City of Coral Springs, Florida

Transcription

1 Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2007 PREPARED BY THE FINANCE DEPARTMENT

2 CITY OF CORAL SPRINGS, FLORIDA Comprehensive Annual Financial Report Fiscal year ended September 30, 2007 PREPARED BY THE DEPARTMENT OF FINANCIAL SERVICES DIRECTOR OF FINANCIAL SERVICES..DAVID L. RUSSEK CITY CONTROLLER..KIM MOSKOWITZ

3 CITY OF CORAL SPRINGS, FLORIDA COMMISSION-MANAGER FORM OF GOVERNMENT CITY COMMISSION MAYOR VICE MAYOR COMMISSIONER COMMISSIONER COMMISSIONER SCOTT J. BROOK ROY GOLD VINCENT M. BOCCARD CLAUDETTE BRUCK TED MENA CITY ATTORNEY CITY CLERK CITY MANAGER MICHAEL S. LEVINSON SAMUEL S. GOREN PETER M. J. RICHARDSON FINANCIAL SERVICES DIRECTOR OF FINANCIAL SERVICES CITY CONTROLLER DAVID L. RUSSEK KIM MOSKOWITZ

4 Table of Contents Introductory Section (unaudited) Letter of Transmittal Certificate of Achievement for Excellence in Financial Reporting Organizational Chart List of Principal Officials i ix x xi Financial Section Independent Auditor s Report 1 2 Management s discussion and analysis (Unaudited) 3 17 Basic financial statements: Government-wide financial statements: Statement of net assets 18 Statement of activities Fund financial statements: Governmental funds: Balance sheet 21 Reconciliation of the balance sheet of governmental funds to the statement of net assets 22 Statement of revenue, expenditures and changes in fund balances 23 Reconciliation of the statement of revenue, expenditures and changes in fund balances of governmental funds to the statement of activities 24 Proprietary funds: Statement of net assets Statement of revenue, expenses and changes in fund net assets 27 Statement of cash flows Fiduciary funds: Statement of net assets 30 Statement of changes in net assets 31 Notes to financial statements Required supplementary information (Unaudited): Schedule of revenue, expenditures and changes in fund balances budget and actual (budgetary basis) general fund 74 Schedule of funding progress 75 Schedule of employer contributions 76 Notes to required supplementary information Supplementary Information: Combining and individual fund statements and schedules: Nonmajor special revenue and capital projects funds: Combining balance sheet Combining statement of revenue, expenditures and changes in fund balances 85 88

5 Table of Contents Financial Section (Continued) Schedules of revenue, expenditures and changes in fund balance budget and actual: Debt Service Fund Major 89 Fire Special Revenue Fund Nonmajor 90 Coral Springs Charter School Special Revenue Fund Nonmajor 91 Public Art Special Revenue Fund Nonmajor 92 Conference Center Special Revenue Fund Nonmajor 93 Enterprise Funds: Water and Sewer Fund Schedule of revenue and expenses (budgetary basis) compared to budget 94 Coral Springs Center for the Arts Fund Schedule of revenue and expenses (budgetary basis) compared to budget 95 Internal Service Funds: Combining statement of net assets 97 Combining statement of revenue, expenses and changes in fund net assets 98 Combining statement of cash flows Self-Insurance Fund Schedule of revenue and expenses (budgetary basis) compared to budget 101 Equipment Services Fund Schedule of revenue and expenses (budgetary basis) compared to budget 102 Fiduciary Funds: Combining statement of net assets Combining statement of changes in net assets Statistical Section (unaudited) Government-wide information: Table 1 Net assets by component 108 Table 2 Changes in net assets Fund information: Table 3 Fund balances, governmental funds Table 4 Changes in fund balances, governmental funds 113 Table 5 Tax revenues by source, governmental funds 114 Table 6 Total taxable assessed value as a percentage of estimated total fair market value Table 7 Direct and overlapping property tax rates Table 8 Principal property taxpayers 119 Table 9 Property tax levies and collections 120 Table 10 Water sold by type of customer 121 Table 11 Water and sewer rates 122 Table 12 Ratios of outstanding debt by type Table 13 Ratios of general bonded debt outstanding 125 Table 14 Direct and overlapping governmental activities debt 126 Table 15 Legal debt margin information 127 Table 16 Pledged-revenue coverage 128 Table 17 Demographic and economic statistics 129 Table 18 Principal employers 130 Table 19 Full-time equivalent city government employees by function 131 Table 20 Operating indicators by function 132 Table 21 Capital asset statistics by function 133

6 Table of Contents Compliance Section 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 Independent Auditor s Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A Schedule of Expenditures of Federal Awards 138 Notes to Schedule of Expenditures of Federal Awards 139 Schedule of Findings and Questioned Costs

7 March 7, 2008 Honorable Mayor, City Commissioners, City Manager and Citizens City of Coral Springs Formal Transmittal of the CAFR The comprehensive annual financial report ( CAFR ) of the City of Coral Springs, Florida (the City ), for the fiscal year ended September 30, 2007 is hereby submitted as mandated by both local ordinances and state statutes. These ordinances and statutes require that the City issues annually a report on its financial position and activities, and that an independent firm of certified public accountants audit this report. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner that presents fairly the financial position and results of operations of the City, on a government-wide and Fund basis. All disclosures necessary to enable the reader to gain an understanding of the City s financial activities have been included. Profile of the Government The City of Coral Springs is the first local government in the nation to receive the coveted Malcolm Baldrige National Quality Award, a Presidential honor that recognizes U.S. companies for organizational performance excellence. Congress established the program in 1987 to raise awareness and reward excellence in quality management. Organizations applying for the award undergo a rigorous evaluation by an independent board of examiners. The examiners evaluate the City s business processes against seven strategic criteria, including leadership, strategic planning, customer and market focus, measurement and analysis, human resource focus, process management and results. The City s commitment to quality and customer satisfaction goes much deeper than just preparation for the Baldrige application process. In 1993, Coral Springs began using a business model that takes customer input and data analysis into consideration before mapping initiatives in the Strategic and Business Plans. The City develops process improvements while comparing results to Fortune 500 businesses and top local governments. Throughout the past fourteen years, the quest for performance excellence has been guided by the principals and practices of the Florida Sterling Council and the Malcolm Baldrige National Quality Program. Already a two-time Florida Governor s Sterling Award winner, Coral Springs has achieved national recognition as a leader in government management, including Money Magazine s Best Places to Live, 100 Best Communities for Young People by America s Promise in 2006 and 2007, and the tenth safest city in the nation according to Morgan Quintno Press. The City of Coral Springs was incorporated on July 10, 1963 and is located in northwestern Broward County, Florida. It encompasses square miles and has a population of approximately 130,000, the fourth largest city in Broward County, and the 13 th largest in the State of Florida. The financial reporting entity (the government) includes all funds of the primary government (that is, the City of Coral Springs as legally defined), as well as its component unit. Component units are legally separate entities for which the primary government is financially accountable. The City provides the following full range of municipal services authorized by its charter: public safety, highways and streets, sanitation, culture, education through its Charter School, recreation, public improvements, planning and zoning, water and sewer, and general administrative services. i

8 Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. Accordingly, the City s Community Redevelopment Agency ( CRA ) is a discrete component unit of the City. Information Useful in Assessing the Government s Economic Condition The City operates under a Commission-Manager form of government, comprised of five elected officials, (the Mayor and four Commissioners). The City Commission determines policy, adopts legislation, and approves the City s annual budget. The City Commission also appoints the City Manager, who as the Chief Administrative Officer is charged with the responsibility of enforcing all ordinances and resolutions passed by the City Commission. The City s average household is made up of 2.95 persons based on the 2005 American Community Survey. The total taxable assessed value of both real and personal property in fiscal year 2007 was $9.506 billion. Single-family real estate taxes on a house with a save our homes assessed value of $224,520 during the year were $4,189 including homestead exemption, of which about 19.5%, or $817, represents City property taxes. The City s unemployment rate as of September 2007 is 3.4% as compared to Broward County s 3.8% and Florida s 4.3%. During fiscal year 2007, an unrelated organization, the Coral Springs Economic Development Foundation ( EDF ) updated their business plan that would ensure additional commercial/industrial development and add significantly to the non-residential tax base. Due to the City achieving residential build-out and the challenges, which have affected the economy following the 2005 hurricane season and rising costs of doing business, the target date for reaching substantial build-out in commercial/industrial property is FY The EDF fosters marketing and development of commercial and industrial land and now promotes redevelopment with our Downtown project (as discussed later under Projects for the Future) as well as future opportunities within the Corporate Park of Coral Springs. The primary mission of the EDF is to assist the City in increasing the nonresidential tax base in order to shift some of the tax burden from the City s residents to businesses. The EDF continues to move forward in accomplishing its own as well as the City s mission. To date, the EDF efforts have resulted in the relocation, expansion and retention of 120 companies. Through these accomplishments, 5,154 new businesses have been started, 13,350 new jobs have been created and 747 jobs have been retained. This growth has resulted in construction of more than 7.3 million square feet of commercial/industrial property and the absorption of 1,380,692 square feet of existing office and industrial space within the City. The combined efforts have resulted in an increase in the City s 2006 tax year s total assessed value for nonresidential properties of $166 million. ii

9 Major Initiatives The City Commission reviews and updates the City s Strategic Plan on a biennial basis. This process is designed to identify the issues that must be addressed to achieve the City s mission (to be the nation s premier community in which to live, work and raise a family) and that will persist over the lifetime of the Strategic Plan. The City s seven strategic priorities include the following: Customer-involved government Financial health and economic development Excellence in education Neighborhood and environmental vitality Youth development and family values Strength in diversity Traffic, mobility and connectivity For each priority, an action plan is developed for implementing policy and operating measures. Through this process, the City s business plan is developed as follows: Commission priorities identify the vital issues Key intended outcomes (KIOs) identify desired results Initiatives allocate activities, resources, personnel, and time planned for the year to achieve each KIO Performance measures obtain specific and measurable data indicating the effectiveness in meeting the KIOs By setting targets (KIOs) the City is able to determine the resources necessary to meet them. The City s staff is charged with the day-to-day operations and is involved in a variety of projects, which are in accordance with the City s strategic plan. These projects reflect the City s commitment to its mission. Projects for Fiscal Year 2007 On September 23, 2003, the Broward County Commission unanimously approved an Interlocal Agreement (ILA) describing the financial plan for the Downtown Coral Springs Community Redevelopment Agency (CRA). The Phase I development of Downtown Coral Springs, also known as One Charter Place, broke ground in August 2005, was completed in 2007 and is currently occupied. All related infrastructure and traffic mitigation projects were completed in tandem with the Phase I development. One Charter Place is approximately 99,000 square feet of mixed-use development with uses including commercial, financial and retail office space, and a multi-purpose parking garage with 475 spaces. The $26 million project is developed on 3.8 acres of City-owned land that was sold by the City to the master developer through the CRA for $2.29 million. Improvements to the Coral Springs Charter School were completed during fiscal years 2007 to create a Fine Arts Wing. An existing 11,700 square foot storage area was remodeled to accommodate an auditorium, dressing rooms, costume and stage storage, a vocal room, and a band room. A Customer Care Center was created to provide increased customer satisfaction and a consistent service-oriented experience. iii

10 Re-established the Bike Patrol Unit within the Police Department to provide better Police coverage of City parks, commercial areas and the Zone 4 corridor. Implemented an Enhanced Permit Notification Program notifying property owners and contractors of the status of their permit application via postcard. Implemented a Small Permit Pilot Program providing speedy service exclusively for small permits and minor revisions for both residential and commercial permits with a 24-hour turnaround. Installed 5 speed cushions as part of a pilot traffic-calming program on Shadowood Boulevard. Alley improvements and road resurfacing Completed expansion of the Dr. Steven G. Paul Dog Park Created 12.2 acres of new wetlands at the Sportsplex Athletic Complex Converted 4 red clay tennis courts to green clay courts Installed irrigation and landscaping on Atlantic Boulevard as part of the linear parks project Installed shade cover at the Slide and Glide park Continued renovations at Mullins Park Completed remodeling of the covered bridge Installed 9 open air bus shelters along University Drive Began replacing several City vehicles with hybrid vehicles and replaced gasoline powered pick up trucks with diesel fuel powered trucks to help reduce annual fuel costs Completed the Water and Sewer System Master Plan update which addresses issues facing the utility during the next ten years and beyond Completed a Water Rate Study that recommended a change in water rates based on the amount of water consumed at each location Began a water conservation campaign to provide conservation tips to consumers through publications and outreach mechanisms Projects for the Future The City plans on working on the following projects in fiscal year 2008: The Community Redevelopment Agency and the master developer are currently refining the redevelopment plans for the remaining corners of the Sample Road and University Drive intersection. The Phase II development program is anticipated to be announced during fiscal year Complete the design phase of the Public Safety Improvement project. This project will provide additional space and security enhancement at the existing facility for both the Police and Fire departments. Install NW 29th Street improvements for Downtown Pathways project Install permanent speed humps (i.e. NW 38 th Drive, NW 112 Avenue and NW 91 st Avenue) Install street indexing signage for Sample Road Expand the Street Tree Subsidy Program to commercial properties along public s right-of-way iv

11 Implement a farmer s market in the downtown CRA district. The Publix Corporation has recently announced that the first Greenwise Marketplace in Broward County will be developed in Downtown Coral Springs. Continue to convert red clay tennis courts to green clay courts Install new lighting systems on 4 fields at Cypress Park Replace grass fields with artificial turf at Aiello Field at Mullins Park Construct a new park near the Whispering Woods neighborhood Upgrade playgrounds and restrooms at several parks Convert two irrigation pumps from using City water to well water resulting in a savings of 3.2 million gallons of potable water annually Lift Station 20 rehabilitation project Repair and/or replace up to 4 raw water wells. These wells are pumped from local sites to the water plant for treatment Continue to install open air bus shelters at high volume stops Provide additional diesel fueling facilities needed to supply the City s fleet Financial Information Budgeting and Accounting Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America. The internal control structure is designed to provide reasonable, but not absolute assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Single Audit As a recipient of federal, state, county and local financial assistance, the City is also responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to those programs. The internal control structure is subject to periodic evaluation by management. The City is required to undergo an annual single audit performed under the provisions of the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. As a part of the City s Single Audit, tests were made to determine the adequacy of the City s internal controls and of its compliance with applicable laws and regulations, including those related to federal assistance programs. Included in a separate report is the information related to the Single Audit, which includes the schedule of expenditures of federal awards, findings and recommendations and auditors reports on the internal control and compliance with applicable laws and regulations. This report discloses no instances of material weaknesses in internal control over financial reporting or significant violations of applicable laws and regulations. v

12 Budgetary Controls The City maintains budgetary controls for the General Fund, Fire Fund, Charter School Fund, Debt Service Fund, Public Arts Fund, Conference Center Fund and all Proprietary Funds. The objective of these controls is to ensure compliance with legal provisions embodied in the annual budget adopted by the City Commission. Activities of the General Fund, Fire Fund, Charter School Fund, Debt Service Fund, and all Proprietary Funds are included in the annual budget. Project-length financial plans are adopted for the Capital Projects Funds and the Special Revenue Grants Fund. The legal level of control (such as, the level at which actual expenditures and transfers out cannot legally exceed the budget appropriations) is maintained at the fund level. The City also maintains an encumbrance accounting system as one method of maintaining budgetary control. Encumbered accounts lapse at year-end for the General Fund and Special Revenue Funds. As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Risk Management The goal of risk management is to qualify and quantify exposures that can weigh upon the City s assets and to affect necessary action to eliminate and reduce losses within the City. 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 s Self-Insurance Internal Service Fund is used to account for and finance both uninsured and insured risks of loss. Coverage is provided for general and auto liability (excess liability contract with a $25,000 selfinsured retention (SIR) and an aggregate stop loss of $3,000,000); property ($100,000 SIR); health and dental ($250,000 SIR and an aggregate stop loss of $8,438,143) and workers compensation as specified by applicable federal and state statutes. In the areas of boiler and machinery, bonding, special events and other exposures, the City does transfer risk to private sector commercial insurance carriers wherever possible. A review of the City s exposures, coupled with monitoring of conditions within the insurance industry, allows risk management to update protection strategies through the acquisition of specific and excess coverage where warranted. Employees Retirement Systems The City s retirement system includes three separate single-employer defined benefit plans included in Pension Trust Funds, which separately cover the general employees, sworn police officers, and firefighters. In addition, the City has six defined contribution plans contracted with the International City Management Associated Retirement Corporation for which the City acts as an agent on behalf of employees. The City also has a pension plan for the city commissioners and a defined contribution plan for volunteer firefighters. At October 1, 2006, the general employees defined benefit plan was funded at 81.6% of the actuarial accrued liability. At October 1, 2006, the police officers defined benefit plan was funded at 80.4% of the actuarial accrued liability. As of October 1, 2006, the firefighters defined benefit plan was funded at 66.3% (December 31, 2002 was the starting date for the firefighters defined benefit plan). Contributions by both the City and employees to the two general employees, the three management, and the City Manager s defined contribution plans were $2,436,853, $602,793, and $52,791, respectively, for fiscal year Contributions by both the City and employees to the general employees, police, and fire defined benefit pension plans were $301,071, $5,701,769, and $2,291,944, respectively, for fiscal year Debt Administration At September 30, 2007, the City had a number of debt issues outstanding. These issues included $13,500,000 of General Obligation Bonds; $11,280,000 of General Obligation Refunding Bonds; $14,650,000 in Water and Sewer Revenue Refunding Bonds; $18,120,000 in Franchise Revenue Refunding Bonds and $44,770,000 in Capital Revenue Bonds from the Florida Intergovernmental Finance Commission as detailed in note 7 to the basic financial statements. vi

13 The City continues to maintain its excellent credit ratings on all of its bond issues. General Obligation Bonds are rated AAA by Fitch Ratings Service, Aaa by Moody s Investors Service and AAA by Standard and Poor s. Water and Sewer Revenue Refunding Bonds (uninsured) are rated AAA and Aa1 by Fitch Ratings Service and Moody s Investors Service, respectively. The Franchise Revenue Refunding Bonds are rated AA+ by Fitch Ratings Service, have an underlying rating of Aa2 according to Moody s Investor Service and AA according to Standard and Poor s. As of September 30, 2007, the City s net bonded debt per capita is $ and its total direct long-term bonded debt payable from general revenue is $87,670,000 or $ per capita. Cash Management Cash temporarily idle during the year was invested as follows: 58.21% in fixed income securities (includes U.S. government securities, mortgage-backed pass throughs, U.S. treasury money market funds and taxable municipals), 24.77% in the State Board of Administration of Florida Local Government Pooled Investment Account, 11.73% in cash and cash equivalents and 5.29% in demand deposits and overnight investment sweep facility. The average yield on maturing investments during the year was 5.30%. This analysis pertains only to the surplus cash for which the City has daily cash management responsibility; therefore, it excludes all pension plan investments. Awards, Acknowledgements and Other Information Independent Audit State statutes require an annual audit by independent certified public accountants. The City selected the accounting firm of McGladrey and Pullen, LLP. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of the federal Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 and the related U.S. Office of Management and Budget s Circular A-133. Auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards were used by the auditors in conducting their engagement. The auditors report on the basic financial statements and combining and individual fund statements and schedules is included in the financial section of this report. The auditors reports on internal controls and compliance with applicable laws and regulations are included in the Single Audit section. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Coral Springs for its comprehensive annual financial report for the fiscal year ended September 30, This was the twenty-eighth consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City also received the GFOA Award for Distinguished Budget Presentation for its annual budget for the sixteenth consecutive year. vii

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19 Independent Auditor s Report The Honorable Mayor, Members of the City Commission, and City Manager City of Coral Springs, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Coral Springs, Florida (the City) as of and for the year ended September 30, 2007, which collectively comprise the City s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City s management. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 aggregate discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Coral Springs, Florida as of September 30, 2007, and the respective changes in financial position and where applicable, cash flows, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 7, 2008 on our consideration of the City s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. 1

20 The management s discussion and analysis ( MD&A ) on pages 3 through 17 and budgetary comparison information for the general fund on page 74, schedule of funding progress and schedule of employer contributions on pages 75 through 78, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City s basic financial statements. The accompanying introductory section, combining and individual fund statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements of the City of Coral Springs, Florida. Additionally, the accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, and is not a required part of the basic financial statements. The combining and individual fund statements and schedules and Schedule of Expenditures of Federal Awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion on them. March 7,

21 Management s Discussion and Analysis (Unaudited) As management of the City of Coral Springs, Florida (the City ), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, Since the management s discussion and analysis ( MD&A ) is designed to focus on the current year s activities, resulting changes and current known facts, please read it in conjunction with the transmittal letter and the City s financial statements. Financial Highlights The assets of the City exceeded its liabilities at the close of fiscal year 2007 by approximately $227,034,000 (net assets). Of this amount, approximately $104,226,000 (unrestricted net assets) may be used to meet the City s ongoing obligations to citizens and creditors in accordance with the City s fund designation and fiscal policies. The City s total net assets increased by approximately $18,092,000 during the current fiscal year. The City s net assets increased as a result of this year s operations. At the end of the current fiscal year, unreserved/undesignated fund balance for the General Fund was $1,249,000 or 1.5% of total General Fund expenditures. The City s total debt increased by approximately $8,675,000 (9.3%) during the current fiscal year. The key factors in this increase are the issuance of $13,500,000 of General Obligation bonds offset by current year payments of principal. The General Fund s total fund balance increased by approximately $11,857,000 for the year ended September 30, Overview of the Financial Statements This financial section of the comprehensive annual financial report consists of the following: independent auditors report, management s discussion and analysis (this section), the basic financial statements, required supplementary information and a section that presents combining and individual fund statements and schedules. The basic financial statements include the following two kinds of statements that present different views of the City: Within the government-wide financial statements, there are two statements that provide both long-term and short-term information about the City s overall financial status. The fund financial statements focus on individual parts of the City government, reporting the City s operations in more detail than the government-wide statements. o o o The governmental fund statements tell how general government services, such as public safety, were financed in the short-term, as well as what remains for future spending. Proprietary Fund statements offer short-term and long-term financial information about the activities the government operates like businesses, such as the water and sewer utility. Fiduciary Fund statements provide information about the financial relationships, such as the retirement plans for the City s employees, in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong. 3

22 Management s Discussion and Analysis (Unaudited) The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that explains and supports the information in the financial statements. The required supplementary information includes a schedule of budget to actual comparisons for the General Fund. Figure 1 shows how the required parts of this annual report are arranged and relate to one another. In addition to these required elements, we have included a section with combining statements that provide details about nonmajor governmental funds, each of which are added together and presented in a single column in the basic financial statements. Combining statements are also presented for the Fiduciary Funds. Individual Internal Service Funds statements are also included, reflecting balances prior to their elimination from the government-wide financial statements, to avoid a doubling-up effect within the governmental and business-type activities columns of said statements. Figure 1 Required Components of the City s Comprehensive Annual Financial Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements Summary Detail 4

23 Management s Discussion and Analysis (Unaudited) 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 assets presents information on all of the City s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets 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 City s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenue and expenses are reported in this statement from some items that will only result in cash flows in future fiscal periods (for example, uncollected taxes and compensated absences). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenue (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, police, fire, parks and recreation, public works, development services, educational programs, cultural and conference center. The business-type activities of the City include water and sewer and the Center for the Arts. The government-wide financial statements include not only the City of Coral Springs itself (the primary government), but also the Community Redevelopment Agency ( CRA ). Financial information for the CRA component unit is discretely presented and is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. In addition, the City has three separate single-employer defined benefit plans, six defined contribution plans for general employees and City management under contract with the International City Management Association Retirement Corporation for which the City acts as an agent for participants, and a defined contribution plan for volunteer firefighters. The pension plans are reported as Fiduciary Funds in the fund financial statements of this report, but are not included in the government-wide statements. Fund Financial Statements A fund is a grouping of related accounts that are 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. These statements focus on individual parts of the City government, reporting the City s operations in more detail than the government-wide statements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary 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 fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. 5

24 Management s Discussion and Analysis (Unaudited) Because the focus of governmental funds is narrower than the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City s near-term financing decisions. The Governmental Fund balance sheet and the Governmental Fund statement of revenue, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several individual governmental funds. Information is presented separately in the Governmental Fund balance sheet and in the Governmental Fund statement of revenue, expenditures and changes in fund balances for the General Fund, the Debt Service Fund, the General Capital Projects Fund and the General Obligation Bond 2006 Series Capital Projects Fund which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the Combining and Individual Fund statements and schedules section. Proprietary Funds The City maintains the following two different types of proprietary funds: Enterprise Funds These funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses Enterprise Funds to account for its water and sewer and Center for the Arts operations. Internal Service Funds These funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses Internal Service Funds to account for its selfinsurance and equipment services operations. Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary Funds provide the same type of information as the government-wide financial statements, only in more detail. The City presents separate columns for the Water and Sewer Fund and for the Center for the Arts Fund because they are both major funds. Internal Services Funds are aggregated and presented in a single column. A statement of cash flows is presented at the fund financial statement level for Proprietary Funds, but no equivalent statement is presented in the government-wide financial statements for either governmental activities or businesstype activities. Fiduciary Funds Fiduciary Funds are used to account for resources held for the benefit of parties outside the City. Fiduciary Funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City s own programs. The accounting used for Fiduciary Funds is much like that used for Proprietary Funds. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. 6

