TOWN OF SOUTH PALM BEACH, FLORIDA

Transcription

1 COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2009 PREPARED BY FINANCE DEPARTMENT

2 TABLE OF CONTENTS Introductory Section Letter of Transmittal... i-iv Organizational Chart...v Certificate of Achievement for Excellence in Financial Reporting... vi Financial Section Independent Auditor s Report Management s Discussion and Analysis (Required Supplementary Information) Basic Financial Statements Government-wide Financial Statements Statement of Net Assets...13 Statement of Activities...14 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet...15 Statement of Revenues, Expenditures and Changes in Fund Balance...16 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of the Governmental Fund to the Statement of Activities...17 Proprietary Fund Financial Statements Statement of Net Assets...18 Statement of Revenues, Expenses and Changes in Net Assets...19 Statement of Cash Flows...20 Notes to Basic Financial Statements Required Supplementary Information (Other than MD&A) Budgetary Comparison Schedule General Fund...34 Note to Budgetary Comparison Schedule...35

3 TABLE OF CONTENTS Statistical Section Net Assets by Component...36 Changes in Net Assets...37 Fund Balances of Governmental Funds...38 Changes in Fund Balances of Governmental Funds...39 General Governmental Tax Revenues by Source...40 Net Assessed Value and Estimated Actual Value of Taxable Property...41 Property Tax Rates Direct and Overlapping Governments...42 Principal Property Taxpayers...43 Property Tax Levies and Collections...44 Ratios of Outstanding Debt by Type...45 Ratios of General Bonded Debt Outstanding...46 Direct and Overlapping Governmental Activities Debt...47 Pledged Revenue Coverage...48 Demographic and Economic Statistics...49 Principal Employers...50 Full-Time Equivalent Town Government Employees by Function...51 Operating Indicators by Function/Program...52 Capital Asset Statistics by Function/Program...53 Compliance Section Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Management Letter in Accordance with the Rules of the Auditor General of the State of Florida

4 INTRODUCTORY SECTION 1

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9 ORGANIZATION CHART SEPTEMBER 30, 2009 Residents of South Palm Beach Town Council Architectural Review Board Code Enforcement Board Board of Adjustment Community Affairs Advisory Board Planning Board Town Attorney Town Manager Department of Building, Zoning & Planning Police Department Finance and Administration Public Works v

10 CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING vi

11 FINANCIAL SECTION

12 INDEPENDENT AUDITORS REPORT

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15 MANAGEMENT S DISCUSSION AND ANALYSIS (MD&A)

16 MANAGEMENT S DISCUSSION AND ANALYSIS As management of the Town of South Palm Beach, we offer readers of the Town of South Palm Beach s (the Town) financial statements this narrative overview and analysis of the financial activities of the Town of South Palm Beach for the fiscal year ended September 30, Financial Highlights The assets of the Town of South Palm Beach exceeded its liabilities at the close of the most recent fiscal year by $3,964,747 (net assets). The Town s total net assets increased by $34,716. This increase is attributable to excess revenues over expenses for As of the close of the current fiscal year, the Town of South Palm Beach s governmental fund reported an ending fund balance of $1,977,067. The Town did not incur any debt during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Town of South Palm Beach s basic financial statements. The Town of South Palm Beach s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Town of South Palm Beach s finances, in a manner similar to a private sector business. The statement of net assets presents information on all of the Town of South Palm Beach 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 the financial position of the Town of South Palm Beach is improving or deteriorating. The statement of activities presents information showing how the government 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 periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the Town of South Palm Beach 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 Town of South Palm Beach include general government, public safety and code enforcement. The government-wide financial statements include only the Town of South Palm Beach itself (known as the primary government). -3-

17 The government-wide financial statements can be found on pages 13 and 14 of this report. 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 Town of South Palm Beach, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Town of South Palm Beach has two fund categories: the governmental fund and the enterprise fund. 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 statement 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 evaluating a government s near-term financing requirements. 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. The Town of South Palm Beach maintains one governmental fund, the general fund. The Town of South Palm Beach adopts an annual appropriated budget for this fund. A budgetary Comparison schedule has been provided for this fund to demonstrate compliance with the budget. The basic governmental fund financial statements can be found on pages 15 to 17 of this report. Proprietary Funds. The Town maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The Town uses enterprise funds to account for its Sewer Utility operations. Notes to the basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 21 to 32 of this report. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government s financial position. In the case of the Town s, assets exceeded liabilities by $3,964,747 at the close of the most recent fiscal year. The portion of the Town, net assets, $1,559,393, that reflects its investment in capital assets (e.g., land and equipment). The Town of South Palm Beach uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Further details on the Town s capital assets are disclosed in Note 6 to the financial statements found on pages 28 to 29 of this report. Our analysis of the financial statements of the Town begins on the next page. The Summary of Net Assets and the Summary of Changes in Net Assets, report information about the Town s -4-

18 activities that will help answer questions about the position of the Town. A comparative analysis is provided with prior year information. Net Assets A Summary of the Town s Net Assets is presented in Table A-1 and a Summary of Changes in Net Assets is presented in Table A-2. There are six basic transactions that affect the comparability of the Statement of Net Assets summary presentation as reflected below: 1. Net results of activities will impact (increase or decrease) current assets and unrestricted and/or restricted assets. 2. Borrowing for capital will increase current assets and long-term debt. 3. Spending borrowed proceeds on new capital will reduce current assets and increase capital assets. There is a second impact, an increase in investment in capital assets and an increase in related debt, which will not change the investment in capital assets, net of debt. 4. Spending of non-borrowed current assets on new capital will reduce current assets and increase capital assets and will also reduce unrestricted net assets and increase investment in capital assets, net of debt. 5. Principal payment on debt will reduce current assets and reduce long-term debt and also reduce unrestricted net assets and increase investments in capital assets, net of debt. 6. Reduction of capital assets through depreciation will reduce capital assets and investment in capital assets, net of debt. As illustrated in Table A-1, at the close of the most recent fiscal year, assets of the Town of South Palm Beach exceeded its liabilities by $3,930,031. The largest portion of the Town of South Palm Beach s assets, $2,405,354 or 61%, is unrestricted assets, which represent the resources that are available to provide services and/or additional capital assets to the citizens of the Town and also meet the Town s obligations to its creditors. The balance of net assets in the amount of $1,559,393 or 39% is composed of investments in capital assets (land, buildings, etc.). The Town uses these capital assets to provide services to its citizens and consequently these assets are not available for future spending. At the end of its most recent fiscal year, the Town of South Palm Beach is able to report positive balances in the two categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The Town s total net assets increased by $34,716 in comparison to the prior year. Generally, the following impacts can significantly affect annual revenues and by extension change net assets: -5-

