uncollectible accounts of $19,747 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, 1995. 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 six (6) 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, Kastor & Young, L.C. of San Antonio, Texas, to perform the independent audit for the fiscal year 1995 -96. 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. Representatives of the audit firm of Thompson, Williams, Biediger, Kastor & Young, L.C. and specifically, Fred Timmons, 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, Kerry R. Sweatt City Manager xv Ax BER W O 00 a a 8 c c I- 0 u t DU axc Aw 0 (D C. 0 ie- C) v= m V 'M rrNrth Ax BER W O 00 a a 8 c c I- 0 u t DU c 4 as. I- j! L. O 0 C L 0 40 CL C 16-2 W < W CL IL rrlpTT 0 cc c CIS 0 ul CL 00 40 CO) 8 3 :," '.404 00 E E LU Ul 0 SE E U. CL cm M M M 1. c axc 0 (D C. 0 'M 0 CL > tCD a U) C13 Cc at � Go E V« M 2 E 0 am w c E E w 5 CO z Z3 CL 0 CD a LO aU Sao FE tM '0 0 0 SO C) C� C; I P� C; c 4 as. I- j! L. O 0 C L 0 40 CL C 16-2 W < W CL IL rrlpTT 0 cc c CIS 0 ul CL 00 40 CO) 8 3 :," '.404 00 E E LU Ul 0 SE E U. CL cm M M M 1. c xvi axc 'M r- c low 0 am w c E E w 5 CO Sao 0 0 CL 2! Z ?- gos C.) = 0 cD cD CD CD U) u. (h d) U) "Rev. Z. >% TTr mew a. ca 0 3.1 IMEP Wf V. 0 2 0 as B. z Cc cm mm O=S (D XCL U) z , --L 0 0 r r N 4 T C4 m LY 1 C4 xvi 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, 1995 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. �E 0fpjCF9 ti MM STATES AM o gym« r Preside SEAL day Executive Director xvii (This Page Intentionally Left Blank) zviii FINANCIAL SECTION (This Page Intentionally Left Blank) 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, 1996, as listed in the table of contents. These financial statements are the responsibility of the CityFs 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 and the provisions of Office of Management and Budget Circular A -128, Audits of State and Local Governments. 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, 1996, 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, 1996, 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 April 11, 1997 on our consideration of the City of Schertz, Texas' internal control structure and a report dated April 11, 1997 on its compliance with laws and regulations. R. LARRY THOMPSON. C.P.A. / PAUL E. WILLIAMS. C.PA- / JAMES L. BIEDIGER. JR., C.P.A. / C. TED KASTOR, C.P.A. / CHARLIE E. YOUNG. JR.. C.P.A. JOHN LEIF. C.P.A. / H. LEE SCHWARTZMAN. C.P.A. / E GLENN CRAVEY, C.P.A. / FRED J. TIMMONS, C.P.A. / JOHN W. GREEN, C.P.A. JAMES T McCARTY, C.P.A. (RETIRED) 3 Thompson, Williams, Biediger, NORTH TOWER u ++ CERTIFIED PUBLIC ACCOUNTANTS 800 N.W. LOOP 410, SUITE 30ON SAN ANTONIO, TEXAS 78216 -5611 210/341 -2581 1 I,aor MEMBERS AMERICAN INSTITUTE OF FAX 210/341.2588 Young, CERTIFIED PUBLIC ACCOUNTANTS L.C. 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, 1996, as listed in the table of contents. These financial statements are the responsibility of the CityFs 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 and the provisions of Office of Management and Budget Circular A -128, Audits of State and Local Governments. 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, 1996, 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, 1996, 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 April 11, 1997 on our consideration of the City of Schertz, Texas' internal control structure and a report dated April 11, 1997 on its compliance with laws and regulations. R. LARRY THOMPSON. C.P.A. / PAUL E. WILLIAMS. C.PA- / JAMES L. BIEDIGER. JR., C.P.A. / C. TED KASTOR, C.P.A. / CHARLIE E. YOUNG. JR.. C.P.A. JOHN LEIF. C.P.A. / H. LEE SCHWARTZMAN. C.P.A. / E GLENN CRAVEY, C.P.A. / FRED J. TIMMONS, C.P.A. / JOHN W. GREEN, C.P.A. JAMES T McCARTY, C.P.A. (RETIRED) 3 (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 April 11, 1997 %��' 404�" '�a q'I' X, a. 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H � a �o l Ie.QwD A 1.a 0 D �w a a qa o a p0m a, +� a 1 m 8 4 0 •o1 � a o .o .o wo a 0 0 0 0.1 A a e .o 1 -d l 4 14 a 00 0 Ma o 2 "4 v 0 a"� v w �e°o °a q�am1 1 14.0 � w 0a ~a° H � Qo O 0 0■ ° 0 14 A ► a u P P H o a U a m a o v y y m 1 Ot w • N 1^p� � 5 �a aUU' a9r, a �t�r1 a a w M 9 W 1►1 a ■ 0 v 4 m m ot m (This Page Intentionally Left Blank) 10 N F a O v U • A 0 i � o a g ► '1 w a►°c Fp °1 3 op w 10„ 0 y M U O In � ♦+� M v� ° 1tii NO U u ab • 0 sl i1 0 a 1 g w W w g to w a W • 7 �1t .• U N N k U pO • H Of .+N�j M M O 0 �Ot Mtl N w pa N • a1 Mo a � �o o a ► a M 'pdp NW11 A tl to Ii0 � id � A +1 y p 04 V W v a O V� a14 Ilw' �FN0 • N Cl ►I li O .y W • •tl•tl i • 0�N 1 p IO W F o N i1 0 .i 0 b N q + 11 N W p ° H U M • a0 N 0 1. N +O 0 0 0 94 +� N W N • U O .0 i O U �O N to) O q y N W U O a ■ O N 91 ~ U d 4 N Eat Q �yICaMW W W a1�a►1 pj 1.1 oa0O O O 01 IN 14 N .1 O 01 M m f!1 .-1 01 r .1 b .1 O N b m 1 I^ n 0 fV goo N M 01 N d 01 m n M O n h m M N h O M M M O f C O r O MI m b m m 1 b M n N ��1I 01 • w w• N r M 01 O M w M 01 q 0 0 b In w N b M !1 h r r M ri b m C b F q m M N O 01 n .-I N r m m b N m b M 01 b m h C h h 01 n .4 M fV r r m O fn .1 m .f .1 .4 .� fn H Wk H H OpJ PI H H M 0 O .-1 h N m b n O .-1 O O N O .1 O fY M O 01 n m 1"I f to O n q 01 n fY m M f C� O b r O Ommb.f O n mm�rhq OMnbO01n Of0 p1 b W q w r r N n n q • b r r N n n b n M h n a M r r r m m h 01 h m h b r f p1 01 m 01 n. 1 .1 m m m n O m N b 01 N n 0 b .� O .1 fV f M h b r n fV .f M M M M M n m .1 M .1 r y H H H H 1 1 1 I M M 1 1 t 1 1 Nm 1 t ry OI 1 1 1 1 1 OI N In N N 01 M ►Mi OI n n 8 b .1 n M O n O .1 fy In .1 b h O .-1 m O b .1 .1 b O O 01 n .1 r ►1 1.� ►1 O r b O r In n m n r .-1 m Ol n H m O f f O M n b .1 01 O/ O f M r O m at Q 5 r r N n M N b r r N 10 n ID b n N n 0% 01 O n n M r f f m m C� q r 01 r IFai i. m O� m f N b .-1 q A f M h b r n C1 Q M M M M M n m .1 M .1 H H h H V H H 1 1 1 I M M 1 1 1 1 1 1 1 1 1 1 1 1 1 b N � Fo r f f f r JL n n a ot In f ..1 H O M M �p b OI p 1 1 1 I f f O I 1 1 1 1 1 O f C; � �1 q q n n N N o b O r o n O m M O M M W i �� w �nm w m M v rri b .-1 m m f M m 111M1p EI as �M A H H H H H a A W � W q Q of o n 1��] �pWfy Ef � e Inn Inn o INn H H H H H U p a h 01 .f M O O O v O r b 0 01 .d f n r m O n 01 m m b n n N h m m � f h O N M n b .1 M n N f 111���fffjjj f r m N n f b m q n .d M O M n O m N N In r b M M M .f f O b y H H H H • A 0 i � o a g ► '1 w a►°c Fp °1 3 op w 10„ 0 y M U O In � ♦+� M v� ° 1tii NO U u ab • 0 sl i1 0 a 1 g w W w g to w a W • 7 �1t .• U N N k U pO • H Of .+N�j M M O 0 �Ot Mtl N w pa N • a1 Mo a � �o o a ► a M 'pdp NW11 A tl to Ii0 � id � A +1 y p 04 V W v a O V� a14 Ilw' �FN0 • N Cl ►I li O .y W • •tl•tl i • 0�N 1 p IO W F o N i1 0 .i 0 b N q + 11 N W p ° H U M • a0 N 0 1. N +O 0 0 0 94 +� N W N • U O .0 i O U �O N to) O q y N W U O a ■ O N 91 ~ U d 4 N Eat Q �yICaMW W W a1�a►1 pj 1.1 oa0O O O 01 IN 14 0 (This Page Intentionally Left Blank) 12 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF REVENUES EXPENDITURES,_ AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL - GENERAL AND DEBT SERVICE FUND TYPE YEAR ENDED SEPTEMBER 30, 1996 (See Accompanying Notes to Financial Statements) 13 GENERAL FUND DEBT SERVICE FUND VARIANCE VARIANCE FAVORABLE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) BUDGET ACTUAL (UNFAVORABLE) REVENUES Taxes $2,335,401 $2,384,706 $ 49,305 $ - $ - $ - Licenses and Permits 273,750 394,841 121,091 - - - Charges for Services 360,236 375,767 15,531 - - - Fines and Forfeitures 232,000 317,403 85,403 - - - Other 142,215 231,297 89,082 - 1,794 1,794 Total Revenues $3,343,602 $3,704,014 $360,412 $ -0- $ 1,794 $ 1,794 EXPENDITURES Current General Government $ 887,973 $ 837,540 $ 50,433 $ - $ 48,550 $ (48,550) Public Safety 1,279,301 1,174,371 104,930 - - - Streets and Parks 388,861 304,722 84,139 - - - Health 96,513 85,665 10,828 - - - Recreation 171,907 156,101 15,806 - - - Economic Development 66,257 57,374 8,883 - - - capital Outlay 398,440 452,795 (54,355) - - - Debt Service Principal - - - 128,150 656,000 (527,850) - - - 96,462 177,461 (80,999) Interest Total Expenditures $3,289,252 $3,068,588 $220,664 $ 224,612 $ 862,011 $(657,399) Excess of Revenues Over (Under) Expenditures $ 54,350 $ 635,426 $581,076 $(224,612) $(880,217) $(655,605) OTHER FINANCING SOURCES (USES) Proceeds of Bond Issue $ - $ - $ - $ - $ 447,000 $ 447,000 Loan Proceeds - 87,891 87,891 - - - Operating Transfers (Out) (224,612) (224,612) - 224,612 383,870 159,258 Total Other Financing Sources (Uses) $ (224,612) $ (136,721) $ 87,891 $ 224,612 $ 830,870 $ 606,258 Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses $$ (170,262) $ 498,705 668,967 $ -0- $ (49,347) $$ (447) FUND BALANCES - OCTOBER 1, 1995 1,190,501 15,000 FUND BALANCES (DEFICIT) - SEPTEMBER 30, 1996 $1,689,206 $ (34,347) (See Accompanying Notes to Financial Statements) 13 (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, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) OPERATING REVENUE Fees Charged to Users Reimbursements and Other Total Operating Revenue OPERATING EXPENSES BEFORE DEPRECIATION Personal 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 Total Nonoperating Revenues (Expenses) Net Income before Other Financing Sources (Uses) OTHER FINANCING SOURCES (USES) Transfers Out Net Income (Loss) RETAINED EARNINGS (DEFICIT) - OCTOBER 1 ENTERPRISE FUNDS $2,932,642 43,597 $2,976,239 TOTALS INTERNAL (MEMORANDUM ONLY) SERVICE 1996 1995 $ 52,442 $2,985,084 $2,566,288 6,700 50,297 57,026 $ 59,142 $3,035,381 $2,623,314 $ 601,270 $ 22,291 $ 623,561 $ 583,924 414,065 - 414,065 411,336 227,600 - 227,600 229,800 282,712 16,090 298,802 229,854 228,707 30,331 259,038 269,016 78,422 78,422 69,853 $1,832,776 $ 68,712 $1,901,488 $1,793,783 $1,143,463 $ (9,570) $1,133,893 $ 829,531 438,688 2,759 441,447 411,806 $ 704,775 $(12,329) $ 692,446 $ 417,725 $ 123,232 $ - $ 123,232 $ 93,416 (191,560) - (191,560) (224,648) $ (68,328) $ -0- $ (68,328) $ (131,232) $ 636,447 $(12,329) $ 624,118 $ 286,493 (159,258) - (159,258) - $ 477,189 $(12,329) $ 464,860 $ 286,493 712,380 (21,757) 690,623 404,130 RETAINED EARNINGS (DEFICIT) - SEPTEMBER 30 $1,1189 $04,086) $1,1� 55 $ 690,623 (See Accompanying Notes to Financial Statements) 15 CITY OF SCHERTZ, TEXAS COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30 1995) TOTALS ENTERPRISE INTERNAL (MEMORANDUM ONLY) FUNDS SERVICE 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Cash Received from Customers $2,761,751 Cash Payments to Suppliers for Goods and Services (334,585) Cash Payments to Employees for Services (597,469) Cash Received for Reimbursements and Other 43,597 Net Cash Provided by Operating Activities $1,873,294 CASH FLOWS FROM NON - CAPITAL FINANCING ACTIVITIES Operating Transfers in (Out) $ (159,258) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and Construction of Capital Assets $ (502,030) Bond Issue Costs (128,985) Principal Payments on Long - Term Debt (1,317,218) Proceeds from Issuance of Long -Term Debt 1,253,000 Interest Paid on Long -Term Debt (194,139) Capital Contributed for Capital Assets 236,908 Net Cash Used in Capital and Related Financing Activities $ (652,464) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Investment $ (601,663) Interest on Investments 123,232 Net Cash Provided by (Used in) Investing Activities $ (478,431) Net Increase in Cash $ 583,141 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 $52,380 (35,587) (22,351) 6,700 1,142 $2,814,131 $ 2,295,311 (370,172) (1,210,461) (619,820) (581,205) 50,297 57,026 $1,874,436 $ 560,671 $ (159,258) $ - $(1,142) $ (503,172) $ (205,868) (128,985) - - (1,317,218) (239,619) - 1,253,000 30,020 (194,139) (228,402) 236,908 10,125 $(1,142) $ (653,606) $ (633,744) $ - $ (601,663) $ - - 123,232 93,567 $ -0- $ (478,431) $ 93,567 $ -0- $ 583,141 $ 20,494 1,539,216 90 1,539,306 1,518,812 $2,122,357 90 $2,122,447 $1,539,306 $1,281,603 $ 90 $1,281,693 $. 