CITY OF JASPER, ALABAMA FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED SEPTEMBER 30, 2012

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1 CITY OF JASPER, ALABAMA FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION YEAR ENDED

2 City of Jasper Table of Contents September 30, 2012 Page INDEPENDENT AUDITORS' REPORT MANAGEMENT'S DISCUSSION AND ANALYSIS BASIC FINANCIAL STATEMENTS Statement of Net Assets Statement of Activities Balance Sheet - Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Assets Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses, and Changes in Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Pension Plan Funding Progress Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual, General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual, Alcohol Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget to Actual, Project Fund OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet: All Nonmajor Governmental Funds

3 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances: All Nonmajor Governmental Funds Nonmajor Special Revenue Funds Nonmajor Capital Projects Funds Nonmajor Debt Service Funds SINGLE AUDIT SECTION Report on Internal Control Over Financial Reporting and on Compliance And Other Matters Based on an Audit of Financial Statements In Accordance With Government Auditing Standards Independent Auditors' Report on Compliance With ReqUirements That Could Have a Direct and Material Effect on Each Major Program And on Internal Control Over Compliance in Accordance With OMB Circular A-133 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs

4 Haynes In! Downard LLP Certified Public Accountants and Business Advisors To the City Council City of Jasper, Alabama INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Jasper, Alabama, as of and for the year ended September 30, 2012, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Jasper, Alabama's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Jasper City Board of Education or the Industrial Development Board of the City of Jasper which represent 100% of the assets, net assets and revenue of the component unit columns. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Jasper City Board of Education or the Industrial Development Board of the City of Jasper, is based on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Jasper, Alabama, as of September 30, 2012, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated August 20, 2013, on our consideration of the City of Jasper, Alabama's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. BIRMINGHAM nd Avenue North. Suite 400 Birmingham, Alabama Phon" ~0,,/ Fo", 205/ JASPER th Avenue a Jasper, Alabama 3550 I Phon.: 205/ Fa." 20',/38 ]"9215 Tolle /

5 Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the schedule of pension plan funding progress and the budgetary comparison information on pages 3 through 10 and 41 through 44 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Jasper, Alabama's financial statements as a whole. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. 7~ J~Je;t// Haynes Downard LLP December 19,

6 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Jasper, Alabama (the "City"), we present this narrative overview and analysis designed to assist readers of the City's financial statements for the fiscal year ended September 30, Our discussion and analysis focuses on significant financial issues, provides an overview of the City's financial activity, identifies changes in the City's financial position, identifies any material deviations from the financial plan (the approved budget), and identifies individual fund issues or concerns. Financial Highlights The assets of the City exceed its liabilities at the close of the fiscal year ended September 30, 2012, by $8,981,785 (net assets). The portion of net assets that may be used to meet the City's ongoing obligations to citizens and creditors (unrestricted net assets) reflects a deficit of $3,748,533. The deficit is primarily the result of the reporting of the OPEB obligation as required by GASB No. 45. The City's total net assets increased by $1,145,997 in fiscal The factor that most influenced this increase was the City's success in reducing operational costs and obtaining grant revenue. The City's total net capital assets increased by $1,735,526 in fiscal This increase was mainly attributable to construction of an access road at the industrial park and other municipal improvements. As of the close of the current fiscal year, the City's governmental funds reported combined fund balances of $1,913,498, an increase of $629,768 from the prior year. $1,155,305 of this amount is available for spending at the City's discretion (unassigned fund balances). At the end of the current fiscal year, the unassigned fund balance of the General Fund (the City's primary operating fund) was $25,316. The City's net long-term debt increased by $1,165,508, or 18.34%, primarily resulting from issuance of warrants in the current year. 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, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. 3

