VILLAGE OF RIVERVIEW, MISSOURI. FINANCIAL REPORT (Audited)

Transcription

1 VILLAGE OF RIVERVIEW, MISSOURI FINANCIAL REPORT (Audited) Year Ended December 31, 2015

2 FINANCIAL REPORT INDEPENDENT AUDITOR S REPORT 1 Page MANAGEMENT S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position - Modified Cash Basis 6 Statement of Activities - Modified Cash Basis 7 Fund Financial Statements: Balance Sheet - Modified Cash Basis - Governmental Funds 8 Reconciliation of the Balance Sheet - Modified Cash Basis of Governmental Funds to the Statement of Net Position - Modified Cash Basis 9 Statement of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis - Governmental Funds 10 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis of Governmental Funds to the Statement of Activities - Modified Cash Basis 11 Notes to Financial Statements 12 SUPPLEMENTAL INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis - Budget and Actual: General Fund 27 Capital Projects Fund 30 Notes to Schedules of Revenues, Expenditures, and Changes in Fund Balances - Modified Cash Basis - Budget and Actual 31 Changes in Net Pension Liability (Asset) And Related Ratios 32 Schedule of Pension Contributions 33 Graphs: General Fund Revenues 34 General Fund Expenditures 35 Contents

3 Hochschild, Bloom & Company LLP Certified Public Accountants Consultants and Advisors INDEPENDENT AUDITOR'S REPORT June 23, 2016 Board of Trustees VILLAGE OF RIVERVIEW, MISSOURI REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying modified cash basis financial statements of the governmental activities and each major fund of the VILLAGE OF RIVERVIEW, MISSOURI (the Village), as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the Village'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. 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 Village'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 D South Outer Forty Road, Suite 135, Chesterfield, Missouri , , Fax D 1000 Washington Square, P. 0. Box 1457, Washington, Missouri , , Fax ~ Pr 1meGlob I I A,Anonorw,o/ ~ a Independent Accounting Firms

4 purpose of expressing an opinion on the effectiveness of the Village 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. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective modified cash basis financial position of the governmental activities and each major fund of the Village as of December 31, 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 - Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village 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, 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 June 23, 2016 on our consideration of the Village 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 Village s internal control over financial reporting and compliance. CERTIFIED PUBLIC ACCOUNTANTS Page 2

5 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2015 This discussion and analysis is intended to be an overview of the Village of Riverview, Missouri s (the Village) financial activities for the fiscal year ended December 31, It should be read in conjunction with the Village s financial statements (attached). USING THE ANNUAL REPORT The annual report consists of a series of financial statements. The statement of net position - modified cash basis and the statement of activities - modified cash basis provide information about the activities of the Village as a whole. Fund financial statements report the Village s operation in more detail than the government-wide financial statements by providing information about the Village s General Fund and Capital Projects Fund. CONDENSED FINANCIAL STATEMENTS A condensed version of the statement of net position - modified cash basis follows: December Change Amount Percent ASSETS Current assets $ 499, ,672 (74,303) - % Capital assets, net of depreciation 1,268,626 1,289,489 (20,863) (2) Total Assets 1,767,995 1,863,161 (95,166) (5) LIABILITIES Current liabilities 1,733 8,198 (6,465) (79) NET POSITION Investment in capital assets 1,268,626 1,289,489 (20,863) (2) Restricted 631, ,023 (535) - Unrestricted (133,852) (66,549) (67,303) (101) Total Net Position $ 1,766,262 1,854,963 (88,701) (5) % A condensed version of the statement of activities - modified cash basis follows: Page 3

