City of Princeton, Illinois. Annual Financial Report. For the Fiscal Year Ended April 30, 2015

Transcription

1 Annual Financial Report For the Fiscal Year Ended

2 TABLE OF CONTENTS Page Management s Discussion and Analysis... 4 Independent Auditors Report... 9 Basic Financial Statements: Statement of Net Position Statement of Activities Balance Sheet Governmental Funds Reconciliation of Fund Balance of Governmental Funds to the Statement of Net Position of Governmental Activities Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Governmental Activities in the Statement of Activities Statement of Net Position Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Statement of Fiduciary Net Position Pension Trust Funds Statement of Changes in Fiduciary Net Position Pension Trust Funds Notes to Financial Statements Required Supplementary Information: Illinois Municipal Retirement Fund Schedule of Funding Progress - Unaudited Budgetary Comparison Schedule General Fund Unaudited Budgetary Comparison Schedule Library Fund Unaudited... 61

3 TABLE OF CONTENTS Continued Budgetary Comparison Schedule Motor Fuel Fund Unaudited Budgetary Comparison Schedule Garbage Fund Unaudited Page Budgetary Comparison Schedule Economic Development Fund Unaudited Notes to Required Supplementary Information Other Schedules: Combining Balance Sheet Non-Major Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balance Non-Major Governmental Funds Electric and Water Services Billing Data Unaudited Insurance Coverage Unaudited Schedule of Assessed Valuation, Property Tax Rates and Tax Extensions Unaudited Schedule of Legal Debt Margin Unaudited... 72

4 Management s Discussion and Analysis This section of the City of Princeton s annual financial report presents our discussion and analysis of the City s financial performance during the fiscal years that ended and Throughout this report, information regarding Perry Memorial Hospital will be referred to as the hospital or the Component Unit Business-Type Activity. It is not the intention of the report to highlight the financial condition of Perry Memorial Hospital. An independent audit of the hospital is conducted outside the audit for the City of Princeton; however, Perry Memorial Hospital is a City owned hospital and therefore, the City must include financial information regarding such. Financial Highlights The City of Princeton has implemented the GASB 34 reporting model, which among other changes requires amounts for depreciation of capital assets within governmental activities. Shown within the Statement of Net Position, year-end net position balances for fiscal year 2015 are $68,219,617. This is comprised of $31,217,048 for governmental activities plus $37,002,569 for business-type activities. Total costs of the City s governmental activities were $11,577,631. In the City s business-type operating activities, expenses were $14,827,641. Total revenues for the City s governmental and business-type activities were $25,690,480. Overview of the Financial Statements This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the City as a whole and present a long-term view of the City s finances. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City s operations in more detail than the government-wide statements by providing information about the City s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. -4-

5 Management s Discussion and Analysis Continued Overview of the Financial Statements Continued Reporting the City as a Whole The Statement of Net Position and the Statement of Activities One of the most important questions asked about the City s finances is Is the City as a whole better off or worse off as a result of the year s activities? The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the City s net position and changes in them. Over time, increases or decreases in the City s net position is one indicator of whether its financial position is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the City s property tax base and the condition of the City s roads, to assess the overall position of the City. Reporting the City s Most Significant Funds Fund Financial Statements Some funds are required to be established by State law and bond covenants. However, the City establishes many funds to control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money. The City s three types of funds (governmental, business-type and fiduciary) use different accounting approaches: Governmental Funds Most of the City s basic services are included in governmental funds, which focus on (1) how cash and other financial assets that can readily be converted to cash flows into and out of these funds and (2) the balances left at year-end that are available for spending. Consequently, the governmental funds statements provide a detailed shortterm view that helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City s programs. We describe the relationship (or differences) between governmental activities and governmental funds at the bottom of the governmental funds statement. Business-Type Activities The City charges fees to customers to help it cover all or most of certain services it provides. The City s water, sewer and electric systems are reported here. -5-