7 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 3D, 2012 Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with an overview of the City's finances, in a manner similar to 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. This statement combines governmental funds' current financial resources with capital assets and long-term obligations. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information focused on functions, and shows how the City's net assets changed during the most recent fiscal year. This is intended to summarize and simplify the user's analysis of revenue and expenses of various governmental services and/or subsidies to various business-type activities. 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 (e.g., uncollected taxes and earned but unused employee 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 typically recover all or a significant portion of the cost of operation, including depreciation, through user fees and charges for services (business-type activities). The governmental activities of the City include general government, public safety, public works, recreation and cultural services, and non-departmental. The business-type activities of the City reflect private sector type operations and include cemeteries. The government-wide financial statements include not only the City itself (known as the primary government), but also the activities of its component units. the Jasper City Board of Education and the Industrial Development Board of the City of Jasper, Alabama. A component unit is a legally separate organization over which the City can exercise influence and/or may be obligated to provide financial subsidies. The focus of the statements is clearly on the primary government and the presentation allows the readers to address the City's relative relationship with the component units. The Board of Education and the Industrial Development Board issue complete financial statements, which may be obtained by contacting the entities directly. Fund Financial Statements Traditional users of governmental financial statements will find the Fund Financial Statements presentation more familiar. The focus is on the City's major funds rather than the City as a whole. 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. Governmental, proprietary, and fiduciary are the three categories of fund types. 4

8 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 3D, 2012 Fund Financial Statements - Continued Governmental Funds - The City of Jasper maintains three individual major governmental runds. 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, the alcohol tax fund, and the project fund. Data from other governmental funds are combined into a single, nonmajor governmental funds aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. For management control of expenditures, the City adopts an annual appropriated budget for all funds. A budgetary comparison statement has been provided as required supplementary information for the City's major governmental funds to demonstrate compliance with their budgets. Proprietary Funds - The City of Jasper maintains two 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 provide for separate information for the two cemeteries, each of which is considered a major fund of the City. Fiduciary Funds -Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support City programs. Notes to the Financial Statements The notes to the financial statements provided in this report convey additional essential information that will magnify the readers' understanding of the data in the government-wide and fund financial statements. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning budgetary comparisons and the City's progress in funding its obligations to provide pension benefits to its employees. The combining fund statements and schedules are presented immediately following the required supplementary information. 5

9 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS Government-wide Financial Analysis Condensed Statement of Net Assets as of September 30, 2012 and 2011 Current and other assets Capital assets Total assets 2012 $ 3,611,477 20,141,962 Governmental 23,753,439 Activities 2011 $ 3,632,874 18,406,436 22,039,310 Business-type Activities 2012 $ 275, , , $ 271, , ,809 Total Primary Government $ 3,886,663 $ 3,904,643 20,409,667 18,676,476 24,296,330 22,581,119 other liabilities Long-term liabilities Total liabilities 1,744,529 13,027,125 14,771,654 2,399,379 11,804,143 14,203, , , , ,628 1,744,529 13,224,753 14,969,282 2,399,379 12,016J71 14,416,150 Net assets: Invested in capital assets, net of related debt Unrestricted (deficit) Total net assets 12,730,318 (3,748,533) $ 8,981J85 12,172,168 (4,336,380) $ 7,835J88 182, ,283 $ 345, , ,866 $ 329,181 12,913,298 (3,586,250) $ 9,327,048 12,342,483 (4,177,514) $ 8,164,969 The City's total assets were $23,753,439 as of September 30, Of this amount, $20,141,962 is accounted for by capital assets, which includes infrastructure. Of the remaining City assets, $3,037,702 is accounted for in cash and cash equivalents, $340,123 in accounts receivable, $24,300 in liens receivable, and the remainder spread among miscellaneous assets. At September 30, 2012, the City had outstanding liabilities of $14,771,654, of which $13,027,125 was long-term. Long-term liabilities include warrants and notes payable, compensated absences, accrued landfill closure and post closure care costs, and the OPEB obligation. Of the total amount outstanding, approximately $1,751,303 was due within one year, with the remainder due at various dates before Included in other liabilities in the above table are $1,697,979 in accounts payable and other current liabilities and $46,550 in accrued interest payable. The largest portion of the City's net assets reflect its investment in capital assets, less any outstanding related debt used to acquire those assets. The City's capital assets are used to provide services to citizens. Consequently, investments in capital assets are not available for future spending. Although the City's investment in 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 used to liquidate these liabilities. The remaining unrestricted net assets reflect a deficit of $3,748,533. This deficit is primarily the result of recording the OPEB obligation of $4,222,395. 6

