2013 Annual Financial ReportCITY OF SANGER, TEXAS
FINANCIAL REPORT
SEPTEMBER 30, 2013
C O N T E N T S
Page(s)
INDEPENDENT AUDITOR’S REPORT ........................................................................................ 1
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) .............................................. 3
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Position ............................................................................................... 15
Statement of Activities ..................................................................................................... 16
Fund Financial Statements
Governmental Funds
Balance Sheet ........................................................................................................... 17
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Position .................................................................................... 19
Statement of Revenues, Expenditures, and Changes in Fund Balances .................. 20
Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities ......................................................................................... 22
Proprietary Funds
Statement of Net Position .......................................................................................... 23
Statement of Revenues, Expenses and Changes in Fund Net Position ................... 24
Statement of Cash Flows .......................................................................................... 25
Notes to Basic Financial Statements .................................................................................... 27
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedule of Funding Progress for Participation in
Texas Municipal Retirement System ............................................................................. 50
Budgetary Comparison Schedule – General Fund ............................................................... 51
Notes to Budgetary Comparison Schedule – General Fund ................................................. 52
SUPPLEMENTARY INFORMATION (UNAUDITED)
Combining Schedule of Revenues and Expenses – Proprietary Fund by Department ......... 53
Analysis of Property Taxes Receivable ................................................................................. 55
AN INDEPENDENT MEMBER OF
BAKER TILLY INTERNATIONAL
WEAVER AND TIDWELL LLP
CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS
2821 WEST SEVENTH STREET, SUITE 700, FORT WORTH, TX 76107
P: 817.332.7905 F: 817.429.5936
1
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor Thomas Muir
and Members of the City Council
City of Sanger, Texas
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the
City of Sanger, Texas (the City) as of and for the year ended September 30, 2013, and the
related notes to the financial statements, which collectively comprise the City’s basic financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
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, each
major fund, and the aggregate remaining fund information of the City, as of September 30,
2013, and the respective changes in financial position and, where applicable, cash flows thereof
for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
To the Honorable Mayor Thomas Muir
and the Members of the City Council
City of Sanger, Texas
Page 2
2
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, the schedule of funding progress, and budgetary
comparison schedule on pages 3 through 12 and 48 through 49 be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board, who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management’s responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not
provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements as a whole.
The Combining Schedule of Revenues and Expenses – Proprietary Fund by Department and
Analysis of Property Taxes Receivable on pages 50 through 52 are presented for purposes of
additional analysis and are not a required part of the basic financial statements. This
information has not been subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, we do not express an opinion or provide any assurance
on them.
WEAVER AND TIDWELL, L.L.P.
Fort Worth, TX
March 3, 2014
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
3
The management of the City of Sanger offers readers of the financial statements this narrative
overview and analysis of the financial activities of the City of Sanger for the fiscal year ended
September 30, 2013. We encourage readers to consider the information presented here in
conjunction with the City’s financial statements and accompanying footnotes of this report.
FINANCIAL HIGHLIGHTS
The assets of the City of Sanger exceeded its liabilities at the close of the most recent
fiscal year by $24,367,796 (net position). Of this amount, $5,518,330 (unrestricted net
position) may be used to meet the government’s ongoing obligations to citizens and
creditors in accordance with the City’s fund designation and fiscal policies.
The City’s total capital assets decreased by $1,257,421. Capital additions were
$799,058 and depreciation expense was $2,056,479.
As of the close of the fiscal year, the City’s governmental funds reported combined
ending fund balances of $3,950,755.
The fund balance of the General Fund increased by $301,498 (39%) to $1,074,895 at
September 30, 2013.
OVERVIEW OF THE FINANCIAL STATEMENTS
The Management’s Discussion and Analysis is intended to serve as an introduction to the City
of Sanger’s basic financial statements. This annual report consists of three components:
(1) government-wide financial statements, (2) fund financial statements, and (3) notes to the
financial statements. This report contains other supplementary information in addition to the
basic financial statements themselves.
Government-wide 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 private-
sector business. The statements report information about the City as a whole using accounting
methods similar to those used by private-sector companies.
The Statement of Net Position includes all of the government’s assets and liabilities, with the
difference between the two being reported as net position. Over time, increases or decreases in
net position are an indicator as to whether the financial position of the City is improving or
deteriorating. To assess the overall health of the City, additional non-financial factors (such as
the City’s tax base) will need to be considered.
The Statement of Activities presents information on how the City’s net position changed during
the fiscal year. All of the current year’s revenues and expenses are accounted for in the
statement of activities regardless of when cash is received or paid. Thus, revenues and
expenses are reported in this statement for some items that will only result in cash flows in
future fiscal periods (e.g., uncollected taxes and earned, but not used vacation leave).
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
4
Both the Statement of Net Position and Statement of Activities are prepared using the accrual
basis of accounting as opposed to the modified accrual basis of accounting.
In its Statement of Net Position and Statement of Activities, the City of Sanger is divided
between two kinds of activities:
Governmental activities. Most of the City’s basic services are included here, such as
general government, public safety, streets, sanitation, and culture and recreation.
Property taxes, sales taxes, franchise fees, and charges for services finance most of
these activities.
Business-type activities. A fee is charged to customers by the City to cover the cost of
services it provides. The City’s utility systems (electric, water, and wastewater) activities
are reported here.
Fund Financial Statements. The fund financial statements provide more detailed information
about the City’s most significant funds and not the City as a whole. Funds are accounting
devices that the City uses to keep track of specific sources of funding and spending for
particular purposes.
Some funds are restricted by State law and by bond covenants.
The City Council establishes guidelines to control and manage money for particular
purposes or to show that it is properly using certain revenue resources.
The City has two categories of funds: governmental funds and proprietary funds.
Governmental funds. The City’s basic services are included in governmental funds,
which focus on cash and other financial assets that can readily be converted to cash
flow, as well as the balances left at year-end that are available for spending.
Consequently, the governmental fund statements provide a detailed short-term view that
helps determine whether there are more or fewer financial resources that can be spent
in the near future to finance the City’s programs. Because this information does not
encompass the additional long-term focus of the government-wide statements, additional
information is provided on the subsequent pages, explaining the relationship (or
differences) between them. The relationship or differences between governmental
activities (reported in the Statement of Net Position and the Statement of Activities) and
governmental funds is detailed in a reconciliation following the fund financial statements.