19 1. Economic conditions can reflect a growing, stable or declining overall economic environment and those conditions can have a significant impact on property, non-ad valorem assessments, sales and use taxes, fees and other revenues derived from the community as well as received from other governments, 2. Changes in tax, assessment and fee rates by elected officials directly affect the revenue streams and have the most direct and immediate impact of all changes. 3. Changing patterns in intergovernmental and grant revenues cause measurable deviations and make annual comparisons less than always meaningful. 4. Market impact on investment income might cause investment revenues to fluctuate widely from year to year. Some other basic impacts are responsible for changes in annual expenditures: 1. Introduction of new programs can have substantial impact on department/program expenditures by requiring new personnel, capital and operating funds. 2. Changes in service levels impacts expenditures by changing the levels of already appropriated expenditures. 3. Salary/contract pricing increases can be a factor contributing to the increase in appropriations. Most contracts entered into by the Town of South Palm Beach have provisions for increases, either automatic or negotiated each year. 4. While inflation generally appears to be at moderate levels, it still always impacts the prices the Town pays for commodities, supplies, fuels, parts and miscellaneous services it requires through the year. It is not uncommon that such goods may increase in price impacting expenditures. Governmental Activities: Governmental activities increased the Town s net assets by $8,738, thereby accounting for 25% of the total growth in the net assets of the Town. Key elements of this increase are as follows: -6-

20 Table A-2 Town of South Palm Beach Changes in Net Assets Business-type Government Activities Activities Total Revenues: Program revenues: Charges for services $ - $ 242,705 $ - $ 273,441 $ - $ 516,146 Operating grants - 1, ,543 Capital grants General revenues: Property taxes - 2,458, ,458,131 Other taxes - 258, ,689 Franchise taxes - 115, ,987 Intergovernmental - 150, ,175 Investment income - 53,869-16,435-70,304 Miscellaneous - 11, ,968 Total revenues - 3,293, ,876-3,582,943 Expenses: General government - 591, ,159 Public safety - 2,327, ,327,895 Public works - 109, ,131 Culture and recreation - 51, ,279 Utilities , ,070 Total expenses - 3,079, ,070-3,256,534 Increase in net assets - 213, , ,409 Net assets, beginning - 2,570,909-1,032,713-3,603,622 Net assets, ending $ - $ 2,784,512 $ - $ 1,145,519 $ - $ 3,930,031 As illustrated by Table A-2, Changes in Net Assets, the Town s revenues during Fiscal Year 2009 reached $3,028,028 and exceeded expenditures after transfers by $8,738. Property Tax Revenues decreased by $92,284 or 4% due to lower assessed valuations on real property located in the Town. Interest on investments decreased by $48,290 or 50% due an unrealized loss of investments with the State Board of Administration. -7-

21 Program Revenues and Expenses Governmental Activities -8-

22 Revenues by Source Governmental Activities Financial Analysis of the Government s Funds As noted earlier, the Town of South Palm Beach uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the Town of South Palm Beach s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town 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. At the end of the current fiscal year, fund balance of the general fund was $1,977,067. Fund balance is reserved for prepaid expenses in the amount of $28,124 and the remainder in the amount of $1,948,943 is available for appropriations. The general fund is the chief operating fund of the Town of South Palm Beach. As a measure of the general fund s liquidity, it may be useful to compare unreserved fund balance and total fund balance to total fund expenditures. Total fund balance represents 61 percent of total general fund expenditures. A summary of the general fund s condensed balance sheet and statement of revenues, expenditures and changes in fund balance is presented in Table B-1 and B-2 for September 30, 2008 and 2009 is shown below: -9-

23 Table B-1 Fiscal Year Total assets $ - $ 1,963,432 Total liabilities $ - $ 109,370 Total fund balance - 1,854,062 Total liabilities and fund balance $ - $ 1,963,432 Table B-2 Fiscal Year Total revenues $ - $ 3,228,533 Total expenditures - 3,040,799 Excess of revenues over expenditures $ - $ 187,734 Governmental activities. Governmental activities increased the Town of South Palm Beach fund balance by approximately $123,005 Key elements of this increase are as follows: Property taxes amounted to $2,365,847 Franchise Fees amounted to $115,097 Utility Taxes amounted to $244,811 Intergovernmental Revenue amounted to $150,313 Charges for services amounted to $38,424 For the most part, increases in expenses closely paralleled inflation and growth in the scope of services. For more detailed information on long term debt activity, and capital asset activity, please refer to the notes to the financial statements. Fund Budgetary Highlights The original budget was not amended. There were no supplemental appropriations for the fiscal year ended September 30, There were no significant variances between the adopted budget and the actual results. Business-type Activities Business-type activities increased the Town s net assets by $25,978 accounting for 75 percent of the total increase in the Town s net assets. The Sewer Enterprise Fund reflected net income of $35,128 including depreciation expense in the amount of $39,

24 Capital Assets As of September 30, 2009, the Town s net investment in capital assets amounted to $1,559,393. The current year increases in capital assets included the purchase of furniture and equipment and improvements to the buildings. Additional information on the Town s capital assets can be found in Note 6 beginning on page 28 of this report. Economic Factors and Next Year s Budgets and Rates The unemployment rate for Palm Beach County is currently percent, which is an increase from a rate of 4.1 percent a year ago. This compares favorably to the state s average unemployment rate of percent and to the national average rate of percent. -11-

25 The government does not have a central business district. It is 100% residential. Inflationary trends in the region compare favorably to national indices. All of these factors were considered in preparing the Town of South Palm Beach s budget for the 2010 fiscal year. Requests for Information This financial report is designed to provide a general overview of the Town of South Palm Beach s finances for all those with an interest in the government s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Town Manager, 3577 South Ocean Boulevard, South Palm Beach, Florida

