CITY OF PAGEDALE, MISSOURI. FINANCIAL REPORT (Audited)

Transcription

1 CITY OF PAGEDALE, MISSOURI FINANCIAL REPORT (Audited) Year Ended September 30, 2015

2 FINANCIAL REPORT INDEPENDENT AUDITOR S REPORT 1 Page MANAGEMENT S DISCUSSION AND ANALYSIS 4 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position - Modified Cash Basis 9 Statement of Activities - Modified Cash Basis 10 Fund Financial Statements: Balance Sheet - Modified Cash Basis - All Governmental Funds 11 Statement of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis - Governmental Funds 12 Statement of Net Position - Modified Cash Basis - Fiduciary Fund 13 Notes to Financial Statements 14 SUPPLEMENTAL INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Modified Cash Basis: General Fund 26 Parks and Stormwater Fund 31 Capital Improvement Fund 32 Nonmajor Governmental Funds: Combining Balance Sheet - Modified Cash Basis 33 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis 34 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Modified Cash Basis: Sewer Lateral Fund 35 Tax Increment Financing Fund 36 Fiduciary Fund Types: Statement of Changes in Assets and Liabilities - Agency Fund 37 Notes to Schedules of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - Modified Cash Basis 38 Contents

3 Hochschild, Bloom & Company LLP Certified Public Accountants Consultants and Advisors INDEPENDENT AUDITOR'S REPORT March 21, 2016 Honorable Mayor and Board of Aldermen CITY OF PAGEDALE, MISSOURI REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying modified cash basis financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the CITY OF PAGEDALE, MISSOURI (the City), as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note A-3; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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. D South Outer Forty Road, Suite 135, Chesterfield, Missouri , , Fax D 1000 Washington Square, P. 0. Box 1457, Washington, Missouri , , Fax ~ Pr"1meGlobal I A,A,<Ociotie,of ~ lndepende11t Accounting Firms

4 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Basis for Qualified Opinion on Governmental Activities Management has not recorded capital assets in governmental activities and accordingly, has not recorded depreciation expense on those assets. Accounting principles generally accepted in the United States of America when applied to such modified cash basis of accounting require that those capital assets be capitalized and depreciated, which would increase the assets, net position, and expenses of the governmental activities. The amount by which this departure would affect the assets, net position, and expenses of the governmental activities is not reasonably determinable. Opinions In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion on Governmental Activities paragraph, the financial statements referred to above present fairly, in all material respects, the respective modified cash basis financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City as of September 30, 2015, and the respective changes in modified cash basis financial position thereof for the year then ended in accordance with the modified cash basis of accounting described in Note A-3. Basis of Accounting We draw attention to Note A-3 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter. Other Matters - Supplemental Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The management s discussion and analysis and supplemental information, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, Page 2

5 and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole on the basis of accounting described in Note A-3. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated March 21, 2016 on our consideration of the City s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City s internal control over financial reporting and compliance. CERTIFIED PUBLIC ACCOUNTANTS Page 3

6 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 As management of the City of Pagedale, Missouri (the City), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, We encourage readers to consider the information presented here along with the City s financial statements, including the footnotes that follow this Management s Discussion and Analysis (MD&A). FINANCIAL HIGHLIGHTS On a government-wide basis the assets of the City exceeded its liabilities for the most recent fiscal year by $2,451,007 (net position). The City has unrestricted net position of $1,820,265. The cost of the governmental activities was $2,577,686 in fiscal year As of the close of the current year, the governmental funds reported combined ending fund balances of $2,451,007, a decrease of $230,202 in comparison to the prior year. Unassigned funds available for spending at the City s discretion amounted to $1,820,265 or 74.3% of total fund balance. At the end of the current fiscal year, unassigned fund balance for the General Fund was $1,820,265 or 90.3% of the General Fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This MD&A is intended to serve as an introduction to the City s financial statements. The City s financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains supplemental information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City s finances, in a manner similar to a private-sector business. The statement of net position - modified cash basis presents information on all of the City s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities - modified cash basis presents information showing how the City s net position changed during the most recent fiscal year. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of the City include general government, housing and sanitation, judicial, parks and stormwater, police protection, public works, and sewer. The City has elected to utilize a modified cash basis of accounting as explained in Note A-3 of the notes to financial statements. Page 4

