ANNUAL FINANCIAL REPORT

Transcription

1 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2017

2 INDEPENDENT AUDITOR S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2017

3 ANMJAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31,2017 FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT 1-3 MANAGEMENT S DISCUSSION AND ANALYSIS 4-10 FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds 15 Reconciliation of Balance Sheet Governmental Funds to the Statement of Net Position 16 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 17 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds to the Statement of Activities 18 Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual General Fund Statement of Net Position Proprietary Funds Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Statement of Cash Flows Proprietary Funds Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in the City s Net Pension Liability and Related Ratios 49 Schedule of City Contributions 50 Notes to the Required Supplementary Information 51

4 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTiNUED) SUPPLEMENTARY INFORMATION Combining and Individual Fund Statements and Schedules: Combining Balance Sheet Nonmajor Governmental Funds 52 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds 53 Law Enforcement Confiscation Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual 54 Hotel / Motel Fund Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual 55 Schedule of Projects Constructed with Special Sales Tax Proceeds 56 Component Unit Downtown Development Authority Balance Sheet 57 Statement of Revenues, Expenditures, and Changes in Fund Balances 58 GOVERNMENTAL REPORTS Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Schedule of Findings and Responses 61 62

5 CLIFTON, LIPFORD, HARDISON&_PARKER, LLC INDEPENDENT AUDITOR S REPORT Mayor and City Council City of Gray Gray, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Gray, Georgia (the City ), as of and for the year ended December 31, 2017, 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 fmancial 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 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. Member of 1503 Bass Road American Insfitute c~f 468 South Houston Lake Road RO. Box 6315 Macon, Georgia CertIfied Public Accountants Warner Robins, Georgia Phone ~ Fax Phone ~ Fax

6 Mayor and City Council City of Gray Page Two 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 financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Gray, Georgia, as of December 31, 2017, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with 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 information on pages 4 through 10, the schedule of changes in the City s net pension liability and related ratios on page 49, the schedule of City contributions on page 50, and the notes to the required supplementary information on page 51 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 Gray, Georgia s basic financial statements. The combining nonmajor fund financial statements, budgetary comparison schedules, schedule of projects constructed with special sales tax proceeds and the Downtown Development Authority s financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining nonmajor fund financial statements, budgetary comparison schedules, schedule of projects constructed with special sales tax proceeds, and the Downtown Development Authority s financial statements are the responsibility of management and were 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 2

7 Mayor and City Council City of Gray Page Three 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 nonmajor fund financial statements, budgetary comparison schedules, schedule of projects constructed with special sales tax proceeds, and the Downtown Development Authority s financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated June 5, 2018 on our consideration of the City of Gray, Georgia 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 solely 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 the effectiveness of the City s 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 Gray, Georgia s internal control over financial reporting and compliance. Macon, Georgia June 5,2018 Al 3

8 MANAGEMENT S DISCUSSION & ANALYSIS

9 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 31, 2017 As management of the City of Gray, Georgia (the City), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the year ended December 31, Financial Highlights The assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources of the City as of December 31, 2017 by $13,104,996. The government s total net position increased by $420,866 for the year ended December 31, As of December 31, 2017, total net position consisted of $8,113,458 invested in capital equipment, net of related debt, $763,034 restricted and $4,228,504 unrestricted. As of the close of the current year the City s governmental funds reported combined ending fund balances of $3,767,902 an increase of $63,464 in comparison with the prior year. o For the year ended December 31, 2017, fund balance for the general fund increased from $3,155,004 to $3,210,304. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The City s basic financial statements comprise three components: 1. government-wide financial statements; 2. fund financial statements; and 3. notes 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 presents information on all of the City s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference being 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 presents information showing how the government s net position changed during the most recent year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future periods. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from others functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The governmental activities of the City include general government, judicial, public safety, public works, health and welfare, culture and recreation, and housing and development. The business-type activities of the City includes an water and sewer fund and sanitation fund. 4