26 BASIC FINANCIAL STATEMENTS

27 STATEMENT OF NET ASSETS SEPTEMBER 30, 2009 Business- Governmental type Activities Activities Totals Assets Cash and cash equivalents $ 1,359,779 $ 465,777 $ 1,825,556 Investments 621, , ,084 Accounts receivable 56,422-56,422 Prepaid items 28,124-28,124 Due from other governments 24,572-24,572 Capital assets not being depreciated 108, ,396 Capital assets being depreciated, net 843, ,826 1,450,997 Total assets 3,041,492 1,286,659 4,328,151 Liabilities Accounts payable and accrued liabilities 87, , ,148 Deferred revenue Noncurrent liabilities: Due within ihi one year 15,996-15,996 Due in more than one year 143, ,960 Total liabilities 248, , ,404 Net assets Invested in capital assets 951, ,826 1,559,393 Unrestricted 1,841, ,671 2,405,354 $ 2,793,250 $ 1,171,497 $ 3,964,747 See notes to basic financial statements. 13

28 STATEMENT OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2009 Net (Expense) Revenue and Program Revenues Changes in Net Assets Charges Operating Capital Businessfor Grants and Grants and Governmental type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental activities General government $ 606,493 $ 153,715 $ - $ - $ (452,778) $ - $ (452,778) Public safety 2,265,320 27,502 13,982 - (2,223,836) - (2,223,836) Physical environment 106, (106,685) - (106,685) Culture and recreation 40, (40,792) - (40,792) Total governmental activities 3,019, ,217 13,982 - (2,824,091) - (2,824,091) Business-type activities Sewer 252, , ,128 35,128 Total business-type activities 252, , ,128 35,128 Total $ 3,271,619 $ 468,674 $ 13,982 $ - (2,824,091) 35,128 (2,788,963) General revenues: Property taxes 2,365,847-2,365,847 Utility taxes 204, ,849 Franchise fees based on gross receipts 115, ,097 Sales and use tax 103, ,718 State revenue sharing - unrestricted 32,613-32,613 Investment loss (5,579) (9,150) (14,729) Miscellaneous 16,284-16,284 Total general revenues 2,832,829 (9,150) 2,823,679 Change in net assets 8,738 25,978 34,716 Net assets, beginning 2,784,512 1,145,519 3,930,031 Net assets, ending $ 2,793,250 $ 1,171,497 $ 3,964,747 See notes to basic financial statements. 14

29 BALANCE SHEET GOVERNMENTAL FUND SEPTEMBER 30, 2009 General Fund Assets Cash and cash equivalents $ 1,359,779 Investments 621,028 Accounts receivable 56,422 Due from other governments 24,572 Prepaid items 28,124 Total assets $ 2,089,925 Liabilities and Fund Balance Liabilities Accounts payable 87,986 Deferred revenue 300 Unearned revenue 24,572 Total liabilities 112,858 Fund balance Reserved for prepaid items 28,124 Unreserved, undesignated 1,948,943 Total fund balance 1,977,067 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 951,567 Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the governmental funds Communications service tax revenues 24,572 Long-term liabilities are not due and payable in the current period and therefore not reported in the funds (159,956) Net assets of governmental activities $ 2,793,250 See notes to basic financial statements. 15

30 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 2009 General Fund Revenues Property taxes $ 2,365,847 Utility taxes 244,811 Franchise fees 115,097 Licenses and permits 115,291 Intergovernmental 150,313 Charges for services 38,424 Fines and forfeitures 27,502 Interest and other 10,705 Total revenues 3,067,990 Expenditures Current General government 565,341 Public safety 2,217,461 Physical environment 86,482 Culture and recreation 40,792 Capital outlay 34,909 Total expenditures 2,944,985 Net change in fund balance 123,005 Fund balance - beginning 1,854,062 Fund balance - ending $ 1,977,067 See notes to basic financial statements. 16

31 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF THE GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2009 Amounts reported for governmental activities in the statement of activities (Page 14) are different because: Net change in fund balance (Page 16) $ 123,005 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. Expenditures for capital assets $ 14,706 Less current year depreciation (66,348) (51,642) Some revenues, expenses, gains and losses reported in the statement of activities are not reported in the governmental funds because they have no effect on current financial resources. Communications service tax revenues (39,962) 962) Some expenses reported in the statement of activities do not require current financial resources and, therefore, are not reported as expenditures in governmental funds. The details of the difference is: Compensated absences (22,663) Change in net assets of governmental activities (Page 14) $ 8,738 See notes to basic financial statements. 17

32 STATEMENT OF NET ASSETS PROPRIETARY FUND SEPTEMBER 30, 2009 Business-type Activities Enterprise Fund Sewer Assets Current assets Cash and cash equivalents $ 465,777 Investments 213,056 Total current assets 678,833 Noncurrent assets Capital assets, net of accumulated depreciation 607,826 Total assets 1,286,659 Liabilities Current liabilities Accounts payable 115,162 Total liabilities 115,162 Net assets Invested in capital assets 607,826 Unrestricted 563,671 Total net assets $ 1,171,497 See notes to basic financial statements. 18

33 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUND FISCAL YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Enterprise Fund Sewer Operating revenues Charges for services $ 287,457 Operating expenses Purchased services 144,207 Repairs and maintenance 67,771 General and administrative 680 Depreciation 39,671 Total operating expenses 252,329 Operating income 35,128 Non-operating expense Investment loss (9,150) Change in net assets 25,978 Net assets - beginning 1,145,519 Net assets - ending $ 1,171,497 See notes to basic financial statements. 19

34 STATEMENT OF CASH FLOWS PROPRIETARY FUND FISCAL YEAR ENDED SEPTEMBER 30, 2009 Business-type Activities Enterprise Fund Sewer Cash flows from operating activities Receipts from customers and users $ 287,457 Payments to suppliers (114,176) Net cash provided by operating activities 173,281 Cash flows from noncapital financing activities Due to other funds (14,619) Net cash used in noncapital financing activities (14,619) Cash flows from capital and related financing activities Purchases of capital assets (189,226) Net cash used in capital and related financing activities (189,226) Cash flows from investing activities Purhases of investments (192,770) Interest received 2,322 Net cash used in investing activities (190,448) Net decrease in cash and cash equivalents (221,012) Cash and cash equivalents - beginning 686,789 Cash and cash equivalents - ending $ 465,777 Reconciliation of operating income to net cash provided by operating activities Operating income $ 35,128 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 39,671 Changes in operating assets and liabilities: Increase in accounts payable 98,482 Total adjustments 138,153 Net cash provided by operating activities $ 173,281 See notes to basic financial statements. 20