Proprietary funds (business-type funds). Services for which the City charges customers
a fee are generally reported in proprietary funds. Proprietary funds, like government-
wide statements, provide both short and long-term financial information. Proprietary
funds are reported in the same manner that all activities are reported in the Statement of
Net Position and the Statement of Activities.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
5
Major Features of the City of Sanger's Government-wide and Fund Financial Statements
Fund Statements
Government-wide
Governmental
Funds Proprietary Funds
Fiduciary
Funds
Scope Entire Agency's
government
(except fiduciary
funds) and the
Agency's
component units
The activities of the
City that are not
proprietary or
fiduciary
Activities the City
operates similar to
private business:
electric, water, and
wastewater utilities
Instances in
which the City
is the trustee or
agent for
someone else's
resources
Required
Financial
Statements
Statement of net
position
Balance Sheet Statement of net
position
Statement of
fiduciary net
position
Statement of
activities
Statement of
revenues,
expenditures and
changes in fund
balances
Statement of
revenues, expenses
and changes in fund
net position
Statement of
changes in
fiduciary net
position
Statement of cash
flows
Accounting basis
and measurement
focus
Accrual
accounting and
economic
resources focus
Modified accrual
accounting and
current financial
resources focus
Accrual accounting
and economic
resources focus
Accrual
accounting and
economic
resources focus
Type of
asset/liability
information
All assets and
liabilities, both
financial and
capital, short-term
and long-term
Only assets
expected to be used
up and liabilities
that come due
during the year or
soon thereafter; no
capital assets
included
All assets and
liabilities, both
financial and
capital, and short-
term and long-term
All assets and
liabilities, both
short-term and
long-term, the
City's funds do
not currently
contain capital
assets, although
they can
Type of
inflow/outflow
information
All revenues and
expenses during
year, regardless of
when cash is
received or paid
Revenues for which
cash is received
during or soon after
the end of the year;
expenditures when
goods or services
have been received
and payment is due
during the year or
soon thereafter
All revenues and
expenses during
year, regardless of
when cash is
received or paid
All revenues
and expenses
during year,
regardless of
when cash is
received or paid
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
6
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As of September 30, 2013, the City’s combined net position was $24,367,796, of which
$10,725,976 can be attributed to governmental activities and $13,641,820 attributed to
business-type activities. This analysis focuses on the net position (Table 1) and changes in net
position (Table 2) of the City’s governmental and business-type activities.
Net position
Net position at September 30, 2013, was $24,367,796, representing an increase of $1,256,571
in total net position of governmental and business-type activities. The largest portion of the
City’s net position reflects its investment in capital assets (e.g., land, building, machinery,
equipment, and infrastructure – streets, drainage, water, wastewater, and electric) less any
related debt used to acquire those 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, it
should be noted that 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.
Changes in Net position
Governmental activities increased the City’s net position by $709,187 and business-type
activities increased the City’s net position by $547,384, accounting for positive growth in
the government-wide net position in fiscal year ended September 30, 2013. The key
elements of these changes are contained in Table 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
7
Table 1 – Net position
2013 2012 2013 2012 2013 2012
Assets
Cash and cash equivalents 1,417,793$ 415,126$ 1,709,541$ 2,293,053$ 3,127,334$ 2,708,179$
Certificates of deposit 409,243 408,004 316,202 335,825 725,445 743,829
Accounts receivable, net 541,799 411,622 1,466,999 1,537,373 2,008,798 1,948,995
Inventories 446,969 433,508 446,969 433,508
Due from other funds 263,811 - 263,811
Restricted cash
and cash equivalents 2,216,131 1,735,949 7,666,873 2,623,570 9,883,004 4,359,519
Bond issuance costs, net 281,317 73,087 - 354,404
Capital assets, net of
accumulated depreciation 14,290,588 14,973,623 12,214,647 12,789,033 26,505,235 27,762,656
Total assets 18,875,554$ 18,489,452$ 23,821,231$ 20,085,449$ 42,696,785$ 38,574,901$
Deferred Outflows of Resources
Deferred refunding loss 29,831$ 33,743$ 67,151$ 75,958$ 96,982$ 109,701$
Liabilities
Accounts payable 329,263$ 272,746$ 808,238$ 581,313$ 1,137,501$ 854,059$
Customer deposits 337,603 315,761 337,603 315,761
Other liabilities 208,725 163,986 69,047 147,008 277,772 310,994
Due from other funds 263,811 - 263,811
Current portion long-term debt 716,472 725,695 748,233 700,908 1,464,705 1,426,603
Compensated absences 95,068 65,240 64,535 33,865 159,603 99,105
Long-term debt 6,829,881 6,981,779 8,218,906 4,924,811 15,048,787 11,906,590
Total liabilities 8,179,409$ 8,209,446$ 10,246,562$ 6,967,477$ 18,425,971$ 15,176,923$
Net position
Invested in capital assets 7,875,265$ 7,371,097$ 7,262,215$ 7,287,190$ 15,137,480$ 14,658,287$
Restricted for specific purpose 330,272 610,227 3,381,714 2,307,809 3,711,986 2,918,036
Unrestricted 2,520,439 2,332,425 2,997,891 3,598,941 5,518,330 5,931,366
Net position 10,725,976$ 10,313,749$ 13,641,820$ 13,193,940$ 24,367,796$ 23,507,689$
Governmental
Activities
Business-Type
Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
8
Table 2 – Changes in Net position
2013 2012 2013 2012 2013 2012
Revenues
Program Revenues:
Charges for services 1,469,430$ 1,511,279$ 10,553,808$ 10,740,154$ 12,023,238$ 12,251,433$
Grants and donations 219,727 500,000 219,727 500,000
General Revenues:
Taxes 4,314,837 4,108,822 4,314,837 4,108,822
Licenses and permits 94,934 130,869 94,934 130,869
Investment earnings 4,013 16,826 15,630 32,902 19,643 49,728
Transfers 523,990 - (523,990) - - -
Miscellaneous 137,590 211,956 137,590 211,956
Gain (loss) on sale of assets 31,028 31,028 -
Total revenues 6,795,549 6,479,752 10,045,448 10,773,056 16,840,997 17,252,808
Expenses
General government 752,757 750,649 752,757 750,649
Police and animal control 1,578,347 1,503,327 1,578,347 1,503,327
Streets and sanitation 1,631,355 1,445,542 1,631,355 1,445,542
Fire and rescue 931,675 766,011 931,675 766,011
Court 202,327 209,333 202,327 209,333
Culture and recreation 681,730 493,541 681,730 493,541
Interest on long-term debt 308,171 340,136 217,588 308,171 557,724
Proprietary expenses 9,498,064 8,850,008 9,498,064 8,850,008
Total expenses 6,086,362 5,508,539 9,498,064 9,067,596 15,584,426 14,576,135
Change in net assets 709,187 971,213 547,384 1,705,460 1,256,571 2,676,673
Adjustments (296,960) (99,504) (396,464) -
Beginning net assets 10,313,749 9,342,536 13,193,940 11,488,480 23,507,689 20,831,016
Ending net assets 10,725,976$ 10,313,749$ 13,641,820$ 13,193,940$ 24,367,796$ 23,507,689$
Governmental Business-Type
Activities Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
9
The City’s total revenues for the year ended September 30, 2013, were $16,840,997 with a
significant portion, 71%, of the City’s total revenue coming from charges for services, 15% from
property taxes, 8% from sales taxes, while 6% is obtained from the remaining revenue sources
(see Figure 1). Because Sanger owns an electric utility, revenues from charges for services are
a large percentage of overall revenues. Without the ownership of its electricity utility, the City’s
property tax rate would be approximately ten cents higher per $100 valuation than its current
rate in order to generate the same amount of operating revenue.