10 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 31, 2017 (CONTINUED) The government-wide financial statements can be found on pages 11 and 12 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 fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. 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, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the year. Such information may be useful in evaluating a government s near-term financing requirements. Because of the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government s near-term financing decisions. Both the governmental funds balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains eight individual governmental funds: the general fund, a hotel/motel tax fund, two SPLOST funds, a law enforcement confiscation fund, a capital improvement fund, a CDBG fund and the perpetual care fund. The City adopts an annual appropriated budget for the general fund, hotel/motel tax fund and the law enforcement confiscation fund. A budgetary comparison statement has been provided to demonstrate compliance with these budgets. The basic governmental funds financial statements can be found on pages 15 through 20 of this report. Proprietary Funds The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses the enterprise fund to account for the activities of the water and sewer fund and the sanitation fund. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The basic proprietary fund financial statements can be found on pages 21 through 26 of this report. 5

11 Notes to Financial Statements MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 31, 2017 (CONTINUED) The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the City, assets and deferred outflow of resources exceeded liabilities and deferred inflows of resources by $13,104,996 at the close of the most recent year. A portion of the City s net position reflects its investment in capital assets, less any related debt outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. As of December 31, 2017 the investment consists of $17,791,976 in assets, with accumulated depreciation of $8,233,262 and outstanding debt of $1,445,256. An additional portion of the City s net position represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position may be used to meet the City s ongoing obligations. As of December 31, 2017 current liabilities decreased by $476,915 and net position increased by $420,866 compared to December 31,

12 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER31, 2017 (CONTINUED) Assets Current and other assets Capital assets Total assets Deferred outflows of resources Related to pensions Total deferred outflows of resources Liabilities Current and other liabilities Long-term liabilities Total liabilities Deferred inflows of resources Related to pensions Total deferred inflows of resources Net position Net investment in capital ass Restricted Unrestricted Total net position Summary of Net Position Governmental Activities Bus ines s-type Activities Total $ 3,919,026 $ 4,027,176 $ 1,811,688 $ 1,544,489 $ 5,730,714 $ 5,571,665 3,358,824 3,476,422 6,199,890 6,353,731 9,558,714 9,830,153 7,277,850 7,503,598 8,011,578 7,898,220 15,289,428 15,401,818 54,693 61,808 33,522 41,206 88, ,014 54,693 61,808 33,522 41,206 88, , , , , , ,356 1,016, , ,240 1,473,464 1,567,985 1,633,130 1,785, , ,039 1,876,565 2,099,457 2,172,486 2,801,496 62,100 11,524 38,061 7, ,161 19,206 62,100 11,524 38,061 7, ,161 19,206 $ 3,358, ,961 3,140,737 6,974,522 $ 3,293, ,797 3,091,520 6,851,843 $ 4,754, ,073 1,087,767 6,130,474 $ 4,768, , ,916 5,832,287 $ 8,113, ,034 4,228,504 13,104,996 $ 8,062, ,185 3,872,436 12,684,130 7

13 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 31, 2017 (CONTINUED) Revenues Program revenues Charges for services Operating grants and contributio Capital grants and contributions General revenues Taxes Investment revenues Miscellaneous Total Revenues Expenses General government Public safety Public works Other Water and Sewer Sanitation Total Expenses Increase (decrease) in net position before transfers Transfers Increase (decrease) in net position Net position - beginning of year Net position - end of year Change in Net Position Governmental Activities Business-type Activities Total $ 231,062 $ 217,031 S 2,150,908 $ 1,857,877 $ 2,381,970 $ 2,074,908 51,713 42, ,713 42, , , , , , ,590 1,895,063 1,830, ,895,063 1,830,754 8,486 7,821 3,386 3,379 11,872 11,200 18,428 7, ,428 7,813 2,542,105 2,446,916 2,324,276 2,419,544 4,866,381 4,866, , , , ,717 1,018, , ,018, , , , , , , , , , ,962,548 1,946,882 1,962,548 1,946, , , , ,847 2,332,191 2,568,875 2,113,324 2,095,729 4,445,515 4,664, ,914 (121,959) 210, , , ,856 (87,235) (88,734) 87,235 88, ,679 (210,693) 298, , , ,856 6,851,843 7,062,536 5,832,287 5,419,738 12,684,130 12,482,274 $ 6,974,522 $ 6,851,843 $ 6,130,474 $ 5,832,287 S 13,104,996 $ 12,684,130 Financial Analysis of the City s Funds The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government s net resources available for spending at the end of the year. As of December 31, 2017 the City s governmental funds reported combined ending fund balances of $3,767,902. The unassigned fund balance reflects a balance of $3,182,907. A total of $584,995 is restricted or assigned to indicate that it is not available for new spending because it has already been committed for restricted purposes. The fund balance of the City s governmental funds increased by $63,464 during the current year. Proprietary Funds The City s proprietary fund financial statements provide the same type of information found in the government-wide financial statements, but in more detail. 8