10 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS Condensed Statement of Activities For the Years Ended September 30, 2012 and 2011 Revenues Governmental Business-Type Total Activities Activities Primary Government Program revenues: Charges for services $ 2,200,207 $ 2,249,545 $ 27,711 $ 19,702 $ 2,227,918 $ 2,269,247 Grants/contributions 1,035,471 5,048,139 1,035,471 General revenues: Property taxes 2,891,824 3,025,305 2,891,824 5ales taxes 8,841,836 8,403,156 8,841,836 Other taxes 1,909,099 1,974,684 1,909,099 Licenses and permits 3,200,175 3,069,015 3,200,175 Other general revenue 412, , , ,103 Total revenues 20,490,687 24,007,503 27,739 23,504 20,518,426 5,048,139 3,025,305 8,403,156 1,974,684 3,069, ,461 24,031,007 Expenses Governmental activities: General government 2,045,023 2,408,106 2,045,023 Public safety 5,867,487 6,145,001 5,867,487 Public works 4,076,300 3,963,848 4,076,300 Recreation and cultural 2,373,433 2,375,935 2,373,433 Non-departmental 4,751,623 5,508,692 4,751,623 Interest on long-term debt 230, , ,824 Business-type activities: Cemeteries 7,936 7,539 7,936 Other 3,721 2,975 3,721 Total expenses 19,344,690 20,629,161 11,657 10,514 19,356,347 2,408,106 6,145,001 3,963,848 2,375,935 5,508, ,579 7,539 2,975 20,639,675 Net Increase (Decrease) $ 1,145,997 $ 3,378,342 $ 16,082 $ 12,990 $ 1,162,079 $ 3,391,332 Total revenues for the City were $20/518/426 for the year ended September Governmental activities provided $20/490/687 or 99.9%1 while $27/739 of business-type activities revenue was provided by charges for services and interest income. The governmental activities received $81841/8361 or 43.15% of total revenue l from sales taxes and $3/ or 15.62% of total revenue l from business licenses and permits. 7

11 Governmental Funds CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS Fund Financial Analysis In the current fiscal year, the City adopted GASB Statement No. 54 which prescribes several new classes of governmental fund balance. As of year-end, the governmental funds reported an unassigned fund balance of $1,155,305 or 10.0% lower than the beginning of the year balance of $1,283,730. The General Fund increased in fund balance from $(60,475) to $25,316. Enterprise Funds The City operates the New Prospect Cemetery and the North Oakhill Cemetery. Lots are sold for $250 each at New Prospect and $600 each at North Oakhill. The City normally charges New Prospect $1,000 for each mowing. The cemeteries will generally operate with a small profit each year, largely as a result of interest income from a certificate of deposit owned by North Oakhill Cemetery. This year New Prospect Cemetery recorded loss from operations of $110 and North Oakhill Cemetery recorded income from operations of $16,082. Budgetary Highlights The following is a brief review of the budgeting changes from the original to the final budget for the General Fund. Salaries were increased $220,547 in certain departments. Certain departments increased repairs and maintenance due to overages. Sales tax revenue was increased totaling $279,441 for the fiscal year. Grant revenue from FEMA was added due to disaster in the amount of $669,173. Capital Assets and Debt Administration Capital Assets Capital Assets As of September 30, 2012 and 2011 (Net of Depreciation) Governmental Business-Type Total Activities Activities Primary Government Land $ ,739, $ 1,739, $ 122, $ 122,500 $ ,861,973 $ ,861,973 Construction in process Buildings Equipment Infrastructure 3,636,997 5,605,708 3,807,575 5,352,209 2,626,429 5,414,285 3,529,433 5,096, , ,540 3,636,997 5,605,708 3,952,780 5,352,209 2,626,429 5,414,285 3,676,973 5,096,816 Total =$==::====:===== 20,141,962 $ 18,406,436 $ 267,705 $ 270,040 $ 20,409,667 $ 18,676,476 8