6 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2015 REVENUES Program revenues: For The Years Ended December Change Amount Percent Charges for services $ 160, ,212 (79,809) (33) % Operating grants and contributions 112, ,695 4,335 4 Total Program Revenues 272, ,907 (75,474) (22) General revenues: Taxes 764, ,703 2,797 0 Investment income 451 1,361 (910) (67) Insurance recoveries - 9,532 (9,532) (100) Other 32,797 60,447 (27,650) (46) Total General Revenues 797, ,043 (35,295) (4) Total Revenues 1,070,181 1,180,950 (110,769) (9) EXPENDITURES Administration 231, ,756 23, City hall 100,515 88,082 12, Police department 651, ,431 37,125 6 Public works 175, ,763 (44,004) (20) Total Expenditures 1,158,882 1,130,032 28,850 3 CHANGE IN NET POSITION (88,701) 50,918 (139,619) 274 NET POSITION, JANUARY 1 1,854,963 1,804,045 50,918 3 NET POSITION, DECEMBER 31 $ 1,766,262 1,854,963 (88,701) (5) % The Village s property tax rates in 2015 were $0.450 per $100 of assessed valuation for residential property, $ per $100 of assessed valuation for commercial property, and $0.311 per $100 of assessed valuation for personal property. You can think of the Village s net position (the difference between assets and liabilities) as one way to measure the Village s financial health or financial position. Over time, increases or decreases in the Village s net position are one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors such as changes in the Village s property tax base, the amount of snow during the winter seasons, etc., to assess the overall health of the Village. The Village has $497,636 in combined ending fund balances. Of this amount, $631,488 is restricted and ($133,852) is unassigned. Page 4

7 MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2015 CAPITAL ASSETS The Village has invested $1,832,921 at December 31, 2015 in a broad range of capital assets, including land, land improvements, buildings, building improvements, machinery and equipment, vehicles, and infrastructure and accumulated depreciation totaled $564,295. This amount represents a net decrease for the current fiscal year (including additions and deductions) of $20,863. The Village s capital assets, net of accumulated depreciation, consisted of: December Land $ 442, ,480 Land improvements 97, ,968 Buildings 69,869 72,721 Building improvements 46,614 51,584 Machinery and equipment 55,346 58,038 Vehicles 130, ,665 Infrastructure 426, ,033 Total $1,268,626 1,289,489 Additional information on the Village s capital assets can be found in Note C in the notes to the financial statements. BUDGETARY HIGHLIGHTS General Fund expenditures were $42,904 or 4% over the amount budgeted of $1,033,688. General Fund revenues were $63,248 or 7% below the amount budgeted of $941,788. The 2015 General Fund final budget was prepared with sales tax revenues set at $401,645, while the amount actually collected was $419,946, resulting in a positive variance of $18,301. The 2015 Capital Projects Fund budget was prepared with sales tax revenues set at $176,000. The amount actually collected was $188,107, resulting in a positive variance of $12,107. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES The 2016 budget was prepared using slow to flat expected revenues and expenditures. CONTACTING THE VILLAGE S FINANCIAL MANAGEMENT This financial report is designed to provide our residents and taxpayers with a general overview of the Village s finances and to show the Village s accountability for the money it receives. If you have any questions about this report or need additional financial information, please contact the Village Clerk s office at 9699 Lilac Drive, St. Louis, MO or by telephone, Page 5

8 STATEMENT OF NET POSITION - MODIFIED CASH BASIS DECEMBER 31, 2015 Governmental Activities ASSETS Cash $ 271,912 Cash - restricted 131,580 Certificates of deposit 95,877 Land 442,480 Capital assets, net of depreciation 826,146 Total Assets 1,767,995 LIABILITIES Payable from restricted assets: Bail bonds payable 1,733 NET POSITION Investment in capital assets 1,268,626 Restricted for: Sewer lateral 125,946 Police training 3,901 Capital projects 501,641 Unrestricted (133,852) Total Net Position $ 1,766,262 See notes to financial statements Page 6

9 STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 2015 Charges For FUNCTIONS/PROGRAMS Expenses Services Governmental Activities Administration 231,052 Program Revenues Operating Capital Grants And Grants And Contributions Contributions Net Revenues (Expenses) And Changes In Net Position $ 32, (198,635) City hall 100, (100,515) Police department 651, , (547,749) Public works 175,759 24, ,030 - (39,550) Total Governmental Activities $ 1,158, , ,030 - (886,449) General Revenues Taxes: Sales 608,053 Property 44,267 Other 112,180 Investment income 451 Other 32,797 Total General Revenues 797,748 CHANGE IN NET POSITION (88,701) NET POSITION, JANUARY 1 1,854,963 NET POSITION, DECEMBER 31 $ 1,766,262 See notes to financial statements Page 7