25 Management s Discussion and Analysis (Unaudited) Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City s progress in funding its obligation to provide pension benefits to its employees. This section also includes a comparison between the City s General fund s adopted and final budget and actual financial results. Although the City adopts an annual appropriated budget for its General Fund, Fire Special Revenue Fund, Charter School Special Revenue Fund, Public Arts Special Revenue Fund, Conference Center Special Revenue Fund, Debt Service Fund, Internal Service Funds and Enterprise Funds, only a budgetary comparison schedule has been provided for the General Fund in this section. The budgetary comparison schedules for the other funds can be found in other various locations. Combining and individual fund statements referred to earlier in connection with nonmajor governmental funds, proprietary funds, and fiduciary funds are presented immediately following the required supplemental information. Government-wide Financial Analysis The two government-wide financial statements report the City s net assets and how they have changed. Table 1 presents net assets the difference between the City s assets and liabilities as one way to measure the City s financial health, or position. There are six basic transactions that will affect the comparability of the Statement of Net Assets summary presentation as reflected below: 1. Net results of activities will impact (increase/decrease) current assets and unrestricted net assets. 2. Borrowing for capital will increase current assets and long-term debt. 3. Spending borrowed proceeds on new capital will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the invested in capital assets, net of debt. 4. Spending of nonborrowed current assets on new capital will reduce current assets and increase capital assets and will reduce unrestricted net assets and increase invested in capital assets, net of debt. 5. Principal payment on debt will reduce current assets and reduce long-term debt and reduce unrestricted net assets and increase invested in capital assets, net of debt. 6. Reduction of capital assets through depreciation will reduce capital assets and invested in capital assets, net of debt. 7

26 Management s Discussion and Analysis (Unaudited) Summary of Net Assets The following schedule presents a summary of net assets of the City as of September 30, 2007 and 2006: Table 1 Summary of Net Assets September 30, 2007 Governmental Activities Business-Type Activities Total Current and other assets $ 139,078,912 $ 121,386,454 $ 8,336,933 $ 9,363,005 $ 147,415,845 $ 130,749,459 Capital assets 156,017, ,726,898 44,156,435 43,836, ,174, ,563,051 Total assets 295,096, ,113,352 52,493,368 53,199, ,589, ,312,510 Long-term liabilities outstanding 91,148,226 80,351,883 14,762,056 16,875, ,910,282 97,226,902 Other liabilities 12,473,276 19,593,757 2,172,395 1,550,273 14,645,671 21,144,030 Total liabilities 103,621,502 99,945,640 16,934,451 18,425, ,555, ,370,932 Net assets: Invested in capital assets Net of related debt 84,257,672 76,644,662 29,506,435 27,086, ,764, ,730,815 Restricted 8,543,612 9,327, , ,000 9,043,612 9,827,518 Unrestricted 98,673,694 88,195,532 5,552,482 7,187, ,226,176 95,383,295 Total net assets $ 191,474,978 $ 174,167,712 $ 35,558,917 $ 34,773,916 $ 227,033,895 $ 208,941,628 The overall position of the City improved in fiscal year Over time, net assets serve as a useful indicator of a government s financial position. The total net assets of the City increased by $18 million or approximately 8.6% from $209 million in 2006 to $227 million in The increase in the City's current and other assets is due to an increase in cash and investments. This is a result of the issuance of $13,500,000 in General Obligation Bonds in October 2006 of which the majority of the proceeds have not been spent as well as payments from receivables related to Hurricane Wilma cleanup. The decrease in other liabilities is due to the payment to vendors for the cleanup costs related to Hurricane Wilma. The increase in longterm liabilities is due to the issuance of $13,500,000 in General Obligation Bonds offset by making on time principal payments for the applicable debt. The overall increase in net assets is a result of the City s operations. A significant portion of the City s net assets (50.1%) reflects its investment in capital assets (for example: land, land improvements, public art, buildings, infrastructure, equipment and construction in progress), less any related debt used to acquire these assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City s investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City s net assets (4%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (45.9%) may be used to meet the City s ongoing obligations to citizens and creditors and is designated in its financial policies and strategies. 8

27 Management s Discussion and Analysis (Unaudited) Summary of Changes in Net Assets The following information is presented to assist the reader in understanding the different types of normal impacts that can affect revenue: 1. Economic condition can reflect a declining, stable or growing environment and has an impact on property, non-ad valorem assessments, sales, or other tax revenue as well as consumer spending habits for building permits, user fees and consumption. 2. The City Commission has authority to set increases or decreases in City s rates (water, sewer, permitting, impact fees, user fees and so on). 3. Changing patterns in intergovernmental and grant revenue (both recurring and nonrecurring) can change and impact the annual comparisons. 4. Market impacts on investment income may cause investment revenue to fluctuate from the prior year. Introduction of new programs can have an impact on property, non-ad valorem assessments, sales or other tax revenue as well as consumer spending habits for building permits, user fees and consumption. Some other impacts on expenses are as follows: 1. Changes in service demand levels can cause the City to increase or decrease authorized staffing. Staffing costs (salary and related benefits) represent approximately 70% of the City s operating costs. 2. Salary increases such as performance increases and market adjustments can impact personal service costs. 3. While inflation appears to be reasonably modest, the City is a consumer of certain commodities such as supplies, fuels and parts. Some functional expenses may experience unusual commodity specific increases. 4. Market impacts on debt service interest expense may cause debt service interest expense to fluctuate from the prior year. Table 2 presents a summary of the City s operations for fiscal year 2007 with comparative information for fiscal year

28 Management s Discussion and Analysis (Unaudited) Table 2 Summary of Changes in Net Assets Governmental Activities Business-Type Activities Total Revenue: Program revenue: Charges for services $ 30,300,482 $ 26,985,211 $ 14,576,649 $ 14,646,067 $ 44,877,131 $ 41,631,278 Operating grants and contributions 12,842,420 34,729, ,842,420 34,729,165 Capital grants and contributions 2,022, , , ,343 2,356,329 1,326,389 General revenue: Property taxes 37,365,747 32,505, ,365,747 32,505,069 Franchise taxes 10,419,429 10,257, ,419,429 10,257,379 Utility taxes 8,904,088 8,975, ,904,088 8,975,176 Communications taxes 5,840,490 6,003, ,840,490 6,003,003 Gas taxes 2,362,796 2,401, ,362,796 2,401,713 Intergovernmental 13,436,207 15,851, ,000-14,206,207 15,851,806 Investment income 6,024,655 3,844, , ,678 6,366,358 4,164,545 Miscellaneous 1,117,901 1,183,791 4, ,444 1,122,766 1,750,235 Total revenue 130,637, ,634,226 16,026,569 15,961, ,663, ,595,758 Expenses: General government 14,808,284 44,308, ,808,284 44,308,179 Public safety: Police 33,394,504 33,690, ,394,504 33,690,873 Fire 19,782,039 17,178, ,782,039 17,178,547 Parks and recreation 14,730,150 15,100, ,730,150 15,100,850 Public works 7,869,622 6,579, ,869,622 6,579,290 Development services 6,767,514 6,700, ,767,514 6,700,607 Educational and cultural programs 11,844,858 10,939, ,844,858 10,939,462 Conference center 237, ,767 - Interest on long-term debt 3,372,463 2,678, ,372,463 2,678,772 Water - - 5,029,745 5,471,372 5,029,745 5,471,372 Sewer - - 9,602,467 8,813,064 9,602,467 8,813,064 Center for the Arts - - 1,132,081 1,155,067 1,132,081 1,155,067 Total expenses 112,807, ,176,580 15,764,293 15,439, ,571, ,616,083 Increases in net assets before transfers 17,829,991 6,457, , ,029 18,092,267 6,979,675 Transfers (522,725) 1,012, ,725 (1,012,095) - - Change in net assets 17,307,266 7,469, ,001 (490,066) 18,092,267 6,979,675 Net assets, beginning 174,167, ,697,971 34,773,916 35,263, ,941, ,961,953 Net assets, ending $ 191,474,978 $ 174,167,712 $ 35,558,917 $ 34,773,916 $ 227,033,895 $ 208,941,628 10

29 Management s Discussion and Analysis (Unaudited) FY 07 - Revenue by Source - Governmental Activities Investment income Intergovernmental Miscellaneous Capital contributions not restricted to specific programs Charges for services Gas taxes Operating grants and contributions Communications taxes Utility taxes Property taxes Capital grants and contributions Franchise taxes FY 06 - Revenue by Source - Governmental Activities Miscellaneous Intergovernmental Investment income Capital contributions not restriced to specific programs Charges for services Operating grants and contributions Gas taxes Communications taxes Utility taxes Property taxes Capital grants and contributions Franchise taxes 11

30 Management s Discussion and Analysis (Unaudited) FY 07 Expenses by Program - Governmental Activities General government Police Fire Parks and recreation Public works Development services Educational programs Cultural Conference center Interest on long-term debt FY 06 Expenses by Program - Governmental Activities General government Police Fire Parks and recreation Public works Development services Educational programs Cultural Conference center Interest on long-term debt 12

31 Management s Discussion and Analysis (Unaudited) Governmental activities increased the City s net assets by $17.3 million, while business-type activities increased the City s net assets by $0.8 million. The net increase in governmental activities net assets is a result of the following: During 2006, the City experienced Hurricane Wilma. Wilma s impact resulted in an approximately $9 million deficit to the City. During 2007, the hurricane season did not adversely impact the City. Charges for services increased by approximately $3.3 million or 12%, due primarily to a $1.4 million dollar increase in Ambulance Transport fees, a $1 million dollar increase from a Fire contract service agreement with a neighboring City and a $0.4 million dollar increase in the Fire Assessment Fee. The City s Operating Grants and Contribution (revenue) decreased $22 million as a result of grants received in 2006 relating to Hurricane Wilma. Property tax revenues increased by approximately $4.9 million due to new construction and increased property tax values. The overall interest rate for the City increased from 4.48% for fiscal year 2006 to 5.3% for fiscal year The $2.2 million increase in investment income is due to the increased overall interest rate as well as an overall increase in cash and investments due to the issuance of $13,500,000 in General Obligation Bonds in October 2006 of which the majority of the proceeds have not been spent. Expenses during 2007 decreased by approximately $24 million primarily due to expenses incurred in 2006 related to Hurricane Wilma ($30 million) that were not incurred in Expenses related to Fire increased $2.6 million primarily due to additional personnel hired as a result of an agreement to provide fire service to a neighboring community. The business-type activities net assets increased by $0.78 million or 2.3% over the prior fiscal year. During 2006, in accordance with the City s Business Plan, the Water and Sewer fund transferred $1.5 million to fund capital needs. The Water and Sewer fund did not transfer additional funds in Financial Analysis of the City of Coral Springs Funds As noted earlier, the City uses fund accounting to help 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, an unreserved fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the total fund balance reached approximately $43,169,000, of which the unreserved fund balance of the General Fund was approximately $42,497,000 ($41,248,000 has been designated). As a measure of the General Fund s liquidity, it may be useful to compare both the unreserved fund balance and the total fund balance to total fund expenditures. Unreserved fund balance represents 52.7% of total General Fund expenditures, while total fund balance represents 53.5% of that same amount. 13

32 Management s Discussion and Analysis (Unaudited) The fund balance of the City s General Fund increased by approximately $11,857,000 during the current fiscal year due mainly to $4.6 million additional revenue received from the Federal Emergency Management Agency and from the State of Florida related to Hurricane Wilma and to the City spending less than budgeted, specifically in general government. The fund balance for the Debt Service Fund increased by approximately $437,000. The increase is attributable to better than anticipated interest earnings. The appropriate payments of the City's debt principal, interest and related costs were made from the City's Debt Service Fund. Other than the transfer per the 2007 Financial Strategy, this fund met its objectives. The fund balance for the General Capital Projects Fund increased by approximately $1,537,000 which is due to monies that were transferred in to fund new capital projects. The General Obligation Bond Series 2006 Capital Projects fund was established in fiscal year The increase in the fund balance of approximately $13,732,000 is due primarily to $13,500,000 in proceeds from the bond issued in October Proprietary Funds The City s Proprietary Funds include the City s Enterprise Funds Water and Sewer Fund and the Center for the Arts Fund. An Enterprise Fund is used to account for activities for which a fee is charged to external users for goods and services. These funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of the Water and Sewer Fund and the Center for the Arts Fund at the end of the current fiscal year totaled approximately $5,505,000 and $47,000, respectively. The operating income (loss) for the Water and Sewer Fund and the Center for the Arts Fund was approximately $1,437,000 and ($1,045,000), respectively. General Fund Budgetary Highlights The General Fund did require some interdepartmental changes to the original budget. A difference between the adopted budget and the final budget for the General Fund were minor and in keeping with the financial strategy adopted in the City s Business Plan for the 2007 fiscal year. No budget amendments were necessary. General Fund revenue exceeded budgetary estimates and expenditures were less than budgeted. This year s actual operations including unbudgeted operations resulted in an $11,857,000 increase to fund balance after all financial policies had been implemented. General Fund revenue exceeded the budget by approximately $8.9 million, or 9.6%. This excess revenue is primarily due to the revenue that the City received from the Federal Emergency Management Agency and from the State of Florida related to Hurricane Wilma which totals approximately $4.6 million. The City exceeded the budget for Building Permits by approximately $1.6 million due to a significant number of renovations that resulted from damage caused by Hurricane Wilma in fiscal year In addition, the City earned investment income of approximately $1.6 million over the budgeted amount due to an overall increase in cash as well as an increase in the interest rates during the fiscal year. 14

33 Management s Discussion and Analysis (Unaudited) General government expenditures were less than budget due primarily to approximately $3 million that was not expended related to the Guaranteed Investment Contract ( GIC ). The GIC provides for a guaranteed return on investments over a specific period of time and the City is contributing approximately $3 million per year to the GIC. Although the City budgets a line item for the approximate $3 million, there is no expense to the City because the money is being set aside by the City to ensure that the GIC is properly funded (reducing cash and increasing investments). Additionally, $1.1 million was budgeted to rebuild reserves depleted due to Hurricane Wilma. There is no expense to the City because the money is being set aside to fund future emergency needs. In addition, the City had several vacant positions during the fiscal year which led to a significant reduction in personnel expenses. The City had approximately 34 vacancies during fiscal year The vacancies were primarily in the Police Department, approximately 10 during the year, which significantly reduced the expenditures for fiscal year The Parks and Recreation expenditures were under budget due to temporary salaries and contractual services expenditures being less than budgeted and approximately 5 vacancies during the year. The remaining variance is made up of multiple minor differences, which are the result of actual expenditures being slightly less than budgeted. In addition, excess transfers relate to approximately $2.7 million from the General Fund to the General Capital Projects Fund per the 2007 Business Plan that was approved by the City Commission and unbudgeted transfers of $500,000 to increase funding to the Tree Trust Fund and $400,000 for additional capital projects. Capital Assets and Debt Administration Capital Assets The City s investment in capital assets, net of related debt, for its governmental and business-type activities as of September 30, 2007 amounts to $113,764,107 (net of accumulated depreciation). This is a net increase (additions less retirements and depreciation) of approximately $10,033,000 or 9.7% from last fiscal year. The following summarizes the City s capital assets as of September 30, 2007: Capital Assets September 30, 2007 (net of depreciation) Governmental Business-type activities activities Total Land $ 29,516,371 $ 29,516,371 $ 631,558 $ 631,558 $ 30,147,929 $ 30,147,929 Land improvements 20,941,014 20,587, , ,821 21,130,685 20,798,447 Public art 96,499 75, ,499 75,499 Buildings 47,553,590 44,591,462 20,541,557 21,898,268 68,095,147 66,489,730 Infrastructure 38,876,496 39,155,854 20,869,259 20,425,424 59,745,755 59,581,278 Equipment 14,941,235 13,365,183 1,924, ,082 16,865,625 14,035,265 Construction in progress 4,092,363 5,434, ,092,363 5,434,903 Total $ 156,017,568 $ 152,726,898 $ 44,156,435 $ 43,836,153 $ 200,174,003 $ 196,563,051 15

34 Management s Discussion and Analysis (Unaudited) Major capital assets expenditures during the current fiscal year included the following: Charter School Fine Arts Wing $2,685,000 The purchase of 3 Fire Trucks $1,319,000 Back up Generator for City Water Plant $1,270,000 Construction of the Wetlands at Sportsplex $1,105,000 The purchase of 40 City vehicles $993,000 Water Treatment Additions $813,000 Road resurfacing projects $730,000 Construction of the Fire Training Facility $549,000 Well Water Rehabilitation $257,000 Public Safety Building renovations $178,000 Sidewalks $134,000 Additional information can be found in Note 6 Capital Assets. Long-Term Debt At September 30, 2007, the City had $102,320,000 in bonded debt (General Obligation, General Obligation Refunding, Revenue and Revenue Refunding Bonds) outstanding. Of this amount, $13,500,000 related to General Obligation Bonds, $11,280,000 related to General Obligation Refunding Bonds, while the remaining $77,540,000 related to various types of Revenue Bonds. The debt position of the City is summarized below and is more fully explained in Note 7 Long-Term Liabilities. Bonded Debt September 30, 2007 Governmental Business-Type Activities Activities Total General obligation bonds $ 13,500,000 $ - $ - $ - $ 13,500,000 $ - General obligation refunding 11,280,000 12,365, ,280,000 12,365,000 Revenue bonds 62,890,000 64,530,000 14,650,000 16,750,000 77,540,000 81,280,000 87,670,000 76,895,000 14,650,000 16,750, ,320,000 93,645,000 Less deferred amounts (537,822) (502,578) - - (537,822) (502,578) Total $ 87,132,178 $ 76,392,422 $ 14,650,000 $ 16,750,000 $ 101,782,178 $ 93,142,422 16

35 Management s Discussion and Analysis (Unaudited) The increase in the City s bonded debt in fiscal year 2007 is due primarily to the issuance of $13,500,000 in General Obligation Bonds to fund the construction of a new fire station, hardening of the glass exterior and various other improvements to the Public Safety Building. This was offset by making on time principal payments for the applicable debt (see Note 7 for more information). The City received the highest investment grade for all of its bond issues related to the General Obligation and Refunding Bonds uninsured: AAA by Fitch Ratings, Aaa by Moody s Investors Service and AAA by Standard and Poor s. For the Water and Sewer Revenue and Refunding Bonds, the City received AAA by Fitch Ratings. Economic Factors and Next Year s Budget The City uses a multi-year strategic planning process that results in a mission and a set of strategic priorities that provide vision and direction for the City. Specific initiatives are developed in response to the priorities identified in the Strategic Plan. The Business Plan is an outcome of the strategic priorities, capturing the City s vision in a specific, directed, and quantifiable form, given the current economic conditions. A key piece in developing the Business Plan and Budgets is the researched findings in the environmental scan and the resulting financial strategy. In developing the Fiscal Year 2008 Business Plan, Annual Budget and Capital Improvement Program, the following economic factors were considered: The rapid growth in elastic revenue over the past two decades has slowed, given that the City has reached residential build-out (defined as having 95% or more of developable land in use) and will shortly reach commercial/industrial build-out. Pay-as-you-go financing and cash funding sources for current year capital projects continue to be viable strategies due to the success of past financial strategies, given the positive year-end surpluses and cash reserves in equipment sinking funds. Due to low staff turnover, the typical 2.5% vacancy factor used across the board was based on a sliding scale by the size of each department and its historical turnover rate. Vacancy factors ranging from 0.0% to 2.5% were used accordingly. Fixed salary increases of 4.25% for nonunion employees, as per the City policy capping the amount of award that can be added to the base salary within the pay-for-performance range of 0% to 7%. Personnel governed by bargaining unit agreements were budgeted at an increase of 7.75% for Fire/EMS and 6.5% for Police. A reduction in the operating milage rate was required by State Statute. Additional factors include modest inflation, weak economic growth, hurricane impact, price of oil and the continued softness in the equity markets. Contacting the City s Financial Services Department The City s financial statements are designed to present users (citizens, taxpayers, customers, investors, and creditors) with a general overview of the City s finances and to demonstrate the City s accountability. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Financial Services Department, 9551 West Sample Road, Coral Springs, Florida

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37 Statement of Net Assets September 30, 2007 Primary Government Component Unit Community Governmental Business-Type Redevelopment Assets Activities Activities Total Agency Cash and cash equivalents $ 43,004,271 $ 1,711,970 $ 44,716,241 $ 275,245 Investments 59,748,044 2,679,622 62,427, ,684 Interest receivable 418,360 32, ,739 - Accounts receivable, net 4,509,085 2,208,736 6,717,821 - Due from other governments 8,063,162 5,000 8,068,162 - Inventory 547, , ,720 - Restricted assets: Cash and cash equivalents - 573, ,889 - Investments with fiscal agent 5,111,139-5,111,139 Investments 913, ,000 1,413,226 - Net pension asset 15,603,414-15,603,414 - Deferred charges 1,161, ,772 1,660,828 - Capital assets not being depreciated: Land 29,516, ,558 30,147,929 3,020,704 Construction in progress 4,092,363-4,092,363 - Capital assets (net of accumulated depreciation): Public art 96,499-96,499 - Land improvements 20,941, ,671 21,130, ,307 Buildings 47,553,590 20,541,557 68,095,147 - Infrastructure 38,876,496 20,869,259 59,745,755 1,049,677 Equipment 14,941,235 1,924,390 16,865,625 - Total assets 295,096,480 52,493, ,589,848 5,415,617 Liabilities Accounts payable and accrued liabilities 6,639,429 1,547,158 8,186,587 10,601 Interest payable 51,058 51, ,406 - Due to other governments 9,009-9,009 2,656,527 Accrued liability for estimated claims 3,179,928-3,179,928 - Deposits and unearned revenue 2,593, ,889 3,167,741 - Noncurrent liabilities: Due within one year: Compensated absences 3,487, ,056 3,599,441 - Bonds payable 2,707,335 2,160,000 4,867,335 - Landfill closure obligation 22,000-22,000 - Due in more than one year: Net pension obligation 248, ,663 - Bonds payable 84,424,843 12,490,000 96,914,843 - Landfill closure obligation 258, ,000 - Total liabilities 103,621,502 16,934, ,555,953 2,667,128 Net Assets Invested in capital assets, net of related debt 84,257,672 29,506, ,764,107 - Restricted for: Debt service 4,841,080-4,841,080 - Law enforcement 2,745,623-2,745,623 - Environmental purposes 21,681-21,681 - Landfill monitoring 22,000-22,000 - Renewal and replacement - 500, ,000 - Capital projects 913, ,228 - Unrestricted 98,673,694 5,552, ,226,176 2,748,489 Total net assets $ 191,474,978 $ 35,558,917 $ 227,033,895 $ 2,748,489 See Notes to Financial Statements. 18

38 Statement of Activities Fiscal Year Ended September 30, 2007 Program Revenue Operating Capital Charges Grants and Grants and Functions/Programs Expenses for Services Contributions Contributions Primary Government: Governmental activities: General government $ 14,808,284 $ 2,481,062 $ 777,670 $ 23,999 Police 33,394,504 2,592,045 1, ,625 Fire 19,782,039 13,945,223 34, ,054 Parks and recreation 14,730,150 3,704,218-61,477 Public works 7,869,622 2, ,275 Development services 6,767,514 5,877, ,547 Educational and cultural programs 11,844,858 1,539,473 12,027,807 - Conference center 237, , Interest on long-term debt 3,372, Total governmental activities 112,807,201 30,300,482 12,842,420 2,022,977 Business-type activities: Water 5,029,745 6,442, ,937 Sewer 9,602,467 8,047, Center for the Arts 1,132,081 86,969-37,415 Total business-type activities 15,764,293 14,576, ,352 Total primary government $ 128,571,494 $ 44,877,131 $ 12,842,420 $ 2,356,329 Component Unit: Community Redevelopment Agency $ 299,769 $ - $ - $ - See Notes to Financial Statements. General revenue: Taxes: Ad valorem, levied for general purpose Ad valorem, levied for debt service Franchise taxes Utility taxes Communication taxes Gas taxes Incremental property tax Intergovernmental not restricted to specific programs Investment income Miscellaneous Transfers Total general revenue and transfers Change in net assets Net assets, beginning Net assets, ending 19