7 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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, the governmental funds financial statements utilize a current financial resources measurement focus as applied to the modified cash basis of accounting. Only current financial assets and liabilities are generally included on their balance sheet. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. 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 City s near-term financial decisions. The City adopts an annual appropriated budget for its governmental funds. Budgetary comparison statements have been provided for the fund to demonstrate legal compliance with the respective adopted budget. Fiduciary fund. The City s fiduciary fund type consists of the Court Bond Fund, which accounts for the City s court bonds. 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. Supplemental information. This MD&A and the budgetary comparison schedules and combining statements represent additional financial information. Such information provides users of this report with data that supplements to government-wide financial statements, fund financial statements, and notes. CONDENSED FINANCIAL STATEMENTS A condensed version of the statement of net position - modified cash basis compared to the prior year follows: Page 5

8 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 September Change Amount Percent ASSETS Current and other assets $ 2,453,903 2,734,660 (280,757) (10.3) % LIABILITIES Current and other liabilities 2,896 53,451 (50,555) (94.6) NET POSITION Restricted 630, ,970 (88,228) (12.3) Unrestricted 1,820,265 1,962,239 (141,974) (7.2) Total Net Position $ 2,451,007 2,681,209 (230,202) (8.6) % A condensed version of the statement of activities - modified cash basis compared to prior year follows: Page 6

9 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 REVENUES Program revenues: For The Years Ended September Change Amount Percent Charges for services $ 608, ,909 (170,088) (21.8) % Operating grants and contributions 52,613 73,519 (20,906) (28.4) General revenues: Taxes: Sales 900, ,739 35, Property 132, ,518 (3,629) (2.7) Utilities 459, ,720 (21,430) (4.5) Other 154, ,652 3, Investment income 4,236 4,697 (461) (9.8) Lease income 32,694 32, Other 2,164 15,888 (13,724) (86.4) Total Revenues 2,347,484 2,538,086 (190,602) (7.5) EXPENSES General government 382, , , Housing/sanitation 281, ,241 (39,704) (12.4) Judicial 202, ,422 3, Parks and stormwater 55,872 53,760 2, Police protection 1,072,561 1,118,804 (46,243) (4.1) Public works 509, ,128 (58,244) (10.3) Sewer 12,475 13,305 (830) (6.2) Debt service: Principal 11,000-11, Interest and other fiscal charges 49,350-49, Total Expenses 2,577,686 2,471, , CHANGE IN NET POSITION (230,202) 66,321 (296,523) (447.1) NET POSITION, OCTOBER 1 2,681,209 2,614,888 66, NET POSITION, SEPTEM- BER 30 $ 2,451,007 2,681,209 (230,202) (8.6) % Page 7

10 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 Change in net position. The decrease in net position of $230,202 was mainly due to an increase in payments on the TIF note payable and development expenses in the TIF district in fiscal year FINANCIAL ANALYSIS OF THE CITY S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City s governmental funds is to provide information on inflows, outflows, and balances of available expendable resources. Such information is useful in assessing the City s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s resources available for spending at the end of the fiscal year. At September 30, 2015, the General Fund s total fund balance was $1,832,679. The General Fund balance decreased by $138,810 mainly due to the decrease in charges for services. Changes for the City s other major governmental funds can be described as follows: The Parks and Stormwater Fund balance increased by $68,843 mainly due to an increase in sales tax revenues and the receipt of grant money. The Capital Improvement Fund decreased by $606 which is relatively stable. GENERAL FUND BUDGETARY HIGHLIGHTS General Fund expenditures were $218,596 or 9.8% under budgeted expenditures of $2,234,309. This was mainly due to less expenditures paid for police protection than budgeted. General Fund revenues were $136,834 or 7% under the amount budgeted of $2,023,175, mainly due to a decrease in fine and court cost revenue. ECONOMIC FACTORS AND NEXT YEAR S BUDGET AND RATES The City expects General fund revenues to decrease and expenditures to increase in Anticipated decreases in sales and utility taxes account for the decrease in overall revenues. Increases in overall expenditures are expected for 2016 mainly due to additional expenses related to police protection. The City expects Capital Improvement Fund revenues to increase due to a grant from MODOT for road improvements, which will be offset by increased expenditures on the project. REQUESTS FOR INFORMATION This financial report is designed to provide our residents and taxpayers with a general overview of the City s finances and to show the City s accountability for the money it receives. If you have any questions about this report or need additional financial information, please contact the City Clerk s office at 1420 Ferguson Avenue, Pagedale, MO or telephone, Page 8

