The City of Crystal City, Missouri. Financial Statements, Independent Auditor's Reports, and Supplementary Information.

Transcription

1 The City of Crystal City, Missouri Financial Statements, Independent Auditor's Reports, and Supplementary Information March 31, 2016

2 The City of Crystal City, Missouri Table of Contents Financial Section Page Independent Auditor's Report 1 Financial Statements Government-Wide Financial Statements: Statement of Net Position 3 Statement of Activities 4 Fund Financial Statements: Combined Balance Sheet - Governmental Funds 5 Reconciliation of Total Government Fund Balance to Net Position of Governmental Activities 6 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds 7 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 8 Statement of Net Position - Proprietary Fund 9 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Fund 10 Statement of Cash Flows - Proprietary Fund 11 Notes to the Financial Statements 12 Required Supplemental Information Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual: General Fund 27 Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Road Tax Fund 28 Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Trash Fund 29 Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Stormwater/Parks Fund 30 Notes to the Required Supplementary Information - Budgetary Schedules 31 Schedule of Changes in Net Pension Liability and Related Ratios - Last 10 Fiscal Years 32 Schedule of Pension Contributions - Last 10 Fiscal Years 33

3 The City of Crystal City, Missouri Table of Contents Page Supplemental Information Combining Balance Sheet - Non-major Governmental Funds 34 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Non-major Governmental Funds 35 Federal Compliance Section Report on Internal Control over Financial Statements and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards 36 Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance. 38 Schedule of Expenditures of Federal Awards 40 Notes to the Schedule of Expenditures of Federal Awards 41 Schedule of Findings and Questioned Costs 42 Follow-Up on Prior Audit Findings 43

4 INDEPENDENT AUDITOR S REPORT Honorable Mayor and City Council City of Crystal City, Missouri We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Crystal City, Missouri, (the City) as of and for the year ended March 31, 2016, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Crystal City, Missouri, as of March 31, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis which has been omitted and required supplemental information, as listed in the

5 table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Although the management s discussion and analysis has been omitted, our opinion on the basic financial statements is not affected by this missing information. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Crystal City, Missouri s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 20, 2016, on our consideration of the City of Crystal City, Missouri s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Crystal City, Missouri s internal control over financial reporting and compliance. Creve Coeur, Missouri September 20,

6 City of Crystal City, Missouri Statement of Net Position March 31, 2016 Governmental Business-Type Activities Activities Total Assets Current Assets: Cash and cash equivalents $ 2,415,497 $ 33,395 $ 2,448,892 Restricted cash and cash equivalents - 4,764,513 4,764,513 Receivables, net Taxes 38,070-38,070 Service charges - 96,359 96,359 Interest Other 193, ,163 Prepaid items 157,989 48, ,768 Unbilled revenue - 139, ,820 Due from other governments 716, ,813 Total Current Assets 3,522,047 5,082,866 8,604,913 Noncurrent Assets: Capital assets, net 10,373,433 13,691,121 24,064,554 Joint venture - 747, ,685 Unamortized bond discounts - 71,101 71,101 Total Noncurrent Assets 10,373,433 14,509,907 24,883,340 Total Assets 13,895,480 19,592,773 33,488,253 Deferred Outflows of Resources Deferred outflows - pension related 517, , ,390 Total Assets and Deferred Outflows of Resources $ 14,413,388 $ 19,762,255 $ 34,175,643 Liabilities Current Liabilities: Accounts payable $ 346,452 $ 491,012 $ 837,464 Sales tax payable - 4,515 4,515 Escrow payable - 162, ,690 Accrued compensated absences 328,903 90, ,741 Customer deposits payable - 129, ,102 Unclaimed property - 6,482 6,482 Current portion of bonds payable - 255, ,000 Current portion of certificates of participation - 65,000 65,000 Current portion of state revolving fund balance - 175, ,498 Accrued interest payable - 57,568 57,568 Other accrued liabilities 67,002 19,500 86,502 Total Current Liabilities 742,357 1,457,205 2,199,562 Noncurrent Liabilities: Unamortized bond premiums - 53,746 53,746 Net pension liability 30, , ,672 Revenue bonds payable - 2,180,000 2,180,000 Proceeds from sale of capital assets - (255,000) (255,000) Certificates of Participation payable - 9,620,000 9,620,000 Less: current portion - (65,000) (65,000) State revolving fund reserve - 1,464,180 1,464,180 Less: current portion - (175,498) (175,498) Total Noncurrent Liabilities 30,345 13,105,755 13,136,100 Total Liabilities 772,702 14,562,960 15,335,662 Deferred Inflows of Resources Deferred inflows - pension related 97,444 6, ,167 Net Position Invested in capital assets, net of related debt 10,373, ,941 10,800,374 Restricted for debt service - 168, ,947 Restricted for enabling legislation 1,330,178-1,330,178 Unrestricted net assets 1,839,631 4,596,684 6,436,315 Total Net Position 13,543,242 5,192,572 18,735,814 Total Liabilities, Deferred Inflows of Resources and Net Position $ 14,413,388 $ 19,762,255 $ 34,175,643 See Notes to the Financial Statements 3