39 Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Governmental Business-Type Community Activities Activities Total Redevelopment Agency $ (11,525,553) $ - $ (11,525,553) $ - (30,582,839) - (30,582,839) - (5,691,814) - (5,691,814) - (10,964,455) - (10,964,455) - (7,209,322) - (7,209,322) - 61,666-61,666-1,722,422-1,722,422 - (78,964) - (78,964) - (3,372,463) - (3,372,463) - (67,641,322) - (67,641,322) - - 1,708,537 1,708, (1,555,132) (1,555,132) - - (1,007,697) (1,007,697) - - (854,292) (854,292) - (67,641,322) (854,292) (68,495,614) (299,769) 35,411,380-35,411,380-1,954,367-1,954,367-10,419,429-10,419,429-8,904,088-8,904,088-5,840,490-5,840,490-2,362,796-2,362, ,767 13,436, ,000 14,206, ,163 6,024, ,703 6,366,358 65,289 1,117,901 4,865 1,122,766 19,875 (522,725) 522, ,948,588 1,639,293 86,587, ,094 17,307, ,001 18,092,267 97, ,167,712 34,773, ,941,628 2,651,164 $ 191,474,978 $ 35,558,917 $ 227,033,895 $ 2,748,489 20

40

41 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets September 30, 2007 Fund balances total governmental funds $ 91,398,285 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 147,496,339 Deferred grant revenue in governmental funds are susceptible to full accrual in the government-wide statements. 3,363,611 Net pension assets/obligations resulting from overfunding/underfunding in the police, fire, and general employees pension plans are not reported in the funds as they are not available to pay for current period expenditures. Net pension asset 15,603,414 Net pension obligation (248,663) Deferred ambulance transport fee revenue in the general fund is 2,067,966 susceptible to full accrual in the government-wide statements. Internal service funds are used by management to charge the costs of fleet management and self-insurance activities to individual funds. The assets and liabilities of the internal service funds, (including capital assets) are included in governmental activities in the statement of net assets: Assets $ 25,355,771 Liabilities (5,315,663) Net assets 20,040,108 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore, are not reported in the governmental funds: Accrued interest payable (51,058) Bonds payable (86,191,410) Compensated absences (3,422,492) Landfill closure obligation (280,000) Total (89,944,960) Bond issuance costs, premiums, discounts, deferred amounts on refundings are recognized when debt is issued in the governmental funds. These items, however, must be capitalized and amortized in the government-wide statements: Bond issuance costs 1,144,459 Amortization 16,597 1,161,056 Deferred amount on advance refunding 749,939 Bond premium (151,614) Amortization (60,503) 537,822 Net assets of governmental activities $ 191,474,978 See Notes to Financial Statements. 22

42 Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Balances Fiscal Year Ended September 30, 2007 General Capital Nonmajor Total Debt Projects G.O. Bonds Governmental Governmental General Service Fund Series 2006 Funds Funds Revenue: Taxes: Ad valorem $ 35,411,380 $ 1,954,367 $ - $ - $ - $ 37,365,747 Franchise fees 10,419, ,419,429 Utility 8,904, ,904,088 Intergovernmental 25,366, ,466-13,580,288 39,769,789 Non-ad valorem special assessment ,099,446 6,099,446 Licenses and permits 5,363, ,255 5,370,595 Charges for services 9,997, ,466,943 15,464,201 Fines and forfeitures 1,378, ,893 2,012,233 Interest and other 4,576, , , ,364 1,160,398 7,648,194 Total revenue 101,416,754 2,495,058 1,531, ,364 26,948, ,053,722 Expenditures: Current: General government 14,247,089 46, ,320-13,630 14,750,179 Public safety: Police 35,663, , , ,295 36,928,923 Fire 7,554,456-1,864,377-11,991,989 21,410,822 Parks and recreation 12,374,150-1,487, ,749 14,208,445 Public works 4,381,365-2,419,515-26,529 6,827,409 Development services 5,981,231-3, ,056 6,285,417 Educational and cultural programs 466,603-34,293-13,006,479 13,507,375 Capital outlay ,342,714 2,342,714 Debt service: Principal - 2,725, ,725,000 Interest and other - 3,314, ,835-3,434,583 Total expenditures 80,667,992 6,085,888 6,633, ,983 28,705, ,420,867 Excess (deficiency) of revenue over (under) expenditures 20,748,762 (3,590,830) (5,102,240) 334,381 (1,757,218) 10,632,855 Other financing sources (uses): Proceeds of bonds ,500,000-13,500,000 Bond discount (95,747) - (95,747) Transfers in 310,640 4,027,529 6,679,062-2,562,007 13,579,238 Transfers out (9,202,833) - (39,856) (6,700) (1,911,680) (11,161,069) Total other financing sources (uses) (8,892,193) 4,027,529 6,639,206 13,397, ,327 15,822,422 Net change in fund balances 11,856, ,699 1,536,966 13,731,934 (1,106,891) 26,455,277 Fund balances, beginning of year 31,312,777 8,503,673 10,284,604-14,841,954 64,943,008 Fund balances, end of year $ 43,169,346 $ 8,940,372 $ 11,821,570 $ 13,731,934 $ 13,735,063 $ 91,398,285 See Notes to Financial Statements. 23

43 Reconciliation of the Statement of Revenue, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Fiscal Year Ended September 30, 2007 Net change in fund balances, total governmental funds $ 26,455,277 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay 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: Expenditures for capital assets $ 10,817,214 Less current year depreciation (8,804,266) Total 2,012,948 The net effect of disposals of capital assets is to decrease net assets: Proceeds from sale of capital assets (2,021) Loss on disposal of capital assets (18,959) Total (20,980) Grant revenue is reported in the statement of activities but is reported as deferred revenue in governmental funds. (3,390,129) Ambulance transport fee revenue is reported in the statement of activities but is reported as deferred revenue in governmental funds. 49,061 Overfunded pension contributions are reported as a reduction of expenses and an increase of the net pension asset on the statement of net assets and are not recorded in the fund financial statements. 2,332,465 The issuance of long-term debt provides current financial resources and the repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither has an effect on net assets. Debt issued: General Obligation Bonds, net of discount and capitalized issurance costs (13,351,482) Debt retired: Principal repayments 2,725,000 Amortization of deferred charges from issuance of debt (43,906) Total (10,670,388) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the internal service funds is reported with governmental activities. 631,487 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Compensated absences (105,263) Landfill closure obligation 10,000 Accrued interest on long-term debt 2,788 Total (92,475) Change in net assets of governmental activities $ 17,307,266 See Notes to Financial Statements. 24

44 Proprietary Funds Statement of Net Assets September 30, 2007 Governmental Business-Type Activities Enterprise Funds Activities Water and Center for Internal Sewer the Arts Total Service Funds Assets: Current assets: Cash and cash equivalents $ 1,711,583 $ 387 $ 1,711,970 $ 6,986,549 Investments 2,679, ,679,622 9,743,321 Interest receivable 32,379-32,379 99,235 Accounts receivables, net 1,252, ,739 1,358,679 5,437 Unbilled usage fees 850, ,057 - Due from other governments 5,000-5,000 - Inventory 125, ,565 - Restricted assets: Cash and cash equivalents 573, ,889 - Total current assets 7,230, ,665 7,337,161 16,834,542 Noncurrent assets: Restricted assets: Investments 500, ,000 - Deferred charges 499, ,772 - Capital assets: Land 198, , ,558 - Land improvements 73, , ,794 - Equipment 2,274, ,645 3,154,376 23,193,573 Buildings 27,471,694 12,946,579 40,418,273 - Water and sewer system/infrastructure 48,569,716 9,649 48,579,365 - Less accumulated depreciation (42,359,484) (6,610,447) (48,969,931) (14,672,344) Total capital assets, net 36,228,331 7,928,104 44,156,435 8,521,229 Total noncurrent assets 37,228,103 7,928,104 45,156,207 8,521,229 Total assets $ 44,458,599 $ 8,034,769 $ 52,493,368 $ 25,355,771 See Notes to Financial Statements. 25

45 Proprietary Funds Statement of Net Assets September 30, 2007 Governmental Business-Type Activities Enterprise Funds Activities Water and Center for Internal Sewer the Arts Total Service Funds Liabilities: Current liabilities payable from current assets: Accounts payable and accrued liabilities $ 1,487,602 $ 59,556 $ 1,547,158 $ 592,252 Accrued interest 51,348-51,348 - Bonds payable 2,160,000-2,160,000 - Compensated absences 112, ,056 64,893 Accrued liability for estimated claims ,179,928 Total current liabilities payable from current assets 3,811,006 59,556 3,870,562 3,837,073 Current liabilities payable from restricted assets: Deposits 573, ,889 - Total current liabilities payable from restricted assets 573, ,889 - Total current liabilities 4,384,895 59,556 4,444,451 3,837,073 Noncurrent liabilities: Revenue bonds payable 12,490,000-12,490,000 1,478,590 Total noncurrent liabilities 12,490,000-12,490,000 1,478,590 Total liabilities 16,874,895 59,556 16,934,451 5,315,663 Net assets: Invested in capital assets, net of 21,578,331 7,928,104 29,506,435 7,042,639 related debt Restricted for: Renewal and replacement 500, ,000 - Unrestricted 5,505,373 47,109 5,552,482 12,997,469 Total net assets $ 27,583,704 $ 7,975,213 $ 35,558,917 $ 20,040,108 See Notes to Financial Statements. 26

46 Proprietary Funds Statement of Revenue, Expenses and Changes in Fund Net Assets Fiscal Year Ended September 30, 2007 Governmental Business-Type Activities Enterprise Funds Activities Water and Center for Internal Sewer the Arts Total Service Funds Operating revenue: Charges for services $ 14,489,680 $ 86,969 $ 14,576,649 $ 17,023,970 Intergovernmental revenue 770, ,000 - Other revenue ,143,803 Total operating revenue 15,259,680 86,969 15,346,649 18,167,773 Operating expenses: Operating and program costs 8,240, ,307 8,647,162 1,115,858 Administration 2,254,378-2,254,378 2,601,279 Nondepartmental 757, , ,019 - Depreciation 2,569, ,547 3,138,108 2,042,669 Insurance claims, net of recoveries ,585,324 Insurance premiums ,068,311 Total operating expenses 13,822,586 1,132,081 14,954,667 16,413,441 Operating income (loss) 1,437,094 (1,045,112) 391,982 1,754,332 Nonoperating revenue (expenses): Interest income 341, , ,343 Interest expense (669,961) - (669,961) - Amortization of bond issue costs (139,665) - (139,665) - Other 4,865-4,865 - Gain on disposal of capital assets ,195 Total nonoperating revenue (expenses) (463,058) - (463,058) 921,538 Income (loss) before capital contributions and transfers 974,036 (1,045,112) (71,076) 2,675,870 Capital contributions impact fees 291, ,673 - Capital contributions 4,264 37,415 41, ,511 Transfers in - 558, ,000 35,275 Transfers out (35,275) - (35,275) (2,976,169) Change in net assets 1,234,698 (449,697) 785, ,487 Total net assets, beginning of year 26,349,006 8,424,910 34,773,916 19,408,621 Total net assets, end of year $ 27,583,704 $ 7,975,213 $ 35,558,917 $ 20,040,108 See Notes to Financial Statements. 27

47 Proprietary Funds Statement of Cash Flows Fiscal Year Ended September 30, 2007 Governmental Business-Type Activities Enterprise Funds Activities Water and Center for Internal Sewer the Arts Total Service Funds Cash Flows From Operating Activities Receipts from customers $ 15,047,720 $ 142,039 $ 15,189,759 $ - Receipts from other funds ,066,350 Receipts from employees and other sources ,875 Payments to suppliers for goods and services (8,067,098) (525,982) (8,593,080) (5,050,480) Payments for claims (7,351,750) Payments to employees for services (2,484,515) - (2,484,515) (1,305,968) Net cash provided by (used in) operating activities 4,496,107 (383,943) 4,112,164 4,230,027 Cash Flows From Noncapital Financing Activities Trustee fee payments 4,865-4,865 - Transfer from other funds - 558, ,000 35,275 Transfer to other funds (35,275) (119,646) (154,921) (2,976,169) Net cash provided by (used in) - noncapital financing activities (30,410) 438, ,944 (2,940,894) Cash Flows From Capital and Related Financing Activities Acquisition and construction of capital assets (3,363,231) (53,485) (3,416,716) (2,444,860) Proceeds from sale of capital assets ,195 Principal paid on bonds (2,100,000) - (2,100,000) - Interest paid on bonds (674,851) - (674,851) - Proceeds from impact fees 291, ,673 - Net cash used in capital and related financing activities (5,846,409) (53,485) (5,899,894) (2,420,665) Cash Flows From Investing Activities Interest received 341, , ,468 Proceeds from sale of investments 2,423,776-2,423,776 5,526,564 Purchase of investments (1,816,593) (539) (1,817,132) (5,327,038) Net cash provided by (used in) investing activities 948,290 (539) 947,751 1,098,994 Net increase (decrease) in cash and cash equivalents (432,422) 387 (432,035) (32,538) Cash and cash equivalents, beginning of year 2,717,894-2,717,894 7,019,087 Cash and cash equivalents, end of year 2,285, ,285,859 6,986,549 Cash and cash equivalents reported as: Cash and cash equivalents, unrestricted 1,711, ,711,970 6,986,549 Cash and cash equivalents, restricted 573, ,889 - $ 2,285,472 $ 387 $ 2,285,859 $ 6,986,549 (Continued) 28

48 Proprietary Funds Statement of Cash Flows (Continued) Fiscal Year Ended September 30, 2007 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss) 1,437,094 Business-Type Activities Governmental Enterprise Funds Activities Water and Center for Internal Sewer the Arts Total Service Funds $ $ (1,045,112) $ 391,982 $ 1,754,332 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 2,569, ,547 3,138,108 2,042,669 Changes in assets and liabilities: (Increase) decrease in accounts receivable (80,810) 55,070 (25,740) 56,608 Increase in due from other governments (5,000) - (5,000) - Increase in inventory (1,922) - (1,922) - Decrease in trustee fees Increase in accounts payable 589,460 37, , ,696 Decrease in accrued liability for estimated claims (17,000) Decrease in compensated absences (12,963) - (12,963) (6,278) Total adjustments 3,059, ,169 3,720,182 2,475,695 Net cash provided by (used in) operating activities $ 4,496,107 $ (383,943) $ 4,112,164 $ 4,230,027 Noncash investing capital, non-capital and related financing activities: Decrease in fair value of investments that are not cash equivalents: Unrealized losses on investments (87,739) - (87,739) (229,621) Purchases of equipment by the following sources were received by the Equipment Services Fund: General Fund ,463 Nonmajor funds ,048 $ - $ - $ - $ 896,511 See Notes to Financial Statements. 29

49 Fiduciary Funds Statement of Net Assets September 30, 2007 Pension Trust Assets Funds Pooled cash and cash equivalents $ 3,228,328 Investments: Government securities 20,484,148 Other debt securities 9,179,307 Equity securities 63,647,821 Mutual funds 61,431,310 Pending trades 18,513 Contributions receivable 998,107 Interest receivable 381,945 Other assets 1,370,681 Total assets 160,740,160 Liabilities: Accounts payable and accrued liabilities 295,293 Pending trades 74,928 Total liabilities 370,221 Net assets: Held in trust for pension benefits $ 160,369,939 See Notes to Financial Statements. 30

50 Fiduciary Funds Statement of Changes in Net Assets Fiscal Year Ended September 30, 2007 Funds Funds Additions: Employee contribution $ 3,452,646 Employer contribution 7,951,544 Rollover 601,936 State contribution 2,058,948 Total contributions 14,065,074 Investment income 8,394,636 Net appreciation in fair value of investments 8,988,746 Other income 29,131 17,412,513 Investment expense (578,297) Net investment income 16,834,216 Total additions 30,899,290 Deductions: Benefit payments 7,119,886 DROP payments and other 1,674,897 Refunds 94,661 Loan Defaults 171,928 Administrative expenses 133,725 Total deductions 9,195,097 Net increase in plan net assets 21,704,193 Net assets held in trust for pension benefits, beginning of year 138,665,746 Net assets held in trust for pension benefits, end of year $ 160,369,939 See Notes to Financial Statements. 31

51 CITY OF CORAL SPRINGS, FLORIDA Index Page Note 1 Summary of Significant Accounting Policies 32 Note 2 Deficit Fund Balances of Individual Funds 38 Note 3 Cash and Cash Equivalents and Investments 38 Note 4 Receivables and Payables 47 Note 5 Interfund Receivables, Payables and Transfers 48 Note 6 Capital Assets and Construction Commitments 50 Note 7 Long-Term Liabilities 54 Note 8 Industrial Development Bonds 60 Note 9 Restricted Assets 60 Note 10 Risk Management 60 Note 11 Contingency 61 Note 12 Employee Retirement Plans 61 Note 13 Subsequent Events 71 Note 14 Pronouncements Issued But Not Yet Adopted 72

52 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies A. Financial Reporting Entity The City of Coral Springs (the City ) was incorporated on July 10, 1963, under the provisions of Chapter Laws of Florida, Acts of The City operates under a Commission-Manager form of government and provides the following full range of municipal services authorized by its charter: public safety, highways and streets, sanitation, culture, education through its charter school, recreation, public improvements, planning and zoning, water and sewer and general administrative services. The City s basic financial statements include the operations of all organizations for which the City is considered to be financially accountable. The City Commission of Coral Springs, Florida under the provisions of Chapter 163 of Florida Statutes established the Coral Springs Community Redevelopment Agency ( CRA ) in 2001, by Ordinance No , as an independent special district. The CRA was established to prepare or have prepared a community redevelopment plan for areas within the City, which are, determined to be slum or blighted areas and to carry out the community redevelopment purposes of Part III, Chapter 163, of the Florida Statutes. The CRA is a discretely presented component unit and is reported in a separate column in the government-wide financial statements. The CRA is a discrete component in that it is a legally separate entity, it has a governing board that is different from the City, a financial benefit/burden relationship exists with the City, and it does not provide services entirely or almost entirely to the City. The CRA s Board is composed of seven persons, appointed by the City of Coral Springs City Commission. Copies of these reports are available at the City Managers Office Department in City Hall 9551 West Sample Road, Coral Springs, FL The following is a summary of the significant accounting policies applicable to the City: The accounting policies of the City conform to accounting principles generally accepted in the United States of America ( GAAP ) applicable to governmental units. The Governmental Accounting Standards Board ( GASB ) is the standard-setting body for governmental accounting and financial reporting. B. Government-Wide and Fund Financial Statements The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements along with the notes to the financial statements. Both the government-wide and fund financial statements (within the basic financial statements) distinguish between the governmental and business-type activities of the City. Government-wide financial statements include a statement of net assets and a statement of activities. These statements report on the government as a whole and provide a financial picture of the entire government. The amounts reported as internal balances represent the residual amounts due between governmental and business-type activities. Fiduciary Funds of the government are not included in this presentation since these resources are not available for funding general government funding programs. 32

53 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) The statement of net assets reports all financial and capital resources of the City s governmental and business-type activities. Governmental activities are those largely supported by taxes and intergovernmental revenue. Businesstype activities rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes: (1) charges for goods or services that are recovered directly from customers for services rendered, 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 that are not directly related to program revenue are reported as general revenue. Separate financial statements are provided for Governmental Funds, Proprietary Funds, and Fiduciary Funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Since the governmental fund financial statements are presented on a different measurement focus and basis of accounting than the government-wide statements, a reconciliation is provided which briefly explains the adjustments necessary to reconcile the governmental fund financial statements to the governmental activities of the governmentwide presentations. C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide, the proprietary fund and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses reported when a liability is incurred, regardless of the timing of related cash flows. The Agency Funds report only assets and liabilities using the accrual basis of accounting but have no measurement focus. All government fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenue are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, landfill postclosure care costs and claims and judgments, are recorded only when payment is due. Property taxes, when levied for, franchise taxes, utility taxes, ambulance fees, intergovernmental revenues when the eligibility requirements are met, and interest income associated with the current fiscal period are measurable and are recorded as revenue, if available. Licenses and permits, charges for services and miscellaneous revenue are recorded as revenue when received in cash because they are generally not measurable until actually received. D. Major Funds and Basis of Presentation The financial transactions of the City are recorded in individual funds. The operations of each fund are accounted for using a separate set of self-balancing accounts, which comprise its assets, liabilities, reserves, fund equities, revenue and expenditures or expenses. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. 33

54 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) Accounting principles generally accepted in the United States of America set forth minimum criteria (percentage of the assets, liabilities, revenue or expenditures/expenses of the applicable fund category and the governmental and enterprise combined) for the determination of major funds. The nonmajor funds are presented in one column in the respective fund financial statements. The focus of governmental fund measurement (in the fund financial statements) is upon determination of financial position and changes in financial position (sources, uses and balances of financial resources). The following is a description of the major governmental funds of the City: The General Fund is the primary operating fund of the City. It is used to account for all financial resources of the general government, except those required to be accounted for in another fund. Revenue is derived primarily from property taxes, utility taxes, state and federal distributions, and other intergovernmental revenue. The general operating expenditures, fixed charges, and capital outlay costs that are not paid through other funds are paid from the General Fund. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general government debt principal, interest, and related costs. The General Capital Projects Fund is used to account for the acquisition and construction of major capital facilities other than those financed by grants and general obligation and revenue bonds. The General Obligation Bond Series 2006 Fund is used to account for the acquisition and construction of a new fire station, hardening of the glass exterior and various other improvements to the Public Safety Building financed by this bond series. The following is a description of the major Proprietary Funds of the City: The Water and Sewer Fund accounts for the provision of water and sewer services to residents of the City that fall under the City s jurisdiction. The Coral Springs Center for the Arts Fund accounts for activities of the Coral Springs Center for the Arts. Additionally, the City reports the following fund types: The Internal Service Funds are used to account for goods or services provided by one department to other departments of the City on a cost-reimbursement basis. The City operates two Internal Service Funds: the Self-Insurance Fund and the Equipment Services Fund. The Fiduciary Funds are used to account for assets held by the City in a trustee capacity or as an agent on behalf of others. The Trust Funds account for the financial resources of the City s pension plans. The funds are accounted for in essentially the same manner as the proprietary funds, using the same measurement focus and basis of accounting. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and other charges between the City s water and sewer function and various other functions of the City. Elimination of these charges would distort the direct costs and program revenue for the various functions concerned. 34

55 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) Amounts reported as program revenue in the government-wide financial statements include: (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions, including special assessments. All revenue that are not program revenue are general revenue, and include all taxes, as well as grants, contributions and investment earnings that are not restricted to a particular program. Proprietary funds distinguish operating revenue and expenses from nonoperating items. Operating revenue and expenses generally result from providing services and producing and delivering goods in connection with a Proprietary Fund s principal ongoing operations. All revenue not meeting this definition are reported as nonoperating revenue and expenses. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first, and then unrestricted resources as they are needed. Based on the accounting and reporting standards set forth in Governmental Accounting Standards Board ( GASB ) Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the City has opted to apply only the accounting and reporting pronouncements issued by the Financial Accounting Standards Board prior to November 30, 1989 to the extent they do not conflict with GASB pronouncements. E. Assets, Liabilities and Net Assets or Equity Equity in pooled cash and investments: The City, for accounting and investment purposes, maintains a pooled cash and investments account. This gives the City the ability to invest large amounts of idle cash for short periods of time and to maximize earning potential. Cash and cash equivalents include demand deposits, repurchase agreements, money market funds, cash on hand, and deposits with the State Board of Administration Local Government Pool. For purposes of the statement of cash flows, the Proprietary Funds cash and cash equivalents are considered to be demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments are recorded at fair value (quoted market price or the best available estimate thereof), with the exception of the investments held by the State Board of Administration. The investments held by the State Board of Administration are recorded at amortized cost, which is consistent with the treatment of 2a-7 like pool securities. Receivables, payables and pending trades: During the course of its operations, the City has numerous transactions between funds to provide goods or render services. These receivables and payables are classified as due from other funds or due to other funds. Balances of interfund receivables and payables not expected to be liquidated within one year are recorded as advances to and advances from other funds. Balances of advances to and from other funds are reserved in the fund balances of the respective funds since these balances are not available for appropriation. All trade and other receivables are shown net of an allowance for uncollectibles. Receivables are analyzed for their collectability based on the terms and conditions of the agreements. In addition to receivables specifically identified as uncollectible, a general allowance is calculated based on the City s historic bad-debt experience. Pending trades represent investment purchases or sales that have been initiated but have not settled as of the balance sheet date. 35

56 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) Inventory: Inventory, consisting primarily of expendable supplies held for consumption, are stated at lower of cost or market on a first-in, first-out basis. The City utilizes the consumption method of accounting, which provides that expenditures are recognized when inventory is used. In the Governmental Funds balance sheet, the reserve for inventories in the General Fund is equal to the amount of inventories to indicate that a portion of the fund balance is not available for future expenditures. Restricted assets: Certain proceeds from revenue refunding bonds, as well as other monies as required by several bond indentures, are classified as restricted assets in the government-wide and proprietary fund statements of net assets. Restricted assets are not presented on the balance sheet of the governmental funds, however, certain assets of these funds are restricted as to use. Capital assets: Capital assets, which include land, public art, property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and the proprietary fund statement of net assets. Infrastructure assets are defined as public domain capital assets such as roads, bridges, sidewalks, traffic signals, and similar items that are immovable and of value only to the government unit. The City capitalizes all capital assets with a cost in excess of a $1,000 threshold and an estimated life greater than one year. Capital assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at estimated fair value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized, but are expensed as incurred. Capital assets are depreciated using the straight-line method over the estimated useful lives of the related assets. The ranges of the useful lives are as follows: Years Equipment 3 7 Vehicles 4 15 Building improvements Land improvements Other infrastructure Buildings 40 Roads 50 Bridges 40 Deferred and unearned revenue: Deferred revenue is recorded for governmental fund receivables that are measurable, but not available. In addition, resources received that do not meet the criteria for revenue recognition, such as occupational licenses collected in advance, are recorded as unearned revenue in the government-wide and the fund statements. 36