699,053 840,754 - 840,754 840,253 $2,122,357 90 $2,122,447 $1,5 (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, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) 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 Provision for Uncollectible Accounts Change in Assets and Liabilities (Increase) Decrease in Accounts Receivable (Increase) Decrease in Inventory (Increase) Decrease in Due from Other Funds (Increase) Decrease in Prepaid Costs Increase (Decrease) in Vouchers Payable Increase (Decrease) in Due to Other Funds Increase (Decrease) in Accrued Vacation Increase (Decrease) in Accrued Interest Payable Increase (Decrease) in Customer Deposits NET CASH PROVIDED BY OPERATING ACTIVITIES Supplemental Disclosure Non -Cash Capital and Related Financing Transactions Acquisition and Construction of Capital Assets Bond Issued Note Payable Issued Federal Financial Assistance Contributed Capital TOTALS ENTERPRISE INTERNAL (MEMORANDUM ONLY) FUNDS SERVICE 1996 1995 $ 704,775 $(12,329) $692,446 $286,493 441,221 2,759 443,980 411,806 78,422 - 78,422 69,853 (54,671) - (54,671) (61,627) 7,202 615 7,817 24,923 (194,642) (62) (194,704) (759,313) - (310) (310) - 121,575 - 121,575 6,276 741,481 10,529 752,010 582,899 3,801 (60) 3,741 2,969 - - - (3,754) 24,130 - 24,130 146 $1,873,294 1,142 $1,8� 74 $560,671 $ 502,030 $ 1,142 $ 503,172 $205,868 1,253,000 - 1,253,000 - - - - 30,020 160,511 - 160,511 - 236,908 - 236,908 10,125 17 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 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 (GASH) 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. Blended 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, develop and implement economic viability to 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. Therefore, the operations of the foundation are reported as a Special Revenue Fund in the report. Annual reports of the Schertz Development Foundation for fiscal year ended September 30, 1996 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. 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 SEPTEMBER 30, 1996 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 SEPTEMBER 30, 1996 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. The City Council must approve over - expenditures of appropriations or transfers of appropriated amounts between departments. 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 SEPTEMBER 30, 1996 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 Investments Cash includes amounts in demand deposits as well as short -term certificates of deposit with a maturity date within three (3) months of the date acquired by the City. Investments generally consists of certificates of deposit with a maturity date greater than three (3) months of the date acquired by the City and are recorded at cost, which approximates market value. F. Short -Term Interfund Receivables /Payables 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 SEPTEMBER 30, 1996 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 SEPTEMBER 30, 1996 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 with an original maturity of approximately ninety days or less to be cash equivalents. 23 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 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 governmentfs 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 1995 comparative totals to conform to the 1996 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 U. S. Treasury bills 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" or "Investments." 24 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 3: DEPOSITS WITH FINANCIAL INSTITUTIONS (CONTINUED) At September 30, 1996, cash deposits with financial institutions amounted to $3,066,284 and Treasury bills totaled $601,663. Bank balances totaled $4,206,199 and were entirely collateralized by securities held by the City's agent in the City's name. There are three (3) categories of risk that apply to the City's bank balances: 1. Insured or collateralized with securities held by the City or by the City's agent in the City's name. 2. Collateralized with securities held by pledging financial institution's trust department of the City's agent in the City's name. 3. Uncollateralized. Deposits, categorized by level of risk are: PRIMARY GOVERNMENT Cash and Cash Equivalents Investments TOTALS COMPONENT UNIT Cash and Cash Equivalents Investments TOTALS COLLATERAL CATEGORY CARRYING MARKET 1 2 3 AMOUNT VALUE $3,006,284 $ - $ - $3,006,284 $6,052,188 601,663 - - 601,663 608,527 $3,607,947 $3,607,947 $6,660,715 $ 10,483 $ - $ - $ 10,481 $ 10,483 $ 10.483, 0 0- $ 10,481 $ 10,483 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 deposits 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. For fiscal year September 30, 1996, the City invested in demand deposits, certificates of deposit, and U. S. Treasury bills. 25 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 4: RECEIVABLES Receivables at September 30, 1996 consist of the following: NET TOTAL RECEIVABLES $101.188 $14,512 $389.147 $504,847 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. NOTE 5: GENERAL FIXED ASSETS The following is a summary of changes in general fixed assets: BALANCES AT DEBT BALANCES AT OCTOBER 1, GENERAL SERVICE ENTERPRISE TOTAL RECEIVABLES 1996 Land $ 423,460 $ - $ - Taxes $ 74,583 $15,276 $ - $ 89,859 Account 30,334 - 508,657 538,991 Gross Receivables $104,917 $15,276 $508,657 $628,850 Less: Allowance for 1,092,935 Equipment 1,027,942 106,297 Uncollectible 3,729 764 119,510 124,003 NET TOTAL RECEIVABLES $101.188 $14,512 $389.147 $504,847 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. NOTE 5: GENERAL FIXED ASSETS The following is a summary of changes in general fixed assets: $11,228,539 $492,727 $ -0- $11,721,266 *Adjusted to Include Land of $15,739 in the Schertz Development Foundation 26 BALANCES AT BALANCES AT OCTOBER 1, SEPTEMBER 30, 1995 ADDITIONS DEDUCTIONS 1996 Land $ 423,460 $ - $ - $ 423,460 Buildings 1,114,290 - - 1,114,290 Improvements Other than Buildings 7,922,195 34,147 - 7,956,342 Vehicles 740,652 352,283 - 1,092,935 Equipment 1,027,942 106,297 1,134,239 $11,228,539 $492,727 $ -0- $11,721,266 *Adjusted to Include Land of $15,739 in the Schertz Development Foundation 26 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 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, 1996: Buildings Improvements Other than Buildings Machinery and Equipment Construction in Progress Accumulated Depreciation Land ENTERPI WATER /SEWER $ 195,724 9,505,982 615,046 100,490 $10,417,242 5,308,340 $ 5,108,902 160,521 USE INTERNAL SAFES SERVICE TOTAL $ 26,656 $59,946 $ 282,326 - - 9,505,982 470,158 25,198 1,110,402 100,490 $496,814 $85,144 $10,999,200 297,754 26,411 5,632,505 $199,060 $58,733 $ 5,366,695 160,521 TOTALS $ 5,269,423 $199,060 $58,733 $ 5,527,216 In the proprietary and internal service funds, the following useful lives are used to compute depreciation: Buildings Sewer and Water Lines Equipment NOTE 7: LONG -TERM DEBT A. Advance Refunding 30 Years 50 Years 5 - 10 Years In October, 1995, the City issued $1,700,000 of General Obligation Refunding Bonds with an interest rate ranging from 3.75`•k to 5.00`k to advance refund a total of $1,525,000 of bonds from the General Long -Term Debt Account Group and the Water and Sewer Fund. The proceeds of the refunding bonds were used to purchase U. S. Obligations or their equivalent in an escrow account of the trust department of the paying agent bank, to provide resources for all future debt service payments of the bonds being refunded. The advance refunding resulted in a total debt service savings of $140,778 and a present value economic benefit of $95,186. 27 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 7: LONG -TERM DEBT (CONTINUED) B. General Long -Term Debt The following is a summary of changes in general long -term debt for the year ended September 30, 1996: Certificates of Obligation 1990 Series General Obligation Refunding Bonds 1995 Series Notes Payable - Bank Due November, 1996 Notes Payable - Bank Due September, 1997 TOTAL GENERAL OBLIGATION BONDS, CERTIFICATES OF OBLIGA- TION, GENERAL OBLIGATION REFUNDING BONDS, AND NOTES PAYABLE 850,000 7 - 9.0% $ 695,000 $ - $315,000 447,000 $ 42,891 45,000 3.75 - 5.00% $ - $447,000 $ 29,000 9.25% $ - $ 42,891 $ $380,000 $418,000 $ 42,891 8.00% - 45,000 45,000 $ -0- $ 87,891 $ -0- $ 87,891 $1,804,000 $534,891 $656.000 $1,682 28 BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, DURING YEAR SEPTEMBER 30, AMOUNT RATE 1995 ISSUED RETIRED 1996 General Obligation Bonds 1962 Series $301,000 3.63% $ 74,000 $ - $ 12,000 $ 62,000 1975 Series 175,000 6.2 - 7.0% 130,000 - 130,000 - 1987 Series 445,000 6.2 - 8.3% 310,000 - 145,000 165,000 1992 Series 620,000 5.2 - 7.2% 595,000 - 25,000 570,000 $1.109,000 $ -0- $312,000 $797,000 Certificates of Obligation 1990 Series General Obligation Refunding Bonds 1995 Series Notes Payable - Bank Due November, 1996 Notes Payable - Bank Due September, 1997 TOTAL GENERAL OBLIGATION BONDS, CERTIFICATES OF OBLIGA- TION, GENERAL OBLIGATION REFUNDING BONDS, AND NOTES PAYABLE 850,000 7 - 9.0% $ 695,000 $ - $315,000 447,000 $ 42,891 45,000 3.75 - 5.00% $ - $447,000 $ 29,000 9.25% $ - $ 42,891 $ $380,000 $418,000 $ 42,891 8.00% - 45,000 45,000 $ -0- $ 87,891 $ -0- $ 87,891 $1,804,000 $534,891 $656.000 $1,682 28 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 7: LONG -TERM DEBT (CONTINUED) B. General Long -Term Debt (Continued) C. Proprietary Long -Term Debt The following is a summary of changes in proprietary long -term debt for the year ended September 30, 1996: BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, AMOUNT RATE 1995 ISSUED RETIRED 1996 Revenue Bonds 1973 BALANCE $ 165,000 5.75 BALANCE 165,000 $ OUTSTANDING 1975 Series OUTSTANDING 7.00 OCTOBER 1, 205,000 - 205,000 - SEPTEMBER 30, Series 1995 ADDITIONS DEDUCTIONS 1996 - 185,000 - Compensated