11 STATEMENT OF NET POSITION - MODIFIED CASH BASIS SEPTEMBER 30, 2015 ASSETS Cash and investments $ 2,453,903 LIABILITIES Due to fidudiary fund 1,017 Payroll and other liabilities 1,879 Total Liabilities 2,896 NET POSITION Restricted for: Protested taxes 12,414 Stormwater projects 344,320 Capital improvements 135,911 Sewer lateral repairs 120,604 Tax increment financing 17,493 Unrestricted 1,820,265 Total Net Position $ 2,451,007 See notes to financial statements Page 9

12 STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS FOR THE YEAR ENDED SEPTEMBER 30, 2015 Program Revenues Net Revenues Charges For Operating Grants And (Expenses) And Change FUNCTIONS/PROGRAMS Expenses Services Contribution In Net Position Governmental Activities General government $ 382, ,620 26,249 (56,616) Housing and sanitation 281,537 14,415 - (267,122) Judicial 202, (202,522) Parks and stormwater 55,872-26,364 (29,508) Police protection 1,072, ,511 - (809,050) Public works 509,884 1,700 - (508,184) Sewer 12,475 29,575-17,100 Debt service: Principal 11, (11,000) Interest and other fiscal charges 49, (49,350) Total Governmental Activities $ 2,577, ,821 52,613 (1,916,252) General Revenues Taxes: Sales 900,329 Property 132,889 Utilities 459,290 Other 154,448 Investment income Lease income Miscellaneous 4,236 32,694 2,164 Total General Revenues 1,686,050 CHANGE IN NET POSITION NET POSITION, OCTOBER 1 (230,202) 2,681,209 NET POSITION, SEPTEMBER 30 $ 2,451,007 See notes to financial statements Page 10

13 BALANCE SHEET - MODIFIED CASH BASIS - ALL GOVERNMENTAL FUNDS SEPTEMBER 30, 2015 Parks And Capital General Stormwater Improvement Nonmajor Fund Fund Fund Funds Total ASSETS Cash and investments $ 1,835, , , ,097 2,453,903 LIABILITIES AND FUND BALANCES Liabilities Payroll and other liabilities $ 1, ,879 Due to other funds 1, ,017 Total Liabilities 2, ,896 Fund Balances Restricted for: Protested taxes 12, ,414 Stormwater projects - 344, ,320 Capital improvements , ,911 Sewer lateral repairs , ,604 Tax increment financing ,493 17,493 Assigned: Subsequent year's budget; appropriation of fund balance 253, ,172 Unassigned 1,567, ,567,093 Total Fund Balances 1,832, , , ,097 2,451,007 Total Liabilities And Fund Balances $ 1,835, , , ,097 2,453,903 See notes to financial statements Page 11