Governmental activities revenues total $6,795,549 for the year ended September 30, 2013, of
which $4,314,837 (63%) is attributed to taxes. Significant expenses for governmental activities
include police and animal control ($1,578,347), streets and sanitation ($1,631,355) and fire and
rescue ($931,675).
Business-type operating revenues decreased by $186,346 to $10,553,808 for the year ended
September 30, 2013, primarily due to a milder summer than the previous year fiscal year.
Business-type expenses increased by $430,468 to $9,498,064 in fiscal year ended
September 30, 2013 mainly due to increased water and electric system maintenance, new
groundwater permit fees and increased cost of transmission service fees.
Figure 1
Property Taxes
15%
Sales Taxes
8%
Other Taxes
3%
Charges for Services
71%
Other Income
3%
Revenue Sources
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
10
FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS
The City uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements.
Governmental Funds
The focus of the City’s governmental funds is to provide information on near-term inflows,
outflows, and balances of resources available to spend. This information is useful in assessing
the financial requirements of the City.
As of September 30, 2013, the City’s governmental funds reported a combined ending fund
balance of $3,950,755, an increase of $1,257,001 from the previous fiscal year’s balance of
$2,693,754. The increase in fund balance is primarily due to funding received for capital
improvements projects prior to incurring the related expenses. Of this fund balance, $1,074,895
constitutes unassigned fund balance, which is available for spending at the government’s
discretion. The remainder of the fund balance is restricted to indicate that it is not available for
new spending because it has already been committed to pay debt service ($359,564), complete
capital projects ($1,056,367), or enhance economic development ($1,459,929).
General Fund. The General Fund is the chief operating fund of the City. At September 30,
2013, the unassigned fund balance of the General Fund was $1,074,895, an increase of
$301,498 from the prior year. The increase is primarily due to transfers from the Enterprise
Fund of $200,000 (general budget transfer) and $180,000 (for purchase of the building from
Denton County).
Capital Projects Fund. The entire balance of the capital projects fund is restricted for capital
construction and acquisition. At September 30, 2013, the capital projects fund had a fund
balance of $1,056,367, an increase of $832,270 from 2012. The increase is primarily due to the
issuance of bonds for the Splash Park project and the transfer of bond reserve funds released
after the 2012 Refunding.
Debt Service Fund. The debt service fund has a total fund balance of $359,564 at
September 30, 2013, an increase of $8,669 over 2012.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
11
Proprietary Funds
The focus of proprietary funds is to provide information on both near-term and long-term inflows,
outflows, and balances of resources. The City’s proprietary fund provides the same type of
information found in the government-wide financial statements, but in more detail. Table 3
represents the cost of each of the City’s business-type activities as well as each function’s net
cost (total cost less fees generated by the activities and intergovernmental aid). The cost of
business-type activities for fiscal year ended September 30, 2013 was $9,237,150. The amount
of charges for services that the City’s tax payers paid for these activities was $10,553,808.
Excess funds are used by the City to help support the general fund, keeping the property tax
rate from increasing. Excess funds are also used to fund capital improvements.
Table 3 – Proprietary Fund Activities
% Change % Change
2013 2012 2013 2012
Water 1,318,162$ 1,064,019$ 23.89% 109,826$ 438,488$ -74.95%
Sewer 708,870 824,434 -14.02% 608,338 519,495 17.10%
Electric 6,467,866 6,307,713 2.54% 1,280,635 1,527,218 -16.15%
Other 742,252 653,842 13.52% (682,141) (595,055) 14.63%
Total 9,237,150$ 8,850,008$ 4.37% 1,316,658$ 1,890,146$ -30.34%
Total Operating Expenses Total Operating Income
Capital Asset and Debt Administration
Capital assets
The City’s investment in capital assets for its governmental and business-type activities as of
September 30, 2013, amounted to $26,505,235 (net of accumulated depreciation). This
investment in capital assets includes land, equipment, buildings, vehicles, streets, drainage,
water, wastewater, and electrical systems (see Table 4).
Table 4 – Capital Assets
2013 2012 2013 2012 2013 2012
Land 906,307$ 862,307$ 323,164$ 323,164$ 1,229,471$ 1,185,471$
Construction in progress 42,771 272,385 132,305 291,414 175,076 563,799
Infrastructure 10,919,425 10,550,634 22,411,107 22,112,636 33,330,532 32,663,270
Buildings and equipment 9,584,682 9,614,364 2,571,984 2,459,441 12,156,666 12,073,805
Total historical cost 21,453,185 21,299,690 25,438,560 25,186,655 46,891,745 46,486,345
Total accumulated depreciation (7,162,597) (6,326,067) (13,223,913) (12,397,622) (20,386,510) (18,723,689)
Net capital assets 14,290,588$ 14,973,623$ 12,214,647$ 12,789,033$ 26,505,235$ 27,762,656$
Governmental Business-Type
Activities Activities Total
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
12
Major capital asset events during the current fiscal year included the following assets purchased
from the departmental operating budgets.
Governmental Activities
Purchase Land and Building to house the Police Department with a value of $181,477
Improvements to the Community Center and Rail Road Ball Fields at a cost of $29,750
Purchase of three vehicles for the Police Department and Animal Control for $93,258
Street Department equipment costing $20,854
Park Department capital additions include a vehicle and herbicide sprayer for $28,696
Business-Type Activities
Upgrades to the SCADA System for $18,400
Purchase of a vehicle and trailer mounted pump for the Water Department $39,891
Purchase of a mobile collector for meter reading $10,980
Purchase of a Vermeer Compact Loader and Primary and Alternate Switches for Wal-
Mart at a cost of $71,386
Capital Improvement Projects are funded from various sources including long-term debt,
interlocal agreements, grants, and transfers from operating budgets. Because construction of
these assets crosses fiscal years, they are recorded as construction in progress until
completed. Upon completion, they are considered fixed assets and depreciated over their
useful life.