10 BALANCE SHEET - MODIFIED CASH BASIS - GOVERNMENTAL FUNDS DECEMBER 31, 2015 General Fund Capital Projects Fund Total Governmental Funds ASSETS Cash $ 104, , ,912 Cash - restricted 131, ,580 Certificates of deposit - 95,877 95,877 Due from other fund - 238, ,021 Total Assets $ 235, , ,390 LIABILITIES AND FUND BALANCES Liabilities Due to other fund $ 238, ,021 Payable from restricted assets: Bail bonds payable 1,733-1,733 Total Liabilities 239, ,754 Fund Balances Restricted for: Sewer lateral 125, ,946 Police training 3,901-3,901 Capital projects - 501, ,641 Unassigned (133,852) - (133,852) Total Fund Balances (4,005) 501, ,636 Total Liabilities And Fund Balances $ 235, , ,390 See notes to financial statements Page 8

11 RECONCILIATION OF THE BALANCE SHEET - MODIFIED CASH BASIS OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION - MODIFIED CASH BASIS DECEMBER 31, 2015 Total Fund Balances - Governmental Funds $ 497,636 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. The cost of the assets is $1,832,921 and the accumulated depreciation is $564,295. 1,268,626 Total Net Position Of Governmental Activities $ 1,766,262 See notes to financial statements Page 9

12 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS - GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2015 Capital Total General Projects Governmental Fund Fund Funds REVENUES Taxes $ 712, , ,709 Licenses and inspection fees 21,248-21,248 Investment income Charges for services 9,950-9,950 Court fines and costs 91,000-91,000 Other 43,336-43,336 Total Revenues 878, ,154 1,066,694 EXPENDITURES Current: Administration 225, ,530 City hall 95,988-95,988 Police department 633, ,550 Public works 120, ,789 Capital outlay ,940 58,675 Total Expenditures 1,076,592 57,940 1,134,532 REVENUES OVER (UNDER) EXPENDI- TURES (198,052) 130,214 (67,838) OTHER FINANCING SOURCES (USES) Transfers in 127, ,554 Transfers out - (127,554) (127,554) Total Other Financing Sources (Uses) 127,554 (127,554) - NET CHANGE IN FUND BALANCES (70,498) 2,660 (67,838) FUND BALANCES, JANUARY 1 66, , ,474 FUND BALANCES (DEFICIT), DECEMBER 31 $ (4,005) 501, ,636 See notes to financial statements Page 10

13 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS FOR THE YEAR ENDED DECEMBER 31, 2015 Net Change In Fund Balances - Governmental Funds $ (67,838) Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported in the governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation ($67,825) exceeded capital outlays over the capitalization threshold ($62,295) in the current period. (5,530) The net effect of various transactions involving capital assets: Disposal of capital assets (15,333) Change In Net Position Of Governmental Activities $ (88,701) See notes to financial statements Page 11

14 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The VILLAGE OF RIVERVIEW, MISSOURI (the Village), incorporated in 1950, is a political subdivision duly organized under the laws of the State of Missouri. The Village operates under the direction of a Board of Trustees and provides or contracts for the following services: public safety, police protection, road and street maintenance, and general administrative services. The more significant accounting policies consistently applied by the Village in the preparation of the accompanying financial statements are summarized below: 1. Reporting Entity The financial statements of the Village include the financial activities of the Village and any component units, entities which are financially accountable to the Village. The Village 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 primary government. For the most part, the effect of interfund activity has been removed from these statements. 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 properly included among program revenues are reported instead as general revenues. Major individual governmental funds are reported as separate columns in the fund financial statements. The Village does not have any fiduciary or proprietary funds. 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Measurement Focus 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. 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 Page 12