14 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 3 1, 2017 (CONTINUED) The water and sewer system fund provides to the City s residential and commercial customers. The City strives to maintain competitive rates to its customers while providing safe drinking water and sewerage treatment. Unrestricted net position of the water and sewerage and sanitation operations at the end of the year amounted to $1,087,767. General Fund Budgetary Highlights The City is ever cognizant of the necessity of being good stewards of public funds while at the same time having the responsibility of accumulating sufficient funds to effectively promote growth and development of the economy. A detailed comparison of the general fund budget to actual amounts can be found on pages 19 through 20 of this report. Capital Assets and Debt Administration Capital Assets The City s investment in capital assets for its governmental and business-type activities as of December 31, 2017 totals $9,558,714 net of accumulated depreciation. This investment in capital assets includes land, buildings and improvements, infrastructure, machinery and equipment, and vehicles. The total decrease in the City s investment in capital assets for the current year was $271,439. Detailed information regarding the capital asset activity for 2017 can be found in Note 8 of this report. Land Water Rights Construction in progress Infrastructure Buildings Storm Drainage Improve. Equipment Vehicles Total Governmental Activities Business-type Activities Total ,043,463 $ 1,043,463 $ 26,167 $ 26,167 $ 1,069,630 $ 1,069, , , , , , ,610 66, ,610 1,251,214 1,359,991 5,442,462 4,751,615 6,693,676 6,111, , , , , , ,800 95, , , , , , , , , ,649 90, , , ,548 $ 3,358,824 $ 3,476,422 $ 6,199,890 $ 6,353,731 $ 9,558,714 $ 9,830,153 Long-Term Debt During 2008, the City entered into a capital lease with the Georgia Municipal Association in the amount of $495,000 for the purchase of a new building for the police department. The lease was paid in full in The water and sewer fund reflects revenue bonds as long-term debt as of December 31, Bonds payable equal $375,000 as of December 31, In 2009, the City borrowed an additional $1,090,026 from GEFA for a belt press for the wastewater treatment. Notes payable equal $701,092 as of December 31, 2017, with $52,630 due within one year. In 2016, the City entered into a contract with GEFA to provide financing for improvements to the water system. The total amount outstanding as of 9

15 MANAGEMENT S DISCUSSION AND ANALYSIS DECEMBER 3 1, (CONTINUED) December 31, 2017 was $369,164, with 17,022 due within one year. Detailed information regarding the long-term debt activity for 2017 can be found in Note 9. Accomplishments/Growth for 2017 In 2017, the City of Gray continued to make great strides in upgrading its water and sewer infrastructure. Three of the existing City wells were rehabbed. City lifts stations electrical components were upgraded to be compatible with a portable generator. Several manholes throughout the City were rehabbed or replaced. The Police Department building lease was paid in full. The Police Department purchased three new vehicles to replace aging vehicles. Request for Information This financial report is designed to provide a general overview of the City s finances for those with an interest in the government s finances. Questions concerning any of the information provided in this report or request for additional information should be addressed to the City Clerk of Gray, P. 0. Box 443, Gray, Georgia