Projects listed below were completed in the current fiscal year and include costs incurred in
prior fiscal years.
Completed Bolivar, 1st, and 3rd Street Drainage and Street Improvements $374,598
Completed Drainage at 4th and Sims, Downtown, and Eastside $244,852
Completed Keaton & 5th Sidewalk $57,506
Costs for projects listed below were incurred in the current fiscal year.
Begin reconstruction of road and sewer improvements on Freese Road $120,839
Begin reconstruction of the Jones and Willow Trunk Line with CDBG funds $14,750
Begin design of East and West side I35 Water and Sewer Extensions and Upgrades
$132,305
Additional information on the City of Sanger's capital assets can be found in Note 4 to the
financial statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
13
Long-term debt
As of September 30, 2013, the City had $16,673,095 in total long-term debt, an increase of $3.2
million to be used for extension of water and wastewater lines in the City. Of the total amount of
long term debt, $6,738,800 is tax supported debt in the form of certificates of obligation and the
remainder represents bonds secured solely by utility revenue sources.
Table 5 – Long-term Debt
2013 2012 2013 2012 2013 2012
Other 148,441$ 126,047$ 378,607$ 94,390$ 527,048$ 220,437$
Capital leases 237,364 340,119 171,867 370,401 409,231 710,520
Notes payable 516,816 553,391 - 516,816 553,391
Certficates of Obligation 6,738,800 6,768,800 6,738,800 6,768,800
Revenue Bonds 8,481,200 5,221,200 8,481,200 5,221,200
Total long-term debt 7,641,421$ 7,788,357$ 9,031,674$ 5,685,991$ 16,673,095$ 13,474,348$
Governmental Business-Type
Activities Activities Total
At the end of the current fiscal year, the City of Sanger had total long-term debt, including notes
payable and capital leases payable, of $16,673,095. Of this amount, $6,738,800 are certificates
of obligation secured by ad valorem taxes and surplus revenues of the utility fund and
$8,481,200 represents bonds secured solely by electric, water, and sewer revenues. The
capital leases payable of $409,231 is for equipment and meters financed through a
lease/purchase agreement. The notes payable is the amount borrowed by the 4A Economic
Development Corporation, a blended component unit, to purchase a warehouse.
During the year, the City issued the $4,260,000 Combination Tax and Revenue Certificates of
Obligation, Series 2013 to construct a Splash Park and improve the City's water and wastewater
system, including costs related to the issuance of the bonds. Moody’s Investors Service
reviewed and assigned a rate of A2 to the Certificates.
Additional information on the City of Sanger's long-term debt can be found in Notes 5 and 6 of
the financial statements.
GENERAL FUND BUDGETARY HIGHLIGHTS
The City revised the general fund original appropriations approved by the City Council to
increase the Police budget by $180,000 for the purchase of the County building. This change
resulted in an overall increase in expenditures from the original budget of 4%.
General fund actual expenditures were $184,061 less than budgeted. Major variances from
budget included the following:
Sanitation revenues (Charges for Services) and Sanitation expenditures (Streets and
sanitation) were both over budget.
Culture and recreation expenditures were under budget by $38,464 because the Park
Director position was vacant for three months.
MANAGEMENT’S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2013
(CONTINUED)
14
General government expenditures were significantly under budget due to lower than
expected legal services ($8,000), economic development ($32,000), and non-
departmental expenses ($68,000). Generally accepted accounting principles require the
city to allocate non-departmental expenses to the various departments. Departmental
operating budgets were generally under budget enough to absorb the allocation of non-
departmental expense without exceeding their budgets. Both Public safety and Fire and
rescue slightly exceeded their expenditure budget due to this allocation.
ECONOMIC FACTORS AND FISCAL YEAR BUDGET AND RATES
The fiscal year 2013-2014 budget incorporates a 3 cent increase in the property tax rate to be
used to fund street maintenance. The new rate is $.665 per $100 valuation and the certified
appraised values used for the fiscal year 2013-2014 budget are $26 million higher than the
amounts budgeted in the 2012-2013 fiscal year, thus increasing the budgeted property tax
revenue. The General Fund budgeted increase in fund balance for fiscal year 2012-2013 is
$20,040.
The 2013-2014 budget includes an 8% increase in water rates and a 10% increase in
wastewater rates to be used for debt service incurred to expand water and wastewater lines.
The Enterprise Fund budgeted increase in fund balance is $127,173.
If revenues and expenditures projected in the 2014 budget are realized, the City will be able to
continue operations, absorb inflationary costs, repair streets, expand the water and wastewater
systems, and increase its total fund balance by $147,213 for the City as a whole.
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, and investors
and creditors with a general overview of the City’s finances and to demonstrate the City’s
accountability for the funds it receives. If you have questions about this report or would like
additional information, please contact the City Manager at the City of Sanger City Hall at 502
Elm Street, Sanger, Texas 76266.