7 City of Crystal City, Missouri Statement of Activities Program Revenues Net (Expense) Revenue and Changes in Net Assets Primary Government Operating Capital Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: City council $ (10,011) $ - $ - $ - $ (10,011) $ - $ (10,011) Treasurer (1,292) (1,292) - (1,292) Municipal court (64,302) 242, , ,758 Mayor (5,042) (5,042) - (5,042) Elections (2,298) (2,298) - (2,298) City clerk/city administrator (969,741) 128, (840,744) - (840,744) City hall (284,635) (284,635) - (284,635) Police department (831,102) - 18,710 - (812,392) - (812,392) Dispatching (193,310) (193,310) - (193,310) Fire department (133,421) (133,421) - (133,421) Building inspector (115,166) (115,166) - (115,166) Canine control (33,986) 3, (30,827) - (30,827) Street department (756,715) (756,715) - (756,715) Mosquito control (9,898) (9,898) - (9,898) Library (113,757) 3,997 14,799 - (94,961) - (94,961) Park and pool (149,805) 44, (105,466) - (105,466) Road tax (38,001) - - 1,011, , ,263 Trash (452,197) 26, (425,973) - (425,973) Stormwater/Parks (493,087) (493,087) - (493,087) Total Governmental Activities (4,657,766) 448,776 33,509 1,011,264 (3,164,217) - (3,164,217) Business-Type Activities: Water and Sewer (2,113,609) 2,343, , , ,556 Total Business-Type Activities (2,113,609) 2,343, , , ,556 Total Primary Government $ (6,771,375) $ 2,792,631 $ 33,509 $ 1,598,574 $ (3,164,217) $ 817,556 $ (2,346,661) General Revenues Sales tax $ 3,175,292 $ - $ 3,175,292 Property taxes 586, ,066 Motor fuel tax 128, ,623 Utility and gross receipts tax 730, ,051 Investment income 8,687 76,515 85,202 Miscellaneous income 133,624 40, ,190 Gain (loss) on disposal of assets (2,124) 763 (1,361) Total General Revenues 4,760, ,844 4,878,063 Change in Net Position 1,596, ,400 2,531,402 Net Position - Beginning, Restated 11,947,240 4,257,172 16,204,412 Net Position - Ending $ 13,543,242 $ 5,192,572 $ 18,735,814 See Notes to the Financial Statements 4

8 City of Crystal City, Missouri Combined Balance Sheet - Governmental Funds March 31, 2016 Non-major Total Road Tax Trash Stormwater/Parks Governmental Governmental General Fund Fund Fund Funds Funds Assets Cash and cash equivalents $ 1,260,551 $ 1,253 $ 196,728 $ 643,250 $ 313,715 $ 2,415,497 Receivables, net - Taxes 25, ,944 38,070 Interest Other - 190,677 2, ,163 Prepaid items 131,354-17,899-8, ,989 Due from other governments 402, ,448 64,463 51, ,722 Due from other funds Total Assets 1,820, , , , ,447 3,483,956 Deferred Outflows of Resources Total Assets and Deferred Outflows of Resources $ 1,820,009 $ 352,378 $ 281,576 $ 694,546 $ 335,447 $ 3,483,956 Liabilities Accounts payable $ 54,618 $ 190,677 $ 7,707 $ 80,132 $ 13,318 $ 346,452 Accrued wages payable Due to other funds Other accrued liabilities 60,502-6, ,002 Total Liabilities 115, ,677 14,207 80,132 13, ,454 Deferred Inflows of Resources Unavailable revenue - property taxes 17, ,800 25,882 Fund Balance Nonspendable: Prepaid items 131,354-17,899-8, ,989 Restricted: Special revenue fund - 161, , , ,593 1,330,178 Unassigned: General fund 1,556, ,556,453 Total Fund Balances 1,687, , , , ,329 3,044,620 Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 1,820,009 $ 352,378 $ 281,576 $ 694,546 $ 335,447 $ 3,483,956 See Notes to the Financial Statements 5