35 NOTES TO BASIC FINANCIAL STATEMENTS

36 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of South Palm Beach, Florida (the Town) is a municipal corporation organized pursuant to Chapter 31276, Laws of Florida, The Town operates under the Council- Manager form of government. The Town s major operations include general government, public safety, physical environment, culture and recreation and sewer services. The basic financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the Town s more significant policies: A. FINANCIAL REPORTING ENTITY The financial statements were prepared in accordance with government accounting standards which establishes standards for defining and reporting on the financial reporting entity. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. The Town is financially accountable for a component unit if it appoints a voting majority of the organization s governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the Town. Based upon the application of these criteria, there were no organizations that met the criteria described above. 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 non-fiduciary activities of the Town. 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. 21

37 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED) The statement of activities demonstrates the degree to which the direct expenses of a given function 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 the governmental fund and proprietary fund. 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 imposed by the provider 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 as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Property taxes, franchise fees and other taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Revenues for expenditure driven grants are recognized when the qualifying expenditures are incurred. All other revenue items are considered to be measurable and available only when cash is received by the Town. 22

38 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (CONTINUED) The Town reports the following major governmental fund: The general fund is the Town s primary operating fund and its only governmental fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Town reports the following major proprietary fund in the basic financial statements: The Town has established the Sewer Fund as its only proprietary fund to account for the billing and collection of fees for sewer services provided by the Town. 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. The Town has the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Town has elected not to follow subsequent privatesector guidance. As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the Town s various utility functions and various other functions of the Town. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. The proprietary fund distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the Town s Sewer fund are charges to customers for services. Operating expenses for enterprise funds include the costs 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 an expense is incurred for purposes for which both unrestricted and restricted net assets are available, it is the Town s policy to first apply restricted resources. 23

39 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY 1. Deposits and Investments The Town s deposits include cash on hand and certificates of deposit. Cash and cash equivalents include cash on hand and investments with the Florida PRIME (formerly known as the Local Government Surplus Funds Trust Fund (LGIP)) administered by the State Board of Administration. Cash and cash equivalents, for purposes of the statement of cash flows, includes pooled cash and investments which are defined as short-term, highly liquid investments with original maturities of three months or less. Town administration is authorized to invest in those instruments authorized by the Florida Statutes. All investments, except the Florida PRIME and Fund B, are reported at fair value, which is based on quoted market prices. The Florida PRIME is recorded at the value of the pool shares (2a-7 like pool), which is fair value. Fund B is a fluctuating NAV pool and is reported based on the fair value factor. 2. Interfund Receivables and 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 (i.e., amounts owed for goods/services rendered to a particular fund by another fund in the reporting entity) are reported as due to/from other funds (current portion) or interfund receivables/payables (non-current portion). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. 3. Receivables Receivables include amounts due from other governments and ad valorem taxes. Receivables are recorded and revenues are recognized as earned or as specific program expenditures/expenses are incurred. Allowance for uncollectible receivables was determined to not be necessary at year end. Sewer operating revenue is generally recognized on the basis of cycle billings rendered bi-annually, in March and September. 24

40 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY (CONTINUED) 4. Prepaid Items Prepaid items consist of certain costs which have been paid prior to the end of the fiscal year, but represent items which are applicable to future accounting periods. Reported amounts in governmental funds are equally offset by a reservation of fund balance, in the fund financial statements, which indicates that these amounts do not constitute available spendable resources even though they are a component of current assets. 5. Capital Assets Capital assets, which include property, plant and equipment, and certain infrastructure assets (e.g., utility plant, roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the governmentwide financial statements. Capital assets are defined by the Town as assets with an initial, individual cost of more than $750 and an estimated useful life in excess of one year. 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. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Tangible capital assets of the Town are depreciated using the straight-line method over the following useful lives: Buildings Improvement other than buildings Furniture, equipment and vehicles Sewer system years years 5 20 years years 6. Unearned Revenue Unearned revenue is recorded for governmental fund receivables that are not both measurable and available. In addition, inflows that do not yet meet the criteria for revenue recognition are recorded as unearned revenue in the government-wide and the fund statements. 7. Compensated Absences Town employees are granted vacation and sick leave in varying amounts based on length of service. The Town s sick leave and vacation policies permit employees to accumulate earned but unused sick pay and vacation benefits although limited to certain 25

41 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY (CONTINUED) maximums based on length of service and personnel department. All vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. In the governmental fund, a liability is recorded only for unused vacation and sick leave payouts for employees who have separated, for example, as a result of employee resignations and retirements. For the governmental fund, compensated absences are liquidated by the general fund. 8. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activity, businesstype activity, or proprietary fund type statement of net assets. In the fund financial statements, governmental fund types recognize the face amount of debt issued as an other financing source. 9. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance to indicate the portion of fund balance that is not appropriable for expenditures or is legally segregated by outside parties for a specific purpose. Designations indicate tentative managerial plans or intent to use financial resources in a future period. Undesignated fund balance indicates the portion of fund balance which is available for future use. 10. Net Assets Net assets of the government-wide and proprietary funds are categorized as invested in capital assets, net of related debt; restricted or unrestricted. Invested in capital assets, net of related debt, is that portion of net assets that relates to the Town s capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct or improve those assets, excluding unexpended proceeds. Restricted net assets is that portion of net assets that has been restricted for general use by external parties (creditors, grantors, contributors, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net assets consist of all net assets that do not meet the definition of either of the other two components. 26

42 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. ASSETS, LIABILITIES AND NET ASSETS OR EQUITY (CONTINUED) 11. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from estimates. NOTE 2 DEPOSITS AND INVESTMENTS DEPOSITS All of the Town s deposits are held in qualified public depositories pursuant to State of Florida Statutes, Chapter 280, Florida Security for Public Deposits Act. Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his or her order. The Treasurer, by rule, shall establish minimum required collateral pledging levels. The pledging level may range from 25% to 125% of the average monthly balance of public deposits depending upon the depository s financial condition and establishment period. All collateral must be deposited with an approved financial institution. Any potential losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. Accordingly, the Town s deposits are deemed insured or collateralized by the entity or its agent in the entity s name. INVESTMENTS The Town does not have a formal investment policy and follows the Florida Statutes for its investment practices. The Town is authorized to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, certificates of deposit, the State Board of Administration investment pool, any intergovernmental investment pools authorized pursuant to Chapter 163 of the Florida Statutes, SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency, and securities of any interest in any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio is limited to obligations of the U.S. government, its agencies and instrumentalities and to repurchase agreements fully collateralized by such U.S. government obligations and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. 27