CITY OF SANGER, TEXAS
STATEMENT OF NET POSITION
SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
15
Governmental Business-type
Activities Activities Total
Cash and cash equivalents 1,417,793$ 1,709,541$ 3,127,334$
Certificates of deposit 409,243 316,202 725,445
Accounts receivable, net
Property taxes net of allowance of $41,367 83,593 - 83,593
Sales taxes 186,444 - 186,444
Emergency medical services, net of
allowance of $1,571,532 91,521 - 91,521
Utility accounts, net of
allowance of $100,227 - 1,466,999 1,466,999
Grants 117,355 - 117,355
Other, net of allowance of $6,899 62,886 - 62,886
Inventories - 446,969 446,969
Internal balances - - -
Restricted cash 1,736,878 6,407,856 8,144,734
Restricted certificates of deposit 479,253 1,259,017 1,738,270
Capital assets
Capital assets not being depreciated 949,078 455,469 1,404,547
Capital assets being depreciated, net 13,341,510 11,759,178 25,100,688
TOTAL ASSETS 18,875,554 23,821,231 42,696,785
Deferred refunding loss 29,831 67,151 96,982
Accounts payable and accrued liabilities 329,263 808,238 1,137,501
Customer deposits - 337,603 337,603
Accrued interest payable 54,370 30,973 85,343
Unearned rent 24,521 - 24,521
Compensated absences, due within one year 48,593 39,014 87,607
Bonds payable, due within one year 579,015 653,485 1,232,500
Notes payable, due within one year 38,294 - 38,294
Capital leases, due within one year 99,163 94,748 193,911
Other 129,834 38,074 167,908
Noncurrent liabilities
Compensated absences, due in more
than one year 46,475 25,521 71,996
Bonds payable, due in more than one year 6,213,158 8,141,787 14,354,945
Notes payable, due in more than one year 478,522 - 478,522
Capital leases, due in more than one year 138,201 77,119 215,320
TOTAL LIABILITIES 8,179,409 10,246,562 18,425,971
Net investment in capital assets 7,875,265 7,262,215 15,137,480
Restricted
Debt service 330,272 1,222,245 1,552,517
Capital improvements - 2,159,469 2,159,469
Unrestricted 2,520,439 2,997,891 5,518,330
TOTAL NET POSITION 10,725,976$ 13,641,820$ 24,367,796$
LIABILITIES
Primary Government
ASSETS
NET POSITION
DEFERRED OUTFLOWS OF RESOURCES
CITY OF SANGER, TEXAS
GOVERNMENT–WIDE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
16
Fees, Fines and Capital Grants
Charges for and Governmental Business- type
Expenses Services Contributions Activities Activities Total
Governmental activities
General government 752,757$ 785,922$ -$ 33,165$ -$ 33,165$
Police and animal control 1,578,347 - - (1,578,347) - (1,578,347)
Streets and sanitation 1,631,355 - 219,727 (1,411,628) - (1,411,628)
Fire and EMS 931,675 514,842 - (416,833) - (416,833)
Court 202,327 168,666 - (33,661) - (33,661)
Culture and recreation 681,730 - - (681,730) - (681,730)
Fiscal agent fees and debt issue costs 12,980 (12,980) (12,980)
Interest on long-term debt 295,191 - - (295,191) - (295,191)
Total governmental activities 6,086,362 1,469,430 219,727 (4,397,205) - (4,397,205)
Business-type activities
Water 1,318,162 1,427,988 - - 109,826 109,826
Sewer 708,870 1,317,208 - - 608,338 608,338
Electric 6,467,866 7,748,501 - - 1,280,635 1,280,635
Fiscal agent fees and debt issue costs 83,530 - (83,530) (83,530)
Interest on long-term debt 177,384 - - - (177,384) (177,384)
Other 742,252 60,111 - - (682,141) (682,141)
Total business-type activities 9,498,064 10,553,808 - 1,055,744 1,055,744
Total primary government 15,584,426$ 12,023,238$ 219,727$ (4,397,205)$ 1,055,744$ (3,341,461)$
General revenues
Taxes
Ad valorem 2,495,024$ -$ 2,495,024$
Sales 1,265,031 - 1,265,031
Franchise taxes 554,782 - 554,782
Licenses and permits 94,934 - 94,934
Interest income 4,013 15,630 19,643
Gain on disposal of assets 31,028 - 31,028
Miscellaneous revenues 137,590 - 137,590
Transfers 523,990 (523,990) -
Total general revenues and transfers 5,106,392 (508,360) 4,598,032
Change in net position 709,187 547,384 1,256,571
NET POSITION, beginning of year, as previously stated 10,313,749 13,193,940 23,507,689
Adjustments (296,960) (99,504) (396,464)
NET POSITION, beginning of year, as restated 10,016,789 13,094,436 23,111,225
NET POSITION, end of year 10,725,976$ 13,641,820$ 24,367,796$
Changes in Net Assets
Net (Expenses) Revenue and
Program Activities
Program Revenues
CITY OF SANGER, TEXAS
BALANCE SHEET – GOVERNMENTAL FUNDS
SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
17
Debt Capital
General Service Projects
Cash and equivalents 560,295$ 303,497$ 548,243$
Certificates of deposit 409,243 - -
Accounts receivable, net
Property taxes, net of allowance of $41,367 58,515 25,078 -
Sales taxes 93,222 - -
Emergency medical services, net of
allowance of $1,571,532 91,521 - -
Other, net allowance of $6,899 62,886 - -
Grants 117,355 - -
Due from other funds 20,518 - -
Restricted cash 100,109 56,567 552,956
Restricted certificates of deposit 112,302 - -
Total assets 1,625,966$ 385,142$ 1,101,199$
Liabilities
Accounts payable 271,201$ 500$ 44,832$
Due to other funds - - -
Other liabilities 129,834 - -
Total liabilities 401,035 500 44,832
Deferred inflows of resources
Unavailable revenue - property taxes 150,036 25,078 -
Fund balances
Restricted
Debt service - 359,564 -
Capital projects - - 1,056,367
Economic development - - -
Unassigned 1,074,895 - -
Total fund balances 1,074,895 359,564 1,056,367
TOTAL LIABILITIES, DEFERRED INFLOWS
AND FUND BALANCES 1,625,966$ 385,142$ 1,101,199$
LIABILITIES, DEFERRED INFLOWS AND
FUND BALANCES
ASSETS
18
Total
Governmental
4A Fund 4B Fund Funds
5,000$ 758$ 1,417,793$
- - 409,243
- - 83,593
46,611 46,611 186,444
- - 91,521
- - 62,886
- - 117,355
- - 20,518
768,917 258,329 1,736,878
93,609 273,342 479,253
914,137$ 579,040$ 4,605,484$
-$ 12,730$ 329,263$
20,518 20,518
- - 129,834
20,518 12,730 479,615
- - 175,114
- - 359,564
- - 1,056,367
893,619 566,310 1,459,929
- - 1,074,895
893,619 566,310 3,950,755 .
914,137$ 579,040$ 4,605,484$
CITY OF SANGER, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUNDS
BALANCE SHEET TO THE STATEMENT OF NET POSITION
SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
19
Total fund balances - governmental funds 3,950,755$
Net assets of governmental activities 10,725,976$
175,114
(7,611,590)
Revenues earned but not available within sixty days of the year end are not
recognized as revenue in the fund financial statements.
Escalating payments for rent income are recorded when received as current
financial resources in the fund financial statements whereas they are are
deferred and recorded ratably over the life of the lease in the government-wide
financial statements.
Long-term liabilities, including bonds payable, are not due and payable in the
current period and therefore are not reported in the fund financial statements.
(24,521)
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets used in governmental activities are not current financial
resources and therefore are not reported in the governmental funds balance
sheet.
Interest payable on long-term debt does not require current financial resources,
therefore interest payable is not reported as a liability in the governmental
funds balance sheet.