16 FINANCIAL STATEMENTS

17 STATEMENT OF NET POSITION DECEMBER 31, 2017 ASSETS Cash and cash equivalents Certificates of deposit Receivables (net of allowance): Accrued interest Taxes Accounts Due from other governments Prepaids Internal balances Restricted assets: Cash and cash equivalents Capital assets: Nondepreciable assets Depreciable assets, net Governmental Activities $ 2,580,226 1,111, ,455 4,880 74,953 31,871 1,043,463 2,315,361 Primary Government Business-type Activities $ 1,167, , ,657 12,125 (31,871) 288, ,967 5,793,923 Total $ 3,748,030 1,336, , ,537 74,953 12, ,073 1,449,430 8,109,284 Component Unit Downtown Development Authority $ 13, , ,839 Total assets - DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions Total deferred outflows of resources 7,277,850 8,011,578 15,289, ,384 54,693 33,522 88,215 54,693 33,522 88,215 The accompanying notes are an integral part of these financial statements. 11

18 V V STATEMENT OF NET POSITION DECEMBER 31, 2017 (CONTINUED) Component Unit Primary Government Downtown Governmental Business-type Development LIABILITIES Activities Activities Total Authority Accounts payable 79, , ,737 - Accrued liabilities 33,051 16,467 49,518 - Accrued interest 1,168 1,168 Customer deposits 202, ,425 Noncurrent liabilities: Due within one year Loans payable 69,652 69,652 Compensated absences 23,332 11,524 34,856 Due in more than one year Loans payable 1,000,604 1,000,604 - Bonds payable 375, ,000 - Net pension liability 159,666 97, ,526 - Total liabilities 295,921 1,876,565 2,172,486 - DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 62,100 38, ,161 - Total deferred inflows of resources 62,100 38, ,161 - NET POSITION Net investment in capital assets 3,358,824 4,754,634 8,113, ,042 Restricted for: Debt service - 288, ,073 Perpetual care 83,734-83,734 Capital outlay 384, ,354 Law enforcement 6,873-6,873 - Unrestricted 3,140,737 1,087,767 4,228,504 13,342 Total net position $ 6,974,522 $ 6,130,474 $ 13,104,996 $ 447,384 The accompanying notes are an integral part of these financial statements. 12

19 STATEMENT OF ACTWITIES FOR THE YEAR ENDED DECEMBER 31,2017 Functions/Programs Primary Government Governmental activities General government Judicial Public safety Public works Health and Welfare Culture and recreation Housing and Development Interest on long-term debt Total governmental activities Business-type activities Water & Sewer Sanitation Total business-type activities Total primary government Component Unit: Downtown Development Authority Expenses $ 512,014 73, , ,135 9,219 7, , ,332,191 1,962, ,776 2,113,324 $ 4,445,515 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 66,417 $ - $ - General Revenues: Property taxes Sales taxes Insurance premium tax Franchise tax Other taxes Unrestricted investment earnings Miscellaneous Total general revenues Transfers 164,645 51, , ,062 51, ,353 1,981, ,047 2,150,908 $ 2,381,970 $ 51,713$ 507,335 ~ Change in net position Net position - beginning of year Net position - end of year - 169, ,982 $ 53,703 $ - $ - $ 120,000 The accompanying notes are an integral part of these financial statements. 13

20 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMEBER 31,2017 (CONTINUED) Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type Activities Activities Total Component Unit Downtown Development Authority $ (445,597) $ (73,527) (728,541) (285,782) (9,219) (7,221) (161,714) (462) - (1,712,063) - $ (445,597) $ (73,527) (728,541) (285,782) (9,219) (7,221) (161,714) (462) (1,712,063) - 189,295 18, ,566 (1,712,063) 207, ,295 18, ,566 (1,504,497) 66, , , , , ,263 8,486 18,428 1,921,977 (87,235) 122,679 6,851,843 $ 6,974, , , , , ,263 3,386 11,872 18,428 3,386 1,925,363 87, ,187 5,832,287 $ 6,130, ,866 12,684,130 $ 13,104,996 2,124 2,124 68, ,963 $ 447,384 The accompanying notes are an integral part of these financial statements. 14