57 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) Compensated absences: The City grants a specific number of vacation and sick leave hours with pay to its employees. When terminated, an employee is paid for accumulated vacation leave and a percentage of unused sick leave hours subject to certain limitations. The cost of accumulated vacation and sick leave is recorded in the government-wide financial statements and Proprietary Funds for both the current and long-term portions. Expenditures for accumulated compensated absences have been recorded in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Long-term obligations: In the government-wide and the Proprietary Funds financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund type statement of net assets. Bonds payable are reported net of the applicable bond premiums or discounts and deferred refunding amounts. Bond premiums, discounts, and issuance costs are amortized over the life of the bonds using the interest method. Deferred amounts on refunding are amortized over the shorter of the remaining life of the old debt or the life of the new debt using the straight-line method, which does not result in a material difference from the effective interest method. Revenue bonds payable are presented net of applicable bond discounts, premiums and deferred refunding amounts, whereas issuance costs are recorded as deferred charges. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Payment of debt principal is reported as an expenditure. Fund equity: In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. Unreserved, undesignated fund balance indicates funds that are available for current expenditures. Deficit fund balances will require future funding. Net assets: Net assets of the government-wide and proprietary funds are categorized as invested in capital assets net of related debt, restricted or unrestricted. The first category represents capital assets, less accumulated depreciation and net of any outstanding debt associated with the acquisition of capital assets. Restricted net assets represent net assets that are restricted by requirements of revenue bonds and other externally imposed constraints. Unrestricted net assets represent the net assets of the City which are not restricted for any project or purpose. Self-insurance: The City is partially self-insured for general and auto liability, property, workers compensation, and employees health and dental. The operating funds are charged premiums by the City s Self-Insurance Fund, which is accounted for as an Internal Service Fund. The accrued liability for estimated claims represents an estimate of the eventual loss on claims including claims incurred but not yet reported. 37

58 Notes to Financial Statements Note 1. Summary of Significant Accounting Policies (Continued) F. Other Policies Property taxes: The City s property tax is levied, becomes a lien on real and personal property located in the City, and is recorded as a receivable on November 1 of each year based upon the assessed value established by the Broward County Property Appraiser as of the prior January 1. The City is permitted by Florida law to levy ad valorem taxes for real and tangible personal property taxes up to $10 per $1,000 of assessed value, except for special benefits and debt service obligations which may be issued with the approval of those taxpayers subject to ad valorem taxes. The assessed value as of January 1, 2006, upon which the 2007 fiscal year levy was based, was approximately $9.5 billion. Taxes were levied at $ per $1,000 for the General Fund and $ per $1,000 for the Debt Service Fund for the year ended September 30, Taxes become payable on November 1 st each year and are discounted 1% for each month for payment prior to the following March 1 st. All unpaid taxes become delinquent on April 1 st and are subject to the issuance of Tax Sale Certificates on June 1 st. Tax collections for the year ended September 30, 2007, were 99.8% of the tax levy, net of discounts allowed. The City s tax revenue is first paid to the Broward County Tax Collector who remits to the City funds collected following a calendar prescribed by law. The City s taxes are billed along with all other taxes due to Broward County taxing entities. The Tax Collector pays the City interest on monies held from the day of collection to the day of distribution. The City has no control over the investment program of the Tax Collector as this program is governed by Florida Statutes. Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States ( GAAP ) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures/expenses during the reporting period. Actual results could differ from management s estimates. Significant estimates used in the financial statements include the liability for self-insured losses. Encumbrances: Encumbrance accounting, under which purchase orders, contracts and other commitments for expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is utilized in the Governmental Funds. Open encumbrances at year-end are reported as reservations of fund balances, except in the General Fund and Special Revenue Funds (nonmajor governmental funds) where open encumbrances lapse at yearend. Encumbrances do not constitute expenditures or liabilities. Note 2. Deficit Fund Balances of Individual Funds The fund deficits in the Grants Fund and Charter School Construction Fund (nonmajor governmental funds) totaling $604,850 and $165,761, respectively, are expected to be eliminated by revenue and transfers in future years. Note 3. Cash and Cash Equivalents and Investments The City maintains a cash and cash equivalents and investments pool that is available for use by all funds except for those in which the cash and investments must be segregated due to bond indenture or other legal restrictions such as in the Pension Trust Funds. Interest earned on pooled cash and investments is allocated to funds based on average daily balances. 38

59 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) The following are components of the City s cash and cash equivalents and investments at September 30, 2007: Cash and Cash Equivalents Primary Government Activities: Petty Cash $ 11,923 Deposits with financial institutions and overnight repurchase investments 4,021,399 State Board of Administration Local Government Surplus Trust Fund 31,145,451 U.S. Government Securities 742,036 Commercial Paper 9,103,255 Money Market Mutual Fund 266,065 Total government cash and cash equivalents 45,290,129 Pension Trust Funds: Deposits with financial institutions 454,968 Money Market Mutual Funds 2,773,360 Total pension cash and cash equivalents 3,228,328 Total cash and cash equivalents 48,518,457 Investments Primary Government Activities: U.S. Government Securities 30,829,788 State Tax Exempt Debt 1,010,275 Asset Backed Securities 3,406,972 Asset Backed CMO's 525,336 Corporate Bonds 8,483,996 Investment with Fiscal Agent 5,111,139 Guaranteed Investment Contract 19,584,525 Total government investments 68,952,031 Pension Trust Funds: Common Stock 63,647,821 Common Stock Mutual Funds 11,109,436 U.S. Government Securities 20,484,148 State of Israel Bonds 1,145,816 Corporate Bonds 8,033,491 Fixed Income Mutual Fund 4,607,380 Investments in Mutual Funds for 401(a) Plans 45,185,752 Investments in Mutual Funds for Volunteer Firefighters Pension Plan 528,742 Total pension investments 154,742,586 Total investments 223,694,617 Total cash and investments $ 272,213,074 Statement of Net Assets Cash and cash equivalents-unrestricted $ 44,716,241 Cash and cash equivalents-restricted 573,889 Investments-unrestricted 62,427,666 Investments-restricted 1,413,226 Investments with fiscal agent 5,111,139 Fiduciary Funds 114,242,161 Cash and cash equivalents 3,228,327 Investments 154,742,586 Total cash and investments $ 272,213,074 39

60 Notes to Financial Statements Note 3. Deposits Cash and Cash Equivalents and Investments (Continued) The deposit authority of the City is prescribed by Florida Statute Chapter 280. City policy conforms to state statute. Deposits whose value exceeds the limits of federal depository insurance are entirely insured or collateralized pursuant to Florida Statues, Chapter 280, Florida Security for Public Deposits Act (the Act ). Under this Act, financial institutions which are qualified as public depositories place, with the State Board of Administration, securities which have a market value equal to 50% of the average daily balance for each month of all public deposits in excess of applicable deposit insurance. The Public Deposit Security Trust Funds have a procedure to allocate and recover losses in the event of default or insolvency. When public deposits are made in accordance with Chapter 280, no public depositor shall be liable for any loss thereof. All City depositories at year-end were designated as qualified public depositories. At year-end, the carrying amount of the City s deposits, which includes petty cash on hand of $11,923 were ($456,186). The bank balance for these deposits, excluding overnight repurchase investments totaled $1,245,569. Bank balances covered by federal deposit insurance totaled $607,259 with the remaining funds insured by the banks participation in the Florida Security for Public Deposits Act. Investments Florida Statutes and the City s investment policy authorize investments in certificates of deposit, obligations of the U.S. Treasury, its agencies and instrumentalities, prime commercial paper, mutual funds and money market mutual funds, state and local government taxable and tax-exempt debt and pooled investments of the State Board of Administration Local Government Surplus Funds Trust Fund ( SBA ). As of September 30, 2007, the City had the following debt-type investments and maturities: Remaining Maturity (in Years) Less Than More Than Fair Investment Type 1 Year 1-5 Years 6-10 Years 10 Years Value SBA $ 31,145,451 $ - $ - $ - $ 31,145,451 Money Market Mutual Fund 266, ,065 Investment with Fiscal Agent 1,256,639 3,854, ,111,139 Commercial Paper 9,103, ,103,255 U.S. Government Securities 15,474,132 13,395,598 2,702,094-31,571,824 State Tax Exempt Debt - 1,010, ,010,275 Asset-Backed Securities - 3,406, ,406,972 Asset-Backed CMO's - 525, ,336 Corporate Bonds 7,073,987 1,410, ,483,996 $ 64,319,529 $ 23,602,690 $ 2,702,094 $ - $ 90,624,313 40

61 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) The above investment schedule includes $742,036 of U.S. Government Securities and $9,103,255 of Commercial Paper that has a maturity schedule of less than three months. Therefore, those amounts are classified as cash and cash equivalents on the financial statements. The City has a Guaranteed Investment Contract ( GIC ) that is not subject to interest rate classification because it is a direct contractual investment and is not a security. The GIC provides for a guaranteed return on investments over a specific period of time. The value of the GIC as of September 30, 2007 is $19,584,525 and the value of the GIC is expected to be sufficient to fund the unreserved portion of the principal due on the FIFC Capital Revenue Bonds Series 2001A which matures on May 1, 2011 and has a total principal due of $38,545,000. The City also has $5,111,139 investments with fiscal agent for the FIFC 2001A and FIFC 2002B Capital Revenue Bonds which is in accordance with the debt agreements. Of the $5,111,139 of investments with fiscal agent, the City has a second GIC in the amount of $3,854,500 with a maturity date of May 1, The second GIC provides for a guaranteed return on investments over a specific period of time. The investment in the second GIC represents a reserve amount required to be maintained in a separate account in accordance with the FIFC bond documents. Interest Rate Risk. Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City s investment policy limits the City s investment portfolio to maturities of 10 years or less with no more than 30% of the City s investment portfolio in maturities of more than three years. The average maturity of the portfolio as a whole may not exceed 3 years. As of September 30, 2007, the average maturity of the City s investment portfolio did not exceed 3 years. See table on previous page for segmented maturity data for City s debt type investments. Credit Risk. State law limits investments in commercial paper to the top two ratings used by nationally recognized statistical rating organizations ( NRSROs ). The City s policy is to limit its investments in commercial paper to the top rating issued by NRSROs and to limit its investments in State and Local Government Debt and Fixed Income Mutual /Money Market Funds to funds with underlying securities ranked at least A by NRSROs. The City has certain investments in an unrated 2a7-like investment pool administered by the State of Florida. 41

62 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) The City s investments are rated as follows: Investment Type Rating Fair Value Commercial Paper A-1 + $ 7,562,410 Commercial Paper A-1 + 1,540,845 U.S. Government Securities AAA 31,571,824 State Tax Exempt Debt AAA 1,010,275 Asset-Backed Securities AAA 3,406,972 Asset-Backed CMO's AAA 525,336 Money Market Mutual Fund AAA 266,065 Investment with Fiscal Agent AAA 1,256,639 Corporate Bonds AAA 3,231,493 Corporate Bonds AA+ 676,191 Corporate Bonds AA 2,079,874 Corporate Bonds AA2 493,512 Corporate Bonds A1 1,003,966 Corporate Bonds A3 998,960 SBA Unrated 31,145,451 Investment with Fiscal Agent Unrated $ 3,854,500 90,624,313 Investments with Fiscal Agent consists of four separate accounts held by the trustee. The Reserve Account 01A totaling $3,854,500, consists of an investment agreement, guaranteed investment contract, that is not rated. All other reserve accounts totaling $1,256,639 are invested in First American Treasury Obligation Funds. A money market fund that is rated AAA by Standard and Poor s rating agency. The amount reported as a GIC in the previous schedule which has a balance of $19,584,525 as of September 30, 2007 is not rated. Custodial Credit Risk. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City s investment policy requires securities, with the exception of securities related to overnight repurchase agreements, be held by a third party custodian and be properly designated as an asset of the City and held in the City s name. As of September 30, 2007, the City s investment portfolio was held with a third-party custodian as required by the City s investment policy. 42

63 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) Concentration of Credit Risk. The City limits the amount that can be invested in any one issuer of Federal Instrumentalities to 25% of the portfolio. The City was in compliance with this policy at year-end. Investments that represent more than 5% of the City s investments are listed below: Issuer Investment Type Reported Amount Percentage Federal Home Loan Banks Federal Instrumentalities $ 8,410,036 12% Federal Home Loan Mortgage Corp. Federal Instrumentalities 8,182,709 12% U.S. Treasury Notes U.S. Treasuries 5,967,509 9% Total $ 22,560,254 Pension Funds The City has three pension plans, the General Employees Retirement Plan (the General Employees Plan ), the Police Officers Retirement Plan (the Police Plan ) and the Firefighters Retirement Plan (the Fire Plan ), whose investments are held separately from those of other City funds. As prescribed by plan documents, the plans are authorized to invest in obligations of the U.S. Government, domestic and international equities, fixed income investments, commercial paper, banker s acceptance and money market funds and mutual funds. The investments of the plans are managed by independent investment managers in accordance with the plan provisions as established by each pension board. The general employees plan has adopted an investment policy to allocate forty percent of fund assets to equities with the balance invested in fixed income securities and cash equivalents. The Police plan has adopted an investment policy to allocate sixty-five percent of fund assets to equities with the balance invested in fixed income securities and cash equivalents. The Fire plan has adopted an investment policy to allocate seventy percent of fund assets to equities with the balance invested in fixed income securities and cash equivalents. The Police Pension Plan may also invest in State of Israel bonds. 43

64 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) Interest Rate Risk. For the City s pension plans, investment maturities are significantly longer. The pension systems may invest in various mortgage-backed securities, such as collateralized mortgage obligations. These securities are based on cash flows on underlying mortgages. Therefore, they are sensitive to prepayments by mortgagees, which may result from a decline in interest rates. The Plans do not have a formal investment policy that limits investment maturities as a means of managing their exposure to fair value losses arising from increasing interest rates: Remaining Maturity (in Years) Less Than More Than Fair Investment Type 1 Year 1-5 Years 6-10 Years 10 Years Value U.S. Government Securities $ 1,610,576 $ 7,941,198 $ 4,873,021 $ 6,059,353 $ 20,484,148 State of Israel Bonds 348, , ,145,816 Corporate Bonds 349,104 5,773, ,598 1,131,710 8,033,491 Money Market Mutual Funds 2,773, ,773,360 Bond Mutual Fund - 4,607, ,607,380 $ 5,081,840 $ 19,118,673 $ 5,652,619 $ 7,191,063 $ 37,044,195 Credit Risk. The Plans have no limits imposed on fixed income securities issued directly by the U.S. Government or any agency or instrumentality thereof. The General Employees Plan and the Fire Plan limit corporate fixed income securities to Baa or higher by Moody s rating services or BBB or higher by Standard and Poor s rating services. Investments in Collateralized Mortgage Obligations ( CMOs ) are limited to issues that are backed by mortgage securities issued, guaranteed or fully insured by Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or are rated Aaa by Moody s or AAA by Standard and Poor s rating services. The Police Plan limits corporate fixed income securities to A or higher by NRSROs and limits money market funds to a rating of A1 or higher by Standard & Poor s or B1 by Moody s. 44

65 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) The Plans fixed income securities were rated by Standard and Poor s or Moody s Investors Services as follows: Investment Type Rating Fair Value U.S. Government Securities AAA $ 13,826,255 Corporate Bonds AAA 2,839,741 Corporate Bonds AA 883,807 Corporate Bonds AA- 833,390 Corporate Bonds A+ 398,411 Corporate Bonds A 159,011 Corporate Bonds A1 1,438,901 Corporate Bonds A2 632,941 Corporate Bonds A3 820,617 Corporate Bonds BBB+ 26,672 State of Israel Bonds AAA 299,061 State of Israel Bonds A- $ 846,755 23,005,562 The following fixed income investments of the Plans were not rated as of September 30, 2007: Investment Type Fair Value U.S. Government Securities $ 6,657,893 As of September 30, 2007, Morningstar rating service rated the Fire Plan s investment in a bond mutual fund 5 stars. Custodial Credit Risk. Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Pension Plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Plans do not have an investment policy for custodial credit risk. As of September 30, 2007, the Plans investment portfolios were held with a third party custodian in the Plans name. 45

66 Notes to Financial Statements Note 3. Cash and Cash Equivalents and Investments (Continued) Concentration of Credit Risk. Investments that represent more than 5% of the General Employees Plan s investments are listed below: Reported Issuer Investment Type Amount Percentage Federal Home Loan PC Pool Federal Instrumentalities $ 338,738 5% Defined Contribution Plans The City offers a variety of defined contribution plans to its employees. Of the $45,185,752 invested in these plans, $1,312,626 is invested in money market and bond mutual funds rated as follows: Reported Issuer Amount Mutual Funds Rated 5 stars by Morningstar $ 157,554 Mutual Funds Rated 4 stars by Morningstar 301,965 Mutual Funds Rated 3 stars by Morningstar 534,737 Mutual Funds Rated 2 stars by Morningstar 174,057 Mutual Funds Not Rated by Morningstar 144,313 Total $ 1,312,626 Discretely Presented Component Unit At year-end, the carrying amount of the Community Redevelopment Agency s deposits was $275,245 and the bank balance for these deposits totaled $275,245. Bank balances covered by federal deposit insurance totaled $100,000 with the remaining funds insured by the banks participation in the Florida Security for Public Deposits Act. Investments totaling $494,684 are invested in pooled investments of the State Board of Administration ( SBA ) Local Government Surplus Funds Trust Fund. The average maturity of these investments are less than one year and the SBA is not rated. The Community Redevelopment Agency does not have a separate deposit and investment policy and it follows the deposit and investment policies of the City as described above. 46

67 Notes to Financial Statements Note 4. Receivables and Payables Year-end receivables for the City s governmental individual major and nonmajor funds, internal service funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Other Internal Governmental General Governmental Service Total Receivables: Accounts $ 9,876,561 $ 773,668 $ 5,437 $ 10,655,666 Allowance for uncollectible accounts (6,146,581) - - (6,146,581) Net governmental receivables $ 3,729,980 $ 773,668 $ 5,437 $ 4,509,085 Receivables for the City s business-type activities, including individual major funds and allowances for uncollectible accounts, are as follows: Water and Center for Business-Type Sewer the Arts Total Receivables: Accounts $ 1,393,136 $ 105,739 $ 1,498,875 Unbilled 850, ,057 Allowance for uncollectible accounts receivable (140,196) - (140,196) Net business-type receivables $ 2,102,997 $ 105,739 $ 2,208,736 Payables at year-end for the City s governmental individual major and nonmajor funds, internal service funds in the aggregate, are as follows: General Debt Capital 2006 Other Internal Governmental General Service Projects Series Governmental Service Total Payables: Vendors $ 1,998,307 $ 262,523 $ 178,113 $ 1,652 $ 854,067 $ 542,602 $ 3,837,264 Retainage , , ,263 Salaries and benefits 2,076, ,978 49,650 2,466,902 Net governmental payables $ 4,074,581 $ 262,523 $ 306,644 $ 1,652 $ 1,401,777 $ 592,252 $ 6,639,429 47

68 Notes to Financial Statements Note 4. Receivables and Payables (Continued) Payables for the City s business-type activities, including individual major funds, are as follows: Water and Center for Business-Type Sewer the Arts Total Payables: Vendors $ 1,390,731 $ 59,556 $ 1,450,287 Salaries and benefits 88,406-88,406 Other 8,465-8,465 Net business-type payables $ 1,487,602 $ 59,556 $ 1,547,158 Note 5. Interfund Receivables, Payables and Transfers During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as due from other funds or due to other funds on the governmental funds balance sheet and proprietary funds statement of net assets. The composition of interfund balances as of September 30, 2007 is as follows: Due from/to Other Funds Receivable Fund Payable Fund Purpose for Balance Amount General Fund Charter School Construction Current portion of loan $ 96,107 General Capital Projects General Fund 2007 Contribution for Capital Improvement Projects 400,000 Tree Preservation Fund General Fund Provide additional funding 500,000 $ 996,107 Advance to/from Other Funds Receivable Fund Payable Fund Purpose for Balance Amount General Fund Charter School Construction Loan for construction of school $ 102,866 The Coral Springs Charter School Construction is reimbursing the City of Coral Springs $96,107 per year for loaning the Charter School money during the construction of the Charter School. There is no interest being charged to the Charter School. 48

69 Notes to Financial Statements Note 5. Interfund Receivables, Payables and Transfers (Continued) Interfund Transfers Transfers In General Total General Debt Capital Nonmajor Center for Internal Transfers Transfers Out Fund Service Projects Governmental the Arts Service Out General Fund $ - $ 3,698,228 $ 3,154,500 $ 1,792,105 $ 558,000 $ 9,202,833 Debt Service General Capital Projects , ,856 G.O. Bonds Series , ,700 Nonmajor - Governmental 310, , , , ,911,680 Water and Sewer ,275 35,275 Internal Service - 63,669 2,912, ,976,169 Total transfers in $ 310,640 $ 4,027,529 $ 6,679,062 $ 2,562,007 $ 558,000 $ 35,275 $ 14,172,513 The transfers to the General Fund primarily relate to a transfer for expenses related to the Fire Fund and expenses related to the Grants fund. The transfers to the Debt Service Fund were made primarily to make principal and interest payments. Over $6.2 million of transfers into the General Capital Projects were to be compliant with the Financial Strategy imposed in the 2007 City s business plan. The other approximate transfers of $.4 million related to capital projects for fiscal year 2007 and future projects. The significant transfers to the Nonmajor Governmental Funds relate to transferring approximately $730,000 to the Charter School Fund for the Fine Arts Wing, approximately $600,000 to the Fire Fund for ad valorem and non-ad valorem taxes related to Churches and Schools, $544,500 to the Fire Fund as an operating subsidy and $500,000 to increase funding in the Tree Trust Fund. The transfer into the Center for the Arts Fund is a subsidy that the City gives towards the operations of the fund. 49

70 Notes to Financial Statements Note 6. Capital Assets and Construction Commitments Capital assets activity for the year ended September 30, 2007 was as follows: Primary Government Governmental Activities (Including Beginning Ending Internal Service Funds) Balance Increases Decreases Balance Capital assets not being depreciated: Land $ 29,516,371 $ - $ - $ 29,516,371 Public Art 75,499 21,000-96,499 Construction in progress 5,434,903 3,715,547 (5,058,087) 4,092,363 Total capital assets not being depreciated 35,026,773 3,736,547 (5,058,087) 33,705,233 Capital assets being depreciated: Land improvements 34,171,599 2,520,008 (1,622,022) 35,069,585 Buildings and improvements 59,242,485 4,634,835-63,877,320 Infrastructure 77,024,760 2,333,385-79,358,145 Equipment 37,794,471 5,991,897 (1,386,022) 42,400,346 Total capital assets being depreciated 208,233,315 15,480,125 (3,008,044) 220,705,396 Less accumulated depreciation for: Land improvements 13,583,973 2,166,620 (1,622,022) 14,128,571 Buildings and improvements 14,651,023 1,672,707-16,323,730 Infrastructure 37,868,906 2,612,743-40,481,649 Equipment 24,429,288 4,394,864 (1,365,041) 27,459,111 Total accumulated depreciation 90,533,190 10,846,934 (2,987,063) 98,393,061 Total capital assets being depreciated, net 117,700,125 4,633,191 (20,981) 122,312,335 Governmental activities capital assets, net $ 152,726,898 $ 8,369,738 $ (5,079,068) $ 156,017,568 Business-Type Activities: Water and Sewer: Capital assets not being depreciated: Land $ 198,576 $ - $ - $ 198,576 Total capital assets not being depreciated $ 198,576 $ - $ - $ 198,576 50