9 City of Crystal City, Missouri Reconciliation of Total Governmental Fund Balance to Net Position of Governmental Activities March 31, 2016 Total Governmental Fund Balances $ 3,044,620 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds 10,373,433 Certain assets and liabilities are not financial resources (uses) and, therefore, are not reported in the governmental funds: Deferred outflows - pension related 517,908 Deferred inflows - pension related (97,444) Accounts receivable collected 60 days after the end of the year are not financial resources and therefore are not reported in the funds 63,973 Accrued net pension liability is not due and payable in the current period and therefore is not reported in the funds (30,345) Long-term liabilities, including compensated absences and capital leases are not due and payable in the current period and therefore are not reported in the funds (328,903) Net Position of Governmental Activities $ 13,543,242 See Notes to the Financial Statements 6

10 City of Crystal City, Missouri Combined Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Stormwater/ Non-major Total Road Tax Trash Parks Governmental Governmental General Fund Fund Fund Funds Funds Revenues Sales tax $ 2,079,115 $ 282,332 $ 465,816 $ 348,029 $ - $ 3,175,292 Property tax 396, , ,283 Motor fuel tax 128, ,623 Licenses, permits and fees 132,156-26,224-47, ,396 Utility and gross receipts tax 743, ,504 Fines and municipal court fees 242, , ,380 Grant revenue and state aid 18,710 1,011, ,799 1,044,773 Investment income 8, ,687 Miscellaneous income 99, ,720 2, ,624 Total Revenues $ 3,848,717 $ 1,293,596 $ 492,040 $ 379,749 $ 269,460 $ 6,283,562 Expenditures Current: City council $ 10,011 $ - $ - $ - $ - $ 10,011 Treasurer 1, ,292 Municipal court 64, ,676 Mayor 5, ,042 Elections 2, ,298 City clerk/city administrator 866, ,222 City hall 270, ,020 Police department 949, ,313 Dispatching 195, ,732 Fire department 114, ,153 Building inspector 114, ,669 Canine control 33, ,511 Street department 783, ,927 Mosquito control 9, ,898 Library ,359 94,359 Park and pool , ,647 Road tax Trash , ,441 Stormwater/Parks ,182-62,182 Debt Service: Debt payments - Principal Debt payments - Interest Capital outlay 160,757 1,341, ,244 12,715 1,919,628 Total Expenditures $ 3,581,521 $ 1,341,912 $ 427,441 $ 466,426 $ 259,721 $ 6,077,021 Excess (Deficiency) of Revenues over Expenditures 267,196 (48,316) 64,599 (86,677) 9, ,541 Other Financing Sources (Uses) Proceeds from sale of capital assets $ 8,750 $ - $ - $ - $ - $ 8,750 Transfers in Transfers out Total Other Financing Sources $ 8,750 $ - $ - $ - $ - $ 8,750 Net Change in Fund Balance 275,946 (48,316) 64,599 (86,677) 9, ,291 Fund Balance - Beginning (Restated) 1,411, , , , ,590 2,829,329 Fund Balance - Ending $ 1,687,807 $ 161,701 $ 267,369 $ 614,414 $ 313,329 $ 3,044,620 See Notes to the Financial Statements 7

11 City of Crystal City, Missouri Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Net Change in Fund Balance - Total Governmental Funds $ 215,291 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expenses to allocate those expenditures over the life of the assets: Capital asset purchases capitalized 1,816,390 Depreciation expense (555,146) Gain/(Loss) on capital assets sold (10,874) Some revenue reported in the statement of activities do not represent financial resources and therefore is not reported as revenue in the funds (27,670) Some expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Pension obligation 177,498 Accrued compensated absences (19,487) Change in Net Position of Governmental Activities $ 1,596,002 See Notes to the Financial Statements 8