12 Capital Assets - Continued CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS This investment in capital assets includes land, buildings, improvements other than buildings, system improvements (drainage and streets) machinery and equipment, park facilities, roads, highways, and bridges. The total increase in the City's investment in capital assets for the current fiscal year was $1,733,191 (an increase of $1,735,526 for governmental activities and a decrease of $2,335 for business-type activities). Major capital asset events during the current fiscal year included the following: Construction of an access road at the industrial park totaling $1,010,568 Purchase of equipment for the City in the amount of $1,038,377 Development of streets, pools and parks in the amount of $703,244 Debt Administration As of year-end, the City had $7,519,708 in debt (bonds, notes, etc.) outstanding compared to $6,354,200 at the end of last year, a $1,165,508 increase. Outstanding Debt at Year-End Governmental: 2006-B Bond Issue $ 420,275 $ 505, Bond Issue 25,523 74, Bond Issue 396, , B Bond Issue 14,372 32, C Bond Issue 103, , Bond Issue 4,165,000 4,805, Bond Issue 2,055,932 Deferred amounts 23,339 20,207 Bank Loans 229, ,034 Business-Type: 2006-B Bond Issue 84,725 99,725 Total Debt $ 7,519,708 $ 6,354,200 The Business-Type debt activity occurred during 2007 totaling $160,534 of the 2006-B Bond Issue used to purchase land to establish the North Oakhill Cemetery. Current year activity consisted only of payment of the Cemetery's portion of the 2006-B Bond. The City issued a general obligation warrant during 2012 in the amount of $2,076,000 to purchase various equipment used throughout the City. 9

13 CITY OF JASPER, ALABAMA MANAGEMENT'S DISCUSSION AND ANALYSIS Economic Factors The City of Jasper is largely dependent upon its sales tax revenue for growth in income. In periods of economic decline, the City is faced with increasing taxes, licenses, or user charges as a means to increase revenue or reducing expenses in the form of reductions in services or employee reductions. Financial Contact The City's financial statements are designed to present users (citizens, taxpayers, customers, investors, and creditors) with a general overview of the City's finances and to demonstrate the City's accountability. If you have questions about the report or need additional financial information, contact the City Clerk on the second floor of City Hall, 400 West 19 th Street, Post Office Box 1589, Jasper, Alabama

14 BASIC FINANCIAL STATEMENTS

15 STATEMENT OF NET ASSETS CITY OF JASPER Primary Government Component Units Industrial Jasper City Dev. Board Governmental Business-Type Board of of the City of Activities Activities Total Education Jas~ert Alabama Assets Cash and cash equivalents $ 3,037,702 $ 273,285 $ 3,310,987 $ 3J54,406 $ 247,851 Investments 8,740,841 Receivable, net 340,123 1, ,024 2,522,835 1,407,901 Liens receivable 24,300 24,300 Accrued interest receivable 27,329 Internal balances 27,791 27,791 Inventories and prepaids 181, ,561 43,009 Capital assets, net Non-depreciable 5,376, ,500 5,498,970 2,008,436 4,285,285 Depreciable 14,765, ,205 14,910,697 11,677,818 1,943,060 Total assets $ 23,753,439 $ 542,891 $ 24,296,330 $ 28,774,674 $ 7,884,097 Liabilities Accounts payable $ 1,286,142 $ $ 1,286,142 $ 1,615,542 Deferred revenue 284, ,697 1,561,120 $ Accrued interest payable 46,550 46,550 Due to other governments 127, ,140 Noncurrent liabilities: Due within one year 1,751,303 16,483 1,767J86 96,065 1,231,840 Due in more than one year 11,275, ,145 11,456,967 52,369 1,334,331 Total liabilities 14,771, ,628 14,969,282 3,325,096 2,566,171 Net Assets Invested in capital assets net of related debt 12,730, ,980 12,913,298 13,686)53 3,662,174 Restricted Capital projects 5,709,717 Other purposes 1,465,101 Unrestricted (3,748,533) 162,283 (3,586,250) 4,588,507 1,655,752 Total net assets $ 8,981J85 $ 345,263 ~ 9,327,048 ~ 25,449,578 ~ 5,317,926 See accompanying notes. 11