71 Notes to Financial Statements Note 6. Capital Assets and Construction Commitments (Continued) Beginning Ending Business-Type Activities (Continued) Balance Increases Decreases Balance Capital assets being depreciated: Land improvements $ 73,098 $ - $ - $ 73,098 Buildings 27,471, ,471,694 Infrastructure 46,615,172 1,954,544-48,569,716 Equipment 870,175 1,412,951 (8,395) 2,274,731 Total capital assets being depreciated 75,030,139 3,367,495 (8,395) 78,389,239 Less accumulated depreciation for: Land improvements 3,655 4,873-8,528 Buildings 13,086, ,221-14,030,753 Infrastructure 26,196,844 1,509,744-27,706,588 Equipment 511, ,723 (8,395) 613,615 Total accumulated depreciation 39,798,318 2,569,561 (8,395) 42,359,484 Total capital assets being depreciated, net 35,231, ,934-36,029,755 Water and sewer capital assets, net 35,430, ,934-36,228,331 Center for the Arts: Capital assets not being depreciated: Land 432, ,982 Total capital assets not being depreciated 432, ,982 Capital assets being depreciated: Land improvements 261,093 8, ,696 Buildings 12,907,804 38,775-12,946,579 Infrastructure 9, ,649 Equipment 836,128 43, ,645 Total capital assets being depreciated 14,014,674 90,895-14,105,569 Less accumulated depreciation for: Land improvements 119,715 24, ,595 Buildings 5,394, ,265-5,845,963 Infrastructure 2, ,518 Equipment 524,934 91, ,371 Total accumulated depreciation 6,041, ,547-6,610,447 Total capital assets being depreciated, net 7,972,774 (477,652) - 7,495,122 Center for the Arts capital assets, net 8,405,756 (477,652) - 7,928,104 Total business-type activities $ 43,836,153 $ 320,282 $ - $ 44,156,435 51

72 Notes to Financial Statements Note 6. Capital Assets and Construction Commitments (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government $ 487,246 Public safety: Police 1,930,101 Fire 1,025,998 Parks and recreation 3,831,652 Public works 2,982,738 Development services 112,864 Conference center 229,903 Educational programs 246,432 Total depreciation expense governmental activities $ 10,846,934 Business-type activities: Water and sewer $ 2,569,561 Center for the Arts 568,547 Total depreciation expense business-type activities $ 3,138,108 Construction Commitments The City has active construction projects as of September 30, Four significant projects that were ongoing as of September 30, 2007 were as follows: Remaining Project Spent-to-Date Commitment Renovation Station 71 $ 61,542 $ 813,783 Construction of emergency generator 1,192, ,562 Charter School Fine Arts Wing 2,742, ,302 Creation of Wetlands 1,098,306 76,463 $ 5,095,086 $ 1,297,110 52

73 Notes to Financial Statements Note 6. Capital Assets and Construction Commitments (Continued) Discretely Presented Component Unit Community Redevelopment Agency Beginning Ending Governmental Activities Balance Increases Decreases Balance Capital assets being depreciated: Land $ - $ 3,020,704 $ - $ 3,020,704 Land improvements 882,004 3, ,439 Buildings and improvements Infrastructure 61,454 1,022,983-1,084,437 Equipment Total capital assets being depreciated 943,458 4,047,122-4,990,580 Less accumulated depreciation for: Land improvements 205, , ,132 Buildings and improvements Infrastructure 13,360 21,400-34,760 Equipment Total accumulated depreciation 219, , ,892 Total capital assets being depreciated, net 724,241 3,921,447-4,645,688 Community Redevelopment Agency capital assets, net $ 724,241 $ 3,921,447 $ - $ 4,645,688 53

74 Notes to Financial Statements Note 7. Long-Term Liabilities The following is a summary of changes in the City s bonded and other indebtedness for the year ended September 30, 2007: Governmental Activities Debt Service Fund (Including Beginning Ending Due Within Internal Service Funds) Balance Additions Reductions Balance One Year Bonds: General obligation bonds $ - $ 13,500,000 $ - $ 13,500,000 $ - General obligation refunding bonds 12,365,000 - (1,085,000) 11,280,000 1,110,000 Revenue bonds 45,295,000 - (525,000) 44,770, ,000 Revenue refunding bonds 19,235,000 - (1,115,000) 18,120,000 1,150,000 Total bonds 76,895,000 13,500,000 (2,725,000) 87,670,000 2,785,000 Deferred loss on advance refunding (749,939) (8,770) 66,601 (692,108) (75,464) Bond premium/disount 247,361 10,881 (103,956) 154,286 (2,201) Total bonds, net 76,392,422 13,502,111 (2,762,355) 87,132,178 2,707,335 Liability for monitoring and maintenance of landfill 290,000 - (10,000) 280,000 22,000 Compensated absences 3,388,400 4,433,117 (4,334,132) 3,487,385 3,487,385 Total governmental activity long-term liabilities $ 80,070,822 $ 17,935,228 $ (7,106,487) $ 90,899,563 $ 6,216,720 Business-Type Activities Water and Sewer Fund: Revenue refunding bonds $ 16,750,000 $ - $ (2,100,000) $ 14,650,000 $ 2,160,000 Compensated absences 125, ,520 (163,483) 112, ,056 Total business-type activity long-term liabilities $ 16,875,019 $ 150,520 $ (2,263,483) $ 14,762,056 $ 2,272,056 54

75 Notes to Financial Statements Note 7. Long-Term Liabilities (Continued) Description of individual bond issues outstanding summarized below are the bonds outstanding for the City s governmental activities: Purpose of Amount Amount Issue Issued Outstanding Interest Rate Governmental activities: General obligation bonds: Series 2003 A Refunding $ 3,080,000 $ 1,925, % Series 2005 A Refunding 4,705,000 4,215, % Series 2005 B Refunding 5,855,000 5,140, % Series 2006 Construction of Public Safety Facilities 13,500,000 13,500, % Total general obligation bonds 27,140,000 24,780,000 Revenue bonds: Series 2004 Franchise refunding Refunding 21,400,000 18,120, % FIFC Series 2001A, Capital Capital purchases 38,545,000 38,545, % * FIFC Series 2002B, Capital Capital purchases 8,875,000 6,225, % * Total revenue bonds 68,820,000 62,890,000 Total for governmental activities $ 95,960,000 $ 87,670,000 * These two issuances are variable rate debt in which the City is disclosing the Low / High annualized monthly interest rate during fiscal year These amounts are revenue bonds of the FIFC which were subsequently loaned to the City. See the subsequent section Florida Intergovernmental Finance Commission for further information on these issuances. 55

76 Notes to Financial Statements Note 7. Long-Term Liabilities (Continued) Description of individual bond issues outstanding summarized below are the bonds outstanding for the City s business-type activities: Purpose Amount Amount of Issue Issued Outstanding Interest Rate Business-type activities: Water and Sewer Revenue Bonds: Series 1998, Refunding Refunding $ 9,675,000 $ 9,195, % Series 2002, Refunding Refunding 15,125,000 5,455, % Total for business-type activities $ 24,800,000 $ 14,650,000 General long-term debt bonds are collateralized by multiple sources. For example, the general obligation bonds are secured by ad valorem taxes on all taxable property within the City and the full faith and credit and taxing power of the City. The franchise revenue bonds are secured by franchise fees. Water and Sewer revenue bonds directly related to and intended to be paid from Proprietary Funds are included in the accounts of such funds. For example, the Water and Sewer bonds are secured by a first lien on and a pledge of the net revenue derived from the operation of the water and sewer system. Florida Intergovernmental Finance Commission ( FIFC ) The FIFC was created by an interlocal agreement in January 2001 to provide low-cost loans to participating Florida local governments with AAA bond ratings. The two founding cities were Coral Springs and Palm Beach Gardens. Subsequently, the cities of Fort Lauderdale, Daytona, Aventura, West Palm Beach and Naples became members. However, during fiscal year 2004, Palm Beach Gardens opted out making the total number of members six as of September 30, As a joint venture among the member governmental units, the FIFC enables its members to participate in pooled debt financings with pricing and cost structures not normally available to governmental entities acting individually. The FIFC issues capital revenue bonds, the proceeds from which are loaned to qualifying governmental members. Loan obligations from the FIFC are reflected as debt by the participating governmental units. All debt payments of principal and interest on the capital revenue bonds issued by the FIFC are serviced by payments from the participating governments. The capital revenue bonds may be remarketed as they mature. The City of Coral Springs has no obligation associated with any FIFC debt issues except its own. 56

77 Notes to Financial Statements Note 7. Long-Term Liabilities (Continued) On May 31, 2001, the FIFC issued, on behalf of the City, Capital Revenue Bonds, Series 2001A in the amount of $38,558,932, which includes a premium of $13,932. The City s $38,545,000 FIFC loan is for 10 years. The loan provides for monthly interest payments, with a final maturity of total principal on May 1, The FIFC issued, on behalf of the City, 4.68% fixed rate capital revenue bonds and then entered into an interest rate swap agreement with J.P. Morgan for a weekly variable interest rate (published The Bond Market Association Municipal Swap Index Rate plus 17.5 basis points). The effect of this transaction is to pay less in interest expense (that is, the average variable interest rate since inception at September 30, 2007 of 2.36% is 232 basis points less than the 4.68% fixed rate). This agreement can be called by the underwriter in seven years. If not called, the agreement remains in effect for 10 years. The City has the option to terminate the swap at any time and revert to the fixed rate. The City will be subject to a fixed rate if the counterparty to the swap defaults or if the swap is terminated. A termination of the swap agreement may also result in the City s making or receiving a termination payment. As of September 30, 2007, the swap had a fair value of $989,588. As the variable index rate varies, net swap payments will inversely vary disproportionately. Swap payments and associated debt, using year-to-date actual average interest rates paid as of September 30, 2007, future principal and interest requirements of the fixed-rate debt and net swap payments would be as follows: Rev. Bond Net Benefit J.P.M. Swap Year Ending 4.68% Fixed of Swap Variable September 30, Principal Interest Arrangement Interest 2008 $ - $ 1,802,025 $ (321,897) $ 1,480, ,802,025 (321,897) 1,480, ,802,025 (321,897) 1,480, ,545,000 1,802,025 (321,897) 1,480,128 Total $ 38,545,000 $ 7,208,100 $ (1,287,588) $ 5,920,512 57

78 Notes to Financial Statements Note 7. Long-Term Liabilities (Continued) Annual Requirements to Amortize Long-Term Debt At September 30, 2007, the annual requirements to amortize long-term debt, other than compensated absences and landfill liability, over the life of the debt is listed below: Governmental Activities Year Ending General Obligation Bonds Revenue Bonds September 30, Principal Interest Principal Interest 2008 $ 1,110,000 $ 915,134 $ 1,675,000 $ 2,217, ,145, ,334 1,730,000 2,163, ,185, ,531 1,795,000 2,108, ,225, ,454 40,400,000 2,051, ,265, ,679 1,890, , ,485,000 3,215,907 10,495,000 2,046, ,030,000 2,142,681 4,905, , ,335, , Total $ 24,780,000 $ 10,381,751 $ 62,890,000 $ 11,575,087 Business-Type Activities Year Ending Revenue Bonds September 30, Principal Interest 2008 $ 2,160,000 $ 610, ,230, , ,305, , ,525, , ,655, , ,775, ,100 Total $ 14,650,000 2,353,483 58

79 Notes to Financial Statements Note 7. Long-Term Liabilities (Continued) Refunded Debt The City has a number of bond issues that have been defeased and remain outstanding. The debt is considered extinguished in an in-substance defeasance and, accordingly, is not reflected in the accompanying financial statements. The following schedule is a summary of the remaining balance outstanding of defeased bonds as of September 30, 2007: Balance Type of Bond Issue Outstanding Water and Sewer Refunding and Improvement Bonds, Series 1978 Def. In 1985 $ 1,350,000 Water and Sewer Revenue Refunding Bond, Series 1992 A Defeased in ,575,000 Franchise Revenue Bonds, Series 1994 Defeased in ,000 Franchise Revenue Bonds, Series 1995 Defeased in ,555,000 Franchise Revenue Refunding Bonds, Series 1996 Defeased in ,820,000 Franchise Revenue Refunding Bonds, Series 1998 Defeased in ,060,000 Franchise Revenue Bonds, Series 1999 Defeased in ,670,000 General Obligation Bonds, Series 1994 Defeased in ,985,000 General Obligation Bonds, Series 1995 Defeased in ,740,000 General Obligation Refunding Bonds, Series 1998 A&B Defeased in ,780,000 General Obligation Bonds, Series 1998 C&D Defeased in ,580,000 Total $ 54,540,000 Estimated Liability for Landfill Monitoring and Maintenance The City has an agreement with the Florida Department of Environmental Protection (contractor) to perform the longterm monitoring and maintenance of a closed landfill in Coral Springs and to pay the costs of such long-term monitoring and maintenance of the landfill. At this time, there is no reason for the City to believe that the contractor will not be financially capable of meeting the terms of the agreement. In accordance with U.S. Environmental Protection Agency rule Solid Waste Disposal and Facility Criteria and GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs, a liability has been established representing amounts estimated to be spent on the long-term monitoring and maintenance of the closed landfill. As of September 30, 2007, the total liability of the monitoring and maintenance of the landfill is estimated at $280,000 with $22,000 reserved for the landfill in the General Fund and recorded as a restricted net asset in the governmental activities. The City has the $22,000 in an escrow account to comply with Rule , Administrative Code for the closed landfill located in the City, which is a $1,000 increase from the previous year. The $22,000 is in the City s Bank Atlantic Concentration Account. The landfill liability will be reassessed on an annual basis, and any increase due to inflation, changes in technology, or additional long-term care requirements will be recorded as a current cost. 59

80 Notes to Financial Statements Note 8. Industrial Development Bonds Under provisions of the Florida Industrial Development Financing Act, to promote the City s economy and to increase the purchasing power and opportunities for gainful employment, the City has authorized and issued the following Industrial Development Bonds as of September 30, 2007: Company Series Authorized Issued AMC Corporation 1995 $ 2,160,000 $ 2,160,000 Alliance Entertainment Corporation ,977,000 6,977,000 Royal Plastics Group Limited ,200,000 5,200,000 Brock Supply Company, Inc. 1997A 1,950,000 1,950,000 Brock Supply Company, Inc. 1997B 2,050,000 2,050,000 Unipower Corporation ,530,000 3,530,000 These bonds do not constitute a debt or liability of the City within the meaning of any constitutional or statutory limitation and, accordingly, are not reflected in the accompanying financial statements. Note 9. Restricted Assets Restricted assets in the Water and Sewer Fund include $500,000 related to renewal and replacement of the City s water and sewer system, per the bond covenants of the issue. Note 10. 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; employee health and natural disasters. The City s Self-Insurance Internal Service Fund is used to account for and finance both uninsured and insured risks of loss. Coverage is provided as follows: Self-Insured Aggregate Type Retention Stop Loss General and Auto Liability $ 25,000 $ 3,000,000 Health and Dental 250,000 8,438,143 Self-Insured Deductible Retention Stop Loss Property $ 100,000 $ 993,793 Workers' Compensation as specified by applicable federal and Florida Statutes. 60

81 Notes to Financial Statements Note 10. Risk Management (Continued) Settled claims have not exceeded the City s retention and excess coverage in force in the last three years. All operating funds of the City participate in the program and make payments to the self-insurance internal service fund based on estimates of the amounts needed to pay prior and current claims. The estimated liability on pending claims at September 30, 2007 of $3,179,928, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicated that it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported ( IBNR ). Changes in the balances of claims liability for 2007 and 2006 are as follows: Claims payable, beginning of the year $ 3,196,928 $ 2,261,260 Incurred claims (including IBNRs) 7,683,691 8,177,199 Payments on claims (7,700,691) (7,241,531) Claims payable, end of the year $ 3,179,928 $ 3,196,928 Note 11. Contingency The City is a defendant in various legal actions. The ultimate outcome of the lawsuits is uncertain. However, in the opinion of the City s management and its legal counsel, the ultimate outcome will not have a material adverse effect on the City s financial condition. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. Note 12. Employee Retirement Plans The City s employee retirement plans include three separate single-employer defined benefit plans, six defined contribution plans for general employees and City management, under contract with the International City Management Association Retirement Corporation ( ICMA-RC ) for which the City acts as an agent for participants, and a defined contribution plan for volunteer firefighters. City employees may participate in one plan. The Police and Fire Pension plans issue stand-alone financial reports. Copies of these reports are available at the Financial Services Department in City Hall. 61

82 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) The pension plan s financial statements are prepared using the accrual basis of accounting. Contributions from members are recorded in the period the City makes payroll deductions from participants. City contribution requirements are actuarially determined and remitted on a biweekly basis with the members contributions for the defined contribution plan and annually or semi-annually for the defined benefit plans. Benefit payments and refunds to members are recognized when due and payable in accordance with the terms of the plan. General Employees Retirement Plan Plan Description The General Employees Retirement Plan (the Plan ) is a single-employer defined benefit plan available to City employees, except sworn police officers. The General Employees Retirement Plan was established by the City Commission on June 1, 1973, and closed to new participants after January 1, The Plan is governed by certain provisions of Chapter 112, Florida Statutes. As of October 1, 2006, employee membership data related to the Plan was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 55 Current employees: Vested 10 Total 65 The Plan provides retirement benefits as well as death and disability benefits. Benefits vest 50% after five years of continuous service, plus 5% for each additional year to 100% after 15 years. Employees who retire at age 55 with 10 years of service are entitled to a retirement benefit, payable monthly for life, in an amount equal to 3% of average monthly earnings times continuous service after January 1, 1991 and 2.5% of average monthly earnings times continuous service prior to January 1, 1991 for each year of credited service. Average monthly earnings are equal to 1/12 of the average annual earnings for the highest consecutive three years of the 10 full years immediately preceding actual retirement. Active members contributing 10% of earnings are also entitled to a 2% cost-of-living increase beginning at retirement. On January 18, 2000, the City Commission approved a monthly stipend for future retirees of $200 from retirement to age 65 and $150 after age 65. Covered employees are required to contribute 8% (or 10% if electing the COLA) of their salary to the Plan. If an employee leaves covered employment or dies before five years of credited service, accumulated employee contributions plus 3% interest for each completed year of service are refunded to the employee or designated beneficiary. 62

83 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Funding policy The following table provides information concerning funding policies: Valuation date October 1, 2006 Actuarial cost method Entry age normal actuarial cost method Amortization method for unfunded actuarial accrued liabilities Level payment, closed Amortization period 15 years Actuarial asset valuation method Market value Actuarial assumptions: Assumed rate of return on investments 8% per annum Salary increases Assumed salaries increase at 5% per year Cost-of-living adjustments 2% Actuarially Determined Contribution Requirements and Contributions Made The Plan s funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentages of payroll contribution rates are determined using the entry age normal actuarial cost method. Unfunded actuarial accrued liability is amortized over 15 years. Plan member contributions are recognized in the period in which the contributions are due. City contributions to the plan, as calculated by the plan actuary, are recognized as revenue when due and the City has made a formal commitment to provide the contributions. The City s and employees contributions for the fiscal year ended September 30, 2006 were $253,817 and $47,254, respectively. These were made in accordance with actuarially determined contribution requirements ascertained through an actuarial valuation performed at September 30, Trend information Trend information indicates the progress made in accumulating sufficient assets to pay benefits when due. An analysis of funding progress for the fiscal year ended September 30, 2007, for the General Employees Retirement Plan is as follows: Annual Percentage Pension of APC Net Pension Fiscal Year Ended Cost (APC) Contributed Obligation September 30, 2007 $ 221, % $ 248,663 September 30, ,029 59% 281,061 September 30, ,546 45% 213,769 63

84 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Police Officers Retirement Plan Plan Description The Police Officers Retirement Plan (the Police Plan) is a single-employer defined benefit plan, which covers all full-time sworn police officers. The Police Officers Retirement Plan was established by the City Commission on June 1, The Police Plan is also governed by certain provisions of Chapters 112 and 185, Florida Statutes. As of October 1, 2006, employee membership data related to the Police Plan was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not receiving them 100 Current employees: Vested 75 Partially vested 40 Nonvested 53 Total 268 The Police Plan provides retirement benefits as well as death and disability benefits. Eligibility for normal retirement is based on 20 years of continuous service regardless of age (or age 55 with 10 years of service). Participants are eligible for early retirement at age 50 with at least 10 years of continuous service. The monthly retirement benefit shall be an amount determined as follows: 3.375% of the average monthly earnings times continuous service. The maximum monthly retirement benefits shall be an amount equal to % of average monthly earnings. Average monthly earnings means 1/12 of the arithmetic average annual earnings for the highest consecutive three years of the 10 full years immediately preceding the actual retirement or termination date of a member, provided that if a member has been employed for fewer than three years such average shall be taken only over the period of his actual employment. Earnings mean all compensation excluding leave payouts at separation and offduty details. For purposes of inclusion in earnings, overtime shall be limited to 300 hours per calendar year, or a prorated amount for a partial year. Compensation other than base salary shall be limited to 13% of base salary. All participants are required to contribute 9% of their salary to the plan. If a participant terminates employment, or dies before five years of credited service, accumulated employee contributions plus 3% interest for each completed year of service are refunded to the employee or designated beneficiary. 64

85 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Funding policy The following table provides information concerning funding policies: Valuation date October 1, 2006 Actuarial cost method Frozen entry age Amortization method for unfunded actuarial accrued liabilities Level percent, open Amortization period 40 years Actuarial asset valuation method 3 year smoothed market Actuarial assumptions: Assumed rate of return on investments 9% per annum* Salary increases Assumed salaries increase at 6.5% per year* Cost-of-living adjustments 2.5% *Includes inflation at 3% Actuarially Determined Contribution Requirements and Contributions Made The Police Plan s funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentage of annual covered payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentages of payroll contribution rates are determined using the entry age actuarial cost method with frozen initial liability. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the pension benefit obligation described above. Police Plan member contributions are recognized in the period in which the contributions are due. City contributions to the plan, as calculated by the plan actuary, are recognized as revenue when due and the City has made a formal commitment to provide the contributions. Contributions for the year ending September 30, 2007, totaling $6,594,245, were made in accordance with actuarially determined contribution requirements determined through an actuarial valuation performed at October 1, Contributions for the fiscal year ended September 30, 2007, of $4,507,773 for the employer, $1,193,996 for the employee and $892,476 for the State of Florida were made in accordance with Florida Statutes. Trend information Trend information indicates the progress made in accumulating sufficient assets to pay benefits when due. An analysis of funding progress for the fiscal year ended September 30, 2007, for the Police Officers Pension Plan is as follows: Annual Percentage Pension of APC Net Pension Fiscal Year Ended Cost (APC) Contributed (Asset) September 30, 2007 $ 3,853, % $ (14,131,568) September 30, ,438, % (11,738,458) September 30, ,959, % (10,252,762) 65

86 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Firefighters Retirement Plan Plan Description The Firefighters Retirement Plan (the Fire Plan ) is a single-employer defined benefit plan, which covers all full-time certified firefighters. The Fire Plan was established by the City Commission with an effective date of December 31, The Fire Plan is also governed by certain provisions of Chapters 112 and 175, Florida Statutes. As of October 1, 2006, employee membership data related to the Plan was as follows: Current employees: Vested 27 Nonvested 111 Total 138 The Fire Plan provides retirement benefits as well as death and disability benefits. Eligibility for normal retirement is based on age 55 with 10 years of services, age 52 with 25 years of service, or age 56 with 3 years of service (12/31/02 entrants only). Participants are eligible for early retirement at age 50 with at least 10 years of continuous service. The monthly retirement benefit shall be an amount determined as follows: 3.25% of the average monthly earnings times continuous service (2.25% for past service unless the member makes the required additional contribution). Average monthly earnings means the average annual earnings for the highest consecutive 3 years of the 10 full years immediately preceding the actual retirement or termination date of a member, provided that a member has been employed for fewer than three years such average shall be taken only over the period of his actual employment. All participants are required to contribute 8.5% of their salary to the plan. If a participant terminates employment, or dies before 10 years of credited service, accumulated employee contributions plus related investment earnings are refunded to the employee or designated beneficiary. 66

87 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Funding policy The following table provides information concerning funding policies: Valuation date October 1, 2006 Actuarial cost method Individual entry age Amortization method for unfunded actuarial accrued liabilities Level percent, open Amortization period 40 years Actuarial asset valuation method Market value Actuarial assumptions: Assumed rate of return on investments 8% per annum* Salary increases Assumed salaries increase at 6% per year* *Includes inflation at 3% Actuarially Determined Contribution Requirements and Contributions Made The Fire Plan s funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as a percentage of annual covered payroll, are sufficient to accumulate sufficient assets to pay benefits when due. Level percentages of payroll contribution rates are determined using the entry age actuarial cost method. Significant actuarial assumptions used to compute contribution requirements are the same as those used to compute the pension benefit obligation described above. Fire Plan member contributions are recognized in the period in which the contributions are due. City contributions to the plan, as calculated by the plan actuary, are recognized as revenue when due and the City has made a formal commitment to provide the contributions. Contributions for the year ending September 30, 2007, totaling $3,458,416, were made in accordance with actuarially determined contribution requirements determined through an actuarial valuation performed at October 1, Contributions for the year ending September 30, 2007, of $1,500,000 for the employer, $791,944 for the employee and $1,166,472 for the State of Florida were made in accordance with Florida Statutes. Trend Information Trend information indicates the progress made in accumulating sufficient assets to pay benefits when due. An analysis of funding progress for the fiscal year ended September 30, 2007, for the Firefighters Retirement Plan is as follows: Annual Percentage Pension of APC Net Pension Fiscal Year Ended Cost (APC) Contributed (Asset) September 30, 2007 $ 1,626, % $ (1,471,846) September 30, ,642, % (1,564,889) September 30, ,201, % (639,554) 67

