CITY OF GREEN PARK, MISSOURI. FINANCIAL REPORT (Audited)

Transcription

1 CITY OF GREEN PARK, MISSOURI FINANCIAL REPORT (Audited) Year Ended December 3 1, 2012

2 FINANCIAL REPORT ~~~~~~~~~~~~~~~~~~~~~~~~~~~ INDEPENDENT AUDITOR'S REPORT Page MANAGEMENT'S DISCUSSION AND ANALYSIS 4 BASIC FINANCIAL STATEl\rIENTS Govenunent-wide Financial Statements: Statement of Net Position - Modified Cash Basis 10 Statement of Activities - Modified Cash Basis 11 Fund Financial Statements: Statement of Assets and Liabilities Arising from Cash Transactions - All Governmental Funds 12 Statement of Revenues Collected, Expenditures Paid, and Changes in Fund Balances - All Governmental Funds 13 Reconciliation of the Statement of Revenues Collected, Expenditures Paid, and Changes in Fund Balances - All Governmental Funds to the Statement of Activities - Modified Cash Basis Notes to Financial Statements SUPPLEMENT AL INFORMATION General Fund - Schedule of Revenues Collected - Budget and Actual 24 General Fund - Schedule of Expenditures Paid - Budget and Actual 25 Capital Projects Fund - Schedule of Revenues Collected and Expenditures Paid - Budget and Actual 26 Notes to Schedules of Revenues Collected and Expenditures Paid - Budget and Actual 27

3 Hochschild, Bloom & Company LLP Certified Public Accountants Consultants and Advisors INDEPENDENT AUDITOR'S REPORT June 26, 2013 Honorable Mayor and Board of Aldermen CITY OF GREEN PARK, MISSOURI REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying modified cash basis financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the CITY OF GREEN PARK, MISSOURI (the City), as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the modified cash basis of accounting described in Note A-3; this includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement Chesterfield Parkway W., Suite 125, Chesterfield, Missouri , , Fax Washington Square, P.O. Box 1457, Washington, Missouri , , Fax g p rime. GI 0 b a I I.,.."'''"""" 1 /,depr dc11ca.t. 'ln(rlnflr71s

4 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, each major fund, and the aggregate remaining fund information of the City as of December 31, 2012, 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. Other Matters - Other Information Our audit was conducted for the purpose of fonning opinions on the financial statements as a whole that collectively comprise the City's basic financial statements. The management's discussion and analysis and supplemental infonnation, 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. The management's discussion and analysis and supplemental infonnation, as listed in the table of contents, 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 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. 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. Page2

5 OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated June 26, 2013 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit perfonned in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. 1-/oc..Ul.J_ ~I oa "'"'- ~ Co-(1<-;f LL P CERTIFIED PUBLIC ~CCOUNTANTS U Page3

6 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 This section of the City of Green Park, Missouri's (the City) financial report is a narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, We encourage readers to consider the infonnation presented here along with the City's financial statements, including the footnotes that follow this Management's Discussion and Analysis (MD&A). FINANCIAL HIGHLIGHTS On a government-wide basis the assets of the City exceeded its liabilities for the most recent fiscal year by $10,846,265 (net position). The City has unrestricted net position of$2,971,477. The cost of the governmental activities was $1,029,014 in fiscal year As of the close of the current year, the governmental funds reported combined ending fund balances of $2,971,477, a decrease of$143,418 in comparison to the prior year. Of this amount, $2,068,418 or 70% is unassigned funds available for spending at the City's discretion. At the end of the current fiscal year, unassigned fund balance for the General Fund was $2,757,914 or 300% of the General Fund expenditures. OVERVIEW OF THE FINANCIAL STATEMENTS This MD&A is intended to serve as an introduction to the City's financial statements. The City's financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains supplemental information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net position - modified cash basis presents infonnation on all of the City's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities - modified cash basis presents information showing how the City's net position changed during the most recent fiscal year. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of the City include administration, engineering, police protection, sanitation, and street maintenance and improvements. Page4

