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FY 2002-2003 -- Comprehensive Annual Financial ReportCity of College Station, Texas Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2003 Mission Statement On behalf of the citizens of College Station, home of Texas A&M University, we will continue to promote and advance the community's quality of life. www.cstx.gov College Station. Embracing the Past, Exploring the Future! CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 PREPARED BY THE CITY OF COLLEGE STATION FISCAL SERVICES DEPARTMENT CHARLES CRYAN, DIRECTOR OF FISCAL SERVICES KATHLEEN HUBBARD, ASSISTANT DIRECTOR OF FISCAL SERVICES/ACCOUNTING MANAGER PHILLIP GUILLEN, INVESTMENT OFFICER CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 Table of Contents Page i INTRODUCTORY SECTION Letter of Transmittal ................................................................................................................................iv GFOA Certificate of Achievement for Excellence in Financial Reporting............................................... x Organizational Chart...............................................................................................................................xi Principal City Officials ............................................................................................................................xii FINANCIAL SECTION Independent Auditors' Report .................................................................................................................1 Management’s Discussion and Analysis (Unaudited).............................................................................3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets..........................................................................................................21 Statement of Activities.............................................................................................................22 Fund Financial Statements: Balance Sheet – Governmental Funds ...................................................................................24 Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Assets................................................................................................25 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds...............................................................................26 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities...............................27 Statement of Net Assets – Proprietary Funds.........................................................................28 Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds .................................................................................30 Statement of Cash Flows – Proprietary Funds .......................................................................32 Notes to the Financial Statements.................................................................................................35 Required Supplementary Information: Schedule of Funding Progress – Texas Municipal Retirement System ........................................69 General Fund Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budgetary Basis)..............................................................70 CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 Table of Contents Page ii Adjustments to General Fund Revenues and Expenditures To Reconcile From Budget Basis to GAAP Basis...............................................................................71 Supplementary Information: Combining and Individual Fund Statements and Schedules: Combining Balance Sheet – Nonmajor Governmental Funds................................................74 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds..............................................................78 Combining Statement of Net Assets – Nonmajor Enterprise Funds.......................................84 Combining Statement of Revenue, Expenses and Changes in Fund Net Assets – Nonmajor Enterprise Funds..................................................................85 Combining Statement of Cash Flows – Nonmajor Enterprise Funds .....................................86 Schedules of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual (Budgetary Basis): Debt Service......................................................................................................................88 Adjustments to Debt Service Fund Revenues To Reconcile from Budget Basis to GAAP Basis...................................................................89 Special Revenue Funds: Community Development ..........................................................................................90 Convention Center......................................................................................................91 Hotel/Motel Tax ..........................................................................................................92 Melrose Apartment Tax Increment Financing District................................................93 Parks Escrow..............................................................................................................94 Wolf Pen Creek Tax Increment Financing District .....................................................95 Adjustments to Special Revenue Fund Revenues and Expenditures to Reconcile from Budget Basis to GAAP Basis.........................................96 Internal Service Funds: Combining Statement of Net Assets ..........................................................................98 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets...................................................................................................100 CITY OF COLLEGE STATION, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003 Table of Contents Page iii Combining Statement of Cash Flows.......................................................................102 Capital Assets Used in the Operation of Governmental Funds: Schedule by Source .................................................................................................107 Schedule by Function and Activity ...........................................................................108 Schedule of Changes by Function and Activity........................................................110 STATISTICAL SECTION Government-wide Expenses by Function...........................................................................................114 Government-wide Revenues...............................................................................................................115 General Governmental Revenues and Other Financing Sources......................................................116 General Governmental Tax Revenues By Source..............................................................................117 General Governmental Expenditures and Other Uses by Function ...................................................118 Property Tax Levies and Collections ..................................................................................................119 Assessed Value of Taxable Properties...............................................................................................120 Property Tax Rates, Ratios and Levies - All Direct and Overlapping Governments ..........................121 Paving Assessment Collections..........................................................................................................122 Computation of Legal Debt Margin .....................................................................................................123 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt Per Capita................124 Schedule of Direct and Estimated Overlapping Debt .........................................................................125 Ratio of Annual Debt Service Expenditures for General Obligation Debt to Total General Governmental Expenditures and Other Uses..........................................................126 Utility Funds - Schedule of Revenue Bond Coverage ........................................................................127 Construction Permits...........................................................................................................................128 Principal Taxpayers.............................................................................................................................129 Principal Utility Customers..................................................................................................................130 Summary of Insurance Coverage .......................................................................................................131 Miscellaneous Statistical and Demographic Data ...............................................................................132 iv The City of College Station, Texas Embracing the Past, Exploring the Future. P.O. Box 9960 • 1101 Texas Avenue • College Station, TX 77842 • (979) 764-3500 www.cstx.gov March 10, 2004 Honorable Mayor, Members of the City Council Citizens of the City of College Station, Texas The City Manager and the Fiscal Services Department are pleased to submit the Comprehensive Annual Financial Report for the City of College Station, Texas (the "City") for the fiscal year ended September 30, 2003. This report is published to provide to the City Council, City staff, our citizens, our bondholders and other interested parties detailed information concerning the financial condition of the City government. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the data is accurate in all material aspects and is organized in a manner designed to fairly present the financial position and results of operations of the City as measured by the financial activity of its various funds. We also believe that all disclosures necessary to enable the reader to gain the maximum understanding of the City's financial affairs have been included. The Local Government Code, Section 103.001 (a) states: "A municipality shall have its records and accounts audited annually and shall have an annual financial statement prepared based on the audit." Likewise the Fiscal and Budgetary Policy Statements adopted annually by the City Council as a part of the City's Approved Budget includes a requirement that the City shall annually have an audit performed by an outside, independent auditor. The City has complied with this requirement, and the independent auditors' report has been included in this report. THE REPORT This report is comprised of three sections: Introductory, Financial and Statistical. The Introductory Section includes this transmittal letter, a listing of the principal City officials, and an organizational chart of the City. The Financial Section contains the Independent Auditors' Report on the basic financial statements, Management's Discussion and Analysis ("MD&A"), the basic financial statements with related notes, and combining and individual fund statements and schedules. The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction therewith. The City of College Station's MD&A may be found immediately following the Independent Auditors' Report. The Statistical Section provides financial and demographic information, usually presented on a multi-year basis, that is relevant to a financial statement reader. The Financial section described above is prepared in accordance with generally accepted accounting principles for governments as prescribed by the Governmental Accounting Standards Board ("GASB") and other professional associations, as applicable. CITY PROFILE Location The City of College Station, incorporated in 1938, is located in Brazos County in East Central Texas, approximately 140 miles north of the Gulf of Mexico, approximately 90 miles northwest of Houston, approxim v approximately 165 miles south of Dallas and approximately 100 miles east of Austin, in an area referred to as the Brazos Valley. The City currently has a land area of 47.2 square miles and a current estimated population of 76,811 as of January 2004. The City has the power, by state statute, to extend its corporate limits by annexation, which it has done periodically. Structure The City of College Station is a home rule municipality and utilizes a Council-Manager form of government organized under the Constitution and laws of the State of Texas. The City Council is composed of a mayor and six council members elected at large. The City Council appoints the City Manager, City Attorney, City Secretary and Municipal Court Judge. Almost all other City staff work under the direction of the City Manager. The Reporting Entity and Services Provided This report includes all government activities, organizations and functions for which the City is financially accountable as defined by the GASB. Based on these criteria, no other governmental organizations are included in the report. For additional information on the reporting entity, refer to Note I-A in the basic financial statements. The City provides a full range of municipal services as prescribed by statute or charter. These services include police, fire and emergency medical services, parks and recreational facilities, library services, street maintenance and construction, public improvements, general administrative services and electrical, water, sewer, and sanitation systems. Internal services of the City accounted for on a cost reimbursement basis are print/mail, risk management, employee health and disability, equipment replacement, fleet management, and communications. Accounting System and Budgetary Control The City's accounting records for general governmental operations are maintained on a modified accrual basis, with the revenues recorded when available and measurable, and expenditures recorded when the services or goods are received and the liabilities incurred. Accounting records for the City's utilities and other proprietary activities are maintained on a full accrual basis with revenues recorded when earned and expenses recorded as goods or services are provided to the user. In developing and maintaining the City's accounting system, consideration is given to the adequacy of the internal control structure. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition, and (2) 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 requires estimates and judgments by management. All internal accounting control evaluations occur within the above framework. We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The annual budget serves as the foundation for the City's financial planning and control. The City Charter provides that the City Manager will submit a proposed budget to the City Council between 30 and 90 days prior to the end of the fiscal year. The City's budget is prepared by function, fund and department. The City Council is required to hold a public hearing on the proposed budget and to adopt a budget no later than the 27th day of the last month of the fiscal year. The City's fiscal year begins on October 1 and ends on September 30. Controls of budgetary spending are at the department level within the City's General Fund and at the individual fund appropriation in all other funds. The City Council must authorize transfers between General Fund departments and all increases in total spending in any fund. vi The City's departments have direct access to review budgets as often as necessary. Monthly closing reports are prepared and reviewed by management showing revenues, expenditures, and balance sheets. Summarized financial reports and budget reports are provided to the City Council on a quarterly basis. FACTORS AFFECTING FINANCIAL CONDITION Economic Conditions College Station's economic outlook is positive. College Station did not experience the full effect of the national and state economic slowdown over the past several years. The area is somewhat immune due to a concentration of stable and even-growing employment sectors such as government, higher education and health care. College Station continues to enjoy one of the lowest unemployment rates in the state. While the nation's unemployment rate neared 6.5 percent, the unemployment rate in Brazos County never exceeded 2.4 percent. Slow but steady job growth also occurred adding approximately 0.8 percent to non-farm payrolls. Many parts of the state and nation experienced reductions in various types of tax revenue. Sales taxes were down in the State of Texas the last two years in a row, the first time since the sales tax was instituted in Texas. Sales tax collections in College Station continued to grow through the last two years of economic turmoil. College Station's sales taxes were up in fiscal year 2003 by 2.8 percent over fiscal year 2002 to $13,780,639. College Station continues to see significant growth in housing and commercial development. There were 658 new housing starts during 2003, somewhat fewer than in 2002 but well ahead of the average number of new housing starts over the last ten years. Total ad valorem assessed valuation increased by approximately $225 million or approximately 9.2 percent for fiscal year 2003 over fiscal year 2002. Commercial development continued to be strong with both new and redevelopment. The City opened a new Home Depot, and Gattitown moved into vacant commercial space. The University Drive corridor had a significant amount of new businesses and increased traffic. One major asset of the City of College is that it is the home of Texas A & M University ("TAMU"). TAMU is located on approximately 5,200 acre campus within the City. TAMU has a significant economic impact on the City, contributing an estimated $784 million annually to the local economy. TAMU has consistently ranked among the top 50 universities in the United States. Each year, TAMU's 2,500 faculty conduct an estimated $400 million worth of sponsored research projects, assisted by more than 5,000 paid graduate students. The $4.2 billion endowment ranked TAMU eleventh in the nation for fiscal year 2000. Student enrollment at TAMU was 44,813 as of September 2003. TAMU employs more than 20,000 full-time and part-time people. Major Initiatives Much of the planned hiking and biking trails were constructed during 2003. A significant portion of the Wolf Pen Creek Trails was completed adding just over a mile of beautiful new trails for use by citizens and visitors. During fiscal year 2003 the City completed the first phase of Veterans Park providing a major new sports venue to the area with soccer fields and softball diamonds. Other parks continue to have upgrades and replacements to their infrastructure. For example, parking and trails were constructed at the Lick Creek Park. Other park enhancements included benches, sidewalks and trails. Several new traffic signals were installed during the year, to provide greater safety and better traffic flow. New street extensions were completed with a short piece of Longmire south of Rock Prairie Road to Graham Road and Dartmouth from Southwest Parkway to Krenek Tap Road. Widening projects began vii on Greens Prairie Road East of Highway 6 to Pebble Creek Parkway and George Bush East from Texas Avenue to Dexter. Widening projects completed were Phase II of Graham Road and Tarrow Street South. A rehab project was completed in Northgate on First and Maple Streets. New traffic signals were installed at the Gateway on University Drive and at Manuel on Texas Avenue. A number of sidewalk projects were completed by year end along the TAMU campus, University Drive and Anderson Street. Technology is an ongoing area of change for the City. During fiscal 2003 a significant upgrade to the City's public safety computer systems was purchased and installed. Public safety is continuing to provide upgrades as other systems are identified and tested. In addition to the public safety computer upgrades, the City purchased a new human resource module. The new module will allow staff to keep more information on the computer reducing the continuing growing need for additional physical storage space. Capital Planning The citizens of the City approved general obligation bond proposals totaling approximately $38.4 million in November 2003. It is anticipated that the various street, traffic safety, public buildings, parks projects and fire station projects funded by these bonds will be built over the next five years. The City has gone to the voters three times in the last nine years with successful general obligation bond proposals. Among the more ambitious projects planned is a City Centre that will eventually group most City departments in a campus-like setting. The site is between the Police Station and Central Park abutting Texas Avenue on the West, Earl Rudder Freeway on the East and Krenek Tap Road on the North. It is projected that the City will be able to make the improvements without increasing the ad valorem tax rate for the capital portion of these projects. Planning in the various utilities provides for an anticipated investment of $101.9 million over the next five years. The funds will be used to provide electric line extensions, transmission enhancements, substations, new customer connections, and replacements of existing facilities. The water utility will replace lines in older neighborhoods, add new transmission and distribution lines, provide for a looped system, add new wells, and continue a project to add transmission capacity from the well field to the City. Wastewater projects include sewer outfall lines, line extensions for annexed areas and new services, and treatment plant improvements. Relatively small rate increases are anticipated for the water and wastewater utilities over the next five years to keep up with the additional capital requirements. Cash Management The City awards its depository contract through official bidding procedures for a two-year period with the provision for up to three one-year extensions. The City is planning to go out for a new contract during 2004. The current depository contract with First American Bank SSB expires October 1, 2004. Temporarily idle cash for all funds is invested by City officials in securities as allowed by Texas Statutes and the City's investment policy. The average balance of the City's investment portfolio for fiscal year 2003 was approximately $134,020,342. The overall portfolio produced total earnings of $3,550,673 which represents a decrease of $1,889,319 from fiscal year 2002, due to lower interest rates resulting in part from the economic slowdown and the Federal Open Market Committee's attempt to stimulate the economy. The City's bank depository agreement requires that all demand deposits and time deposits are secured by pledged collateral with a market value equal to no less than 102 percent of the deposits, less $100,000 which is insured by the Federal Deposit Insurance Corporation. Evidence of the pledged collateral is maintained by the Fiscal Services Department and a third party financial institution. Collateral is reviewed monthly to assure the market value of the securities pledged equals or exceeds the related bank balances. Assets pledged to the City by its depository are held by the Federal Home Loan Bank, Dallas, Texas, pursuant to a separate Custody Account Agreement. Investment securities purchased for the City, except investments in pooled funds and mutual funds, are on a delivery versus payment basis. That is, funds are not wired or paid until verification has been made viii that the correct security has been received by the custodian. Securities are held in a custody account in the City's name. The original copy of all safekeeping statements is delivered to the City. J.P. Morgan Chase has been designated as the City's safekeeping and custodian bank. During fiscal year 2003, the City Council reviewed the existing Investment Policy as required by state law and no changes were made to the policy. The investment policy provides for an Investment Committee comprised of the Chief Financial Officer, the Assistant Director of Fiscal Services and the Investment Officer. For additional information on the City's investments refer to Note IV-B to the financial statements. Risk Management The City's risk management program is administered by the Risk Management Division. The division is responsible for monitoring all claims filed against the City as well as handling the filing of claims as necessary on behalf of the City. The Risk Management Division is responsible for administering the City's Workers Compensation and Property Casualty Self Insurance Funds. The City's Risk Manager is responsible for ensuring that the City's coverage is adequate to protect the City in the event of potential losses and for ensuring continuous coverage. The City is developing an aggressive safety training program. Employee Retirement System The City is a member of the Texas Municipal Retirement System ("TMRS") which covers all full-time and certain part-time employees. The plan provides for no benefits beyond the contributions of the employee, employer and earnings on the individual employee account. Employee contributions are six (6) percent of gross earnings. The City's contribution rate for 2003 was 9.62 percent. The employee contribution rate has been increased for 2004 to seven (7) percent. The contribution rate for the City is set by TMRS annually for a calendar year. Any unfunded liability (actuarially determined cost to the City not already paid) is paid over a 25-year period and is included as a part of the rate the City pays. OTHER INFORMAITON Independent Audit Section 37 of the City's Charter requires that not less than thirty (30) days prior to the end of each fiscal year, the City Council shall designate a qualified public accountant or accountants who, as of the end of the fiscal year, shall make an independent audit of accounts and other evidences of financial transactions of the city government and shall submit the report to the City Council. Such accountants shall have no personal interest, direct or indirect, in the fiscal affairs of the city government. They shall not maintain any account or record of the city business, but, within specifications approved by the city council, shall post- audit the books and documents kept by the Department of Fiscal Services and any separate or subordinate accounts kept by any other office, department or agency of the city government. The City of College Station has engaged Ingram, Wallis & Company of Bryan, Texas to perform the audit, and their opinion has been included in this report. It should be noted that the auditors included all funds in their audit, performed their audit in accordance with U.S. generally accepted auditing standards, and concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of College Station's financial statements for the fiscal year ended September 30, 2003, are fairly presented in conformity with U.S. generally accepted accounting principals. The independent auditors' report is presented as the first component of the financial section of this report. Certificate of Achievement The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of College Station for its Comprehensive Annual Financial Report ("CAFR") for the Fiscal Year ended September 30, 2002. The x CITY OF COLLEGE STATION CITIZENS OF COLLEGE STATION MAYOR AND COUNCIL CITY ATTORNEY CITY SECRETARY MUNICIPAL JUDGES APPOINTED BOARDS CITY MANAGER'S OFFICE City Manager Assistant City Manager COMMUNITY PROGRAMS OFFICE OF BUDGET AND STRATEGIC PLANNING PUBLIC COMMUNICATIONS AND MARKETING EMERGENCY MANAGEMENT FIRE POLICE ECONOMIC DEVELOPMENT/ COMMUNITY DEV. FISCAL SERVICES PARKS & RECREATION DEVELOPMENT SERVICES PUBLIC WORKS PUBLIC UTILITIES OFFICE OF TECHNOLOGY & INFORMATION SERVICES HUMAN RESOURCES ADMINISTRATION SUPPRESSION PREVENTION EMS ADMINISTRATION UNIFORM PATROL CRIMINAL INVESTIGATIONS SPECIAL SERVICES QUARTERMASTER COMMUNICATIONS / JAIL PROFESSIONAL STANDARDS INFORMATION SERVICES BUSINESS PARK EDC LIAISON REDEVELOPMENT TOURISM DEVELOPMENT RETAIL DEVELOPMENT SPECIAL PROJECTS/ CIP COMMUNITY DEVELOPMENT ACCOUNTING PURCHASING RISK MANAGEMENT MUNICIPAL COURT ADMINISTRATION RECREATION SPECIAL FACILITIES PARKS OPERATIONS FORESTRY CONVENTION & VISITORS BUREAU ARTS COUNCIL BUILDING INSPECTION PLANNING STREETS DRAINAGE FLEET TRAFFIC SOLID WASTE COLLECTION ENGINEERING FACILITIES MAINTENANCE ELECTRIC WATER WASTEWATER MANAGEMENT INFORMATION SERVICES GEOGRAPHIC INFORMATION AND MAP SERVICES COMMUNICATION SERVICES PRINT/MAIL UTILITY CUSTOMER SERVICES LIBRARYxi xii CITY OF COLLEGE STATION, TEXAS PRINCIPAL CITY OFFICIALS September 30, 2003 Elected Officials: Mayor.............................................................................................................................. Ron Silvia Council Member, Mayor Pro Tem....................................................................................Anne Hazen Council Member, Place 1............................................................................................James Massey Council Member, Place 2..................................................................................................John Happ Council Member, Place 3...........................................................................................Robert Wareing Council Member, Place 4................................................................................................Scott Mears Council Member, Place 5.......................................................................................... Dennis Maloney City Administration: City Manager .......................................................................................................Thomas E. Brymer Assistant City Manager.................................................................................................Glenn Brown City Attorney ......................................................................................................Marshall Cargill, Jr. City Secretary ............................................................................................................ Connie Hooks Director of Public Utilities ..............................................................................................John Woody Director of the Office of Technology and Information Services.......................................Olivia Burnside Director of Fiscal Services ........................................................................................... Charles Cryan Director of Economic Development Services .......................................................................Kim Foutz Director of Development Services .................................................................................Kelly Templin Fire Chief................................................................................................................. David Giordano Director of Parks and Recreation...............................................................................Stephen Beachy Director of Human Resources .....................................................................................Julie O’Connell Police Chief............................................................................................................... Edgar Feldman Director of Public Works..................................................................................................Mark Smith Director of Budget and Strategic Planning .................................................................. Jeffrey Kersten City Communications Director ..................................................................................Rebecca Nugent xiii Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 3 This section of the City of College Station's (the City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal. FINANCIAL HIGHLIGHTS • The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $262,991,837 (net assets). Of this amount, $59,843,384 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. • The City's total net assets increased by $15,638,297 during the fiscal year. • At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $63,222,164, a decrease of $2,566,709 when compared to the prior year. This decrease was due to a decrease in two areas: operating transfers in and proceeds from the issuance of long-term debt. • Approximately 30.7% of the combined governmental funds ending fund balance, or $19,391,739, is available for spending at the City's discretion (unreserved-undesignated fund balance). • During fiscal year 2003, the City's total debt increased by approximately $2,195,000. Key factors in this increase were the issuance of $4,790,000 in General Obligation Bonds, $1,780,000 in Certificates of Obligation, and $16,010,000 in Revenue Bonds for the Electric, Water, and Sewer Funds. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: (1) Government-wide financial statements (2) Fund financial statements (3) Notes to the financial statements. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 4 This report also contains other supplementary information in addition to the basic financial statements themselves. The following diagram illustrates the relationship between the different components of this report: Relationship Between Comprehensive Annual Financial Report (CAFR) and Basic Financial Statements and Required Supplementary Information (RSI) General information on the government Introductory structure, services, and environment Section Pages i-xii + Management's Discussion and Analysis Pages 3-20 Government-Wide Financial Statements Basic Pages 21-23 Financial Governmental Fund Financial Statements Statements Pages 24-27 and Proprietary Fund Financial Statements Financial RSI Pages 28-33 Section Notes to the Financial Statements Pages 35-68 Additional Required Supplementary Information Pages 69-71 Information on individual funds and other supplementary information not required by GAAP Pages 73-111 + Trend Data and Nonfinancial Data Pages 114-136 Statistical Section Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 5 Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether or not the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused vacation and sick leave. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, police, financial services, information systems, planning and development, fire, municipal services, parks and recreation, and citizen and neighborhood resources. The business-type activities of the City include electric, water, sewer, and solid waste operations. The government-wide financial statements can be found on pages 21-23. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near- term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in determining what financial resources are available in the near future to finance the City's programs. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 6 The City maintains several individual governmental funds organized according to their type (special revenue, debt service, and capital projects). Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Debt Service Fund, and Streets Capital Projects Fund which are considered to be major funds. Data from the remaining governmental funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major governmental funds is provided in the form of combining statements elsewhere in this report. The governmental fund financial statements can be found on pages 24- 27. The City adopts an annual appropriated budget for its General Fund, Debt Service Fund, and Streets Capital Projects Funds. A budgetary comparison statement has been provided for the General Fund, Debt Service Fund and Special Revenue Funds to demonstrate compliance with their budgets. Proprietary Funds Proprietary funds are generally used to account for services for which the City charges customers--either outside customers or internal units or departments of the City. Proprietary funds provide the same type of information as shown in the government-wide financial statements, only in more detail. The City maintains the following two types of proprietary funds: Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the operations of the electric, water, sewer, sanitation, Cedar Creek Condominiums and parking activities of the City. The Electric, Water, and Sewer funds are considered to be major funds of the City while the remaining funds (Sanitation, Northgate Parking Garage, and Cedar Creek Condominiums) are presented in aggregate as non-major enterprise funds. Individual fund data for the non-major enterprise funds can be found in the form of combining statements elsewhere in this report. Internal service funds are used to report activities that provide supplies and services for certain City programs and activities. The City uses internal service funds to account for communication, fleet maintenance, print-mail, and utility billing services. It also uses internal service funds to account for equipment replacement; employee benefits; and unemployment, workers' compensation, and property casualty insurance. All of these services, with the exception of utility billing, predominantly benefit governmental rather than business-type functions and have been included within governmental activities in the government-wide financial statements. The Utility Billing Fund has been included with the business-type activities in the government-wide financial statements. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found on pages 28-33. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 7 Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report presents on pages 69-71 certain required supplementary information concerning the City's progress in funding its obligation to provide pension benefits to its employees and the general fund budget-to-actual comparison. Combining Statements The combining statements referred to earlier in connection with the non-major governmental and enterprise funds and the internal service funds are presented on pages 73-103 immediately following the required supplementary information on pensions. GOVERNMENT-WIDE FINANCIAL ANALYSIS This is the first year that the City has presented its financial statements under the new reporting model required by the Governmental Accounting Standards Board Statement No. 34 ("GASB 34"), Basic Financial Statements--and Management's Discussion and Analysis ("MD&A")--for State and Local Governments. Because this reporting model significantly changes both the recording and presentation of financial data, the City has not restated prior fiscal years for the purposes of providing comparative information for the MD&A. In future years, when prior-year information is available, a comparative analysis of government-wide data will be included in this report. Analysis of Net Assets As noted earlier, net assets may serve as a useful indicator of a government's financial position. For the City, assets exceeded liabilities by $262,991,837 at the close of the current fiscal year. The largest portion of the City's net assets (71.7 percent) reflects its investment of $188,649,733 in capital assets (e.g., land, buildings, and equipment), less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be liquidated for these liabilities. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 8 Net Assets September 30, 2003 Governmental Business-Type Activities Activities Total Assets Current and Other Assets $78,351,388 $64,640,588 $142,991,976 Capital Assets 124,024,176 169,975,339 293,999,515 Total Assets 202,375,564 234,615,927 436,991,491 Liabilities Long-Term Liabilities Outstanding 77,339,680 79,547,501 156,887,181 Other Liabilities 6,135,086 10,977,387 17,112,473 Total Liabilities 83,474,766 90,524,888 173,999,654 Net Assets Invested in Capital Assets, Net of Related Debt 78,791,820 109,857,913 188,649,733 Restricted 12,031,989 2,466,731 14,498,720 Unrestricted 28,076,989 31,766,395 59,843,384 Total Net Assets $118,900,798 $144,091,039 $262,991,837 An additional portion of the City's net assets, $14,498,720 (5.5 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets, $59,843,384 (22.8 percent) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City was able to report positive balances in all three categories of net assets for the government as a whole, as well as for the business-type activities. Analysis of Changes in Net Assets The City's net assets increased by $15,638,297 as a result of fiscal year 2003 operations. Governmental activities increased net assets by $8,091,291, thereby accounting for 51.7 percent of the total growth in net assets. Business-type activities accounted for the remaining 48.3 percent of the growth and totaled $7,547,006. The following table provides a summary of the City's operations for the year ended September 30, 2003 and highlights key elements of the increase in the City's net assets: Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 9 Changes in Net Assets For the Fiscal Year Ended September 30, 2003 Governmental Business-Type Activities Activities Total Revenues Program Revenues: Charges for Services $8,437,681 $71,148,910 $79,586,591 Operating Grants and Contributions 1,891,808 50,700 1,942,508 Capital Grants and Contributions 6,399,178 3,887,629 10,286,807 General Revenues: Property Taxes 13,441,000 - 13,441,000 Sales Tax 14,027,489 - 14,027,489 Other Taxes 3,808,962 - 3,808,962 Interest and Investment Income 1,739,929 1,126,900 2,866,829 Other 19,563 - 19,563 Total Revenues 49,765,610 76,214,139 125,979,749 Expenses General Government 7,857,618 - 7,857,618 Fiscal Services 1,834,859 - 1,834,859 Police 9,374,251 - 9,374,251 Fire 7,102,089 - 7,102,089 Development Services 1,651,761 - 1,651,761 Public Works 5,242,162 - 5,242,162 Parks and Recreation 6,361,728 - 6,361,728 Office of Technology and Information Services 2,919,155 - 2,919,155 Interest on Long Term Debt 3,643,268 - 3,643,268 Unallocated Depreciation 2,543,780 - 2,543,780 Electric Utility - 43,299,695 43,299,695 Water Utility - 6,283,025 6,283,025 Sewer Utility - 7,347,315 7,347,315 Sanitation Services - 4,419,352 4,419,352 Parking Operations - 461,394 461,394 Cedar Creek Condominiums - - - Total Expenses 48,530,671 61,810,781 110,341,452 Increase in Assets Before Transfers 1,234,939 14,403,358 15,638,297 Transfers 6,856,352 (6,856,352) - Increase in Net Assets 8,091,291 7,547,006 15,638,297 Net Assets at Beginning of Year 110,809,507 136,544,033 247,353,540 Net Assets at End of Year $118,900,798 $144,091,039 $262,991,837 Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 10 The chart below illustrates the City's governmental revenues by source. For governmental activities overall without regard to program, sales tax is the largest single source of funds (24.8 percent) followed by property tax (23.7 percent), charges for services (14.9 percent), grants and contributions (14.6 percent), and transfers (12.1 percent). All other governmental revenues account for 9.9 percent of all governmental revenues. City of College Station, Texas Governmental Revenues By Source $56,621,962 14.9% 23.7% 24.8% 6.7% 3.1%12.1%0.1% 14.6% Charges for Services Grants and Contributions Property Tax Sales Tax Other Taxes Investment Income Other Transfers Governmental expenses by function are depicted in the following chart. Police operations is the largest function in expense (19.3 percent), followed by general government (16.2 percent), fire operations (14.6 percent), parks and recreation (13.1 percent), and public works (10.8 percent). Expenses for all other governmental functions amounted to 26 percent, the largest of which was interest on long-term debt (7.5 percent). City of College Station, Texas Governmental Expenses $48,530,671 5.2%3.4%3.8% 7.5% 10.8% 16.2%13.1% 14.6% 19.3% 6.1% Unallocated Depreciation Development Services Fiscal Services OTIS Interest on LT Debt Public Works General Government Parks and Recreation Fire Police Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 11 Another useful chart depicts governmental activity program revenues relative to program expenses. That data is presented below: Governmental Activity Comparison of Program Revenues to Program Expenses - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000General GovernmentFiscal ServicesPoliceFireDevelopment ServicesPublic WorksParks and RecreationOffice of Technology and Information ServicesInterest on Long-Term DebtUnallocated DepreciationProgram Revenues Program Expenses As with the statement of net assets and the statement of activities, because the GASB 34 reporting model significantly changes the form of financial data, the City has not restated prior fiscal year revenue and expense information. Year to year comparisons will be included in future reports. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 12 Revenues for the City's business-type activities are presented in the following chart. Charges for services provided the largest share of revenues (93.4 percent) for the City's business-type activities. It was followed by grants and contributions (5.2 percent) and investment income (1.4 percent). Business-Type Revenues $76,214,139 93.4% 5.2%1.4% Charges for Services Grants and Contributions Investment Income The chart below shows the relative expenses for the City's business-type activities, the largest of which was electric system operations (63.1 percent) followed by sewer system operations (10.7 percent), transfers (10 percent), water system operations (9.1 percent), sanitation operations (6.4 percent), and parking operations (0.7 percent). Business-Type Expenses $68,667,133 63.1%9.1% 10.7% 6.4% 0.7%10.0% Electric Water Sewer Sanitation Parking Operations Transfers Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 13 FINANCIAL ANALYSIS OF THE CITY'S FUNDS As noted above, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The types of governmental funds reported by the City include the General Fund, Debt Service Funds, and Streets Capital Projects Fund. Other governmental funds of the City are reported as non-major funds. At of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of $63,222,164 Approximately 30.67 percent ($19,391,739) of this total amount constitutes unreserved fund balance and is available for spending at the City's discretion. A portion of the unreserved fund balance ($982,237) is the investment income earned on debt issued for a convention center project and has been designated by management for funding of that project. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed as follows: (1) To pay debt service ($1,636,307), (2) To liquidate contracts and purchase orders of the prior period ($10,521,932), (3) To capital improvements ($29,384,115), (4) To permanent cemetery endowments ($883,476), (5) To police criminal investigation activity ($15,402), (6) To inventory ($54,825), (7) To Court Technology ($195,731), (8) To Court Security ($138,053), and (9) To Court Efficiency ($18,347). Revenues for governmental functions overall totaled approximately $43,149,966 in the fiscal year ended September 30, 2003, an increase of 2.8 percent or $1,188,532 from the fiscal year ended September 30, 2002. Expenditures for governmental functions totaling $58,966,401 decreased by approximately 0.7 percent ($435,080) from the fiscal year ended September 30, 2002. In fiscal year 2003, expenditures for governmental functions exceeded revenues by $15,816,435. That amount was 9.3 percent less than the previous year's amount of $17,440,047. The General Fund is the chief operating fund of the City of College Station. At the end of the current fiscal year, the unreserved, undesignated fund balance was $9,522,041 while the total fund balance reached $11,250,335. The City's fiscal and budgetary policies require that the Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 14 General Fund's undesignated fund balance be at least equal to 15 percent of budgeted expenditures, a percentage equal to 55 days of expenditures. The unreserved, undesignated fund balance is approximately 26 percent of fiscal year 2003 budgeted expenditures and exceeds the minimum requirement set by policy As a measure of the fund's liquidity, it is useful to compare both unreserved and total fund balance to total fund actual expenditures. Unreserved fund balance represents 28.3 percent of total general fund expenditures while total fund balance represents 33.4 percent of the same amount. The fund balance of the General Fund increased by $1,139,110 (11.3 percent) during the current fiscal year. Key factors in this growth were as follows: • A 5.5 percent increase in taxes, most of which resulted from an increase in property tax revenues due to growth in the tax base, • A 16.3 percent increase in licenses and permits which was a direct result of the increased residential construction experienced in fiscal year 2003, • A 19.3 percent increase in fines due to more aggressive collection efforts and increases in the amount of traffic fines, and • The issuance of $1,000,000 in certificates of obligation for the purchase of equipment. The Debt Service Fund ended the fiscal year with a fund balance of $1,636,307, all of which is reserved for the payment of debt service. The net decrease in fund balance during the current fiscal year was $718,906. A $585,749 increase in debt service revenues and other financing sources was more than offset by principal retirement and interest payments. Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements but in more detail. At the end of the current fiscal year, the City's proprietary funds reported combined ending net assets of $143,178,115. Approximately 22.1 percent ($31,585,262) of this total amount constitutes unrestricted net assets. The remainder of net assets for the proprietary funds, $111,592,853, is reported as follows: (1) Invested in capital assets, net of related debt ($109,102,463), (2) Restricted for debt service ($2,466,731), and (3) Restricted for capital projects ($23,659). Operating revenues for proprietary activities totaled $69,257,364 for the fiscal year, an increase of 3.4 percent or $2,357,696 from the previous fiscal year. Operating expenses increased $1,433,122 or 2.6 percent for the same period causing operating income to increase $924,574 or 8.6 percent. The proprietary funds reported net nonoperating revenues (expenses) of ($826,277) at the end of fiscal year 2003 as compared to net nonoperating revenues (expenses) of $2,016,622 in the previous fiscal year. As a result of the increase in operating income and the decline in net nonoperating revenues (expenses), the increase in net assets ($7,863,964) was $1,873,753 more than the change in net assets for the previous year. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 15 Electric Fund At the end of the fiscal year, the unrestricted net assets for the Electric Fund totaled $4,724,633. The electric utility ended the fiscal year with working capital of $4,463,537, a decrease of $9,802,343 or 68.7 percent from fiscal year 2002. The majority of this decrease was due to an $8.7 million settlement of a lawsuit involving a dispute over wheeling charges. In addition, the City decided to use current resources to provide for capital requirements for the electric system and certain other capital acquisitions, a strategy that will help maintain a low debt to equity ratio, maintain relatively low annual debt service payments, and allow the City to be more flexible as it faces the challenges of deregulation within the electric utility industry. The City’s policy with regard to its enterprise funds is to maintain at least 15 percent of annual operating expenses in working capital, a percentage equal to 55 days of expenses. At September 30, 2003, Electric Fund working capital equaled approximately 10.5 percent. This deficiency is primarily due to the lawsuit settlement mentioned previously. Electric Fund operating revenues increased by 2.9 percent ($1,313,760) during fiscal year 2003 while operating expenses increased 5.6 percent ($2,232,312) during the same period resulting in a 17.8 percent decrease ($918,552) in operating income. The large increase in operating expenses was due to the settlement of the lawsuit. As a result of this large expense, net assets for the Electric Fund decreased by $550,685 during the fiscal year. Water Fund Unrestricted net assets for the Water Fund at September 30, 2003 were $11,430,295. Working capital in the Water Fund at the end of fiscal year 2003 was $11,590,001, an increase of approximately 4.2 percent from fiscal year 2002. Water Fund working capital was 237.6 percent of total operating expense and exceeds the minimum 15 percent requirement under the Council's adopted policy. Water Fund operating revenues decreased by 1.0 percent ($88,608) during fiscal year 2003 as a result of slightly lower water consumption due to cooler temperatures and increased rainfall. During the same period, operating expenses declined 16.3 percent ($952,895). As a result, operating income rose 30.3 percent to $3,720,160 in fiscal year 2003. The Water Fund's change in net assets was $4,275,577, an 80.4 percent increase over the previous years. This increase was largely due to the inclusion of $2,045,171 in capital contributions. Sewer Fund The Sewer Fund's unrestricted net assets at the end of fiscal year 2003 were $5,135,602. The Sewer Fund ended the fiscal year with a working capital balance of $4,531,078, which was 20.6 percent above fiscal year 2002. Sewer Fund working capital was 80.9 percent of total operating expenses and is well above the minimum requirement for the fund. Operating revenues in the Sewer Fund were $8,883,482, a $680,028 (8.3 percent) increase over the previous fiscal year. Operating expenses increased from $5,268,030 to $5,599,591 or 6.3 percent while operating income rose by 11.9 percent from $2,935,424 to $3,283,891. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 16 BUDGETARY HIGHLIGHTS The final amended budget for fiscal year 2003 totaled $159,137,707 for all funds. Of this amount $132,737,952 (83 percent) was budgeted for operations and maintenance expenditures, and $26,399,755 (17 percent) was budgeted for capital improvement projects. In the General Fund the final revised budgeted change in fund balance was $1,067,349 lower than the original budgeted change and the significant items that comprise this difference can be briefly summarized as follows: • $520,219 - Encumbrances rolled over from previous fiscal year • $200,000 - Additional funding for the Arts Council of the Brazos Valley • $128,760 - Matching funds for FEMA Fire Equipment Grant • $115,472 - Gainsharing distribution to employees • $100,000 - Cable franchise renewal In the General Fund the actual change in fund balance was $3,603,046 higher than the final revised budgeted change and the significant items that comprise this difference can be briefly summarized as follows: • $754,905 - Additional Fines, Forfeits & Penalties revenue generated from more efficient municipal court operations and an increase in the number of tickets written. • $725,840 - Lower expenditures in the economic development fund related to economic development incentives that were budgeted for and did not occur in FY 03. • $377,776 - Additional Charges for Services revenue generated by an increase in the collection of emergency medical fees, an increase in Parks and Recreation fees, and various other fee and usage increases. • $298,125 - Lower Other Non-departmental expenditures related to savings identified as part of the FY 03 budget process. • $210,024 - Lower Capital Outlay expenditures primarily related to the delay of a fire vehicle purchase that will occur in FY 04. • $175,255 - Lower Purchased Professional Services expenditures related to two franchise agreements that did not require the use of all the funds budgeted. • $152,360 - Additional Licenses and Permits revenue generated from an increase in building activity and an increase in the minimum building permit fee. Strategic planning is a driving force in the preparation of the City's budget. Strategic planning is centered around the following four vision statements under which are listed some of the key items in the fiscal year 2003 budget: Vision Statement #1--Core Services We will provide high quality customer service focused basic City services at a reasonable cost. These core services include police, fire, and emergency management services; traffic and drainage services; the City's administrative services; electric, water, wastewater and sanitation operations; and capital projects for each of these areas. Key items included in the 2003 fiscal year budget include: • Funding of the second of three phases for the operation and maintenance of Fire Station #5 which is scheduled to begin operation in 2004, Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 17 • An additional Code Enforcement Officer to be funded through Community Development Block Grant funds, • Funding for the televising of City Council meetings, • Funding to enhance e-government by providing more City services on line and by revamping the City's web page, • A six percent increase in wastewater rates to help fund the additional debt issued for the expansion of the Lick Creek Wastewater Treatment Plant, • An increase of $1.00 per month in the residential sanitation rate in order to add another residential route, and • The elimination of seven positions in the General Fund. These positions were vacant on October 1, 2002 and their elimination did not impact any existing employees. Vision Statement #2--Parks and Leisure Services We will provide a large range of recreational and cultural arts opportunities. The 2003 fiscal year budget provided resources to continue funding the Parks and Recreation Department at current service levels. Additional resources were included for the following: • Funding necessary to operate and maintain the first phase of Veteran's Park which was dedicated to all veterans of the Brazos Valley in November 2002. Phase I of the park included six soccer fields, two softball fields, parking, a maintenance shop, landscaping, irrigation and an entry road and • Funding to implement the Parks Maintenance Standards adopted by the City Council. Vision Statement #3--Planning and Development We will provide a well-planned community. Activities related to this vision statement include planning and development services. A key focus of the fiscal 2003 budget was funding to complete revisions to the Unified Development Ordinance. Vision Statement #4--Economic Development We will provide a strong and diverse economic environment. This vision statement encompasses the City's economic development initiatives. The fiscal 2003 budget included the following: • Resources to continue the development of a second business park as part of an ongoing effort to strengthen and diversify the tax base, • Funding for the development of the entire 30/60 corridor in College Station, an area bounded by State Highway 60 on the north and State Highway 30 on the south and identified as an area ripe for development, and • Funding for the continued development of a hotel/conference center. CAPITAL ASSETS The City of College Station's investment in capital assets for its governmental and business-type activities as of September 30, 2003 amounted to $293,999,515 (net of accumulated depreciation). This investment in capital assets includes land, utility systems, buildings and building improvements, improvements other than buildings, machinery and equipment, infrastructure, and construction in progress. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 18 Capital Assets at Year End Net of Accumulated Depreciation Governmental Business-Type Activities Activities Total Land $19,714,327 $672,811 $20,387,138 Utility Systems - 132,632,271 132,632,271 Buildings and Building Improvements 17,995,750 5,442,667 23,438,417 Improvements Other than Buildings 7,794,091 - 7,794,091 Machinery and Equipment 9,303,164 106,846 9,410,010 Infrastructure 55,373,740 - 55,373,740 Construction in Progress 13,843,104 31,120,744 44,963,848 $124,024,176 $169,975,339 $293,999,515 Major capital projects completed by the City during the 2003 fiscal year include the following: • A new $3.2 million Municipal Court Building. In addition to Court and Legal staff, the building houses Fire Administration and Brazos Valley Solid Waste Management personnel, • A $1.2 million rehab of Fire Station 2, • A $3.2 million regional athletic park (Veteran's Park), • The Second Street Promenade in the Northgate area ($675,000), • A $1.4 million extension of George Bush Drive East, • New electric services and system extensions totaling $1.4 million, • Overhead and underground electric system improvements totaling $1.6 million • Thoroughfare street lighting improvements totaling $440,566, • A $3.1 million new elevated water storage tower, and • A $285,910 upgrade to the Hensel Park sewer lift station. Of significance is $10.2 million in developer capital contributions during fiscal year 2003. These contributions accounted for approximately 48.8 percent of the $19.5 million increase in capital assets. Additional information on the City's capital assets can be found in Note IV-D to the financial statements on pages 52 - 54. DEBT ADMINISTRATION At the end of the 2003 fiscal year, the City of College Station had total debt outstanding of $155,375,000. Of this amount, $75,695,000 (48.7 percent) comprised debt backed by the full faith and credit of the City . The remaining debt is revenue bonds secured by specified revenue sources. Year-End Outstanding Debt Payable Governmental Business-Type Activities Activities Total General Obligation Bonds $43,170,000 $ - $43,170,000 Revenue Bonds - 79,680,000 79,680,000 Certificates of Obligation 32,525,000 - 32,525,000 $75,695,000 $79,680,000 $155,375,000 Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 19 The City's total debt increased by $2,195,000 (1.4 percent) during the current fiscal year. The change in total debt was a result of the following: • Issuance of $4.79 million in general obligation bonds, $1.78 million in certificates of obligation, and $16.01 million in utility revenue bonds; and • Retirement of $3.285 million in general obligation bonds, $2.535 million in certificates of obligation, and $14.565 million in utility revenue bonds. Included in this debt activity was the issuance of $11.16 million in utility system revenue bonds to refinance previously outstanding revenue bonds totaling $10.75 million. As a result of this refunding, the City will reduce its total debt service payments over the next six (6) years by approximately $885,000. The City's General Obligation and Certificates of Obligation are rated AA- by Standard & Poors ("S&P") and Aa1 by Moody's Investors Service ("Moody's"). The underlying ratings for the City's revenue bonds are A+ by S&P and A3 by Moody's. Because the City's last bond issue was insured, those bonds were rated AAA with S&P and Aaa with Moody's. Additional information on the City's long-term debt can be found in Note IV-G to the financial statements on pages 55 - 59 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City of College Station has continued to grow and has not experienced some of the more severe economic downturns faced by other cities, both in the state and in the nation. Indicators of that growth include the following: • An estimated population increase of 41.5 percent for the period of 1990 through 2003, • An approximate $142 million increase to the ad valorem tax base during fiscal year 2003 and a 41.7 percent increase in value of new development for the same period, • A local economy that has maintained an unemployment rate of less than 4 percent since 1990, • Sales tax revenue that grew 2.8 percent during the fiscal year, and • A six (6) percent increase in electric customer connections during the current fiscal year. Part of the reason the City has been insulated from some of the effects of the slower national and state economy is due to the major influence of Texas A&M University on the local economy. However, because of some slight budget reductions at Texas A&M, the City's proposed fiscal year 2004 budget was prepared conservatively with recommendations for maintaining current service levels. As a result, the proposed ad valorem tax rate for the 2004 fiscal year remains at $0.4777 per $100 valuation ($0.1946 for operations and maintenance and $0.2831 for debt service). This proposed tax rate will meet the debt service obligations of the City and provide operations and maintenance funding in the General Fund. Current and anticipated growth in the community has resulted in increased demands for services and has put pressure on the City's utility systems. Consequently, the 2004 proposed budget includes a four (4) percent revenue increase in the Sewer Fund. This rate increase is needed to fund the expansion of the Lick Creek Wastewater Treatment Plant and other capital projects needed to maintain, rehabilitate, and expand the sewer system infrastructure in order to keep up with the growth. No electric, water, sanitation, or drainage rate increases are proposed in the 2004 fiscal year budget. Management's Discussion and Analysis For the Fiscal Year Ended September 30, 2003 (Unaudited) City of College Station, Texas 20 The fiscal year 2004 proposed budget for capital improvements totals $34,919,321. The City anticipates significant expenditures for infrastructure rehabilitation and improvements in the Southside area, an older part of the City. These projects include rehabilitation of utilities, drainage ways, and streets. Some of the more significant projects are as follows: • Street rehabilitation in the Southside area ($1.2 million), • Extension of Longmire Drive ($2.2 million), • Widening of Greens Prairie Road ($3.7 million), • Extension of Dartmouth Drive ($3.4 million), • Expansion of the Lincoln Center ($623,000), • Development of Woodway Park ($700,000), • Construction of Fire Station #5 ($1.3 million), and • Construction of the Spring Creek Business Park ($2.3 million) It is anticipated that the City will issue $8.72 million in certificates of obligation during fiscal year 2004 to help fund electric and sewer capital projects. However, no debt issues are planned for water capital improvements since these projects will be funded using current revenues. In addition, the City plans to issue general obligation bonds for the following: $855,000 for drainage improvements, $1.05 million for streets, $550,000 for traffic projects, $150,000 for parks projects, and $4.355 million for public facilities. An additional $505,000 in certificates of obligation will be issued for Phase II of the Business Park. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of College Station's financial position for all who have an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: City of College Station Fiscal Services Department ATTN: Director of Fiscal Services P.O. Box 9960 College Station, Texas 77842-9960 or visit our website at http://www.cstx.gov. CITY OF COLLEGE STATION, TEXAS Statement of Net Assets As of September 30, 2003 Governmental Business-type Activities Activities Total Assets Equity in Cash and Cash Equivalents 29,605,118$ 8,694,946$ 38,300,064$ Equity in Investments 45,195,119 13,273,083 58,468,202 Receivables, net 3,039,738 9,097,396 12,137,134 Internal Balances (373,704) 373,704 0 Inventories 171,431 1,344,451 1,515,882 Prepaid Costs 35,848 0 35,848 Restricted Assets Equity in Cash and Cash Equivalents 268,288 9,253,299 9,521,587 Equity in Investments 409,550 14,125,424 14,534,974 Receivables, net 0 62,139 62,139 Equity in Joint Venture 0 7,606,185 7,606,185 Deferred Charges, net 0 809,961 809,961 Capital Assets: Land and Construction in Progress 33,557,431 31,793,555 65,350,986 Other Capital Assets, net of accumulated depreciation 90,466,745 138,181,784 228,648,529 Total Assets 202,375,564 234,615,927 436,991,491 Liabilities Accounts Payable 2,893,220 8,499,332 11,392,552 Accrued Interest Payable 0 3,941 3,941 Retainage Payable 234,130 0 234,130 Refundable Deposits 25,814 0 25,814 Claims Payable 418,859 0 418,859 Accrued Liabilities 1,285,438 458,667 1,744,105 Customer Construction Advances 63,958 92,152 156,110 Other Deferred Revenues 714,813 822 715,635 Liabilities Payable from Restricted Assets Accounts Payable 0 836 836 Accrued Interest Payable 469,476 642,102 1,111,578 Retainage Payable 0 157,460 157,460 Accrued Liabilities 29,378 15,836 45,214 Refundable Deposits 0 1,106,239 1,106,239 Non-current liabilities Due within one year: Compensated Absences 80,413 15,984 96,397 Bonds and Certificates of Obligation Payable 5,680,000 4,025,000 9,705,000 Due in more than one year: Bonds and Certificates of Obligation Payable 70,015,000 75,655,000 145,670,000 Unamortized Premium on Bonds 0 (435,753) (435,753) Compensated Absences 1,564,267 287,270 1,851,537 Total Liabilities 83,474,766 90,524,888 173,999,654 Net Assets Invested in Capital Assets, net of related debt 78,791,820 109,857,913 188,649,733 Restricted for: Debt Service 1,346,593 2,466,731 3,813,324 Other 10,685,396 0 10,685,396 Unrestricted 28,076,989 31,766,395 59,843,384 Total Net Assets 118,900,798$ 144,091,039$ 262,991,837$ The notes to the financial statements are an integral part of this statement. 21 CITY OF COLLEGE STATION Statement of Activities For the Year Ended September 30, 2003 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General Government 7,857,618$ 516,258$ 1,462,949$ 0$ Fiscal Services 1,834,859 327,188 0 0 Police 9,374,251 3,215,162 149,829 0 Fire 7,102,089 637,443 279,030 0 Development Services 1,651,761 1,104,793 0 0 Public Works 5,242,162 1,237,447 0 6,399,178 Parks and Recreation 6,361,728 1,399,390 0 0 Office of Technology and Information Services 2,919,155 0 0 0 Interest on long-term debt 3,643,268 0 0 0 Unallocated Depreciation 2,543,780 0 0 0 Total governmental activities 48,530,671 8,437,681 1,891,808 6,399,178 Business-type activities: Electric 43,299,695 46,592,459 0 425,613 Water 6,283,025 8,861,195 50,700 2,045,171 Sewer 7,347,315 9,159,142 0 1,416,845 Sanitation 4,419,352 5,986,207 0 0 Cedar Creek Condominiums 0 4,341 0 0 Northgate Parking 461,394 545,566 0 0 Total business-type activities 61,810,781 71,148,910 50,700 3,887,629 Total primary government 110,341,452$ 79,586,591$ 1,942,508$ 10,286,807$ General Revenue: Property taxes Sales taxes Franchise taxes Hotel/Motel taxes Unrestricted investment earnings Gain on sale of capital assets Transfers Total general revenues and transfers Change in net assets Net assets - beginning Net assets - ending The notes to the financial statements are an integral part of this statement. 22 Net Revenue (Expense) and Changes in Net Assets Governmental Business-type Activities Activities Total (5,878,411)$ 0$ (5,878,411)$ (1,507,671) 0 (1,507,671) (6,009,260) 0 (6,009,260) (6,185,616) 0 (6,185,616) (546,968) 0 (546,968) 2,394,463 0 2,394,463 (4,962,338) 0 (4,962,338) (2,919,155) 0 (2,919,155) (3,643,268) 0 (3,643,268) (2,543,780) 0 (2,543,780) (31,802,004) 0 (31,802,004) 0 3,718,377 3,718,377 0 4,674,041 4,674,041 0 3,228,672 3,228,672 0 1,566,855 1,566,855 0 4,341 4,341 0 84,172 84,172 0 13,276,458 13,276,458 (31,802,004)$ 13,276,458$ (18,525,546)$ 13,441,000$ 0$ 13,441,000$ 14,027,489 0 14,027,489 1,688,947 0 1,688,947 2,120,015 0 2,120,015 1,739,929 1,126,900 2,866,829 19,563 0 19,563 6,856,352 (6,856,352) 0 39,893,295 (5,729,452) 34,163,843 8,091,291 7,547,006 15,638,297 110,809,507 136,544,033 247,353,540 118,900,798$ 144,091,039$ 262,991,837$ 23 CITY OF COLLEGE STATION, TEXAS Balance Sheet Governmental Funds As of September 30, 2003 Other Total Streets Governmental Governmental General Debt Service Projects Funds Funds Assets and Other Debits Assets Equity in Cash and Cash Equivalents 4,771,083$ 659,180$ 8,520,371$ 11,943,224$ 25,893,858$ Equity in Investments 7,283,195 1,006,257 13,006,589 18,231,673 39,527,714 Receivables Accrued Interest 37,049 4,140 63,595 88,905 193,689 Grants 87,528 0 0 323,399 410,927 Letter of Credit 25,000 0 0 0 25,000 Accounts 499,079 0 246,774 211,977 957,830 Special Assessments 21,796 0 0 0 21,796 Taxes 1,352,185 205,357 0 0 1,557,542 Notes and Loans 0 0 0 9,356 9,356 Other 12,513 0 0 0 12,513 Less Allowance for Uncollectible Accounts (48,865) 0 (246,774) (18,973) (314,612) Due from Other Funds 19,271 0 0 0 19,271 Inventories 54,825 0 0 2,373 57,198 Restricted Assets Equity in Cash and Cash Equivalents 268,288 0 0 0 268,288 Equity in Investments 409,550 0 0 0 409,550 Total Assets 14,792,497$ 1,874,934$ 21,590,555$ 30,791,934$ 69,049,920$ Liabilities and Fund Balances Liabilities Accounts Payable 1,094,055$ 0$ 723,793$ 831,172$ 2,649,020$ Retainage Payable 4,511 0 95,753 133,866 234,130 Due to Other Funds 0 0 0 200,000 200,000 Refundable Deposits 5,403 0 0 20,411 25,814 Accrued Liabilities 1,218,955 33,270 0 (998) 1,251,227 Customer Construction Advances 32,963 0 30,995 0 63,958 Other Deferred Revenues 1,156,897 205,357 0 11,975 1,374,229 Liabilities Payable from Restricted Assets Accrued Liabilities 29,378 0 0 0 29,378 Total Liabilities 3,542,162 238,627 850,541 1,196,426 5,827,756 Fund Balances Reserved 1,728,294 1,636,307 20,740,014 18,743,573 42,848,188 Unreserved Designated for subsequent Years Expenditures 0 0 0 982,237 982,237 Undesignated 9,522,041 0 0 9,869,698 19,391,739 Total Fund Balances 11,250,335 1,636,307 20,740,014 29,595,508 63,222,164 Total Liabilities and Fund Balances 14,792,497$ 1,874,934$ 21,590,555$ 30,791,934$ 69,049,920$ The notes to the financial statements are an integral part of this statement. 24 CITY OF COLLEGE STATION, TEXAS Reconciliation of Governmental Funds Balance Sheet to the Statement of Net Assets As of September 30, 2003 Amounts reported for governmental activities in the statement of net assets are different because: Total Fund Balance per balance sheet: 63,222,164$ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 115,593,538 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 659,416 Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, fleet maintenance, equipment replacement and print/mail, to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net assets. 17,194,410 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. (77,768,730) Net Assets of governmental activities: 118,900,798$ The notes to the financial statements are an integral part of this statement. 25 CITY OF COLLEGE STATION, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended September 30, 2003 General Debt Service Streets Projects Other Governmental Funds Total Governmental Funds Revenues Taxes 20,994,078$ 7,645,600$ 0$ 2,637,773$ 31,277,451$ Licenses and Permits 1,012,960 0 0 0 1,012,960 Intergovernmental 487,934 0 8,400 1,454,549 1,950,883 Charges for Services 2,403,316 0 0 206,740 2,610,056 Fines, Forfeits and Penalties 2,654,154 0 0 3,489 2,657,643 Special Assessments 0 0 0 1,035,023 1,035,023 Investment Income 281,092 90,104 483,575 688,255 1,543,026 Rents and Royalties 112,993 0 0 120,033 233,026 Loan Repayments 0 0 0 11,322 11,322 Contributions 20,987 0 106,871 348,055 475,913 Reimbursed Expenditures 7,258 0 0 0 7,258 Other 182,810 0 95,553 57,042 335,405 Total Revenues 28,157,582 7,735,704 694,399 6,562,281 43,149,966 Expenditures Current General Government 3,471,279 0 293,800 0 3,765,079 Fiscal Services 2,319,008 0 0 0 2,319,008 Police 9,143,331 0 0 0 9,143,331 Fire 6,989,125 0 0 0 6,989,125 Development Services 1,935,277 0 0 0 1,935,277 Public Works 5,292,243 0 0 0 5,292,243 Economic and Community Development 6,369 0 0 0 6,369 Parks and Recreation 6,279,342 0 0 0 6,279,342 Office of Technology and Information Services 2,320,950 0 0 0 2,320,950 Library 681,350 0 0 0 681,350 Reimbursed Administrative (6,013,085) 0 250,000 2,059,556 (3,703,529) Contributions 445,251 0 0 1,128,400 1,573,651 Community Development Block Grant 0 0 0 222,169 222,169 Home Grant 0 0 0 408,779 408,779 Other 91,428 0 268,708 264,701 624,837 Capital Outlay 673,305 0 3,188,075 7,425,068 11,286,448 Debt Service Principal Retirement 0 5,820,000 0 0 5,820,000 Interest Payments 0 3,647,529 0 0 3,647,529 Issuance Costs 41,098 392 42,087 34,758 118,335 Fiscal Charges 0 12,500 0 0 12,500 Intergovernmental 0 0 223,608 0 223,608 Total Expenditures 33,676,271 9,480,421 4,266,278 11,543,431 58,966,401 Deficiency of Revenues Under Expenditures (5,518,689) (1,744,717) (3,571,879) (4,981,150) (15,816,435) Other Financing Sources (Uses) Proceeds from Long-Term Debt 1,000,000 0 2,473,000 3,097,000 6,570,000 Sale of Capital Assets 19,563 67,311 (78,441) 11,130 19,563 Transfers In 6,741,826 958,500 98,790 111,574 7,910,690 Transfers Out (1,103,590) 0 0 (890,004) (1,993,594) Total Other Financing Sources (Uses) 6,657,799 1,025,811 2,493,349 2,329,700 12,506,659 Net Change in Fund Balances 1,139,110 (718,906) (1,078,530) (2,651,450) (3,309,776) Fund Balances, October 1 10,111,225 2,355,213 21,818,544 32,246,958 66,531,940 Fund Balances, September 30 11,250,335$ 1,636,307$ 20,740,014$ 29,595,508$ 63,222,164$ The notes to the financial statements are an integral part of this statement. 26 CITY OF COLLEGE STATION, TEXAS Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended September 30, 2003 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balance - total governmental funds (3,309,776)$ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. 5,041,727 The effect of various miscellaneous transactions involving capital assets is to increase net assets. 6,399,178 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. 27,648 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long- term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. This amount is the net effect of these differences in the treatment of long-term debt. (750,000) 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. (89,894) Internal Service Funds are used by management to charge the costs of certain activities, such as insurance, fleet maintenance, equipment replacement and Print/Mail, to individual funds. The net revenues of certain activities of internal service funds is reported within governmental activities. 772,408 Change in Net Assets of governmental activities: 8,091,291$ The notes to the financial statements are an integral part of this statement. 27 City of College Station, Texas Statement of Net Assets Proprietary Funds As of September 30, 2003 Governmental Business-type Activities - Enterprise Funds Activities Electric Water Sewer Other Enterprise Funds Total Enterprise Funds 2003 Internal Service Funds Current Assets Equity in Cash and Cash Equivalents 1,688,473$ 4,622,471$ 1,461,950$ 892,190$ 8,665,084$ 3,741,122$ Equity in Investments 2,577,503 7,056,334 2,231,709 1,361,952 13,227,498 5,712,990 Receivables, net 6,354,877 986,965 971,135 770,846 9,083,823 179,270 Inventories 1,002,027 288,362 19,777 34,285 1,344,451 114,233 Prepaid Costs 0 0 0 0 0 35,848 Total Current Assets 11,622,880 12,954,132 4,684,571 3,059,273 32,320,856 9,783,463 Restricted Assets Equity in Cash and Cash Equivalents 3,651,400 2,972,399 2,629,500 0 9,253,299 0 Equity in Investments 5,573,966 4,537,452 4,014,006 0 14,125,424 0 Receivables, net 24,812 18,724 18,603 0 62,139 0 Total Restricted Assets 9,250,178 7,528,575 6,662,109 0 23,440,862 0 0 Advance to Other Funds 200,000 0 0 0 200,000 0 Equity in Joint Venture 0 0 0 7,606,185 7,606,185 0 Deferred Charges Water Well 0 1,167,075 0 0 1,167,075 0 Bond Issuance Costs 278,669 247,020 357,245 0 882,934 0 Accumulated Amortization (61,455) (1,109,711) (68,882) 0 (1,240,048) 0 Total Deferred Charges 217,214 304,384 288,363 0 809,961 0 Capital Assets Utility Plant 81,998,169 60,409,385 59,170,659 0 201,578,213 0 Buildings 0 0 0 5,723,063 5,723,063 746,575 Machinery and Equipment 0 0 0 1,411,242 1,411,242 20,604,879 Accumulated Depreciation (35,594,167) (18,596,627) (15,486,939) (1,584,792) (71,262,525) (12,189,025) Construction in Progress 3,368,689 13,405,377 14,346,678 0 31,120,744 0 Land 0 0 0 672,811 672,811 0 Total Capital Assets, net of accumulated depreciation 49,772,691 55,218,135 58,030,398 6,222,324 169,243,548 9,162,429 Total Assets 71,062,963 76,005,226 69,665,441 16,887,782 233,621,412 18,945,892 Liabilities Current Liabilities Accounts Payable 6,877,323 1,270,736 95,107 248,625 8,491,791 251,741 Accrued Interest Payable 0 0 0 3,941 3,941 0 Retainage Payable 0 0 0 0 0 0 Interfund Payable 0 0 0 0 0 19,271 Accrued Liabilities 256,816 37,755 46,256 85,205 426,032 66,846 Customer Construction Advances 24,382 55,640 12,130 0 92,152 0 Other Deferred Revenues 822 0 0 0 822 0 Claims Payable 0 0 0 0 0 418,859 Total Current Liabilities 7,159,343 1,364,131 153,493 337,771 9,014,738 756,717 Current Liabilities Payable from Restricted Assets Accounts Payable 836 0 0 0 836 0 Accrued Interest Payable 136,590 215,687 289,825 0 642,102 0 Retainage Payable 0 118,865 38,595 0 157,460 0 Accrued Liabilities 13,174 0 2,662 0 15,836 0 Refundable Deposits 959,501 144,838 0 1,900 1,106,239 0 Revenue Bonds 1,053,250 1,157,068 1,814,682 0 4,025,000 0 Total Current Liabilities Payable from Restricted Assets 2,163,351 1,636,458 2,145,764 1,900 5,947,473 0 28 City of College Station, Texas Statement of Net Assets Proprietary Funds As of September 30, 2003 Governmental Business-type Activities - Enterprise Funds Activities Electric Water Sewer Other Enterprise Funds Total Enterprise Funds 2003 Internal Service Funds Noncurrent Liabilities Revenue Bonds 17,575,987 26,071,617 32,007,396 0 75,655,000 0 Unamortized Premium on Bonds (143,435) (42,653) (249,665) 0 (435,753) 0 Accrued Vacation 127,104 46,077 57,603 31,055 261,839 81,841 Total Noncurrent Liabilities 17,559,656 26,075,041 31,815,334 31,055 75,481,086 81,841 Total Liabilities 26,882,350 29,075,630 34,114,591 370,726 90,443,297 838,558 Net Assets Invested in Capital Assets, net of related debt 38,920,619 35,087,170 28,896,009 6,222,324 109,126,122 9,162,429 Restricted for: Debt Service 535,361 412,131 1,519,239 0 2,466,731 0 Unrestricted 4,724,633 11,430,295 5,135,602 10,294,732 31,585,262 8,944,905 Total Net Assets 44,180,613$ 46,929,596$ 35,550,850$ 16,517,056$ 143,178,115 18,107,334$ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 912,924 Net assets business-type activities 144,091,039$ The notes to the financial statements are an integral part of this statement. 29 CITY OF COLLEGE STATION, TEXAS Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Fiscal Year Ended September 30, 2003 Governmental Business-type Activities - Enterprise Funds Activities Electric Water Sewer Other Enterprise Funds Total Enterprise Funds Internal Service Funds Operating Revenues Electric Sales 45,480,173$ 0$ 0$ 0$ 45,480,173$ 0$ Water Sales 0 8,029,071 0 0 8,029,071 0 Sewer Service 0 0 8,523,513 0 8,523,513 0 Garbage Collection Fees 0 0 0 4,659,525 4,659,525 0 Charges for Services 541,571 541,571 6,423,682 Other 1,085,424 568,096 359,969 10,022 2,023,511 5,389,123 Total Operating Revenues 46,565,597 8,597,167 8,883,482 5,211,118 69,257,364 11,812,805 Operating Expenses Electric Operations 40,100,091 0 0 0 40,100,091 0 Salaries and Benefits 0 1,241,608 1,400,243 1,542,963 4,184,814 2,273,036 Supplies 0 73,666 265,261 206,639 545,566 794,619 Maintenance 0 63,267 153,525 488,982 705,774 163,289 Purchased Professional Services 0 139,723 156,739 328,157 624,619 63,753 Claims 0 0 0 0 0 100,318 Administration Fees 0 0 0 0 0 350,769 Premiums 0 0 0 0 0 977,586 Purchased Property Services 0 867,255 489,902 1,197,700 2,554,857 56,407 Other Purchased Services 0 145,206 261,269 431,938 838,413 3,926,591 Reimbursed Administrative 0 1,160,270 1,057,053 416,871 2,634,194 1,183,646 Depreciation 2,210,537 1,031,967 1,759,172 177,128 5,178,804 2,723,472 Other 0 154,045 56,427 22,938 233,410 36,893 Total Operating Expenses 42,310,628 4,877,007 5,599,591 4,813,316 57,600,542 12,650,379 Operating Income 4,254,969 3,720,160 3,283,891 397,802 11,656,822 (837,574) Nonoperating Revenues (Expenses) Investment Income 370,522 439,285 266,272 48,719 1,124,798 199,005 Reimbursed Expenses 26,862 5,055 25,557 1,440 58,914 63,486 Grants 0 50,700 0 0 50,700 0 Earnings in Joint Venture 0 0 0 1,316,660 1,316,660 0 Interest Expense (736,076) (1,332,355) (1,708,902) 0 (3,777,333) 0 Other, net (114,261) 258,973 250,103 5,169 399,984 93,419 Total Nonoperating Revenues (Expenses) (452,953) (578,342) (1,166,970) 1,371,988 (826,277) 355,910 Income Before Capital Contributions and Transfers 3,802,016 3,141,818 2,116,921 1,769,790 10,830,545 (481,664) Capital Contributions 425,613 2,045,171 1,416,845 0 3,887,629 0 Transfers In 0 0 0 0 0 1,159,582 Transfers Out (4,778,314) (911,412) (832,648) (331,836) (6,854,210) (222,468) Change in Net Assets (550,685) 4,275,577 2,701,118 1,437,954 7,863,964 455,450 Beginning Net Assets 44,731,298 42,654,019 32,849,732 15,079,102 17,651,884 Ending Net Assets 44,180,613$ 46,929,596$ 35,550,850$ 16,517,056$ 18,107,334$ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. (316,958) Change in net assets of business-type activities 7,547,006$ The notes to the financial statements are an integral part of this statement. 