16 STATEMENT OF ACTIVITIES CITY OF JASPER FOR THE YEAR ENDING Net Revenue (Expense) and Changes in Net Assets Program Revenues Primary Government Component Units Industrial Program Capital Business- Jasper City Development Charges for Grants and Grants and Governmental Type Board of Board of the ~enses Services Contributions Contributions Activities Activities Total Education City of Jasper Primary Government: Governmental activities: General government $ (2,045,023) $ 26,076 $ $ 955,795 $ (1,063,152) $ $ (1,063,152) $ $ Pu blic safety (5,867,487) 532,901 79,676 (5,254,910) (5,254,910) Public works (4,076,300) 1,412,984 (2,663,316) (2,663,316) Recreation and cultural services (2,373,433) 228,246 (2,145,187) (2,145,187) Non-departmental (4,751,623) (4,751,623) (4,751,623) Interest on long-term debt (230,824) (230,824) (230,824) Total governmental activities (19,344,690) 2,200,207 1,035,471 (16,109,012) (16,109,012) Business-type activities: Cemeteries (7,936) 27,711 19,775 19,775 Interest on long-term debt (3,721) (3,721) (3,721) Total business-type activities (11,657) 27,711 16,054 16,054 Total primary government $ (19,356,347) $ 2,227,918 $ $ 1,035,471 (16,109,012) 16,054 (16,092,958) Component Units Jasper City Board of Education $ (26,215,579) $ 2,249,939 $ 14,738,600 $ 691,824 (8,535,216) Industrial Development Board $ (530,271) $ 341,164 $ $ (189,107) General Revenues: Taxes: Sales and use tax 8,841,836 8,841,836 6,101,777 Property tax 2,891,824 2,891,824 1,492,297 License and permits 3,200,175 3,200, ,000 Other taxes 1,909,099 1,909, , ,935 Investment earnings 2, ,069 85, Other general revenues 410, , ,510 29,725 Transfers Total general revenues and transfers 17,255, ,255,037 8,568, ,972 Change in net assets 1,145,997 16,082 1,162,079 33, ,865 Net assets - beginning 7,835, ,181 8,164,969 25,416,318 4,753,061 Net assets - ending $ 8,981,785 $ 345,263 $ 9,327,048 $ 25,449,578 $ 5,317,926 See accompanying notes. 12

17 BALANCE SHEET GOVERNMENTAL FUNDS CITY OF JASPER Other Total Major Funds Govern- Govern- Alcohol Project mental mental General Fund Fund Funds Funds Assets Cash and cash equivalents $ 760,811 $ 225,704 $ 181,826 $ 1,869,361 $ 3,037,702 Receivables, net 261,510 78, ,123 Liens receivable 24,300 24,300 Due from other funds 120,502 11,414 40, ,485 Inventories and prepaids 181, ,561 Total assets $ 1,348,684 $ 225,704 $ 271,853 $ 1,909,930 $ 3,756,171 liabilities and Fund Balance liabilities Accounts payable $ 1,079,049 $ 100,000 $ 69,139 $ 37,954 $ 1,286,142 Due to other funds 14,125 4, , ,694 Due to other governments 127, ,140 Deferred revenue 230,194 54, ,697 Total liabilities 1,323, , , ,763 1,842,673 Fund Balance Unassigned 25, , , ,974 1,155,305. Committed 758, ,193 Total fund balance 25, , ,211 1,619,167 1,913,498 Total liabilities and fund balance $ 1,348,684 $ 225,704 $ 271,853 $ 1,909,930 $ 3,756,171 See accompanying notes. 13

18 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS CITY OF JASPER Fund Balances - total governmental funds $ 1,913,498 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet. Governmental capital assets Less accumulated depreciation 44,301,680 (24,159,718) 20,141,962 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds balance sheet. Governmental bonds payable and loans payable Current year accrued interest Accrued landfill closure and postclosure costs Compensated absences OPEB obligation (7,411,644) (46,550) (80,001) (1,289,746) ( 4,222,395) (13,050,336) Advance bond refunding gains and losses cannot be expensed, but must be deferred and amortized over the remaining life of the old debt or the life of the new debt, whichever is shorter. Advance refunding call premium Bond discount 65,269 (88,608) (23,339) Net assets of governmental activities $ 8,981,785 See accompanying notes. 14