6 Management s Discussion and Analysis Continued Overview of the Financial Statements Continued Reporting the City s Most Significant Funds Fund Financial Statements Continued Fiduciary Funds The City has fiduciary responsibilities for other assets that can be used only for the trust beneficiaries. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City s fiduciary activities are reported in a separate Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. Financial Analysis of the City as a Whole Governmental Activities Business-Type Activities Total April 30, April 30, April 30, April 30, April 30, April 30, Current and other assets $ 2,832,950 $ 4,094,513 $ 6,770,472 $ 5,566,396 $ 9,603,422 $ 9,660,909 Capital assets 39,659,042 40,971,611 57,915,437 59,473,566 97,574, ,445,177 Total assets $ 42,491,992 $ 45,066,124 $ 64,685,909 $ 65,039,962 $ 107,177,901 $ 110,106,086 Long-term liabilities $ 7,967,681 $ 8,795,156 $ 24,873,356 $ 26,929,738 $ 32,841,007 $ 35,724,894 Other liabilities 1,890,028 1,787,198 2,809,984 2,848,982 4,700,012 4,636,180 Total liabilities 9,857,709 10,582,354 27,683,340 29,778,720 37,541,019 40,361,074 Deferred revenue 1,417,265 1,119, ,417,265 1,119,702 Net position: Invested in capital assets, net of debt 30,689,792 31,110,536 30,825,210 30,521,417 61,515,032 61,631,953 Restricted 1,886,131 2,421, ,886,131 2,421,730 Unrestricted (1,358,905) (168,198) 6,177,359 4,739,825 4,818,454 4,571,627 Total net position 31,217,018 33,364,068 37,002,569 35,261,242 68,219,617 68,625,310 Total liabilities and net position $ 42,491,992 $ 45,066,124 $ 64,685,909 $ 65,039,962 $ 107,177,901 $ 110,106,086-6-

7 Management s Discussion and Analysis Continued Change in Net Position Governmental Activities Business-Type Activities Total April 30, April 30, April 30, April 30, April 30, April 30, Revenues: Program Revenues: Charges for services $ 3,263,529 $ 3,470,544 $ 16,259,442 $ 16,365,259 $ 19,522,971 $ 19,835,803 Grants 85, , ,109,924 86,175 1,341,059 General Revenues: Property taxes 1,033,267 1,217, ,033,267 1,217,616 Intergovernmental taxes 4,036,962 3,874, ,036,962 3,874,476 Investment income 42,700 40,174 3,211 4,361 45,911 44,535 Miscellaneous 965, , , ,479 Transfers 74, ,000 (74,800) (462,000) - - Total revenues 9,501,834 10,103,424 16,188,646 17,017,544 25,690,480 27,120,968 Expenses: General government $ 3,262,465 $ 2,941,972 $ - $ - $ 3,262,465 $ 2,941,972 Public safety 3,842,001 4,374, ,842,001 4,374,267 Public works 2,931,599 2,521, ,931,599 2,521,561 Culture and recreation 883, , , ,714 Development 160,018 63, ,018 63,654 Cemetery 271, , , ,005 Garbage 227, , , ,463 Water - - 2,791,636 2,639,335 2,791,636 2,639,335 Electric ,658,981 10,938,735 10,658,981 10,938,735 Sewer - - 1,377,024 1,406,189 1,377,024 1,406,189 Total expenses 11,577,631 11,529,636 14,827,641 14,984,259 26,405,272 26,513,895 Changes in net position $ (2,075,797) $ (1,426,212) $ 1,361,005 $ 2,033,285 $ (714,792) $ 607,073 Capital Assets At the end of fiscal year 2015, the City of Princeton had $97,574,479, invested in capital assets, net of depreciation. These assets represent equipment, buildings and structures and infrastructure. Historically, only capital assets in the business-type funds were capitalized. As part of GASB 34, the City established a threshold for capitalization in the amount of $50,000, based on a per item basis. Infrastructure is valued at the composite cost. Infrastructure that has been capitalized to comply with GASB 34 includes, but is not limited to, City right-of-way property, streets, alleys, sidewalks and storm sewer. Depreciation is calculated based on the straight-line method. This year s major expenditures were electric, sewer and water department upgrades along with police equipment. -7-

8 Management s Discussion and Analysis Continued Debt At year-end, the City had $13,741,880 in bonds outstanding. The City has $21,925,989 in bank and IL EPA loans outstanding. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers and creditors with a general overview of the City s finances and to demonstrate the City s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City Clerk at City of Princeton, 2 South Main Street, Princeton, IL