7 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 The City has elected to utilize a modified cash basis of accounting as explained in Note A-3 of the notes to financial statements. The government-wide financial statements can be found beginning on page 10 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fond accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, the governmental funds financial statements utilize a current financial resources measurement focus as applied to the modified cash basis of accounting. Only current financial assets and liabilities are generally included on their balance sheet. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. Such infonnation may be useful in evaluating a government's near-tenn financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the infonnation presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-tenn impact of the City's near-tenn financial decisions. Both the governmental funds statement of assets and liabilities arising from cash transactions and the governmental funds statement of revenues collected, expenditures paid, and changes in fund balances provide a reconciliation to facilitate this comparison between the governmental funds and the government-wide governmental activities. The City adopts an annual appropriated budget for its governmental funds. Budgetary comparison statements have been provided for the fund to demonstrate legal compliance with the respective adopted budget. The govermnental funds financial statements can be found beginning on page 12 of this report. Notes to the basic financial statements. The notes provide additional infonnation that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found beginning on page 15 of this report. Supplemental information. In addition to the basic financial statements and accompanying notes, certain supplemental infonnation can be found beginning on page 24 of this report. Pages

8 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 CONDENSED FINANCIAL STATEMENTS A condensed version of the statement of net position - modified cash basis compared to the prior year follows: December Change Amount Percent ASSETS Current and other assets $ 3,231,219 3,372,553 (141,334) (4.2) % Capital assets 7,874,788 5,669,131 2,205, Total Assets 11,106,007 9,041,684 2,064, LIABILITIES Payroll liabilities 1,076 1, Sewer lateral fees 8, ,019 1,782.0 Escrow deposits 250, ,208 (7,011) (2.7) Total Liabilities 259, ,658 2, NET POSITION Invested in capital assets 7,874,788 5,669,131 2,205, Unrestricted 2,971,477 3,114,895 (143,418) (4.6) Total Net Position $ 10,846,265 8,784,026 2,062, % A condensed version of the statement of activities - modified cash basis compared to prior year follows: Page6

9 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 For The Years Ended December Change Amount Percent REVENUES Program revenues: Charges for services $ 41,171 28,795 12, % Operating grants and contributions 207, ,410 (2,047) (1.0) Capital grants and contributions 1,548, , , General revenues: Taxes: Sales 753, ,745 (1,000) (0.1) Gross receipts 508, ,390 (17,303) (3.3) Cigarette 7,559 7, Investment income 25,152 56,395 (31,243) (55.4) Total Revenues 3,091,253 2,367, , EXPENSES Administration 349, ,226 60, Engineering 78,828 61,524 17, Police protection 223, ,339 (3,075) (1.4) Sanitation 181, ,741 Streets 195, ,594 (57,036) (22.6) Total Expenses 1,029,014 1,011,424 17, CHANGE IN NET POSITION 2,062,239 1,355, , NET POSITION, JANUARY 1 8,784,026 7,428,335 1,355, NET POSITION, DECEM- BER31 $ 10,846,265 8,784,026 2,062, % The City's property tax rates in 2012 remained at zero; the same as Sales taxes collected remained flat in 2012 after increasing the previous year due to improving local and national economic conditions. You can think of the City's net position (the difference between assets and liabilities) as one way to measure the City's financial health or financial position. Over time, increases or decreases in the City'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 City's property tax base, the amount of snow during the winter season, etc., to assess the overall health of the City. The current year's growth in net position is attributed to infrastructure improvements. Page7