14,290,588
(54,370)
CITY OF SANGER, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN
FUND BALANCES – GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
20
Debt Capital
General Service Projects
REVENUES
Property taxes 1,755,838$ 738,395$ -$
Sales taxes 631,812
Licenses and permits 94,934 - -
Charges for services 785,922 - -
Fire and rescue 530,810 - -
Court 168,666 - -
Franchise taxes 554,782 - -
Intergovernmental revenues 133,427 - 86,300
Interest 1,200 679 360
Miscellaneous 23,435 - -
Total revenues 4,680,826 739,074 86,660
EXPENDITURES
Current
General government 658,870 610 -
Police and animal control 1,478,058 - -
Streets and sanitation 899,067 - 86,300
Fire and EMS 816,965 - -
Court 201,942 - -
Culture and recreation 434,364 - -
Capital outlay 357,095 - 144,891
Debt service
Principal retirement 102,755 541,200 -
Interest charges 4,240 258,250 -
Fiscal agent's fees and
debt issue costs - 345 12,635
Total expenditures 4,953,356 800,405 243,826
Excess (deficiency) of
revenues over expenditures (272,530) (61,331) (157,166)
Other financing sources (uses)
Proceeds on sale of assets 31,028 - -
Proceeds from bond issuance - - 511,200
Premium on bond issuance - - 41,746
Transfers in 543,000 180,000 642,997
Transfers out - (110,000) (206,507)
Total other financing sources (uses)574,028 70,000 989,436
Net change in fund balances 301,498 8,669 832,270
FUND BALANCES, beginning of year 773,397 350,895 224,097
FUND BALANCES, end of year 1,074,895$ 359,564$ 1,056,367$
21
Total
Governmental
4A Fund 4B Fund Funds
-$ -$ 2,494,233$
316,721 316,498 1,265,031
- - 94,934
- - 785,922
- - 530,810
- - 168,666
- - 554,782
- - 219,727
992 782 4,013
98,668 - 122,103
416,381 317,280 6,240,221
- 32,330 691,810
- - 1,478,058
- - 985,367
- - 816,965
- - 201,942
- - 434,364
- - 501,986
36,575 - 680,530
24,692 - 287,182
- - 12,980
61,267 32,330 6,091,184
355,114 284,950 149,037
- - 31,028
- - 511,200
- - 41,746
- - 1,365,997
(320,500) (205,000) (842,007)
(320,500) (205,000) 1,107,964
34,614 79,950 1,257,001
859,005 486,360 2,693,754
893,619$ 566,310$ 3,950,755$
CITY OF SANGER, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES
YEAR ENDED SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
22
Net change in fund balances - total governmental funds 1,257,001$
501,986
(1,185,021)
143,024
(8,113)
15,487
(15,177)
Change in net position of governmental activities 709,187$
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of capital
assets recorded in the current period.
Certain revenues in the government-wide statement of activities that do not
provide current financial resources are not reported as revenue in the
governmental funds.
Depreciation expense on capital assets is reported in the statement of activities
and does not require the use of current financial resources. Therefore,
depreciation expense is not reported as expenditures in the governmental funds.
The issuance of long-term debt (e.g. bonds) provides current financial resources
to governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net position. Also, governmental funds
report the effect of issuance costs, premiums, discounts, and similar items when
debt is first issued, whereas the amounts are deferred and amortized in the
statement of activities. This amount consists of repayments of $680,530 less
proceeds of $511,200, premiums of $41,746, plus amortization of premiums,
discounts, and deferred loss on refundings of $104 and a change in long-term
compensated absences payable of $15,336,which is the net effect of these
differences in the treatment of long-term debt and related items.
Current year changes in accrued interest payable do not require the use of
current financial resources; therefore, are not reported as expenditures in
governmental funds.
Governmental funds recognize escalating rental income as received. However,
in the statement of activities, the rent is deferred and recognized ratably over the
term of the lease agreement.
CITY OF SANGER, TEXAS
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
23
Water, Sewer,
and Electric
Fund
CURRENT ASSETS
Cash and investments 1,709,541$
Certificates of deposit 316,202
Receivables
Utility accounts receivable, net of allowance of $100,227 1,466,999
Inventories 446,969
Total current assets 3,939,711
NONCURRENT ASSETS
Capital assets, at cost
Land and land improvements 323,164
Buildings and equipment 2,571,984
Infrastructure 22,411,107
Construction in progress 132,305
Accumulated depreciation (13,223,913)
Total capital assets, net of accumulated depreciation 12,214,647
Restricted cash and cash equivalents 6,407,856
Restricted certificates of deposit 1,259,017
Total noncurrent assets 19,881,520
TOTAL ASSETS 23,821,231$
Deferred loss on refunding 67,151
CURRENT LIABILITIES
Accounts payable and accrued liabilities 808,238$
Accrued interest payable 30,973
Compensated absences, due within one year 39,014
Bonds payable, due within one year 653,485
Capital lease obligation, due within one year 94,748
Other 38,074
Total current liabilities 1,664,532
NONCURRENT LIABILITIES
Compensated absences, due in more than one year 25,521
Bonds payable, due in more than one year 8,141,787
Capital lease obligation, due in more than one year 77,119
Customer deposits 337,603
Total liabilities 10,246,562
NET POSITION
Net investment in capital assets 7,262,215
Restricted
Revenue bond retirement 1,222,245
Capital improvements 2,159,469
Unrestricted 2,997,891
TOTAL NET POSITION 13,641,820$
LIABILITIES AND NET ASSETS
ASSETS
DEFERRED OUTFLOWS OF RESOURCES
CITY OF SANGER, TEXAS
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND
NET POSITION – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
24
Water, Sewer,
and Electric
Fund
OPERATING REVENUES
Charges for services 10,035,815$
Connection fees 62,527
Tap fees 396,300
Miscellaneous 59,166
Total operating revenue 10,553,808
OPERATING EXPENSES
Salaries, wages and benefits 1,421,479
Purchased professional and technical services 197,137
Utilities 346,187
Materials and supplies 99,157
Water and electric purchases 5,176,010
Franchise fees 387,288
Depreciation 871,458
Repairs and maintenance 696,458
Bad debt expense 41,976
Total operating expenses 9,237,150
Operating income 1,316,658
NONOPERATING REVENUES (EXPENSES)
Transfers in 506,507
Transfers out (1,030,497)
Fiscal agent fees and debt issue costs (83,530)
Interest and investment income 15,630
Interest and amortization expense (177,384)
Total nonoperating revenues (expenses)(769,274)
Change in net position 547,384
NET POSITION, beginning of year - as previously reported 13,193,940
Adjustments (99,504)
NET POSITION, beginning of year - as restated 13,094,436
NET POSITION, end of year 13,641,820$
CITY OF SANGER, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
The Notes to Basic Financial Statements are
an integral part of this statement.