14 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2015 Parks And Capital General Stormwater Improvement Nonmajor Fund Fund Fund Funds Total REVENUES Taxes $ 1,242, , ,065 69,302 1,646,956 Licenses and permits 277, ,974 Charges for services 45, ,575 75,458 Grants and contributions 26,249 10,000 16,364-52,613 Fines and court costs 255, ,389 Lease income 32, ,694 Investment income 3, ,236 Miscellaneous 2, ,164 Total Revenues 1,886, , ,794 99,129 2,347,484 EXPENDITURES Current: Administration 175,415 1, ,449 Community liaison 10, ,515 Housing and sanitation 281, ,537 Legislation 88, ,442 Municipal court 114, ,080 Police protection 1,032,997-39,564-1,072,561 Public works 257,526 54, , , ,051 YWCA 55, ,201 Debt service: Principal ,000 11,000 Interest ,350 49,350 Total Expenditures 2,015,713 55, , ,679 2,580,186 REVENUES OVER (UNDER) EXPEN- DITURES (129,372) 70,348 (56,128) (117,550) (232,702) OTHER FINANCING SOURCES (USES) Insurance recoveries 2, ,500 Transfers in ,522 13,443 68,965 Transfers out (11,938) (1,505) - (55,522) (68,965) Total Other Financing Sources (Uses) (9,438) (1,505) 55,522 (42,079) 2,500 NET CHANGE IN FUND BALANCES (138,810) 68,843 (606) (159,629) (230,202) FUND BALANCES, OCTOBER 1 1,971, , , ,726 2,681,209 FUND BALANCES, SEPTEMBER 30 $ 1,832, , , ,097 2,451,007 See notes to financial statements Page 12

15 STATEMENT OF NET POSITION - AGENCY FUND SEPTEMBER 30, 2015 ASSETS Cash $ 11,073 Due from General Fund 1,017 Total Assets $ 12,090 LIABILITIES Due to others - court appearance bonds $ 12,090 See notes to financial statements Page 13

16 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The CITY OF PAGEDALE, MISSOURI (the City) was incorporated in The City operates under a Mayor and Board of Aldermen form of government and provides various services including judicial, police protection, housing and sanitation, streets and public improvements, parks and stormwater, and general administrative services. The more significant accounting policies consistently applied by the City in the preparation of the accompanying financial statements are summarized below: 1. Reporting Entity The financial statements of the City include the financial activities of the City and any component units. The City does not currently have any component units. 2. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position - modified cash basis and the statement of activities - modified cash basis) report information on all of the nonfiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities - modified cash basis demonstrates the degree to which the direct expenses of a given function or segment is 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 included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement Focus Measurement focus is a term used to describe how transactions are recorded within the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied. Page 14

17 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) In the government-wide statement of net position - modified cash basis and the statement of activities - modified cash basis, governmental activities are presented using the economic resources measurement focus, within the limitations of the modified cash basis of accounting. However, the City has elected not to report capital assets and long-term debt. In the fund financial statements, all governmental funds utilize a current financial resources measurement focus as applied to the modified cash basis of accounting. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resourced during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. Basis of Accounting In the government-wide statement of net position - modified cash basis and statement of activities - modified cash basis and the fund financial statements, governmental activities are presented using a modified cash basis of accounting. This basis recognizes assets, liabilities, net position/fund equity, revenues, and expenses/expenditures when they result from cash transactions. This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. As a result of the use of this modified cash basis of accounting, certain assets and their related revenues (such as accounts receivable) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid and accrued expenses and liabilities) are not recorded in these financial statements. If the City utilized the basis of accounting recognized as accounting principles generally accepted in the United States of America, the fund financial statements for governmental funds would use the modified accrual basis of accounting. All government-wide financial statements would be presented on the accrual basis of accounting. The City reports the following major governmental funds: General Fund -- The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Parks and Stormwater Fund -- The Parks and Stormwater Fund is used to account for sales taxes to be used for parks and stormwater projects. Capital Improvement Fund -- The Capital Improvement Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities. Page 15

18 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Agency Funds -- The agency Funds are custodial in nature (costs equal liabilities) and do not involve the measurement of results of operations. The City s Agency Funds consist of the Court Bond Fund. 4. Property Taxes Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied in October of each year based on the assessed value as of the prior January 1 for all taxable real and personal property located within the City. Payment is due upon receipt of billing and becomes delinquent after December 31. All property tax assessment, billing, and collection functions are handled by the St. Louis County government. Taxes collected are remitted to the City by the St. Louis County Collector (the Collector) in the month subsequent to the actual collection date. 5. Cash and Investments Missouri state statutes authorize the City to invest in certain obligations of the U.S. Treasury, U.S. government and its agencies, collateralized repurchase agreements, collateralized public deposits (certificates of deposit), bankers acceptances, and commercial paper. Deposits in financial institutions in excess of federally insured amounts must be collateralized by securities pledged to the City by those same institutions. The collateral is required to be held by the City or by the trust department of a financial institution other than the pledging bank. Investments are reported at fair value. 6. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City maintains commercial insurance coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any significant uninsured losses to the City. 7. Fund Balance Policies The fund balance amounts are reported in the following applicable categories listed from the most restrictive to the least restrictive: Nonspendable -- The portion of fund balance that is not in a spendable form or is required to be maintained intact. Because the City uses the modified cash basis of accounting, it has no assets that fall into this category. Page 16