10 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 The City has committed $440,000 of fund balance for future contingencies. This amount of fund balance has been set aside on the internal records of the City and is included in unrestricted net position on the statement of net position - modified cash basis. GOVERNMENTAL FUNDS Total fund balances for all governmental funds decreased by $143,418. The General Fund balance increased by $207,271 mainly due to a decrease in street maintenance expenditures. The Capital Projects Fund decreased by $350,689 due to expenditures for street projects. While the Capital Projects Fund shows $273,069 for committed for construction, creating a negative unassigned balance, the City is expected to receive 80% of that amount from grants. BUDGETARY HIGHLIGHTS General Fund expenditures were $89,318 or 9% under budgeted expenditures of $1,007,949. General Fund revenues were $54,452 or 5% over the amount budgeted of $1,071,450. Overall General Fund revenues are below the 2011 total by $37,736, due to a decrease in utility tax and investment revenue. Capital Projects Fund expenditures were $206,090 or 10% over budgeted expenditures of $2,109,950 primarily due to fluctuations in the grant project costs. Capital Projects Fund revenues were $216,210 or 10% under the amount budgeted of $2, 181,561 primarily due to grant revenue. CAPITAL ASSETS The City invested $2,304,879 in capital assets during the year ended December 31, 2012; a larger amount than in prior years due to the road and bridge projects. The balances of capital assets over the capitalization threshold, net of accumulated depreciation, were as follows: December Construction in progress ROW /Easements Office furniture and equipment Leasehold improvements Infrastructure Total Capital Assets $ 3,896,082 60,073 8,900 4,137 3,905,596 $ 7,874,788 2,952,190 60,073 5,223 4,763 2,646,882 5,669,131 Additional infonnation on the City's capital assets can be found in Note C to the financial statements. Page8

11 MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2012 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES + The nation-wide economic recession has impacted the City's operations to the extent that growth of General Fund tax revenue has slowed in comparison to prior years. Sales taxes total 30% of the City's revenue. The General Fund sales tax saw an increase of0.1%versus2011. The Capital Projects Fund capital improvements sales tax decreased 0.3% from No growth is estimated for General Fund sales tax or capital improvements sales tax in Interest earnings on idle monies were lower in 2012, earning an average of 0.8%. The City anticipates interest earnings to average 0.7% in The Capital Projects Fund expenditures for 2013 are projected to be $130,000, which will primarily stem from the City road and bridge projects to be partially funded from grants. + The 2013 budget was prepared with property tax rates remaining at zero. CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial repo1i is designed to provide our residents and taxpayers with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have any questions about this report or need additional financial information, please contact the City Clerk's office at Mueller Road, Suite 2, Green Park, MO or telephone, Page 9

12 STATEMENT OF NET POSITION - MODIFIED CASH BASIS ~~~~~~~~~~~~~~~~~~~~~~~~DECEMBER31,2012 ASSETS Cash and investments Cash - restricted for escrows Deposits Capital assets: Construction in progress Other capital assets, net of accumulated depreciation Total Assets LIABILITIES Payroll liabilities Sewer lateral fees Escrow deposits Total Liabilities NET POSITION Invested in capital assets Unrestricted Total Net Position $ 2,977, ,197 3,200 3,956,155 3,918,633 11,106,007 1,076 8, , ,742 7,874,788 2,971,477 $ 10,846,265 Page 10

13 STATEMENT OF ACTIVITIES - MODIFIED CASH BASIS THE YEAR ENDED DECEMBER 31, 2012 FUNCTIONS/PROGRAMS Governmental Activities Administration Engineering Police protection Sanitation Streets Total Governmental Activities Expenses $ 349,623 78, , , ,558 $ 1,029,014 Program Revenues Charges Operating Capital For Grants And Grants And Services Contributions Contributions 7,370 33, ,701 18,662 1,548,176 41, ,363 1,548,176 Net Revenues (Expenses) And Change In Net Position (342,253) (45,027) (34,563) (181,741) 1,371, ,696 General Revenues Taxes: Sales Gross receipts Cigarette Investment income Total General Revenues 753, ,087 7,559 25,152 1,294,543 CHANGE IN NET POSITION 2,062,239 NET POSITION, JANUARY 1 8,784,026 NET POSITION, DECEMBER 31 $ 10,846,265 See notes to financial statements Page 11