21 BALANCE SHEET GOVERNMENTAL FUNDS DECEMBER31, 2017 ASSETS General 2015 SPLOST Non-Maj or Governmental Funds Total Governmental Funds Cash and cash equivalents Certificates of deposit Receivables, net of allowance Taxes Accounts Due from other governments Due from other funds Total Assets LIABILITIES Accounts payable Accrued liabilities Due to other funds Total Liabilities DEFERRED II JFLOWS OF RESOURCES Unavailable revenue - property taxes Total Deferred Inflows of Resources FUND BALANCES Restricted Assigned Unassigned Total fund balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 2,123,394 $ 245,077 $ 211,755 $ 2,580,226 1,033,144-78,497 1,111, , ,455 3,049-1,831 4,880 47,000 27,953-74,953 32, ,071 $ 3,354,113 $ 273,030 $ 292,083 $ 3,919,226 $ 72,557 $ 5,582 $ 1,733 $ 79,872 33, , ,608 5,582 1, ,123 38, ,201 38, , , , ,961 27,397-82, ,034 3,182, ,182,907 3,21 0, , ,150 3,767,902 $ 3,354,113 $ 273,030 $ 292,083 $ 3,919,226 The accompanying notes are an integral part of these financial statements. 15

22 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION FOR THE YEAR ENDED DECEMBER 31,2017 Amounts reported for governmental activities in the statement of net position are different because: Total fund balances - governmental funds $ 3,767,902 Capital Assets Capital assets used in governmental activities are not financed resources and, therefore, are not reported in the funds. Cost of assets 5,616,698 Accumulated depreciation (2,257,874) Deferred outflows of resources Related to pensions 54,693 Long-term Liabilities Long-term liabilities are not due and payable in the current period and, therefore, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities both current and longterm are reported in the Statement of Net Position. Long-term liabilities at year-end consist of the following: Compensated absences (23,332) Net pension liability (159,666) Deferred inflows of resources Related to pensions (62,100) Revenues Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds. 38,201 Total Net position of Governmental Activities $ 6,974,522 The accompanying notes are an integral part of these financial statements. 16

23 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 REVENUES: Taxes: Property Sales Other taxes Licenses and permits Intergovernmental Fines and forfeitures Investment earnings Miscellaneous Total revenues EXPENDITURES: Current: General government Judicial Public safety Public works Health and welfare Culture and recreation Housing and development Debt service: Principal Interest Capital outlay Total Expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES): Transfers out Total other financing sources and (uses) Net change in fund balances Fund balance - beginning of year Fund balance - end of year General 2015 SPLOST Non-Maj or Governmental Funds Total Governmental Funds $ 886,665 $ - $ - $ 886, , , ,043-11, ,339 66, ,417 51, , , , ,645 8, ,622 17, ,428 2,201, ,353 12,226 2,550, ,557-11, ,853 73, , , , ,145 37,969 12, ,621 9, , ,221 7, , , , ,896 4, , ,751 10, ,337 2,058, ,720 41,695 2,399, ,535 37,633 (29,469) 150,699 (87,235) - - (87,235) (87,235) - - (87,235) 55,300 37,633 (29,469) 63,464 3,155, , ,619 3,704,438 $ 3,210,304 $ 267,448 $ 290,150 $ 3,767,902 The accompanying notes are an integral part of these financial statements. 17

24 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 63,464 Capital Assets Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is depreciated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current period. Total capital outlays 126,576 Total depreciation (244,174) Deferred outflows of resources related to pensions is not available during the current period and therefore is not reported in the funds. Change in deferred outflows of resources related to pensions (7,115) Long-term Debt Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the Statement of Activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. The adjustments for these items are as follows: Capital leases 182,896 Accrued interest 3,808 Compensated absences (1,247) Net pension liability 57,574 Deferred inflows of resources related to pensions is not available during the current period and therefore is not reported in the funds. Change in deferred inflows of resources related to pensions (50,576) Revenues Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (8,527) Change in net position of governmental activities $ 122,679 The accompanying notes are an integral part of these financial statements. 18