9 Independent Auditors Report The Honorable Mayor and City Council City of Princeton, Illinois We have audited the accompanying financial statements of the governmental activities, business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Princeton, Illinois ( City ), as of and for the year ended, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Julia Rackley Perry Memorial Hospital Fund, which represents 34.73%, 42.37%, and 67.33% respectively, of the assets, net position, and revenues of the business-type activities of the City. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for the City of Princeton, is based solely 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

10 Unmodified Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City, as of April 30, 2015, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with the accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, the Illinois Municipal Retirement Fund Schedule of Funding Progress, and budgetary comparison information on pages 59 and 60 through 64 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Princeton, Illinois s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 27, 2015, on our consideration of the City of Princeton s internal control over financial reporting and on our test of its compliance with certain provision 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 of Princeton s internal control over financial reporting and compliance. Bloomington, Illinois October 27, 2015

11 BASIC FINANCIAL STATEMENTS

12 Statement of Net Position Governmental Business-Type Component Activities Activities Total Unit Assets Cash and cash equivalents $ (497,706) $ 5,516,131 $ 5,018,425 $ 6,915,411 Investments 388, ,811 - Receivables, net: Property taxes 1,372,100-1,372,100 - Intergovernmental taxes 732, ,647 - Accounts 174, , ,216 3,213,256 Prepaid expenses 54,781 53, , ,383 Inventory - 744, , ,867 Interfund balance 48,179 (48,179) - - Notes receivable 559, ,377 6,952,329 Capital assets (net of accumulated depreciation) 39,659,042 57,915,437 97,574,479 16,631,796 Total assets $ 42,491,992 $ 64,685,909 $ 107,177,901 $ 34,424,042 Liabilities Accounts payable $ 155,001 $ 79,230 $ 234,231 $ 1,775,970 Accrued expenses 623, ,677 1,038,142 2,694,327 Accrued interest 109, , ,214 - Deposits - 99,206 99,206 - Notes payable: Due within one year 298,099 1,139,650 1,437, ,688 Due in more than one year 497,997 19,990,243 20,488,240 1,525,822 Bonds payable: Due within one year 703, ,000 1,613,470 - Due in more than one year 7,383,410 4,745,000 12,128,410 - Other long-term debt 86, , , ,742 Total liabilities 9,857,709 27,683,340 37,541,049 7,224,549 Deferred Inflows of Resources Deferred revenue 1,417,265-1,417,265 - Net Position Invested in capital assets, net of related debt 30,689,792 30,825,210 61,515,002 14,490,286 Restricted for: Hospital ,876 Motor fuel tax 398, ,737 - Tax increment Cemetery trust 78,074-78,074 - Library trust 111, ,700 - Garage 537, ,072 - Library 398, ,593 - Debt service Insurance 361, ,955 - Unrestricted (1,358,905) 6,177,359 4,818,454 12,005,331 Total net position 31,217,018 37,002,569 68,219,587 27,199,493 Total liabilities deferred inflow of recourses and net position $ 42,491,992 $ 64,685,909 $ 107,177,901 $ 34,424,042 The accompanying notes are an integral part of this statement. -12-

13 Statement of Activities For the Year Ended Program Revenues Operating Charges for Fines, fees Grants and Expenses Services and permits Contributions Governmental Activities General government $ 2,474,377 $ 1,816,324 $ 151,212 $ - Public safety 3,842, ,607 46,886 20,579 Public works 2,931, ,875 Culture and recreation 883,039 54,462-11,142 Economic development 160, ,640-34,294 Building and zoning 490,946-24,839 - Cemetery 271,281 73, Garbage 227, , Interest on long-term debt 297, Total governmental activities 11,577,631 3,263, ,937 85,382 Business-Type Activities Water 2,791,636 2,675, Electric 10,658,981 11,092, Sewer 1,377,024 2,490, Total business-type activities 14,827,641 16,259, Total primary government $ 26,405,272 $ 19,522,971 $ 222,937 $ 86,175 Component Unit: Hospital $ 35,323,461 $ 33,476,809 $ - $ 85,789 General revenues: Taxes: Property Income tax Motor fuel tax Replacement tax Sales tax Use tax Telecommunications tax Video gaming tax Miscellaneous Investment income Transfers Total general revenues and transfers Change in net position Net position, beginning of year, as restated Net position, end of year The accompanying notes are an integral part of this statement.