12 City of Crystal City, Missouri Statement of Net Position - Proprietary Fund March 31, 2016 Water and Sewer Fund Assets Current Assets Cash and cash equivalents $ 33,395 Restricted cash and cash equivalents 4,764,513 Receivables, net Service charges 96,359 Interest - Prepaid items 48,779 Unbilled revenue 139,820 Total Current Assets 5,082,866 Noncurrent Assets Capital assets, net 13,691,121 Joint venture 747,685 Unamortized bond discounts 71,101 Total Noncurrent Assets 14,509,907 Total Assets 19,592,773 Deferred Outflows of Resources Deferred outflows - pension related 169,482 Total Assets and Deferred Outflows of Resources $ 19,762,255 Liabilities Current Liabilities Accounts payable $ 491,012 Sales tax payable 4,515 Escrow payable 162,690 Accrued compensated absences 90,838 Customer deposits payable 129,102 Unclaimed property 6,482 Current portion of bonds payable 255,000 Current portion of certificates of participation 65,000 Current portion of state revolving fund balance 175,498 Accrued interest payable 57,568 Other accrued liabilities 19,500 Total Current Liabilities 1,457,205 Noncurrent Liabilities Unamortized bond premiums 53,746 Net pension liability 283,327 Revenue bonds payable 2,180,000 Less: current portion (255,000) Certificates of participation payable 9,620,000 Less: current portion (65,000) State revolving fund balance 1,464,180 Less: current portion (175,498) 13,105,755 Total Liabilities 14,562,960 Deferred Inflows of Resources Deferred inflows - pension related 6,723 Net Position Invested in capital assets, net of related debt 426,941 Restricted for debt service 168,947 Unrestricted net assets 4,596,684 Total Net Position 5,192,572 Total Liabilities, Deferred Inflows of Resources and Net Position $ 19,762,255 See Notes to the Financial Statements 9

13 City of Crystal City, Missouri Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds Water and Sewer Fund Operating Revenues Water and sewer charges $ 2,341,000 Other revenues 2,855 Total Operating Revenues 2,343,855 Operating Expenses Personnel 1,008,488 Repairs 454,455 Supplies 125,538 Telephone 6,199 Utilities 98,972 Depreciation 264,937 Miscellaneous 28,030 Total Operating Expenses 1,986,619 Net Operating Income (Loss) 357,236 Non-operating Revenues (Expenses) Interest expense and bond fees (126,990) Capital contribution 587,310 Other revenues (expenses) 40,566 Interest income 76,515 Gain (loss) on sale of capital assets 750 Gain (loss) on joint venture 13 Net Non-operating Revenues (Expenses) 578,164 Change in Net Position $ 935,400 Total Net Position - Beginning of Year (Restated) 4,257,172 Total Net Position - End of Year $ 5,192,572 See Notes to the Financial Statements 10

14 Water and Sewer Fund Cash Flows from Operating Activities Receipts from customers $ 2,323,716 Payments to suppliers (678,543) Payments to employees (1,025,943) Net Cash Provided (Used) by Operating Activities 619,230 Cash Flows from Capital and Related Financing Activities: Interest and debt issue costs (127,246) Principal paid on debt (245,000) Proceeds from sale of assets 750 Capital contributions 750,000 Miscellaneous income 40,566 Borrowings from General Fund (20,000) State revolving fund reserve (170,053) Net Cash Provided (Used) by Capital and Related Financing Activities 229,017 Cash Flows from Investing Activities Asset purchases (5,036,249) Investment earnings 67,556 Net Cash Provided (Used) by Investing Activities (4,968,693) Net Increase (Decrease) in Cash $ (4,120,446) Cash and cash equivalents - Beginning of Year 8,918,354 Cash and cash equivalents - End of Year $ 4,797,908 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating Income (Loss) $ 357,236 Adjustments to reconcile operating income to net cash provided (used) by operating activities Depreciation expense 264,937 Changes in Assets and Liabilities Receivables, net (26,403) Prepaid items 9,500 Joint venture 49,352 Deferred outflows - pension related (89,692) Customer deposits payable 5,077 Wages and compensated absence payable 8,847 Unclaimed property payable 1,187 Net pension obligation 74,667 Other accrued liabilities (18,000) Deferred inflows - pension related 6,723 Accounts and other payables (24,201) Net Cash Provided (Used) by Operating Activities $ 619,230 Noncash Investing, Capital and Financing Activities: None City of Crystal City, Missouri Statement of Cash Flows - Proprietary Fund See Notes to the Financial Statements 11