Absences Payable $108,856 $20,617 $ -0- $129,473 900,000 - 15,000 885,000 GENERAL OBLIGATION YEAR ENDED NOTES REFUNDING GENERAL CERTIFICATE OF SEPTEMBER 30, PAYABLE BONDS OBLIGATION OBLIGATION 1997 $95,469 $ 66,175 $ 119,365 $ 75,948 1998 - 62,248 120,669 76,772 1999 - 39,755 120,546 77,718 2000 - 38,661 116,375 78,231 2001 - 91,265 64,093 73,519 2002 -2006 - 211,162 388,650 88,081 Thereafter - - 185,310 - TOTAL $95,469 $509,266 $1,115,008 $470,269 Principal $87,891 $418,000 $ 797,000 $380,000 Interest 7,578 91,266 318,008 90,269 TOTAL $95,469 $509,266 $1,115 $470,269 C. Proprietary Long -Term Debt The following is a summary of changes in proprietary long -term debt for the year ended September 30, 1996: BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, AMOUNT RATE 1995 ISSUED RETIRED 1996 Revenue Bonds 1973 Series $ 165,000 5.75 - 6.10% $ 165,000 $ - $ 40,000 $ 125,000 1975 Series 325,000 7.00 - 7.75% 205,000 - 205,000 - 1981 Series 475,000 9.00 - 10.0% 185,000 - 185,000 - 1988 Series 1,020,000 6.30 - 8.30% 900,000 - 15,000 885,000 $1,455,000 $ -0- $445,000 $1,0� 100 29 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 7: LONG -TERM DEBT (CONTINUED) C. Proprietary Long -Term Debt (Continued) 30 BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, AMOUNT RATE 1995 ISSUED RETIRED 1996 Certificates of obliga- tion 1981 Series $ 150,000 9.30 - 10.00% $ 55,000 $ - $ 55,000 $ - 1983 Series 1,250,000 8.20 - 10.00% 745,000 - 660,000 85,000 1992 Series 200,000,5.00 - 7.00% 1801000 - 10,000 170,000 $$ 980.000 $ -0- $725,000 $ 255,000 General Obliga- tion Refunding Bonds 1995 Series $1,253,000 3.75 - 5.00% - $1,253,000 91,000 $1,162,000 BALANCE BALANCE OUTSTANDING OUTSTANDING ORIGINAL INTEREST OCTOBER 1, SEPTEMBER 30, AMOUNT RATE 1995 ISSUED RETIRED 1996 Public Facility -Loan (HUD) $142,000 5.00% 84,000 $ -0- 4,000 $ 80,000 Note Payable $273,000 7.60% $196,017 $ - $22,198 $173,819 Note Payable $ 30,000 8.25% 30,020 - 30,020 - $226,037 $ -0- $52,218 $173,819 The annual requirements to amortize all debt outstanding as of September 30, 1996 including interest payments are as follows: GENERAL OBLIGATION CERTIFICATES PUBLIC YEAR ENDED REFUNDING REVENUE OF FACILITY NOTES SEPTEMBER 30, BONDS BONDS OBLIGATION LOAN PAYABLE 1997 $ 132,226 $ 125,578 $112,310 $ 8,000 $ 37,212 1998 228,748 122,012 18,960 7,800 37,212 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 -2006 235,097 797,437 130,320 33,000 37,213 Thereafter - 133,563 51,000 - TOTALS $1,361,755 $1,506,303 $315,250 $122,000 $223,273 30 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 7: LONG -TERM DEBT (CONTINUED) C. Proprietary Long -Term Debt (Continued) GENERAL OBLIGATION YEAR ENDED REFUNDING REVENUE SEPTEMBER 30, BONDS BONDS Principal $1,162,000 $1,010,000 Interest 199,755 496,303 TOTALS $1,361,755 $1,506,303 CERTIFICATES PUBLIC OF FACILITY NOTES OBLIGATION LOAN PAYABLE $255,000 $ 80,000 $173,819 60,250 42,000 49,454 $315,250 $122,000 $223,273 Bonded debt of the City consists of various series of general obligation bonds, revenue bonds, certificates of obligation, public facility loan (HUD), public property finance contractual obligations, and two notes 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 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. Public property finance contractual obligations are payable from a levy of ad valorem taxes upon all taxable property within the City. The notes payable are 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 and blended component units as of September 30, 1996: General Fund Special Revenue Funds Schertz Development Foundation Forestry Debt Service Capital Projects Enterprise Funds Water and Sewer System SAFES Internal Service Fund TOTALS 31 DUE FROM DUE TO OTHER FUNDS OTHER FUNDS $1,822,032 $ 859,509 218 376,668 1,061,091 1,911 62 758 269,360 571,516 1,459,375 70,611 30,853 $3,261,982 $3.26 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 8: INTERFUND ASSETS /LIABILITIES (CONTINUED) The following is a summary of amounts due to and due from primary government and discretely presented component units. DUE FROM DUE TO COMPONENT PRIMARY UNIT GOVERNMENT General Fund $115 $ -0- Library Fund 115 TOTALS 115 115 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, 1996, is as follows: Operating Revenues Operating Expenses, Exclusive of Depreciation and Amortization Depreciation Operating Income Other Income (Expenses) Net Income before Transfers Transfers Out NET INCOME Total Assets Total Equity Working Capital Additions to Fixed Assets Outstanding Debt NOTE 10: CONTRIBUTED CAPITAL WATER /SEWER SAFES TOTAL $2,390,600 $585,639 $2,976,239 (1,325,796) (506,980) (397,619) (41,069) $ 667,185 $ 37,590 (82,489) 14,161 $ 584,696 $ 51,751 (159,258) - (1,832,776) (438,688) $ 704,775 (68,328) $ 636,447 (159,258) $ 425,438 51,751 $ 477,189 $9,204,267 $644,067 $9,848,334 $4,643,219 $560.207 $5,203,426 $1,258,368 $361,147 $1,619,515 $ 457,127 $ 45,134 $ 502,261 $2,680,819 $ -0- $2,680,819 During the year, contributed capital increased by the following amounts: 32 WATER AND INTERNAL SEWER SAFES SERVICE SOURCE FUND FUND FUND TOTAL Developers $ 78,930 $ - $ - $ 78,930 Federal Financial Assistance 160,511 - - 160,511 Less: Depreciation on Contribution (2,533) - - (2,533) Totals $ 236,908 $ -0- $ -0- $ 236,908 Contributed Capital, October 1 3,550,180 226,769 63,577 3,840,526 CONTRIBUTED CAPITAL, SEPTEMBER 30 $3,787,088 $226,769 $63,577 $4,077,434 32 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 11: OPERATING TRANSFERS Operating transfers are comprised as follows: General Fund Water and Sewer Fund Debt Service Fund NOTE 12: DEFICIT RETAINED EARNINGS IN OUT 383,870 $224,612 159,258 For the year ended September 30, 1996, the Internal Service Fund has a deficit retained earnings balance of $34,086. 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 1997 to offset this deficit balance. The Debt Service Fund had a deficit fund balance of $34,347 because transfers from the General Fund and Water and Sewer Fund were too low. Transfers will be adjusted in 1997. NOTE 13: PENSION PLAN Description The City provides pension benefits for all of its full -time employees through a nontraditional, joint contributory, defined contribution plan in the state -wide Texas Municipal Retirement System (TMRS), one of over 670 administered by TMRS, an agent multiple - employer public employee retirement system. It is the opinion of the TMRS management that the plans in TMRS are substantially defined contribution plans, but they have elected to provide additional voluntary disclosure to help foster a better understanding of some of the nontraditional characteristics of the plan. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City - financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are a percent of the employee's accumulated contributions. In addition, the City can grant as often as annually another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contribution accumulated with interest if the current employee contribution rate and city matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer - financed monetary credits with interest were used to purchase an annuity. 33 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 13: PENSION PLAN (CONTINUED) Description (Continued) Members can retire at ages sixty (60) and above with ten (10) or more years of service or with twenty -five (25) years of service regardless of age. The plan also provides death and disability benefits. A member is vested after ten (10) years, but he must leave his accumulated contributions in the plan. If a member withdraws his own money, he is not entitled to the employer- financed monetary credits, even if he was vested. ' The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions The contribution rate for the employees is 5%, and the City matching percent is currently 100`•k, both as adopted by the governing body of the City. Under the state law governing TMRS, the City contribution rate is annually determined by the actuary. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's twenty -five (25) year amortization period. When the City periodically adopts updated service credits and increases in annuities in effect, the increased unfunded actuarial liability is to be amortized over a new twenty -five (25) year period. Currently, the unfunded actuarial liability is being amortized over the twenty -five (25) year period which began September, 1994. The unit credit actuarial cost method is used for determining the City contribution rate. Contributions are made monthly by both the employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one (1) year lag between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. The City's total payroll in fiscal year 1996 was $2,133,469 and the City's contributions were based on a payroll of $1,794,550. Both the City and the covered employees made the required contributions, amounting to $91,335, (15.12% for the months in calendar year 1995, 3.15% normal cost plus 1.97% to amortize the unfunded actuarial liability and 5.08% for the months in calendar year 1996, 3.23% normal cost plus 1.85% to amortize the unfunded actuarial liability) for the City and $89,678 (5%) for the employees. There were no related -party transactions. 