14 Program Net (Expense) Revenue and Revenues Changes in Net Position Capital Business- Grants and Governmental Type Component Contributions Activities Activities Total Unit $ - $ (506,841) $ - $ (506,841) $ - - (3,078,929) - (3,078,929) - - (2,912,724) - (2,912,724) - - (817,435) - (817,435) - - (19,084) - (19,084) - - (466,107) - (466,107) - - (197,222) - (197,222) , , (297,142) - (297,142) - - (8,005,783) - (8,005,783) (115,762) (115,762) , , ,113,699 1,113, ,432,594 1,432,594 - $ - $ (8,005,783) $ 1,432,594 $ (6,573,189) $ - $ - $ - $ - $ - $ (1,760,863) 1,033,267-1,033, , , , , , ,425-2,396,464-2,396, , , , ,274-88,448-88, , ,257-42,700 3,211 45,911 46,382 74,800 (74,800) - - 5,929,986 (71,589) 5,858,397 46,382 (2,075,797) 1,361,005 (714,792) (1,714,481) 33,292,845 35,641,564 68,934,409 28,913,974 $ 31,217,048 $ 37,002,569 $ 68,219,617 $ 27,199,

15 Balance Sheet Governmental Funds Motor General Library Fuel Tax Garbage Fund Fund Funds Fund Assets Cash and cash equivalents $ (282,659) $ 253,725 $ 428,966 $ 530,983 Investments 54, , Receivable, net: Property taxes 586, , Intergovernmental taxes 706,006-17,816 - Other 154, ,814 Due from other funds 4, Total assets $ 1,223,021 $ 872,493 $ 446,782 $ 550,797 Liabilities Accounts payable $ 52,241 $ - $ 34,482 $ 6,836 Accrued expenses 613, ,889 Due to other funds 200,791-13,563 - Total liabilities 867,000-48,045 13,725 Deferred inflows of Resources Deferred revenue 631, , Fund Balance Restricted: Motor fuel tax ,737 - Tax increment Cemetery trust Library trust - 111, Library - 398, Debt service Assigned: Garbage ,072 Unassigned (275,944) Total fund balance (275,944) 510, , ,072 Total liabilities and fund balance $ 1,223,021 $ 872,493 $ 446,782 $ 550,797 The accompanying notes are an integral part of this statement. -14-

16 Balance Sheet Governmental Funds Continued Economic Other Development Governmental Fund Funds Total Assets Cash and cash equivalents $ (733,447) $ (1,118,129) $ (920,561) Investments - 78, ,811 Receivable, net: Property taxes - 423,100 1,372,100 Intergovernmental taxes 8, ,647 Other ,761 Due from other funds - 443, ,286 Total assets $ (724,622) $ (172,427) $ 2,196,044 Liabilities Accounts payable $ - $ 7,442 $ 101,001 Accrued expenses - 2, ,465 Due to other funds 169,539 9, ,207 Total liabilities 169,539 19,364 1,117,673 Deferred Inflows of Resources Deferred revenue - 423,100 1,417,265 Fund Balance Restricted: Motor fuel tax ,737 Tax increment Cemetery trust - 78,074 78,074 Library trust ,700 Library ,593 Debt service Assigned: Garbage ,072 Unassigned (894,161) (692,965) (1,863,070) Total fund balance (894,161) (614,891) (338,894) Total liabilities and fund balance $ (724,622) $ (172,427) $ 2,196,044 The accompanying notes are an integral part of this statement. -15-

17 Reconciliation of Fund Balance of Governmental Funds to the Statement of Net Position of Governmental Activities Fund balance of governmental funds $ (338,894) Amounts reported for governmental activities in the statement of net position are different because: Capital assets of $61,545,587 net of accumulated depreciation of $21,495,545 are not current financial resources and, therefore, are not reported in the governmental fund financial statements. 39,659,042 Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 559,377 Other assets not available to defray the costs of current expenses are not reported in the fund financial statements. 54,781 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund are included in government activities in the statement of net position. 361,955 Certain liabilities, including bonds payable, accrued interest and bond premiums are not due and payable in the current period and therefore are not reported in the funds: Bond premium $ (86,274) Accrued interest payable (109,993) Bonds and notes payable (8,882,976) (9,079,243) Net position of governmental activities $ 31,217,018 The accompanying notes are an integral part of this statement. -16-