14 STATEMENT OF ASSETS AND LIABILITIES ARISING FROM CASH TRANSACTIONS - ALL GOVERNMENTAL FUNDS DECEMBER 31, 2012 ASSETS Cash and investments Cash - restricted for escrows Deposits Due from Capital Projects Fund Total Assets $ $ Capital General Projects Fund Fund Total 2,977,822 2,977, , ,197 3,200 3, , ,427 3,647,646 3,647,646 LIABILITIES AND FUND BALANCES Liabilities Payroll Liabilities Sewer lateral fees Escrow deposits Due to General Fund Total Liabilities $ 1,076 1,076 8,469 8, , , , , , , ,169 Fund Balances Committed for contingencies Committed for construction Assigned for subsequent year's budget Unassigned Total Fund Balances Total Liabilities And Fund Balances $ 440, , , , , ,990 2,757,914 (689,496) 2,068,418 3,387,904 (416,427) 2,971,477 3,647,646 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. Total Net Position Of Governmental Activities 7,874,788 $ 10,846,265 Page 12

15 STATEMENT OF REVENUES COLLECTED, EXPENDITURES PAID, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2012 Capital General Projects Fund Fund Total REVENUES Taxes $ 1,059, ,175 1,476,754 Grants 1,548,176 1,548,176 Licenses and permits 41,171 41,171 Investment income 25,152 25, 152 Total Revenues 1,125,902 1,965,351 3,091,253 EXPENDITURES Administration 307, ,846 Engineering 123, ,656 Police protection 223, ,264 Sanitation 181, ,741 Street maintenance 82,124 82,124 Street projects 2,316,040 2,316,040 Total Expenditures 918,631 2,316,040 3,234,671 NET CHANGES IN FUND BALANCES 207,271 (350,689) (143,418) FUND BALANCES, JANUARY 1 3,180,633 (65,738) 3,114,895 FUND BALANCES, DECEMBER 31 $ 3,387,904 (416,427) 2,971,477 See notes to financial statements Page 13

16 ~~~~~~~~~~~~~~~~~-FOR THE CITY OF GREEN PARK, MISSOURI RECONCILIATION OF THE STATEMENT OF REVENUES COLLECTED, EXPENDITURES PAID, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES-MODIFIED CASH BASIS YEAR ENDED DECEMBER 31, 2012 Amounts reported for governmental activities in the statement of activities are different because: Net changes in fund balances Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays over the capitalization threshold ($2,304,878) exceeded depreciation ($99,221) in the current year. Change In Net Position Of Governmental Activities $ (143,418) 2,205,657 $ 2,062,239 Page 14

17 ~~~~~~~~~~~~~~~~~~~~~-NOTES TO CITY OF GREEN PARK, MISSOURI NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FINANCIAL STATEMENTS The CITY OF GREEN PARK, MISSOURI (the City) was incorporated in The City operates under a Mayor-Board of Aldennen fonn of government and provides various services including legislative, public safety (police only), streets, health and social services, public improvements, planning and zoning, and general administrative services. The more significant accounting policies consistently applied by the City in the preparation of the accompanying financial statements are summarized below: 1. Reporting Entity The financial statements of the City include the financial activities of the City and any component units, entities which are financially accountable to the City. The City does not currently have any component units. 2. Fund Accounting The government-wide financial statements (i.e., the statement of net position - modified cash basis and the statement of activities - modified cash basis) report infonnation on all of the activities of the City. 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 charges to those directly relating to the function or segment. Taxes and other items not included among program revenues are reported instead as general revenues. The following major governmental funds are used by the City: 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 revenue is used for general ongoing government services such as police, public works, and administration. Capital Projects Fund -- The Capital Projects Fund accounts for financial resources to be used for the acquisition or construction of major capital facilities. 3. Basis of Accounting In the government-wide statement of net position - modified cash basis and statement of activities - modified cash basis and the fund financial statements, governmental activities are presented using a modified cash basis of accounting. This basis recognizes assets, liabilities, net position/fund equity, revenues, and expenses/expenditures when they result from cash transactions. This basis is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Page 15