19 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS CITY OF JASPER FOR THE YEAR ENDED Other Total Major Funds Govern- Govern- Alcohol Project mental mental General Fund Fund Funds Funds Revenues Taxes $ 12,752,092 $ 734,953 $ $ 155,714 $ 13,642,759 Interest ,041 Licenses and permits 3,159,530 40,645 3,200,175 Fines and forfeitures 342, , ,586 Intergovernmental 182, ,958 Charges and fees 314,350 1,340,098 1,654,448 Rental income 29,173 29,173 Grant proceeds & donations 1,035,471 1,035,471 M iscella neous 15, , , ,076 Total revenues 16,797, ,795 1,354,086 1,563,627 20,490,687 Expenditures Current: General government 1,532,716 1,569 12,396 31,016 1,577,697 Public safety 5,426,170 24,675 5,450,845 Public works 2,270,033 1,490,074 4,500 3,764,607 Recreation and cultural services 2,006,145 5,662 2,011,807 Nondepartmental 2,054,004 2,054,004 Intergovernmental 2,571,344 50,000 60,468 2,681,812 Debt service: principal 29, , ,624 Interest and other charges 7, , ,377 Capital outlay 42,135 3,500 3,220,511 3,266,146 Total expenditures 15,902,547 51,569 1,543,186 4,439,617 21,936,919 Excess (deficiency) of revenue over expenditures 894, ,226 (189,100) (2,875,990) (1,446,232) Other Financing Sources (Uses) Proceeds of long-term debt 2,076,000 2,076,000 Transfer in 157,668 85,000 2,199,702 2,442,370 Transfer out (966,509) (782,448) (693,413) (2,442,370) Net other financing sources (uses) (808,841) (697,448) 3,582,289 2,076,000 Net Change in Fund Balance 85,791 26,778 (189,100) 706, ,768 Beginning Fund Balance (60,475) 94, , ,868 1,283,730 Ending Fund Balance $ 25,316 $ 120,804 $ 148,211 $1,619,167 $ 1,913,498 See accompanying notes. 15

20 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVTIES CITY OF JASPER FOR THE YEAR ENDED Net change in fund balances - total governmental funds $ 629,768 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is depreciated over their estimated useful lives. Expenditures for capital assets Less current year depreciation 3,266,147 (1,530,621) 1,735,526 Some expenses reported in the statement of activities differ from amounts reported as expenditures in governmental funds Compensated absences Increase in OPEB obligation Accrued interest Amortization of issuance costs, premiums, etc. Accrued closure and post closure costs Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This is the amount by which proceeds exceeded repayments. 213,016 (228,823) 3,685 (3,132) (26,667) (41,921) Bond and loan proceeds Principal payments (2,076,000) 898,624 (1,177,376) 516,229 Change in net assets of governmental activities $ 1,145,997 See accompanying notes. 16

21 STATEMENT OF NET ASSETS PROPRIETARY FUNDS CITY OF JASPER Enterprise Fund New North Total Prospect Oakhill Business-Type Cemetery Cemetery Activities Assets Current Assets: Cash and cash equivalents Accrued interest receivable Total current assets $ 244,492 1, ,393 $ 28,793 28,793 $ 273,285 1, ,186 Noncurrent Assets: Capital assets Land Equipment and improvements Less: accumulated depreciation Total noncurrent assets 122,500 30, ,148 (27,385) 125, , ,427 (35,485) 141, , , ,575 (62,870) 267,705 Total Assets $ 372,156 $ 170,735 $ 542,891 Liabilities Due to other funds $ $ $ Noncurrent Liabilities: Due within one year: Bonds payable Due in more than one year: Deferred revenue Bonds payable 112,903 16,483 68,242 16, ,903 68,242 Total Liabilities 112,903 84, ,628 Net Assets Invested in capital assets, net of related debt Unrestricted 125, ,490 57, ,980 28, ,283 Net Assets $ 259,253 $ 86,010 $ 345,263 See accompanying notes. 17

22 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS CITY OF JASPER FOR THE YEAR ENDED SEPTEMBER 3D, 2012 Enterpise Fund New North Total Prospect Oakhill Business-Type Cemetery Cemetery Activities Operating Revenues Sale of lots $ 1,500 $ 24,600 $ 26,100 Annual upkeep 1,434 1,434 Miscellaneous Total operating revenues 3,096 24,615 27,711 Operating Expenses Depreciation 1,088 6,848 7,936 Total operating expenses 1,088 6,848 7,936 Income (Loss) from operations 2,008 17,767 19,775 Nonoperating Revenues (Expenses) Interest expense (3,721) (3,721) Interest income Total Nonoperating Revenues (Expenses) (3,693) (3,693) Changes in net assets 2,008 14,074 16,082 Net assets - Beginning 257,245 71, ,181 Net assets - Ending $ 259,253 $ 86,010 $ 345,263 See accompanying notes. 18