19 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 7. Fund Balance Policies (Continued) Restricted -- The portion of fund balance that is subject to external restrictions and constrained to specific purposes imposed by agreement, through constitutional provisions, or by enabling legislation. Committed -- The portion of fund balance with constraints or limitations by formal action (ordinance) of the Board of Aldermen, the highest level of decision-making authority. Assigned -- The portion of fund balance that the City intends to use for a specific purpose as determined by the applicable City officials to which the Board of Aldermen has designated authority. Unassigned -- Amounts that are available for any purpose; these positive amounts are reported only in the General Fund. When both restricted and unrestricted resources are available, the City will spend the most restricted amounts before the least restricted. 8. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Missouri Local Government Employees Retirement System (LAGERS) and additions to/deductions from LAGERS fiduciary net position have been determined on the same basis as they are reported by LAGERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. LAGERS investments are reported at fair value. See Note F. NOTE B - CASH AND INVESTMENTS 1. Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the City s deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City s bank deposits are required by state law to be secured by the deposit of certain securities specified at RSMo with the City or trustee institution. The value of the securities must amount to the total of the City s cash not insured by the Federal Deposit Insurance Corporation. As of September 30, 2015, the City s bank balances were entirely secured or collateralized with securities held by the City or by its agent in the City s name. Page 17

20 NOTES TO FINANCIAL STATEMENTS NOTE B - CASH AND INVESTMENTS (Continued) 2. Investments As of September 30, 2015, the City had the following investments: Maturities Fair No Less Than 1-5 Credit Value Maturity One Year Years Risk Certificates of deposit $ 1,093, , ,753 Not rated Money market funds 200, , Not rated Total Investments $ 1,293, , , ,753 Investment Policies Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Although the City has no formal investment policy regarding credit risk, the portfolio is diversified to reduce potential losses on individual securities. Interest Rate Risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Investments held for longer periods are subject to increased risk of adverse interest rate changes. The City has no formal investment policy regarding interest rate risk, but interest rate risk is minimized by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, therefore avoiding the need to sell securities on the open market prior to maturity and investing primarily in shorter term securities. Concentration of Credit Risk is the risk of loss attributed to the magnitude of the City s investment in a single issuer. The City has no formal investment policy relating to concentration of credit risk, but concentration of credit risk is minimized by diversifying the investment portfolio. Custodial Credit Risk is the risk that in the event of a bank failure, the City s deposits may not be returned or the City will not be fully able to recover collateral securities in the possession of an outside party. Protection of the City s deposits is provided by the FDIC, by eligible securities pledged by the financial institution, or by a single collateral pool established by the financial institution. NOTE C - COMMITMENTS AND CONTINGENCIES The City may be subject to claims and legal proceedings covering various matters that arise in the ordinary course of its activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the City. Page 18