88 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Annual Pension Cost and Net Pension Obligations The annual pension cost and net pension obligation for each Pension Plan for fiscal year ended September 30, 2007 for the General Employees, Police Officers and Firefighters is as follows: General Police Employees Officers Firefighters Annual required contribution (ARC) $ 253,817 $ 4,481,737 $ 1,675,437 Interest on net pension obligation (asset) 22,485 (1,103,939) (88,413) Adjustment to annual required contribution (54,883) 476,158 39,602 Annual pension cost 221,419 3,853,956 1,626,626 State contribution - 1,211, ,313 Employer contribution 253,817 4,507,773 1,500,000 Other actuarial adjustments - (527,530) 459,730 Increase (decrease) in net pension obligation (asset) (32,398) (2,393,110) 93,043 Net pension obligation (asset), beginning of year 281,061 (11,738,458) (1,564,889) Net pension obligation (asset), end of year $ 248,663 $ (14,131,568) $ (1,471,846) Specific Investment Information Investments that individually represented 5% or more of the net assets of the General Employees Retirement Plan are disclosed in footnote 3. There were no investments that individually represented 5% or more of the net assets of the Police Officers Retirement Plan or the Firefighters Retirement Plan. 68

89 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Employee Pension Plans That Do Not Issue Stand-Alone Financial Statements The following are the employee pension plans that do not issue stand-alone financial statements: General City Volunteer General Employees Commission Firefighters Employees Management City Manager Pension Pension Pension 401 (a) Plan 401 (a) Plan 401 (a) Plan Assets: Pooled cash and cash equivalents $ 127,422 $ 28,546 $ 423,086 $ - $ - $ - Pooled investments - 39, , Mutual funds ,742 33,729,439 10,743, ,009 Government securities 2,330, Bonds 778, Common stock 3,413, Contributions receivable 153, Interest receivable 47, , Other assets ,332,951 37,730 - Total assets 6,851,651 68,660 1,548,327 35,062,390 10,781, ,009 Net assets held in trust for pension benefits $ 6,851,651 $ 68,660 $ 1,548,327 $ 35,062,390 $ 10,781,034 $ 713,009 Additions: Employee contribution $ 47,254 $ - $ - $ 1,202,903 $ 205,991 $ 10,558 Employer contribution 253,817 16,969-1,233, ,802 42,233 Rollover , ,880 - Total contributions 301,071 16,969-2,665, ,673 52,791 Investment income 257,467 2, ,838 3,962,424 1,260,740 90,578 Net appreciation in fair value of investments 518, , , Net investment income 776,394 3, ,906 4,067,227 1,261,144 90,578 Total additions 1,077,465 20, ,906 6,733,136 2,236, ,369 Deductions: Benefit payments 658,691 10,800-2,384, ,355 - Loan defaults ,466 (538) - Investment expense and other 67,980-1,268 10, Total deductions 726,671 10,800 1,268 2,567, , Net increase in plan net assets 350,794 9, ,638 4,165,260 1,736, ,355 Net assets held in trust for pension benefits, beginning of year 6,500,857 59,438 1,412,689 30,897,130 9,044, ,654 Net assets held in trust for pension benefits, end of year $ 6,851,651 $ 68,660 $ 1,548,327 $ 35,062,390 $ 10,781,034 $ 713,009 69

90 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) General Employees Defined Contribution Pension Plans The City has contracted with the ICMA-RC on behalf of its general employees for two defined contribution pension plans. The City also contracts with the ICMA-RC for three defined-contribution pension plans for all general employees categorized as directors and managers and a separate plan for the City Manager. All six plans are established under the provisions of Section 401(a) of the Internal Revenue Code as Money Purchase Plans and Trusts. The assets of the plans are owned by the employee; however, the City has a custodial responsibility to properly administer the plans. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The General Employees Plan provisions require the City to contribute 7% of each participant s salary for the first seven years of service and 9% of the participant s salary thereafter. Participants are required to contribute either 6% or 8% of earnings (depending on plan selection) for the plan year. Employees are eligible to participate from the date of employment. The City s contributions for each employee (and interest allocated to the employee s account) are fully vested after five years of continuous service. City contributions for, and interest forfeited by, employees who leave employment before five years of service are refunded to the City by the trustee after a minimum holding period of three years. At September 30, 2007, there were 94 plan members in the 6% plan and 270 in the 8% plan. The City and employees contributions for the year ended September 30, 2007, to the defined contribution plans, were $1,233,950 and $1,202,903, respectively. The management plan provisions require the City to contribute 11% of each participant s salary for the first seven years of service and 13% of the participant s salary thereafter. Participants contribute 0%, 5% or 10% of salary (depending on plan selection) for the plan year. Employees are eligible to participate in the plan from the date of employment. The City s contributions for each employee (and interest allocated to the employee s account) are fully vested at the time of the contribution. The City Manager s Plan requires the City to contribute 20% of the City Manager s salary for each plan year. In addition, the City Manager is required to contribute 5% of his salary for each plan year. The City s contribution and those of the City Manager (and interest allocated to the City Manager s account) are fully vested at the time of the contribution. The City s contributions were calculated using the covered payroll amount of approximately $3.35 million for the fiscal year ended September 30, The City s and employees contributions for the fiscal year ended September 30, 2007 were $103,862 and $0 for the Management 401(a) Plan 0%; $71,247 and $28,210 for the Management 401(a) Plan 5%; $221,693 and $177,781 for the Management 401(a) Plan 10%; and $42,233 and $10,558 for the City Manager 401(a) Plan, respectively. At September 30, 2007, there were 7 plan members in the 0% plan, 5 plan members in the 5% plan and 18 members in the 10% plan. 70

91 Notes to Financial Statements Note 12. Employee Retirement Plans (Continued) Volunteer Firefighters Pension Plan The Volunteer Firefighters Pension Plan is a single-employer defined contribution plan, which covers all volunteer firefighters. The Volunteer Firefighters Pension Plan was established by the City Commission on September 4, 1990, retroactive to January 1, In June 1994, the Plan was amended to reduce the City s contribution to the plan administrator from $967 to $648 with $319 being paid directly to the firefighter as a supplemental contribution for each participant for each year of credited service after vesting. A participant earns a year of credited service by completing 576 shift hours and 144 training hours per calendar year. Benefits are fully vested after 5 years of credited service. Note 13. Subsequent Events As discussed in Note 3, at September 30, 2007, the City had $31,145,451 invested in the State Board of Administration s Local Government Surplus Funds Trust Fund Investment Pool ( Pool ). On November 29, 2007, the State Board of Administration implemented a temporary freeze on the assets held in the Pool due to an unprecedented amount of withdrawals from the Fund coupled with the absence of market liquidity for certain securities within the Pool. The significant amount of withdrawals followed reports that the Pool held asset-backed commercial paper that was subject to sub-prime mortgage risk. On December 4, 2007, based on recommendations from an outside financial advisor, the State Board of Administration restructured the Pool into two separate pools. Pool A consisted of all money market appropriate assets, which was approximately $12 billion or 86% of Pool assets. Pool B consisted of assets that either defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk, which was approximately $2 billion or 14% of Pool assets. At the time of the restructuring, all current Pool participants had their existing balances proportionately allocated into Pool A and Pool B. Currently, Pool A participants may withdraw 37% of their balance or $4 million, whichever is greater, without penalty. Withdrawals from Pool A in excess of the above limit are subject to a 2% redemption fee. New investments in Pool A are not subject to the redemption fee or withdrawal restrictions. Future withdrawal provisions from Pool A will be subject to further evaluation based on the maturities of existing investments and the liquidity requirements of the Pool. On January 31, 2008, Standard and Poor's Ratings Services assigned its AAAM principal stability fund rating to Pool A. Currently, Pool B participants are prohibited from withdrawing any amount from the Pool and a formal withdrawal policy has not yet been developed. Market valuations of the assets held in Pool B are not readily available. In addition, full realization of the principle value of Pool B assets is not readily determinable. As of January 31, 2008 the City had withdrawn the majority of its investments in the pool without being subjected to any losses. The City has $4,439 and $523,896 invested in Pool A and B, respectively. Additional information regarding the Local Government Surplus Funds Trust Fund may be obtained from the State Board of Administration. 71

92 Notes to Financial Statements Note 13. Subsequent Events (Continued) Discretely Presented Component Unit At September 30, 2007, the Community Redevelopment Agency had $494,684 invested in the State Board of Administration's Local Government Surplus Funds Trust Fund Investment Pool ( Pool ). As of January 31, 2008 the City had withdrawn the majority of its investments in the pool without being subjected to any losses. The City has $2,102 and $69,718 invested in Pool A and B, respectively. Note 14. Pronouncements Issued But Not Yet Adopted GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, was issued in June. This Statement improves the relevance and usefulness of financial reporting by requiring systematic, accrual-basis measurement and recognition of OPEB cost (expense) over a period that approximates employees years of service and provides information about actuarial accrued liabilities associated with OPEB and whether, and to what extent, progress is being made in funding the plan. The provisions of this Statement will be effective for the City beginning with its year ending September 30, GASB Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, was issued September This Statement establishes accounting and financial reporting standards for transactions in which a government receives, or is entitled to, resources in exchange for future cash flows generated by collecting specific receivables or specific future revenues. It also provides disclosure requirements for a government that pledges or commits future cash flows from a specific revenue source. In addition this Statement establishes accounting and financial reporting standards for intra-entity transfers of assets and future revenues. The provisions of this Statement will be effective for the City beginning with its year ending September 30, GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, was issued November This Statement addresses accounting and financial reporting standards for pollution (including contamination) remediation obligations, which are obligations to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups. The provisions of this Statement will be effective for the City beginning with its year ending September 30, GASB Statement No. 50, Pension Disclosures an Amendment of GASB Statements No. 25 and 27 was issued May This Statement more closely aligns the financial reporting requirements for pensions with those for other postemployment benefits ( OPEB ) and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information ( RSI ) by pension plans and by employers that provide pension benefits. The provisions of this Statement will be effective for the City beginning with its year ending September 30,

93 Notes to Financial Statements Note 14. Pronouncements Issued But Not Yet Adopted (Continued) GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, was issued June This Statement establishes accounting and financial reporting requirements for intangible assets to reduce these inconsistencies, thereby enhancing the comparability of the accounting and financial reporting of such assets among state and local governments. The provisions of this Statement will be effective for the City beginning with its year ending September 30, The City s management has not yet determined the effect these statements will have on the City s financial statements. 73

94 General Fund Schedule of Revenue, Expenditures and Changes in Fund Balances Budget and Actual (Budgetary Basis) (Unaudited) Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenue: Taxes: Ad valorem $ 34,883,030 $ 34,883,030 $ 35,411,380 $ 528,350 Franchise fees 9,634,907 9,634,907 10,419, ,522 Utility 8,756,406 8,756,406 8,904, ,682 Intergovernmental 21,262,833 21,302,833 25,366,035 4,063,202 Licenses and permits 3,754,782 3,754,782 5,363,340 1,608,558 Charges for services 9,716,939 9,676,939 9,997, ,319 Fines and forfeitures 1,479,727 1,479,727 1,378,340 (101,387) Interest and other 3,004,825 3,004,825 4,576,884 1,572,059 Total revenue 92,493,449 92,493, ,416,754 8,923,305 Expenditures: Current: General government 18,505,792 18,403,792 13,742,026 4,661,766 Public safety: Police 36,173,486 36,173,486 35,663, ,388 Fire 7,382,928 7,484,928 7,554,456 (69,528) Parks and recreation 13,310,785 13,310,785 12,374, ,635 Public works 4,576,364 4,576,364 4,381, ,999 Development services 6,221,459 6,221,459 5,981, ,228 Educational and cultural 435, , ,603 (31,560) Capital outlay 400, , ,000 Total expenditures 87,005,857 87,005,857 80,162,929 6,842,928 Excess of revenue over expenditures 5,487,592 5,487,592 21,253,825 15,766,233 Other financing sources (uses): Transfers in 202, , , ,357 Transfers out (5,689,875) (5,689,875) (9,202,833) (3,512,958) Total other financing sources (uses) (5,487,592) (5,487,592) (8,892,193) (3,404,601) Net change in fund balances ,361,632 12,361,632 Fund balance, beginning of year 32,527,712 Fund balance, end of year $ 44,889,344 See Notes to Required Supplementary Information. 74

95 Schedule of Funding Progress September 30, 2007 (Dollar amounts in thousands) (Unaudited) General Employees Retirement Plan Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Valuation Liability AAL Funded Covered of Covered of Assets (AAL) (UAAL) Ratio Payroll Payroll Actuarial Valuation Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) October 1, 2004 $ 6,469 $ 7,715 $ 1, % $ % October 1, ,591 7,935 1, % % October 1, ,529 8,001 1, % % Police Officers Retirement Plan Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Valuation Liability AAL Funded Covered of Covered of Assets (AAL) (UAAL) Ratio Payroll Payroll Actuarial Valuation Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) October 1, 2004 $ 60,797 $ 78,773 $ 17, % $ 10, % October 1, ,536 87,763 18, % 10, % October 1, ,824 94,271 18, % 10, % Firefighters Retirement Plan Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Valuation Liability AAL Funded Covered of Covered of Assets (AAL) (UAAL) Ratio Payroll Payroll Actuarial Valuation Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) October 1, 2004 $ 4,279 $ 8,972 $ 4, % $ 5, % October 1, ,368 13,540 6, % 7, % October 1, ,688 16,109 5, % 7, % See Notes to Required Supplementary Information. 75

96 Schedule of Employer Contributions September 30, 2007 (Unaudited) General Employees Retirement Plan Employer Contributions Annual Required Percentage Year Ended Contribution Contributed September 30, 2006 $ 181,194 52% September 30, ,703 42% September 30, ,109 41% Police Officers Retirement Plan Employer Contributions Annual Required Percentage Year Ended Contribution Contributed September 30, 2006 $ 4,326, % September 30, ,432, % September 30, ,181, % Firefighters Retirement Plan Employer Contributions Annual Required Percentage Year Ended Contribution Contributed September 30, 2006 $ 1,674, % September 30, ,220, % September 30, , % See Notes to Required Supplementary Information. 76

97 Notes to Required Supplementary Information September 30, 2007 (Unaudited) Budgetary Procedures and Budgetary Accounting The City adheres to the following procedures in establishing the budgetary data reflected in the accompanying financial statements: Prior to September 30, the City Manager submits, to the City Commission, proposed operating budgets for the General Fund, Debt Service Fund, Fire Special Revenue Fund, Charter School Special Revenue Fund, Enterprise Funds, and Internal Service Funds for the fiscal year commencing October 1. The operating budget includes proposed expenditures and the means of financing them. As part of the City s annual budgeting process, expenditures, and funding sources for capital projects are identified through the Capital Improvement Program Budget. Public hearings are conducted at City Hall to obtain taxpayer comments. Prior to September 30th, the budget is legally enacted through passage of a resolution. Each department director is authorized to transfer budget amounts within individual departments. Revisions that alter the total expenditure of any department within a fund must be approved by the City Manager. The City commission must approve revisions that alter the total expenditures of any fund. Actual expenditures and transfers out may not exceed budget appropriations at the individual fund level. Legal level of control is maintained at the fund level. If during the course of the fiscal year, it becomes evident that a particular fund is unable to provide the required level of services to the community due to unexpected higher costs of providing services or a shortfall of revenue, the budget may be amended. The Director of Financial Services submits to the City Commission a request to amend the budget. The request contains explanations written by the director(s) of the department(s) making the request. The request includes a proposal for financing if additional expenditures are requested. The accompanying budgetary data represents the original and the final amended budgets as approved by the City Commission. The difference between the two columns represents authorized budget transfers within the fiscal year. The General Fund budget is prepared on the modified accrual basis. However, certain general fund operations are not budgeted and are excluded from the budget to actual presentation. The operations that are not budgeted are the Departmental Gain Sharing and the Computer Replacement Reserve. The City provides departmental gain sharing to encourage employees and teams of employees to think creatively and improve processes thereby reducing City expenditures and passing the resulting cost savings to taxpayers and other customers. 77

98 Notes to Required Supplementary Information September 30, 2007 (Unaudited) The following schedule reconciles the revenue and expenditure amounts on the combined statement of revenue, expenditures, and changes in fund balances budget and actual (budgetary basis) to amounts on the combined statement of revenue, expenditures, and changes in fund balances: Expenditures Expenditures budgetary basis $ 80,162,929 Departmental gain sharing expenditures for the year ended September 30, ,224 Computer replacement expenditures for the year ended September 30, ,839 Expenditures GAAP basis $ 80,667,992 The information presented in the required supplementary schedules was determined as part of the actuarial valuations information as of the latest actuarial valuation follows: General Employees Police Officers Firefighters Retirement Plan Retirement Plan Retirement Plan Actuarial valuation October 1, 2006 October 1, 2006 October 1, 2006 Cost method Entry age normal Frozen entry age Individual entry age Asset valuation method Market value 3-year smoothed market Market value Amortization method Level payment, closed Level percent, open Level percent, open Amortization period 15 years 40 years 40 years Actuarial assumptions: Assumed rate of return on investments 8% per annum 9% per annum* 8% per annum* Salary increases 5% per year 6.5% per year* 6% per year* * Includes inflation at 3% * Includes inflation at 3% Cost-of-living adjustments 2.0% 2.5% n/a 78

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100 Nonmajor Special Revenue Funds Special Revenue Funds are used to account for specific revenue that are restricted to expenditures for particular purposes. Law Enforcement Contraband Forfeiture Fund to account for law enforcement related projects funded by the proceeds from forfeited confiscated property. Tree Trust Fund to account for fines received in accordance with the City s tree preservation ordinance. Road Impact Fund to account for impact fees designated for various City roads. Grants Fund to account for certain federal and state grants received by the City. Commercial Vehicle Fund to account for fines collected for violations of commercial vehicle weight restrictions pursuant to Chapter 316 of the Florida Statutes. Fire Fund to account for the operations of the City s emergency medical and fire prevention and suppression services. Environmental Mitigation Fund to account for funds received for the maintenance of various environmental sites throughout the City. Environmentally Sensitive Land Fund to account for the operations of the City s ability to provide a funding source exclusively for acquiring, enhancing, and maintaining environmentally sensitive land. Charter School Fund to account for the operations of the Charter School and the proceeds of specific revenue sources (other than major capital projects) that are legally restricted for specified purposes related to the City of Coral Springs Charter School. Public Arts Fund to account for the operations related to the City s public arts program. Library Reserve Fund to account for the maintenance of the grounds surrounding the Northwest Regional Library. Conference Center Fund to account for the maintenance of the Conference Center located in the Marriott Hotel. 79

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102 Nonmajor Capital Projects Funds Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. Franchise Revenue Bonds to account for the acquisition and construction of capital facilities funded by franchise revenue bonds. Grants Capital Projects to account for certain grants received for capital improvements. Variable Rate Debt to account for the acquisition and construction of capital facilities funded by variable rate debt. Charter School Construction Fund to account for the acquisition and construction of the Coral Springs Charter School funded by variable rate debt, Student Infrastructure Thrift ( SIT ) and Charter School Capital Outlay Funds. Capital Revenue Bonds Fund #1 to account for the acquisition or construction of major capital facilities financed by the issuance of capital revenue bonds 2001A Series. Capital Revenue Bonds Fund #2 to account for the acquisition or construction of major capital facilities financed by the issuance of capital revenue bonds 2002 B Series. 80

103 Nonmajor Special Revenue Funds Combining Balance Sheet September 30, 2007 Law Enforcement Contraband Tree Road Commercial Forfeiture Trust Impact Grants Vehicle Assets Fund Fund Fund Fund Fund Cash and cash equivalents $ 1,150,018 $ 319,807 $ 86,586 $ 84,167 $ 108,656 Investments 1,599, , , , ,153 Interest receivable 16,294 4,531 1,227 1,192 1,539 Accounts receivables, net , Due from other funds - 500, Due from other governments Total assets $ 2,766,123 $ 1,269,227 $ 208,266 $ 777,294 $ 261,732 Liabilities Accounts payable and accrued liabilities $ 20,500 $ 340 $ - $ 96,794 $ - Deposits and deferred revenue ,285,350 - Total liabilities 20, ,382,144 - Fund Balances (Deficit) Unreserved: Designated per financial policies Designated for future maintenance Undesignated 2,745,623 1,268, ,266 (604,850) 261,732 Total fund balances (deficit) 2,745,623 1,268, ,266 (604,850) 261,732 Total liabilities and fund balances (deficit) $ 2,766,123 $ 1,269,227 $ 208,266 $ 777,294 $ 261,732 81

104 Total Environmentally Nonmajor Environmental Sensitive Charter Public Library Conference Special Fire Mitigation Land School Arts Reserve Center Revenue Fund Fund Fund Fund Fund Fund Fund Funds $ 641,882 $ 26,952 $ 33,163 $ 1,968,695 $ 296,741 $ 1,048,603 $ 259,654 $ 6,024, ,934 37,494 46,133 2,738, ,801 1,458, ,208 8,381,379 9, ,893 4,204 14,857 3,679 85,362 38, , , , , ,246 $ 1,582,400 $ 64,828 $ 79,766 $ 5,015,466 $ 713,746 $ 2,522,190 $ 624,541 $ 15,885,579 $ 409,683 $ - $ 58,085 $ 577,840 $ - $ 19,315 $ - $ 1,182, , , ,715, ,018-58, , ,739 19,315-2,897, , ,549, ,049, , , ,382 64,828 21,681 1,887, ,307 2,502, ,541 9,901, ,382 64,828 21,681 4,437, ,007 2,502, ,541 12,987,598 $ 1,582,400 $ 64,828 $ 79,766 $ 5,015,466 $ 713,746 $ 2,522,190 $ 624,541 $ 15,885,579 82

105 Nonmajor Capital Projects Funds Combining Balance Sheet September 30, 2007 Charter Franchise Grants Variable School Revenue Capital Rate Construction Assets Bonds Projects Debt Fund Cash and cash equivalents $ 9,588 $ - $ 244,399 $ 104,310 Investments 13, , ,108 Interest receivable 136-3,463 1,478 Accounts receivables, net Due from other funds Due from other governments Total assets $ 23,062 $ - $ 587,852 $ 250,896 Liabilities Accounts payable and accrued liabilities $ - $ - $ - $ 217,684 Due to other funds ,107 Deposits and deferred revenue Advances from other funds ,866 Total liabilities ,657 Fund Balances (Deficit) Reserved for capital projects Unreserved: Designated per financial policies Designated for subsequent years expenditures 23, ,852 - Undesignated (165,761) Total fund balances (deficit) 23, ,852 (165,761) Total liabilities and fund balances (deficit) $ 23,062 $ - $ 587,852 $ 250,896 83

106 Total Capital Capital Nonmajor Total Revenue Revenue Capital Nonmajor Bonds Bonds Projects Governmental Fund #1 Fund #2 Funds Funds $ - $ 126,325 $ 484,622 $ 6,509, , ,169 9,055,548-1,790 6,867 92, , , ,246 $ - $ 303,848 $ 1,165,658 $ 17,051,237 $ - $ 1,536 $ 219,220 $ 1,401, ,107 96, ,715, , ,866-1, ,193 3,316,174-9,837 9,837 9, ,049, , , , (165,761) 9,736, , ,465 13,735,063 $ - $ 303,848 $ 1,165,658 $ 17,051,237 84

107 Nonmajor Special Revenue Funds Combining Statement of Revenue, Expenditures and Changes in Fund Balances Fiscal Year Ended September 30, 2007 Law Enforcement Contraband Tree Road Commercial Forfeiture Trust Impact Grants Vehicle Fund Fund Fund Fund Fund Revenue: Intergovernmental $ - $ - $ - $ 1,532,681 $ - Non-ad valorem special assessment Licenses and permits - 7, Charges for services Fines and forfeitures 617,039 13, ,409 Interest and other 151,682 50,603 11,248 29,224 14,032 Total revenue 768,721 71,303 11,248 1,561,905 17,441 Expenditures: Current: Public safety: Police 658, ,107 - Fire ,186 - Parks and recreation - 313, Development services ,056 - Educational and cultural programs Capital outlay ,543,644 - Total expenditures 658, ,754-1,897,993 - Excess (deficiency) of revenue over (under) expenditures 110,685 (242,451) 11,248 (336,088) 17,441 Other financing sources (uses): Transfers in - 500, Transfers out (89,029) - Total other financing sources (uses) - 500,000 - (89,029) - Net change in fund balances 110, ,549 11,248 (425,117) 17,441 Fund balances (deficit) 2,634,938 1,011, ,018 (179,733) 244,291 Fund balances, end of year $ 2,745,623 $ 1,268,887 $ 208,266 $ (604,850) $ 261,732 85