43 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) INVESTMENTS (CONTINUED) The State Board of Administration (SBA) administers the Florida PRIME (formerly known as the Local Government Surplus Funds Trust Fund (LGIP)), and the Fund B Surplus Funds Trust Fund. (Fund B), both of which are governed by Chapter 19-7 of the Florida Administrative Code and Chapters 218 and 215 of the Florida Statutes. These rules provide guidance and establish the policies and general operating procedures for the administration of the Florida PRIME and Fund B. The Florida PRIME is not a registrant with the Securities and Exchange Commission (SEC); however, the Board has adopted operating procedures consistent with the requirements for a 2a-7 fund, which permits money market funds to use amortized cost to maintain a constant net asset value (NAV) of $1 per share. The fair value of the position in the Florida PRIME is equal to the value of the pool shares. The Fund B is accounted for as a fluctuating NAV pool. As of September 30, 2009, the fair value factor for Fund B was $ per share. The Fund B is not subject to participant withdrawal requests. Distributions from Fund B, as determined by the SBA, are effected by transferring eligible cash or securities to the Florida PRIME, consistent with the pro rata allocation of pool shareholders of record at the creation of Fund B. One hundred percent of such distributions from Fund B are available as liquid balance within the Florida PRIME. The investments in the Florida PRIME and Fund B are not insured by FDIC or any other governmental agency. As of September 30, 2009, the Town had the following investments: Fair Value Maturities Florida PRIME $ 6, days Fund B 36, years U.S. Treasury Bills 797,928 11/19/2009 $ 840,111 INTEREST RATE RISK The Town does not have a formal investment policy that limits investment maturities as a means of managing its exposure to market value losses arising from increasing interest rates. To mitigate risk, the Town primarily invests in investments with maturities of 12 months or less. 28

44 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 2 DEPOSITS AND INVESTMENTS (CONTINUED) CREDIT RISK The Town does not have an investment policy that limits investments to the highest ratings by two of the nationally recognized statistical rating organization (NRSRO) (Standard and Poor s and Moody s Investment Services). Excess funds are sent to the SBA for their investment. The Florida PRIME is rated AAAm by Standard and Poor s. The Fund B is not rated by an NRSO. CONCENTRATION OF CREDIT RISK The Town s diversifies its portfolio in such a way to control the risk of loss resulting from concentration of assets to a specific maturity, instrument, issue, dealer, or bank through which these securities are bought and sold. As of September 30, 2009, the value of each position held in the Town s portfolio is less than 5% in any one issuer. NOTE 3 PROPERTY TAXES Property taxes are billed and collected within the same fiscal period. Ad valorem taxes on property values are assessed as of January 1 and are levied the following October. Taxes are payable on November 1, with discounts allowed of 1% to 4% if paid prior to March 1 of the following calendar year. All unpaid taxes on real and personal property become delinquent and subject to lien on April 1. Real and personal property taxes are collected by Palm Beach County (the County) and remitted to the Town. Revenue is recognized at the time when monies are received by the Town. State law permits Florida cities to levy a maximum of $10 per $1,000 (10 mills) of assessed taxable value for general government services. The City levied taxes at a rate of approximately mills, leaving a margin of mills under the maximum possible assessment of 10 mills. NOTE 4 RECEIVABLES Receivables for the Town s individual major fund, including the applicable allowance for uncollectible accounts, are as follows: General Franchise fees $ 8,984 Utility taxes 13,246 Intergovernmental 34,192 56,422 Less allowance for uncollectibles - Net total receivables $ 56,422 29

45 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 5 CAPITAL ASSETS The following summarizes capital asset activity for the fiscal year ended September 30, 2009: Governmental activities Capital assets, not being depreciated: Land 108,396 Beginning Ending Balance Increases Decreases Balance $ $ - $ - $ 108,396 Construction in progress Total capital assets, not being depreciated 108, ,396 Capital assets, being depreciated: Buildings and improvements 764,069 9, ,565 Improvements other than buildings 154, ,391 Furniture, equipment and vehicles 489,382 5, ,592 Total capital assets, being depreciated 1,407,842 14,706-1,422,548 Less accumulated depreciation for: Buildings and improvements (147,145) (22,278) - (169,423) Improvements other than buildings (7,270) (7,827) (15,097) Furniture, equipment and vehicles (358,614) (36,243) - (394,857) Total accumulated depreciation (513,029) (66,348) - (579,377) Total capital assets, being depreciated, net 894,813 (51,642) - 843,171 Governmental activities, capital assets, net $ 1,003,209 $ (51,642) $ - $ 951,567 Business-type activities Capital assets, not being depreciated: Construction in Progress $ 39,603 $ - $ (39,603) $ - Capital assets, being depreciated: Sewer system 856, ,829 1,085,121 Machinery and equipment 40, ,025 Total capital assets, being depreciated 896, ,829-1,125,146 Less accumulated depreciation for: Sewer system (437,624) (39,671) - (477,295) Machinery and equipment (40,025) - - (40,025) Total accumulated depreciation (477,649) (39,671) - (517,320) Total capital assets, being depreciated, net 418, , ,826 Business-type activities, capital assets, net $ 458,271 $ 189,158 $ (39,603) $ 607,826 30

46 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 NOTE 5 CAPITAL ASSETS (CONTINUED) Depreciation expense for the fiscal year ended September 30, 2009 was charged to functions/programs of the Town as follows: Governmental activities: General government $ 31,778 Public safety 34,570 Total depreciation expenses - governmental activities $ 66,348 Business-type activities: Sewer $ 39,671 NOTE 6 LONG-TERM DEBT Changes in long-term debt are as follows: Beginning Ending Due Within Balance Additions Retirements Balance One Year Governmental activities: Compensated absences $ 137,293 $ 30,872 $ 8,209 $ 159,956 $ 15,996 For governmental activities, compensated absences are liquidated by the General Fund. NOTE 7 FLORIDA RETIREMENT SYSTEM PLAN DESCRIPTION The Town has elected to extend the Florida Retirement System Plan to all Town employees, including police officers. The Florida Retirement System (FRS) is a costsharing multiple-employer Public Employment Retirement System (PERS) which covers substantially all permanent full and part time Town employees. The FRS is noncontributory and is totally administered by the State of Florida. Benefit provisions are established under Chapter 121, Florida Statutes, which may be amended by the Florida Legislature. A description of FRS benefits under the defined benefit plan (FRS Pension Plan) can be found at Beginning in 2002, a defined contribution plan alternative to the existing defined benefit plan known as the Public Employee Optional Retirement Program or the FRS investment became available to FRS members. FRS issues an annual financial report. A copy can be obtained by sending a written request to: Division of Retirement, P.O. Box 9000, Tallahassee, FL NOTE 7 FLORIDA RETIREMENT SYSTEM (CONTINUED) 31