21 NOTES TO FINANCIAL STATEMENTS NOTE C - COMMITMENTS AND CONTINGENCIES The City contracted the St. Louis County to provide communication services for its police department. Payments for services for the year ended September 30, 2015 amounted to $31,711. The contract is set up annually. The City contracted with the REJIS Commission to provide court record procession services. Payments for services for the year ended September 30, 2015 amounted to $39,034. NOTE D - LEASE The City leases a building to the YWCA at a monthly rent of $2,662 or $31,944 per year. The lease agreement expires on September 30, NOTE E - TIF REVENUE NOTE PAYABLE On December 1, 2014, the City entered into a Tax Increment Financing Revenue Note (Beyond Housing TIF Redevelopment Project) Series 2014 in the amount of $1,890,000 which is a special limited obligation of the City, payable solely from payments in lieu of taxes attributable to the increase in assessed value of real property and incremental increases in economic activity taxes from the project areas. The note does not constitute a general obligation of the City. The balance of the note outstanding at September 30, 2015 is as follows: Date Of Annual Balance Date Of Principal Original September 30 Date Issued Maturity Payment Amount 2015 Taxable Tax Increment Revenue Note (Beyond Housing TIF Redevelopment Project) Series May 1 $1,809,000 $1,789,000 NOTE F - PENSION PLAN Plan Description The City defined benefit pension plan provides certain retirement, disability, and death benefits to plan members and beneficiaries. The City participates in the LAGERS. LAGERS is an agent multiple-employer, statewide public employee pension plan established in 1967 and administered in accordance with RSMo As such, it is LAGERS responsibility to administer the law in accordance with the expressed intent of the General Assembly. The plan is qualified under the Internal Revenue Code Section 401(a) and is tax exempt. The responsibility for the operations and administration of LAGERS is vested in the LAGERS Board of Trustees consisting of seven persons. LAGERS issues a publicly available financial report that in- Page 19

22 NOTES TO FINANCIAL STATEMENTS NOTE F - PENSION PLAN (Continued) cludes financial statements and required supplementary information. This report may be obtained by accessing the LAGERS website at Benefits Provided LAGERS provides retirement, death and disability benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing LAGERS. All benefits vest after 5 years of credited service. Employees who retire on or after age 60 (55 for police) with 5 or more years of service are entitled to an allowance for life based upon the benefit program information provided below. Employees may retire with an early retirement benefit with a minimum of 5 years of credited service and after attaining age 55 (50 for police) and receive a reduced allowance Valuation Benefit multiplier Final average salary Member contributions 1.25% for life 5 years Noncontributory for employees Benefit terms provide for annual post retirement adjustments to each member s retirement allowance subsequent to the member s retirement date. The annual adjustment is based on the increase in the Consumer Price Index and is limited to 4% per year. Employees Covered by Benefit Terms At June 30, 2015, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 15 Inactive employees entitled to but not yet receiving benefits 22 Active employees 23 Contributions Total 60 The City is required to contribute amounts at least equal to the actuarially determined rate, as established by LAGERS. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance an unfunded accrued liability. Fulltime employees of the employer do not contribute to the pension plan. The City contribution rates are 0.2% (General) and 0.2% (Police) of annual covered payroll. Net Pension Liability The City s net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of February 28, Page 20

23 NOTES TO FINANCIAL STATEMENTS NOTE F - PENSION PLAN (Continued) Actuarial Assumptions The total pension liability in the February 28, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increase Investment rate of return 3.5% wage inflation; 3% price inflation 3.5% to 6.8% including wage inflation 7.25%, net of investment and administrative expenses Mortality rates were based on 105% of the 1994 Group Annuity Mortality Table set back zero years for both males and females. The actuarial assumptions used in the February 28, 2015 valuation were based on the results of an actuarial experience study for the period March 1, 2005 through February 28, The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment expenses and inflation) are developed for each major asset class. These ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Expected Real Rate Asset Class Allocation Of Return Equity 48.50% 5.50% Fixed income Real assets Strategic Assets Discount Rate The discount rate used to measure the total pension liability is 7.25%. The projection of cash flows used to determine the discount rate assumes that employer and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for employers. Based on these assumptions, the pension plan s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payment to determine the total pension liability. Page 21