23 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS CITY OF JASPER FOR THE YEAR ENDED Enterprise Fund New North Total Prospect Oakhill Business-Type Cemetery Cemetery Activities Cash Flows from Operating Activities Receipts from sales of lots $ 1,500 $ 24,600 $ 26,100 Receipts for annual upkeep 1, ,611 Net Cash Provided by Operating Activities 3,096 24,615 27,711 Cash Flows from Investing Activities Cash received from interest earnings Net Cash Provided by Investing Activities Cash Flows from Capital and Related Financing Activities Purchase of capital assets (5,601) (5,601) Principal paid on long-term debt (15,000) (15,000) Cash paid for interest expense (3,721) (3,721) Net Cash Used by Capital and Related Financing Activities (24,322) (24,322) Net Increase in Cash 3, ,417 Cash and Cash Equivalents - Beginning 241,396 28, ,868 Cash and Cash Equivalents - Ending $ 244,492 $ 28,793 $ 273,285 Reconciliation of Operating Income to Net Cash Provided by (used in) Operating Activities Operating income (loss) $ 2,008 $ 17,767 $ 19,775 Depreciation expense 1,088 6,848 7,936 Net Cash Provided by Operating Activities $ 3,096 $ 24,615 $ 27,711 See accompanying notes. 19

24 STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS CITY OF JASPER Assets Cash and cash equivalents $ Private Purpose Trust 24,018 Liabilities Due to other funds 27,791 Net Assets Held in trusts for individuals $ (3,773) See accompanying notes. 20

25 NOTES TO FINANCIAL STATEMENTS CITY OF JASPER, ALABAMA NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Jasper, Alabama (the "City") operates under a Mayor-Council form of government. The City/s major operations include police and fire protection, parks, library and recreation, public works, and general administrative services. In addition, the City owns and operates two cemeteries. The City/s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GMp l ) 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 GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes the ultimate authority on GMP for state and local governmental units. Governments are also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements. Although the City has the option to apply FASB pronouncements issued after that date to its business-type activities and enterprise funds, the City has chosen not to do so. The more significant accounting policies established by GAAP and used by the City are discussed below. As required by GMP, these financial statements present the City and its component units, separate legal entities for which the City is considered to be financially accountable. The City has no blended component units. On the other hand, the City does have two discretely presented component units. The Jasper City Board of Education has a September 30 year end, and the Industrial Development Board of the City of Jasper, Alabama has a December 31 year end. Jasper City Board of Education - Five members of the Board of Education are appointed by the City and the Board of Education as an agency of the State of Alabama under the general supervision and financial jurisdiction of the Alabama State Department of Education. The City is obligated in some manner for the debt of the Board of Education and the City levies a sales tax specifically for operations of the Board of Education. Complete financial statements for the Jasper City Board of Education may be obtained at the following administrative office: Jasper City Board of Education, th Street West, P.O. Box 500, Jasper, Alabama Industrial Development Board of the City of Jasper, Alabama - The Industrial Development Board's board members are appointed by the City and the City is obligated in some manner for the debt of the Industrial Development Board. Complete financial statements for the Industrial Development Board may be obtained at the following administrative office: Industrial Development Board, P.O. Box 972, Jasper, Alabama