47 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 FUNDING POLICY The FRS funding policy provides for monthly employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are adequate to accumulate sufficient assets to pay benefits when due. Level percentage of payroll employer contribution rates, established by state law, are determined using the entry-age actuarial cost method. If an unfunded actuarial liability reemerges as a result of future plan benefits changes, assumption changes, or methodology changes, it is assumed any unfunded actuarial liability would be amortized over 30 years, using level dollar amounts. Except for gains reserved for rate stabilization, it is anticipated future actuarial gains and losses are amortized on a rolling 10% basis, as a level dollar amount. The Town s required contribution rate ranges from 9.85% to 20.92% of covered payroll, based on employee risk groups. The Town s contributions to FRS for the years ending September 30, 2009, 2008 and 2007 were $149,032, $133,035 and $141,056, respectively, equal to the required contributions for each year. NOTE 8 DEFINED CONTRIBUTION EMPLOYEE RETIREMENT PLAN PLAN DESCRIPTION The Town provides retirement benefits through the Town of South Palm Beach 401(k) Retirement Plan (the Plan) for one employee in the Public Works Department. When the Town joined the FRS Pension Plan effective January 1, 2005 this employee elected to remain in the 401(k) plan. The Town is not accepting any new employees into this plan. This defined contribution pension plan is administered by the International City Management Association Retirement Corporation. In a defined contribution plan, benefits depend solely on amounts contributed to the Plan plus investment earnings. Within certain limitations as specified in the Plan, the investment policy is determined by the Town Council and can only be amended by the Town Council. FUNDING POLICY The Town contributes 15% of the participant s covered compensation to the Plan. The employee is permitted to make elective contributions up to a maximum of 17.5% of his covered compensation. Vesting commences after two years of certified service with 20% vesting in year two and 20% each year thereafter until fully vested after six years. In addition, the Town will match the employee s compensation of 1% up to additional 5%. The Plan held no securities of the Town or related parties during the year or as of the close of the fiscal year. The Town s contribution for the year was approximately $7,500. NOTE 9 COMMITMENTS AND CONTINGENCIES 32

48 NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2009 INTERLOCAL AGREEMENTS City of Lake Worth Utilities Authority The Town has entered into an agreement with the City of Lake Worth, Florida, providing for the disposal of sewage generated by the Town s collection system by utilizing the East Central Regional Wastewater Reclamation Facility (ECRWRF) treatment facilities. Under the terms of this agreement, the Town has agreed to pay each month to the City of Lake Worth a pro rata share of the City s operating costs of the ECRWRF s treatment facilities. The agreement also requires the Town to pay an amount equal to its pro rata share, based upon reserved capacity, of the non-federally funded capital expenditures required of the City for pumping, transmission and treatment disposal facilities constructed for the benefit of the Town system and its customers. The minimum rate which the Town has agreed to pay is it s pro rata share of the debt service requirements of the Refunding Revenue Bonds, Series The total amount paid under this agreement for the fiscal year ended September 30, 2009 was approximately $190,000. Fire EMS Services Effective October 1, 2004, the Town entered into an Interlocal agreement with Palm Beach County for fire protection and emergency medical services. This contract calls for the Town to compensate the county based on the MSTU millage rate of or one half the costs of operating station #38. The Town s annual cost to Palm Beach County for the fiscal year ended September 30, 2009 was $1,099,384. Town of Manalapan Dispatch Services The Town has entered into an agreement with the Town of Manalapan, Florida for the provision of public safety communications and dispatch services for a period of five years beginning October 1, The total amount paid under this agreement for the fiscal year ended September 30, 2009 was $73,767. RISK MANAGEMENT The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Town purchases commercial insurance to cover the various risks. Retention of risk is limited to those that are uninsurable with deductibles of $500 per occurrence. There were no reductions in insurance coverages from coverages in the prior year. There were no settled claims that have exceeded insurance coverage for each of the past three years. 33

49 REQUIRED SUPPLEMENTARY INFORMATION

50 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 2009 Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues Property taxes $ 2,325,800 $ 2,325,800 $ 2,365,847 $ 40,047 Utility taxes 195, , ,811 49,811 Franchise fees 89,300 89, ,097 25,797 Licenses and permits 115, , , Intergovernmental 149, , ,313 1,013 Charges for services 63,000 63,000 38,424 (24,576) Fines and forfeitures 14,100 14,100 27,502 13,402 Interest and other 46,050 46,050 10,705 (35,345) Total revenues 2,997,550 2,997,550 3,067,990 70,440 Expenditures Current General government 565, , , Public safety 2,225,700 2,225,700 2,217,461 8,239 Physical environment 102, ,950 86,482 16,468 Culture and recreation 64,000 64,000 40,792 23,208 Capital outlay 214, ,000 34, ,091 Total expenditures 3,172,550 3,172,550 2,944, ,565 Excess (deficiency) of revenues over expenditures (175,000) (175,000) 123,005 (51,995) Other financing sources: Appropriation of prior years' fund balance 175, ,000 - (175,000) Total other financing sources 175, ,000 - (175,000) Net change in fund balance $ - $ - $ 123,005 $ 123,005 Fund balance, beginning 1,854,062 Fund balance, ending $ 1,977,067 See note to budgetary comparison schedule. 34

51 NOTE TO BUDGETARY COMPARISON SCHEDULE SEPTEMBER 30, 2009 NOTE 1 BUDGETS AND BUDGETARY ACCOUNTING An annual appropriated budget is adopted for the general fund on a basis consistent with accounting principles generally accepted in the United States of America. The Town follows these procedures in establishing the budgetary data reflected in the basic financial statements. a. Approximately July 1 st, the Town Manager submits to the Town Council a proposed operating budget for the fiscal year commencing the following October 1 st. The operating budget includes proposed expenditures and the means of financing them. b. Public hearings are conducted to obtain taxpayer comments. c. Prior to October 1 st, the budget is legally enacted through passage of an ordinance. d. Appropriations are legally controlled at the fund level and expenditures may not legally exceed budgeted appropriations at that level. e. The Town Council approves total budget appropriations only. The Town Manager is authorized to transfer budget amounts between departments within any fund. However, any revisions that alter the total appropriations of any fund must be approved by the Town Council. f. Formal budgetary integration is employed as a management control device during the year for the one budgeted fund. g. Appropriations which are neither expended nor specifically designated to be carried over lapse at the end of the fiscal year. h. There were no budget amendments made during the year. There were no supplemental appropriations during the year. 35