15 Note 1 - Summary of Significant Accounting Policies Background Financial Reporting Entity Government-Wide and Fund Financial Statements City of Crystal City, Missouri Notes to the Financial Statements The financial statements of the City of Crystal City, Missouri (the "City") have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below: The City of Crystal City, Missouri was incorporated in It currently operates as a third class city of the State of Missouri under a Mayor and Council form of government and provides the following services as authorized by its charter: public safety (fire, police and dispatching); streets, bridges and sidewalks; park and recreation; public improvements; planning and zoning; water, sewer and trash services; levee control; library; animal control and municipal court. Under generally accepted accounting principles, the reporting entity consists of the City and other organizations for which the City is financially accountable or organizations that, because of the nature and significance of their relationship to the City, may not be excluded from the financial reporting entity. Based upon these criteria, the City has determined that there are no other governmental units that should be included in the financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information about the reporting government as a whole. They include all funds of the reporting entity. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The statement of activities demonstrates the degree to which the direct expenses of a given function or identifiable activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. Program revenues include 1) charges to those who purchase, use or directly benefit from goods, services or privileges provided by a given function or activity and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Taxes and other items not properly included among program revenues are reported instead as general revenues. Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute is assets, liabilities, fund equity, revenues and expenditures/expenses. Funds are organized into three categories: governmental, proprietary and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 12

16 City of Crystal City, Missouri Notes to the Financial Statements Note 1 - Summary of Significant Accounting Policies (continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales tax, intergovernmental grants, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. In accordance with GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The City reports the following major governmental funds: General Fund - The General Fund is the primary operating fund of the City and is always classified as a major fund. It is used to account for all financial resources except those required to be accounted for in another fund. Road Tax Fund - A fund used to account for road sales tax revenue. The expenditures from this fund are restricted to the construction and maintenance of streets and bridges. Trash Fund A fund used to account for the trash service sales tax and user fees collected for trash service. The expenditures from this fund are restricted to those related to providing trash services to the residents of Crystal City. Stormwater/Parks Fund - A fund used to account for the stormwater/parks sales tax. The expenditures from this fund are restricted to use for the stormwater/parks maintenance. The City reports the following major proprietary fund: Water and Sewer Fund An enterprise fund is used to account for user fees for water and sewer services and expenditures related to providing those services. In addition, the City also reports the following governmental special revenue funds as non-major: Library Fund and Park & Pool Fund - Funds used to account for the proceeds of specific revenue that are legally restricted to expenditure for specified purposes. 13

17 Note 1 - Summary of Significant Accounting Policies (continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation (continued) Fund Equity City of Crystal City, Missouri Notes to the Financial Statements In accordance with GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements, the City has elected to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) Opinions, issued on or before November 30, 1989, for its government-wide and proprietary fund financial statements, unless those pronouncements conflict with or contradict GASB pronouncements. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the enterprise funds are the charges for goods and services provided. Operating expenses of the enterprise funds include the cost of these goods and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The government-wide and proprietary financial statements are classified in the following categories: Invested in Capital Assets, Net of Related Debt represents capital assets, net of accumulated depreciation, less the outstanding balances of any notes, lease or other borrowings that are attributable to the acquisition, construction or improvements of the assets. Net assets invested in capital assets, net of related debt, excludes unspent bond and loan proceeds. Restricted net position is legally restricted or identified for specific purposes by outside parties or by law through constitutional provisions or enabling legislation. Unrestricted net position is the residual assets and represent assets available for future operations or distribution. The governmental fund equities, under GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, are classified in the following categories: Nonspendable fund balances are amounts that cannot be spent because they are either a.) not in spendable form (i.e. inventory and prepaid items) or b.) legally or contractually required to be maintained intact. Restricted fund balances are amounts that can be used only for specific purposes because of a.) constitutional provisions or enabling legislation or b.) externally imposed constraints such as creditors, grantors, laws or other governments. Committed fund balances are those amounts that can only be used for specific purposes pursuant to constraints imposed by the City Council through an ordinance or resolution. Assigned fund balances are any amounts for which it is the City's intent that the funds be used for specific purposes but there exist no legal or binding restrictions or commitments. Assignments are made by the City's management. Unassigned fund balances are residual amounts for the government's general fund and include all spendable amounts not contained in the other classifications. 14