18 Statement of Revenues, Expenditures and Change in Fund Balance Governmental Funds For the Year Ended Motor General Library Fuel Tax Garbage Fund Fund Funds Fund Revenues: Property taxes $ 621,743 $ 305,401 $ - $ - Income tax 771, Motor fuel tax ,873 - Replacement tax 100,728 10, Sales tax 2,396, Use tax 154, Telecommunications tax 261, Video gaming tax Other taxes 122, Charges for services 697,886 52, ,929 Fines and fees 171, License and permits 51, Grants and donations 75,315 9, Interest 12,901 2, Revolving loan repayments Other 557,534 61, Total revenues 5,996, , , ,265 Current Expenditures: General government 408, Public safety 3,586, Public works 1,327,468-75,130 - Economic development 39, Culture and recreation 274, , Building and zoning 271, Cemetery Garbage ,946 Debt service: Principal 258, ,000 33,418 Interest 28,125-47,850 3,430 Capital outlay 408, ,526 - Total expenditures 6,602, , , ,794 Excess (deficiency) of revenues over (under) expenditures (606,381) (130,708) (250,683) (10,529) Other financing sources: Bond and loan proceeds 189, Transfers in 29,000-8,020 - Transfers out (186,442) Total other financing sources (uses) 31,667-8,020 - Net changes in fund balance (574,714) (130,708) (242,663) (10,529) Fund balance, beginning of year, as restated 298, , , ,601 Fund balance, end of year $ (275,944) $ 510,293 $ 398,737 $ 537,072 The accompanying notes are an integral part of this statement. -17-

19 Statement of Revenues, Expenditures and Change in Fund Balance Governmental Funds Continued For the Year Ended Economic Other Development Governmental Fund Funds Total Revenues: Property taxes $ - $ 106,123 $ 1,033,267 Income tax ,712 Motor fuel tax ,873 Replacement tax ,425 Sales tax - - 2,396,464 Use tax ,766 Telecommunications tax ,274 Video gaming tax 88,448-88,448 Other taxes ,854 Charges for services 106,640-1,373,638 Fines and fees ,331 License and permits ,606 Grants and donations ,382 Interest 15,091 10,283 42,331 Revolving loan repayments 184, ,502 Other - 73, ,970 Total revenues 394, ,465 7,794,843 Current Expenditures: General government ,659 Public safety - - 3,586,200 Public works - - 1,402,598 Economic development 128,655 31, ,018 Culture and recreation ,479 Building and zoning ,281 Cemetery - 227, ,228 Garbage ,946 Debt service: Principal 200, ,375 1,087,556 Interest 107, , ,782 Capital outlay ,853 Total expenditures 436, ,347 9,461,600 Excess (deficiency) of revenues over (under) expenditures (41,574) (626,882) (1,666,757) Other financing sources: Bond and loan proceeds ,109 Transfers in 45, , ,242 Transfers out - - (186,442) Total other financing sources (uses) 45, , ,909 Net changes in fund balance 4,226 (448,460) (1,402,848) Fund balance, beginning of year, as restated (898,387) (166,431) 1,063,954 Fund balance, end of year $ (894,161) $ (614,891) $ (338,894) The accompanying notes are an integral part of this statement. -18-

20 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Governmental Activities in the Statement of Activities For the Year Ended Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balance total governmental funds $ (1,402,848) Capital outlays are reported as expenditures in this fund financial statement because they use current financial resources, but they are presented as assets in the statement of activities and depreciated over their estimated economic lives; depreciation ($1,578,477) for the year is more than capital outlays ($265,908) reported in the governmental funds. (1,312,569) In the governmental funds, repayment of notes receivable are reported as revenues and disbursements of note receivable proceeds are reported as expenditures as these amounts increase or decrease financial resources. However, these amounts are applied towards the balance of the receivables in the statement of net position. (144,502) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. (7,576) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of the internal service fund is reported with governmental activities. (113,386) The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however has any effect on net position. Also, governmental funds report the effect of issuances costs and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statements of activities. The following is the detail of the net effect of these differences in the treatment of long-term debt: Proceeds from long-term debt $ (189,109) Repayment of long-term debt 1,087,556 Amortization of bond premium 6, ,084 Change in net position of governmental activities $ (2,075,797) The accompanying notes are an integral part of this statement. -19-