108 Total Environmentally Nonmajor Environmental Sensitive Charter Public Library Special Fire Mitigation Land School Arts Reserve Conference Revenue Fund Fund Fund Fund Fund Fund Center Funds $ 19,800 $ - $ - $ 12,027,807 $ - $ - $ - $ 13,580,288 6,099, ,099, ,255 5,068, , ,803 5,466, , ,615 3,501 28, ,619 34, ,690 31, ,291 11,361,528 3,501 28,803 12,286, , , ,020 26,715, ,143 11,931, ,981, , , ,277, ,735-10,439, ,220-66,986-7,864 2,342,714 11,931, ,220 10,277,585 66, ,735 7,864 26,039,236 (569,535) 3,501 (695,417) 2,008, ,544 (21,045) 182, ,880 1,292, ,792,104 (888,390) - (98,853) (730,046) (1,806,318) 403,714 - (98,853) (730,046) (14,214) (165,821) 3,501 (794,270) 1,278, ,544 (21,045) 182, ,666 1,051,203 61, ,951 3,158, ,463 2,523, ,385 12,325,932 $ 885,382 $ 64,828 $ 21,681 $ 4,437,626 $ 571,007 $ 2,502,875 $ 624,541 $ 12,987,598 86

109 Nonmajor Capital Projects Funds Combining Statement of Revenue, Expenditures and Changes in Fund Balances Fiscal Year Ended September 30, 2007 Charter Franchise Grants Variable School Revenue Capital Rate Construction Bonds Projects Debt Fund Revenue: Intergovernmental $ - $ - $ - $ - Non-ad valorem special assessment Licenses and permits Charges for services Fines and forfeitures Interest and other 1, ,234 31,984 74,367 Total revenue 1, ,234 31,984 74,367 Expenditures: General government Public safety: Police Fire Parks and recreation Public works - - 6,374 - Development services Educational and cultural programs ,567,159 Capital outlay Total expenditures - - 6,374 2,567,159 Excess (deficiency) of revenue over (under) expenditures 1, ,234 25,610 (2,492,792) Other financing sources (uses): Transfers in - 39, ,047 Transfers out Total other financing sources (uses) - 39, ,047 Net change in fund balance 1, ,090 25,610 (1,762,745) Fund balances (deficit), as amended to exclude a component unit 21,816 (141,090) 562,242 1,596,984 Fund balances (deficit), end of year $ 23,062 $ - $ 587,852 $ (165,761) 87

110 Total Capital Capital Nonmajor Total Revenue Revenue Capital Nonmajor Bonds Bonds Projects Governmental Fund #1 Fund #2 Funds Funds $ - $ - $ - $ 13,580, ,099, , ,466, ,893 5,690 18, ,107 1,160,398 5,690 18, ,107 26,948,223-13,630 13,630 13,630-15,152 15, ,295-10,740 10,740 11,991,989-32,995 32, ,749-20,155 26,529 26, , ,567,159 13,006, ,342,714-92,672 2,666,205 28,705,441 5,690 (74,086) (2,433,098) (1,757,218) ,903 2,562,007 (105,362) - (105,362) (1,911,680) (105,362) - 664, ,327 (99,672) (74,086) (1,768,557) (1,106,891) 99, ,398 2,516,022 14,841,954 $ - $ 302,312 $ 747,465 $ 13,735,063 88

111 Debt Service Fund Major Schedule of Revenue, Expenditures and Changes in Fund Balances Budget and Actual Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenue: Ad valorem taxes $ 1,922,779 $ 1,922,779 $ 1,954,367 $ 31,588 Interest and other 9,629 9, , ,062 Total revenue 1,932,408 1,932,408 2,495, ,650 Expenditures: Current: General government 8,000 8,000 46,140 (38,140) Debt service: Principal 3,450,000 3,450,000 2,725, ,000 Interest and other 3,252,657 3,252,657 3,314,748 (62,091) Bond issuance costs 2,000 2,000-2,000 Total expenditures 6,712,657 6,712,657 6,085, ,769 Excess (deficiency) of revenue over (under) expenditures (4,780,249) (4,780,249) (3,590,830) 1,189,419 Other financing sources (uses): Transfers in 4,780,249 4,780,249 4,027,529 (752,720) Total other financing sources (uses) 4,780,249 4,780,249 4,027,529 (752,720) Net change in fund balances $ - $ - 436,699 $ 436,699 Fund balance, beginning of year 8,503,673 Fund balance, end of year $ 8,940,372 89

112 Fire Special Revenue Fund Nonmajor Schedule of Revenue, Expenditures and Changes in Fund Balances Budget and Actual Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenue: Intergovernmental $ 24,640 $ 24,640 $ 19,800 $ (4,840) Non-ad valorem special assessment 5,980,180 5,980,180 6,099, ,266 Charges for services 5,138,877 5,138,877 5,068,667 (70,210) Interest and other 124, , ,615 49,393 Total revenue 11,267,919 11,267,919 11,361,528 93,609 Expenditures: Current: Fire 12,289,986 12,265,026 11,931, ,963 Capital outlay 24,960 24,960-24,960 Total expenditures 12,314,946 12,289,986 11,931, ,923 Excess (deficiency) of revenue over (under) expenditures (1,047,027) (1,022,067) (569,535) 452,532 Other financing sources (uses): Transfers in 1,292,104 1,292,104 1,292,104 - Transfers out (270,037) (270,037) (888,390) (618,353) Total other financing sources (uses) 1,022,067 1,022, ,714 (618,353) Net change in fund balance $ (24,960) $ - (165,821) $ (165,821) Fund balance, beginning of year 1,051,203 Fund balance, end of year $ 885,382 90

113 Coral Springs Charter School Special Revenue Fund Nonmajor Schedule of Revenue, Expenditures and Changes in Fund Balances Budget and Actual (Budgetary Basis) Fiscal Year Ended September 30, 2007 Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenue: Intergovernmental $ 11,156,911 $ 11,156,911 $ 12,027,807 $ 870,896 Interest and other 38,000 38, , ,619 Total revenue 11,194,911 11,194,911 12,286,426 1,091,515 Expenditures: Educational programs 11,194,911 11,194,911 10,277, ,326 Total expenditures 11,194,911 11,194,911 10,277, ,326 Excess of revenue over expenditures - - 2,008,841 2,008,841 Other financing sources (uses): Transfers out - - (730,046) (730,046) Total other financing sources (uses) - - (730,046) (730,046) Net change in fund balance $ - $ - 1,278,795 $ 1,278,795 Fund balance, beginning of year 3,158,831 Fund balance, end of year $ 4,437,626 91

114 Public Art Special Revenue Fund Nonmajor Schedule of Revenue, Expenditures, and Changes in Fund Balances Budget and Actual Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenue: Charges for services $ 241,500 $ 241,500 $ 239,473 $ (2,027) Interest and other ,057 34,057 Total revenue 241, , ,530 32,030 Expenditures: Capital Outlay 241, ,745 66, ,759 Total expenditures 241, ,745 66, ,759 Excess of revenue over expenditures $ - $ (123,245) 206,544 $ 329,789 Fund balance, beginning of year 364,463 Fund balance, end of year $ 571,007 92

115 Conference Center Special Revenue Fund Nonmajor Schedule of Revenue, Expenditures, and Changes in Fund Balances Budget and Actual Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) Revenue: Conference Center $ 180,000 $ 180,000 $ 158,803 $ (21,197) Interest and other ,217 31,217 Total revenue 180, , ,020 10,020 Expenditures: Capital Outlay 180, ,000 7, ,136 Total expenditures 180, ,000 7, ,136 Excess of revenue over expenditures , ,156 Net change in fund balance $ - $ - 182,156 $ 182,156 Fund balance, beginning of year 442,385 Fund balance, end of year $ 624,541 93

116 Water and Sewer Fund Schedule of Revenue and Expenses (Budgetary Basis) Compared to Budget Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Operating revenue: Water sales $ 6,554,875 $ 6,554,875 $ 6,398,806 $ (156,069) Sewer service charge 8,186,675 8,186,675 7,984,460 (202,215) Charges for services 75,000 75, ,749 50,749 Total operating revenue 14,816,550 14,816,550 14,509,015 (307,535) Operating expenses: Wastewater treatment 4,122,979 4,122,979 4,156,962 (33,983) Water treatment 2,558,638 2,559,222 2,450, ,702 Water distribution 839, , , ,783 Wastewater collection 1,046,326 1,046, ,746 72,580 Administration 2,359,529 2,359,529 2,254, ,151 Insurance expense 729, , ,085 - Renewal and replacement 75,000 75,000 75,000 - Capital replacement 60,000 60,000 28,707 31,293 Total operating expenses 11,790,575 11,791,159 11,398, ,526 Operating income 3,025,975 3,025,391 3,110,382 84,991 Nonoperating revenue (expenses): Interest income 100, , ,741 16,741 Meter sales 50,000 50,000 11,805 (38,195) Debt service (2,774,850) (2,774,850) (669,961) 2,104,889 Trustee fees (15,000) (15,000) (6,940) 8,060 Total nonoperating revenue (expenses) (2,639,850) (2,639,850) (548,355) 2,091,495 Excess of revenue over expenses $ 386,125 $ 385,541 $ 2,562,027 $ 2,176,486 The above schedule reflects certain adjustments to actual revenue and expenses to present data on a basis comparable to adopted budget. 94

117 Coral Springs Center for the Arts Fund Schedule of Revenue and Expenses (Budgetary Basis) Compared to Budget Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Operating revenue: Coral Springs Center for the Arts $ 245,000 $ 245,000 $ 86,969 $ (158,031) Operating expenses: Operating and program costs 623, , , ,693 Nondepartmental 180, , ,227 22,773 Total operating expenses 803, , , ,466 Operating loss (558,000) (558,000) (476,565) 81,435 Nonoperating revenue: Transfers in 558, , ,000 - Excess of revenue over expenses $ - $ - $ 81,435 $ 81,435 The above schedule reflects certain adjustments to actual revenue and expenses to present data on a basis comparable to adopted budget. 95

118 Internal Service Funds Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and other government units, on a cost reimbursement basis. Self-Insurance Fund to account for the costs of insuring the City in the areas of general liability, auto liability, property, life and medical benefits, and workers compensation. The City is primarily selfinsured in these areas. Other funds are billed to cover actual premium costs claims and to maintain an adequate balance in fund equity. Equipment Services Fund to account for the costs of operating a maintenance facility for City vehicles. Other departments are billed to cover operating costs, including insurance and depreciation on the vehicles, and to provide for future replacement of the vehicles. New vehicles are initially purchased by the user departments and contributed to the Equipment Services Fund. 96

119 Internal Service Funds Combining Statement of Net Assets September 30, 2007 Self- Equipment Assets Insurance Fund Services Fund Total Current Assets Cash and cash equivalents $ 2,694,430 $ 4,292,119 $ 6,986,549 Investments 3,772,477 5,970,844 9,743,321 Interest receivable 38,422 60,813 99,235 Accounts receivable, net 19 5,418 5,437 Total current assets 6,505,348 10,329,194 16,834,542 Noncurrent assets Capital assets, net - 8,521,229 8,521,229 Total assets 6,505,348 18,850,423 25,355,771 Liabilities and Net Assets Current Liabilities Accounts payable and accrued liabilities 82, , ,252 Compensated absences 11,748 53,145 64,893 Accrued liability for estimated claims 3,179,928-3,179,928 Total current liabilities 3,274, ,659 3,837,073 Noncurrent liabilities: Revenue bonds payable - 1,478,590 1,478,590 Total liabilities 3,274,414 2,041,249 5,315,663 Net assets: Invested in capital assets, net of related debt - 7,042,639 7,042,639 Unrestricted 3,230,934 9,766,535 12,997,469 Total net assets $ 3,230,934 $ 16,809,174 $ 20,040,108 97

120 Internal Service Funds Combining Statement of Revenue, Expenses and Changes in Fund Net Assets Fiscal Year Ended September 30, 2007 Self- Equipment Insurance Fund Services Fund Total Operating revenue: Charges for services $ 11,509,049 $ 5,514,921 $ 17,023,970 Other revenue 1,101,423 42,380 1,143,803 Total operating revenue 12,610,472 5,557,301 18,167,773 Operating expenses: Operating and program costs - 1,115,858 1,115,858 Administration 1,172,254 1,429,025 2,601,279 Depreciation - 2,042,669 2,042,669 Insurance claims, net of recoveries 7,585,324-7,585,324 Insurance premiums 3,068,311-3,068,311 Total operating expenses 11,825,889 4,587,552 16,413,441 Operating income (loss) 784, ,749 1,754,332 Nonoperating revenue (expenses): Interest income 384, , ,343 Gain on disposal of capital assets - 24,195 24,195 Total nonoperating revenue (expenses), net 384, , ,538 Income before contributions and transfers 1,169,297 1,506,573 2,675,870 Capital contributions - 896, ,511 Transfers in - 35,275 35,275 Transfers out (2,912,500) (63,669) (2,976,169) Change in net assets (1,743,203) 2,374, ,487 Net assets, beginning of year 4,974,137 14,434,484 19,408,621 Net assets, end of year $ 3,230,934 $ 16,809,174 $ 20,040,108 98

121 Internal Service Funds Combining Statement of Cash Flows Fiscal Year Ended September 30, 2007 Self- Equipment Insurance Fund Services Fund Total Cash Flows From Operating Activities Receipts from other funds $ 11,509,049 $ 5,557,301 $ 17,066,350 Receipts from employees and other sources 871, ,875 Payments to suppliers for goods and services (4,016,863) (1,033,617) (5,050,480) Payments for claims (7,351,750) - (7,351,750) Payments to employees for services (186,937) (1,119,031) (1,305,968) Net cash provided by operating activities 825,374 3,404,653 4,230,027 Cash Flows From Noncapital Financing Activities: Transfer from other funds - 35,275 35,275 Transfer to other funds (2,912,500) (63,669) (2,976,169) Net cash used in noncapital financing activities (2,912,500) (28,394) (2,940,894) Cash Flows From Capital and Related Financing Activities Acquisition and construction of capital assets - (2,444,860) (2,444,860) Proceeds from sale of capital assets - 24,195 24,195 Net cash used in capital and related financing activities - (2,420,665) (2,420,665) Cash Flows From Investing Activities Interest received 386, , ,468 Proceeds from sale of investments 3,120,028 2,406,536 5,526,564 Purchase of investments (2,062,079) (3,264,959) (5,327,038) Net cash provided by (used in) investing activities 1,444,788 (345,794) 1,098,994 Net increase (decrease) in cash and cash equivalents (642,338) 609,800 (32,538) Cash and cash equivalents, beginning of year 3,336,768 3,682,319 7,019,087 Cash and cash equivalents, end of year $ 2,694,430 $ 4,292,119 $ 6,986,549 (Continued) 99

122 Internal Service Funds Combining Statement of Cash Flows (Continued) Fiscal Year Ended September 30, 2007 Self- Equipment Insurance Fund Services Fund Total Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ 784,583 $ 969,749 $ 1,754,332 Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation - 2,042,669 2,042,669 Changes in assets and liabilities: Decrease in accounts receivable 21,026 35,582 56,608 Increase in accounts payable 35, , ,696 Decrease in accrued liability for estimated claims (17,000) - (17,000) Increase (decrease) in compensated absences 1,148 (7,426) (6,278) Total adjustments 40,791 2,434,904 2,475,695 Net cash provided by operating activities $ 825,374 $ 3,404,653 $ 4,230,027 Noncash investing and capital financing activities: Decrease in fair value of investments that are not cash equivalents: Unrealized losses on investments $ (98,653) $ (130,968) $ (229,621) Purchases of equipment by the following sources totaling $896,511 were received by the Equipment Services Fund: General Fund - 3,463 3,463 Nonmajor funds - 893, ,048 $ - $ 896,511 $ 896,

123 Self-Insurance Fund Schedule of Revenue and Expenses (Budgetary Basis) Compared to Budget Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Operating revenue: Charges for services: General Fund $ 8,808,907 $ 8,808,907 $ 8,808,907 $ - Water and Sewer Fund 1,147,444 1,147,444 1,147,444 - Equipment Services Fund 187, , ,205 - Self-Insurance Fund 15,768 15,768 15,768 - Health Fund 1,783 1,783 1,783 - Fire Fund 1,309,442 1,309,442 1,347,942 38,500 Other revenue 874, ,865 1,101, ,558 Interest 162, , , ,964 Total operating revenue 12,508,164 12,508,164 12,995, ,022 Operating expenses: Life, health and dental 9,292,580 9,292,580 8,360, ,981 Property 2,007,084 2,007,084 2,298,924 (291,840) Casualty 183, , ,680 7,320 Workers compensation 1,025,500 1,025, ,686 34,814 Total operating expenses 12,508,164 12,508,164 11,825, ,275 Excess of revenue over (under) expenses $ - $ - $ 1,169,297 $ 1,169,297 The above schedule reflects certain adjustments to actual revenue and expense to present data on a basis comparable to the adopted budget. 101

124 Equipment Services Fund Schedule of Revenue and Expenses (Budgetary Basis) Compared to Budget Fiscal Year Ended September 30, 2007 Variance with Final Budget Budgeted Amounts Actual Positive Original Final Amounts (Negative) Operating revenue: Charges for services $ 5,514,921 $ 5,514,921 $ 5,514,921 $ - Interest 160, , , ,629 Other revenue 3,029,600 3,029,600 42,380 (2,987,220) Total operating revenue 8,704,521 8,704,521 6,069,930 (2,634,591) Operating expenses: Personal services 1,107,561 1,107,561 1,068,989 38,572 Current expenses 1,995,368 1,995,368 1,429, ,342 Depreciation expense 2,756,250 2,756,250 2,042, ,581 Equipment purchases 2,761,021 2,761,021 46,868 2,714,153 GIC contributions 84,321 84,321-84,321 Total operating expenses 8,704,521 8,704,521 4,587,552 4,116,969 Excess of revenue over expenses $ - $ - $ 1,482,378 $ 1,482,378 The above schedule reflects certain adjustments to actual revenue and expenses to present data on a basis comparable to adopted budget. 102

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126 Fiduciary Funds Fiduciary Funds are used to account for assets held by the City in a trustee capacity or as an agent on behalf of others. General Employees, Police Officers and Firefighters Pension Trust Funds to account for the accumulation of resources to be used for retirement benefit payments to the City s employees and Commissioners. Resources are contributed by the employees at rates fixed by law and by the City at amounts determined by annual actuarial valuations. City Commission and Volunteer Firefighters Pension Trust Funds to account for the accumulation of resources to be used for retirement benefit payments to city commissioners and volunteer firefighters. Resources are contributed by the City at rates fixed by the City. Defined Contribution Plans to account for the assets of six employee 401(a) plans for which the City acts as an agent on behalf of plan participants. 103

127 Fiduciary Funds Combining Statement of Net Assets September 30, 2007 General Police City Volunteer Employees Officers Firefighters Commission Firefighters Assets Pension Pension Pension Pension Pension Assets: Pooled cash and cash equivalents $ 127,422 $ 2,437,837 $ 211,437 $ 28,546 $ 423,086 Pooled investments , ,561 Government securities 2,330,924 17,524, Bonds 778,958 8,400, Common stock 3,413,037 60,234, Mutual funds ,716, ,742 Pending trades - 18, Contributions receivable 153, , , Interest receivable 47, ,146 17, ,938 Other assets Total assets 6,851,651 89,232,355 16,482,734 68,660 1,548,327 Liabilities: Accounts payable and accrued liabilities - 120, , Pending trades - 74, Total liabilities - 195, , Net assets held in trust for pension benefits $ 6,851,651 $ 89,036,597 $ 16,308,271 $ 68,660 $ 1,548,

128 General General Employees Employees Management Management Management 401 (a) Plan 401 (a) Plan 401 (a) Plan 401 (a) Plan 401 (a) Plan City Manager 6% 8% 0% 5% 10% 401 (a) Plan Total $ - $ - $ - $ - $ - $ - $ 3,228, , ,855, ,179, ,647,821 7,969,753 25,759,686 3,903,498 1,568,267 5,271, ,009 61,431, , , , , ,823 6,560 13,819 17,351-1,370,681 8,400,881 26,661,509 3,910,058 1,582,086 5,288, , ,740, , , ,221 $ 8,400,881 $ 26,661,509 $ 3,910,058 $ 1,582,086 $ 5,288,890 $ 713,009 $ 160,369,

129 Fiduciary Funds Combining Statement of Changes in Net Assets Fiscal Year Ended September 30, 2007 General Police City Volunteer Employees Officers Firefighters Commission Firefighters Pension Pension Pension Pension Pension Additions: Employee contribution $ 47,254 $ 1,193,996 $ 791,944 $ - $ - Employer contribution 253,817 4,507,773 1,500,000 16,969 - Rollover State contribution - 892,476 1,166, Total contributions 301,071 6,594,245 3,458,416 16,969 - Investment income 257,467 2,169, ,266 2, ,838 Net appreciation (depreciation) in fair value of investments 518,927 6,994,151 1,355, ,068 Other income - 21,080 8, ,394 9,184,283 1,892,928 3, ,906 Less investment expense - (562,093) (16,204) - - Net investment income 776,394 8,622,190 1,876,724 3, ,906 Total additions 1,077,465 15,216,435 5,335,140 20, ,906 Deductions: Benefit payments 658,691 3,541,420 24,033 10,800 - Refunds - 51,956 42, Loan defaults Administrative expenses 67,980 5,472 47,840-1,268 DROP payments and other - 1,674, Total deductions 726,671 5,273, ,578 10,800 1,268 Net increase (decrease) in plan net assets 350,794 9,942,690 5,220,562 9, ,638 Net assets held in trust for pension benefits, beginning of year 6,500,857 79,093,907 11,087,709 59,438 1,412,689 Net assets held in trust for pension benefits, end of year $ 6,851,651 $ 89,036,597 $ 16,308,271 $ 68,660 $ 1,548,

130 General General Employees Employees Management Management Management 401 (a) Plan 401 (a) Plan 401 (a) Plan 401 (a) Plan 401 (a) Plan City Manager 6% 8% 0% 5% 10% 401 (a) Plan Total $ 241,471 $ 961,432 $ - $ 28,210 $ 177,781 $ 10,558 $ 3,452, , , ,862 71, ,693 42,233 7,951, , ,218 1,050 50, , ,058, ,728 2,112, , , ,086 52,791 14,065, ,296 3,043, , , ,402 90,578 8,394,636 32,249 72, ,988, , ,545 3,115, , , ,402 90,578 17,412, (578,297) 951,545 3,115, , , ,402 90,578 16,834,216 1,505,273 5,227, , ,541 1,117, ,369 30,899, ,785 1,846, , ,688-7,119, ,661 56, , (538) - 171,928 3,811 7, , ,674, ,296 1,969, , , ,195, ,977 3,258, , , , ,355 21,704,193 7,493,904 23,403,226 3,258,024 1,305,668 4,480, , ,665,746 $ 8,400,881 $ 26,661,509 $ 3,910,058 $ 1,582,086 $ 5,288,890 $ 713,009 $ 160,369,

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133 CITY OF CORAL SPRINGS, FLORIDA Index Statistical Section This part of the City of Coral Springs comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the City s financial performance and well-being have changed over time. Page Net Assets by Component 108 Changes in Net Assets Fund Balances, Governmental Funds Changes in Fund Balances, Governmental Funds 113 Tax Revenues by Source, Governmental Funds 114 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City s ability to generate its property taxes. Total taxable assessed value as a percentage of estimated total fair market value Direct and Overlapping Property Tax Rates Principal Property Taxpayers 119 Property Tax Levies and Collections 120 Water Sold by Type of Customer 121 Water and Sewer Rates 122

134 Debt Capacity These schedules present information to help the reader assess the affordability of the City s current levels of outstanding debt and the City s ability to issue additional debt in the future. Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding 125 Direct and Overlapping Governmental Activities Debt 126 Legal Debt Margin Information 127 Pledged-Revenue Coverage 128 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City s financial activities take place and to help make comparisons over time and with other governments. Demographic and Economic Statistics 129 Principal Employers 130 Operating Information These schedules contain information about the City s operations and resources to help the reader understand how the City s financial information relates to the services the City provides and the activities it performs. Full-Time Equivalent City Government Employees by Function 131 Operating Indicators by Function 132 Capital Asset Statistics by Function 133 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented Statement 34 in fiscal year 2003; schedules presenting governmentwide information include information beginning that year.