34 CITY OF SCHERT2, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 13: PENSION PLAN (CONTINUED) Funding Status and Progress Even though the substance of the City's plan is not to provide a defined benefit in some form, some additional voluntary disclosure is appropriate due to the nontraditional nature of the defined contribution plan which had an initial unfunded pension benefit obligation due to the monetary credits granted by the City for services rendered before the plan began and which can have additions to the unfunded pension benefit obligation through the periodic adoption of increases in benefit credits and benefits. Statement No. 5 of the Governmental Accounting Standards Board (GASB 5) defines pension benefit obligation as a standardized disclosure measure of the actuarial present value of pension benefits, adjusted for the effects of projected salary increases, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of public employee pension plans, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among public employee pension plans. The pension benefit obligation shown below is similar in nature to the standardized disclosure measure required by GASB 5 for defined benefit plans except that there is no need to project salary increases since the benefit credits earned for service to date are not dependent upon future salaries. The calculations were made as part of the annual actuarial valuation as of December 31, 1995. Because of the money - purchase nature of the plan the interest rate assumption, currently 8.0% per year, does not have as much impact on the results as it does for a defined benefit plan. Market value of assets is not determined for each city's plan, but the market value of assets for TMRS as a whole was 114.2% of book value as of December 31, 1995. Pension Benefit Obligation Annuitants Currently Receiving Benefits $ 157,727 Terminated Employees 40,742 Current Employees Accumulated Employee Contributions Including Allocated Invested Earnings 248,592 Employer- Financed Vested 448,594 Employer- Financed Nonvested 153,771 TOTAL $1,049,426 Net Assets Available for Benefits, at Book Value $ 43,745 Unfunded Pension Benefit Obligation $ 555,681 35 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 13: PENSION PLAN (CONTINUED) The book value of assets is amortized cost for bonds and original cost for short -term securities and stocks. The actuarial assumptions used to compute the actuarially determined city contribution rate are the same as those used to compute the pension benefit obligation. Trend Information The ten (10) year historical trend information is being developed prospectively. Because the City joined the Texas Municipal Retirement System (TMRS) during 1993, only information for the last three (3) years is available as follows: Net Assets Available for Benefits Pension Benefit Obligation Percentage Funded Unfunded (Assets in Excess of) Pension Benefit Obligation Annual Covered Payroll Unfunded Pension Benefit Obligation as a % to Payroll City Contribution to TMRS Average City Rate NOTE 14: MARKETABLE SECURITIES YEAR ENDED SEPTEMBER 30, 1996 1995 1994 $ 493,745 $ 320,126 $ 133,346 $1,049,426 $ 876,870 $ 654,382 47.05% 36.51% 20.38% $ 555,681 $ 556,744 $ 521,030 $1,794,550 $1,844,503 $1,633,320 30.97% 30.18% 31.90% $ 91,335 $91,702 $ 70,991 5.09% 4.97% 4.35% At September 30, 1996, the marketable securities portfolio was comprised of one U. S. Treasury bill that the City of Schertz, Texas, has the intent and ability to hold to maturity. In accordance with FASB No. 115, these securities are carried at cost, adjusted for amortization of premiums and accretions of discounts. The amortized cost and fair value of marketable securities held to maturity at September 30, 1996 were: Securities to be Held to Maturity - U. S. Treasury Bill (Maturing in August, 1997) 36 GROSS AMORTIZED UNREALIZED FAIR COST GAINS VALUE $601.663, $6,864 $608,527 CITY OF SCHERTZ, TEXAS NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 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, 1996, 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, 1996. 37 (This Page Intentionally Left Blank) 36 COMBINING, INDIVIDUAL FUND AND ACCOUNT GROUP STATEMENTS AND SCHEDULES (This Page Intentionally Left Blank) 40 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. 41 (This Page Intentionally Left Blank) vl CITY OF SCHERTZ, TEXAS GENERAL FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995 ASSETS Cash and Cash Equivalents Accounts Receivable Delinquent Taxes Receivable (Net of Allowances) Due from Other Funds Inventory of Supplies, at Cost Other Receivables TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Accounts Payable Due to Other Funds Deferred Revenue Total Liabilities FUND BALANCES Reserved for Park Improvements 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) 43 SEPTEMBER 30, 1996 1995 $ 714,563 $ 947,237 30,334 13,172 70,854 63,418 1,822,147 540,391 12,398 13,058 169 $2,650,296 $1,577,445 $ 30,727 $ 51,087 859,509 272,439 70,854 63,418 $ 961,090 $ 386,944 $ 83,134 $ 1,073 19,980 3,489 12,398 13,059 18,821 18,821 15,144 15,144 45,000 45,000 1,494,729 1,093,915 $1,689,206 $1,190,501 $2,650,296 $1,577,445 CITY OF SCHERTZ, TEXAS GENERAL FUND COMPARATIVE SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 1996 OTHER FINANCIAL SOURCES (USES) Loan Proceeds Operating Transfers - (Out) Total Other Financial Sources (Uses) Excess of Revenues and Other Financing Sources over Expenditures and Other Financing Uses FUND BALANCES - OCTOBER 1 FUND BALANCES - SEPTEMBER 30 $ - $ 87,891 (224,612) (224,612) $ (224,612) $ (136,721) $ (170) $ 498,705 44 1,190,501 $1,6 1 206 $ 87,891 $ - (242,879) $ 87,891 $ 668,967 $ (242,879) $ 404,727 785,774 $1,190,501 1996 VARIANCE FAVORABLE 1995 BUDGET ACTUAL (UNFAVORABLE) ACTUAL REVENUES Taxes $2,335,401 $2,384,706 $ 49,305 $2,285,735 Licenses and Permits 273,750 394,841 121,091 134,391 Charges for Services 360,236 375,767 15,531 353,050 Fines and Forfeitures 232,000 317,403 85,403 209,719 Other Sources 142,215 231,297 89,082 291,864 Total Revenues $3,343,602 $3,704,014 $360,412 $3,274,759 EXPENDITURES Current General Government $ 887,973 $ 837,540 $ 50,433 $ 813,789 Public Safety 1,279,301 1,174,371 104,930 1,059,331 Streets and Parks 388,861 304,722 84,139 349,659 Health 96,513 85,685 10,828 80,324 Recreation 171,907 156,101 15,806 176,062 Economic Development 66,257 57,374 8,883 52,989 Capital Outlay 398,440 452,795 (54,355) 94,999 Total Expenditures $3,289,252 $3,068,588 $220,664 $2,627,153 Excess of Revenues over Expenditures $ 54,350 $ 635,426 $581,076 $ 647,606 OTHER FINANCIAL SOURCES (USES) Loan Proceeds Operating Transfers - (Out) Total Other Financial Sources (Uses) Excess of Revenues and Other Financing Sources over Expenditures and Other Financing Uses FUND BALANCES - OCTOBER 1 FUND BALANCES - SEPTEMBER 30 $ - $ 87,891 (224,612) (224,612) $ (224,612) $ (136,721) $ (170) $ 498,705 44 1,190,501 $1,6 1 206 $ 87,891 $ - (242,879) $ 87,891 $ 668,967 $ (242,879) $ 404,727 785,774 $1,190,501 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 1996 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 Sources Reimbursements Proceeds from Litigation Cibolo Creek Municipal Authority Interest Sale of Assets Sale of Recycled Materials Miscellaneous State and Federal Grants Total Other Sources TOTAL REVENUES 1996 VARIANCE FAVORABLE 1995 BUDGET ACTUAL (UNFAVORABLE) ACTUAL $1,345,531 $1,356,184 12,000 10,304 715,000 760,667 248,870 243,403 14,000 14,148 $2,335,401 $2,384,706 $ 10,653 $1,303,562 (1,696) 11,976 45,667 697,713 (5,467) 242,218 148 30,266 $ 49,305 $2,285,735 $ 273,750 $ 394,841 $121,091 $ 134,391 $ 210,000 $ 225,000 $ 15,000 $ 210,000 31,500 29,796 (1,704) 27,087 4,300 4,925 625 4,575 6,800 7,342 542 6,423 79,836 85,436 5,600• 81,761 27,800 23,268 (4,532) 23,204 $ 360,236 $ 375,767 $ 15,531 $ 353,050 $ 232,000 $ 317,403 $ 85,403 $ 209,719 $ 15,000 $ 43,355 $ 28,355 $ 25,630 - 16,850 16,850 155,534 6,200 6,106 (94) 6,289 12,805 31,703 18,898 25,121 - - - 25,000 22,000 22,323 323 22,371 50,910 85,690 34,780 31,919 35,300 25,270 (10,030) - $ 142,215 $ 231,297 $ 89,082 $ 291,864 $3,343,602 $3,704,014 $360.412, $3,2759 45 CITY OF SCHERTZ, TEXAS GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET YEAR ENDED SEPTEMBER 30, 1996 Public Safet Police Department $ 888,860 1996 $ 62,366 $ 742,916 Fire Department 329,786 291,330 VARIANCE 263,430 Inspection 60,655 56,547 FAVORABLE 1995 Total Public Safety BUDGET ACTUAL (UNFAVORABLE) ACTUAL CURRENT General Government $ 298,751 $ 223,082 $ 75,669 $ 245,334 City Council $ 19,688 $ 16,795 $ 2,893 $ 18,645 City Manager 217,595 201,206 16,389 178,606 Tax 85,293 78,777 6,516 78,626 Planning and Zoning 124,855 126,716 (1,861) 108,402 Legal 43,000 56,922 (13,922) 80,821 Municipal Court 70,207 67,059 3,148 53,723 Municipal Building 115,127 109,006 6,121 100,865 General Administration 101,508 87,772 13,736 98,302 Other - Unclassified 110,700 93,287 17,413 95,799 Total General Government $ 887,973 $ 837,540 $ 50,433 $ 813,789 Public Safet Police Department $ 888,860 $ 826,494 $ 62,366 $ 742,916 Fire Department 329,786 291,330 38,456 263,430 Inspection 60,655 56,547 4,108 52,985 Total Public Safety $1,279,301 $1,174,371 $104,930 $1,059,331 Streets and Parks Streets $ 298,751 $ 223,082 $ 75,669 $ 245,334 Parks 90,110 81,640 8,470 104,325 Total Streets and Parks $ 388,861 $ 304,722 $ 84,139 $ 349,659 Health Animal Control $ 96,513 $ 85,685 $ 10,828 $ 80,324 Recreation Swimming Pool $ 59,840 $ 50,794 $ 9,046 $ 50,498 Library 112,067 105,307 6,760 125,564 Total Recreation $ 171,907 $ 156,101 $ 15,806 $ 176,062 Economic Development $ 660257 $ 57,374 $ 8,883 $ 52,989 CAPITAL OUTLAY $ 398,440 $ 452,795 $(54,355) $ 94,999 TOTAL EXPENDITURES $3,289,252 $3,0 $220,664 $2,627,153 46 SPECIAL REVENUE 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. 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. Schertz Development Foundation - will account for donations to the foundation and other revenues for the development of economic viability to the City. 47 CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) TAX HOTEL SCHERTZ INCREMENT OCCUPANCY DEVELOPMENT TOTALS FINANCING TAX FORESTRY FOUNDATION 1996 1995 ASSETS Cash and Cash Equivalents Investments Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Due to Other Funds FUND BALANCES Unreserved Designated TOTAL LIABILITIES AND FUND BALANCES $1,687 $3,372 $853 $49,214 $55,126 $ 7,278 - - - - - 41,819 218 218 218 $1,687 $3,372 853 $49,,432 $55,344 $49J15 $ - $ - $758 $ - $ 758 $ 763 1,687 3,372 95 49,432 54,586 48,552 $1,687 3,372 853 $49,432 $55,344 $49,315 (See Accompanying Notes to Financial Statements) 48 CITY OF SCHERTZ, TEXAS SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) (See Accompanying Notes to Financial Statements) 49 TAX HOTEL SCHERTZ INCREMENT OCCUPANCY DEVELOPMENT TOTALS FINANCING TAX FORESTRY FOUNDATION 1996 1995 REVENUES other Donations $ - $ - $ - $ 9,704 $ 9,704 $ 6,050 Tax Revenue 1,687 3,372 - - 5,059 - Sale of Land - - - - - 34,002 Interest - - 39 1,804 1,843 1,722 Total Revenues $1,687 $3,372 39 $11,508 $16,606 $41,774 EXPENDITURES General and Administrative $ - $ - $ - $ 5,367 $ 5,367 $ - Contractual Services - - - 205 205 11,169 Supplies /Maintenance - - - - - 20,278 Infrastructure - - - 5,000 5,000 - Total Expenditures $ -0- $ _0_ $_0_ $10,572 $10,572 $13,447 Excess of Revenues Over Expenditures $1,687 $3,372 $ 39 $ 936 $ 6,034 $28,327 FUND BALANCES - OCTOBER 1 - - 56 48,496 48,552 20,225 FUND BALANCES - SEPTEMBER 30 $1,687 $3,372 95 $49,432 $54,586 $48,552 (See Accompanying Notes to Financial Statements) 49 (This Page Intentionally Left Blank) 50 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. 