24 NOTES TO FINANCIAL STATEMENTS NOTE F - PENSION PLAN (Continued) Changes in the Net Pension Liability Total Pension Liability (a) Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (Asset) (b) (a) - (b) Balances at June 30, 2014 $ 1,256,154 6,721,260 (5,465,106) Changes for the year: Service cost 57,125-57,125 Interest 91,281-91,281 Difference between expected and actual experience (21,134) - (21,134) Contributions - employer - 1,497 (1,497) Net investment income - 131,122 (131,122) Benefit payments, including refunds (51,237) (51,237) - Administrative expense - (3,448) 3,448 Other changes - 242,280 (242,280) Net Changes 76, ,214 (244,179) Balances at June 30, 2015 $ 1,332,189 7,041,474 (5,709,285) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the employer, calculated using the discount rate of 7.25%, as well as what the employer s net pension liability would be using a discount rate that is 1% point lower (6.25%) or 1% point higher (8.25%) than the current rate. Current Single Discount 1% Decrease Rate Assumption 1% Increase Total pension liability $ 1,538,190 1,332,189 1,164,935 Plan fiduciary net position 7,041,474 7,041,474 7,041,474 Net Pension Asset $ (5,503,284 ) (5,709,285 ) (5,876,539 ) Page 22

25 NOTES TO FINANCIAL STATEMENTS NOTE F - PENSION PLAN (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2015 the employer recognized negative pension expense of $1,485. Reported deferred outflows and inflows of resources are related to the following sources: Outflows Inflows Net Outflows Differences in experience $ 4,435 (18,005) (13,570) Excess investment returns 290, ,323 Contributions subsequent to the measurement date Total $ 295,142 (18,005) 277,137 Amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For The Years Ending June $ 65, , , ,223 Total $ 277,137 NOTE G - INTERFUND TRANSACTIONS Individual interfund transactions are as follows: For The Year Ended September 30 Transfers In Transfers Out 2015 Tax Increment Financing Fund General Fund $ 11,938 Tax Increment Financing Fund Parks and Stormwater Fund 1,505 Capital Improvement Fund Tax Increment Financing Fund 55,522 Total $ 68,965 Page 23

26 NOTES TO FINANCIAL STATEMENTS NOTE G - INTERFUND TRANSACTIONS (Continued) Interfund transfers were used to move revenues from the fund that ordinance or budget requires to collect them to the fund that ordinance or budget requires to expend them. NOTE H - PRIOR PERIOD ADJUSTMENTS The previously stated net position/fund balance has been restated as follows: General Fund Governmental Activities Net position/fund balance, September 30, 2014, as previously stated $ 1,997,739 2,707,459 Restatement for insurance deposits held on behalf of residents (26,250) (26,250) Net Position/Fund Balance, September 30, 2014, As Restated $ 1,971,489 2,681,209 NOTE I - RESTRICTED NET POSITION The government-wide statement of net position report $630,742 of restricted net position, all of which is restricted by enabling legislation. Page 24

27 SUPPLEMENTAL INFORMATION SUPPLEMENTAL INFORMATION SECTION Page 25

28 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - BUDGET AND ACTUAL - MODIFIED CASH BASIS - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2015 Original Over And Final (Under) Budget Actual Budget REVENUES Taxes Cable and utility $ 485, ,290 (26,210) Cigarette 7,000 8,797 1,797 Motor vehicle taxes and fees 143, ,193 (8,807) Property 92,500 81,998 (10,502) Road and bridge 25,000 30,589 5,589 Sales 475, ,978 52,978 Total Taxes 1,228,000 1,242,845 14,845 Licenses and permits 257, ,974 20,199 Charges for services 89,000 45,883 (43,117) Grants and contributions - 26,249 26,249 Fines and court costs 404, ,389 (148,611) Lease income 30,000 32,694 2,694 Investment income 4,000 3,227 (773) Miscellaneous 10,400 2,080 (8,320) Total Revenues 2,023,175 1,886,341 (136,834) EXPENDITURES Administration Contractual services 1, (533) Dues and subscriptions (185) Equipment rental (164) Employee training 1,000 - (1,000) Insurance 5,800 4,290 (1,510) Janitorial 2,600 2,566 (34) Miscellaneous 4,000 7,311 3,311 Office supplies 2, (1,240) Payroll taxes 7,200 6,655 (545) Postage (328) Printing (39) Professional fees 35,000 41,548 6,548 Repairs 1,000 - (1,000) Salaries and benefits 105, ,583 (1,246) (Continued) Page 26