30 31 CITY OF COLLEGE STATION, TEXAS Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended September 30, 2003 Governmental Business-type Activities - Enterprise Funds Activities Electric Water Sewer Other Enterprise Funds Total Internal Service Funds Cash Flows from Operating Activities: Cash Received from Customers 46,506,490$ 8,735,538$ 8,875,278$ 5,246,513$ 69,363,819$ 11,832,544$ Cash Payments to Suppliers for Goods and Services (35,707,181) (1,773,113) (2,636,902) (3,081,284) (43,198,480) (7,739,308) Cash Payments to Employees for Services (2,197,748) (1,251,318) (1,402,678) (1,535,864) (6,387,608) (2,269,365) Customer Deposits Received 45,092 24,498 0 0 69,590 0 Customer Deposits Returned 0 0 0 (50) (50) 0 Cash Received for Reimbursed Expenses 26,862 5,055 25,557 1,440 58,914 63,486 Cash Received from Grants 0 50,700 0 0 50,700 0 Cash Received for Miscellaneous Revenues 0 258,973 283,832 6,896 549,701 62,472 Cash Received from Other Funds 0 0 0 0 0 62,161 Cash Paid to Other Funds 0 0 0 0 0 (50,233) Cash Paid for Miscellaneous Expenses (113,728) (53,128) 0 (4,231) (171,087) (38,201) Net Cash Provided by Operating Activities 8,559,787 5,997,205 5,145,087 633,420 20,335,499 1,923,556 Cash Flows from Noncapital Financing Activities: Transfers In from Other Funds 0 0 0 0 0 1,161,082 Transfers Out to Other Funds (4,778,314) (911,412) (832,648) (331,836) (6,854,210) (222,468) Net Cash Provided (Used) by Noncapital Financing Activities (4,778,314) (911,412) (832,648) (331,836) (6,854,210) 938,614 Cash Flows from Capital and Related Financing Activities: Acquisition and Construction of Capital Assets (9,203,777) (3,942,586) (2,667,993) (23,500) (15,837,856) (2,549,100) Proceeds from Sale of Assets 0 0 0 0 0 225,400 Principal Paid on Revenue Bonds (960,350) (1,142,300) (1,712,350) 0 (3,815,000) 0 Interest Paid on Revenue Bonds (756,227) (1,400,313) (1,792,892) 0 (3,949,432) 0 Fees Paid to Fiscal Agent (3,638) (2,676) (4,374) 0 (10,688) 0 Proceeds from Revenue Bonds 4,850,000 0 0 0 4,850,000 0 Issuance Costs Paid on Revenue Bonds (38,397) (7,322) (4,374) 0 (50,093) 0 Net Cash Used by Capital and Related Financing Activities (6,112,389) (6,495,197) (6,181,983) (23,500) (18,813,069) (2,323,700) Cash Flows from Investing Activities: Purchase of Investments (32,712,749) (45,616,056) (25,106,488) (5,141,848) (108,577,141) (21,882,771) Proceeds from Sale and Maturities of Investment Securities 31,628,022 43,228,322 24,314,072 4,660,309 103,830,725 20,154,263 Investment Income 425,691 497,509 299,943 53,759 1,276,902 215,900 Net Cash Used by Investing Activities (659,036) (1,890,225) (492,473) (427,780) (3,469,514) (1,512,608) Net Decrease in Cash and Cash Equivalents (2,989,952) (3,299,629) (2,362,017) (149,696) (8,801,294) (974,138) Cash and Cash Equivalents, Oct. 1 8,329,825 10,894,499 6,453,467 1,041,886 26,719,677 4,715,260 Cash and Cash Equivalents, Sept. 30 5,339,873$ 7,594,870$ 4,091,450$ 892,190$ 17,918,383$ 3,741,122$ 32 CITY OF COLLEGE STATION, TEXAS Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended September 30, 2003 Governmental Business-type Activities - Enterprise Funds Activities Electric Water Sewer Other Enterprise Funds Total Internal Service Funds Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating Income (Loss) 4,254,969$ 3,720,160$ 3,283,891$ 397,802$ 11,656,822$ (837,574)$ Adjustment to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation, Bad Debt Expense, Inventory Loss 2,467,191 1,078,605 1,809,545 177,128 5,532,469 2,723,472 Provision for Uncollectible Accounts 32,273 1,437 7,184 2,347 43,241 0 Miscellaneous Nonoperating Revenues 26,862 314,728 309,389 8,336 659,315 125,958 Miscellaneous Nonoperating Expenses (113,728) (53,128) 0 (4,231) (171,087) (63,010) Changes in Assets and Liabilities: 0 Change in Accounts Receivable (70,583) 138,371 (8,204) 35,395 94,979 53,275 Change in Other Receivables 11,476 0 0 0 11,476 0 Change in Due from Other Funds 0 0 0 0 0 62,161 Change in Inventory (54,304) 43,123 (2,617) (31,469) (45,267) (5,717) Change in Prepaid Costs 0 0 0 0 0 32,363 Change in Accounts Payable 2,079,866 752,258 (248,035) 50,633 2,634,722 (379,208) Change in Due to Other Funds 0 0 0 0 0 (50,233) Change in Claims Payable 0 0 0 0 0 267,362 Change in Accrued Liabilities (127,766) (16,151) (3,762) (7,417) (155,096) (2,834) Change in Refundable Deposits 45,092 24,498 0 (50) 69,540 0 Change in Accrued Vacation 8,439 (6,696) (2,304) 4,946 4,385 (2,459) Total Adjustments 4,304,818 2,277,045 1,861,196 235,618 8,678,677 2,761,130 Net Cash Provided by Operating Activities 8,559,787$ 5,997,205$ 5,145,087$ 633,420$ 20,335,499$ 1,923,556$ The notes to the financial statements are an integral part of this statement. 33 34 Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 35 I. Summary of Significant Accounting Policies A. Financial Reporting Entity The City of College Station, Texas ("City"), the financial reporting entity presented in these financial statements, was incorporated in 1938 and is a municipal corporation incorporated under the provisions of H.B. 901 of the Texas Legislature. The City operates under a Council-Manager form of government and provides such services as authorized by its charter to advance the welfare, health, comfort, safety and convenience of the City and its inhabitants. The City of College Station entered into a joint venture in 1990 with the City of Bryan, Texas creating the Brazos Valley Solid Waste Management Agency ("BVSWMA"). BVSWMA was formed to combine landfill operations for the two cities. It is subject to joint control, and each City holds a 50% interest and ownership in BVSWMA. The City's equity interest in BVSWMA is reported in the Sanitation Fund. (See Note V-C). The financial statements of the City have been prepared in conformity with generally accepted accounting principles ("GAAP") as applied to state and local governments. The more significant of the City's accounting policies are described below. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses for a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 36 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. The City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to vacation, claims, and judgments, are recorded only when payment is due. Property taxes, other local taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and, therefore, have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the City receives cash. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund. The Debt Service Fund accounts for the financial resources accumulated for the payment of principal, interest and related costs on long-term debt paid primarily from taxes levied by the City. The fund balance of the Debt Service Fund is reserved to signify that the amounts are restricted exclusively for debt service expenditures. The Streets Capital Projects Fund accounts for the costs of new street construction, street improvements, and traffic signalization made with funds provided by proceeds from the sale of general obligation bonds and by investing those proceeds. The City reports the following major proprietary funds: The Electric Fund accounts for the activities necessary to provide electric services to the residents of the City. These activities include administration, distribution system operations and maintenance, transmission system operations and maintenance, new construction, and financing and related debt service. Billing and collection services are accounted for as an internal service fund. The Water Fund accounts for the activities necessary to provide water services to the residents of the City. These activities include administrative services, water production and distribution system operations and maintenance, new construction, financing and related debt service. Billing and collection services are accounted for as an internal service fund. The Sewer Fund accounts for the activities necessary to provide sewer collection and treatment services to the residents of the City. These activities include administrative services, wastewater system operations and maintenance, new construction, financing and related debt service. Billing and collection services are accounted for as an internal service fund. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 37 Additionally, the City reports the following fund types: Internal service funds account for activities related to the operation and maintenance of the City's radio and telephone systems; administration of health insurance provided to City employees; the City's risk management activities, including general liability, unemployment, and workers' compensation claims and associated administrative expenses on a cost reimbursement basis; utility billing and collection activities related to the City's electric, water, and sewer utilities and residential and commercial garbage collection; activities related to the management of the City's vehicles and heavy equipment, including preventative maintenance and vehicle repair; activities related to the City's printing and mail operations; and activities related to the purchase and replacement of vehicles and large motorized equipment, telephone and radio systems, and technological infrastructure equipment not budgeted in other funds. Private sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. 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 to not follow subsequent private sector guidance. In general, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this rule are payments-in-lieu of taxes, indirect costs and franchise fees, and other charges between the City's Electric, Water, and Sewer funds because elimination of these charges would distort the direct costs and program revenues reported in the Statement of Activities. Amounts reported as program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges for customer services including electric, water, sewer, and sanitation fees, equipment purchase amounts, and risk management charges. Operating expenses for enterprise funds and internal service funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use unrestricted resources first, and then restricted resources as they are needed. D. Implementation of New Accounting Principles In fiscal year 2003, the City adopted seven new statements of financial accounting standards issued by the Governmental Accounting Standards Board (GASB): Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 38 GASB Statement No. 33--Accounting and Financial Reporting for Nonexchange Transactions ("GASB 33") Statement No. 33 prescribes accounting and financial reporting standards for nonexchange transactions. It applies to those nonexchange transactions involving financial or capital resources but does not apply to other resources, such as contributed services. In prior years, capital contributions were recorded as a direct addition to the contributed capital equity account. GASB 33 requires contributions of capital assets be recorded as revenue in the Statement of Revenues, Expenses and Changes in Fund Net Assets. Capital contributions in the City's electric, water and sewer funds amounted to $3.8 million. Capital contributions recorded as revenue for governmental activities totaled $6.4 million. For reporting purposes these revenues are shown in the statement of activities as capital contributions program revenue. GASB Statement No. 34--Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments ("GASB 34") Statement No. 34 affects the manner in which the City records transactions and presents financial information. The goal of Statement No. 34 is to make the Comprehensive Annual Financial Reports (CAFRs) of state and local governments easier to understand and more useful to the people who use governmental financial information to make decisions. State and local governments have traditionally used a financial reporting model substantially different from the one used to prepare private sector financial reports. GASB Statement No. 34 establishes new requirements and a new reporting model for state and local governments that more closely resemble private sector financial reporting. The governmental fund financial statements continue to be presented as a building block for the new GASB 34 statements. However, the following are new sections not previously included in the CAFR: a. Management's Discussion and Analysis--GASB Statement No. 34 requires that financial statements be accompanied by a narrative introduction and analytical overview of the City's financial activities in the form of "management's discussion and analysis" (MD&A). This analysis is similar to the analysis provided in the annual reports of private sector organizations. b. Government-Wide Financial Statements--The reporting model includes financial statements prepared using full accrual accounting for all of the City's activities. This approach includes not just current assets and liabilities but also capital and other long-term liabilities. Accrual accounting also reports all of the revenues and costs of providing services each year, not just those received or paid in the current year or soon thereafter. Statement of Net Assets--The Statement of Net Assets is designed to display the financial position of the primary government (government and business-type activities). The City now reports all capital assets in the government-wide statement of net assets, and reports depreciation expense--the cost of "using up" capital assets--in the statement of activities. The net assets of the City are broken down into three categories: 1) invested in capital assets, net of related debt, 2) restricted, and 3) unrestricted. Statement of Activities--The government-wide statement of activities reports expenses and revenues in a format that focuses on the cost of each of the City's Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 39 functions. The expense of individual functions is compared to the revenue generated directly by the function. Accordingly, the City has recorded capital and certain other long-term assets and liabilities in the statement of net assets and has reported all revenues and the cost of providing services under the accrual basis of accounting in the statement of activities. The government-wide financial statements split the City programs between governmental and business-type activities. The beginning net asset amount for the business-type activities equals fund equity of the enterprise funds from the previous year. The beginning net asset amount for governmental activities reflects fund balance for governmental funds at October 1, 2002 adjusted for the conversion to the accrual basis of accounting and the consolidation of internal service fund's net assets. As a result of implementing GASB 34, the previously reported governmental fund balance reconciles to net assets of the governmental activities as of October 1, 2002 as follows: Fund Balance October 1, 2002 66,531,940$ Net Capital Assets 104,152,633 Long-term Liabilities (76,455,099) Interest Expense (473,737) Deferred Revenue 631,768 Internal Service Fund Assets 16,422,002 Net Assets, October 1, 2002 110,809,507$ GASB Statement No. 36--Recipient Reporting for Certain Shared Nonexchange Revenues ("GASB 36") GASB Statement No. 36 amends GASB Statement No. 33 with respect to the manner in which shared nonexchange revenues are accounted for by recipient governments. GASB Statement No. 37--Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments: Omnibus ("GASB 37") This statement amends GASB Statement No. 34 to either 1) clarify certain provisions or 2) modify other provisions that GASB believes may have unintended consequences in some circumstances. Accordingly, the City considered the effects of this statement when adopting the provisions of GASB Statement No. 34 as previously described. GASB Statement No. 38--Certain Financial Statement Note Disclosures ("GASB 38") This statement modifies, establishes, and rescinds certain financial statement disclosure requirements. Accordingly, certain footnote disclosures have been revised to conform to the provisions of GASB Statement No. 38. GASB Statement No. 39--Determining Whether Certain Organizations Are Component Units ("GASB 39") This statement establishes additional guidance on the application of existing standards for the assessment of potential component units in determining the financial reporting entity. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 40 GASB Statement No. 41--Budgetary Comparison Schedules--Perspective Differences-- An Amendment of GASB Statement No. 34 ("GASB 41") This statement amends paragraph 130 of Statement No. 34 and applies to all state and local governments. GASB Interpretation No. 6--Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements GASB Interpretation No. 6 clarifies the application of existing standards for distinguishing the respective portions of certain types of liabilities that should be reported as (a) governmental fund liabilities and expenditures and (b) general long-term liabilities of the City. E. Assets, Liabilities, and Net Assets or Equity Cash and Cash Equivalents Cash and cash equivalents are short term highly liquid investments that are (a) readily convertible to known amounts of cash and (b) so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Therefore, for purposes of the statement of cash flows, cash and cash equivalents (including restricted assets) include demand accounts, repurchase agreements, and government securities and agency notes with original maturities of three months or less when purchased. All cash, except for petty cash accounts, is deposited with the City's depository bank (First American Bank, Bryan, Texas) in interest bearing accounts or is invested. The City uses a pooling method to account for cash and cash equivalents. Equity in cash and cash equivalents and interest income from the cash pool is allocated to the participating funds on a monthly basis. The amount of the allocation is determined by calculating a ratio of each fund's equity in the pool to the total pool. Investments Investments are made in accordance with the City's Investment Policy which was adopted by the City Council in June 2003. This policy is applicable to all City funds and permits investment in obligations of the U.S. Government or its agencies, repurchase agreements, commercial paper, certificates of deposit, guaranteed investment contracts, public funds investment pools, and money market mutual funds. This policy states that the Director of Fiscal Services shall designate the City’s Investment Officer with whom responsibility and authority for investment transactions reside. The investments purchased under the provisions of the Investment Policy are managed to maintain liquidity for meeting the City's needs for cash and to limit potential market risks in periods of rising interest rates which depress the market value of securities. As a guideline, maturity of securities should not exceed five years for cash management purposes, with an optimum weighted average maturity of less than two years. Investments in securities of a longer maturity than two years are considered prudent for funds maintained for capital construction and debt service funds, if necessary to meet projected disbursement schedules. As a general guideline, the City’s cash management portfolio is designed with the objective of meeting, over the course of full market cycles, the average return on three-month U.S. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 41 Treasury Bills, or the average rate of federal funds, whichever is higher. These indices are considered benchmarks for riskless investment transactions and therefore comprise a standard for the portfolio's rate of return. The investment program seeks to augment rates of return above this level. In a diversified portfolio, measured losses are inevitable and must be considered within the context of the overall portfolio. The objective in investment of construction funds is at least to match inflation increases in construction costs. Active portfolio management includes the practice of selling securities prior to maturity and using the proceeds to purchase other securities. Such "swaps" are performed for a variety of valid reasons: to lengthen maturities as interest rates rise, to secure market profits and shorten maturities as interest rates fall, and to take advantage of the differences in relative yield between different types of securities and varying maturities. "Swap" analysis is the responsibility of the City Investment Officer and the decision to execute the "swap" rests with him. To protect the portfolio from imprudent trading, no security may be sold until such time as the current market value of the security plus interest earned from date of purchase is at least equal to the purchase price of that security. State statutes authorize the City to invest in fully-insured time deposits, direct debt securities of the United States or its agencies, and fully collateralized repurchase agreements. The repurchase agreements must be purchased pursuant to a master repurchase agreement which specifies that the transaction be held in a safekeeping account subject to the control and custody of the City. Investments in security repurchase agreements may be made only with the City's depository bank, with state or national banks domiciled in the state of Texas, or with securities dealers reporting to the Federal Reserve Bank of New York ("Primary I. Dealers"). All securities are purchased delivery-vs.-payment and held in the City's name in a safekeeping account at JP Morgan Chase Bank. Investments of all funds consist mainly of U. S. Treasury and Agency securities, flexible repurchase agreements, and investments in public funds investment pools (TexPool). Investments are stated at fair value in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. The City also uses a pooling method to account for investments. Equity in investments and interest income from the investment pool is allocated to the participating funds on a monthly basis and is determined by calculating a ratio of each fund's equity in the investment pool to the total pool. GASB Statement No. 31 provides that governmental entities may report all investments at fair value or they may elect to report certain money market investments and participating interest-earning investment contracts at amortized cost. The City has elected to report all investments at fair value. Inventories and Prepaid Costs Inventories are accounted for using the consumption method and are valued at year-end based on cost, with cost determined using an average cost method. Payments made to vendors for services that will benefit periods beyond September 30, 2003, are recorded as prepaid costs with a reserve for prepaid items recognized in the governmental funds in the fund level financial statements to signify that a portion of fund balance is not available for other subsequent expenditures. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 42 Interfund Transactions and Receivables/Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." Restricted Assets In the Enterprise Funds, proceeds of utility revenue bonds, as well as resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. In addition, customer utility deposits are classified as restricted assets because the deposit remains the property of the customer and is not available for operations. In the General Fund, restricted assets are comprised of Municipal Court cash bonds, Municipal Court security funds, Municipal Court technology funds, and police seizure funds, all of which are not available for operations. Investment in Joint Venture The Proprietary Funds' investment in joint venture is recorded using the equity method of accounting. Required disclosures concerning the joint venture are presented in Note V-C. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $3,000 and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Assets owned by the electric utility are capitalized in accordance with Federal Energy Regulatory Commission (FERC) guidelines. Furthermore, assets owned by either the water or sewer utilities are capitalized in accordance with the National Association of Regulatory Utility Commissioners (NARUC) guidelines. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's useful life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. In accordance with Financial Accounting Standards Board Statement No. 71, interest is not capitalized during construction of capital assets of business-type activities because interest is recovered currently in the City's established rate. Beginning in FY 03 the estimated useful lives for the utility systems have been adjusted prospectively to coordinate with FERC or NARUC standards. All other estimated lives have been adjusted to comply with GFOA recommended practices guidelines. Depreciation of all assets is recorded and calculated using the straight-line method over the following estimated useful lives: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 43 Electric System 1-50 Years Water System 2-50 Years Sewer System 2-50 Years Infrastructure 10-50 Years Buildings and Building Improvements 5-50 Years Land Improvements 10-45 Years Machinery and Equipment 5-20 Years Motor Vehicles 3-12 Years Furniture, Fixtures and Office Equipment 5-20 Years The amounts reported for governmental-type infrastructure are based on historical data and are subject to adjustments as a result of an appraisal to be conducted during fiscal year 2004. Compensated Absences Employees are credited with vacation at rates of 10 to 20 days per year, depending upon length of service. Carryover of unused vacation time from one year to the next is allowed for a maximum of two years. Upon termination, the respective employees are paid for any accrued vacation not taken (up to the two-year maximum). Accumulated vacation is accrued when earned in the government-wide and proprietary fund financial statements. No liability has been recorded in the governmental fund financial statements. Employees are credited with sick leave at the rate of one day per month. There is no maximum to the number of sick days that each employee can accumulate. Because the City does not pay employees for unused accumulated sick leave, no related liability has been recorded in the financial statements. Long-Term Obligations In the government-wide financial statements and in the fund financial statements for the proprietary fund types, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount and deferred amounts on refundings. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 44 E. Budgetary Control The City follows these procedures in establishing the budgetary data: 1. Prior to September 1, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means for financing them. 2. All budget requests are compiled by the Office of Budget and Strategic Planning and then presented with comparative and supporting data to the Mayor and City Council for review. 3. Public hearings are properly advertised and conducted at City Hall for taxpayer comments. 4. Prior to September 27, the budget is legally enacted through passage of an ordinance. 5. The City Council must approve all transfers of budgeted amounts between departments within any fund and any revision that alters the total expenditures of any fund. An amount is also budgeted each year for contingencies which may arise. The Council has authorized the City Manager to make budget transfers for contingencies if the amount does not exceed $15,000. All other transfers must be approved by City Council. City Council may transfer amounts among individual budget line items within major expenditure categories during the year, but no such transfer may increase the overall total budget. Budgeted amounts as originally adopted were not significantly changed by such transfers during the year. 6. In accordance with the City Charter, the budget may be amended after the following conditions are met: (a) The City Manager certifies that there are available revenues in excess of those estimated in the budget. (b) The City Council holds a public hearing on the supplemental appropriation. (c) The City Council approves the supplemental appropriation. Management may not amend the budget without seeking the approval of the City Council. II. Reconciliation of Government-Wide and Fund Financial Statements A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Assets The governmental fund balance sheet includes a reconciliation between fund balance--total governmental funds and net assets--governmental activities as reported in the government- wide statement of net assets. The details of this $55,678,634 difference are as follows: When capital assets (land, buildings, equipment, etc.) that are to be used in governmental activities are purchased or constructed, the costs of those assets are reported as expenditures in governmental funds. However, the statement of net assets includes those capital assets among the assets of the City as a whole. Cost of Capital Assets 145,302,009$ Accumulated Depreciation (29,708,471) Net Capital Assets 115,593,538$ Long-term liabilities applicable to the City's governmental activities are not due and payable in the current period and, accordingly, are not Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 45 reported as fund liabilities in the governmental funds. All liabilities, both current and long-term, are reported in the statement of net assets. Bonds Payable (75,695,000)$ Accrued Interest Payable (469,476) Compensated Absences (1,604,254) (77,768,730)$ Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current period expenditures. Those assets (for example, receivables) are offset by deferred revenues in the governmental funds and, thus, are not included in fund balance. Deferred revenue for emergency medical services, paving assessments, and property taxes shown on the governmental fund statements is not deferred on the statement of net assets. Deferred property tax revenue 331,582$ Deferred emergency medical services revenue 306,037 Paving assessment revenue 21,796 659,415$ Internal service funds are used by management to charge certain activities, such as self insurance, print-mail services, and fleet maintenance, to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net assets. 17,194,410$ B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances--total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $5,041,727 difference are as follows: Capital Outlay 9,011,549$ Depreciation Expense (3,969,822) Net Adjustment to increase net changes in fund balances- total governmental funds to arrive at changes in net assets of governmental activities 5,041,727$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 46 Another element of that reconciliation states that "The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net assets." The details of the $6,399,178 difference are as follows: Donations of capital assets increase net assets in the statement of activities, but do not appear in the governmental funds because they are not a financial resource. 