51 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995 ASSETS SEPTEMBER 30, 1996 1995 Cash and Cash Equivalents $235,013 $ 34,271 Delinquent Taxes Receivable (Net of Allowances) 14,512 13,916 Investments 104,866 TOTAL ASSETS $249,525 $153,053 LIABILITIES AND FUND BALANCES LIABILITIES Due to Other Funds $269,360 $124,137 Deferred Revenue Ad Valorem Taxes 14,512 13,916 Total Liabilities $283,872 $138,053 FUND BALANCES (DEFICIT) Reserved for Debt Service (34,347) '15,000 TOTAL LIABILITIES AND FUND BALANCE $249,525 $153,053 (See Accompanying Notes to Financial Statements) 52 CITY OF SCHERTZ, TEXAS DEBT SERVICE FUND COMPARATIVE STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 1996 REVENUES Interest Income EXPENDITURES Debt Service Bond Principal Bond Interest Bond Issue Costs Fiscal Agent Fees Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Operating Transfers In Proceeds from Bond Issue Total Other Financing Sources (Uses) Excess of Revenues (Deficiency) and Other Financing Sources Over (Under) Expenditures and Other Financing Uses FUND BALANCES - OCTOBER 1 FUND BALANCES (DEFICIT) - SEPTEMBER 30 1996 VARIANCE FAVORABLE 1995 BUDGET ACTUAL (UNFAVORABLE) ACTUAL $ -0- $ 1,794 $ 1,794 $ 6,594 $ 128,150 $ 656,000 $(527,850) $ 165,000 96,462 177,461 (80,999) 129,255 - 46,016 (46,016) - - 2,534 (2,534) 2,090 $ 224,612 $ 882,011 $(657,399) $ 296,345 $(224,612) $(880,217) $(655,605) $(289,751) $ 224,612 $ 383,870 - 447,000 $ 224,612 $ 830,870 $ 159,258 447,000 $ 606,258 $ -0- $ (49,347) $$ (449) 15,000 $ ($ (3) (See Accompanying Notes to Financial Statements) 53 $ 242,879 $ 242,879 $ (46,872) 61,872 $$ 15,000 (This Page Intentionally Left Blank) 54 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.) 6161 (This Page Intentionally Left Blank) 56 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE BALANCE SHEETS SEPTEMBER 30, 1996 AND 1995 ASSETS Cash and Cash Equivalents Accounts Receivable Accrued Interest Due from Other Funds TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Due to Other Funds Accounts Payable Total Liabilities FUND BALANCES Unreserved - Designated for Capital Improvements TOTAL LIABILITIES AND FUND BALANCES TOTALS 1996 1995 $ 719,889 $ 674,261 - 80,356 376,668 292,154 $1,096,557 $1,046,771 $ 571,516 $ 494,840 56,186 $ 571,516 $ 551,026 525,041 495,745 $1,096,557 $1,046,771 (See Accompanying Notes to Financial Statements) 57 CITY OF SCHERTZ, TEXAS CAPITAL PROJECTS FUND COMPARATIVE STATEMENTS OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES YEARS ENDED SEPTEMBER 30, 1996 AND 1995 REVENUES Other Federal Financial Assistance Interest Income Other Total Revenues EXPENDITURES Capital Outlay Excess (Deficiency) of Revenues Over (Under) Expenditures FUND BALANCES - BEGINNING OF YEAR FUND BALANCES - END OF YEAR TOTALS 1996 1995 $ 36,765 26,678 $ 63,443 $ 110,713 33,246 1,660 $ 145,619 34,147 750,180 $ 29,296 $ (604,561) 495,745 1,100,306 $525,041 S - 495,745 (See Accompanying Notes to Financial Statements) 58 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. 59 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) RESTRICTED ASSETS Cash and Cash Equivalents FIXED ASSETS Land and Improvements Buildings Improvements Other than Buildings Machinery, Equipment, and Vehicles Construction in Progress Totals Less: Accumulated Depreciation Total Fixed Assets OTHER ASSETS Organizational Costs (Net of Accumulated Amortization of $1,233 and $1,185 for 1996 and 1995) Bond Issue Costs (Net of Accumulated Amortization of $12,479 and $ -0- for 1996 and 1995) Total Other Assets TOTAL ASSETS $ 840,754 $ -0- $ 840,754 $ 840,253 $ 160,521 $ - $ 160,521 $ 160,521 195,724 26,656 222,380 222,380 9,505,982 - 9,505,982 8,879,069 615,046 470,158 1,085,204 969,221 100,490 100,490 341,125 $10,577,763 $496,814 $11,074,577 $10,572,316 5,308,340 297,754 5,606,094 5,177,400 $ 5,269,423 $199,060 $ 5,468,483 $-5,394,916 $ 667 $ - $ 667 $ 715 116,506 - 116,506 - $ 117,173 $ -0- $ 117,173 $ 715 $ 9,204,267 $644,067 $ 9,848,334 $ 8,309,816 (See Accompanying Notes to Financial Statements) 60 WATER AND SEWER TOTALS' SYSTEM SAFES 1996 1995 ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 921,707 $359,896 $1,281,603 $ 698,963 Investments 601,663 - 601,663 - Accounts Receivable (Net) 325,497 63,650 389,147 412,898 Due from Other Funds 1,061,091 1,911 1,063,002 868,360 Inventory of Supplies, at Cost 66,959 19,550 86,509 93,711 Total Current Assets $ 2,976,917 $445,007 $3,421,924 $ 2,073,932 RESTRICTED ASSETS Cash and Cash Equivalents FIXED ASSETS Land and Improvements Buildings Improvements Other than Buildings Machinery, Equipment, and Vehicles Construction in Progress Totals Less: Accumulated Depreciation Total Fixed Assets OTHER ASSETS Organizational Costs (Net of Accumulated Amortization of $1,233 and $1,185 for 1996 and 1995) Bond Issue Costs (Net of Accumulated Amortization of $12,479 and $ -0- for 1996 and 1995) Total Other Assets TOTAL ASSETS $ 840,754 $ -0- $ 840,754 $ 840,253 $ 160,521 $ - $ 160,521 $ 160,521 195,724 26,656 222,380 222,380 9,505,982 - 9,505,982 8,879,069 615,046 470,158 1,085,204 969,221 100,490 100,490 341,125 $10,577,763 $496,814 $11,074,577 $10,572,316 5,308,340 297,754 5,606,094 5,177,400 $ 5,269,423 $199,060 $ 5,468,483 $-5,394,916 $ 667 $ - $ 667 $ 715 116,506 - 116,506 - $ 117,173 $ -0- $ 117,173 $ 715 $ 9,204,267 $644,067 $ 9,848,334 $ 8,309,816 (See Accompanying Notes to Financial Statements) 60 LIABILITIES AND EQUITY CURRENT LIABILITIES Vouchers Payable Note Payable Due to Other Funds Accrued Vacation and Sick Leave 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 SYSTEM SAFES $ 211,339 $ 7,222 23,899 - 1,459,375 70,611 23,936 6,027 $1,718,549 $ 83,860 $ 143,815 $ - 55,000 - 95,000 - 82,000 - 4,000 - 41,764 - TOTALS 1996 1995 $ 218,561 23,.899 1,529,986 29,963 $1,802,409 $ 143,815 55,000 95,000 82,000 4,000 41,764 $ 96,755 52,218 788,505 26,162 $ 963,640 $ 119,685 100,000 100,000 4,000 44,343 $ 421,579 $ -0- $ 421,579 $ 368,028 $ 955,000 $ - $ 955,000 $1,355,000 160,000 - 160,000 880,000 1,080,000 - 1,080,000 - 76,000 - 76,000 80,000 149,920 149,920 .173,819 $2,420,920 $ -0- $2,420,920 $2,488,819 $4,561,048 $ 83,860 $4,644,908 $3,820,487 $3,787,088 $226,769 $4,013,857 $3,776,949 382,368 - 382,368 382,368 40,000 - 40,000 40,000 433,763 333,438 767,201 290,012 $4,643,219 $560,207 $5,203,426 $4,489,329 $9,204,267 $644,067 $9,8� 4 $8,3� 09 61 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS YEAR ENDED SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) OPERATING REVENUES Fees Charged to Users Reimbursements and Other Total Operating Revenues OPERATING EXPENSES BEFORE DEPRECIATION Personal 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 Total Nonoperating Revenues (Expenses) Net Income before Other Financing Sources (Uses) OTHER FINANCING SOURCES (USES) Transfers Out Net Income RETAINED EARNINGS AT BEGINNING OF YEAR RETAINED EARNINGS AT END OF YEAR WATER AND TOTALS SEWER SYSTEM SAFES 1996 1995 $2,347,003 $585,639 $2,932,642 $2,517,892 43,597 43,597 45.026 $2,390,600 $585,639 $2,976,239 $2,562,918 $ 360,289 $240,981 $ 601,270 $ 561,845 414,065 - 414,065 411,336 225,000 2,600 227,600 229,800 206,938 75,774 282,712 215,337 117,257 111,450 228,707 241,711 2.247 76.175 78,422 69,853 $1,325,796 $506,980 $1,832,776 $1,729,882 $1,064,804 $ 78,659 $1,143,463 $ 833,036 397,619 41.069 438.688 409,041 $ 667,185 $ 37,590 $ 704,775 $ 423,995 $ 106,348 $ 16,884 (188,837) (2,723) $ (82,489) $ 14,161 $ 584,696 $ 51,751 (159,258) - $ 425,438 $ 51,751 $ 123,232 $ 93,416 (191,560) (224,648) $ (68,328) $ (131.232) $ 636,447 $ 292,763 (159,258) - $ 477,189 $ 292,763 430.693 281,687 712,380 419,617 $ 856,131 $333.438 $1,1,569 $ 7� 1 0 (See Accompanying Notes to Financial Statements) 62 CITY OF SCHERTZ, TEXAS ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30, 1996 (WITH COMPARATIVE TOTALS FOR SEPTEMBER 30, 1995) 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 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 Bond Issue Costs Principal Payments on Long -Term Debt Proceeds from Issuance of 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 (Used in) Investing Activities Net Increase 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 1996 1995 (239,619) 1,253,000 $2,189,156 $572,595 $2,761,751 $2,240,947 (96,632) (237,953) (334,585) (1,168,425) (356,488) (240,981) (597,469) (559,001) 43,597 - 43,597 45,026 $1,779,633 $ 93,661 $1,873,294 $ 558,547 $ (159,258) $ -0- $ (159,258) $ - $ (456,896) $(45,134) $ (502,030) $ (203,745) (128,985) - (128,985) - (1,287,198) (30,020) (1,317,218) (239,619) 1,253,000 - 1,253,000 30,020 (191,416) (2,723) (194,139) (228,402) 236,908 236,908 10,125 $ (574,587) $(77,877) $ (652,464) $ (631,621) $ (601,663) $ - $ (601,663) $ - 106,348 16,884 123,232 93,567 $ (495,315) $ 16,884 $ (478,431) $ 93,567 $ 550,473 $ 32,668 $ 583,141 $ 20,493 1,211,988 $1,762,461 $ 921,707 840,754 $1,762,461 (See Accompanying Notes to Financial Statements) 63 327,228 1,539,216 1,518,723 $359,896 $2,122,357 $1,539,216 $359,896 $1,281,603 $ 698,963 - 840,754 840,253 $359,896 $2,122,357 $1,539,216 (Continued) CITY OF SCHERTZ, TEXAS ENTERPRISE FUND COMBINING STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES YEAR ENDED SEPTEMBER 30. 1996 WATER AND TOTALS SEWER SYSTEM SAFES 1996 1995 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING INCOME Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities Depreciation /Amortization Provision for Uncollectible Accounts Change in Assets and Liabilities (Increase) Decrease in Accounts Receivable (Increase) Decrease in Inventory (Increase) Decrease in Due from Other Funds Increase (Decrease) in Vouchers Payable Increase (Decrease) in Due to Other Funds Increase (Decrease) in Accrued Vacation Increase (Decrease) in Accrued Interest Payable Increase (Decrease) in Customers Deposits NET CASH PROVIDED BY OPERATING ACTIVITIES Supplemental Disclosures Non -Cash Capital and Related Financing Transactions Acquisition and Construction of Capital Assets Bonds Issued Note Payable Issued Federal Financial Assistance Contributed Capital $ 667,185 $ 37,590 $ 704,775 $292,763 400,152 41,069 441,221 409,041 2,247 76,175 78,422 69,853 33,516 (88,187) (54,671) (61,627) 5,493 1,709 7,202 25,137 (193,610) (1,032) (194,642) (760,397) 118,878 2,697 121,575 6,276 717,841 23,640 741,481 578,265 3,801 - 3,801 2,844 - - - (3,754) 24,130 24,130 146 $1,7779 S 93,661 $1,873,294 $$ 558,547 $ 456,896 $ 45,134 $ 502,030 $203,745 1,253,000 - 1,253,000 - - - - 30,020 160,511 - 160,511 - 236,908 - 236,908 10,125 64 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. 