29 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - BUDGET AND ACTUAL - MODIFIED CASH BASIS - GENERAL FUND (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2015 Original Over And Final (Under) Budget Actual Budget EXPENDITURES (Continued) Administration (Continued) Telephone 1, (249) Website 3,000 2,739 (261) Bank charges (84) Building: Utilities 3,000 1,545 (1,455) Maintenance 1, (887) Capital outlay Total Administration 176, ,415 (814) Community Liaison Miscellaneous 11,400 6,298 (5,102) Postage (197) Printing 6,000 4,214 (1,786) Total Community Liaison 17,600 10,515 (7,085) Housing and Sanitation Contractual services 251, ,857 (12,643) Dues and subscriptions (500) Equipment rental (182) Inspections 11,000 10,809 (191) Insurance 3,000 2,957 (43) Janitorial 1, (408) Miscellaneous (496) Mosquito control 1, (127) Office supplies (343) Payroll taxes 1,300 2, Postage (89) Printing (242) Repairs 1, (1,262) Salaries and benefits 29,200 21,333 (7,867) Telephone 1, (531) Training (200) Utilities 1, (473) Vehicle 1,100 1, Capital outlay Total Housing And Sanitation 305, ,537 (24,263) (Continued) Page 27

30 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - BUDGET AND ACTUAL - MODIFIED CASH BASIS - GENERAL FUND (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2015 Original Over And Final (Under) Budget Actual Budget EXPENDITURES (Continued) Legislation Contractual services Dues and subscriptions 2, (2,070) Equipment rental 1, (1,182) Insurance 6,000 2,848 (3,152) Janitorial 2,100 1,838 (262) Miscellaneous 3, (2,983) Office supplies (244) Payroll taxes 6,000 5,622 (378) Postage (289) Printing Repairs 1, (925) Salaries and benefits 75,500 73,927 (1,573) Telephone (257) Training 3, (2,800) Utilities 2,000 1,039 (961) Website Total Legislation 104,700 88,442 (16,258) Municipal Court Capital outlay - 1,080 1,080 Contractual services 10,300 9,331 (969) Equipment rental (174) Insurance 4,000 3,478 (522) Janitorial 2,600 3, Legal fees 20,000 26,522 6,522 Miscellaneous (247) Office Supplies 2, (1,227) Payroll taxes 4,200 3,915 (285) Postage 2, (1,487) Printing 1, (890) Repairs 2, (2,249) Salaries and benefits 62,030 61,311 (719) Telephone 1,800 1,170 (630) Training 1, (989) Utilities 3,100 2,058 (1,042) Total Municipal Court 117, ,080 (3,150) (Continued) Page 28

31 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - BUDGET AND ACTUAL - MODIFIED CASH BASIS - GENERAL FUND (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2015 Original Over And Final (Under) Budget Actual Budget EXPENDITURES (Continued) Police Protection Contractual services 64,000 62,138 (1,862) Dues and subscriptions (750) Equipment rental 2, (1,868) Insurance 95,000 82,853 (12,147) Janitorial 9,500 8,967 (533) Office supplies 3,000 1,341 (1,659) Payroll taxes 57,000 56,480 (520) Police supplies and equipment 10,300 2,860 (7,440) Postage (464) Printing 2, (1,407) Prisoner expenses 2, (1,779) Repairs 34,000 13,871 (20,129) Salaries and benefits 799, ,085 (72,665) Miscellaneous 5,000 4,685 (315) Telephone 6,000 3,539 (2,461) Training 6,000 4,168 (1,832) Uniforms 17,000 14,227 (2,773) Utilities 6,000 5,138 (862) Vehicle 54,500 34,333 (20,167) Website Capital outlay 20,000 9,581 (10,419) Total Police Protection 1,194,550 1,032,997 (161,553) Public Works Contractual services 1, (1,187) Dumping fees 4,000 3,175 (825) Equipment rental (181) Insurance 33,000 30,196 (2,804) Janitorial (258) Landscaping services 5,000 2,006 (2,994) Miscellaneous 5,000 2,152 (2,848) Office and safety supplies (525) Payroll taxes 8,000 6,432 (1,568) Postage (230) Printing - 2,233 2,233 Repairs 13,500 6,810 (6,690) (Continued) Page 29