15 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) current financial assets and liabilities are generally included on their balance sheets. Their operating statement 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 balances, revenues, and expenses/expenditures when they result from cash transactions with a provision for depreciation in the government-wide financial statements. 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 revenues for billed or provided services not yet collected) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid) are not recorded in these financial statements. If the Village 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 Village reports the following major governmental funds: General Fund -- The General Fund accounts for all activities except those required to be accounted for in another fund. Revenues in this fund are derived from taxes, fees, and other sources that usually are not designated for any specific purpose. The revenues are used for general ongoing government services such as administration, maintenance, and police protection. Capital Projects Fund -- The Capital Projects Fund is used to account for financial resources from capital improvements sales tax. The revenues are to be used for the acquisition, construction, or maintenance of major capital facilities, public improvements, and operating equipment. Page 13

16 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 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 property located within the Village. Payment is due upon receipt of billing and becomes delinquent after December 31. Property taxes are billed and collected by St. Louis County and remitted by the County to the Village. The Village receives 98.5% of property tax collections (½% is paid to the St. Louis County Assessor and 1% is paid to the St. Louis County Collector for their services). For 2015, the Village s tax rates levied per $100 of assessed valuation was $0.450 for residential property, $0.362 for commercial property, and $0.311 for personal property. The assessed valuation for property located in the Village at January 1, 2015, upon which the 2015 levy was based for real property, personal property, and public utilities was $12,915, Cash and Investments For purposes of financial reporting, cash and investments includes all demand and savings accounts, certificates of deposit, and petty cash. The Village s investments consist of certificates of deposit. State statutes also authorize the Village to invest in obligations of the U.S. Treasury, federal agencies, commercial paper, corporate bonds, and repurchase agreements. 6. Interfund Transactions Transfers of resources from a fund receiving revenue to the fund through which the resources are to be expended are recorded as other financing sources (uses) in the governmental fund types. In the process of aggregating data for the statement of net position - modified cash basis and the statement of activities - modified cash basis, some amounts reported as interfund activity and balances in the funds were eliminated or reclassified. Interfund receivables and payables were eliminated to minimize the grossing up effect on assets and liabilities within the governmental activities column. Page 14

17 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 7. Compensated Absences The policy for vacation pay allows employees to take time off with pay and requires vacation leave to be used in the year of accumulation. The policy for sick pay allows employees to earn one-half work day per month up to a maximum of 240 hours. One-third of sick pay accumulated is paid upon an employee leaving the Village. Because of the accounting method used, the Village does not record a liability for unused sick time. 8. 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. 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 Trustees, the highest level of decision-making authority. Assigned -- The portion of fund balance that the Village intends to use for a specific purpose as determined by the applicable Village officials to which the Board of Trustees has designated authority. Unassigned -- Amounts that are available for any purpose; these amounts are reported only in the General Fund. When both restricted and unrestricted resources are available, the Village will spend the most restricted amounts before the least restricted. 9. Capital Assets The Village s modified cash basis of accounting reports capital assets resulting from cash transactions and reports depreciation where appropriate. The accounting treatment over capital assets depends on whether they are reported in the government-wide or fund financial statements. Page 15

18 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 9. Capital Assets (Continued) In the government-wide financial statements, capital assets arising from cash transactions are accounted for as assets in the statement of net position - modified cash basis. All capital assets are valued at historical cost or estimated historical cost if actual is unavailable. Depreciation of all exhaustible capital assets arising from cash transactions is recorded as an allocated expense in the statement of activities - modified cash basis, with accumulated depreciation reflected in the statement of net position - modified cash basis. Depreciation is provided over the assets estimated useful lives using the straight-line method of depreciation. A capitalization threshold of $5,000 is used to report capital assets. The estimated useful lives by type of asset is as follows: Asset Years Land improvements Buildings 50 Building improvements 5-50 Machinery and equipment 5-20 Vehicles 8 Infrastructure 7-50 In the fund financial statements, capital assets arising from cash transactions acquired for use in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. 10. Restricted Assets Certain resources set aside for sewer lateral, police training, and bail bonds amounting to $125,946, $3,901, and $1,733, respectively, at December 31, 2015, are classified as restricted assets because their use is limited. 11. Use of Estimates The preparation of financial statements requires the Village to make estimates and assumptions that affect the reported amounts of assets and liabilities at fiscal year-end. Actual results could differ from those estimates. 12. Pensions For purposes of measuring the net pension liability (asset), 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 Page 16