135 Table 1 Net Assets by Component Last Five Fiscal Years (Accrual Basis of Accounting) Governmental activities Invested in capital assets, net of related debt $ 84,257,672 $ 76,644,662 $ 65,581,508 $ 77,193,728 $ 73,895,642 Restricted 8,543,612 9,327,518 8,075,966 16,467,944 15,702,018 Unrestricted 98,673,694 88,195,532 93,040,497 60,365,221 51,655,636 Total governmental activities net assets $ 191,474,978 $ 174,167,712 $ 166,697,971 $ 154,026,893 $ 141,253,296 Business-type activities Invested in capital assets, net of related debt $ 29,506,435 $ 27,086,153 $ 26,005,058 $ 25,675,482 24,690,181 Restricted 500, , , ,000 - Unrestricted 5,552,482 7,187,763 8,758,924 9,842,195 13,350,965 Total business-type activities net assets $ 35,558,917 $ 34,773,916 $ 35,263,982 $ 36,017,677 $ 38,041,146 Primary government Invested in capital assets, net of related debt $ 113,764,107 $ 103,730,815 $ 91,586,566 $ 102,869,210 $ 98,585,823 Restricted 9,043,612 9,827,518 8,575,966 16,967,944 15,702,018 Unrestricted 104,226,176 95,383, ,799,421 70,207,416 65,006,601 Total primary government net assets $ 227,033,895 $ 208,941,628 $ 201,961,953 $ 190,044,570 $ 179,294,442 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year Source: City of Coral Springs, Financial Services Department 108

136 Changes in Net Assets Last Five Fiscal Years (Accrual Basis of Accounting) Expenses Governmental activities: General government $ 14,808,284 $ 44,308,179 $ 13,464,797 $ 11,794,349 $ 11,285,289 Police 33,394,504 33,690,873 31,320,674 29,952,962 28,246,092 Fire 19,782,039 17,178,547 15,230,961 12,790,616 11,795,738 Parks and recreation 14,730,150 15,100,850 14,890,015 13,806,972 11,699,451 Public works 7,869,622 6,579,290 6,563,314 7,276,328 8,104,466 Development services 6,767,514 6,700,607 6,685,116 5,419,544 5,132,494 Educational and cultural programs 11,844,858 10,825,111 9,926,377 9,716,901 8,657,583 Conference center 237, ,351 49, , ,977 Interest on long-term debt 3,372,463 2,678,772 2,019,479 2,204,449 2,440,420 Total governmental activities expenses 112,807, ,176, ,149,849 93,321,898 87,679,510 Business-type activities: Water 5,029,745 5,471,372 5,807,896 5,844,110 5,484,106 Sewer 9,602,467 8,813,064 8,478,861 7,761,899 7,358,306 Center for the Arts 1,132,081 1,155,067 1,174,767 1,218,066 1,359,357 Total business-type activities expenses 15,764,293 15,439,503 15,461,524 14,824,075 14,201,769 Total primary government expenses $ 128,571,494 $ 152,616,083 $ 115,611,373 $ 108,145,973 $ 101,881,279 Program Revenues Governmental activities: Charges for services: General government $ 2,481,062 $ 2,247,736 $ 2,170,968 $ 1,900,250 $ 1,689,844 Police 2,592,045 2,646,184 2,598,602 2,465,333 2,593,703 Fire 13,945,223 11,732,599 11,960,543 9,673,496 3,149,033 Parks and recreation 3,704,218 3,392,903 3,487,017 3,204,897 3,267,455 Public works 2,025 1, , , ,326 Development services 5,877,633 5,240,817 4,254,016 3,363,595 3,383,749 Educational and cultural programs 1,539,473 1,573,373 1,216,007 1,200,000 1,276,603 Conference center 158, ,704 46, , ,847 Operating grants and contributions 12,842,420 34,729, ,632 2,667, ,657 Capital grants and contributions 2,022, ,046 1,889,118 2,298, ,080 Total governmental activities program revenues $ 45,165,879 $ 62,611,422 $ 28,555,493 $ 27,673,175 $ 17,086,297 (Continued) 109

137 Table 2 Changes in Net Assets (Continued) Last Five Fiscal Years (Accrual Basis of Accounting) Business-type activities: Charges for services: Water $ 6,442,345 $ 6,440,241 $ 6,501,590 $ 6,345,275 $ 6,372,548 Sewer 8,047,335 8,045,022 8,084,162 7,974,391 7,853,329 Center for the Arts 86, , , ,475 Capital grants and contributions 333, , Total business-type activities program revenues 14,910,001 15,075,410 14,585,752 14,525,814 14,458,352 Total primary government program revenues $ 60,075,880 $ 77,686,832 $ 43,141,245 $ 42,198,989 $ 31,544,649 Net (Expense)/Revenue Governmental activities (67,641,322) (74,565,158) (71,594,356) (65,648,723) (70,593,213) Business-type activities (854,292) (364,093) (875,772) (298,261) 256,583 Total primary government net expense $ (68,495,614) $ (74,929,251) $ (72,470,128) $ (65,946,984) $ (70,336,630) General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Ad valorem, levied for general purpose $ 35,411,380 $ 30,523,566 $ 27,055,409 $ 24,633,008 $ 22,495,054 Ad valorem, levied for debt service 1,954,367 1,981,503 2,743,518 2,630,997 3,038,915 Franchise taxes 10,419,429 10,257,379 8,610,108 8,211,651 7,867,761 Utility taxes 8,904,088 8,975,176 8,672,235 8,409,569 8,457,976 Communication taxes 5,840,490 6,003,003 5,778,167 5,869,425 6,019,213 Gas taxes 2,362,796 2,401,713 2,376,521 2,358,100 2,292,054 Special assessments ,692,800 Intergovernmental not restricted to specific programs 13,436,207 15,851,806 23,955,098 20,727,136 19,394,528 Investment income 6,024,655 3,844,867 2,241,145 1,436,064 2,322,024 Miscellaneous 1,117,901 1,183,791 2,590,042 1,155,017 1,261,521 Capital contributions not restricted to specific programs , ,771 Transfers (522,725) 1,012, ,494 2,543,052 1,345,000 Total governmental activities 84,948,588 82,034,899 84,365,737 78,422,320 79,931,617 Business-type activities: Intergovernmental 770, Investment income 341, , , , ,401 Miscellaneous 4, , , , ,064 Capital contributions not restricted to specific programs ,625 58,535 5,166 Transfers 522,725 (1,012,095) (343,494) (2,543,052) (1,345,000) Total business-type activities 1,639,293 (125,973) 122,077 (1,725,208) (214,369) Total primary government $ 86,587,881 $ 81,908,926 $ 84,487,814 $ 76,697,112 $ 79,717,248 Change in Net Assets Governmental activities $ 17,307,266 $ 7,469,741 $ 12,771,381 $ 12,773,597 $ 9,338,404 Business-type activities 785,001 (490,066) (753,695) (2,023,469) 42,214 Total primary government $ 18,092,267 $ 6,979,675 $ 12,017,686 $ 10,750,128 $ 9,380,618 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year Source: City of Coral Springs, Financial Services Department 110

138 Fund Balances, Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) General Fund Reserved $ 672,021 $ 902,239 $ 856,872 $ 863,277 $ 5,010,126 Unreserved 42,497,325 30,410,538 37,476,236 31,944,400 24,706,811 Total general fund $ 43,169,346 $ 31,312,777 $ 38,333,108 $ 32,807,677 $ 29,716,937 All Other Governmental Funds Reserved $ 510,068 $ 9,563,801 $ 14,201,821 $ 12,463,285 $ 16,563,739 Unreserved, reported in: Special revenue funds 9,937,607 12,325,932 11,491,339 8,335,536 8,057,598 Capital project funds 25,790,901 11,740,498 8,696,339 11,709,137 12,198,129 Debt service fund 8,940,372-1,365, Total all other governmental funds $ 45,178,948 $ 33,630,231 $ 35,754,499 $ 32,507,958 $ 36,819,466 Source: City of Coral Springs, Financial Services Department 111

139 Table $ 2,530,130 $ 1,696,467 $ 5,061,966 $ 374,720 $ 221,225 23,634,624 21,212,073 11,722,828 15,421,045 19,093,751 $ 26,164,754 $ 22,908,540 $ 16,784,794 $ 15,795,765 $ 19,314,976 $ 12,466,700 $ 10,345,278 $ 6,287,626 $ 8,557,328 $ 4,184,216 7,996,270 6,139,624 3,072,199 4,930,535 2,138,657 7,160,134 13,116,924 13,981,098 10,031,945 29,758, $ 27,623,104 $ 29,601,826 $ 23,340,923 $ 23,519,808 $ 36,081,

140 Table 4 Changes in Fund Balances, Governmental Funds Last Five Fiscal Years (Modified Accrual Basis of Accounting) Revenues Ad valorem taxes $ 37,365,747 $ 32,505,069 $ 29,798,927 $ 27,264,005 $ 25,533,968 Franchise fees 10,419,429 10,257,379 8,610,108 8,211,651 7,867,761 Utility taxes 8,904,088 8,975,176 8,672,235 8,409,569 8,457,976 Intergovernmental 39,769,789 55,039,704 36,280,806 30,866,827 28,504,080 Non ad valorem special assessment 6,099,446 5,666,355 5,505,110 5,002,346 4,692,800 Licenses and permits 5,370,595 4,565,124 3,665,701 2,924,165 2,990,747 Charges for services 15,464,201 11,717,550 13,297,356 10,398,821 9,647,316 Fines and forfeitures 2,012,233 2,361,470 2,176,921 2,009,056 1,979,682 Interest and other 7,648,194 5,755,681 5,017,966 4,014,057 4,976,631 Total revenues 133,053, ,843, ,025,130 99,100,497 94,650,961 Expenditures General government 14,750,179 44,264,767 13,253,042 11,339,517 12,379,899 Police 36,928,923 35,645,602 33,258,999 31,534,320 28,972,359 Fire 21,410,822 21,951,568 16,500,253 12,786,961 11,613,896 Parks and recreation 14,208,445 14,632,633 14,212,386 18,967,450 13,696,133 Public works 6,827,409 6,232,644 6,153,134 7,217,499 5,150,112 Development services 6,285,417 6,225,832 5,033,918 4,678,905 4,879,339 Educational and cultural programs 13,507,375 10,710,113 9,517,951 9,783,320 8,685,028 Capital outlay 2,342, ,051 1,529,685 1,186, ,286 Debt service 2,948,944 Principal 2,725,000 3,725,000 3,998,434 3,340,000 2,430,890 Interest 3,434,583 2,670,994 2,229,113 2,150, ,500 Bond issuance costs ,546 Total expenditures 122,420, ,998, ,686, ,984,485 91,851,932 Excess (deficiency) of revenues over (under) expenditures 10,632,855 (10,154,696) 7,338,215 (3,883,988) 2,799,029 Other Financing Sources (Uses) Debt proceeds 13,500, ,875,000 Refunding bonds issues ,960,000-7,382,696 Premium received (discount paid) (95,747) - 173, Closing costs provided , Other financing sources , Payment to refunded bond escrow agent - - (32,338,308) - (7,344,799) Refunding bond issuance costs - - (165,025) - - Sale of assets - - 1,535, Transfers in 13,579,238 12,971,256 15,506,168 13,015,069 30,948,538 Transfers out (11,161,069) (11,961,159) (15,408,498) (10,351,849) (29,911,919) Total other financing sources (uses) 15,822,422 1,010,097 1,534,060 2,663,220 9,949,516 Net change in fund balances $ 26,455,277 $ (9,144,599) $ 8,872,275 $ (1,220,768) $ 12,748,545 Debt service as a percentage of noncapital expenditures 5.5% 5.0% 6.0% 5.4% 6.2% Note: Information for fiscal years 1998 to 2002 is unavailable. Source: City of Coral Springs, Financial Services Department 113

141 Table 5 Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Property Franchise Utility Public Service Fiscal Year Taxes Fees Taxes Fees 1998 $ 16,262,607 $ 6,850,767 $ 10,311,528 $ 267, ,664,361 6,651,410 10,738, , ,375,830 7,685,070 11,540, ,172,868 8,495,246 12,184, ,037,671 7,291,450 8,111, ,533,968 7,867,761 8,457, ,264,005 8,211,651 8,409, ,798,927 8,610,108 8,672, ,505,069 10,257,379 8,975, ,365,747 10,419,429 8,904,088 - Change % 52.1% (13.6)% -(100.0)% Source: City of Coral Springs, Financial Services Department 114

142 Total Taxable Assessed Value as a Percentage of Estimated Total Fair Market Value Last Ten Fiscal Years Just Value Less: Total Taxable Real Personal Tax-Exempt Assessed Fiscal Year Tax Year Property Property Property Value (1) $ 4,665,831,890 $ 254,809,313 $ 753,783,238 $ 4,166,857, ,017,696, ,039, ,765,236 4,460,970, ,310,761, ,299, ,268,635 4,753,792, ,789,284, ,425, ,692,286 5,176,018, ,447,844, ,048,697 1,180,986,822 5,604,905, ,356,877, ,441,476 1,609,663,592 6,106,655, ,527,616, ,888,668 2,191,749,433 6,692,755, ,554,606, ,784,420 2,629,617,224 7,286,774, ,305,867, ,562,433 3,440,590,241 8,243,839, ,203,814, ,966,915 5,080,936,457 9,505,845,128 Note: Tax Roll Ad Valorem Assessments are determined as of January 1st for each ensuing fiscal year. Per Florida State Statutes property must be assessed at 100% of Market Value; Just Value is Market Value less reasonable fees and costs of purchase, etc. for Real Property. For Personal Property figures assumes on average the Assessed Value has been depreciated 45% from the cost net. (1) Figures As of November (DR-403) versus previous July 1st DR-420; The Prior Year's Final Gross Taxable Value appears (Line 7) on the next Tax Year's DR-420. The Difference between Total Taxable Assessed Value and Final Gross Taxable Value is Value Adjustment Board (VAB) Changes. (2) Total Direct Tax Rate is the sum of the City's Operating and Debt Millage Rates. (3) Estimated Total Fair Market Value figures based on Real Property assessed on average at 88% and Personal Property at 55%. Source: Broward County, Florida Property Appraiser- Form DR-403 (Revised Recapitulation of the Ad Valorem Assessment Rolls For Coral Springs) 115

143 Table 6 Total Taxable Assessed Value Total Estimated As A Percentage Of Direct Tax Total Fair Estimated Total Rate (2) Market Value (3) Fair Market Value $ $ 5,765,371, % ,176,544, % ,586,410, % ,195,870, % ,941,729, % ,013,617, % ,339,361, % ,515,297, % ,535,871, % ,837,001, % 116

144 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years City of Coral Springs County Debt Total Debt Total Operating Service City Operating Service County Fiscal Year Millage Millage Millage Millage Millage Millage (1) (1) Increase is due to decision by the Fourth District Court of Appeals that has caused the City to move the cost of the EMS Division from the Fire Rescue Fund into the General Fund. No increase to the prior year's millage rate would have been necessary without this change. Source: Broward County, Florida Property Appraiser. 117

145 Table 7 Overlapping Rates School District North South Florida Florida Total Debt Total Broward Water Inland Direct & Operating Service School Children's Hospital Management Navigation Overlapping Millage Millage Millage Services District District District Rates

146 Table 8 Principal Property Taxpayers Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Knickerbocker Properties Inc. $ 50,277, % $ - - Florida Power & Light 47,078, % 29,939, % Beach Hill Dev Coral Springs 40,016, % - - ERP Operating LP 38,709, % - - Cabot 30,213, % - - City National Bank of Florida 28,144, % - - Lake Pointe Trust Corp 25,785, % - - EQR Lincoln Village 24,452, % 16,531, % Royal Palm Dev Inc 20,072, % - - Harbor Inn of CS 19,966, % - - Coral-CS/LTD Associates ,774, % JPI Coral Springs LP ,580, % Southern Bell Telephone Co ,188, % Merry Land & Invest Co. Inc ,109, % United Dominion Realty Trust ,619, % Florida Sunrise Ltd ,423, % Olen Residential Realty Corp ,345, % AEW #69 Corporation ,837, % Total $ 324,716, % $ 274,351, % Source: Broward County, Florida Revenue Collector 119

147 Table 9 Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date for the Percentage in Subsequent Percentage Fiscal Year Fiscal Year Amount of Levy Years Amount of Levy 1998 $ 16,857,093 $ 16,807, % $ 21,128 $ 16,828, % ,446,519 18,398, % 19,668 18,417, % ,972,683 18,908, % 32,640 18,941, % ,074,075 23,006, % 35,432 23,041, % ,995,181 24,885, % 39,910 24,925, % ,530,345 26,440, % 38,624 26,478, % ,296,047 28,174, % 70,269 28,245, % ,839,629 30,754, % 42,348 30,796, % ,713,683 33,612, % 54,453 33,667, % ,573,689 38,479, % - 38,479, % Source: Broward County, Florida Revenue Collector 120

148 Table 10 Water Sold by Type of Customer Last Two Fiscal Years (In millions of gallons) Type of Customer Fiscal Year Fiscal Year Residential Single Family 1,028,989 1,047,724 Residential Multi-Family 817, ,086 Commercial 197, ,214 Irrigation 239, ,752 Public-private 60,385 68,414 Construction 2,400 1,350 Fire Hydrant 2, Total 2,348,525 2,479,252 Total direct rate per 1,000 gallons $ 0.93 $ 0.93 Note: The City began to report water sales information in fiscal year Source: City of Coral Springs, Financial Services Department 121

149 Table 11 Water and Sewer Rates Last Ten Fiscal Years Water Sewer Monthly Rate per Monthly Rate per Fiscal Year Base Rate 1,000 Gallons Base Rate 1,000 Gallons 1998 $ Note: Rates are based on 1" meter, which is the standard household meter size. Source: City of Coral Springs, Financial Services Department 122

150 Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities General General Obligation Revenue Obligation Refunding Revenue Refunding Capital Fiscal Year Bonds Bonds Bonds Bonds Leases 1998 $ 4,925,000 $ 23,320,000 $ 22,263,000 $ 41,860,000 $ 907, ,460,000 22,175,000 24,615,000 39,815, , ,975,000 20,870,000 31,675,001 31,110, , ,465,000 19,505,000 41,485,000 29,165, ,245,000 17,750,000 41,485,000 18,595, ,135,000 49,885,000 18,160, ,825,000 49,310,000 17,705, ,470,000 45,820,000 20,330, ,365,000 45,295,000 19,235, ,500,000 11,280,000 44,770,000 18,120,000 - Source: City of Coral Springs, Financial Services Department 123

151 Table 12 Business-Type Activities Revenue Total Percentage Revenue Refunding Primary of Personal Per Bonds Bonds Government Income Capita $ 55,000 $ 29,580,000 $ 122,910, % $ 1,147-28,250, ,869, % 1,073-26,850, ,661, % ,385, ,005, % ,600, ,675, % ,750, ,930, % ,790, ,630, % ,795,000 99,415, % ,750,000 93,645, % ,650, ,320, %

152 Table 13 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years General Bonded Debt Outstanding General Percentage of General Obligation Actual Taxable Obligation Refunding Value of Per Fiscal Year Bonds Bonds Total Property Capita 1998 $ 4,925,000 $ 23,320,000 $ 28,245, % $ ,460,000 22,175,000 26,635, % ,975,000 20,870,000 24,845, % ,465,000 19,505,000 22,970, % ,245,000 17,750,000 20,995, % ,135,000 19,135, % ,825,000 16,825, % ,470,000 14,470, % ,365,000 12,365, % ,500,000 11,280,000 24,780, % Source: City of Coral Springs, Financial Services Department 125

153 Table 14 Direct and Overlapping Governmental Activities Debt As of September 30, 2007 Estimated Share of Estimated Direct and Debt Percentage Overlapping Governmental Unit Outstanding Applicable Debt Broward County School Board $ 27,949, % $ 1,670,713 Broward County 532,535, % 31,974,260 Subtotal, overlapping debt 33,644,973 City direct debt 24,780,000 Total direct and overlapping debt $ 58,424,973 Sources: Assessed value data used to estimate applicable percentages provided by the Broward County, Florida Property Appraiser. Debt outstanding data provided by each governmental unit. 126

154 Table 15 Legal Debt Margin Information Last Ten Fiscal Years The charter of the City of Coral Springs does not impose a bonded debt limit. 127

155 Table 16 Pledged-Revenue Coverage Last Ten Fiscal Years Water and Sewer Revenue Bonds Less: Net Gross Operating Available Debt Service Fiscal Year Revenue (1) Expenses (2) Revenue Principal Interest Coverage 1998 $ 14,518,090 $ 8,638,917 $ 5,879,173 $ 1,235,000 $ 1,682, ,958,128 8,952,314 5,005,814 1,330,000 1,576, ,265,770 8,165,947 6,099,823 1,400,000 1,508, ,139,036 7,932,760 6,206,276 1,465,000 1,443, ,571,084 8,890,142 5,680,942 1,420,417 (3) 1,289, ,525,695 9,391,930 5,133,765 1,850, , ,465,989 10,210,715 4,255,274 1,960, , ,754,619 10,805,282 3,949,337 1,995, , ,804,941 10,823,808 3,981,133 2,045, , ,831,383 11,259,961 3,571,422 2,100, , (1) Includes operating revenue and interest income. (2) Includes other nonoperating expenses and excludes depreciation, interest, and amortization of bond issue costs and gainsharing. (3) Principal amount includes 11/12 of the principal on 1992 bond issuance which was refunded on July 1, Balance also includes $50,000 principal payment on 1998 issuance. 128

156 Table 17 Demographic and Economic Statistics Last Ten Fiscal Years Per Capita Fiscal Personal Personal Median School Unemployment Year Population (1) Income Income (2) Age (2) Enrollment (3) Rate (4) ,156 $ 2,799,879,124 $ 26, , % ,724 3,198,546,396 28, , % ,549 3,212,143,974 27, , % ,085 3,236,771,090 26, , % ,687 3,421,126,995 27, , % ,000 3,459,600,000 27, , % ,711 3,826,672,200 30, , % ,852 3,867,336,924 30, , % ,615 4,211,450,580 32, , % ,766 4,393,487,462 33, , % Source: (1) Bureau of Economic and Business Research (2) U.S. Bureau of Census ESRI (3) School of Broward County, Florida (4) State of Florida LAUS 129

157 Table 18 Principal Employers Current Year and Nine Years Ago Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Broward County Schools 2, % Walmart/Sam's Club 1, % Publix Supermarkets 1, % Alliance Entertainment 1, % Coral Springs Medical Center 1, % First Data % City of Coral Springs % Coral Springs Auto Mall % Macy's % Sears % Total 10, % - - Note: Information for 1998 is unavailable. Source: Coral Springs Economic Development Foundation. 130

158 Table 19 Full-Time Equivalent City Government Employees by Function Last Ten Fiscal Years Function General government Police Fire & EMS Parks and recreation Public works Development services Water and sewer Equipment services Other Total Source: City of Coral Springs, Financial Services Department 131

159 Table 20 Operating Indicators by Function Last Two Fiscal Years Fiscal Year Fiscal Year Function General government Building permits issued 16,535 15,103 Building inspections conducted 83,577 60,769 Police Physical arrests 3,134 3,155 Parking violations 5,303 3,908 Traffic violations 28,674 26,791 Fire Emergency responses 14,671 9,000 Fires extinguished Inspections 2,969 1,425 Public works Streets resurfacing (miles) 9 10 Potholes repaired Recreation and culture Athletic field permits issued 1,200 1,150 City centers admissions 162, ,000 Water Consumers 12,788 12,694 Water main breaks 7 7 Average daily consumption (thousands of gallons) 6,792 8,360 Sewer Average daily sewage treatment (thousands of gallons) 7,560 8,200 Transit Total route miles 84,000 70,800 Passengers 120, ,594 Note: The information for fiscal years is unavailable. Source: City of Coral Springs, Florida 132

160 Table 21 Capital Asset Statistics by Function Last Two Fiscal Years Fiscal Year Fiscal Year Function Police Stations 1 1 Substations 2 3 Patrol units Fire Stations 8 5 Public works Streets (lane miles) Streetlights Recreation and culture Parks Parks acres Playgrounds Playgrounds acres 3 3 Pools 7 7 Tennis courts Baseball/softball diamonds Soccer/football fields City centers 1 1 Community centers 3 3 Water Water mains (miles) Fire hydrants 1,500 1,500 Storage capacity (thousands of gallons) 16,000 16,000 Sewer Sanitary sewers (miles) Treatment capacity (thousands of gallons) 9,790 9,790 Transit Buses 2 2 Note: The information for fiscal years is unavailable. Source: City of Coral Springs, Florida 133

161 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 The Honorable Mayor, City Commission and City Manager City of Coral Springs, Florida: We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Coral Springs, Florida (the City ), as of and for the year ended September 30, 2007, which collectively comprise the City s basic financial statements and have issued our report thereon dated March 7, 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. Internal Control over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. 134

162 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the City Commission, federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. Fort Lauderdale, Florida March 7,

163 Independent Auditor s Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 The Honorable Mayor, City Commission and City Manager City of Coral Springs, Florida Compliance We have audited the compliance of the City of Coral Springs, Florida (the City ), with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, The City s major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City s management. Our responsibility is to express an opinion on the City s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City s compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City s compliance with those requirements. In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended September 30, The results of our auditing procedures disclosed an instance of noncompliance with those requirements that is required to be reported in accordance with OMB Circular A-133 and which is described in the accompanying Schedule of Findings and Questioned Costs as item CF Internal Control over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance but, not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. McGladrey & Pullen, LLP is a member firm of RSM International, an affiliation of separate and independent legal entities. 136