25 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES in FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2017 Budget Original Final Actual Variance with Final Budget REVENUES: Taxes: General property taxes $ 746,050 $ 752,443 $ 886,665 $ 134,222 Local option sales tax 320, , ,586 36,586 Other taxes: Insurance premium tax 188, , ,729 28,729 Motor vehicle tax 133, , ,242 (33,164) Franchise tax 230, , ,347 (4,653) Beer and wine tax 80,000 87,235 87,235 - Real estate transfer tax 1,700 1,700 2, Recording intangible taxes 5,000 5,000 13,954 8,954 Mobilehometax Penalties and interest 2,500 2,500 2,402 (98) Total Taxes Licenses and Permits: Business licenses and permits Intergovernmental Revenues: Department of transportation Jones County Board of Education Crossing Guards Total Intergovernmental Revenues 1,707,140 1,720,768 1,892,294 68,000 68,000 66,417 41,713 41,713 10,000 10,000 10,000 10,000 51,713 51, ,526 (1,583) Fines, Forfeitures and Penalties: Fine and forfeitures 129, , ,645 35,121 Total Fines, Forfeitures and Penalties 129, , ,645 35,121 Miscellaneous: Interest earnings Miscellaneous 4,800 2,121 4,800 14,399 8,056 17,928 3,256 3,529 Total Miscellaneous 6,921 19,199 25,984 6,785 Total Revenues $ 1,921,061 $ 1,989,204 $ 2,201,053 $ 211,849 The accompanying notes are an integral part of these financial statements. PAGE 1 OF 2 19

26 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) Budget Variance with Original Final Actual Final Budget EXPENDITURES: Current: General Government General administration $ 537,283 $ 534,564 $ 493,557 $ 41,007 Judicial Municipal court 69,100 71,463 70,077 1,386 Public defender 3,600 3,600 3, Public Safety Police 676, , ,699 17,779 Prisoner custody 17,000 15,161 9,720 5,441 Fire 84,565 85,765 85, Dispatching 77,845 83,038 83,038 - Emergency management 1,000 1,000 1,000 Public Works Highways and streets 306, , ,145 64,568 Health and Welfare Community center 6,500 9,219 9,219 Housing and Development Better Hometown 25,000 25,000 25,000 - KeepJonesBeautiful 7,368 7,368 7, Planning and Zoning 9,600 9,600 9,600 - Downtown Development 20, , ,000 Debt Service Principal 185, , ,896 2,104 Interest 5,000 5,000 4, Total Expenditures 2,031,061 2,191,969 2,058, ,451 Excess (Deficiency) of Revenues over Expenditures (110,000) (202,765) 142, ,300 Other Financing Sources (Uses): Transfer to Water and Sewer Fund (80,000) (87,235) (87,235) - Total Other Financing Sources (Uses) (80,000) (87,235) (87,235) - Net change in fund balance (190,000) (290,000) 55, ,300 Fundbalance-beginningofyear 3,155,004 3,155,004 3,155,004 - Fund balance - end of year $ 2,965,004 $ 2,865,004 $ 3,210,304 $ 345,300 The accompanying notes are an integral part of these financial statements. PAGE 2 OF 2 20

27 STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2017 ASSETS Current assets: Cash and cash equivalents Certificates of deposit Restricted cash, cash equivalents and investments: Revenue bond covenant accounts Accrued interest receivable Accounts receivable (net of allowance for uncollectibles) Due from other funds Prepaid items Total current assets Business-type Activities Enterprise Funds Nonmajor Water and Sanitation Sewer Fund Fund Total $ 1,135,776 $ 32,028 $ 1,167, , , , , ,292 14, ,657-1,735 1,735 12,125-12,125 1,797,166 48,128 1,845,294 Noncurrent assets: Capital assets: Nondepreciable assets Depreciable assets, net Total capital assets Total noncurrent assets Total assets 405, ,967 5,793,923-5,793,923 6,199,890-6,199,890 6,199,890-6,199,890 7,997,056 48,128 8,045,184 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources related to pensions Total deferred outflows of resources 33,522-33,522 33,522-33,522 The accompanying notes are an integral part of these financial statements. PAGE 1 OF 2 21