25
Water, Sewer,
and Electric
Fund
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 10,646,024$
Cash paid to employees (1,400,773)
Cash paid to suppliers (7,074,605)
Net cash provided by operating activities 2,170,646
CASH FLOWS FROM NON-CAPITAL
FINANCING ACTIVITIES
Transfers in 506,507
Transfers out (1,030,497)
Net cash used in non-capital
financing activities (523,990)
CASH FLOWS FROM CAPITAL
AND RELATED FINANCING ACTIVITIES
Principal paid on long-term debt (687,334)
Proceeds from issuance of long-term debt 4,054,941
Capital expenditures (297,072)
Interest and fees paid on debt issuance (292,653)
Net cash provided by capital
and related financing activities 2,777,882
CASH FLOWS FROM INVESTING ACTIVITIES
Reinvested interest (5,535)
Proceeds on maturity of investments 349,683
Interest on investments 15,630
Net cash provided by investing activities 359,778
Net change in cash 4,784,316
CASH AND CASH EQUIVALENTS, beginning of the year 3,333,081
CASH AND CASH EQUIVALENTS, end of the year 8,117,397$
CITY OF SANGER, TEXAS
STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS
YEAR ENDED SEPTEMBER 30, 2013
(CONTINUED)
The Notes to Basic Financial Statements are
an integral part of this statement.
26
Water, Sewer,
and Electric
Fund
RECONCILIATION OF CASH AND CASH EQUIVALENTS
PER STATEMENT OF CASH FLOWS TO THE
STATEMENT OF NET ASSETS
Cash and investments 1,709,541$
Restricted cash and cash equivalents 6,407,856
Cash and cash equivalents - ending 8,117,397$
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Operating income 1,316,658$
Adjustments to reconcile operating income to net cash provided by
operating activities
Depreciation 871,458
Decrease in accounts receivable 70,374
Increase in inventory (13,461)
Increase in accounts payable
and accrued liabilities 226,925
Decrease in due to other funds (263,811)
Decrease in other liabilities (59,339)
Increase in customer deposits 21,842
Net cash provided by operating activities 2,170,646$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
27
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Sanger (the City) was incorporated in 1886. The City operates under a Council-
Manager form of government and provides the following services as authorized by its
charter: general government, public safety, streets and sanitation, culture and recreation,
water and wastewater operations and electricity operations.
The accounting and reporting policies of the City relating to the funds included in the
accompanying basic financial statements conform to accounting principles generally
accepted in the United States of America applicable to state and local governments.
Generally accepted accounting principles for local governments include those principles
prescribed by the Governmental Accounting Standards Board (GASB) and the American
Institute of Certified Public Accountants in the publication entitled Audits of State and Local
Governmental Units. The more significant accounting policies of the City are described
below.
New Pronouncements
Effective October 1, 2012, the City implemented GASB Statement No. 63, Financial
Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net
Position. GASB Statement No. 63 provides financial reporting guidance for deferred
outflows of resources and deferred inflows of resources, introduced and defined in
GASB Concepts Statement No. 4. This statement amends the net asset reporting
requirements in Statement No. 34, Basic Financial Statements – and Management
Discussion and Analysis – for State and Local Governments, and other pronouncements
by incorporating deferred outflows of resources and deferred inflows of resources into
the definitions of the required components of the residual measure and by renaming that
measure as net position, rather than net assets.
In addition, effective October 1, 2012, the City elected to early implement GASB
Statement No. 65, Items Previously Reported as Assets and Liabilities. This statement
reclassifies certain items that were previously reported as assets and liabilities, as
deferred outflows or inflows of resources, and recognizes these items as outflows or
inflows of resources.
Financial Reporting Entity
As required by accounting principles generally accepted in the United States of America,
these financial statements include the primary government and organizations for which
the primary government is financially accountable and other organizations for which the
nature and significance of their relationship with the primary government are such that
exclusion would cause the reporting entity's financial statements to be misleading or
incomplete.
The definition of the reporting entity is based primarily on the notion of financial
accountability. A primary government is financially accountable for the organizations
that make up its legal entity. It is also financially accountable for legally separate
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
28
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Financial Reporting Entity – Continued
organizations if its officials appoint a voting majority of an organization's governing body
and either it is able to impose its will on that organization or there is a potential for the
organization to provide specific financial benefits to, or to impose specific financial
burdens on, the primary government. A primary government may also be financially
accountable for governmental organizations that are fiscally dependent on it.
A primary government has the ability to impose its will on an organization if it can
significantly influence the programs, projects, or activities of, or the level of services
performed or provided by, the organization. A financial benefit or burden relationship
exists if the primary government (a) is entitled to the organization's resources; (b) is
legally obligated or has otherwise assumed the obligation to finance the deficits of, or
provide financial support to, the organization; or (c) is obligated in some manner for the
debt of the organization. Some organizations are included as component units because
of their fiscal dependency on the primary government.
An organization is fiscally dependent on the primary government if it is unable to adopt
its budget, levy taxes, set rates or charges, or issue bonded debt without approval by the
primary government.
The following entities were found to be component units of the City and are included in
the accompanying financial statements:
Blended Component Unit (4A) - The Sanger Texas Industrial Development
Corporation (STIDC) is governed by a board of five directors, all of whom are
appointed by the City Council of the City of Sanger and any of whom can be
removed from office by the City Council at its will. The STIDC was incorporated in
the state of Texas as a non-profit industrial development corporation under Section
4A of the Development Corporation Act of 1979. The purpose of the STIDC is to
promote economic development within the City of Sanger.
Blended Component Unit (4B) - The Sanger Texas Development Corporation
(STDC) is governed by a board of seven directors, all of whom are appointed by the
City Council at its will. The STDC was incorporated in the state of Texas as a non-
profit industrial development corporation under Section 4B of the Development
Corporation Act of 1979. The purpose of the STDC is to promote economic and
community development within the City of Sanger.
Basis of Presentation
The government-wide financial statements (the statement of net position and the
statement of activities) report information on all of the activities of the City. The effect of
interfund activity within the governmental and business-type activities columns has been
removed from these statements. Governmental activities, which normally are supported
by taxes and intergovernmental revenues, are reported separately from business-type
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
29
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Basis of Presentation – Continued
activities, which 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 program are offset by program revenues. Direct expenses are those that are
clearly identifiable with a specific program. Program revenues include 1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given program and 2) operating or capital grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular program. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
Fund Financial Statements
The City segregates transactions related to certain functions or activities in separate
funds in order to aid financial management and to demonstrate legal compliance.