19 NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 12. Pensions (Continued) 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. NOTE B - CASH AND INVESTMENTS 1. Deposits with Financial Institutions Custodial credit risk for deposits is the risk that in the event of a bank failure, the Village s deposits may not be returned or the Village will not be able to recover collateral securities in the possession of an outside party. The Village s bank deposits are required by state law to be secured by the deposit of certain securities specified at RSMo with the Village or trustee institution. The value of the securities must amount to the total of the Village s cash not insured by the Federal Deposit Insurance Corporation. As of December 31, 2015, the carrying amount of the Village s deposits, including certificates of deposit, was $499,369 and the bank balances totaled $513,476. Of the Village s bank balances, $250,000 was covered by federal depository insurance, $95,877 was covered by credit union insurance, and $167,599 was uncollateralized. 2. Investments Investment Policies Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The Village minimizes credit risk by prequalifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Village will do business, limiting investments to the safest types of securities, and diversifying the portfolio so that potential losses on individual securities will be minimized. 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 Village minimizes interest rate risk by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and investing operating funds primarily in shorter-term securities. Concentration of Credit Risk is the risk of loss attributed to the magnitude of the Village s investment in a single issuer. The Village minimizes concentration of credit risk by diversifying the portfolio. Page 17

20 NOTES TO FINANCIAL STATEMENTS NOTE C - CAPITAL ASSETS The following is a summary of changes in capital assets: For The Year Ended December 31, 2015 Balance Balance December 31 December Increases Decreases 2015 Capital assets not being depreciated: Land $ 442, ,480 Capital assets being depreciated: Land improvements 150, ,625 Buildings 170, ,317 Building improvements 118, ,414 Machinery and equipment 152,237 7, ,661 Vehicles 210,098 54,871 69, ,211 Infrastructure 596, ,213 Total Capital Assets Being Depreciated 1,397,904 62,295 69,758 1,390,441 Less - Accumulated depreciation for: Land improvements 37,657 15,063-52,720 Buildings 97,596 2, ,448 Building improvements 66,830 4,970-71,800 Machinery and equipment 94,199 10, ,315 Vehicles 99,433 19,919 54,425 64,927 Infrastructure 155,180 14, ,085 Total Accumulated Depreciation 550,895 67,825 54, ,295 Total Capital Assets Being Depreciated, Net 847,009 (5,530) 15, ,146 Capital Assets, Net $ 1,289,489 (5,530) 15,333 1,268,626 Depreciation expense was charged to functions/programs as follows: Page 18

21 NOTE C - CAPITAL ASSETS (Continued) VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS For The Year Ended December City hall $ 4,527 Police department 17,616 Public works 45,682 Total $67,825 NOTE D - 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 multipleemployer, 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 includes 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 1.25% Final average salary 5 Years Member contributions 4% Page 19

22 NOTE D - PENSION PLAN (Continued) VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS 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 9 Inactive employees entitled to but not yet receiving benefits 8 Active employees 13 Contributions Total 30 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. Full-time employees of the employer do not contribute to the pension plan. The City contribution rates are 7.2% (General) and 4.2% (Police) of annual covered payroll. Net Pension Liability (Asset) The City s net pension liability (asset) was measured as of June 30, 2015, and the total pension liability (asset) used to calculate the net pension liability (asset) was determined by an actuarial valuation as of February 28, Actuarial Assumptions The total pension liability (asset) 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, Page 20