21 Statement of Net Position Proprietary Funds Governmental Business-type Activities Enterprise Fund Activities Water Electric Sewer Internal Fund Fund Fund Total Service Assets Current assets: Cash and cash equivalents $ 1,432,350 $ 4,169,229 $ (85,448) $ 5,516,131 $ 422,855 Accounts receivable, net 111, ,355 69, ,455 - Prepaid expenses 13,801 28,561 10,975 53,337 - Inventory 40, , ,728 - Due from other funds - 210,076 13, ,639 - Total current assets 1,597,300 5,435,949 9,041 7,042, ,855 Capital assets: Land 44, ,456 43, ,815 - Property and equipment, net 27,648,722 16,147,372 13,884,528 57,680,622 - Total capital assets 27,693,319 16,293,828 13,928,290 57,915,437 - Total assets $ 29,290,619 $ 21,729,777 $ 13,937,331 $ 64,957,727 $ 422,855 Liabilities Current liabilities: Notes payable current $ 800,933 $ - $ 338,717 $ 1,139,650 $ - Bonds payable current 95, , , ,000 - Accounts payable 15,169 63, ,230 54,000 Accrued expenses 70, ,938 56, ,677 - Accrued interest 116,252 15,824 35, ,221 - Deposits 16,481 82,725-99,206 - Due to other funds , ,818 6,900 Total current liabilities 1,113, ,701 1,148,154 3,081,802 60,900 Non-current liabilities: Notes payable less current maturities 15,523,939-4,466,304 19,990,243 - Bond premium - 138, ,113 - Bonds payable less current maturities 1,375,000 1,550,000 1,820,000 4,745,000 - Total non-current liabilities 16,898,939 1,688,113 6,286,304 24,873,356 - Total liabilities 18,012,886 2,507,814 7,434,458 27,955,158 60,900 Net Position Invested in capital assets, net of related debt 9,782,195 14,219,891 6,823,124 30,825,210 - Restricted for insurance ,955 Unrestricted 1,495,538 5,002,072 (320,251) 6,177,359 - Total net position 11,277,733 19,221,963 6,502,873 37,002, ,955 Total liabilities & net position $ 29,290,619 $ 21,729,777 $ 13,937,331 $ 64,957,727 $ 422,855 The accompanying notes are an integral part of this statement. -20-

22 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended Governmental Business-type Activities Enterprise Fund Activities Water Electric Sewer Internal Fund Fund Fund Total Service Operating revenues: Charges for services $ 2,675,874 $ 11,092,845 $ 2,490,723 $ 16,259,442 $ 1,816,324 Total operating revenues 2,675,874 11,092,845 2,490,723 16,259,442 1,816,324 Operating expenses: Distribution 839,057 1,485,174-2,324,231 - Treatment 413, ,382 1,230,132 - General 237, ,717 21, ,457 1,930,079 Generation - 7,168,905-7,168,905 - Payment in lieu of tax - 400, ,000 - Depreciation 881,447 1,005, ,631 2,309,379 - Total operating expenses 2,371,838 10,629,097 1,260,169 14,261,104 1,930,079 Operating income 304, ,748 1,230,554 1,998,338 (113,755) Nonoperating revenue (expense) Grant proceeds Interest income 635 2,576-3, Interest expense (419,798) (29,884) (116,855) (566,537) - Total nonoperating revenues (expense) (419,163) (26,515) (116,855) (562,533) 369 Net income before transfers (115,127) 437,233 1,113,699 1,435,805 (113,386) Transfers in ,000 40,000 - Transfers out - (114,800) - (114,800) - Total net transfers - (114,800) 40,000 (74,800) - Changes in net position (115,127) 322,433 1,153,699 1,361,005 (113,386) Net position, beginning of year, as restated 11,392,860 18,899,530 5,349,174 35,641, ,341 Net position, end of year $ 11,277,733 $ 19,221,963 $ 6,502,873 $ 37,002,569 $ 361,955 The accompanying notes are an integral part of this statement. -21-