18 Note 1 - Summary of Significant Accounting Policies (continued) Cash and Investments For the purpose of the Statement of Net Position, cash and cash equivalents includes all demand, savings accounts, and certificates of deposit of the City. For the purpose of the proprietary fund Statement of Cash Flows, cash and cash equivalents include all demand and savings accounts, and certificates of deposit or short-term investments with an original maturity of three months or less. Inventories The City does not maintain an inventory of supplies. Receivables Capital Assets and Depreciation The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are long-lived assets of the City as a whole. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized in the government-wide statements. Infrastructure such as streets, traffic signals and signs are capitalized on a prospective basis beginning April 1, The valuation basis for general capital assets are historical cost, or where historical cost is not available, estimated historical cost based on replacement cost. Donated capital assets are capitalized at estimated fair market value on the date donated. Depreciation of capital assets is computed and recorded by the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows: buildings, 20 to 50 years; improvements/infrastructure, 5 to 50 years; equipment, 2 to 15 years. Budgets and Budgetary Accounting In accordance with Chapter 67, RSMo, the City of Crystal City adopts an annual operating budget at the beginning of the fiscal year, which can be amended by the Council throughout the year. Formal budgetary accounting is employed as a management control for all funds of the City. Budgetary comparison schedules are presented in the Supplementary Section as Required Supplementary Information. The budgetary basis is the modified accrual basis of accounting. Unpaid Compensated Absences City of Crystal City, Missouri Notes to the Financial Statements Receivables consist of all revenues earned and not yet received. All receivables are reported at their gross value and, where appropriate, are reduced by the estimated amount deemed to be uncollectible. Allowance for uncollectable accounts for Business- Type Activities for the year ended March 31, 2016 was $24,000. Capital assets in the proprietary funds are capitalized in the fund in which they are utilized. The valuation basis for proprietary fund capital assets are the same as those used for the general capital assets. It is the City s policy to permit employees to accumulate earned, but unused vacation, which will be paid to employees upon separation from the City s service. The City accrues unused portions of vacation pay in the period the fund liability is incurred. The liability for accrued vacation for the fiscal year ending March 31, 2016 was $130,784 for the General Fund and $28,234 for the Water/Sewer Fund. 15

19 Note 1 - Summary of Significant Accounting Policies (continued) Unpaid Compensated Absences (continued) Post-Employment Benefits Property Taxes Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Restricted Net Position/Fund Balance Capitalization of Interest City of Crystal City, Missouri Notes to the Financial Statements As permitted by Governmental Accounting Standards Board Statement No. 16, the vesting method is used to accrue sick leave liability. The liability is based on the sick leave accumulated at year-end by those employees who are expected to become eligible to receive such payments. The portion not expected to be liquidated with expendable available financial resources is not reported as a fund liability in accordance with Interpretation No. 6 of the Governmental Accounting Standards Board. The liability for accrued sick leave for the fiscal year ending March 31, 2016 was $198,119 for the General Fund and $62,604 for the Water/Sewer Fund. The City does not provide significant post-employment benefits, except those mandated by the Consolidated Omnibus Budget Reconciliation Act (COBRA). The requirements established by COBRA are fully funded by employees who elect coverage under the Act, and no direct costs are incurred by the City. Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied at the end of August and mailed to residents in October, and are payable on or before January 1 of the following year. All unpaid taxes then become delinquent. Jefferson County bills and collects property taxes on the City s behalf. Property tax revenues are recognized when billed. Proprietary funds, because of certain bond covenants, are required to establish and maintain prescribed amounts of resources (consisting of cash and temporary investments) that can be used only for specific purposes such as servicing outstanding debt, construction, and specific types of expenses. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first and then unrestricted resources, as needed. In conformity with Financial Accounting Standards No. 34, Capitalization of Interest Cost, the City capitalizes interest costs for business-type activities only, from the date of the borrowing until the projects acquired with those funds are ready for their intended use. During the year ended March 31, 2016, $348,626 in interest costs were capitalized as fixed assets in the Water and Sewer Fund as part of the costs of constructing the new water plant. Total interest costs for the year ended March 31, 2016 for the Water and Sewer Fund totaled $119,