65 (This Page Intentionally Left Blank) 66 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 67 SEPTEMBER 30, 1996 1995 $ 423,4.60 $ 423,460 1,114,290 1,114,290 7,956,342 7,922,195 1,092,935 740,652 1,134,239 1,027,942 $11,721,266 $11,228,539 $ 2,526,393 $ 2,073,598 1,317,990 1,317,990 182,686 182,686 317,005 317,005 113,614 113,614 180,984 146,837 7,066,305 7,066,305 10,504 10,504 5,785 $11,721,266 $11,228,539 CITY OF SCHERTZ, TEXAS SCHEDULES OF GENERAL FIXED ASSETS - BY FUNCTION AND ACTIVITY YEAR ENDED SEPTEMBER 30, 1996 BALANCE BALANCE OCTOBER 1, SEPTEMBER 30, 1995 ADDITIONS DEDUCTIONS 1996 General Government $ 926,042 $ 6,310 $ - $ 932,352 Public Safety Police 373,279 200,215 - 573,494 Fire 644,074 184,863 - 828,937 Inspection 24,055 900 - 24,955 Street and Park Street 7,530,655 55,647 - 7,586,302 Pool 541,773 1,527 - 543,300 Parks 685,252 2,730 - 687,982 Health Animal Control 223,948 8,760 - 232,708 Library 268,957 31,775 - 300,732 Development Foundation 10,504 - - 10,504 TOTALS $11,228,539 $492.727 $ $11.721,266 68 COMPONENTS OF GENERAL FIXED ASSETS IMPROVEMENTS OTHER THAN LAND BUILDINGS BUILDINGS VEHICLES EQUIPMENT $ 63,769 $ 623,236 $ 48,310 $ 6,676 $ 190,361 - - - 418,408 155,086 12,000 65,000 5,670 479,985 266,282 - - 139 18,031 6,785 108,333 400 7,068,867 145,109 263,593 - - 530,309 - 12,991 182,662 195,159 202,906 17,998 89,257 23,161 106,071 65,274 6,728 37,259 23,031 124,424 34,867 - 112,625 10,504 $423,460 $1,114,290 $7,956,342 $1.092.935 $1,134,239 69 (This Page Intentionally Left Blank) 70 STATISTICAL INFORMATION 71 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 1987 $715,242 $488,536 $318,719 $55,657 $188,193 $1,766,347 1988 807,754 523,000 283,323 47,507 216,662 1,878,246 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 2,34,4,541 1993 741,305 924,222 373,213 75,441 479,836 2,594,017 1994 744,801 978,121 305,633 80,494 647,556 2,756,605 1995 813,789 1,059,331 349,659 80,324 633,842 2,936,945 1996 886,090 1,174,371 304,722 85,685 1,510,303 3,961,171 (1) Includes General, Special Revenue and Debt Service Funds 72 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 73 LICENSES CHARGES FINES FISCAL AND FOR AND YEAR TAXES PERMITS SERVICES FORFEITURES OTHER TOTAL* 1987 $1,152,108 $76,821 $32,459 $159,837 $203,837 $1,625,062 1988 1,308,600 54,627 32,391 139,008 272,230 1,806,856 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 2,526,5'58 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 2,384,706 394,841 375,767 317,403 249,697 3,722,414 *Includes General, Special Revenue and Debt Service Funds * *Reclassification Among These Categories Performed in 1991 73 (This Page Intentionally Left Blank) 74 M w o z d° W O W E co at u, V co r1 0o a, r-q %D a 5 w a H V an n C% n co n ,M ,0 ,D z W H H x x ,H�yy W H H A c� H z V LM o N tD M %0 .a V 0 A W c/1 D, n N o, V n ,D o ,D w In C, N .-1 M Go co 1-1 V Co H z 0% .-i ,D ,D w V .n .� ., all Vi H H N V In 0o n co Co n 0o OD E A 5 W 0 A W dP W x z Ln V 0 O H H H W M N 1D n O O C, %0 ,n r- El 0 A o aD n ,D a o, C, n o, W 0 C, C, Ot a, C, a, C, a, H H x o H E A O r� H H E-1 0 U o n M n V w n M M V Nj z n .a .-4 V N ,n M O %0 OD Ri O H H M O . 01 O M Ln . 0D fV . to r•4 . E C% V o V M o n M ,0 rn x la U Ch M M co r-1 M O o O In O H a ,M %D n 0o 0 O 1-1 N M M U U t11 W O H U "z M OD M V N ,n n V O V A W H `J E OD O V Ln V C% N M n C1 a, 01 M O M %D co N a, r4 N Ol U Q7y E4 z W n co V o, n D, n •a M M a a a ra .i r♦ M �4 ri w W yr A U U > w w O z Eq E o ,D tD t0 o O M a ,n , W W U n H H O PG w W a n 4 v, ep n n O ao ,D ao H H U �, a 0% at C, o, D, o, rn rn rn C% z U w a O W H H O M N V 0 a, M O 0 x C, M n N ,n tD O %0 0o m a E o N D, o, n M ,n co u, N D, W E-1 N V N V Ln V M N O N a U C, n r-1 %0 n H co a, C, V 04 H W LM %0 n OD a, O O 1-4 N M 0 a o � U V C, N co OD V a, M O Go OD n tD M O 1D Go M C% ,n r-1 C, o N %D O ri O V ,n H x ► ► . . . ► ► • ► 0 H W O Go V Ln N N N r- O H a V r+ o V o —1 M ,D t0 n n 0% O O 1-4 N M M n OD C, O r-1 N M V ,n %0 co ao co 0, C, o, a, a, o, a, C, o, C, 0% C, (A a, at C, D, a a W 0 0 0 0 0 0 O 0 0 0 i4 M M M M M M M M M M 4 P4 +1 4J 4J 4J 41 41 4J 4-) aai aQi aai aai aai a�i aai aai aai aai U) w w w w w w cn cn cn Ln n (This Page Intentionally Left Blank) FF-1 CITY OF SCHERTZ, TEXAS ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY TABLE 4 77 FISCAL ESTIMATED LEVY YEAR ACTUAL ASSESSMENT ASSESSED TAX TAX YEAR ENDED VALUES PERCENTAGE VALUATIONS RATE LEVY 1987 09 -30 -87 $153,457,116 100% $147,961,601 .4128% $ 610,784 1988 09 -30 -88 379,674,429 100 285,978,200 .24705 706,369 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 77 CITY OF SCHERTZ, TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS TABLE 5 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 78 COUNTY YEAR ** CITY SCHOOL COUNTY ROAD 100% 100% 100% 100% ASSESSMENT ASSESSMENT ASSESSMENT ASSESSMENT RATE* RATE* RATE RATE 1987 .4128 % 1.14 % .3875% .04 % 1988 .24705 .783 .2852 .0820 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 *All rates shown are per $100 assessed valuation. * *Year shown is the fiscal year of collection. Taxes were levied the previous calendar year. 78 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 79 NET RATIO GENERAL OF NET BONDED BONDED DEBT DEBT PER FISCAL YEAR ESTIMATED ASSESSED NET GENERAL TO ASSESSED CAPITA September 30, 1987 12,500 $147,961,601 $757,798 .51. $60.62 September 30, 1988 12,580 285,978,200 758,401 .27 60.29 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 7150,300 .26 65.62 September 30, 1992 11,500 268,170,123 687015 .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 *Based on Preliminary 1990 Census. This estimate has been challenged by the City. * *Includes General Bonded Debt Issued During Current Year 79 CITY OF SCHERTZ, TEXAS COMPUTATION OF DIRECT AND OVERLAPPING DEBT YEAR ENDED SEPTEMBER 30, 1996 *Bezar County *Comal County *Comal Independent School District *Guadalupe County *Schertz- Cibolo- Universal City Independent School District *San Antonio River Authority *Alamo Community College District Total Net Overlapping Debt *City of Schertz TOTAL DIRECT AND OVERLAPPING DEBT (2.56% OF ASSESSED VALUE - $800.75 PER CAPITA) TABLE 7 *Source of Data - Texas Municipal Reports, City of Schertz, 1995 (Latest Available) Compiled and Published by Municipal Advisory Council of Texas 11,959,146 04 -01 -95 65,640,000 06 -30 -95 69,595,000 08 -31 -95 51.88 6,204,405 .02 13,128 .02 13,919 $6,604,599 1,847,362 07 -31 -95 100.00 1,847,362 80 $8,4 NET DEBT PERCENT AMOUNT AS OF OVER- OVER - AMOUNT 08 -31 -95 LAPPING LAPPING $171,035,609 04 -30 -95 .02% $ 34,207 4,987,238 12 -31 -94 .09 4,489 34,174,689 08 -31 -95 .12 41,010 1,989,431 09 -30 -94 14.75 293,441 *Source of Data - Texas Municipal Reports, City of Schertz, 1995 (Latest Available) Compiled and Published by Municipal Advisory Council of Texas 11,959,146 04 -01 -95 65,640,000 06 -30 -95 69,595,000 08 -31 -95 51.88 6,204,405 .02 13,128 .02 13,919 $6,604,599 1,847,362 07 -31 -95 100.00 1,847,362 80 $8,4 CITY OF SCHERTZ, TEXAS LEGAL DEBT MARGIN YEAR ENDED SEPTEMBER 30, 1996 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. 81 (This Page Intentionally Left Blank) 82 CITY OF SCHERT2, TEXAS RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL EXPENDITURES LAST TEN FISCAL YEARS TABLE 9 *Includes General, Special Revenue, and Debt Service Funds 83 PERCENT OF DEBT DEBT SERVICE TO SERVICE GENERAL FISCAL YEAR PRINCIPAL INTEREST TOTAL EXPENDITURES* EXPENDITURES September 30, 1987 $22,000 $25,169 $47,169 $1,766,347 2.7% September 30, 1988 24,000 72,900 96,900 1,878,246 5.2 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 15501493 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 *Includes General, Special Revenue, and Debt Service Funds 83 V CD O 01 N 1D co %o n n CD V .-1 r1 P4 M 1D O N aD n n w co M w �D �o o+ o o .� M V �r► o a O 1% W N N N M M M M M M v PD w w az E W O on E1 aD N Of N .-1 01 V .i N n w P4 0% M U1 rl u1 Ln n M w n L7 D w V %0 CD n n w O N N Co Z U E a M M M M M cn% v v V% v 3 w » » r1 rl rl rl » O 01 M N 01 N G V M CD n N %0 M O %0 ri 01 O 4 M M rl U V M M O M M N %D co O ut V V CD N n n O N co V Ln 01 &M V V %D r♦ O O O %D LM in Ln N V co n Ln% n E n n 01 Co N r4 .-1 r1 rl M M M M M N N N N N 1M H V M M 0 M M N %D CD 0 W IM v e CD N n n O N CD W V 1M m 1n V V %D rl O O a W p) W r1 N n n Oh V w N LM N U E EI n %D %D V M M N N .-1 0% z M N N N .a rl r4 rl .a > H Ix W w to a o 0 0 0 0 0 0 0 0 0 W N O O O O O O O O O O A w H o w o 0 O 0 0 O 0 0 o O W W U Ln M CD co M O O in O 1M H w A P4 z O .i N M OD eD a 0+ O v W ow H r♦ `? ri rl .-1 E U W ra N A O C7 H M rl rl O O1 kn M V CD V AD z W W E V O1 co ao rl n o co N 0 H % M IQ'i rl LM 01 V 01 V �o 01 %D CD W H O O H . . . , . 0 a id U w U O IM M O Ln M O O V v W z z w rA Ln V m n n co M 01 n %D pql W H m a V V 10 V M N N %D O 3 O V P4 z o 0% 0 v Ln v u, O m tD 0 W H .d .d 0% n M n �o n 01 0% Z W W E 0% to N O Of Ln 14 10 v n a H w a P Q, E z O H CD 1D in n 01 M n 1D N Ln H a w w U Co LM V CD M O m O Ch N O a w W Co O 0 O r♦ N M N N M H w k m a • • • • • • • a w P+ r ) . a rt .a rl ., .a .a .a O w yr A rl o rl V v Ch m V n O t7 �o r4 n Ln ut V ko u1 N o z W O N N u9 co O n 1D rr %0 H O . . . ► . ► . ► . ► E4 z c► N a n in n n n n o W M O N 1M rl co rl 01 1D Of > M In n LM in V %D 0% M M W W a P4 ri ra rl 1-1 rt -4 .a r't r1 N O W. n CD Ch O rl N M V M 1D O co co 01 0% O1 01 01 0% 01 0% O1 0% at 0% O1 01 (h m 0h A rl rl rl rl .-I rl rl rl .-I r) W q , , z o 0 0 0 0 0 0 0 0 O W M M M M M M M M M M a � H � N H fa � :1 M ►� w 0 41 4J 43 v 41 v +J +J +� aai aai aai aai aai 0 0 0 4) 4) w w 00 w w w w w w w V CD CITY OF SCHERTZ, TEXAS WATERWORKS AND SEWER SYSTEM FUND REVENUE BOND REQUIREMENTS AND RESTRICTED FUNDS YEAR ENDED SEPTEMBER 30, 1996 UTILITY SYSTEM REVENUE BONDS, SERIES 1973: Principal Payment, Due September 1, 1997 Interest Payment, Due March 1, 1997 UTILITY SYSTEM REVENUE BONDS, SERIES 1987: Principal Payment, Due September 1, 1997 Interest Payment, Due March 1, 1997 Total Requirements CASH - RESTRICTED UNDER REQUIREMENTS RESERVE FUND REQUIREMENT ANNUAL PRINCIPAL/ SEMI - ANNUAL INTEREST $ 40,000 3,664 15,000 31,625 TABLE 11 REQUIREMENT AT SEPTEMBER 30, BASIS 1996 1 /12th $ 3,333 1 /6th 611 1 /12th 1,250 1 /6th 5,271 $10,465 7,391 $0,074) 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, 1996 met these requirements. 1 'h Time Average Annual Principal and Interest Requirement (Annual $136,937) Cash and Investments FUNDS AVAILABLE OVER (UNDER) REQUIREMENT 85 $205,406 342,238 $136 (This Page Intentionally Left Blank) 86 CITY OF SCHERTZ, TEXAS DEMOGRAPHIC STATISTICS 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 LAST TEN FISCAL YEARS TABLE 12 LEVEL IN a. f. PER YEARS OF CAPITA MEDIAN FORMAL SCHOOL UNEMPLOYMENT FISCAL POPULATION INCOME AGE EDUCATION ENROLLMENT RATE IN % YEAR (1) (2) (3) (3) (4) (3) 1987 12,500 Est. $ - 41 12 2,306 5.7% 1988 12,580 Est. 8,300 41 12 2,334 6.2 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 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 ITS' r W H N H a w a� U w w O E H H U cn .a w a aq H H H w °a w w H 7A w E W E W 0 H EA E-1 W U A a H E W w w z a O U W H w O O z z 0 H H U N W 0 0 U U w a a W z A z m rl ro 41 U 04 m TI +1 to W M v N N n V' LA O o co n rI W Ot Ct N n N n O v Ct N a o O %0 o v ra w 0% co to co . n . O ` ► m 1-4 to M co Ot n 0o m tD ao o to o v n n N N to a eh co to n o to Q'i CD Go Ln -0 O M M 10 u1 ro z c; N en o to to to to O O .-1 .� ern eh to -0 a N t0 U Iz N r♦ s! d ch 1D oD O O ri eh N co t0 I �7 Ln n tD o► tD N O 0 H ► H n to to co 10 cn n a ri U z co N M N to to V-I to O N 10 to ao 14 N e•1 e+1 co V to N LO O N M n V' co Ot en Ot 10 cn to n to H ro m ara H N co N to n co N 10 1D t0 w o V• O o n n co ..� .r '� N N 1-1 9-1 rl N N N roaoc+J o O Ct to N O 10 e•1 co to Ct I to %0 m N Go co C% co n Ct to rl to n N at i H ► ► ► . ► ► ► ► ► ► U co .