23 Statement of Cash Flows Proprietary Funds For the Year Ended Governmental Business-type Activities Enterprise Fund Activities Water Electric Sewer Internal Fund Fund Fund Total Service Cash flows from operating activities: Cash received from customers $ 2,685,139 $ 11,301,040 $ 2,481,235 $ 16,467,414 $ 1,816,324 Cash payments to employees for services (552,883) (667,875) (286,595) (1,507,353) - Cash payment to suppliers for goods and services (967,975) (8,903,196) (545,089) (10,416,260) (1,930,079) Net cash provided by operating activities 1,164,281 1,729,969 1,649,551 4,543,801 (113,755) Cash flows from non-capital financing activities: Cash from (to) interfund borrowing - (13,135) 174, ,838 - Transfers from (to) other funds - (114,800) 40,000 (74,800) - Net cash provided by (used in) non-capital financing activities - (127,935) 214,973 87,038 - Cash flows from capital and related financial activities: Purchase of capital assets (118,483) (569,498) (63,269) (751,250) - Proceeds from operating grants Principal paid on bonds and notes payable (787,760) (365,000) (848,761) (2,001,521) - Payments on bond premium - (27,622) - (27,622) - Interest paid on bonds and notes payable (396,315) (18,078) (127,725) (542,118) - Net cash provided by (used in) capital and related financing activities (1,302,558) (979,405) (1,039,755) (3,321,718) - Cash flows from investing activities: Interest received 635 2,576-3, Net cash provided by investing activities 635 2,576-3, Net increase in cash and cash equivalents (137,642) 625, ,769 1,312,332 (113,386) Cash and cash equivalents, beginning of year 1,569,992 3,544,024 (910,217) 4,203, ,241 Cash and cash equivalents, end of year $ 1,432,350 $ 4,169,229 $ (85,448) $ 5,516,131 $ 422,

24 Statement of Cash Flows Proprietary Funds Continued For the Year Ended Governmental Business-type Activities Enterprise Fund Activities Water Electric Sewer Internal Fund Fund Fund Total Service Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income $ 304,036 $ 463,748 $ 1,230,554 $ 1,998,338 $ (113,755) Adjustments to reconcile operating income to net cash provided by (used in) operating activities: Depreciation 881,447 1,005, ,631 2,309,379 - Change in assets and liabilities: Accounts receivable, net 8, ,044 (9,488) 206,368 - Prepaid expenses 1, (2,203) (453) - Inventory - 120, ,825 - Accounts payable 10,049 (68,797) (9,052) (67,800) - Accrued expenses (41,942) ,109 (24,460) - Deposits 453 1,151-1,604 - Net cash provided by operating activities $ 1,164,281 $ 1,729,969 $ 1,649,551 $ 4,543,801 $ (113,755) The accompanying notes are an integral part of this statement. -23-

25 Statement of Fiduciary Net Position Pension Trust Funds Pension Trust Funds Police Fireman Total Assets Cash $ 202,927 $ 465,713 $ 668,640 Investments 7,266,701 6,167,685 13,434,386 Receivables, net: Property taxes 297, , ,500 Due from other funds - 32,165 32,165 Total assets 7,766,828 6,930,863 14,697,691 Liabilities Due to other funds 32,165-32,165 Total liabilities 32,165-32,165 Net position held in trust for pension benefits $ 7,734,663 $ 6,930,863 $ 14,665,526 The accompanying notes are an integral part of this statement. -24-

26 Statement of Changes in Fiduciary Net Position Pension Trust Funds For the Year Ended Pension Trust Funds Police Fireman Total Additions Property taxes $ 292,607 $ 261,348 $ 553,955 Contributions 104,607 75, ,881 Investment income 478, , ,171 Total additions to plan net position 875, ,713 1,604,007 Deductions Pension benefits 343, , ,385 Administrative expenses 4,393 3,954 8,347 Total deductions 347, , ,732 Change in net position 527, , ,275 Net position held in trust for pension benefits, beginning of year 7,207,195 6,651,056 13,858,251 Net position held in trust for pension benefits, end of the year $ 7,734,663 $ 6,930,863 $ 14,665,526 The accompanying notes are an integral part of this statement. -25-