23 NOTE D - PENSION PLAN (Continued) VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS 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 long-term 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 NOTE D - PENSION PLAN (Continued) Changes in the Net Pension Liability VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS Total Pension Liability (a) Increase (Decrease) Plan Fiduciary Net Pension Net Position Liability (Asset) (b) (a) - (b) Balances at June 30, 2014 $ 1,024,823 1,144,044 (119,221) Changes for the year: Service cost 43,579-43,579 Interest 74,882-74,882 Difference between expected and actual experience (68,688) - (68,688) Contributions - employer - 29,056 (29,056) Contributions - employee - 21,884 (21,884) Net investment income - 22,518 (22,518) Benefit payments, including refunds (27,243) (27,243) - Administrative expense - (2,703) 2,703 Other changes - 32,947 (32,947) Net Changes 22,530 76,459 (53,929) Balances at June 30, 2015 $ 1,047,353 1,220,503 (173,150) Sensitivity of the Net Pension Liability (Asset) to Changes in the Discount Rate The following presents the net pension liability (asset) of the employer, calculated using the discount rate of 7.25%, as well as what the employer s net pension liability (asset) would be using a discount rate that is 1 percentage point lower (6.25%) or one percentage point higher (8.25%) than the current rate. Current Single Discount 1% Decrease Rate Assumption 1% Increase Net pension liability (asset) ($2,447 ) (173,150 ) (313,098 ) Page 22

25 NOTE D - PENSION PLAN (Continued) VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended December 31, 2015 the employer recognized an actuarially determined negative pension expense of $19,511. The employer reported deferred outflows and inflows of resources related to pensions from the following sources: Net Outflows Inflows Outflows Differences in experience $ - (55,239) (55,239) Excess (deficit) investment returns 49,877-49,877 Employer contributions subsequent to the measurement date* 13,184-13,184 Total $ 63,061 (55,239) 7,822 *The amount reported as deferred outflows of resources an actuarially determined resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending June 30, 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 $ 12, , , , (8,816) Thereafter (4,085) Total $ 7,822 NOTE E - CONTRACTUAL AGREEMENT The Village purchases its police dispatching services under a contractual agreement with the St. Louis County Police Department. The contract is renegotiated annually. For 2015, $22,690 was paid for dispatching services. Page 23

26 NOTES TO FINANCIAL STATEMENTS NOTE F - OPERATING LEASE The Village is obligated under two noncancelable operating lease agreements for office equipment through November Total costs under the leases were $4,094 for the year ended December 31, The following is a schedule of future minimum rental payments required per the lease agreements: For The Years Ending December $3, ,768 NOTE G - INTERFUND ASSETS/LIABILITIES Individual interfund assets and liabilities balances are as follows: Due from/to other funds December 31 Receivable Fund Payable Fund 2015 Capital Projects Fund General Fund $238,021 All of these interfund balances are due to either timing differences or to the elimination of negative cash balances within the various funds. Interfund balances are expected to be repaid, beginning the next fiscal year. Interfund transfers For The Year Ended December 31 Transfers Out Transfers In 2015 Capital Projects Fund General Fund $127,554 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. Page 24

27 NOTE H - RESTRICTED NET POSITION VILLAGE OF RIVERVIEW, MISSOURI NOTES TO FINANCIAL STATEMENTS The government-wide statement of net position - modified cash basis reports $631,488 of restricted net position, all of which is restricted by enabling legislation. NOTE I - RISK MANAGEMENT The Village 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 Village maintains commercial insurance coverage covering each of those risks of loss. Settled claims did not exceed this commercial coverage in any of the past three years. NOTE J - DEFICIT BALANCE At December 31, 2015, the General Fund s deficit of $4,005 is the result of expenditures which exceeded revenues in 2015 plus prior years. The accumulated deficit will be offset by future revenues received by the fund. Page 25