26 NOTES TO FINANCIAL STATEMENTS CITY OF JASPER, ALABAMA NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Related Organizations - The City is also responsible for appointing a voting majority of the boards of other organizations, but the City's financial accountability for these organizations does not extend beyond making the appointments, or the financial resources and obligations of these organizations are immaterial. The City appointed a voting majority of the following boards: Jasper Water Works and Sewer Board, Inc., City of Jasper Library Board, City of Jasper Housing Authority, City of Jasper Board of Zoning Adjustments, City of Jasper Housing Authority, and City of Jasper Medical and Public Building Authority. These organizations are related organizations, which have not been included in the reporting entity. Government-Wide and Fund Financial Statements The City's basic financial statements include both government-wide and fund financial statements. Government-wide financial statements focus on the City as a whole, and are designed to allow the users of financial reports to assess the City's operational accountability. The fund financial statements focus on major individual funds, and are designed to demonstrate the City's fiscal accountability. Operational accountability refers to the City's responsibility to report the extent to which it has met its operating objectives efficiently and effectively, using all resources available for that purpose, and whether it can continue to meet those objectives for the foreseeable future. Fiscal accountability is the City's responsibility to demonstrate that its actions in the current period have complied with public decisions concerning the raising and spending of public money in the short term (usually one budgetary cycle or one year). For the most part, the effect of interfund activity has been removed from the government-wide financial 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 government-wide statement of activities reflects both the gross and net costs per functional category (i.e., general government, public safety, etc.) by offsetting direct expenses with program revenues. Direct expenses are those that are clearly identifiable with a specific program. 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, and 2) operating or capital grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported as general revenues. The fund financial statements provide separate financial statements for governmental funds, proprietary funds and fiduciary funds (even though fiduciary funds are excluded from the government-wide financial statements). The emphasis of the fund financial statements is on the City's major funds, and each major fund is reported in a separate column. Non-major funds of each type are summarized into a single column. 22

27 NOTES TO FINANCIAL STATEMENTS CITY OF JASPER, ALABAMA NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 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 and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when the related liability is incurred. Property taxes are recognized as revenues in the year 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 available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose! the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred. However! debt service expenditures! as well as expenditures related to compensated absences and claims and judgments! are recorded only when payment is due. Property taxes! sales and use taxes! beer taxes! lodging taxes! rental and leasing taxes! payments in lieu of taxes! intergovernmental revenue 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 year. All other revenues are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General Fund - The General Fund is the main operating fund of the City. It is used to account for all financial resources 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. Alcohol Fund - The Alcohol Fund is a Special Revenue Fund used to account for the revenue collected from the sale of alcoholic beverages within the City. There are no restrictions on the use of these funds. This fund is used to purchase capital outlay items! pay debt service! provide education funds! and provide funds for payment of lawsuits. It also currently pays the cost of an inspection officer. Project Fund - The Project Fund is a Special Revenue Fund established to account for garbage service provided by the City. Garbage fees collected from businesses and residents are deposited into this fund. The fees collected for garbage service are used to pay for certain garbage expenses and capital improvements. 23

28 NOTES TO FINANCIAL STATEMENTS CITY OF JASPER, ALABAMA NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued The City reports the following major proprietary funds to account for the activities associated with the respective cemeteries: New Prospect Cemetery North Oakhill Cemetery Additionally, the City reports the following fund types: Special Revenue Funds - The City's nonmajor special revenue funds are used to account for resources that are legally restricted to expenditure for specific purposes, not including those accounted for in capital projects funds. Debt Service Funds - Debt service funds account for the payment of principal and interest on long-term debt not financed by proprietary funds. Capital Projects Funds - The City's non major capital projects funds account for the costs of constructing or acquiring capital assets and major improvements other than those financed by proprietary funds. Fiduciary Funds: Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support City programs. The reporting focus is on net assets and changes in net assets and is reported using accounting principles similar to proprietary funds. The City's fiduciary fund is presented in the fiduciary fund financial statements by type. Since by definition these assets are being held for the benefit of a third party (other private parties) and cannot be used to address activities or obligations of the government, this fund is not incorporated into the government-wide statements. The City maintains the following fiduciary fund: Hazardous Duty Pay - In 1992 the Legislature of the State of Alabama enacted a bill enabling the City of Jasper to levy additional court costs and charges of twelve dollars ($12) upon any criminal or civil case whose jurisdiction is in the City of Jasper Municipal Court of the 14th Judicial Circuit. The legislative act requires that money collected from these charges be placed in a special fund know as the Hazardous Duty Pay Fund. As funds are available, each police officer is entitled to hazardous duty pay of $150 per month, and each jailer is entitled to $100 per month. Funds are transferred into the Hazardous Duty Pay Fund as court costs are collected, and funds are transferred out as payroll to the police officers and jailers. 24