6,399,178$ Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $750,000 difference are as follows: Debt issued or incurred: Issuance of general obligation bonds and certificates of obligation 6,570,000$ Principal Payments (5,820,000) Net Adjustment to decrease net changes in fund balances- total governmental funds to arrive at changes in net assets of governmental activities 750,000$ Another element of that reconciliation states that "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." The details of this $89,894 difference are as follows: Compensated absences 94,155$ Accrued interest (4,261) Net Adjustment to decrease net changes in fund balances- total governmental funds to arrive at changes in net assets of governmental activities 89,894$ III. Stewardship, Compliance, and Accountability A. Budgetary Information The Council approved two budget amendments during fiscal year 2003. Those budgets amendments included the following appropriations: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 47 Gainsharing $ 171,094 Fire Equipment 128,760 Professional Services for Cable Franchise Renewal 100,000 Street Improvement Land Purchase 115,000 Parks Summer Tennis Program 5,500 Arts Council Building 200,000 Water/Sewer Taps 100,000 Workers' Compensation Claims 100,000 Electric Litigation Settlement 8,700,000 1. Budget appropriations are adopted at the fund level for all funds except the General Fund. In the General Fund, budget appropriations are adopted at the department level. Expenditures in excess of appropriations for each fund are prohibited by the City Charter. Appropriations which have not been expended or lawfully encumbered lapse at the end of the budget year. 2. Formal budgetary integration is legally enacted and employed as a management control device during the year for all funds. 3. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities. B. Excess of Expenditures Over Appropriations The amounts of any excesses of expenditures/expenses over appropriations during fiscal year 2003, and the funds in which they occurred are as follows: Fund Amount Debt Service $ 15,663 Fleet Maintenance 129,121 Print/Mail 47,603 Property and Casualty 85,352 Workers' Compensation 149,790 Unbudgeted interest expense on the 2003 Certificate of Obligation led to the $15,663 excess in the Debt Service Fund. Higher than expected expenses for supplies resulted in the $129,121 excess in the Fleet Maintenance Fund, and the $47,603 excess in the Print/Mail Services Fund is a result of higher than expected salaries and benefits, supplies and capital outlay expenditures. In the Property and Casualty and Workers' Compensation Funds, higher than expected expenses for claims, administration fees, and premiums resulted in the $85,352 and $149,790 excess. C. Deficit Fund Balance / Unreserved Retained Earnings The Communication Services Fund, Fleet Maintenance Fund, Print/Mail Fund, and Workers' Compensation Fund ended the fiscal year with an Unreserved Retained Earnings deficit. The Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 48 $31,351 deficit in the Communication Services Fund, the $42,350 deficit in the Fleet Maintenance Fund, and the $2,584 deficit in the Print/Mail Fund are all primarily due to unbudgeted depreciation expense. The $21,673 deficit in the Workers' Compensation Fund is primarily due to higher than expected expenses for claims and premiums. IV. Detailed Notes on All Funds A. Change in Accounting Policy The City implemented GASB 34 for the fiscal year ended September 30, 2003. The following adjustments were made in order to properly state beginning net assets using the full accrual method of accounting: Restatement of Beginning Net Assets for Governmental Funds Net Assets: Fund balance at September 30,2002, as previously reported for: Governmental fund types General 10,111,225$ Special Revenue 15,616,606 Debt Service 2,355,213 Capital Projects 37,705,829 Cemetery Perpetual Care 743,067 Total fund balances at September 30, 2002 as previously reported 66,531,940 Prior period adjustments GASB Statement No. 34 adjustments Beginning residual balances from internal activities accounted for as Internal Service Funds 16,422,002 Net capital assets 104,152,633 Long-term liabilities - Prior Years Compensated Absences (1,510,099) Long-term liabilities - Debt (74,945,000) Interest expense related to prior years (473,737) Deferred revenue related to prior years 631,768 44,277,567 Net Assets - Governmental Funds at October 1, 2002 110,809,507$ In addition several adjustments were made to the fund financial statements in order to properly record the activity in accordance with the recent accounting pronouncements. B. Cash and Investments Deposits State statutes require that all deposits in financial institutions be fully collateralized with depository insurance or by U.S. Government obligations or its agencies and instrumentalities or by direct obligations of Texas or its agencies and instrumentalities that have a market value of not less than the principal amount of the deposits. At year end, the City's demand deposits at First American Bank were entirely covered by federal depository insurance or by Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 49 collateral held by the City's custodial bank (Federal Home Loan Bank of Dallas) in the City's name. At year end, the carrying amount of the City's demand deposits was $1,062,363, and the bank balance was $1,339,853. Investments The City's investment program is guided by State statutes, by various City ordinances, and by the City's investment policy which amplifies those guidelines and prescribes how the City will operate its investment program in accordance with applicable laws and regulations. This policy further sets forth (a) the basic principles governing the investment of City funds, (b) the objectives of the City's investment program, and (c) the authority, responsibilities, limitations, documentation and requirements to be used in the administration and operation of the City's investment program. Investments authorized by the City's investment policy are those approved by the revised State of Texas Public Funds Investment Act of 1997 and the Texas Public Funds Collateral Act of 1989. These investments include the following: • Obligations of the United States or its agencies and instrumentalities; • Direct obligations of the State of Texas or its agencies; • Other obligations, the principal of and interest on which is unconditionally guaranteed or insured by the State of Texas or the United States or its agencies; • 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 "A" or its equivalent; • Certificates of deposit issued by state and national banks domiciled in Texas that are secured by obligations qualified as acceptable collateral; • Certificates of deposit issued by savings and loan associations domiciled in Texas that are secured by obligations qualified as acceptable collateral; • Prime domestic bankers' acceptances; • Commercial paper with a stated maturity of 270 days or less from the date of issuance that is rated not less than "A-1," "P-1," or its equivalent; • Fully collateralized repurchase agreements having a defined termination date, secured by qualified obligations, pledged with a third party, and placed through a primary government securities dealer as defined by the Federal Reserve, or a bank domiciled in Texas; • Money-market mutual funds that are SEC registered no-load funds with dollar- weighted average portfolio maturity of 120 days or less; or • Public funds investment pools. The City's investment policy prohibits the substitution of collateral on repurchase agreements without prior approval by the City. Also, reverse repurchase agreements are prohibited by the policy. The City's investment portfolio is comprised of the following classifications of securities: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 50 As a Percentage Bank Demand Accounts 1.00% U.S. Treasury Securities 1.50% U.S. Government Agencies and Instrumentalities Securities 59.00% Texas Local Government Investment Pool 24.00% Fidelity Money Market Mutual Fund 9.50% Flexible Repurchase 5.00% Total 100.00% The City's investments are categorized to give an indication of the level of risk assumed by the City at year end. Category 1 includes securities that are insured or registered, or securities held by the City or its agent in the City's name. Category 2 includes uninsured and unregistered securities, with securities held by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered securities, with securities held by the counterparty in the City's name, or held by the counterparty's trust department or agent, but not in the City's name. All securities held at September 30, 2003 were Category 1 investments with the exception of Texpool. The fair value of all investments was as follows: Fair Value Bank Demand Accounts 1,208,248$ U.S. Treasury Securities 1,812,372 U.S. Government Agencies and Instrumentalities Securities 71,286,648 Texas Local Government Investment Pool 28,997,959 Fidelity Money Market Mutual Fund 11,478,359 Flexible Repurchase 6,041,241 Total 120,824,827$ "TexPool" is a local government investment pool created and managed by the Texas State Treasurer to invest funds on behalf of Texas political subdivisions. The pool operates on a $1.00 net asset value basis and allows same day or next day redemptions and deposits. Interest is allocated daily based on portfolio earnings and participant account balances. The City's investment in TexPool is stated at cost, which approximates fair value. The fair value of Texpool's investments as a whole was at least 102% of the book value as of September 30, 2003. The fair value of the City's investment is the same as the value of the pool shares. TexPool is not managed by the City, and the City does not possess securities that exist in either physical or book entry form. Consequently, these securities have not been classified. Under the Texas Public Funds Investment Act, TexPool must maintain an AAA or equivalent rating from at least one nationally recognized rating agency. TexPool is currently rated AAAm by Standard and Poor's. The revenue bond ordinances require disclosure of the investments held by the reserve fund. Sufficient investments exist in the pool to adequately meet reserve fund requirements. A detailed list of those securities is available in the office of the Director of Fiscal Services. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 51 C. Receivables Receivables as of year end for the City's individual major funds and nonmajor and internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Governmental Activities:Internal Debt Streets Service Fund General Service Projects Nonmajor Allocation Total Taxes: Property 126,225$ 205,357$ -$ -$ -$ 331,582$ Beverage 108,557 - - - - 108,557 Sales Tax 1,117,403 - - - - 1,117,403 Subtotal Taxes 1,352,185 205,357 - - - 1,557,542 Accrued Interest 37,049 4,140 63,595 88,905 26,093 219,782 Grants 87,528 - - 323,399 - 410,927 Accounts/Charges for Services 499,079 - 246,774 211,977 142,315 1,100,145 Special Assessments 21,796 - - - 21,796 Miscellaneous 37,513 - - 9,356 - 46,869 Total Gross Governmental 2,035,150 209,497 310,369 633,637 168,408 3,357,061 Less Allowance for Uncollectible (48,865) - (246,774) (18,973) (2,711) (317,323) Net Total Receivables 1,986,285$ 209,497$ 63,595$ 614,664$ 165,697$ 3,039,738$ Business-type Activities:Internal Service Fund Electric Water Sewer Nonmajor Allocation Total Accrued Interest 11,152$ 30,243$ 11,124$ 5,610$ 166$ 58,295$ Accounts/Charges for Services 6,732,462 996,484 1,038,125 596,222 18,154 9,381,447 Miscellaneous 1,106,193 - - 215,493 8,945 1,330,631 Total Gross Major Enterprise 7,849,807 1,026,727 1,049,249 817,325 27,265 10,770,373 Less Allowance for Uncollectible (1,494,930) (39,762) (78,114) (46,479) (13,692) (1,672,977) Net Total Receivables 6,354,877$ 986,965$ 971,135$ 770,846$ 13,573$ 9,097,396$ Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received but not yet earned. At the end of the fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Total Property Tax 331,583$ -$ 331,583$ Special Assessments 21,796 - 21,796 Fines and Penalties - 677,838 677,838 Emergency Services 306,037 - 306,037 Other 36,975 - 36,975 696,391$ 677,838$ 1,374,229$ D. Capital Assets Capital asset activity for the year ended September 30, 2003 was as follows: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 52 Beginning Ending Governmental Activities Balance Increases Decreases Balance Capital Assets, Not Being Depreciated Land 18,240,824$ 1,473,503$ -$ 19,714,327$ Construction in Progress 18,000,215 11,227,758 (15,384,869) 13,843,104 Total Capital Assets, Not Being Depreciated 36,241,039 12,701,261 (15,384,869) 33,557,431 Capital Assets, Being Depreciated Buildings and Building Improvements 18,739,391 3,913,006 - 22,652,397 Improvements Other Than Buildings 10,469,640 3,189,044 - 13,658,684 Machinery and Equipment 25,278,189 2,832,690 (1,941,048) 26,169,831 Infrastructure 58,129,552 10,969,551 - 69,099,103 Total Capital Assets, Being Depreciated 112,616,772 20,904,291 (1,941,048) 131,580,015 Less Accumulated Depreciation for: Buildings and Building Improvements 4,288,635 368,012 4,656,647 Improvements Other Than Buildings 5,324,444 540,149 - 5,864,593 Machinery and Equipment 14,522,563 3,858,331 (1,514,227) 16,866,667 Infrastructure 11,850,216 1,875,147 - 13,725,363 Total Accumulated Depreciation 35,985,858 6,641,639 (1,514,227) 41,113,270 Total Capital Assets Being Depreciated, Net 76,630,914 14,262,652 (426,821) 90,466,745 Governmental Type Activities Capital Assets, Net 112,871,953$ 26,963,913$ (15,811,690)$ 124,024,176$ Beginning Ending Business-Type Activities Balance Increases Decreases Balance Capital Assets, Not Being Depreciated Land 672,811$ -$ -$ 672,811$ Construction in Progress 28,078,744 13,146,015 (10,104,015) 31,120,744 Total Capital Assets, Not Being Depreciated 28,751,555 13,146,015 (10,104,015) 31,793,555 Capital Assets, Being Depreciated Electric System 79,373,678 4,887,640 (747,132) 83,514,186 Water System 56,947,504 3,482,701 (20,819) 60,409,386 Sewer System 56,734,151 2,466,226 (29,717) 59,170,660 Buildings and Building Improvements 5,608,687 114,376 - 5,723,063 Improvements Other Than Buildings - - - - Machinery and Equipment 1,567,168 69,875 (225,801) 1,411,242 Total Capital Assets, Being Depreciated 200,231,188 11,020,818 (1,023,469) 210,228,537 Less Accumulated Depreciation for: Electric System 34,454,084 2,262,193 (337,884) 36,378,393 Water System 17,593,109 1,031,967 (28,447) 18,596,629 Sewer System 13,728,525 1,788,749 (30,335) 15,486,939 Buildings and Building Improvements 140,179 140,217 - 280,396 Improvements Other Than Buildings - - - - Machinery and Equipment 1,456,060 36,911 (188,575) 1,304,396 Total Accumulated Depreciation 67,371,957 5,260,037 (585,241) 72,046,753 Total Capital Assets Being Depreciated, Net 132,859,231 5,760,781 (438,228) 138,181,784 Business Type Activities Capital Assets, Net 161,610,786$ 18,906,796$ (10,542,243)$ 169,975,339$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 53 Depreciation expense was charged to governmental activities of the City as follows: Development Services 18,744$ Fire 97,797 Fiscal Services 54,072 General Government 48,028 Office of Technology and Information Services 351,430 Parks and Recreation 598,987 Police 99,599 Public Works 157,385 Non-departmental 2,543,780 Total Depreciation Expense 3,969,822$ E. Interfund Transactions Transfers between funds during the year were as follows: Governmental Business-type Transfers In Transfers Out Activities, net Activities, net General Fund 6,741,826$ (1,103,590)$ 5,638,236$ -$ Debt Service Fund 958,500 - 958,500 - Special Revenue Funds: Community Development - (147,504) (147,504) - Convention Center - (742,500) (742,500) - Hotel/Motel - - - - Melrose TIF 652 - 652 - Parks Escrow 1,040 - 1,040 - Capital Projects Funds: Business Park Projects - - - - Drainage Projects 34,432 - 34,432 - General Government Projects 75,450 - 75,450 - Parks Projects - - - - Streets Projects 98,790 - 98,790 - Enterprise Funds: Electric - (4,778,314) - (4,778,314) Water - (911,412) - (911,412) Sewer - (832,648) - (832,648) Sanitation - (331,468) - (331,468) Parking - (368) - (368) Internal Service Funds: Communication Services 49,300 (1,363) 47,937 - Employee Benefits - - - - Equipment Replacement 972,144 (216,000) 756,144 - Fleet Maintenance - (2,708) (2,708) - Print-Mail Services - (255) (255) - Property and Casualty 22,500 - 22,500 - Unemployment - - - - Utility Billing - (2,142) - (2,142) Workers' Compensation 115,638 - 115,638 - 9,070,272$ (9,070,272)$ 6,856,352$ (6,856,352)$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 54 The composition of due to/due from balances as of September 30, 2003 is as follows: Due To Due From Amount General Fund Fleet Maintenance Fund $19,271 Electric Fund Hotel/Motel Tax Fund $200,000 F. Deferred Charges See Note IV C. G. Long-Term Debt A summary of long-term debt transactions, including current portion, for the year ended September 30, 2003 is as follows: Amounts Beginning Incurred/ Matured/ Ending Due Within Balance Issued Retired Balance One Year Governmental Activities: General Obligation Bonds $41,665,000 $4,790,000 $3,285,000 $43,170,000 $2,875,000 Certificates of Obligation 33,280,000 1,780,000 2,535,000 32,525,000 2,805,000 Accrued Vacation 1,547,337 1,069,681 972,338 1,644,680 80,413 Governmental Activity Long Term Debt $76,492,337 $7,639,681 $6,792,338 $77,339,680 $5,760,413 Business-type Activities: Utility Revenue Bonds $78,235,000 $16,010,000 $14,565,000 $79,680,000 $4,025,000 Accrued Vacation: Electric Fund 118,665 131,849 123,409 127,105 3,198 Water Fund 52,773 49,679 56,375 46,077 3,171 Sewer Fund 59,908 50,866 53,171 57,603 3,853 Other Enterprise 73,172 90,823 91,526 72,469 5,762 Business-type Activity Long Term Debt $78,539,518 $16,333,217 $14,889,481 $79,983,254 $4,040,984 Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 55 Long-term debt at September 30, 2003 includes the following individual issues (not including unamortized premiums or discounts): Interest Issue Maturity Original Net Rate (%) Date Date Issue Retirement Outstanding General Obligation Bonds: 1991 Issue 6.00-8.00 12/23/91 2/15/12 4,625,000$ 3,875,000$ 750,000$ 1994 Issue 5.50-7.50 8/15/94 2/14/14 6,250,000 3,200,000 3,050,000 1995 Issue 5.10-7.00 8/1/95 2/15/13 4,700,000 1,450,000 3,250,000 1996 Issue and Refunding 4.70-7.50 12/1/96 2/15/15 11,845,000 6,450,000 5,395,000 1998 Issue 4.50-6.50 4/1/98 2/15/17 6,200,000 940,000 5,260,000 1999 Issue 3.40-5.40 4/15/99 2/15/17 6,230,000 895,000 5,335,000 2000 Issue 5.00-7.00 4/13/00 2/15/18 8,460,000 1,545,000 6,915,000 2001 Issue 5.00-7.00 8/1/01 2/15/17 4,140,000 1,465,000 2,675,000 2002 Issue 4.25-6.25 3/1/02 2/15/21 6,445,000 695,000 5,750,000 2003 Issue 3.00-5.00 7/9/03 2/15/23 4,790,000 - 4,790,000 63,685,000$ 20,515,000$ 43,170,000$ Certificates of Obligation: 1998 Issue 4.55-7.30 4/1/98 2/15/17 5,500,000$ 835,000$ 4,665,000$ 2000 Issue 5.00-7.00 4/13/00 2/15/18 4,050,000 945,000 3,105,000 2000A Issue 4.75-6.75 8/1/00 2/15/20 8,100,000 1,335,000 6,765,000 2001 Issue 3.50-5.00 8/2/01 2/15/20 3,650,000 920,000 2,730,000 2002 Issue 3.50-5.125 3/1/02 2/15/20 14,480,000 1,000,000 13,480,000 2003 Issue 2.50-3.25 12/5/02 2/15/08 1,000,000 - 1,000,000 2003A Issue 3.0-4.25 7/9/03 2/15/23 780,000 - 780,000 37,560,000$ 5,035,000$ 32,525,000$ Utility Revenue Bonds: 1994 Issue 5.40-6.40 10/1/94 2/1/04 16,500,000$ 15,675,000$ 825,000$ 1995 Issue 5.25-6.25 8/1/95 2/1/16 6,000,000 2,100,000 3,900,000 1996 Issue 4.15-5.60 12/1/96 2/1/17 10,110,000 2,835,000 7,275,000 1998 Issue 4.55-6.50 4/1/98 2/1/17 2,700,000 425,000 2,275,000 2000 Issue 5.00-7.00 4/13/00 2/15/18 10,500,000 975,000 9,525,000 2001 Issue 3.50-5.50 8/1/01 2/15/21 23,500,000 1,315,000 22,185,000 2002 Issue 4.00-6.00 3/1/02 2/15/22 18,215,000 530,000 17,685,000 2003 Issue Refunding 3.50-4.25 12/5/02 2/1/14 11,160,000 - 11,160,000 2003A Issue 2.50-4.25 7/9/03 2/15/23 4,850,000 - 4,850,000 103,535,000$ 23,855,000$ 79,680,000$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 56 The annual requirements to amortize debt outstanding as of September 30, 2003 follows. Due to the nature of the obligation for accrued vacation, annual requirements to amortize such obligations are not determinable and have not been included in the following summary: The City intends to retire all of its general long-term liabilities, plus interest, from ad valorem taxes. The proprietary fund type long-term debt will be repaid, plus interest, from the operating revenues of the Electric, Water, and Sewer Funds. General Obligation Bonds and Certificates The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. The City is required by bond convenants to create from ad valorem tax revenues a sinking fund sufficient to pay the current interest and principal installments as they become due. In addition to the sinking fund, there are a number of limitations and restrictions contained in the various general obligation bond and certificate indentures. The City is in compliance with the significant limitations and restrictions at September 30, 2003. On July 9, 2003 the City issued $4.79 million in General Obligation Bonds with a true interest cost of 3.75%. The proceeds from the sale of the bonds will be used for street projects, traffic Governmental Activities General Obligation Certificates of Obligation Year Ended September 30, Principal Interest Principal Interest 2004 2,875,000$ 2,074,199 2,805,000$ 1,506,320$ 2005 2,640,000 1,904,989 2,940,000 1,360,454 2006 2,480,000 1,772,597 2,405,000 1,237,781 2007 2,590,000 1,648,470 2,075,000 1,140,797 2008 2,680,000 1,520,654 1,900,000 1,054,145 2009-2013 15,020,000 5,477,286 7,600,000 4,216,951 2014-2018 11,865,000 1,997,911 9,430,000 2,081,466 2019-2023 3,020,000 281,700 3,370,000 190,765 43,170,000$ 16,677,806$ 32,525,000$ 12,788,679$ Business-Type Activities Electric Water Sewer Year Ended September 30, Principal Interest Principal Interest Principal Interest 2004 1,053,250$ 785,373$ 1,157,068$ 1,276,969$ 1,814,682$ 1,698,164$ 2005 1,256,500 722,089 1,258,700 1,224,548 1,894,800 1,596,642 2006 1,269,000 673,697 1,309,300 1,167,298 1,941,700 1,493,537 2007 1,064,750 628,524 1,182,000 1,112,451 1,898,250 1,395,787 2008 1,082,250 587,329 1,242,850 1,059,629 1,949,900 1,306,178 2009-2013 5,689,250 2,234,762 7,213,000 4,305,735 10,577,750 5,006,596 2014-2018 4,325,250 1,075,432 8,799,100 2,344,115 9,360,650 2,307,650 2019-2023 2,982,500 317,690 5,025,850 449,017 4,331,650 384,943 18,722,750$ 7,024,896$ 27,187,868$ 12,939,762$ 33,769,382$ 15,189,497$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 57 management projects, drainage projects, a new fire station, city facilities, and to pay the costs incurred in connection with the issuance of the bonds. On December 5, 2002 the City issued $1 million in Certificates of Obligation for the purchase of equipment and to pay the costs of the debt issuance. The true interest rate of this debt is 3.31%. The City also issued $780,000 in Certificates of Obligation on July 9, 2003, the proceeds of which are to be used for streets projects and for the payment of costs incurred in connection with the debt issuance. The true interest rate of this debt is 3.83%. Revenue Bonds Utility system revenue bonds are secured by the net revenues of the Electric, Water, and Sewer Funds as defined in the respective bond indentures. The City pledges income derived from the acquired or constructed assets to pay the debt service. In addition, the City is required to maintain debt service funds and bond reserve funds for all outstanding revenue bonds. Amounts in the reserve fund are to be used to pay principal and interest on outstanding bonds at any time sufficient funds are not available in the bond interest and redemption fund. The bond indentures require that the City accumulate reserves to an amount equal to the average annual principal and interest requirements of all outstanding bonds secured by the net revenues of the system. On July 9, 2003 the City issued $4.85 million in utility revenue bonds with a true interest cost of 3.79%. Proceeds from the sale of the bonds will be used for electric, water and sewer system improvements and for payment of the costs incurred in connection with the issuance of the bonds. Arbitrage Compliance Arbitrage provisions of the Internal Revenue Tax Act of 1986 require the City to rebate to the federal government excess arbitrage earnings from bond proceeds. As of September 30, 2003, the City is not obligated to pay any future rebates. Defeasance On December 5, 2002 the City issued $11.16 million in revenue refunding bonds with an average interest rate of 4.02% to refund $10.75 million of Series 1993, 1993 Refunding, and 1994 with an average interest rate of 5.93%. As a result of this refunding, the City will reduce its total debt service payments over the next 6 years by approximately $885,000 and will obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of $720,738. The proceeds from the issuance of the bonds were used to purchase U.S. Government securities that were placed in an irrevocable trust with an escrow agent to provide debt service payments on the bonds being refunded. As a result, the refunded bonds are considered to be defeased, and the liability has been removed from the business-type activities column of the City's financial statements. In prior years, the city defeased certain revenue refunding bonds totaling $50,330,000 and certain general obligation bonds and certificates of obligation totaling $18,392,126 by placing the proceeds of the refunding bonds in an irrevocable trust to provide for all future debt service on the refunded bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30, 2003, the outstanding principal balance of the defeased revenue refunding bonds was $1,400,000 and the outstanding principal balance of the defeased general obligation bonds and certificates of obligation was $4,655,000. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 58 The assets, liabilities, and financial transactions of all of these trust accounts and the liability for refunded (defeased) bonds are not reflected in the financial statements of the City. The tables below reflect refunded debt outstanding at September 30, 2003 and net of any amounts to be paid or retired by the trustee on October 1, 2003: H. Reservations/Designations of Fund Balances and Net Assets Fund balances for governmental activities have been reserved or designated at September 30, 2003 as follows: Reserved Designated Governmental Activities: General Fund: Reserved for Encumbrances 1,305,936$ -$ Reserved for Inventory 54,825 - Reserved for Police Seizure 15,402 - Reserved for Court Technology 195,731 - Reserved for Court Security 138,053 - Reserved for Court Efficiency Improvements 18,347 - Debt Service: Reserved for Bond Debt Service 1,636,307 - Streets Projects: Reserved for Encumbrances 5,531,771 - Reserved for Capital Projects 15,208,243 - Other Governmental Funds: Reserved for Encumbrances 3,684,226 - Reserved for Capital Projects 14,175,871 - Reserved for Endowment 883,476 - Designated for Convention Center - 982,237 Total 42,848,188$ 982,237$ Refunded in Year Ended September 30, 2003 Utility System Revenue & Refunding Bonds, Series 1993 $2,500,000 Utility System Revenue Bonds, Series 1994 8,250,000 $10,750,000 Refunded in Prior Years Utility System Revenue Bonds, Series 1990 $1,400,000 General Obligation Bonds, Series 1984 450,000 General Obligation Bonds, Series 1989 450,000 General Obligation & Refunding Bonds, Series 1991 1,425,000 General Obligation Refunding Bonds, Series 1996 2,330,000 $6,055,000 Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 59 V. OTHER INFORMATION A. Property Taxes Property tax is levied each October 1 on the assessed (appraised) value listed as of the prior January 1 for all real and business personal property located in the City. Taxable assessed value represents the appraisal value less applicable exemptions authorized by the City Council. Taxes are due October 1 and are delinquent after the following January 31. Tax liens are automatic and become enforceable as of January 1 of each year. Taxes become delinquent February 1 and are subject to interest and penalty charges. The tax rate to finance general governmental services including debt service was 47.77 cents per $100 of assessed valuation for the year ended September 30, 2003. Under current state statutes, the City's ability to increase the levy for property taxation is subject to a maximum rate of $2.50 per $100 valuation. The Brazos County Appraisal District ("Appraisal District") is responsible for the recording and appraisal of property for all taxing units in Brazos County. The Appraisal District is required to assess property at 100 percent of its appraised value. Real property must be reappraised at least every three years. The City may, at its own expense, require annual reviews by the Appraisal District through various appeals and, if necessary, legal action. Under this system, if the rate, excluding tax rates for bonds and other contractual obligations adjusted for new improvements, exceeds the rate for the previous year by more than eight (8) percent, qualified voters of the City may petition for an election to determine whether to limit the tax rate to no more than eight (8) percent above the tax rate of the previous year. Brazos County bills and collects the property taxes for the City. B. Risk Management A government entity, such as the City of College Station, is faced with many risks. These risks can be generally subdivided into four categories of loss: direct property loss, indirect property loss, liability loss, and personnel losses. The City employs a combination of risk management strategies to provide acceptable levels of protection regarding these potential risks. The City is insured by the Texas Municipal League Intergovernmental Risk Pool, (TMLIRP) for all of its real and personal property and mobile equipment. TMLIRP is funded by calculated contributions form the City's operating funds and provides all of the claims handling for these lines of coverage. The City carries a $100,000.00 deductible per occurrence on its property insurance policy with TMLIRP. Property insurance covers all direct losses and some indirect losses. On all lines of liability coverage, the City is self-insured. The City has procured excess liability coverage through State National Insurance Company that is A.M. Best rated A-VII. The self-insured retention ("SIR") is $250,000.00 per claim. The claims are handled by a third party claims administrator ("TPA") located in Houston, Texas. The City is also self-insured on its workers' compensation coverage. The City opted for excess workers' compensation coverage with a SIR of $250,000 per claim feature. The City's carrier is State National Insurance Company, and the TPA handles all of the workers' compensation claims. In the event of a simultaneous liability and workers' compensation claim, only one SIR applies. Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 60 The City’s runoff claims for liability and worker compensation is estimated to be less than $150,000.00. Historically, the City’s incurred but not reported claims are immaterial to its approach to claim funding. Lastly, the City also uses its Unemployment Fund to account for self-insurance activity involving claims filed under unemployment compensation laws. Monthly contributions based on a percentage of payroll are determined each year during the budget process and are used to fund this activity. Settlements have not exceeded coverages for each of the past three fiscal years. The liabilities for insurance claims reported in each of the funds are based on Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and if the amount of the loss can be reasonably estimated. These liabilities include an estimate for incurred but not reported claims. Changes in the balances of claims liabilities for the self- insurance funds that are accounted for as Internal Service Funds for fiscal years 2003 and 2002 are as follows: 2003 2002 Unpaid Claims, October 1 $151,495 $412,677 Incurred Claims (including IBNR's) 826,091 846,134 Claims Paid (558,727) (1,107,316) Unpaid Claims, September 30 $418,859 $151,495 C. Joint Venture In May 1990, the City of College Station joined the City of Bryan in creating BVSWMA. The primary purpose of BVSWMA is to achieve economy of scale savings for the participants through joint ownership and use of regional waste management facilities. Each city holds a 50% interest and ownership in BVSWMA. BVSWMA is governed by an Administrative Board of Trustees ("Board") comprised of the City Manager and a staff person from each city; in addition, the Mayors of each city serve alternating two-year terms on the Board. The Board has complete responsibility for the daily operating activities of BVSWMA. After Board approval, the BVSWMA annual budget is presented for approval by both cities as a part of their regular budget. The City's share of BVSWMA's change in net assets for fiscal 2003 was $1,316,660. The following is a summary of information from the audited financial statements of BVSWMA as of September 30, 2003: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 61 A copy of BVSWMA's separate audited financial statements may be obtained from the City's Fiscal Services Department. D. RETIREMENT PLAN The City has adopted GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and GASB Statement No. 27, Accounting for Pensions by State and Local Government Employees. These statements require the following disclosures: Plan Description The City provides pension benefits for all of its full-time employees through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System ("TMRS"), one of 774 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of a theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to 2003 Assets: Current Assets 12,157,013$ Capital Assets (Net of $4,223,732 Accumulated Depreciation) 4,031,163 Deferred Landfill Permits (Net of $355,233 Accumulated Amortization) 2,169,484 Total Assets 18,357,660 Liabilities: Current Liabilities 586,729 Noncurrent Liabilities: Accrued Post Closure Maintenance Costs 2,558,562 Total Liabilities 3,145,291 Net Assets: Invested in Capital Assets 4,031,163 Unrestricted 11,181,206 Total Net Assets 15,212,369$ Program Revenues 5,383,382$ Program Expenses 3,068,038 Program Income 2,315,344 General Revenues 317,975 Change in Net Assets 2,633,319$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 62 establishment of the plan. Monetary credits for service since the plan began are 200 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 contributions accumulated with interest if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions with interest and the employer-financed monetary credits with interest were used to purchase an annuity. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within actuarial constraints also in the statutes. Plan provisions for the City were as follows: Members can retire at age 60 and above with 5 or more years of service or with 20 years of service regardless of age. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Contributions Under the state law governing TMRS, the actuary annually determines the City contribution rate. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee’s retirement date, not at the time the employee’s contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the remainder of the plan’s 25-year amortization period. The unit credit actuarial cost method is used for determining the City contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is one-year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. (i.e. December 31, 2002 valuation is effective for rates beginning January 2004). Deposit Rate: 6% Matching Ratio (City to Employee): 2 to 1 Members Vested After: 5 years Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 63 The following is a schedule of actuarial liabilities and funding progress: Actuarial assumptions as of the latest actuarial valuation are as follows: Each of the 774 Municipalities have an annual, individual actuarial valuation performed. All assumptions for the 12-31-02 valuations are contained in the 2002 TMRS Comprehensive Annual Financial Report, a copy of which may be obtained by writing to P.O. Box 149153, Austin, Texas 78714-9153. Trend Information Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Applicable historical trend information concerning this plan is presented on the next page: Actuarial Cost Method: Unit Credit Amortization Method: Level Percent of Payroll Remaining Amortization Period: 25 Years--Open Period Asset Valuation Method: Amortized Cost (to accurately reflect the requirements of GASB Statement No. 25, paragraphs 36e and 138) Investment Rate of Return: 8% Projected Salary Increases: None Includes Inflation at: None Cost-of-Living Adjustments: None Actuarial Valuation Date 12/31/2002 Actuarial Value of Assets 57,742,291$ Actuarial Accrued Liability 68,424,249$ Percentage Funded 84.4% Unfunded (Overfunded) Actuarial Accrued Liability (UAAL) 10,681,958$ Annual Covered Payroll 27,784,120$ UAAL as a Percentage of Covered Payroll 38.4% Net Pension Obligation (NPO) at Beginning of Period -$ Plus Annual Pension Cost: Annual Required Contribution (ARC) 2,694,930 Less Contributions Made 2,694,930 NPO at the End of the Period -$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 64 Unfunded Net Assets Available Accrued Accrued as a Percent of Actuarial Actuarial Actuarial Actuarial Pension Benefit Valuation Date Value of Assets Liability (AAL) Liability (UAAL) Obligation 12/31/1993 19,345,662$ 22,717,522$ 3,371,860$ 85% 12/31/1994 21,696,264 26,863,012 4,893,748 82% 12/31/1995 26,004,146 31,518,807 5,514,661 83% 12/31/1996 30,332,645 36,941,994 6,609,349 82% 12/31/1997 34,566,021 42,100,099 7,534,078 82% 12/31/1998 38,759,223 45,574,205 6,814,982 85% 12/31/1999 43,010,803 49,987,308 6,976,505 86% 12/31/2000 47,880,750 55,811,761 7,931,011 86% 12/31/2001 52,927,528 61,856,550 8,929,022 86% 12/31/2002 57,742,291 68,424,249 10,681,958 84% Fiscal Year Annual Required Contributions Net Pension Ending Contribution (ARC) Made Obligation 1994 980,194$ 980,194$ -$ 1995 1,028,586 1,028,586 - 1996 1,107,037 1,107,037 - 1997 1,299,737 1,299,737 - 1998 1,662,022 1,662,022 - 1999 1,965,749 1,965,749 - 2000 2,154,204 2,154,204 - 2001 2,272,217 2,272,217 - 2002 2,511,159 2,511,159 - 2003 2,694,930 2,694,930 - Annual UAAL as a Actuarial Covered Percentage of Valuation Date Payroll Covered Payroll 12/31/1993 16,049,130$ 21% 12/31/1994 17,086,936 29% 12/31/1995 17,581,968 31% 12/31/1996 18,001,720 37% 12/31/1997 17,839,856 42% 12/31/1998 19,339,128 35% 12/31/1999 20,803,862 34% 12/31/2000 23,651,256 34% 12/31/2001 25,422,558 35% 12/31/2002 27,784,120 38% Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 65 Post Retirement/Employment Benefits In addition to providing pension benefits, the City provides certain health care benefits for retired employees as established by City Resolution No. 9-13-90-5.10, which was passed and approved by the City Council on September 13, 1990. According to this resolution, employees who retire while working for the City and their dependents are eligible to remain on the City’s health plan as long as the employee makes monthly premium payments. During fiscal year 2003, twelve former employees were covered under this arrangement. Prior to the passage of this resolution, employees who reached retirement while working for the City were eligible to remain on the City’s self-insured health plan and have their monthly premiums paid for by the City. During fiscal year 2003, one retiree was covered under this plan; however, claims filed by this retiree were not material. The City also provides health benefits as required by the Federal Government under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"). COBRA requires employers that sponsor group health plans to provide continuation of group coverage to employees and their dependents under certain circumstances where coverage would otherwise end. Terminated employees who qualify under COBRA pay premium costs for themselves and dependents. Expenditures are recognized as claims are submitted. COBRA participants are reimbursed at the same levels as active employees. The amount of expenditures related to COBRA claims for the year ended September 30, 2003 was not material. As of September 30, 2003 the City has 10 COBRA participants. E. Segment Information The City issues revenue bonds to finance its electric, water, and sewer utility capital improvements. Summary financial information for each fund with outstanding revenue supported debt is presented below. The Electric Fund provides electric service to the City's residents and includes transmission and distribution systems. The Water Fund provides water services to the residents of the City and includes water production and distribution. The Sewer Fund operates the City's wastewater collection, pumping, and treatment systems. The Electric, Water, and Sewer funds are accounted for separately. However, their revenue bonds carry a combined pledge of revenues from all three systems. Segment information for the year ended September 30, 2003 is as follows: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 66 Condensed Statement of Revenues, Expenses and Changes in Fund Net Assets Electric Water Sewer Fund Fund Fund Charges for Services (Pledged Against Bonds) 46,565,597$ 8,597,167$ 8,883,482$ Operating Expense Before Depreciation (40,100,091) (3,845,040) (3,840,419) Operating Income Before Depreciation (Pledged Against Bonds) 6,465,506 4,752,127 5,043,063 Depreciation Expense (2,210,537) (1,031,967) (1,759,172) Operating Income 4,254,969 3,720,160 3,283,891 Nonoperating Revenues (Expenses): Investment Earnings 370,522 439,285 266,272 Intergovernmental Transfers In - - - Intergovernmental Transfers Out (4,778,314) (911,412) (832,648) Interest Expense (736,076) (1,332,355) (1,708,902) Other, Net (87,399) 314,728 275,660 Capital Contributions 425,613 2,045,171 1,416,845 Change in Net Assets (550,685) 4,275,577 2,701,118 Beginning Net Assets 44,731,298 42,654,019 32,849,732 Ending Net Assets 44,180,613$ 46,929,596$ 35,550,850$ Condensed Statement of Net Assets Electric Water Sewer Fund Fund Fund Assets: Current Assets 11,622,880$ 12,954,132$ 4,684,571$ Due from Other Funds 200,000 - - Restricted Assets 9,250,178 7,528,575 6,662,109 Deferred Charges 217,214 304,384 288,363 Capital Assets, Net of Accumulated Depreciation 49,772,691 55,218,135 58,030,398 Total Assets 71,062,963 76,005,226 69,665,441 Liabilities: Current Liabilities 7,159,343 1,364,131 153,493 Current Liabilities Payable from Restricted Assets 2,163,351 1,636,458 2,145,764 Noncurrent Liabilities 17,559,656 26,075,041 31,815,334 Total Liabilities 26,882,350 29,075,630 34,114,591 Net Assets: Invested in Capital Assets, Net of Related Debt 38,920,619 35,087,170 28,896,009 Restricted for Debt Service 535,361 412,131 1,519,239 Unrestricted 4,724,633 11,430,295 5,135,602 Total Net Assets 44,180,613$ 46,929,596$ 35,550,850$ Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 67 Condensed Statement of Cash Flows Electric Water Sewer Fund Fund Fund Net Cash Provided (Used) by: Operating Activities 8,559,787$ 5,997,205$ 5,145,087$ Noncapital Financing Activities (4,778,314) (911,412) (832,648) Capital and Related Financing Activities (6,112,389) (6,495,197) (6,181,983) Investing Activities (659,036) (1,890,225) (492,473) Net Decrease (2,989,952) (3,299,629) (2,362,017) Beginning Cash and Cash Equivalents 8,329,825 10,894,499 6,453,467 Ending Cash and Cash Equivalents 5,339,873$ 7,594,870$ 4,091,450$ F. Deferred Compensation Plan The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code ("IRC") 457. The plan, as amended, is available to all employees and permits them to defer a portion of their salary until future years. The plan funds are not available to employees until termination, retirement, death, or emergency. All amounts of compensation deferred under the plan (until paid or made available to the employee or other beneficiary) were placed in trust for the exclusive benefit of the participants and the beneficiaries. This action is in accordance with changes made to IRC Section 457. Since the City is no longer the Plan Administrator or the trustee, the assets of the plan are no longer a reportable fund in the City's basic financial statements. G. Commitments and Contingencies Construction Commitments The City has active construction projects as of September 30, 2003. At year-end, the construction commitments with contractors for specific projects were as follows: Notes to the Financial Statements For the Fiscal Year Ended September 30, 2003 City of College Station, Texas 68 Remaining Project Name Spent to Date Commitment Water Well #6 and Water Line 1,490,039$ 619,854$ University Drive Sidewalk Project 49,307 33,778 Copperfield Parkway Extension 646,310 1,269,006 Carter Creek Lift Pump 8,275 282,125 Traffic Signalization 63,471 243,924 Pebble Creek Parkway Rehab - 90,212 Lick Creek Park Site Development 302,062 121,453 Miller Park Playground Improvements - 88,899 Longmire Drive Extension 255,956 62,074 Anderson Street Sidewalks 27,558 151,397 George Bush Drive East Widening 406,728 892,822 Wolf Pen Creek Lower Trails Phase I 1,042,971 157,978 Wolf Pen Creek Marquee 17,848 88,253 Park Place Water Improvements 2,820,144 171,708 7,130,669$ 4,273,483$ H. Bonds Available for Sale Authorized general obligation bonds available for future issue are as follows: Year Unissued Authorized Amount Public Buildings 1984 700,000$ Street Improvements 1984 500,000 Drainage Improvements 1998 855,000 Total 2,055,000$ I. Revenue Bond Coverage All the net revenues of the Electric, Water, and Sewer Funds are pledged for the payment of debt service of the revenue bonds and other indebtedness payable from those revenues. Net revenues, as defined by the revenue bond resolutions, include substantially all of the revenues and expenses of the above named funds other than certain interest income and expense, and depreciation and amortization. These bond resolutions further require that the net revenues, as defined, equal at least 1.40 times the average annual debt service on all revenue bonds and other indebtedness payable from those revenues and 1.25 times the maximum annual debt service on all revenue bonds and other indebtedness payable from those revenues. The maximum annual debt service is defined as the maximum principal and interest payments to be paid in any one year remaining in the life of the bonds, and the average annual debt service is defined as the sum of all principal and interest payments due over the remaining life of the bonds divided by the remaining life of the bonds. The City is in compliance with these requirements. CITY OF COLLEGE STATION, TEXAS Schedule of Funding Progress Texas Municipal Retirement System Last Ten Fiscal Years UAAL as a Actuarial Actuarial Percentage Actuarial Value of Accrued Unfunded Funded Covered of Covered Valuation Assets Liability (AAL) AAL (UAAL) Ratio Payroll Payroll Date* (a) (b) (b-a) (a/b) (c) [(b-a)/c] 12/31/1994 19,345,662$ 22,717,522$ 3,371,860$ 85.2% 16,049,130$ 21.0% 12/31/1995 21,696,264 26,863,012 5,166,748 80.8% 17,086,936 30.2% 12/31/1996 26,004,146 31,518,807 5,514,661 82.5% 17,581,968 31.4% 12/31/1997 30,332,645 36,941,994 6,609,349 82.1% 18,001,720 36.7% 12/31/1998 34,566,021 42,100,099 7,534,078 82.1% 17,839,856 42.2% 12/31/1999 38,759,223 45,574,205 6,814,982 85.0% 19,339,128 35.2% 12/31/2000 43,010,803 49,987,308 6,976,505 86.0% 20,803,862 33.5% 12/31/2001 47,880,750 55,811,761 7,931,011 85.8% 23,651,256 33.5% 12/31/2002 52,927,528 61,856,550 8,929,022 85.6% 25,422,558 35.1% 12/31/2003 57,742,291 68,424,249 10,681,958 84.4% 27,784,120 38.4% *Assets are stated at cost as of December 31 of the preceding year. 69 CITY OF COLLEGE STATION, TEXAS Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) General Fund For the Fiscal Year Ended September 30, 2003 Budget Actual Variance Over (Under) Revenues Taxes 20,981,161$ 20,995,505$ 14,344$ Licenses and Permits 860,600 1,012,960 152,360 Intergovernmental 507,595 487,934 (19,661) Charges for Services 1,974,824 2,403,316 428,492 Fines, Forfeits and Penalties 1,903,110 2,658,015 754,905 Investment Income 381,000 306,118 (74,882) Rents and Royalties 113,860 112,993 (867) Contributions 16,500 20,987 4,487 Reimbursed Expenditures 6,500 7,258 758 Other 153,650 186,352 32,702 Total Revenues 26,898,800 28,191,438 1,292,638 Expenditures Current General Government 3,560,143 3,476,247 (83,896) Fiscal Services 2,379,060 2,312,629 (66,431) Police 9,328,304 9,127,628 (200,676) Fire 7,102,878 6,965,582 (137,296) Development Services 1,950,999 1,933,490 (17,509) Public Works 5,526,005 5,428,711 (97,294) Parks and Recreation 6,343,466 6,271,038 (72,428) Office of Technology and Information Services 3,173,794 3,001,222 (172,572) Nondepartmental Reimbursed Administrative (6,064,414) (6,013,085) 51,329 Contributions 196,998 422,498 225,500 Other 1,409,183 70,128 (1,339,055) Capital Outlay 1,123,051 677,158 (445,893) Total Expenditures 36,029,467 33,673,246 (2,356,221) Excess (Deficiency) of Revenues Over (Under) Expenditures (9,130,667) (5,481,808) 3,648,859 Other Financing Sources (Uses) Sale of General Fixed Assets 30,900 19,563 (11,337) Operating Transfers In 6,740,200 6,741,826 1,626 Operating Transfer Out (106,861) (142,963) (36,102) Total Other Financing Sources (Uses) 6,664,239 6,618,426 (45,813) Net Change in Fund Balances (2,466,428) 1,136,618 3,603,046 Fund Balances, October 1 10,111,225 10,111,225 0 Fund Balances, September 30 7,644,797$ 11,247,843$ 3,603,046$ 70 CITY OF COLLEGE STATION, TEXAS Adjustments to General Fund Revenues and Expenditures To Reconcile From Budget Basis to GAAP Basis For the Fiscal Year Ended September 30, 2003 Net change in fund balance - Budget Basis 1,136,618$ Revenues Market Adjustment for Investments (24,994) Other (7,961) Expenditures Bad Debt Expense (43,727) Payroll Accrual, net (54,139) Capitalize/Reclass Assets 163,706 Reclass Expense (26,707) Other (3,686) Net change in fund balance - GAAP Basis 1,139,110$ 71 72 73 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Community Development - to account for funds granted to the City by the Federal Department of Housing and Urban Development for use on various community improvement projects. Convention Center - to account for the receipt and expenditure of funds received by the City in the operation and maintenance of a convention center. Revenues associated with this fund are derived from the hotel and motel occupancy tax and convention center rentals. Hotel/Motel Tax - to account for the receipt and expenditure of funds received by the City from the assessment of hotel and motel occupancy tax. Usage of funds is restricted to the construction and maintenance of convention and civic facilities and to the promotion of tourism and arts within the City. Melrose Apartment Tax Increment Financing District - to account for the receipt and expenditure of funds received by the City from the creation of a tax increment financing district for the Melrose Apartments. Parks Escrow - to account for the receipt and expenditure of funds received by the City from residential land developers, who dedicate land, or money in lieu of land, for use in the development of neighborhood parks in residential areas. Wolf Pen Creek Tax Increment Financing District - to account for the receipt and expenditure of funds received by the City from the creation of a tax increment financing district for the Wolf Pen Creek area. CAPITAL PROJECTS FUNDS Capital Projects Funds are used to account for the acquisition and construction of major capital improvements other than those financed by proprietary funds and trust funds. Business Park - to account for the cost of street, water, and sewer improvements at the College Station Business Park. Drainage Projects - to account for the cost of drainage improvements made with funds provided by a drainage utility fee and proceeds from the sale of general obligation funds. General Government Projects - to account for the cost of new building construction and building improvements made with funds provided by proceeds from the sale of general obligation bonds. Parks Projects - to account for the costs of new parks and improvements to existing parks made with funds provided from the sale of general obligation bonds. PERMANENT FUNDS Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the City's programs. Cemetery Perpetual Care Fund - to account for principal trust amounts received and related interest income for the College Station cemetery. CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet Nonmajor Governmental Funds As of September 30, 2003 Special Revenue Funds Capital Projects Funds Permanent Funds Total Current Assets Equity in Cash and Cash Equivalents 5,551,214$ 6,045,190$ 346,820$ 11,943,224$ Equity in Investments 8,474,088 9,228,155 529,430 18,231,673 Receivables Accrued Interest 41,433 44,968 2,504 88,905 Grants 323,399 0 0 323,399 Accounts 80,381 123,003 8,593 211,977 Loans 9,356 0 0 9,356 Less Allowance for Uncollectible Accounts (2,363) (10,546) (6,064) (18,973) Inventories 0 0 2,373 2,373 Total Assets 14,477,508$ 15,430,770$ 883,656$ 30,791,934$ Liabilities and Fund Balances Liabilities Accounts Payable 536,668$ 294,324$ 180$ 831,172$ Retainage Payable 117,294 16,572 0 133,866 Interfund Payable 200,000 0 0 200,000 Refundable Deposits 20,411 0 0 20,411 Accrued Liabilities (1,242) 244 0 (998) Other Deferred Revenues 11,975 0 0 11,975 Total Liabilities 885,106 311,140 180 1,196,426 Fund Balances Reserved Reserved for Encumbrances 2,740,467 943,759 0 3,684,226 Reserved for Capital Projects 0 14,175,871 0 14,175,871 Reserved for Perpetual Care 0 0 883,476 883,476 Unreserved Designated for Subsequent Years Expenditures 982,237 0 0 982,237 Undesignated 9,869,698 0 0 9,869,698 Total Fund Balances 13,592,402 15,119,630 883,476 29,595,508 Total Liabilities and Fund Balances 14,477,508$ 15,430,770$ 883,656$ 30,791,934$ 74 CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet Nonmajor Governmental Funds - Special Revenue As of September 30, 2003 Community Development Convention Center Hotel/Motel Tax Parks Escrow Wolf Pen Creek Tax Increment Financing District Total Current Assets Equity in Cash and Cash Equivalents 232,639$ 2,864,725$ 846,356$ 628,430$ 979,064$ 5,551,214$ Equity in Investments 355,130 4,373,085 1,291,987 959,317 1,494,569 8,474,088 Receivables Accrued Interest 0 22,947 6,233 4,550 7,703 41,433 Grants 323,399 0 0 0 0 323,399 Accounts 1,200 0 79,181 0 0 80,381 Loans 9,356 0 0 0 0 9,356 Less Allowance for Uncollectible Accounts (1,200) 0 (1,163) 0 0 (2,363) Total Assets 920,524$ 7,260,757$ 2,222,594$ 1,592,297$ 2,481,336$ 14,477,508$ Liabilities and Fund Balances Liabilities Accounts Payable 181,815$ 259,127$ 85,151$ 0$ 10,575$ 536,668$ Retainage Payable 342 47,314 10,492 0 59,146 117,294 Interfund Payable 0 0 200,000 0 0 200,000 Refundable Deposits 0 0 20,411 0 0 20,411 Accrued Liabilities (1,290) 0 48 0 0 (1,242) Other Deferred Revenues 8,016 0 3,959 0 0 11,975 Total Liabilities 188,883 306,441 320,061 0 69,721 885,106 Fund Balances Reserved Reserved for Encumbrances 268,551 2,093,840 182,945 54,403 140,728 2,740,467 Unreserved Designated for Subsequent Years Expenditures 0 982,237 0 0 0 982,237 Undesignated 463,090 3,878,239 1,719,588 1,537,894 2,270,887 9,869,698 Total Fund Balances 731,641 6,954,316 1,902,533 1,592,297 2,411,615 13,592,402 Total Liabilities and Fund Balances 920,524$ 7,260,757$ 2,222,594$ 1,592,297$ 2,481,336$ 14,477,508$ 75 CITY OF COLLEGE STATION, TEXAS Combining Balance Sheet Nonmajor Governmental Funds - Capital Projects Funds As of September 30, 2003 Business Park Drainage Projects General Government Projects Parks Projects Total Current Assets Equity in Cash and Cash Equivalents 912,867$ 3,022,410$ 1,964,371$ 145,542$ 6,045,190$ Equity in Investments 1,393,517 4,613,795 2,998,669 222,174 9,228,155 Receivables Accrued Interest 6,691 22,084 14,758 1,435 44,968 Grants 0 0 0 0 0 Accounts 0 123,003 0 0 123,003 Less Allowance for Uncollectible Accounts 0 (10,546) 0 0 (10,546) Total Assets 2,313,075$ 7,770,746$ 4,977,798$ 369,151$ 15,430,770$ Liabilities and Fund Balances Liabilities Accounts Payable 4,565$ 1,224$ 251,642$ 36,893$ 294,324$ Retainage Payable 0 0 0 16,572 16,572 Accrued Liabilities 0 0 0 244 244 Total Liabilities 4,565 1,224 251,642 53,709 311,140 Fund Balances Reserved Reserved for Encumbrances 0 201,460 573,673 168,626 943,759 Reserved for Capital Projects 2,308,510 7,568,062 4,152,483 146,816 14,175,871 Total Fund Balances 2,308,510 7,769,522 4,726,156 315,442 15,119,630 Total Liabilities and Fund Balances 2,313,075$ 7,770,746$ 4,977,798$ 369,151$ 15,430,770$ 76 CITY OF COLLEGE STATION, TEXAS Balance Sheet Nonmajor Governmental Fund - Permanent Fund Cemetery Perpetual Care Fund As of September 30, 2003 Current Assets Equity in Cash and Cash Equivalents 346,820$ Equity in Investments 529,430 Receivables Accrued Interest 2,504 Accounts 8,593 Allowance for Uncollectible Accounts (6,064) Inventories 2,373 Total Assets 883,656$ Liabilities and Fund Balances Liabilities Accounts Payable 180$ Total Liabilities 180 Fund Balances Reserved Reserved for Perpetual Care 883,476 Total Fund Balances 883,476 Total Liabilities and Fund Balances 883,656$ 77 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Fiscal Year Ended September 30, 2003 Special Revenue Funds Capital Projects Funds Permanent Funds Total Revenues Taxes 2,637,773$ 0$ 0$ 2,637,773$ Charges for Services 18,400 62,536 125,804 206,740 Intergovernmental 1,446,747 