28 STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2017 (CONTINUED) LIABILITIES Current liabilities: Accounts payable Accrued liabilities Customer deposits payable Accrued interest payable Compensated absences Due to other funds Notes payable - current Total current liabilities Noncurrent liabilities: Revenue bonds payable Notes payable Net pension liability Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted: Restricted for debt service Unrestricted Total net position Water and Sewer Fund Business-type Activities Enterprise_Funds Nonmajor Sanitation Fund Total $ 89,194 $ 12,671 $ 101,865 16,467-16, , ,425 1,168-1,168 11,524-11,524 33,606-33,606 69,652-69, ,036 12, , , ,000 1,000,604-1,000,604 97,860-97,860 1,473,464-1,473,464 1,897,500 12,671 1,910,171 38,061-38,061 38,061-38,061 4,754,634-4,754, , ,073 1,052,310 35,457 1,087,767 $ 6,095,017 $ 35,457 $ 6,130,474 The accompanying notes are an integral part of these financial statements. PAGE 2 OF 2 22

29 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 Operating Revenues: Charges for sales and services: Water sales Sewerage fees Garbage fees Connection fees Penalties and other fees Miscellaneous Total operating revenues Operating Expenses: Salaries Employee benefits Depreciation Utilities Maintenance and supplies Insurance Gas, oil, tires Professional fees Contracted services Travel Engineering fees County water expense Other operating expenses Total Operating Expenses Operating Income (Loss) Non-Operating Revenues (Expenses): Interest revenue Intergovernmental revenue Interest expense Total Non-Operating Revenues (Expenses) Business-type Activities Enterprise Funds Nonmajor Water and Sanitation Sewer Fund Fund Total $ 1,064,138 $ - $ 1,064, , , , ,047 76,149-76,149 30,256-30,256 5,068-5,068 1,981, ,047 2,150, , ,020 47,436-47, , , , , , , , ,586 11,488-11,488 20,763-20, , ,680 10,999-10,999 14,969-14, , ,528 43, ,338 1,917, ,776 2,068,326 64,311 18,271 82,582 3,386-3,386 18,488-18,488 (44,998) - (44,998) (23,124) - (23,124) The accompanying notes are an integral part of these financial statements. PAGE 1 OF 2 23

30 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER31, 2017 Business-type Activities Enterprise Funds Nonmajor Water and Sanitation Sewer Fund Fund Total Net Income (Loss) before Contributions and Transfers Capital contributions Transfers in Change in net position Net position - beginning of year Net position - end of year 41,187 18,271 59, , ,494 87,235-87, ,916 18, ,187 5,815,101 17,186 5,832,287 $ 6,095,017 $ 35,457 $ 6,130,474 The accompanying notes are an integral part of these financial statements. PAGE 2 OF 2 24

31 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 Cash Flows from Operating Activities: Cash received from customers Cash paid to suppliers for good and services Cash paid to employees Net Cash Provided by (Used for) Operating Activities Cash Flows from Noncapital Financing Activities: Transfer from General Fund Net Cash Provided by (Used for) Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities: Acquisition and construction of assets Intergovernmental revenue Proceeds from financing Principal paid on revenue bonds Principal paid on notes Interest paid on revenue bonds Net Cash Provided by (Used for) Capital and Related Financing Activities Cash Flows from Investing Activities: Interest received Net Cash Provided by (Used for) Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning of Year Cash and Cash Equivalents - End of Year Reconciliation of Cash Equivalents: Cash Restricted cash Total Cash and Cash Equivalents Water and Sewer Fund Business-type Activities Enterprise Funds Nonmajor Sanitation Fund 166,867 (150,994) Total $ 1,993,676 $ $ 2,160,543 (1,146,620) (1,297,614) (452,663) (452,663) 394,393 15, ,266 87,235-87,235 87,235-87,235 (62,695) - (62,695) 38,284-38,284 27,732-27,732 (110,000) - (110,000) (57,224) - (57,224) (45,083) - (45,083) (208,986) - (208,986) 3,329-3,329 3,329-3, ,971 15, ,844 1,372,592 16,155 1,388,747 $ 1,648,563 $ 32,028 $ 1,680,591 $ 1,360,490 $ 32,028 $ 1,392, , ,073 $ 1,648,563 $ 32,028 $ 1,680,591 The accompanying notes are an integral part of these financial statements. PAGE 1 OF 2 25