20 City of Crystal City, Missouri Notes to the Financial Statements Note 2 - Deposits and Investments Cash and time deposits include all funds held in checking accounts, money market accounts, cash on hand and certificates of deposit with original maturities of greater than three months. For cash flow purposes, these are considered cash equivalents. Deposits and investments are stated at cost, which approximates market. Restricted cash includes amounts held in trust as required by certain bond covenants. The City complies with Missouri state statute and allows investments in obligations of the United States, the state of Missouri, certain bonds of political subdivisions within Missouri, and out-of-state municipal bonds, provided they are rated in the highest nationally ranked category. In April 2014, the City adopted a formal deposit and investment policy. Missouri Statutes require that all funds of the City on deposit in financial institutions must be collateralized by the depository institution with appropriate securities to the extent not provided by FDIC insurance. As of March 31, 2016, the deposits and investments of the City were fully insured or collateralized by securities held in the City s name. GASB Statement No. 40, Deposit and Investment Risk Disclosures - an amendment of GASB Statement No. 3, requires that deposits and investments be classified by credit risk. Classification of deposits and investments by credit risk are as follows: Deposits Category 1 - Insured or collateralized with securities held by the entity or by its agent in the entity s name. Category 2 - Collateralized with securities held by the pledging financial institution s trust department or agent in the entity s name. Category 3 - Deposits which are uninsured or uncollateralized. Investments Category 1 - Insured or registered, with securities held by the entity or its agent in the entity s name. Category 2 - Uninsured and unregistered, with securities held by the counterparty s trust department or agent in the entity s name. Category 3 - Uninsured and unregistered, with securities held by the counter party, or by its trust department or agent, but not in the entity s name. Deposits and investments were categorized as follows at March 31, 2016: Category 1 Category 2 Uncategorized Total Checking and savings $ 1,810,725 $ - $ - $ 1,810,725 Money market accounts 135, ,207 Certificates of deposit 797, ,611 Escrowed funds - 4,469,537-4,469,537 Cash on hand $ 2,743,543 $ 4,469,537 $ 325 $ 7,213,405 At March 31, 2016, the City had no Category 3 deposits or investments. 17

21 City of Crystal City, Missouri Notes to the Financial Statements Note 3 - Risk Management The City is exposed to various risks of losses related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees and natural disasters, and has established a risk management strategy that attempts to minimize losses and the carrying costs of insurance. The City has purchased commercial insurance that includes reasonable deductible amounts. The portion of uninsured loss is not expected to be significant with respect to the financial position of the City. There have been no significant reductions in coverage from the prior year and settlements have not exceeded coverage in the past three years. The City participated in a limited risk management program for major medical. The City is responsible for claims, claim reserves and administration costs of the program. The City s self-insurance is limited to $40,000 per individual per calendar year. After claims reach this amount, a private insurance carrier will pay the remaining claims. Liabilities for this program are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Accrued insurance claim liabilities as of March 31, 2016, are as follows: Fund Balance General Fund $ 39,000 Trash Fund 6,500 Water/Sewer Fund 19,500 $ 65,000 Note 4 - Fixed Assets Changes in fixed assets are as follows for the year ended March 31, 2016: Balance, Balance, March 31, 2015 Additions Deletions March 31, 2016 Governmental Activities: Capital Assets, non-depreciable Land $ 395,990 $ - $ - $ 395,990 Construction in process - 323, ,775 Capital Assets, depreciable Buildings 2,106,815 58,988-2,165,803 Infrastructure 9,422,302 1,336,605-10,758,907 Furniture, Machinery and Equipment 2,916,485 - (4,361) 2,912,124 Vehicles 981,892 97,019 (99,763) 979,148 $ 15,823,484 $ 1,816,387 $ (104,124) $ 17,535,747 Less: Accumulated Depreciation (6,700,421) (555,146) 93,253 (7,162,314) Capital Assets (net) $ 9,123,063 $ 1,261,241 $ (10,871) $ 10,373,433 Proprietary Activities Capital Assets, non-depreciated Construction in process $ 2,390,871 $ 4,930,519 $ - $ 7,321,390 Capital Assets, depreciated Buildings 198, ,004 Infrastructure 9,076, ,309-9,664,292 Furniture, Machinery and Equipment 1,589, ,589,184 Vehicles 172,595 - (16,000) 156,595 $ 13,427,637 $ 5,517,828 $ (16,000) $ 18,929,465 Less: Accumulated Depreciation (4,989,407) (264,937) 16,000 (5,238,344) Capital Assets (net) $ 8,438,230 $ 5,252,891 $ - $ 13,691,121 18