18 ~~~~~~~~~~~~~~~~~~~~~-NOTES TO CITY OF GREEN PARK, MISSOURI FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Basis of Accounting (Continued) As a result of the use of this modified cash basis of accounting, certain assets and their related revenues (such as accounts receivable) and certain liabilities and their related expenses (such as accounts payable and expenses for goods or services received but not yet paid and accrued expenses and liabilities) are not recorded in these financial statements. If the City utilized the basis of accounting recognized as accounting principles generally accepted in the United States of America, the fund financial statements for governmental funds would use the modified accrual basis of accounting. All government-wide statements would be presented on the accrual basis of accounting. 4. Property Taxes The City does not levy a tax on the assessed value of real and personal property located within the City. 5. Investments Missouri state statutes and the City's investment policies authorize the City to invest in certain obligations of the U.S. Treasury, U.S. government and its agencies, collateralized repurchase agreements, certificates of deposit, and commercial paper. Deposits in financial institutions in excess of federally insured amounts must be collateralized by securities pledged to the City by those same institutions. The collateral is required to be held by the City or by the trust department of a financial institution other than the pledging bank. Investments are stated at fair value. 6. Capital Assets Capital assets, which include office furniture and equipment, and infrastructure assets (e.g., roads), are reported in the governmental activities of the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $500 and an estimated useful life greater than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. The City has elected to report major general infrastructure assets prospectively from The costs of nonnal maintenance and repairs that do not add to the value of the assets or materially extend the asset's life are not capitalized. Depreciation is being computed on the straight-line method, using asset lives as follows: Page 16

19 ~~~~~~~~~~~~~~~~~~~~~-NOTES TO CITY OF GREEN PARK, MISSOURI FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 6. Capital Assets (Continued) Assets Office furniture and equipment Leasehold improvements Infrastrncture Years Compensated Absences Employees accrue vacation and sick pay during the year and vested amounts remain unpaid at December 31, The City records expenditures for compensated absences on the cash basis. 8. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City maintains commercial insurance coverage covering each of those risks of loss. Management believes such coverage is sufficient to preclude any significant uninsured losses to the City. 9. Use of Estimates The preparation of basic financial statements requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and the accompanying notes. Actual results could differ from those estimates. 10. Fund Balance Policies The fund balance amounts are reported in the following applicable categories listed from the most restrictive to the least restrictive: N onspendable -- The portion of fund balance that is not in a spendable fonn 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 fonnal action (ordinance) of the Board of Aldermen, the highest level of decision-making authority. Page 17

20 NOTES TO FINANCIAL STATEMENTS ~~~~~~~~~~~~~~~~~~~~~ NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 10. Fund Balance Policies (Continued) Assigned -- The portion of fund balance that the City intends to use for a specific purpose as determined by the applicable City officials to which the Board of Aldermen has designated authority. Unassigned -- Amounts that are available for any purpose; these positive amounts are reported only in the General Fund. When both restricted and unrestricted resources are available, the City will spend the most restricted amounts before the least restricted. NOTE B - CASH AND INVESTMENTS 1. Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City's bank deposits are required by state law to be secured by the deposit of certain securities specified at RSMo with the City or trustee institution. The value of the securities must amount to the total of the City's cash not insured by the Federal Deposit Insurance Corporation. As of December 31, 2012, the City's bank balances were entirely secured or collateralized with securities held by the City or by its agent in the City's name. 2. Investments As of December 31, 2012, the City had the following investments: Maturities Fair No Less Than 1-5 Credit Value Maturity One Year Years Risk Certificates of deposit $ 1,440, , ,320 NIA Money market funds 855, ,982 Not rated Total Investments 2,296, , ,320 Cash deposits 931 Total Cash And Investments $ Page 18

21 ~~~~~~~~~~~~~~~~~~~~~-NOTES TO NOTE B - CASH AND INVESTMENTS (Continued) 2. Investments (Continued) Investments Policies CITY OF GREEN PARK, MISSOURI FINANCIAL STATEMENTS Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City will minimize credit risk by prequalifying the financial institutions, brokers/dealers, intennediaries, and advisors with which the City will do business 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 City will minimize interest rate risk by structuring the investment portfolio so the securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. Concentration of Credit Risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. The City addresses custodial credit risk by prequalifying institutions with which the City places investments, diversifying the investment portfolio, and maintaining a standard of quality for investments. NOTE C - CAPITAL ASSETS Capital assets activity was as follows: Page 19