7,802 0 1,454,549 Special Assessment 0 1,035,023 0 1,035,023 Fines, Forfeits and Penalties 3,489 0 0 3,489 Investment Income 340,842 328,004 19,409 688,255 Rents and Royalties 120,033 0 0 120,033 Loan Repayments 11,322 0 0 11,322 Contributions 309,000 37,621 1,434 348,055 Other 45,841 11,201 0 57,042 Total Revenues 4,933,447 1,482,187 146,647 6,562,281 Expenditures Current Community Development Block Grant 222,169 0 0 222,169 Home Grant 408,779 0 0 408,779 Reimbursed Administrative 1,308,808 750,748 0 2,059,556 Contributions 1,128,400 0 0 1,128,400 Other 162,520 95,943 6,238 264,701 Capital Outlay 2,838,663 4,586,405 0 7,425,068 Debt Issuance Costs 0 34,758 0 34,758 Total Expenditures 6,069,339 5,467,854 6,238 11,543,431 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,135,892) (3,985,667) 140,409 (4,981,150) Other Financing Sources (Uses) Proceeds from Long-Term Debt Issuance 0 3,097,000 0 3,097,000 Sale of Capital Assets 0 11,130 0 11,130 Transfers In 1,692 109,882 0 111,574 Transfers Out (890,004) 0 0 (890,004) Total Other Financing Sources (Uses) (888,312) 3,218,012 0 2,329,700 Net Change in Fund Balances (2,024,204) (767,655) 140,409 (2,651,450) Fund Balances, October 1 15,616,606 15,887,285 743,067 32,246,958 Fund Balances, September 30 13,592,402$ 15,119,630$ 883,476$ 29,595,508$ 78 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds - Special Revenue Funds For the Fiscal Year Ended September 30, 2003 Community Development Convention Center Hotel/Motel Tax Melrose Apartment Tax Increment Financing District Parks Escrow Wolf Pen Creek Tax Increment Financing District Total Revenues Taxes 0$ 0$ 2,120,015$ 0$ 0$ 517,758$ 2,637,773$ Charges for Services 0 0 18,400 0 0 0 18,400 Intergovernmental 1,446,747 0 0 0 0 0 1,446,747 Fines, Forfeits and Penalties 0 0 3,489 0 0 0 3,489 Investment Income 0 192,499 50,315 524 34,183 63,321 340,842 Rents and Royalties 0 0 120,033 0 0 0 120,033 Loan Repayments 11,322 0 0 0 0 0 11,322 Contributions 0 0 0 0 309,000 0 309,000 Other 26,851 16,301 217 0 0 2,472 45,841 Total Revenues 1,484,920 208,800 2,312,469 524 343,183 583,551 4,933,447 Expenditures Current Community Development Block Grant 222,169 0 0 0 0 0 222,169 Home Grant 408,779 0 0 0 0 0 408,779 Reimbursed Administrative 680,231 50,000 573,577 0 5,000 0 1,308,808 Contributions 0 0 1,128,400 0 0 0 1,128,400 Other 1,200 9 161,072 0 0 239 162,520 Capital Outlay 0 1,771,504 0 96,000 67,000 904,159 2,838,663 Total Expenditures 1,312,379 1,821,513 1,863,049 96,000 72,000 904,398 6,069,339 Excess (Deficiency) of Revenues Over (Under) Expenditures 172,541 (1,612,713) 449,420 (95,476) 271,183 (320,847) (1,135,892) Other Financing Sources (Uses) Transfers In 0 0 0 652 1,040 0 1,692 Transfers Out (147,504) (250,000) 0 0 0 (492,500) (890,004) Total Other Financing Sources (Uses) (147,504) (250,000) 0 652 1,040 (492,500) (888,312) Net Change in Fund Balances 25,037 (1,862,713) 449,420 (94,824) 272,223 (813,347) (2,024,204) Fund Balances, October 1 706,604 8,817,029 1,453,113 94,824 1,320,074 3,224,962 15,616,606 Fund Balances, September 30 731,641$ 6,954,316$ 1,902,533$ 0$ 1,592,297$ 2,411,615$ 13,592,402$ 79 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Governmental Funds - Capital Projects Funds For the Fiscal Year Ended September 30, 2003 Business Park Drainage Projects General Government Projects Parks Projects Total Revenues Charges for Services 0$ 0$ 0$ 62,536$ 62,536$ Intergovernmental 0 0 10 7,792 7,802 Special Assessment 0 1,035,023 0 0 1,035,023 Investment Income 53,902 159,238 100,644 14,220 328,004 Contributions 0 0 37,621 0 37,621 Other 0 6,625 2,828 1,748 11,201 Total Revenues 53,902 1,200,886 141,103 86,296 1,482,187 Expenditures Current Reimbursed Administrative 50,000 620,748 60,000 20,000 750,748 Other 0 54,734 41,209 0 95,943 Capital Outlay 4,656 339,143 3,733,174 509,432 4,586,405 Debt Service Issuance Costs 0 11,764 22,994 0 34,758 Total Expenditures 54,656 1,026,389 3,857,377 529,432 5,467,854 Excess (Deficiency) of Revenues Over (Under) Expenditures (754) 174,497 (3,716,274) (443,136) (3,985,667) Other Financing Sources Proceeds from Long-Term Debt Issuance 0 1,000,000 2,097,000 0 3,097,000 Sale of Capital Assets 0 0 10,530 600 11,130 Transfers In 0 34,432 75,450 0 109,882 Total Other Financing Sources 0 1,034,432 2,182,980 600 3,218,012 Net Change in Fund Balances (754) 1,208,929 (1,533,294) (442,536) (767,655) Fund Balances, October 1 2,309,264 6,560,593 6,259,450 757,978 15,887,285 Fund Balances, September 30 2,308,510$ 7,769,522$ 4,726,156$ 315,442$ 15,119,630$ 80 CITY OF COLLEGE STATION, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balance Nonmajor Governmental Fund - Permanent Fund Cemetery Perpetual Care Fund For the Fiscal Year Ended September 30, 2003 Revenues Sale of Cemetery Lots 125,804$ Investment Income 19,409 Contributions 1,434 Other 0 Total Revenues 146,647 Expenditures Other 6,238 Total Expenditures 6,238 Excess of Revenues Over Expenditures 140,409 Fund Balance, October 1 743,067 Fund Balance, September 30 883,476$ 81 82 83 COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE FUNDS Sanitation - to account for all sanitation collection and disposal activities by the City for both residential and commercial residents. Cedar Creek Condominiums - to account for revenues and expenses related to the operation and maintenance of the Cedar Creek Condominiums. Northgate Parking Garage - to account for revenues and expenses related to the operation and maintenance of the Northgate parking garage and parking lot. City of College Station, Texas Combining Statement of Net Assets Nonmajor Enterprise Funds As of September 30, 2003 Sanitation Cedar Creek Condominiums Northgate Parking Garage Total Current Assets Equity in Cash and Cash Equivalents 357,525$ 98,986$ 435,679$ 892,190$ Equity in Investments 545,771 151,105 665,076 1,361,952 Receivables, net 547,339 202,971 20,536 770,846 Inventories 34,285 0 0 34,285 Total Current Assets 1,484,920 453,062 1,121,291 3,059,273 Equity in Joint Venture 7,606,185 0 0 7,606,185 Capital Assets Buildings 0 0 5,723,063 5,723,063 Machinery and Equipment 1,282,939 0 128,303 1,411,242 Accumulated Depreciation (1,250,848) 0 (333,944) (1,584,792) Construction in Progress 0 0 0 0 Land 0 0 672,811 672,811 Total Capital Assets, net of accumulated depreciation 32,091 0 6,190,233 6,222,324 Total Assets 9,123,196 453,062 7,311,524 16,887,782 Liabilities Current Liabilities Accounts Payable 99,001 142,980 6,644 248,625 Accrued Interest Payable 3,941 0 0 3,941 Interfund Payable 76,807 0 8,398 85,205 Total Current Liabilities 179,749 142,980 15,042 337,771 Current Liabilities Payable from Restricted Assets Refundable Deposits 0 0 1,900 1,900 Total Current Liabilities Payable from Restricted Assets 0 0 1,900 1,900 Noncurrent Liabilities Accrued Vacation 30,581 0 474 31,055 Total Noncurrent Liabilities 30,581 0 474 31,055 Total Liabilities 210,330 142,980 17,416 370,726 Net Assets Invested in Capital Assets, net of related debt 32,091 0 6,190,233 6,222,324 Unrestricted 8,880,775 310,082 1,103,875 10,294,732 Total Net Assets 8,912,866$ 310,082$ 7,294,108$ 16,517,056$ 84 CITY OF COLLEGE STATION, TEXAS Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds For the Fiscal Year Ended September 30, 2003 Sanitation Cedar Creek Condominiums Northgate Parking Garage Total Operating Revenues Garbage Collection Fees 4,659,525$ 0$ 0$ 4,659,525$ Charges for Services 0 541,571 541,571 Other 10,022 0 0 10,022 Total Operating Revenues 4,669,547 0 541,571 5,211,118 Operating Expenses Salaries and Benefits 1,382,654 0 160,309 1,542,963 Supplies 192,478 0 14,161 206,639 Maintenance 476,976 0 12,006 488,982 Purchased Professional Services 269,476 0 58,681 328,157 Purchased Property Services 1,155,103 0 42,597 1,197,700 Other Purchased Services 427,239 0 4,699 431,938 Reimbursed Administrative 416,871 0 0 416,871 Depreciation 11,250 0 165,878 177,128 Other 21,368 0 1,570 22,938 Total Operating Expenses 4,353,415 0 459,901 4,813,316 Operating Income 316,132 0 81,670 397,802 Nonoperating Revenues (Expenses) Investment Income 24,455 2,502 21,762 48,719 Reimbursed Expenses 0 0 1,440 1,440 Earnings in Joint Venture 1,316,660 0 0 1,316,660 Other, Net (1,727) 4,341 2,555 5,169 Total Nonoperating Revenues (Expenses) 1,339,388 6,843 25,757 1,371,988 Income Before Transfers 1,655,520 6,843 107,427 1,769,790 Transfers Out (331,468) 0 (368) (331,836) Change in Net Assets 1,324,052 6,843 107,059 1,437,954 Beginning Net Assets 7,588,814 303,239 7,187,049 15,079,102 Ending Net Assets 8,912,866$ 310,082$ 7,294,108$ 16,517,056$ 85 CITY OF COLLEGE STATION, TEXAS Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Fiscal Year Ended September 30, 2003 Northgate Cedar Creek Parking Sanitation Condominiums Garage Total Cash Flows from Operating Activities: Cash Received from Customers 4,662,732$ 0$ 583,781$ 5,246,513$ Cash Payments to Suppliers for Goods and Services (2,954,747) 0 (126,537) (3,081,284) Cash Payments to Employees for Services (1,375,988) 0 (159,876) (1,535,864) Customer Deposits Returned 0 0 (50) (50) Cash Received for Reimbursed Expenses 0 0 1,440 1,440 Cash Received for Miscellaneous Revenues 0 4,341 2,555 6,896 Cash Paid for Miscellaneous Expenses (1,728) (2,503) 0 (4,231) Net Cash Provided by Operating Activities 330,269 1,838 301,313 633,420 Cash Flows from Noncapital Financing Activities: Transfers Out to Other Funds (331,468) 0 (368) (331,836) Net Cash Used by Noncapital Financing Activities (331,468) 0 (368) (331,836) Cash Flows from Capital and Related Financing Activities: Acquisition and Construction of Capital Assets (23,500) 0 0 (23,500) Net Cash Used by Capital and Related Financing Activities (23,500) 0 0 (23,500) Cash Flows from Investing Activities: Purchase of Investments (2,124,693) (586,514) (2,430,641) (481,539) Proceeds from Sale and Maturities of Investment Securities 1,991,280 547,963 2,121,066 0 Investment Income 27,650 2,502 23,607 53,759 Net Cash Used by Investing Activities (105,763) (36,049) (285,968) (427,780) Net Increase (Decrease) in Cash and Cash Equivalents (130,462) (34,211) 14,977 (149,696) Cash and Cash Equivalents, Oct. 1 487,987 133,197 420,702 1,041,886 Cash and Cash Equivalents, Sept. 30 357,525$ 98,986$ 435,679$ 892,190$ Reconciliation of Operating Income to Net Cash Provided by Operating Activities: Operating Income 316,132$ 0$ 81,670$ 397,802$ Adjustment to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation, Bad Debt Expense, Inventory Loss 11,250 0 165,878 177,128 Provision for Uncollectible Accounts 827 0 1,520 2,347 Miscellaneous Nonoperating Revenues 0 4,341 3,995 8,336 Miscellaneous Nonoperating Expenses (1,728) (2,503) 0 (4,231) Changes in Assets and Liabilities: Change in Accounts Receivable (6,815) 0 42,210 35,395 Change in Inventory (31,469) 0 0 (31,469) Change in Accounts Payable 45,218 0 5,415 50,633 Change in Accrued Liabilities (8,052) 0 635 (7,417) Change in Refundable Deposits 0 0 (50) (50) Change in Accrued Vacation 4,906 0 40 4,946 Total Adjustments 14,137 1,838 219,643 235,618 Net Cash Provided by Operating Activities 330,269$ 1,838$ 301,313$ 633,420$ 86 87 SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS) Debt Service and Special Revenue Funds CITY OF COLLEGE STATION, TEXAS Debt Service Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Taxes 7,689,713$ 7,689,713$ 7,645,600$ (44,113)$ Investment Income 100,000 100,000 85,295 (14,705) Accrued Bond Interest 0 0 7,605 7,605 Other 0 0 67,311 67,311 Total Revenues 7,789,713 7,789,713 7,805,811 16,098 Expenditures Debt Service Principal Payments 5,820,000 5,820,000 5,820,000 0 Interest Payments 3,629,760 3,629,760 3,647,529 17,769 Fiscal Charges 6,000 6,000 12,500 6,500 Debt Issuance Cost 8,998 8,998 392 (8,606) Total Expenditures 9,464,758 9,464,758 9,480,421 15,663 Deficiency of Revenues Under Expenditures (1,675,045) (1,675,045) (1,674,610) 435 Other Financing Sources Transfers In 958,500 958,500 958,500 0 Total Other Financing Sources 958,500 958,500 958,500 0 Net Change in Fund Balances (716,545) (716,545) (716,110) 435 Fund Balances, October 1 2,376,726 2,376,726 2,376,726 0 Fund Balances, September 30 1,660,181$ 1,660,181$ 1,660,616$ 435$ 88 CITY OF COLLEGE STATION, TEXAS Adjustments to Debt Service Revenues To Reconcile From Budget Basis to GAAP Basis Debt Service Fund For the Fiscal Year Ended September 30, 2003 Change in Fund Balance - Budget Basis (716,110)$ Revenues Market Adjustment for Investments (2,796) Change in Fund Balance - GAAP Basis (718,906)$ 89 CITY OF COLLEGE STATION, TEXAS Community Development Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Intergovernmental Community Development Block Grant 2,418,262$ 2,418,262$ 844,425$ (1,573,837)$ Home Grant 1,636,420 1,636,420 602,322 (1,034,098) Loan Repayments 0 0 10,751 10,751 Interest on Loans 0 0 571 571 Other 20,000 20,000 26,851 6,851 Total Revenues 4,074,682 4,074,682 1,484,920 (2,589,762) Expenditures Community Development Block Grant 2,438,262 2,438,262 222,169 (2,216,093) Home Grant 1,636,420 1,636,420 408,779 (1,227,641) Reimbursed Administrative 0 0 680,231 680,231 Affordable Housing 100,000 100,000 0 (100,000) Total Expenditures 4,174,682 4,174,682 1,311,179 (2,863,503) Excess (Deficiency) of Revenues Over (Under) Expenditures (100,000) (100,000) 173,741 273,741 Other Financing Uses Transfers Out 0 0 (147,504) (147,504) Total Other Financing Uses 0 0 (147,504) (147,504) Net Change in Fund Balances (100,000) (100,000) 26,237 126,237 Fund Balances, October 1 276,092 276,092 276,092 0 Fund Balances, September 30 176,092$ 176,092$ 302,329$ 126,237$ See reconciliation to GAAP basis on page 96. 90 CITY OF COLLEGE STATION, TEXAS Convention Center Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Investment Income 400,000$ 400,000$ 207,994$ (192,006)$ Total Revenues 400,000 400,000 207,994 (192,006) Expenditures Current Other Purchased Services 0 0 9 9 Reimbursed Administrative 50,000 50,000 50,000 0 Capital Outlay 9,170,000 9,170,000 1,762,103 (7,407,897) Total Expenditures 9,220,000 9,220,000 1,812,112 (7,407,888) Deficiency of Revenues Under Expenditures (8,820,000) (8,820,000) (1,604,118) 7,215,882 Other Financing Sources (Uses) Transfers In 1,100,000 1,100,000 0 (1,100,000) Transfers Out (230,000) (230,000) (250,000) (20,000) Other 0 0 16,301 16,301 Total Other Financing Sources (Uses) 870,000 870,000 (233,699) (1,103,699) Net Change in Fund Balances (7,950,000) (7,950,000) (1,837,817) 6,112,183 Fund Balances, October 1 8,796,349 8,796,349 8,796,349 0 Fund Balances, September 30 846,349$ 846,349$ 6,958,532$ 6,112,183$ See reconciliation to GAAP basis on page 96. 91 CITY OF COLLEGE STATION, TEXAS Hotel/Motel Tax Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Taxes 1,926,009$ 2,015,000$ 2,120,015$ 105,015$ Charges for Services 25,341 17,520 18,400 880 Fines, Forfeits and Penalties 0 0 2,889 2,889 Investment Income 79,577 75,000 54,524 (20,476) Rents and Royalties 114,668 114,800 120,033 5,233 Other 0 6,900 816 (6,084) Total Revenues 2,145,595 2,229,220 2,316,677 87,457 Expenditures Current Development Services 196,062 416,000 54,247 (361,753) Reimbursed Administrative 266,297 734,983 573,577 (161,406) Contributions 1,140,400 1,128,400 1,128,400 0 Other 11,829 6,200 105,904 99,704 Debt Service Principal Retirement 148,052 40,000 0 (40,000) Contingency 0 25,000 0 (25,000) Total Expenditures 1,762,640 2,350,583 1,862,128 (488,455) Excess (Deficiency) of Revenues Over (Under) Expenditures 382,955 (121,363) 454,549 575,912 Other Financing Uses Transfers Out 0 (600,000) 0 600,000 Total Other Financing Uses 0 (600,000) 0 600,000 Net Change in Fund Balances 382,955 (721,363) 454,549 1,175,912 Fund Balances, October 1 1,353,645 1,353,645 1,353,645 0 Fund Balances, September 30 1,736,600$ 632,282$ 1,808,194$ 1,175,912$ See reconciliation to GAAP basis on page 96. 92 CITY OF COLLEGE STATION, TEXAS Melrose Apartment Tax Increment Financing District Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Investment Income 2,000$ 2,000$ 524$ (1,476)$ Total Revenues 2,000 2,000 524 (1,476) Expenditures Capital Outlay 96,000 96,000 96,000 0 Total Expenditures 96,000 96,000 96,000 0 Deficiency of Revenues Under Expenditures (94,000) (94,000) (95,476) (1,476) Other Financing Sources Transfers In 0 0 652 652 Net Change in Fund Balances (94,000) (94,000) (94,824) (824) Fund Balances, October 1 93,160 93,160 93,160 0 Fund Balances, September 30 (840)$ (840)$ (1,664)$ (824)$ See reconciliation to GAAP basis on page 96. 93 CITY OF COLLEGE STATION, TEXAS Parks Escrow Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Investment Income 5,000$ 5,000$ 37,256$ 32,256$ Other 50,000 50,000 309,000 259,000 Total Revenues 55,000 55,000 346,256 291,256 Expenditures Current Reimbursed Administrative 5,000 5,000 5,000 0 Other 0 8,000 0 (8,000) Capital Outlay 1,259,000 1,251,000 67,000 (1,184,000) Total Expenditures 1,264,000 1,264,000 72,000 (1,192,000) Excess (Deficiency) of Revenues Over (Under ) Expenditures (1,209,000) (1,209,000) 274,256 1,483,256 Other Financing Sources Transfers In 0 0 1,040 1,040 Total Other Financing Sources 0 0 1,040 1,040 Net Change in Fund Balances (1,209,000) (1,209,000) 275,296 1,484,296 Fund Balances, October 1 1,319,858 1,319,858 1,319,858 0 Fund Balances, September 30 110,858$ 110,858$ 1,595,154$ 1,484,296$ See reconciliation to GAAP basis on page 96. . 94 CITY OF COLLEGE STATION Wolf Pen Creek Tax Increment Financing District Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Budgetary Basis) For the Fiscal Year Ended September 30, 2003 Original Budget Revised Budget Actual Variance Over (Under) Revenues Taxes 498,000$ 498,000$ 517,758$ 19,758$ Investment Income 60,000 60,000 68,523 8,523 Other 0 0 2,472 2,472 Total Revenues 558,000 558,000 588,753 30,753 Expenditures Current Parks and Recreation 700 700 241 (459) Capital Outlay 1,910,000 1,910,000 879,425 (1,030,575) Total Expenditures 1,910,700 1,910,700 879,666 (1,031,034) Deficiency of Revenues Under Expenditures (1,352,700) (1,352,700) (290,913) 1,061,787 Other Financing Uses Transfers Out (492,500) (492,500) (492,500) 0 Total Other Financing Uses (492,500) (492,500) (492,500) 0 Net Change in Fund Balances (1,845,200) (1,845,200) (783,413) 1,061,787 Fund Balances, October 1 3,231,563 3,231,563 3,231,563 0 Fund Balances, September 30 1,386,363$ 1,386,363$ 2,448,150$ 1,061,787$ See reconciliation to GAAP basis on page 96. 95 CITY OF COLLEGE STATION, TEXAS Adjustments to Special Revenue Fund Revenues and Expenditures to Reconcile from Budget Basis to GAAP Basis For the Fiscal Year Ended September 30, 2003 Community Development Convention Center Hotel/Motel Tax Melrose Apartment Tax Increment Financing District Parks Escrow Wolf Pen Creek Tax Increment Financing District Change in Fund Balance - Budget Basis 26,237$ (1,837,817)$ 454,549$ (94,824)$ 275,296$ (783,413)$ Revenues: Market Adjustment for Investments - (15,495) (4,208) - (3,073) (5,202) Expenditures: Bad Debt Expense (1,200) - (921) - - Capitalized Salaries - (6,218) - - - (24,732) Reclass Expense - (3,183) - - - - Change in Fund Balance - GAAP Basis 25,037$ (1,862,713)$ 449,420$ (94,824)$ 272,223$ (813,347)$ 96 97 COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS Communication Services - to account for the activities related to the operation and maintenance of the City’s radio and telephone systems. Employee Benefits - to account for self-insurance activity related to administration of the City's health benefits plan. Equipment Replacement - to account for the purchase of City equipment such as vehicles and large motorized equipment, the telephone and radio systems, and replacement assets for existing technological infrastructure equipment not budgeted in other funds. Fleet Maintenance - to account for all activities related to the management of the City’s vehicles and heavy equipment, including preventive maintenance and vehicle repair activities. Print-Mail Services - to account for the activities related to the City’s printing and mailing operations. Property and Casualty - to account for insurance activity relating to all claims filed for liability cases (both injury and property) and property losses incurred for City property. Unemployment - to account for self-insurance activity on claims filed under unemployment compensation laws. Utility Billing - to account for the billing and collection activities relating to the City’s electric, water, and sewer utilities and residential and commercial garbage collection. Workers' Compensation - to account for self-insurance activity relating to administration of the City's workers' compensation plan. CITY OF COLLEGE STATION, TEXAS Internal Service Funds Combining Statement of Net Assets As of September 30, 2003 Communication Services Employee Benefits Equipment Replacement Fleet Maintenance Current Assets Equity in Cash and Cash Equivalents 2,075$ 622,202$ 2,870,170$ 0$ Equity in Investments 5,227 949,809 4,381,397 0 Receivables Accrued Interest (18) 4,173 20,502 (245) Accounts 0 4,047 0 5,924 Other 00 00 Less Allowance for Uncollectible Accounts 0 (1,059) 0 0 Inventories 0 0 0 85,254 Prepaid Costs 0 0 0 0 Total Current Assets 7,284 1,579,172 7,272,069 90,933 Capital Assets Buildings 0 0 0 746,575 Machinery and Equipment 1,207,944 0 17,526,180 208,820 Accumulated Depreciation (979,009) 0 (9,917,456) (390,252) Total Capital Assets 228,935 0 7,608,724 565,143 Total Assets 236,219 1,579,172 14,880,793 656,076 Liabilities Current Liabilities Accounts Payable 20,196 53,373 35,900 70,246 Due to Other Funds 0 0 0 19,271 Claims Payable 0 0 0 0 Accrued Liabilities 9,617 0 0 17,628 Total Current Liabilities 29,813 53,373 35,900 107,145 Noncurrent Liabilities Accrued Vacation 8,822 0 0 26,138 Total Noncurrent Liabilities 8,822 0 0 26,138 Total Liabilities 38,635 53,373 35,900 133,283 Net Assets Invested in Capital Assets 228,935 0 7,608,724 565,143 Unreserved Retained Earnings (Deficits) (31,351) 1,525,799 7,236,169 (42,350) Total Net Assets 197,584$ 1,525,799$ 14,844,893$ 522,793$ 98 Print/Mail Services Property and Casualty Unemployment Utility Billing Workers' Compensation Total 914$ 122,797$ 39,311$ 29,862$ 53,791$ 3,741,122$ 1,395 187,454 60,010 45,585 82,113 5,712,990 (93) 988 287 166 499 26,259 0 132,344 0 18,154 0 160,469 0 0 0 8,945 0 8,945 0 (1,652) 0 (13,692) 0 (16,403) 28,979 0 0 0 0 114,233 11,848 0 0 0 24,000 35,848 43,043 441,931 99,608 89,020 160,403 9,783,463 0 0 0 0 0 746,575 145,918 0 0 1,516,017 0 20,604,879 (118,082) 0 0 (784,226) 0 (12,189,025) 27,836 0 0 731,791 0 9,162,429 70,879 441,931 99,608 820,811 160,403 18,945,892 33,195 27,942 0 7,541 3,348 251,741 0 0 0 0 0 19,271 0 240,131 0 0 178,728 418,859 6,966 0 0 32,635 0 66,846 40,161 268,073 0 40,176 182,076 756,717 5,466 0 0 41,415 0 81,841 5,466 0 0 41,415 0 81,841 45,627 268,073 0 81,591 182,076 838,558 27,836 0 0 731,791 0 9,162,429 (2,584) 173,858 99,608 7,429 (21,673) 8,944,905 25,252$ 173,858$ 99,608$ 739,220$ (21,673)$ 18,107,334$ 99 CITY OF COLLEGE STATION, TEXAS Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Assets For the Fiscal Year Ended September 30, 2003 Communication Services Employee Benefits Equipment Replacement Fleet Maintenance Operating Revenues Charges for Services 626,652$ 0$ 2,115,381$ 1,380,311$ Premiums 0 4,497,134 0 0 Other 00 00 Total Operating Revenues 626,652 4,497,134 2,115,381 1,380,311 Operating Expenses Salaries and Benefits 314,308 0 0 629,453 Supplies 85,569 0 0 545,881 Maintenance 83,460 0 3,510 26,084 Purchased Professional Services 11,936 0 0 2,535 Purchased Property Services 11,375 0 0 16,203 Other Purchased Services 25,442 2,338 0 25,983 Claims 0 10,137 0 0 Administration Fees 0 49,424 0 0 Premiums 0 3,664,830 0 0 Reimbursed Administrative 85,000 54,949 0 137,177 Depreciation 100,012 0 2,538,411 24,183 Other 0 94 0 16,177 Total Operating Expenses 717,102 3,781,772 2,541,921 1,423,676 Operating Income (90,450) 715,362 (426,540) (43,365) Nonoperating Revenues (Expenses) Investment Income (709) 31,923 156,303 (1,311) Reimbursed Expenses 0 423 21,582 364 Other, Net 1,500 18,806 83,868 781 Total Nonoperating Revenues (Expenses) 791 51,152 261,753 (166) Income Before Transfers (89,659) 766,514 (164,787) (43,531) Transfers Transfers In 49,300 0 972,144 0 Transfers Out (1,363) 0 (216,000) (2,708) Total Transfers 47,937 0 756,144 (2,708) Change in Net Assets (41,722) 766,514 591,357 (46,239) Beginning Net Assets 239,306 759,285 14,253,536 569,032 Ending Net Assets 197,584$ 1,525,799$ 14,844,893$ 522,793$ 100 Print/Mail Property and Casualty Unemployment Utility Billing Workers' Compensation Total 376,337$ 0$ 0$ 1,925,001$ 0$ 6,423,682$ 0 395,175 0 0 348,632 5,240,941 0 0 0 141,320 6,862 148,182 376,337 395,175 0 2,066,321 355,494 11,812,805 189,142 0 0 1,140,133 0 2,273,036 108,667 0 0 54,502 0 794,619 10,517 0 0 39,718 0 163,289 107 16,880 0 23,415 8,880 63,753 40,301 0 0 32,439 0 100,318 9,789 0 0 287,217 0 350,769 0 478,240 15,439 0 473,770 977,586 0 5,218 0 0 1,765 56,407 0 159,261 0 0 102,500 3,926,591 47,327 131,990 0 595,212 131,991 1,183,646 9,210 0 0 51,656 0 2,723,472 0 12,785 0 7,837 0 36,893 415,060 804,374 15,439 2,232,129 718,906 12,650,379 (38,723) (409,199) (15,439) (165,808) (363,412) (837,574) (785) 7,151 2,416 2,102 1,915 199,005 0 41,117 0 0 0 63,486 0 0 0 115 (11,651) 93,419 (785) 48,268 2,416 2,217 (9,736) 355,910 (39,508) (360,931) (13,023) (163,591) (373,148) (481,664) 0 22,500 0 0 115,638 1,159,582 (255) 0 0 (2,142) 0 (222,468) (255) 22,500 0 (2,142) 115,638 937,114 (39,763) (338,431) (13,023) (165,733) (257,510) 455,450 65,015 512,289 112,631 904,953 235,837 17,651,884 25,252$ 173,858$ 99,608$ 739,220$ (21,673)$ 18,107,334$ 101 CITY OF COLLEGE STATION, TEXAS Internal Service Funds Combining Statement of Cash Flows For the Fiscal Year Ended September 30, 2003 Communication Employee Equipment Fleet Print/Mail Services Benefits Replacement Maintenance Services Cash Flows from Operating Activities Cash Received from Customers 626,652$ 4,497,134$ 2,115,381$ 1,382,963$ 376,337$ Cash Payments to Suppliers for Goods and Services (291,068) (4,133,491) 5,272 (750,351) (193,083) Cash Payments to Employees for Services (312,645) 0 0 (624,737) (189,131) Cash Received for Reimbursed Expenses 0 423 21,582 364 0 Cash Received for Miscellaneous Revenues 0 18,806 42,770 781 0 Cash Received from Other Funds 0 (1,418) 69,503 (5,924) 0 Cash Paid to Other Funds (51,419) 0 0 1,186 0 Cash Paid for Miscellaneous Expenses 0 0 (18,713) 0 0 Net Cash Provided (Used) by Operating Activities (28,480) 381,454 2,235,795 4,282 (5,877) Cash Flows from Noncapital Financing Activities: Transfers In from Other Funds 50,800 0 972,144 0 0 Transfers Out to Other Funds (1,363) 0 (216,000) (2,708) (255) Net Cash Provided (Used) by Noncapital Financing Activities 49,437 0 756,144 (2,708) (255) Cash Flows from Capital and Related Financing Activities: Acquisition of Capital Assets (12,524) 0 (2,523,003) 0 (4,628) Proceeds from Sale of Assets 0 0 225,400 0 0 Net Cash Used by Capital and Related Financing Activities:(12,524) 0 (2,297,603) 0 (4,628) Cash Flows from Investing Activities: Purchase of Investments (16,091) (3,495,242) (16,642,349) 0 (11,119) Proceeds from Sale and Maturities of Investment Securities 10,863 3,075,382 15,186,935 0 16,053 Investment Income (1,130) 33,463 168,621 (1,574) (750) Net Cash Provided (Used) by Investing Activities: (6,358) (386,397) (1,286,793) (1,574) 4,184 Net Increase (Decrease) in Cash and Cash Equivalents 2,075 (4,943) (592,457) 0 (6,576) Cash and Cash Equivalents, Oct. 1 0 627,145 3,462,627 0 7,490 Cash and Cash Equivalents, Sept. 30 2,075$ 622,202$ 2,870,170$ -$ 914$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating Income (Loss) (90,450)$ 715,362$ (426,540)$ (43,365)$ (38,723)$ Adjustment to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation 100,012 0 2,538,411 24,183 9,210 Miscellaneous Nonoperating Revenues 0 19,229 64,352 1,145 0 Miscellaneous Nonoperating Expenses 0 0 (18,713) 0 0 Change in Assets and Liabilities: Change in Accounts Receivable 0 1,059 0 2,652 0 Change in Due from Other Funds 0 (1,418) 69,503 (5,924) 0 Change in Inventories 0 0 0 (5,283) (434) Change in Prepaid Costs 0 0 0 0 2,363 Change in Accounts Payable 14,057 (352,778) 8,782 27,309 22,784 Change in Due to Other Funds (51,419) 0 0 1,186 0 Change in Claims Payable 0 0 0 0 0 Change in Accrued Liabilities (1,169) 0 0 (1,332) (66) Change in Accrued Vacation 489 0 0 3,711 (1,011) Total Adjustments 61,970 (333,908) 2,662,335 47,647 32,846 Net Cash Provided (Used) by Operating Activities (28,480)$ 381,454$ 2,235,795$ 4,282$ (5,877)$ 102 Property and Utility Workers' Casualty Unemployment Billing Compensation Total 401,460$ 0$ 2,077,123$ 355,494$ 11,832,544$ (713,413) (20,410) (1,038,331) (604,433) (7,739,308) 0 0 (1,142,852) 0 (2,269,365) 41,117 0 0 0 63,486 0 0 115 0 62,472 0 0 0 0 62,161 0 0 0 0 (50,233) 0 0 (7,837) (11,651) (38,201) (270,836) (20,410) (111,782) (260,590) 1,923,556 22,500 0 0 115,638 1,161,082 0 0 (2,142) 0 (222,468) 22,500 0 (2,142) 115,638 938,614 0 0 (8,945) 0 (2,549,100) 0 0 0 0 225,400 0 0 (8,945) 0 (2,323,700) (848,566) (242,505) (236,920) (389,979) (21,882,771) 912,921 236,076 280,916 435,117 20,154,263 8,786 2,742 2,725 3,017 215,900 73,141 (3,687) 46,721 48,155 (1,512,608) (175,195) (24,097) (76,148) (96,797) (974,138) 297,992 63,408 106,010 150,588 4,715,260 122,797$ 39,311$ 29,862$ 53,791$ 3,741,122$ (409,199)$ (15,439)$ (165,808)$ (363,412)$ (837,574)$ 0 0 51,656 0 2,723,472 41,117 0 115 0 125,958 0 (32,646) (11,651) (63,010) 7,937 0 41,627 0 53,275 0 0 0 0 62,161 0 0 0 0 (5,717) 0 0 0 30,000 32,363 (96,928) (4,971) (811) 3,348 (379,208) 0 0 0 0 (50,233) 186,237 0 0 81,125 267,362 0 0 (267) 0 (2,834) 0 0 (5,648) 0 (2,459) 138,363 (4,971) 54,026 102,822 2,761,130 (270,836)$ (20,410)$ (111,782)$ (260,590)$ 1,923,556$ 103 104 105 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 106 Governmental funds capital assets: Building and Building Improvements 21,905,822$ Improvements 13,658,683 Machinery and Equipment 7,080,970 Infrastructure 69,099,103 Construction in Progress 13,843,104 Land 19,714,327 145,302,009$ Investments in governmental funds capital assets by source: Capital Projects 108,604,464$ General Fund Revenues 6,584,066 Special Revenue Funds 3,980,769 Contributions 26,132,710 145,302,009$ This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. CITY OF COLLEGE STATION, TEXAS CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE As of September 30, 2003 107 City of College Station Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity For the Year Ended September 30, 2003 Improvements Machine/Tool Function and Activity Total Buildings Land Other than Bldg Equipment Infrastructure Development Services: Development Services Administration 18,670$ -$ -$ -$ 18,670$ -$ Engineering 61,420 - - - 61,420 - Planning 40,014 - - - 40,014 - 120,104 - - - 120,104 - Fire: Emergency Medical Services 183,109 - - - 183,109 - Fire Administration 38,307 - - - 38,307 - Fire Prevention 30,876 - - - 30,876 - Fire Suppression 671,459 - - - 671,459 - 923,751 - - - 923,751 - Fiscal Services: Accounting 13,511 - - - 13,511 - Fiscal Administration 40,113 - - - 40,113 - Municipal Court 241,609 - - - 241,609 - Purchasing 5,700 - - - 5,700 - Risk Management - - - - - - 300,933 - - - 300,933 - General Government: Budget/Research 11,085 - - - 11,085 - Community Development 114,315 - 20,840 - 93,475 - City Manager 14,993 - - - 14,993 - City Programs 1,437,504 - 1,437,504 - - - City Secretary 10,324 - - - 10,324 - Economic Development 20,568 - 14,470 - 6,098 - Human Resources 7,452 - - - 7,452 - Legal 9,871 - - - 9,871 - Capital Projects 15,287,007 - 14,786,656 - - 500,351 Public Relations 9,714 - - - 9,714 - 16,922,833 - 16,259,470 - 163,012 500,351 Office of Technology and Information Services: Geographic Information Systems 134,575 - - - 134,575 - Library Services 511,481 - 40,000 - 471,481 - Management Information Systems 1,158,268 - - - 1,158,268 - OTIS Administration 72,208 - - - 72,208 - 1,876,532 - 40,000 - 1,836,532 - Police: Criminal Investigation 67,828 - - - 67,828 - Communications/Jail 87,453 - - - 87,453 - Police Administration 12,973 - - - 12,973 - Professional Standards - - - - - - Quartermaster 3,890 - - - 3,890 - Special Services - - - - - - Technical Services - - - - - - Uniform Patrol 349,991 - - - 349,991 - 522,135 - - - 522,135 - Parks and Recreation: Forestry 67,365 - - - 67,365 - Parks Administration 79,779 - - 36,599 43,180 - Parks Maintenance/Operations 285,627 - - 45,021 240,606 - Capital Projects 14,239,421 707,701 634,579 12,897,141 - - Recreation 42,102 - - - 42,102 - Special Facilities 43,430 - - - 43,430 - 14,757,724 707,701 634,579 12,978,761 436,683 - 108 City of College Station Capital Assets Used in the Operation of Governmental Funds Schedule by Function and Activity For the Year Ended September 30, 2003 Improvements Machine/Tool Function and Activity Total Buildings Land Other than Bldg Equipment Infrastructure Public Works: Drainage Maintenance 20,258 - - - 20,258 - Engineering 71,135 - - - 71,135 - Facilities Maintenance 23,715 5,255 - - 18,460 - Public Works Administration 24,641 - - - 24,641 - Capital Projects 4,657,971 - 857,750 - - 3,800,221 Streets Maintenance 356,325 - - - 356,325 - Traffic Signs/Markings - - - - - - Traffic Signals - - - - - - 5,154,045 5,255 857,750 - 490,819 3,800,221 Other: Non-departmental 90,880,848 21,192,866 1,922,528 679,922 2,287,001 64,798,531 90,880,848 21,192,866 1,922,528 679,922 2,287,001 64,798,531 Construction in Progress 13,843,104 2,766,689 - 543,959 936,476 9,595,980 13,843,104 2,766,689 - 543,959 936,476 9,595,980 Total governmental funds capital assets 145,302,009$ 24,672,511$ 19,714,327$ 14,202,642$ 8,017,446$ 78,695,083$ This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 109 City of College Station Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the Year Ended September 30, 2003 Governmental Funds Governmental Funds Capital Assets Capital Assets Function and Activity 9/30/02 Additions Retirements 9/30/03 Development Services: Development Services Administration 18,670$ -$ -$ 18,670$ Engineering 61,420 - - 61,420 Planning 40,014 - - 40,014 120,104 - - 120,104 Fire: Emergency Medical Services 183,109 - - 183,109 Fire Administration 38,307 - - 38,307 Fire Prevention 30,876 - - 30,876 Fire Suppression 656,557 14,902 - 671,459 908,849 14,902 - 923,751 Fiscal Services: Accounting 13,511 - - 13,511 Fiscal Administration 40,113 - - 40,113 Municipal Court 216,524 25,085 - 241,609 Purchasing 5,700 - - 5,700 Risk Management - - - - 275,848 25,085 - 300,933 General Government: Budget/Research 11,085 - - 11,085 Community Development 93,475 20,840 - 114,315 City Manager 14,993 - - 14,993 City Programs 1,437,504 - - 1,437,504 City Secretary 10,324 - - 10,324 Economic Development 20,568 - - 20,568 Human Resources 7,452 - - 7,452 Legal 9,871 - - 9,871 Capital Projects 14,786,656 500,351 - 15,287,007 Public Relations 9,714 - - 9,714 16,401,642 521,191 - 16,922,833 Office of Technology and Information Services: Geographic Information Systems 134,575 - - 134,575 Library Services 471,481 40,000 - 511,481 Management Information Systems 1,135,993 22,275 - 1,158,268 OTIS Administration 72,208 - - 72,208 1,814,257 62,275 - 1,876,532 Police: Criminal Investigation 60,363 7,465 - 67,828 Communications/Jail 56,242 31,211 - 87,453 Police Administration 12,973 - - 12,973 Professional Standards - - - - Quartermaster 3,890 - - 3,890 Special Services - - - - Technical Services - - - - Uniform Patrol 349,991 - - 349,991 483,459 38,676 - 522,135 110 City of College Station Capital Assets Used in the Operation of Governmental Funds Schedule of Changes by Function and Activity For the Year Ended September 30, 2003 Governmental Funds Governmental Funds Capital Assets Capital Assets Function and Activity 9/30/02 Additions Retirements 9/30/03 Parks and Recreation: Forestry 67,365 - - 67,365 Parks Administration 79,779 - - 79,779 Parks Maintenance/Operations 265,684 19,943 - 285,627 Capital Projects 10,427,686 3,811,735 - 14,239,421 Recreation 42,102 - - 42,102 Special Facilities 43,430 - - 43,430 10,926,046 3,831,678 - 14,757,724 Public Works: Drainage Maintenance 20,258 - - 20,258 Engineering 33,402 37,733 - 71,135 Facilities Maintenance 23,715 - - 23,715 Public Works Administration 24,641 - - 24,641 Capital Projects - 4,657,971 - 4,657,971 Streets Maintenance 356,325 - - 356,325 Traffic Signs/Markings - - - - Traffic Signals - - - - 458,341 4,695,704 - 5,154,045 Other: Non-departmental 80,690,334 10,378,327 (187,813) 90,880,848 80,690,334 10,378,327 (187,813) 90,880,848 Construction in Progress 18,000,215 11,227,758 (15,384,869) 13,843,104 Total governmental funds capital assets 130,079,095$ 30,795,596$ (15,572,682)$ 145,302,009$ This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 111 112 113 Office ofParks Technology and Interest onOtherFiscal General Fiscal Development Public and Information Long-Term Unallocated BusinessYear Government Services Police Fire Services Works Recreation Services Debt Depreciation Electric Water Sewer Types Total2003 7,857,618$ 1,834,859$ 9,374,251$ 7,102,089$ 1,651,761$ 5,242,162$ 6,361,728$ 2,919,155$ 3,643,268$ 2,543,780$ 43,299,695$ 6,283,025$ 7,347,315$ 4,880,746$ 110,341,452$ (1)The City of College Station first applied GASB statement no. 34 in fiscal year 2003; therefore,government wide financial information for years prior to fiscal year 2003 is not available.Source: City of College StationLAST TEN FISCAL YEARS (1)CITY OF COLLEGE STATION, TEXASGOVERNMENT-WIDE EXPENSES BY FUNCTION114 Operating Capital UnrestrictedFiscal Charges for Grants and Grants and InvestmentYear Services Contributions Contributions Taxes Earnings Miscellaneous Total2003 79,586,591$ 1,942,508$ 10,286,807$ 31,277,451$ 2,866,829$ 19,563$ 125,979,749$ (1) The City of College Station first applied GASB statement no. 34 in fiscal year 2003; therefore,government wide financial information for years prior to fiscal year 2003 is not available.Source: City of College StationProgram Revenues General RevenuesCITY OF COLLEGE STATION, TEXASGOVERNMENT-WIDE REVENUESLAST TEN FISCAL YEARS (1)115 Fines, OtherFiscal Licenses & Forfeits Charges for FinancingYear Taxes Permits & Penalties Services Transfers All Other Sources Total1994 14,855,112$ 557,440$ 915,126$ 1,066,268$ 4,407,529$ 760,676$ 2,731,232$ 25,293,383$ 1995 15,983,707 523,725 1,003,547 1,181,703 4,915,000 1,009,282 3,478,224 28,095,188 1996 18,697,853 513,624 1,342,865 1,249,491 5,523,091 962,608 199,300 28,488,832 1997 18,552,416 487,300 1,177,057 1,250,952 5,387,075 1,304,713 6,828,120 34,987,633 1998 20,300,800 577,032 1,233,604 1,368,883 5,396,700 1,324,899 32,375 30,234,293 1999 21,458,761 643,968 1,208,499 1,463,432 5,664,744 1,414,194 22,082 31,875,680 2000 23,304,989 680,776 1,393,505 1,681,877 6,303,785 1,622,967 55,403 35,043,302 2001 24,474,987 779,159 1,796,203 1,892,964 6,895,193 1,750,703 24,329 37,613,538 2002 27,065,526 870,636 2,225,354 2,160,678 7,288,572 1,369,579 30,106 41,010,451 2003 29,157,436 1,012,960 2,654,154 2,403,316 7,700,326 665,420 1,086,874 44,680,486 (1) Revenues presented include the General and Debt Service Fund Source: City of College StationCITY OF COLLEGE STATION, TEXASGENERAL GOVERNMENTAL REVENUES AND OTHER FINANCING SOURCES (1)LAST TEN FISCAL YEARS116 GeneralFiscal Year Property Sales Franchise Mixed Drink Total1994 5,720,627$ 8,671,072$ 358,392$ 105,021$ 14,855,112$ 1995 6,489,976 8,887,016 485,368 121,347 15,983,707 1996 7,216,073 9,468,207 1,876,572 137,001 18,697,853 1997 7,534,910 9,775,888 1,088,349 153,269 18,552,416 1998 7,777,890 10,912,466 1,415,464 194,980 20,300,800 1999 8,272,479 11,489,702 1,523,736 172,844 21,458,761 2000 8,967,583 12,573,564 1,577,815 186,027 23,304,989 2001 9,799,281 12,773,722 1,644,627 257,357 24,474,987 2002 11,716,307 13,400,054 1,714,241 234,924 27,065,526 2003 13,441,000 13,780,639 1,688,947 246,850 29,157,436 Source: City of College StationCITY OF COLLEGE STATIONGENERAL GOVERNMENTAL TAX REVENUES BY SOURCELAST TEN FISCAL YEARS117 General Public Parks and Library Capital Reimbursed All Debt TransfersFiscal Year Government Police Fire Works Recreation Services Outlay Administrative Other Service Out Total1994 5,923,568$ 4,715,064$ 3,454,391$ 2,533,983$ 3,083,389$ 282,255$ 1,120,536$ (2,886,557)$ 251,454$ 3,320,922$ 445,000$ 22,244,005$ 1995 6,832,606 5,041,596 3,827,835 2,428,727 3,629,244 327,393 480,470 (2,966,008) 298,041 7,364,085 (2) 2,438,668 29,702,657 1996 6,669,982 5,357,437 3,887,596 3,554,664 3,820,477 326,310 593,796 (3,371,737) 314,767 5,601,567 80,500 26,835,359 1997 7,005,557 5,860,586 3,898,305 3,142,284 4,146,567 367,545 365,591 (3,240,805) 336,410 4,517,030 6,761,040 33,160,110 1998 6,264,446 6,289,005 4,195,334 3,821,635 4,263,428 546,437 641,779 (3,683,731) 448,263 4,607,064 2,478,117 29,871,777 1999 7,045,038 6,903,838 4,841,832 3,923,009 4,592,990 571,742 659,861 (4,034,541) 344,589 4,997,131 757,030 30,602,519 2000 7,812,664 7,567,620 5,179,104 4,353,073 5,168,231 600,778 397,312 (4,645,701) 544,170 5,582,927 1,115,376 33,675,554 2001 8,783,263 8,273,632 5,702,804 4,583,796 5,185,737 581,768 376,328 (5,287,928) 606,757 7,700,234 767,000 37,273,391 2002 9,731,964 8,914,893 6,405,874 5,211,720 6,045,622 734,083 150,000 (5,823,852) 305,049 9,384,142 480,807 41,540,302 2003 10,052,883 9,143,331 6,989,125 5,292,243 6,279,342 681,350 673,305 (6,013,085) 577,777 9,480,421 1,103,590 44,260,282 (1) Expenditures presented include the General and Debt Service Funds.(2) Includes refunding of $3,460,00 of short term debt.Source: City of College StationCITY OF COLLEGE STATION, TEXASGENERAL GOVERNMENTAL EXPENDITURES AND OTHER USES BY FUNCTION (1)LAST TEN FISCAL YEARS118 OutstandingPercent Delinquent Total Collections as Outstanding Delinquent Taxes asTotal Tax of Levy Tax Total Tax a Percent of Current Delinquent a Percent of CurrentFiscal Year Tax Levy Collections Collected Collections Collections Levy Taxes Levy1994 5,681,754$ 5,591,040$ 98.40% 129,587$ 5,720,627$ 100.68% 282,137 4.97%1995 6,471,493 6,403,250 98.95% 86,727 6,489,977 100.29% 249,879 3.86%1996 7,171,715 7,086,990 98.82% 74,982 7,161,972 99.86% 233,927 3.26%1997 7,506,754 7,433,046 99.02% 60,133 7,493,179 99.82% 215,100 2.87%1998 7,758,131 7,688,127 99.10% 50,005 7,738,132 99.74% 233,548 3.01%1999 8,292,212 8,164,162 98.46% 59,095 8,223,257 99.17% 200,077 2.41%2000 9,068,352 8,866,966 97.78% 47,940 8,914,906 98.31% 134,418 1.48%2001 9,939,852 9,684,038 97.43% 62,887 9,746,925 98.06% 248,883 2.50%2001 11,892,629 11,570,787 97.29% 80,751 11,651,538 97.97% 328,666 2.76%2003 13,010,508 12,595,378 96.81% 236,468 12,831,846 98.63% 331,582 2.55%Source: City Of College StationCITY OF COLLEGE STATIONLAST TEN FISCAL YEARSPROPERTY TAX LEVIES AND COLLECTIONS119 Land and Personal Property Less Exemptions Less TIF (2)Fiscal Year Improvements and Minerals and Abatements Captured Value Total1994 1,145,143,509$ 172,473,765$ 41,945,080$ -$ 1,275,672,194$ 1995 1,315,229,397 183,852,688 44,813,941 - 1,454,268,144 1996 1,500,298,696 158,694,184 47,371,511 - 1,611,621,369 1997 1,699,990,449 235,332,211 234,121,234 5,526,343 1,695,675,083 1998 1,813,136,426 251,996,841 245,085,209 12,889,738 1,807,158,320 1999 1,946,701,852 261,317,181 276,453,209 18,504,453 1,913,061,371 2000 2,134,828,786 285,990,138 308,471,247 37,318,353 2,075,029,324 2001 2,357,679,796 303,435,454 345,752,888 41,698,188 2,273,664,174 2002 2,565,933,396 304,577,588 380,950,901 39,379,860 2,450,180,223 2003 2,843,495,003 308,466,163 428,395,713 48,757,938 2,674,807,515 (1) Assessed Value is 100% of the estimated actual value.(2) Tax Increment Financing District (TIF) Sources: Brazos County Appraisal District 2002 Certified Appraisal RollCITY OF COLLEGE STATION, TEXASASSESSED VALUE OF TAXABLE PROPERTIES (1)LAST TEN FISCAL YEARS120 Fiscal Year (1) City School County Total (3) City School County City School County1994 0.4450$ 1.63$ 0.434$ 2.5090$ 100% 100% 100% 5,681,754$ 23,390,262$ 13,374,336$ 1995 0.4450 1.6100 0.4180 2.4730 100% 100% 100% 6,471,498 26,261,015 14,211,900 1996 0.4450 1.6100 0.4100 2.4650 100% 100% 100% 7,171,715 28,663,937 15,071,727 1997 0.4427 1.6900 0.4180 2.5507 100% 100% 100% 7,506,754 31,524,892 15,968,203 1998 0.4293 1.7400 0.4170 2.5863 100% 100% 100% 7,758,131 33,969,261 17,043,370 1999 0.4293 1.7500 0.4170 2.5963 100% 100% 100% 8,292,212 36,786,152 17,749,813 2000 0.4293 1.7500 0.4170 2.5963 100% 100% 100% 9,068,352 39,822,571 18,917,599 2001 0.4293 1.7500 0.4100 2.5893 100% 100% 100% 9,939,852 44,121,783 20,283,475 2002 0.4777 1.7900 0.4200 2.6877 100% 100% 100% 11,892,630 48,527,735 22,629,312 2003 0.4777 1.7900 0.4146 2.6823 100% 100% 100% 13,010,508 53,294,883 24,066,065 (1) Tax rates are established by each taxing jurisdiction on an annual basis for revenues to be collected in the following fiscal year.(2) The date that taxes are due for all jurisdictions is October 1. Taxes for all jurisdictions become delinquent on February 1. The penalty is set by state law at 6% in February, and an additional 1% per month up to 12%. The interest is accrued at 1% per month.(3) The upper limit of the tax rate is set at $2.50/$100 of assessed value for each jurisdiction by State Statute. This limit is for both operations and debt service combined.Source: Brazos County Appraisal DistrictTax Rates (2)(per $100 of Assessed Value) Tax Ratios Original Tax LeviesCITY OF COLLEGE STATION, TEXASPROPERTY TAX RATES, RATIOS AND LEVIESALL DIRECT AND OVERLAPPING GOVERNMENTSLAST TEN FISCAL YEARS121 Percentage of Total Current Assessments Assessments OutstandingFiscal Year Assessment Collected Collected (%) Assessments1994 -$ 4,779$ 3.34% 138,471$ 1995 - 59,141 42.71% 79,330 1996 - 17,217 21.70% 62,113 1997 - 2,152 3.46% 59,962 1998 - 36,367 60.65% 23,595 1999 - 503 2.13% 23,092 2000 - 1,296 5.31% 21,796 2001 - 350 1.61% 21,446 2002 - - 0.00% 21,796 2003 - - 0.00% 21,796 Source: City of College Station Fiscal Services DepartmentCITY OF COLLEGE STATION, TEXASPAVING ASSESSMENT COLLECTIONSLAST TEN FISCAL YEARS122 The City has no general obligation legal debt limit other than a ceiling on the tax rate as specifiedby the State of Texas. The prescribed maximum is $2.50 per $100 at 100% valuation. CITY OF COLLEGE STATION, TEXASCOMPUTATION OF LEGAL DEBT MARGINSeptember 30, 2003123 Ratio of NetEstimated Assessed Gross Less Debt Service Net Net Bonded Debt Bonded DebtFiscal Year Population Value Bonded Debt Cash Funds Bonded Debt To Assessed Valuation Per Capita1994 56,374 (1) 1,275,672,194$ 17,028,340$ 1,364,212$ 15,664,128$ 1.23 2781995 58,627 (1) 1,454,268,144 25,722,210 1,845,774 23,876,436 1.64 4071996 60,040 (1) 1,611,621,369 22,263,475 1,189,570 21,073,905 1.31 3511997 61,525 (1) 1,695,675,083 25,388,915 1,947,403 23,441,512 1.38 3811998 63,130 (1) 1,807,158,320 28,960,000 2,826,148 26,133,852 1.45 4141999 66,200 (1) 1,913,061,371 32,750,000 3,472,280 29,277,720 1.53 4422000 68,038 (2) 2,075,029,324 38,700,000 4,202,042 34,497,958 1.66 5072001 70,308 (1) 2,273,664,174 39,375,000 1,722,254 37,652,746 1.66 5362002 72,500 (1) 2,450,180,223 41,665,000 1,287,038 40,377,962 1.65 5572003 75,763 (1) 2,674,807,515 43,170,000 659,180 42,510,820 1.59 561Source:(1) Metropolitan Planning Organization & City of College Station Planning Division(2) U.S. Government Preliminary GuideCITY OF COLLEGE STATION, TEXASRATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUEAND NET BONDED DEBT PER CAPITALAST TEN FISCAL YEARS124 Per Taxing Body Amount As Of Percent Amount Capita *ESTIMATED OVERLAPPING DEBTCollege Station I.S.D. (1) 57,188,480$ 8/31/2003 83.48% 47,740,943$ 630$ Brazos County (2) 25,897,123$ 9/30/2003 46.80% 12,119,854 160 Bryan I.S.D (3) 67,256,468$ 9/1/2003 5.17% 3,477,159 46 63,337,956$ 836$ NET BONDED DEBTCity of College Station (4) 75,695,000$ 9/30/2003 100.00% 75,695,000 999 NET BONDED AND ESTIMATED OVERLAPPING DEBT 139,032,956$ 1,835$ *Population: 75,763Source:(1) College Station Independent School District(2) Brazos County Auditor(3) Bryan Independent School District(4) City of College Station Finance DepartmentCITY OF COLLEGE STATION, TEXASSCHEDULE OF DIRECT AND ESTIMATED OVERLAPPING DEBTSEPTEMBER 30, 2003Net Debt City's Share 125 Total GeneralInterest, Fiscal Governmentaland Other Total Debt ExpendituresFiscal Year Principal Charges Service and Other Uses Ratio1994 2,066,045$ 1,254,877$ 3,320,922$ 22,244,005$ 14.93%1995 5,796,130 (1) 1,519,907 7,316,037 29,702,657 24.63%1996 3,938,735 1,660,441 5,599,176 26,835,359 20.86%1997 2,694,075 1,738,745 4,432,820 33,160,109 13.37%1998 3,113,915 1,483,793 4,597,708 29,871,777 15.39%1999 2,845,000 2,141,792 4,986,792 30,602,519 16.30%2000 3,460,000 2,122,927 5,582,927 33,675,554 16.58%2001 4,475,000 3,222,734 7,697,734 37,273,391 20.65%2002 5,950,000 3,434,142 9,384,142 41,540,302 22.59%2003 5,820,000 3,660,028 9,480,028 44,260,282 21.42%(1) Includes refunding of $3,460,000 of short term debt.Source: City of College StationLAST TEN FISCAL YEARSCITY OF COLLEGE STATION, TEXASRATIO OF ANNUAL DEBT SERVICE EXPENDITURESFOR GENERAL OBLIGATION DEBTTO TOTAL GENERAL GOVERNMENTAL EXPENDITURES AND OTHER USES126 OperatingExpensesOperating (Excluding Net Average Annual Maximum AnnualFiscal Year Revenues Depreciation) Revenues Total Coverage Total Coverage1994 (1)48,291,091$ 36,190,720$ 12,100,371$ 1,553,305$ 7.79 4,176,525$ 2.901995 47,365,953 34,682,369 12,683,584 2,819,408 4.50 6,099,551 2.081996 (2)45,380,036 32,395,644 12,984,392 2,655,401 4.89 6,089,271 2.131997 48,615,366 29,608,260 19,007,106 2,968,110 6.40 6,388,449 2.981998 49,966,216 27,885,854 22,080,362 3,014,943 7.32 5,906,739 3.741999 49,101,104 30,080,145 19,020,959 2,844,899 6.69 5,502,384 3.462000 52,932,584 41,925,412 11,007,172 3,472,421 3.17 5,687,161 1.942001 59,143,896 45,465,778 13,687,118 4,688,518 2.92 6,395,244 2.142002 62,141,066 46,274,555 15,866,511 5,825,064 2.72 8,048,707 1.972003 64,046,246 47,785,550 16,260,696 5,773,582 2.81 8,084,285 2.01(1) In Fiscal Year 1994, the Utility Billing Fund was combined with the Electric Fund for reporting purposes.(2) In Fiscal Year 1996, the Utility Billing Fund was reported separately as an Internal Service Fund.Source: City of College StationCITY OF COLLEGE STATION, TEXASUTILITY FUNDSSCHEDULE OF REVENUE BOND COVERAGELAST TEN FISCAL YEARS127 Number Number Numberof of of Fiscal Year Permits Value Permits Value Permits Value1994 583 64,673,810$ 225 20,505,039$ 808 85,178,849$ 1995 634 28,514,709 102 38,130,694 736 66,645,403 1996 656 48,953,298 131 14,432,979 787 63,386,277 1997 590 53,435,022 212 47,682,555 802 101,117,577 1998 655 69,831,880 150 57,439,865 805 127,271,745 1999 1,020 87,917,466 138 26,665,024 1,158 114,582,490 2000 639 85,278,855 162 46,094,230 801 131,373,085 2001 782 79,340,756 191 40,194,722 973 119,535,478 2002 776 58,965,494 177 27,658,030 953 86,623,524 2003 658 96,990,934 106 36,366,447 764 133,357,381 Source: City of College Station Development ServicesResidential Commercial TotalCITY OF COLLEGE STATION, TEXASCONSTRUCTION PERMITSLAST TEN CALENDAR YEARS128 Percent of Total2003 Assessed AssessedTaxpayer Type of Business Valuation ValuationCB&L Associates Retail Mall 49,331,205 1.84%Verizon Communications, Inc Utility 34,347,890 1.28%Alkosser/Weinberg Housing 33,751,295 1.26%College Station Hospital, LP Medical 25,681,960 0.96%Wal-Mart's/Sam's Retail 23,769,510 0.89%Melrose Apartments Housing 19,400,000 0.73%Fairfield College Station, LP Housing 18,340,000 0.69%301 Church Avenue, LP Housing 17,936,445 0.67%HE Butt Store Property Co. Grocery 17,615,105 0.66%University Commons Housing 17,279,200 0.65%257,452,610 9.63% Source: Brazos County Appraisal DistrictCITY OF COLLEGE STATION, TEXASPRINCIPAL TAXPAYERSSEPTEMBER 30, 2003129 FY2003 Total Percent of Utility KWH KWHCustomer Type of Business Consumption ConsumedCity of College Station Municipality 20,381,634 2.94%CSISD Schools 16,507,466 2.38%CBL & Associates Retail Mall 14,058,351 2.03%Wal-Mart Retail 7,688,880 1.11%Kroger Retail Grocery 7,040,960 1.02%State Headquarters/TAMU University 6,349,360 0.92%College Station Medical Ctr Hospital 5,888,480 0.85%US Dept of Agr Government 5,338,003 0.77%Lane C/S Ltd. Hotel 5,155,500 0.74%HEB Retail Grocery 5,033,160 0.73%TOTAL 93,441,794 13.48%Total KWH Consumption for the period October 1, 2002 to September 30, 2003 was693,287,482Source: City of College Station Utility Billing Division CITY OF COLLEGE STATION, TEXASPRINCIPAL UTILITY CUSTOMERSSEPTEMBER 30, 2003130 Self InsuredInsurance Company Coverage Retention LimitsState National Insurance Co Worker Compensation 250,000$ StatutoryState National Insurance Co General Liability $250,000 per occurrence $5,000,000 per occurrenceLaw Enforcement Liability$15,000,000 annual aggregateState National Insurance Co Errors & Omissions Liability $250,000 per wrongful act $5,000,000 per wrong act$15,000,000 annual aggregateState National Insurance Co Automobile Liability $250,000 per occurrence $5,000,000 per occurrenceTexas Municipal League Catastrophe Coverage 100,000$ 15,000,000$ Texas Municipal League Real & Personal Property $100,000 per occurrence Replacement cost/$129,140,235annual aggregateTexas Municipal League Mobile Equipment $100,000 per occurrence Actual cash value $5,095,324annual aggregateTexas Municipal League Boiler & Machinery $100,000 per accident $5,000,000 per accidentTexas Municipal League Public Employee Dishonesty $100,000 per occurrence $300,000 annual limitTexas Municipal League Forgery or Alteration $100,000 per occurrence $300,000 annual limitTexas Municipal League Theft, Disappearance & Destruction $100,000 per occurrence $300,000 annual limitTexas Municipal League Computer Fraud $100,000 per occurrence $100,000 annual limitCITY OF COLLEGE STATIONSUMMARY OF INSURANCE COVERAGESeptember 30, 2003131 Date Incorporated October 1938Date first charter adopted October 1938Date present charter amended May 1992Form of government Council-ManagerArea in square miles:Year Square Miles1938 1.51948 4.21958 7.31968 17.31978 22.61982 23.81986 26.71988 27.71992 28.11994 30.01996 38.21998 40.8Miles of streets Paved 733 Lane MilesUnpaved 4.3 Lane MilesMiles of sidewalks 89 MilesFire Protection:Number of stations 4Number of full-time employees 103Police Protection:Number of employees (sworn) 100Number of employees (civilian) 43Number of patrol units 25One jail facility with a capacity of 17MISCELLANEOUS STATISTICAL AND DEMOGRAPHIC DATASEPTEMBER 30, 2003CITY OF COLLEGE STATION, TEXAS132 RECREATION:Number of playgrounds 35 Number of gyms 1Number of basketball courts 22 Number of volleyball courts 7Number of soccer fields 19 Number of nature trails 8Number of softball/baseball fields 19 Number of open play areas 29Number of tennis courts 14 Number of picnic pavilions 6Number of picnic shelters 19 Number of jogging/walking trails 22Number of swimming pools 3PARKS:Facility Acres Facility AcresAnderson 8.90 Merry Oaks 4.60Arboretum/Bee Creek 43.50 Oaks 7.50Bill Madeley 5.14 Parkway 1.90Brison 9.20 Pebble Creek 10.20Brother's Pond 16.12 Raintree 13.00Castlegate 8.26 Richard Carter 7.14Central 47.20 Sandstone 15.21Conference Center 2.30 Shenandoah 14.77Cy Miller 2.50 Southeast Park 62.00Eastgate 1.80 Southwest Park Site 4.78Edelweiss 12.30 Southwood Complex 44.70Edelweiss Gardens 7.74 Steeplechase Park Site 9.00Emerald Forest 4.59 Thomas 16.10Gabbard 10.70 University Park Site 10.20Georgia K. Fitch 11.30 Veterans Athletic 150.00Hensel-TAMU 29.70 W.A. Tarrow (includes Lincoln) 21.26Jack and Dorothy Miller 10.00 Westfield 4.29Lemon Tree 15.40 Windwood 1.37Lick Creek 515.50 Wolfpen Creek 19.49Lion's 1.50 Woodcreek 6.60Longmire 4.16 Woodland Hills 13.91Luther Jones 1.80 Woodway Park Site 6.26TOTAL ACREAGE1,213.89CITY OF COLLEGE STATION, TEXASMISCELLANEOUS STATISTICAL AND DEMOGRAPHIC DATASEPTEMBER 30, 2003(Continued)133 UTILITY FUNDS:Electric Customers (Connections)35,421 Average Electrical Consumption: 54,820,470 KWH/MonthWater Customers (Connections)29,358 Average Water Consumption: 253,259 MGW/MonthNumber of Employees:Electric59Water28Sewer36Water Capacity:Number of Wells6Combined Capacity of Wells 26 million gallons per dayNumber of Ground Storage Tanks, 2 One 3-million gallon, One 5-million gallonNumber of Elevated Storage Tanks, 2 One 3-million gallon, One 2-million gallonMiles of Water Lines311 milesElectric Capacity:Maximum Capacity 255 megawattsAnnual Peak Demand 163 megawattsNumber of Substations4Miles of Distribution Lines 414 milesMiles of Sewer Lines262 milesSolid Waste Collection Fund:Number of Users (Units) 28,215 Methodology Curbside pickup using automated containersCITY OF COLLEGE STATION, TEXASMISCELLANEOUS STATISTICAL AND DEMOGRAPHIC DATASEPTEMBER 30, 2003(Continued)134 Education:Attendance centers 11 Number of classrooms 550 Number of teachers 600 Number of students 7,683 Elections:Number of registered voters:Last general election (Brazos County) 86,558 Last municipal election 43,313 Number of votes cast in:Last general election (Brazos County) 6,449 Last municipal election 1,878 Percentage of registered voters voting in:Last general election (Brazos County) 7.45%Last municipal election 4.34%Population:Estimate Census Count2000 68,038 1990 52,456 1980 37,296 1970 17,676 1960 1,196 1950 7,925 Source: City of College StationCITY OF COLLEGE STATION, TEXASMISCELLANEOUS STATISTICAL AND DEMOGRAPHIC DATASEPTEMBER 30, 2003(Continued)135 Year University Enrollment1994 42,0181995 41,7901996 41,8921997 41,4611998 43,3891999 43,4422000 44,0262001 44,6182002 45,1432003 44,813Source: TAMU, Office of Institutional Studies And PlanningTotal Number Number PercentYear Labor Force Employed Unemployed Unemployed1994 27,312 26,546 766 2.81995 27,430 26,561 869 3.21996 26,691 25,973 718 2.71997 28,453 27,862 591 2.11998 28,889 28,377 512 1.81999 30,793 30,246 547 1.82000 31,273 30,802 471 1.52001 30,572 30,020 552 1.82002 29,734 29,105 629 2.12003 33,975 33,160 815 2.4Source: Texas Workforce Commission (Austin, Texas)PRIMARY LABOR FORCE FOR COLLEGE STATIONCITY OF COLLEGE STATION, TEXASMISCELLANEOUS STATISTICAL AND DEMOGRAPHIC DATASEPTEMBER 30, 2003(Continued)ACTUAL TEXAS A&M UNIVERSITY ENROLLMENTBY FALL SEMESTERS136