28 SUPPLEMENTAL INFORMATION SUPPLEMENTAL INFORMATION SECTION Page 26

29 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - MODIFIED CASH BASIS - BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Original Over And Final (Under) Budget Actual Budget REVENUES Taxes Real estate $ 46,970 37,807 (9,163) Personal property 7,204 6,460 (744) Road and bridge 15,757 12,830 (2,927) Railroad/utility 2,566 2, Cigarette 7,282 10,037 2,755 Gasoline 73,715 76,051 2,336 Motor vehicle 31,800 35,979 4,179 Sales 401, ,946 18,301 Use 61,023 35,722 (25,301) Franchise 50,077 50, Sewer lateral 22,950 24,179 1,229 Total Taxes 720, ,602 (8,387) Licenses and Inspection Fees Business licenses 15,016 8,103 (6,913) Dog licenses (174) Building inspection fees 15,200 13,115 (2,085) Electrical inspection fees (300) Total Licenses And Inspection Fees 30,720 21,248 (9,472) Investment Income Charges for Services 14,500 9,950 (4,550) Court Fines and Costs 118,926 91,000 (27,926) Other Lease income 41,436 23,557 (17,879) Miscellaneous 3,603 11,275 7,672 Bond forfeiture income 10,251 7,285 (2,966) Lien release income 1,155 1, Total Other 56,445 43,336 (13,109) Total Revenues 941, ,540 (63,248) EXPENDITURES Administration Wages 6,000 6,000 - Bank service charges Court system fees 6,750 3,879 (2,871) City attorney fees 6,000 12,384 6,384 Dues and subscriptions (18) (Continued) Page 27

30 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - MODIFIED CASH BASIS - BUDGET AND ACTUAL - GENERAL FUND (Continued) FOR THE YEAR ENDED DECEMBER 31, 2015 Original Over And Final (Under) Budget Actual Budget EXPENDITURES (Continued) Administration (Continued) Election expenses 676 1, Employee health insurance 5,218 1,493 (3,725) Employee retirement 2,232 1,776 (456) Inspector compensation 31,013 30,967 (46) Miscellaneous 1,100 1, Payroll taxes 2,832 3, Printing and publication 250 1,564 1,314 Professional fees 38,186 37,141 (1,045) Property and liability insurance 38,775 75,138 36,363 Seminars and training 2,589 1,818 (771) Workers' compensation 49,663 46,420 (3,243) Total Administration 191, ,530 34,120 City Hall Wages 53,450 56,314 2,864 Dues and subscriptions (115) Employee health insurance (21) Employee retirement 2,485 3, Leases 6,600 4,989 (1,611) Maintenance and repairs 1, (261) Miscellaneous 100 2,310 2,210 Payroll taxes 4,089 4, Postage 1,300 2,776 1,476 Printing and publication (100) Seminars and training 1, (347) Supplies 2,385 6,564 4,179 Utilities 12,000 13,209 1,209 Total City Hall 84,726 95,988 11,262 Police Department Wages 446, ,433 27,732 Capital outlay (310) Employee health insurance 54,266 33,447 (20,819) Employee retirement 18,019 18, Equipment lease 4,000 1,074 (2,926) Equipment maintenance 14,500 13,819 (681) Gas and oil 20,000 15,024 (4,976) Jail fees 1, (825) Law enforcement supplies 700 1,782 1,082 Miscellaneous 200 2,489 2,289 Office supplies Payroll taxes 34,926 34,437 (489) (Continued) Page 28