32 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017 (CONTINUED) Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Water and Sewer Fund Business-type Activities Enterprise_Funds Nonmajor Sanitation Fund Total Operating Income (Loss) $ 64,311 $ 18,271 $ 82,582 Adjustment to Reconcile Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities: Depreciation 368, ,029 Changes in Assets and Liabilities: (Increase) decrease in accounts receivables (Increase) decrease in due from other funds (Increase) decrease in prepaids (Increase) decrease in deferred outflows - pensions Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in customer water deposits Increase (decrease) in due to other funds Increase (decrease) in compensated absences Increase (decrease) in net pension liability Increase (decrease) in deferred inflows - pensions Total adjustments Net Cash Provided by (Used for) Operating Activities 7,200 (2,180) 5,020 - (551) (551) 2,625-2,625 7,684-7,684 (37,992) 333 (37,659) (3,184) - (3,184) 4,615-4,615 (2,188) - (2,188) (120) - (120) (46,966) - (46,966) 30,379-30, ,082 (2,398) 327,684 $ 394,393 $ 15,873 $ 410,266 NONCASH CAPITAL FINANCING ACTIVITIES Contributions of capital assets from government $ 151,494 $ - $ 151,494 The accompanying notes are an integral part of these financial statements. PAGE 2 OF 2 26

33 NOTES TO THE FINANCIAL STATEMENTS

34 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies The City of Gray was incorporated in 1911 under the provision of an Act of the General Assembly of Georgia. The City operates under a mayor-council form of government and provides the following services as authorized by its charter: public safety, highways and streets, sanitation, health and social services, recreation and general administrative services. The accounting policies of the City of Gray conform to generally accepted accounting principles as applicable to governments. The following is a summary of the City s more significant policies applied in the preparation of the accompanying financial statements. A. Reporting Entity As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Gray, Georgia (primary government) and its component units. A component unit is a legally separate organization for which the elected officials of the primary government are financially accountable. In addition, a component unit can be another organization for which the nature and significance of its relationship with a primary government is such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. The component unit discussed below is included in the City s reporting entity because of the significance of its operational and financial relationships with the City. In conformity with generally accepted accounting principles, as set forth in Statement of Governmental Accounting Standards Board (GASB) No. 61 The Financial Reporting Entity: Omnibus, an amendment of GASB Statement No. 14 and 34, the City s relationships with other governments and agencies have been examined. The component unit column in the combined financial statements includes the financial data for the Downtown Development Authority, as of December 31, The financial information for the component unit is reported in columns separate from the City s financial information to emphasize that it is legally separate from the City. Downtown Development Authority The Downtown Development Authority is a public body, corporate and politic, and was created upon the adoption and approval of the Development Authorities Law of the State of Georgia. The Mayor and City Council appoint all members of the Downtown Development Authority. The Downtown Development Authority is audited along with the primary government financial statements and separate financial statements are not prepared. A joint venture has the following characteristics: 1. It is a legal entity that results from a contractual arrangement. 2. It is owned, operated or governed by two or more participants as a separate and specific activity subject to joint control. 3. Participants retain an ongoing financial interest or an ongoing financial responsibility, 27

35 NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 (CONTINUED) Under Georgia law, the City, in conjunction with other cities and counties in the middle Georgia area, is a member of the Middle Georgia Regional Commission (the RC ) and is required to pay annual dues thereto. Membership in a RC is required by the Official Code of Georgia Annotated (OCGA) Section which provides for the organizational structure of the RC in Georgia. The RC Board membership includes the chief elected official of each county and municipality of the area. OCGA provides that the member governments are liable for any debts or obligations of a RC. Separate financial statements may be obtained from: Middle Georgia Regional Commission 175-C Emery Highway Macon, GA B. Government-Wide and Fund Financial Statements The government-wide financial statements (Statement of Net Position and Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from businesstype activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. 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. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation Government-Wide Financial Statements The government-wide financial statements are reported using the flow of 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 in 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. 28