52 STATISTICAL SECTION

53 STATISTICAL SECTION This part of the Town of South Palm Beach's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town's overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the Town's financial performance and well-being have changed over time. These schedules include: 36 Revenue Capacity These schedules contain information to help the reader assess the Town's most significant local revenue source, the property tax. 40 Debt Capacity These schedules present information to help the reader assess the affordability of the Town's current levels of outstanding debt and the Town's ability to issue additional debt in the future. 45 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town's financial activities take place. 49 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Town's financial report relates to the services the Town provides and the activities it performs. 52 Sources: Unless other wise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

54 NET ASSETS BY COMPONENT LAST FOUR FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Governmental activities: Invested in capital assets, net of related debt $ 993,222 $ 1,018,199 $ 1,003,209 $ 951,567 Restricted Unrestricted 1,154,451 1,552,710 1,781,303 1,841,683 Total governmental activities net assets 2,147,673 2,570,909 2,784,512 2,793,250 Business-type activities: Invested in capital assets, net of related debt 481, , , ,826 Restricted Unrestricted 461, , , ,671 Total business-type activities net assets 942,517 1,032,713 1,145,519 1,171,497 Total government: Invested in capital assets, net of related debt 1,474,661 1,466,728 1,461,480 1,559,393 Restricted Unrestricted 1,615,529 2,136,894 2,468,551 2,405,354 Total government net assets $ 3,090,190 $ 3,603,622 $ 3,930,031 $ 3,964,747 36

55 CHANGES IN NET ASSETS LAST FOUR FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Expenses: Governmental activities: General government $ 536,257 $ 626,381 $ 591,159 $ 606,493 Public safety 2,098,158 2,348,502 2,327,895 2,265,320 Physical Environment 61,119 73, , ,685 Transportation Culture/recreation 48,858 49,736 51,279 40,792 Total governmental activities 2,744,392 3,098,411 3,079,464 3,019,290 Business-type activities: Utility system 195, , , ,329 Total business-type activities 195, , , ,329 Total government expenses $ 2,939,849 $ 3,307,828 $ 3,256,534 $ 3,271,619 Program revenues: Governmental activities: Charges for services: General government $ 197,842 $ 188,413 $ 192,536 $ 153,715 Public safety 21,339 17,286 50,169 27,502 Culture/recreation Operating grants and contributions: Capital grants and contributions - 70,307 1,543 13,982 Total governmental activities program revenue 219, , , ,199 Business-type activities: Charges for services: Utility system 234, , , ,457 Operating grants and contributions: Capital grants and contributions Total business-type activities program revenues 234, , , ,457 Total program revenues $ 453,780 $ 543,079 $ 517,689 $ 482,656 Net (expense) revenue: Governmental activities $ (2,525,211) $ (2,822,405) $ (2,835,216) $ (2,824,091) Business-type activities 39,142 57,656 96,371 35,128 Total net expense $ (2,486,069) $ (2,764,749) $ (2,738,845) $ (2,788,963) General revenues: Governmental activities: Taxes: Property taxes $ 2,093,756 $ 2,608,927 $ 2,458,131 $ 2,365,847 Utility taxes 228, , , ,849 Intergovernmental revenues 295, , , ,331 Franchise taxes 113, , , ,097 Investment earnings 58, ,506 53,869 (5,579) Miscellaneous 8,088 12,965 11,968 16,284 Total governmental activities 2,797,293 3,245,641 3,048,819 2,832,829 Business-type activities: Investment earnings 29,593 32,540 16,435 (9,150) Total business-type activities 29,593 32,540 16,435 (9,150) Total general revenues $ 2,826,886 $ 3,278,181 $ 3,065,254 $ 2,823,679 Change in net assets: Governmental activities $ 272,082 $ 423,236 $ 213,603 $ 8,738 Business-type activities 68,735 90, ,806 25,978 Total change in net assets $ 340,817 $ 513,432 $ 326,409 $ 34,716 37

56 FUND BALANCES OF GOVERNMENTAL FUNDS LAST FOUR FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year General fund: Reserved $ 46,318 $ 23,304 $ 18,984 $ 28,124 Unreserved 1,220,514 1,643,024 1,835,078 1,948,943 Total general fund 1,266,832 1,666,328 1,854,062 1,977,067 All other governmental funds: Reserved Total all other governmental fund Total governmental funds $ 1,266,832 $ 1,666,328 $ 1,854,062 $ 1,977,067 38

57 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST FOUR FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Revenues: Ad valorem taxes $ 2,093,756 $ 2,608,927 $ 2,458,131 $ 2,365,847 Franchise fees 113, , , ,097 Utility taxes 228, , , ,811 Licenses and permits 154, , , ,291 Intergovernmental revenue 295, , , ,313 Charges for services 43,060 37,496 43,159 38,424 Fines and forfeitures 21,339 17,286 50,169 27,503 Investment income 58, ,506 53,869 10,705 Miscellaneous 8,088 12,965 11,968 - Total revenues 3,016,474 3,521,647 3,228,533 3,067,991 Expenditures: Current: General government 514, , , ,341 Public safety 2,044,199 2,286,921 2,278,844 2,217,461 Physical environment 61,119 70,856 74,500 86,482 Culture and recreation 48,858 49,736 51,279 40,792 Capital outlay 189, ,557 86,378 34,909 Total expenditures 2,858,658 3,122,151 3,040,799 2,944,985 Excess of revenues over expenditures 157, , , ,006 Other financing sources (uses): Transfers in Transfers out Total other financing sources (uses) Net change in fund balances $ 157,816 $ 399,496 $ 187,734 $ 123,006 Debt service as a percentage of non-capital expenditures 0.00% 0.00% 0.00% 0.00% 39

58 GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) Fiscal Ad Valorem Franchise Utility Year Taxes Taxes Taxes Total , , ,703 1,117, , , ,637 1,202, ,029, ,288 80,354 1,304, ,171,726 86, ,100 1,462, ,375, , ,014 1,702, ,626, , ,796 1,962, ,093, , ,327 2,435, ,608, , ,914 2,958, ,458, , ,155 2,768, ,365, , ,811 2,725,755 Source: Town of South Palm Beach Finance Department 40