31 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - MODIFIED CASH BASIS - BUDGET AND ACTUAL - GENERAL FUND (Continued) FOR THE YEAR ENDED DECEMBER 31, 2015 Original Over And Final (Under) Budget Actual Budget EXPENDITURES (Continued) Police Department (Continued) Police dispatch service 25,012 22,690 (2,322) Police communication - 2,094 2,094 Police uniforms 1,000 1, Seminars and training 5,000 2,259 (2,741) Utilities 3,000 3, Vehicle maintenance 2,500 5,477 2,977 Total Police Department 631, ,940 2,016 Public Works Wages 47,955 44,570 (3,385) Capital outlay 1, (1,155) Clothing allowance (400) Employee health insurance 7,236 16,481 9,245 Employee retirement 2,724 2,725 1 Equipment maintenance 3, (2,297) Gas and oil 7,000 3,311 (3,689) Sewer lateral repairs 14,595 14,564 (31) Materials 8,600 4,139 (4,461) Miscellaneous Park expense 400 1, Payroll taxes 3,668 3,322 (346) Signs (150) Small equipment (200) Street lighting 24,100 22,726 (1,374) Street repair 1,000 - (1,000) Utilities 1,300 3,232 1,932 Vehicle maintenance 1,500 3,075 1,575 Total Public Works 125, ,134 (4,494) Total Expenditures 1,033,688 1,076,592 42,904 REVENUES UNDER EXPENDITURES (91,900) (198,052) (106,152) OTHER FINANCING SOURCES Transfers in 40, ,554 86,997 NET CHANGE IN FUND BALANCE $ (51,343) (70,498) (19,155) FUND BALANCE, JANUARY 1 66,493 FUND BALANCE, DECEMBER 31 $ (4,005) Page 29

32 SUPPLEMENTAL INFORMATION - SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE - MODIFIED CASH BASIS - BUDGET AND ACTUAL - CAPITAL PROJECTS FUND FOR THE YEAR ENDED DECEMBER 31, 2015 Original Over And Final (Under) Budget Actual Budget REVENUES Sales taxes $ 176, ,107 12,107 Investment income (153) Intergovernmental 24,000 - (24,000) Total Revenues 200, ,154 (12,046) EXPENDITURES Capital outlay 69,700 57,940 (11,760) REVENUES OVER (UNDER) EXPENDITURES 130, ,214 (286) OTHER FINANCING USES Transfers out (110,250) (127,554) 17,304 NET CHANGE IN FUND BALANCE $ 20,250 2,660 (17,590) FUND BALANCE, JANUARY 1 498,981 FUND BALANCE, DECEMBER 31 $ 501,641 Page 30

33 SUPPLEMENTAL INFORMATION - NOTES TO SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - MODIFIED CASH BASIS - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2015 Budgetary Data The Village follows these procedures in establishing the budgetary data reflected in the financial statements: a. The proposed budget is submitted to the Board of Trustees for the fiscal year in December for all funds. The operating budget includes proposed expenditures and means of financing them, not to exceed the total revenues of the preceding year plus any fund balance at the end of such year. b. The budget must be adopted by the Board of Trustees prior to the beginning of the fiscal year. c. Budget amendments must be approved by the Board of Trustees. d. All annual appropriations lapse at fiscal year-end. Excess of Expenditures Over Appropriations For the year ended December 31, 2015, expenditures exceeded appropriations in the General Fund by $42,904. Page 31

34 SUPPLEMENTAL INFORMATION - SCHEDULE OF CHANGES IN NET PENSION LIABILITY (ASSET) AND RELATED RATIOS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Pension Liability Service cost $ 43,579 Interest on the total pension liability 74,882 Difference between expected and actual experience (68,688) Benefit payments (27,243) Net Change In Total Pension Liability 22,530 Pension Liability Beginning 1,024,823 Total Pension Liability Ending (a) $ 1,047,353 Plan Fiduciary Net Position Contributions - employer $ 29,056 Contributions - employee 21,884 Pension plan net investment income 22,518 Benefit payments (27,243) Pension plan administrative expense (2,703) Other 32,947 Net Change In Plan Fiduciary Net Position 76,459 Plan Fiduciary Net Position Beginning 1,144,044 Plan Fiduciary Net Position Ending (b) $ 1,220,503 Net Pension Liability (Asset) Ending (a-b) $ (173,150) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability % Covered Employee Payroll (for February 28/29 Actuarial Valuation) $ 487,148 Net Pension Liability (Asset) as a Percentage of Covered Employee Payroll (35.54) % Notes: Information is not available for fiscal years prior to The amounts noted above are as of the measurement date which is June 30 prior to the end of the fiscal year. Page 32