22 NOTES TO FINANCIAL STATEMENTS ~~~~~~~~~~~~~~~~~~~~~ NOTE C - CAPITAL ASSETS (Continued) For The Year Ended December 31, 2012 Balance December Increase Decrease Capital assets not being depreciated: ROW /Easements $ 60,073 Construction in progress 2,952,190 1,987, Total Capital Assets Not Being Depreciated, 3,012,263 1,987, Capital assets being depreciated: Office furniture and equipment 31,548 5,840 11,958 Leasehold improvements 9,385 Infrastructure 3,035,259 1,355,146 Total Capital Assets Being Depreciated 3,076,192 1,360,986 11,958 Less - Accumulated depreciation for: Office furniture and equipment 26,325 2,163 11,958 Leasehold improvements 4, Infrastructure 388,377 96,432 Total Accumulated Depreciation 419,324 99, Total Capital Assets Being Depreciated, Net 2,656,868 1,261,765 Balance December ,073 3,896,082 3,956,155 25,430 9,385 4,390,405 4,425,220 16,530 5, , ,587 3,918,633 Capital Assets, Net $ 5,669,131 3,249, ,874,788 Depreciation expense was charged to functions/programs of the City as follows: For The Year Ended December Administration Street maintenance Total $ $ 2,789 96,432 99,221 Page 20

23 NOTES TO FINANCIAL STATEMENTS ~~~~~~~~~~~~~~~~~~~~~ NOTED - OPERATING LEASE The City is obligated under a real estate lease for building and office facilities through October 31, It is accounted for as an operating lease. Rent expense was $46, 103 for the year ended December 31, The City also has the option of extending the tenn of the lease for an additional five years. The commitment as of December 31, 2012 for the remaining term of the lease not including the City's share of operating expenses is as follows: For The Years Ended December $38,100 31,750 Total $ NOTE E - DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan through the Equitable Equivest Unit Annuity Collections, created in accordance with Internal Revenue Code Section 457. The plan was established by an ordinance of the City Board of Aldermen through a plan dated July The plan, available to all City employees, permits them to defer a portion of their salary until future years. Pursuant to the plan's provisions, the City is obligated to match contributions equal to 3% of each active eligible participant's deferral. The City's contributions paid to the plan amounted to $0 for the year ended December 31, NOTE F - COMMITMENTS AND CONTINGENCIES The City contracted the St. Louis County Police Department to provide services. Payments for services for the year ended December 31, 2012 amounted to $223,264. The contract is set up for one-year tenns, expiring on May 31, This amount can be adjusted when both parties agree that special circumstances require additional related costs. The City contracted American Eagle Waste Ind., L.L.C. to provide residential solid waste collection services. Payments for services for the year ended December 31, 2012 amounted to $181,741. The contract tenns are for a period of three years with an option to extend the contract for a maximum period of three years expiring January 31, 2013 at the sole option of the City. The City is a member of the Missouri Public Entity Risk Management Fund (MOPERM), which is a public entity risk pool for general liability, law enforcement liability, public officials' errors and omission, and automobile liability. The City pays an annual contribution to MOPERM for its insurance cov- Page 21

24 NOTES TO FINANCIAL STATEMENTS ~~~~~~~~~~~~~~~~~~~~ NOTE F - COMMITMENTS AND CONTINGENCIES (Continued) erage. Should the contributions received not produce sufficient funds to meet obligations, MOPERM is empowered to make special assessments. Members of MO PERM are jointly and severally liable for all claims against MOPERM. Settled claims have not exceeded the City's commercial coverages in any of the past three fiscal years. Page 22

25 SUPPLEMENTAL INFORMATION SUPPLEMENTAL INFORMATION SECTION Page 23

26 SUPPLEMENTAL INFORMATION - GENERAL FUND - SCHEDULE OF REVENUES COLLECTED - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, Over Budgeted Amounts (Under) Original Final Actual Budget Actual REVENUES Taxes: Cigarette $ 7,000 7,000 7, ,383 Cable and utility 484, , ,087 24, ,390 Gasoline 73,000 73,000 66,760 (6,240) 73,461 Motor vehicle fee increase 11,000 11,000 11, ,684 Motor vehicle sales tax 15,000 15,000 16,215 1,215 15,897 Road and bridge 105, , ,384 8, ,368 Sales 310, , ,570 26, ,265 Total Taxes 1,005,000 1,005,000 1,059,579 54,579 1,078,448 Licenses and permits 26,450 26,450 41,171 14,721 28,795 Investment income 40,000 40,000 25,152 (14,848) 56,395 Total Revenues 1,071,450 1,125,902 54,452 1,163,638 Page 24