59 NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Estimated Real Property Total Actual Value Fiscal Year Total Net Direct Estimated as a Percentage Ended Residential Commercial Personal Assessed Tax Actual of Net Assessed September 30, Property Property Property Value Rate Value Value ,862,684-2,241, ,103, , % ,547,525-2,198, ,746, ,060, % ,732,309-2,385, ,118, ,125, % ,037,336-2,358, ,396, ,576, % ,448,593-2,416, ,864, ,682, % ,014,781-2,596, ,611, ,174, % ,954,410-2,586, ,540, ,703, % ,164,261-2,485, ,649, ,666, % ,649,736-2,543, ,192, ,819, % ,859,041-2,490, ,350, ,887, % Note: Property in the Town is reassessed each year. Tax rates are per $1,000 of assessed value. The Town has no commercial zoned property. Source: Palm Beach County Property Appraiser's Office. 41

60 PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS Town of South Palm Beach Overlapping Rates (1) Palm Beach Palm Beach Palm BeachSouth Florida Florida Total County Palm County County Water Children's Inland Direct and Fiscal Tax Roll General Debt Total School Beach Health Care Library Management Services NavigationOverlapping Year Year Operations Service Town Board County District System District Council District Rates Note: All millage rates are based on $1 for every $1,000 of assessed value. Sources: Town of South Palm Beach Finance Department and Palm Beach County Property Appraiser's Office. (1) Overlapping rates are those of local and county governments that apply to property owners within the Town of South Palm Beach. Not all overlapping rates apply to all Town of South Palm Beach property owners (i.e., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). 42

61 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Percent of Percent of Total Total Net Village Net Net Village Net Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Taxpayer Value Rank Value Kosova Realty Corp. $ 4,735, % Kosova Realty Corp. $ 3,200, % EFN Family LTD Ptrs 2,516, % EFN Family LTD Ptrs 700, % James & Eileen Roche 894, % James & Eileen Roche 590, % Eliot Gittelmacher 722, % Eliot Gittelmacher 466, % ** % ** % ** % ** % ** % ** % ** % ** % ** % ** % ** % ** % $ 8,869, % $ 4,956, % Source: Tax roll provided by Palm Beach County Property Appraisers Office. Note: ** Remainder of taxpayers are condominium units all with similar immaterial differences in assessed values. 43

62 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within Total Taxes the Fiscal Year Fiscal Year Levied for of the Levy Collections in Total Collections to Date Ended Fiscal Percent Subsequent Percent September 30, Year Amount of Levy Year's Amount of Levy , , % , % ,013, , % , % ,060,913 1,029, % 1,425 1,030, % ,215,797 1,170, % - 1,170, % ,413,075 1,375, % - 1,375, % ,683,622 1,626, % - 1,626, % ,174,000 2,093, % - 2,093, % ,697,998 2,608, % - 2,608, % ,543,131 2,458, % - 2,458, % ,490,984 2,365, % - 2,365, % Source: Town of South Palm Beach Finance Department and Palm Beach County Tax Collector's Office. 44

63 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Note: The Town does not have any outstanding debt. 45

64 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Note: The Town has not had any outstanding debt in the last ten years. 46

65 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT SEPTEMBER 30, Percentage Applicable to Amount Applicable to the Residents Net the Town of the Town Debt of South of South Government Unit Outstanding Palm Beach (1) Palm Beach Debt repaid with property taxes: Palm Beach County $ 290,410, % $ 820,359 Palm Beach County School Board % - Town of South Palm Beach Direct Debt - Total Direct and Overlapping Debt $ 820,359 Sources: Assessed value data used to estimate applicable percentages provided by the Palm Beach County Property Appraiser. Debt outstanding data provided by each governmental unit. (1) General Obligation Bonds (2) Estimated based on 2006 Ratio of Assessed Taxable Values (3) As of August 1, 2007, Palm Beach County School Board's General Obligation Bonds were paid off. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the Town. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the Town of South Palm Beach. This process recognizes that, when considering the Town's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping government. 47

66 PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Note: The Town does not have any outstanding debt and therefore, no revenues are pledged for any purpose. 48

67 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Personal Income (Amounts Expressed in Per Capital Thousands) Personal Unemployment Year Population (1) (2) Income (2) Rate (3) ,708 40,950 39, % ,651 42,588 41, % ,600 44,292 43, % ,586 46,063 44, % ,531 47,906 46, % ,531 49,822 48, % ,526 51,815 50, % ,526 53,887 52, % ,526 56,043 54, % ,580 58,285 56, % Sources: (1) (2) United States Census Bureau. All years assumed at a 4% inflation factor. (3) U.S. Bureau of Labor Statistics, Palm Beach County, Florida. Individual Town statistics not 49

68 PRINCIPAL EMPLOYERS CURRENT YEAR AND TWELVE YEARS AGO Percentage of Percentage of Total Town Total Town Employer Employees Rank Employment Employees Rank Employment The Mayfair % % Town Hall % % Palm Beach Ocean Front Inn % % Barclay % % Tuscany % % Concordia East & West % % Dune Deck % % Southgate % % Tides Restaurant % % Palmsea % % Le Chateau % % Total % % Source: Town of South Palm Beach Finance Department 50

69 FULL-TIME EQUIVALENT TOWN GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS General Government Public Safety Physical Environment Total number of employees Source: Town of South Palm Beach Finance Department. 51

70 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program Public safety: Police: Police personnel and officers Police calls for service 2,068 1,923 1,597 1,449 1,511 1,279 1,212 1,418 1,555 1,944 Parking violations Traffic violations 1,005 1, Fire: Fire personnel Fire alarms answered Fire inspections performed Planning and development: Building permits issued Occupational licenses issued Sources: Various Town Departments Note: Indicators are not available for the general government function. The Town does not have a fire department. 52

71 CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS Function/Program General government: Number of general government buildings Public safety: Police: Police stations Patrol units Fire: Fire stations Transportation: Miles of streets 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 Number of street lights Number of traffic signals Culture and recreation: Parks Parks acreage Community center Swimming pools Tennis courts Baseball/softball fields Utility system: Miles of mains 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 5/8 Fire hydrants - Town of South Palm Beach Fire hydrants - Outside Town of South Palm Beach Maximum daily capacity (thousands of gallons, est 69,900 69,900 69,900 69,900 69,900 69,900 69,900 69,900 69,900 69,900 Sources: Various Town Departments Note: Unless otherwise noted by an amount or number, the answer is zero. 53

72 COMPLIANCE SECTION

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