27 Notes to Financial Statements Note 1 Summary of Significant Accounting Policies: Reporting Entity For financial reporting purposes, the City of Princeton, Illinois (the primary government), includes all funds, agencies, boards, commissions and authorities that are controlled by or dependent upon the City. This was determined on the basis of taxing authority, authority to appoint members to the governing board of the component unit, budget adoption, outstanding debt secured by revenues or general obligation of the City, obligation of the City to finance any deficits that may occur or receipt of significant subsidies from the City. The component units discussed below are included in the City s reporting entity because of the significance of their operational and functional relationships with the City. Blended Component Units Based on the foregoing criteria, the Library Board, the Police Pension Board and the Firemen s Pension Board are included in the financial statements as blended component units. The Princeton City Council is responsible for the adoption of tax levies for these funds and has delegated the adoption of the annual operating budgets to the respective boards of these funds. Discretely Presented Component Unit The component unit column in the combined financial statements include the financial data of the City-owned hospital. These amounts are reported separately to emphasize that the hospital is legally a separate organization for which the elected officials of the city are financially accountable. The Hospital obtained the majority interest of Partners Health System, effective May, Partners Health System is a not-for-profit corporation whose mission is to create an integrated healthcare delivery system. Prior to April 30, 2002 the Hospital accounted for its investment in Partners Health System on the equity method and the balance had been written down to zero. The Hospital collectively refers to the Partners Heath System and the Hospital as the Organization in its audit report. For the purpose of this combined financial report, we will refer to the Organization as the Hospital. Government-Wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of changes in net position) report information on all of the activities of the primary government. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which are normally 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. -26-

28 Notes to Financial Statements Note 1 Summary of Significant Accounting Policies Continued: Government-Wide Financial Statements Continued The statement of activities 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 properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments are recorded only when payment is due. Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. -27-

29 Notes to Financial Statements Continued Note 1 Summary of Significant Accounting Policies Continued: Measurement Focus, Basis of Accounting, and Financial Statement Presentation Continued The funds are grouped into two fund types and five generic funds as described below: Governmental Fund Types These are the funds through which most governmental functions typically are financed. The funds included in this category are as follows: General Fund This fund is established to account for resources devoted to financing the general services that the City performs for its citizens. General tax revenues and other sources of revenue used to finance the fundamental operations of the City are included in this fund. The fund is charged with all costs of operating the government for which a separate fund has not been established. Special Revenue Funds These funds are established to account for the proceeds of specific revenue sources other than special assessments, expendable trusts, or major capital projects that are legally restricted to expenditures for specified purposes. Debt Service Funds These funds are established for the purpose of accumulating resources for the payment of interest and principal on long-term general obligation debt other than that payable from Enterprise Funds. Capital Projects Fund This fund is established to account for major capital expenditures not financed by Enterprise Funds. Permanent Fund This fund accounts for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that benefit the government or its citizenry. Internal Service Fund This fund is used to account for the City s self-insured health plan. The purpose of the fund is to pay medical claims of the City s employees and certain retirees and their covered dependents, and to minimize the total cost of the annual insurance to the City. Medical claims exceeding $150,000 per covered individual with aggregate limit are covered through a private insurance carrier. Fiduciary Funds These funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the City. When these assets are held under the terms of a formal trust agreement, pension funds are used. -28-

30 Notes to Financial Statements Continued Note 1 Summary of Significant Accounting Policies Continued: Measurement Focus, Basis of Accounting, and Financial Statement Presentation Continued Proprietary Fund Types These funds account for operations that are organized to be self-supporting through user charges. The funds included in this category are the Enterprise Funds. Enterprise Funds These funds are established to account for operations that are financed and conducted in a manner similar to private business enterprises, where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and Enterprise Funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. The effect of inter-fund activity has been eliminated from the government-wide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the Water Fund, Sewer Fund, and Electric Fund are charges to customers for sales and services. The Water Fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first, then unrestricted resources as they are needed. -29-