27 SUPPLEMENTAL INFORMATION - GENERAL FUND - SCHEDULE OF EXPENDITURES PAID - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, Over Budgeted Amounts (Under) Original Final Actual Budget Actual EXPENDITURES Administration: Wages $ 117, , , ,841 Capital outlay 10,000 10,000 8,390 (1,610) 1,881 Dues and subscriptions 3,000 3,000 2,407 (593) 2,595 Election fees 1,500 1, (836) 868 Employee training 3,000 3,000 2,185 (815) 2,238 Health services 1,200 1, (394) 1,102 Health insurance 20,700 20,700 18,970 (1,730) 17,807 Insurance 8,000 8,000 4,634 (3,366) 4,549 Legal notices and publications 2,500 2,500 1,425 (1,075) 2,185 Licenses and permits 6,000 6,000 6, ,875 Maintenance and repairs Miscellaneous ,932 1, Newsletters and delivery 4,000 4,000 3,991 (9) 3,895 Office 5,000 5,000 6,713 1,713 4,719 Outside labor 5,500 5,500 6, ,591 Payroll taxes 23,000 23,000 9,226 (13,774) 9,224 Postage (226) 469 Professional fees 86,000 86,000 61,563 (24,437) 59,972 Public relations 2,000 2,000 1,560 (440) 1,228 Rent 45,100 45,100 46,103 1,003 46,052 Telephone 3,200 3,200 3, ,042 Utilities 3,300 3,300 2,657 (643) 2,196 Total Administration 351, , ,846 (44,103) 288,108 Engineering: General 65,000 65,000 78,828 13,828 61,524 Capital outlay 25,000 25,000 44,828 19,828 36,374 Total Engineering 90,000 90, ,656 33,656 97,898 Police protection 230, , ,264 (6,736) 226,339 Sanitation 186, , (4,259) 181,741 Street maintenance 150, ,000 (67,876) 163,440 Total Expenditures $ 1,007,949 1,007, ,631 (89,318) 957,526 Page 25

28 SUPPLEMENTAL INFORMATION - CAPITAL PROJECTS FUND - SCHEDULE OF REVENUES COLLECTED AND EXPENDITURES PAID - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR THE YEAR ENDED DECEMBER 31, 2011 REVENUES Taxes Grants Total Revenues Budgeted Amounts Original Final $ 400, ,000 1,781,561 1,781,561 2,181,561 2,181, Over (Under) Actual Budget Actual 417,175 17, ,480 1,548,176 (233,385) 784,997 1,965,351 (216,210) 1,203,477 EXPENDITURES Street projects CHANGE IN FUND BALANCE 2,109,950 2,109,950 $ 71,611 71,611 2,316, ,090 1,635,840 (350,689) (422,300) (432,363) Page 26

29 SUPPLEMENTAL INFORMATION - NOTES TO SCHEDULES OF REVENUES COLLECTED AND EXPENDITURES PAID - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31, 2012 Budgetary Data The City follows these procedures in establishing the budgetary data: a. The proposed budget is submitted to the Board of Aldennen. The operating budget includes proposed expenditures and means of financing them, not to exceed the total revenues plus any fond balance at the end of such year. Budgets are adopted on the modified cash basis of accountmg. b. The budget must be adopted by the Board of Aldennen. Expenditures may not exceed appropriations on the fund level. c. Budget amendments must be approved by the Board of Aldennen. d. All annual appropriations lapse at year-end. For the year ended December 31, 2012, expenditures in the Capital Projects Fund were over budget by $206,090, due to certain costs related to a grant project. Page 27