22 City of Crystal City, Missouri Notes to the Financial Statements Note 4 - Fixed Assets (continued) Depreciation expense charged to each function for the year ended March 31, 2016 is as follows: City Clerk $ 15,926 City Hall 27,888 Police Department 69,403 Fire Department 29,327 Street Department 205,781 Library 9,483 Park Department 11,703 Pool Department 271 Road Department 135,893 Trash Department 21,209 Stormwater/Parks Department $ 28, ,146 Note 5 - Economic Concentrations Approximately 39% of the city sales tax revenues received in the General Fund and Stormwater/Parks Fund is provided by a single taxpayer located in the City. The taxes are collected by the State of Missouri and remitted to the City of Festus, Missouri who pays them to the City of Crystal City. Note 6 - Employee Retirement Plan General Information about the Pension Plan Plan description - The City of Crystal City's defined benefit pension plan provides certain retirement, disability and death benefits to plan members and beneficiaries. The City of Crystal City participates in the Missouri Local Government Employees Retirement System (LAGERS). LAGERS is an agent multiple-employer, statewide public employee pension plan established in 1967 and administered in accordance with RSMo As such, it is LAGERS responsibility to administer the law in accordance with the expressed intent of the General Assembly. The plan is qualified under the Internal Revenue Code Section 401(a) and is tax exempt. The responsibility for the operations and administration of LAGERS is vested in the LAGERS Board of Trustees consisting of seven persons. LAGERS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained by accessing the LAGERS website at Benefits provided - LAGERS provides retirement, death and disability benefits. Benefit provisions are adopted by the governing body of the employer, within the options available in the state statutes governing LAGERS. All benefits vest after 5 years of credited service. Employees who retire on or after age 60 (55 for police) with 5 or more years of service are entitled to an allowance for life based upon the benefit program information provided below. Employees may retire with an early retirement benefit with a minimum of 5 years of credited service and after attaining age 55 (50 for police) and receive a reduced allowance Valuation Benefit Multiplier 2.00% Final Average Salary 5 years Member Contributions 0% Benefit terms provide for annual post retirement adjustments to each member s retirement allowance subsequent to the member s retirement date. The annual adjustment is based on the increase in the Consumer Price Index and is limited to 4% per year. 19

23 Note 6 - Employee Retirement Plan (continued) City of Crystal City, Missouri Notes to the Financial Statements Employees covered by benefit terms - At June 30, 2015, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 23 Inactive employees entitled to but not yet receiving benefits 21 Active employees Contributions - The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by LAGERS. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance an unfunded accrued liability. Full-time employees of the employer do not contribute to the pension plan. Employer contribution rates are 18.7% (General) and 11.1% (Police) of annual covered payroll. Net Pension Liability - The employer s net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of February 28, Actuarial Assumptions - The total pension liability in the February 28, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary Increase Investment Rate of Return 3.5% wage inflation; 3.0% price inflation 3.5% - 6.8% including wage inflation 7.25%, net of investment and administrative expenses Mortality rates were based on the 1994 Group Annuity Mortality Table set back 0 years for both males and females. The actuarial assumptions used in the February 28, 2015 valuation were based on the results of an actuarial experience study for the period March 1, 2005 through February 28, Actuarial Assumptions (continued) - The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-Term Target Expected Real Asset Class Allocation Rate of Return Equity 43.00% 5.29% Fixed Income 26.00% 2.23% Real Assets 21.00% 3.31% Strategic Assets 10.00% 5.73% Discount rate - The discount rates used to measure the total pension liability are 7.25% (General) and 7.25% (Police). The projection of cash flows used to determine the discount rates assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plan s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payment to determine the total pension liability. 20