-I co n aD n %0 to Ct eh a 01 n N N N n O 10 cn to n to en 10 n O cn U U w w W to cn v o N o .-1 en -0 o i U to tD to cn M m m to 40 n co Ch O ra N eh v to to N M ao Ct co Ct of Ct Ct C1 m at o► Ct Ct Ct a Ct 0% Ct y O E to %0 n1 M n v to ao O to H n O Ct Ct .4 O to N v to w m v M on V N co C1 to O 0 ► ► ► • ► • W V' n N to V0 n cvl ► ► N 01 O Ot .-1 n co t0 n %0 A C1 .-I ri C1 n O aT e+f ri e+1 tp N r-4 N rq c+1 to N n N %D tD O t0 t0 10 10 co co 4L* R1 W 0 H EA E-1 W U A a H E W w w z a O U W H w O O z z 0 H H U N W 0 0 U U w a a W z A z m rl ro 41 U 04 m TI +1 to W M v t0 O n r4 O N co M O V' co O t0 V' O 10 co O N Ot N N V' ri cn O O O M 1D N r1 to O o n n ` O • n M • eh N • to r♦ • Ct Ln co . n . O ` ► m 1-4 to M co Ot n to to t�f ` N • ► N ► co ► N . co w ro N co N n en o to N to 00 0 en n l0 ern eh to -0 a N t0 U ' N r♦ s! d P4 CS H O 0 to 10 to co Go U n o • n to o o O to to to ra o N ao co YD o a N Ct O U pe M 10 to ao Go co to co r� ao w .a a +J p W U ed a0 LO O N M n V' co Ot en Ot 10 cn to n to H ro m ara 10 N O N n 1d cd 4-1 yl '� ra +�Q:airtti roaoc+J o w w sw O 0 H N U t0 n N N rq r 1 Q1 r♦ 1-1 to A H -H .-1 ei N rl ri N cn N > 4J U rl rl U Id U U w w W w d n co Ch O ra N eh v to to N D7 Ct ao Ct co Ct of Ct Ct C1 m at o► Ct Ct Ct a Ct 0% Ct y O 14 r4 r4 14 r4 r4 .-1 w 0% CD CITY OF SCHERTZ, TEXAS PRINCIPAL TAXPAYERS YEAR ENDED SEPTEMBER 30, 1996 TABLE 14 90 1995 PERCENTAGE OF ASSESSED TOTAL ASSESSED PRINCIPAL TAXPAYERS TYPE OF BUSINESS VALUATION VALUATION 1. Eric W. White Real Estate $ 5,717,248 20.34% 2. Negley Paint Co., Inc. Industrial 3,599,250 12.80 3. Sycamore Creek Partners Apartments 3,359,231 11.95 4. PSPI, Inc. Machine Fabricating 3,110,173 11.06 5. Garden Ridge Pottery Mercantile- 3,059,174 10.88 6. American Freightways Corp. Transportation 2,897,949 10.32 7. Guadalupe Valley Electric Utility 2,152,230 7.66 8. Southwestern Bell Telephone Co. Telephone Utility 1,563,560 5.56 9. Beck Readymiz Concrete Co. Manufacturing 1,341,425 4.77 10. UPADHYAYA, Inc. Motel 1,309,789 4.66 TOTAL (8.46% OF 1995 ASSESSED VALUATION) $28,110,029 100.00% 90 CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 1996 Date of Incorporation: Date First Charter Adopted: Date Present Charter Adopted: Form of Government: YEAR 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 Miles of Highways, Streets and Alleys Streets and Highways, Paved Streets, Unpaved Alleys Sidewalks Miles of Sewer: Storm Sanitary Building Permits: TABLE 15 December, 1958 April, 1974 Amended March, 1989 Council - Manager SQUARE MILES 24.15 24.15 24.15 24.15 24.15 23.75 23.75 22.42 22.42 22.38 93.69 Miles 6.78 Miles 3.44 Miles 15.09 Miles 2.18 Miles 41.04 Miles (Continued) 91 VALUE OF YEAR PERMITS ISSUED BUILDINGS 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 1988 368 7,752,335 1987 430 9,725,569 (Continued) 91 CITY OF SCHERTZ, TEXAS MISCELLANEOUS STATISTICS YEAR ENDED SEPTEMBER 30, 1996 Fire Protection: Number of Stations Number of Employees (Full and Part -Time) Number of Volunteers Recreation: Parks Playgrounds Other Recreational Facilities: Baseball Fields Softball Fields Large Pavilion Small Pavilion Picnic Tables: Unpovered Restrooms: Male Female Concessions Stands Community Center City Employees: September 30, 1996 Elections: Number of Registered Voters Number of Votes in: Last Municipal Election Percentage of Registered Voters Voting in: Last Municipal Election Source: Municipal Election Records Population: Census Population Count 1996 (Estimate) 1990 1980 1970 1960 1950 1940 ��l TABLE 15 1 17 30 7 65 3 2 10,000 Square Feet Covered 600 Square Feet Covered 50 6 6 1 1 157 7,343 945 13.0% 14,500 10,597 7,260 4,061 2,281 1,200 600 SINGLE AUDIT REPORTS 93 (This Page Intentionally Left Blank) 94 NORTH TOWER 800 N.W. LOOP 410, SUITE 5WN 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, Kastor T Young, LC. CERTIFIED PUBLIC ACCOUNTANTS MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Independent Auditor's Report on Schedule of Federal Financial Assistance We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. These general purpose financial statements are the responsibility of the City of Schertz, Texas, management. Our responsibility is to express an opinion on these general purpose 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 and the provisions of Office of Managemefit and Budget (OMB) Circular A -128, Audits of State and Local Governments. Those standards and OMB Circular A -128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements of the City of Schertz, Texas, taken as a whole. The accompanying Schedule of Federal Financial Assistance is presented for purposes of additional analysis and is not a required part of the general purpose financial statements. The information in this schedule has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF, 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. JAMES T. McCARTY, C.P.A. (RETIRED) 95 (This Page Intentionally Left Blank) 96 W W H N H a w pq U W W O H H U A M W H z a w %D 0 a a W a w w H E-4 �. in 0% H zN 1p CO a .i x w H W Ln U n .i n z In N U > o n w rQ E-1 A � rl N I N z a Lm W U1 W Ch M w A m Of X 9 H r' Z Gy U D O H � a, L7 Ln Go Go W N N W A z N N N W U z n a O p Ca N O Ln Iq Qi CA I W W Ri 1 ° aV4 ° N o V w ro 8 4J 0% a w 0 b +J of \H a o Ow 1340 ° � 1 °° Ow p, , +J PC .a 43 a ° .H E-4 E4 �0 H A N -H A .0 m W :C c7 t7 $ w +► N A >y 6 1� H q N d C7 O r ° q 0� O 0 H z t O 4J 0 H x z 0 U B W A 0 W 0 W H a d r U O +J r11 U 41 4) A g U O 4J >4 U 4J 0 wv�a +�� ro�v�ro00 to 00 0 to W N H m N CI O it O H m b O H O m H aM > E 0 0 0 U GL 0 0 0 U W E-4 O A n a CITY OF SCHERTZ, TEXAS NOTES TO SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE YEAR ENDED SEPTEMBER 30, 1996 1. GENERAL The accompanying Schedule of Federal Financial Assistance presents the activity of all federal financial assistance programs of the City of Schertz, Texas. The City of Schertz, Texas, reporting entity is` defined in Note 1 to the City's general purpose financial statements. All federal financial assistance passed through other government agencies are included on the schedule. 2. BASIS OF ACCOUNTING The accompanying Schedule of Federal Financial Assistance is presented using the modified accrual basis of accounting, which is described in Note 1 to the City's general purpose financial statements. 3. RECONCILIATION OF FEDERAL FINANCIAL ASSISTANCE Federal Financial Assistance was received in the following funds: Water and -Sewer System Fund Capital Projects Fund 98 The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30,'1996, and have issued our report thereon dated April 11, 1997. 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 general purpose financial statements are free of material misstatement. The management of the City of Schertz, Texas, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to asses the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the general purpose financial statements of the City of Schertz, Texas, for the year ended September 30, 1996, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. 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. JOHN LEIF, 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. JAMES T. MCCARTY, C.P.A. (RETIRED) 99 Thompson, Williams, Biediger, NORTH TOWER 800 N.W. LOOP 410, SUITE 30ON Kas tor CERTIFIED PUBLIC ACCOUNTANTS SAN ANTONIO. TEXAS 78216.5611 210/341.2581 T MEMBERS AMERICAN INSTITUTE OF FAX 210/341 -2588 Young, CERTIFIED PUBLIC ACCOUNTANTS L.-C. The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30,'1996, and have issued our report thereon dated April 11, 1997. 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 general purpose financial statements are free of material misstatement. The management of the City of Schertz, Texas, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to asses the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the general purpose financial statements of the City of Schertz, Texas, for the year ended September 30, 1996, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. 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. JOHN LEIF, 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. JAMES T. MCCARTY, C.P.A. (RETIRED) 99 (This Page Intentionally Left Blank) 100 Independent Auditorl's Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards (Continued) Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial statements. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities 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 structure and its operations that we consider to be material weaknesses as defined above. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses as defined above. This report is intended for the information of the City of Schertz, Texas, management and city council. However, this report is a matter of public record, and its distribution is not limited. San Antonio, Texas April 11, 1997 9 Vol Certified Public Accountants 101 (This Page Intentionally Deft Blank) 102 The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Compliance Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. 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 general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the City of Schertz, Texas, is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. 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. This report is intended for the information of the City of Schertz, Texas' management and city council. However, this report is a matter of public record and its distribution is not limited. Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF, 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. JAMES T. MCCARTY C.P.A. (RETIRED) 103 Thompson, Williams, NORTH TOWER 800 N.W. LOOP 410, SUITE Biediger, Kastor CERTIFIED PUBLIC ACCOUNTANTS 3WN 11 VVM1n SAN ANTONIO, TEXAS 78216 -5611 210/341 -2581 FAX 210/341.2588 MEMBERS AMERICAN INSTITUTE OF Young, CERTIFIED PUBLIC ACCOUNTANTS L.C. The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Compliance Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. 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 general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the City of Schertz, Texas, is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. 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. This report is intended for the information of the City of Schertz, Texas' management and city council. However, this report is a matter of public record and its distribution is not limited. Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF, 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. JAMES T. MCCARTY C.P.A. (RETIRED) 103 (This Page Intentionally Left Blank) 104 The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs We have audited tire� general purpose financial statements of City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget Circular A -128, Audits of State and Local Governments. Those standards and OMB Circular A -128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit for the year ended September 30, 1996, we considered the internal control structure of the City of Schertz, Texas, in order to determine our auditing procedures for the purpose of expressing our opinion on the City of Schertz, Texas' general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A -128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated April 11, 1997. The management of City of Schertz, Texas, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur 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. JOHN LEIF. C.P.A. / H. LEE SCHWARTZMAN. C.P.A. / F. GLENN CRAVEY, C.P.A. / FRED A TIMMONS, C.P.A. / JOHN W. GREEN. C.P.A. JAMES T. McCARTY, C.P.A. (RETIRED) 105 Thompson, Williams, Biediger, NORTH TOWER 800 N.W. LOOP 410, SUITE WON Kastor CERTIFIED PUBLIC ACCOUNTANTS SAN ANTONIO. TEXAS 78216 -5611 210/341 -2581 FAX 210/341 T MEMBERS AMERICAN INSTITUTE OF -2588 Young, CERTIFIED PUBLIC ACCOUNTANTS L.C. The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs We have audited tire� general purpose financial statements of City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget Circular A -128, Audits of State and Local Governments. Those standards and OMB Circular A -128 require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. In planning and performing our audit for the year ended September 30, 1996, we considered the internal control structure of the City of Schertz, Texas, in order to determine our auditing procedures for the purpose of expressing our opinion on the City of Schertz, Texas' general purpose financial statements and to report on the internal control structure in accordance with OMB Circular A -128. This report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed internal control structure policies and procedures relevant to our audit of the general purpose financial statements in a separate report dated April 11, 1997. The management of City of Schertz, Texas, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles, and that federal financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur 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. JOHN LEIF. C.P.A. / H. LEE SCHWARTZMAN. C.P.A. / F. GLENN CRAVEY, C.P.A. / FRED A TIMMONS, C.P.A. / JOHN W. GREEN. C.P.A. JAMES T. McCARTY, C.P.A. (RETIRED) 105 (This Page Intentionally Left Blank) 106 Independent Auditorfs Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs (Continued) and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures used in administering federal financial assistance programs in the following categories: Claims for Advances and Reimbursements General Requirements • Political Activity • Davis -Bacon Act • Civil Rights • Cash Management • Federal Financial Reports • Allowable Cost /Cost Principles • Drug -Free Work -Place Act • Administrative Requirements Specific Requirements • Types of Services • Eligibility For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and determined whether they have been placed in operation, and we assessed control risk. During the year ended September 30, 1996, the City of Schertz, Texas, had no major federal financial assistance programs and expended 100 percent of its total federal financial assistance under its nonmajor federal financial assistance programs: United States Department of Housing and Urban Development - Texas Department of Housing and Community Affairs We performed tests of controls, as required by OMB Circular A -128, to evaluate the effectiveness of the design and operation of internal control structure policies and procedures that we have considered relevant to preventing or detecting material noncompliance with specific requirements, general requirements, and requirements governing claims for advances and reimbursements and amounts claimed or used for matching that are applicable to the aforementioned nonmajor programs. Our procedures were less in scope than would be necessary to render an opinion on these internal control structure policies and procedures. Accordingly, we do not express such an opinion. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, would adversely affect the City of Schertz, Texas' ability to administer federal financial assistance programs in accordance with applicable laws and regulations. 107 Independent Auditor's Report on Internal Control Structure Used in Administering Federal Financial Assistance Programs (Continued) A material weakness is a condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur and not be detected within a timely period by employees int he normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operations that we consider to be material weaknesses as defined above. our consideration of the internal control structure policies and procedures used in administering federal financial assistance would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly would not necessarily disclose all reportable conditions that are also considered to be weaknesses. This report is intended for the information of the City of Schertz, Texas" management and city council. However, this report is a matter of public record, and its distribution is not limited. San Antonio, Texas April 11, 1997 �JA14d& JO,114�W Certified Public Accountants 108 The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Compliance with the General Requirements Applicable to Federal Financial Assistance Programs We have audited the general purpose financial statements of the City, of Schertz, Texas, as of and for the year ended September 30,'1996, and have issued our report thereon dated April 11, 1997. We have applied procedures to test the City of Schertz, Texas', compliance with the following requirements applicable to its federal financial assistance programs which are identified in the Schedule of Federal Financial Assistance for the year ended September 30, 1996: political activity, Davis -Bacon Act, civil rights, cash management, federal financial reports, allowable costs /cost principles, Drug -free Work- place Act, and administrative requirements. Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the City of Schertz, Texas' compliance with the requirements listed in the.preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Schertz, Texas, had not complied, in all material respects, with those requirements. This report is intended for the information of the City of Schertz, Texas' management and city council. However, this report is a matter of public record and its distribution is not limited. � aVM, 0'� . Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF, 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. JAMES T McCARTY, C.P.A. (RETIRED) 109 Thompson, Williams, Biediger, NORTH TOWER Kastor CERTIFIED PUBLIC ACCOUNTANTS 800 N.W. LOOP 410, SUITE 300N SAN ANTONIO. TEXAS 78216 -5611 210/341.2581 FAX 2101341.2588 MEMBERS AMERICAN INSTITUTE OF Young, CERTIFIED PUBLIC ACCOUNTANTS L.C. The Honorable Mayor and Members of the City Council City of Schertz, Texas Independent Auditor's Report on Compliance with the General Requirements Applicable to Federal Financial Assistance Programs We have audited the general purpose financial statements of the City, of Schertz, Texas, as of and for the year ended September 30,'1996, and have issued our report thereon dated April 11, 1997. We have applied procedures to test the City of Schertz, Texas', compliance with the following requirements applicable to its federal financial assistance programs which are identified in the Schedule of Federal Financial Assistance for the year ended September 30, 1996: political activity, Davis -Bacon Act, civil rights, cash management, federal financial reports, allowable costs /cost principles, Drug -free Work- place Act, and administrative requirements. Our procedures were limited to the applicable procedures described in the Office of Management and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the City of Schertz, Texas' compliance with the requirements listed in the.preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the second paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Schertz, Texas, had not complied, in all material respects, with those requirements. This report is intended for the information of the City of Schertz, Texas' management and city council. However, this report is a matter of public record and its distribution is not limited. � aVM, 0'� . Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF, 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. JAMES T McCARTY, C.P.A. (RETIRED) 109 (This Page Intentionally Left Blank) 110 Thompson, Williams, NORTH TOWER Biediger, Kastor 800 N.W. LOOP 410, SUITE 300N SAN ANTONIO, TEXAS 78216 -5611 210/341.2581 Young FAX 210/341 -2588 L.C. To the Honorable Mayor and Members of the City Council City of Schertz, Texas CERTIFIED PUBLIC ACCOUNTANTS MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Independent Auditor's Report on Compliance with Specific Requirements Applicable to Nonmaior Federal Financial Assistance Program Transactions We have audited the general purpose financial statements of the City of Schertz, Texas, as of and for the year ended September 30, 1996, and have issued our report thereon dated April 11, 1997. In connection with our audit on the general purpose financial statements of the City of Schertz, Texas, and with our consideration of the City of Schertz, Texas, internal control structure used to administer federal financial assistance programs, as required by Office of Management and Budget Circular A -128, Audits of State and Local Governments, we selected certain transactions applicable to certain nonmajor federal financial assistance programs for the year ended September 30, 1996. As required by OMB Circular A -128, we have performed auditing procedures to test compliance with the requirements governing types of services allowed or unallowed and eligibility that are applicable to those transactions. Our procedures were substantially less in scope than an audit, the objective of which is the expression on an opinion on the City of Schertz, Texas' compliance with these requirements. Accordingly, we do not express such an.opinion. With respect to the items tested, the results of those procedures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Schertz, Texas, had not complied, in all material respects, with those requirements. This report is intended for the information of the City of Schertz, Texas' management and city council. However, this report is a matter of public record and its distribution is not limited. Certified Public Accountants San Antonio, Texas April 11, 1997 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. JOHN LEIF 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. JAMES T MCCARTY, C.P.A. (RETIRED) 111