Separate statements are presented for governmental and proprietary activities. These
statements present each major fund as a separate column on the fund financial
statements; all non-major funds are aggregated and presented in a single column.
Governmental funds are those funds through which most governmental functions
typically are financed. The measurement focus of governmental funds is on the sources,
uses and balance of current financial resources. The City has presented the following
major governmental funds:
General Fund
The General Fund is the main operating fund of the City. This fund is used to
account for all financial resources not accounted for in other funds. All general tax
revenues and other receipts that are not restricted by law or contractual agreement
to some other fund are accounted for in this fund. General operating expenditures,
fixed charges and capital improvement costs that are not paid through other funds
are paid from the General Fund.
Debt Service Fund
The Debt Service Fund is used to account for the accumulation of financial
resources for the payment of principal, interest and related costs on general
long-term debt paid primarily from taxes levied by the City. The fund balance of the
Debt Service Fund is restricted to signify the amounts that are restricted exclusively
for debt service expenditures.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
30
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Fund Financial Statements – Continued
Capital Projects Fund
The Capital Projects Fund is used to account for funds received and expended for
the construction and renovation of thoroughfares, arterial streets and drainage
improvements in the City and construction, renovation, expansion and major
improvement of various City facilities, acquisition of land and other large
nonrecurring projects.
4A and 4B Funds
The 4A and 4B Funds are used to account for sales tax revenues collected for the
purposes set forth by the Sanger Economic Development Corporation.
Proprietary Funds are accounted for using the economic resources measurement focus
and the accrual basis of accounting. The accounting objectives are determinations of
net income, financial position and cash flow. All assets and liabilities are included on the
Statement of Net Position. The City has presented the following major proprietary fund:
Water, Sewer and Electric Fund
The Water, Sewer and Electric Fund is the primary operating fund for water, sewer
and electric. It also accounts for all financial resources of the City concerning water,
sewer and electric sales. Its activity is financed with debt secured by a pledge of the
net revenues and has the requirement that the cost of providing services, including
capital costs, be recovered by user fees and charges.
Proprietary funds distinguish operating revenues and expenses from non-operating
items. Operating revenues and expenses generally result from providing services and
producing and delivering goods in connection with a proprietary fund’s principal ongoing
operations. Operating expenses for the proprietary funds include the cost of personnel
and contractual services, supplies and depreciation on capital assets. All revenues and
expenses not meeting this definition are reported as non-operating revenues and
expenses.
Measurement Focus and Basis of Accounting
Measurement focus refers to what is being measured; basis of accounting refers to
when revenues and expenditures are recognized in the accounts and reported in the
financial statements. Basis of accounting relates to the timing of the measurement
made, regardless of the measurement focus applied.
The government-wide statements and fund financial statements for proprietary funds are
reported using the economic resources measurement focus and the accrual basis of
accounting. The economic resources measurement focus means all assets and
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
31
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Measurement Focus and Basis of Accounting – Continued
liabilities (whether current or non-current) are included on the statement of net position
and the operating statements present increases (revenues) and decreases (expenses)
in net position. Under the accrual basis of accounting, revenues are recognized when
earned, including unbilled water and wastewater services, which are accrued. Expenses
are recognized at the time the liability is incurred.
Governmental fund financial statements are reported using the current financial
resources measurement focus and are accounted for using the modified accrual basis of
accounting. Under the modified accrual basis of accounting, revenues are recognized
when susceptible to accrual; i.e., when they become both measurable and available.
Measurable means the amount of the transaction can be determined and available
means collectible within the current period or soon enough thereafter to be used to pay
liabilities of the current period. The City considers receivables collected within sixty days
after year-end to be available and recognizes them as revenues of the current year.
Expenditures are recorded when the related fund liability is incurred.
However, debt service expenditures are recorded only when payment is due.
The revenues susceptible to accrual are property taxes, franchise fees, licenses,
charges for service, interest income and intergovernmental revenues. Sales taxes
collected and held by the state at year end on behalf of the government are also
recognized as revenue. All other governmental fund revenues are recognized when
received.
Cash and Investments
Cash of all funds, including restricted cash, are pooled into common pooled accounts in
order to maximize investment opportunities. Each fund whose monies are deposited in
the pooled cash accounts has equity therein, and interest earned on the investment of
these monies is allocated based upon relative equity at month end. An individual fund’s
pooled cash and investments are available upon demand. The City considers pooled
and other cash and investments amounts that are purchased with a maturity of ninety
days or less to be cash equivalents.
All investments are recorded at fair value based on quoted market prices. Fair value is
the amount at which a financial instrument could be exchanged in a current transaction
between willing parties.
State statutes authorize the City to invest in obligations of the U.S. Government or its
agencies; obligations of the State of Texas or its agencies; and certain other obligations,
repurchase agreements, money market mutual funds and certificates of deposits within
established criterion.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
32
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Restricted Resources
If both restricted and unrestricted resources are available for use, it is the City’s policy to
use restricted resources first and unrestricted resources as needed.
Property Taxes
Property taxes are levied by October 1 on the assessed value listed as of the prior
January 1 for all real and business personal property in conformity with Subtitle E, Texas
Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not
paid before February 1 of the year following the year in which imposed. On January 1 of
each year, a tax lien attaches to property to secure the payment of all taxes, penalties,
and interest ultimately imposed. Property tax revenues are considered available when
they become due or past due and receivable within the current period. Personal
property taxes not collected by April 1 are forwarded for collection proceedings. Real
property taxes not collected by July 1 are forwarded for collection proceedings.
Inventories and Prepaid Items
Inventories, which are recognized as expenses as consumed, are stated at cost (first-in,
first-out method). Inventories consist primarily of expendable supplies for the Proprietary
Fund. Prepaid balances are for payments made by the City in the current year to
provide services occurring in the subsequent fiscal year.
Interfund Receivables and Payables
Any residual balances outstanding between the governmental activities and business-
type activities are reported in the government-wide financial statements as internal
balances.
Transactions between Funds
Interfund services provided and used are accounted for as revenues and expenditures
or expenses. Transactions that constitute reimbursements to a fund for expenditures or
expenses initially made from it that are properly applicable to another fund, are recorded
as expenditures or expenses in the reimbursing fund and as a reduction of expenditures
or expenses in the fund reimbursed. All other interfund transactions are recorded as
transfers.
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets, are
reported in the applicable governmental or business-type activities columns in the
government-wide financial statements and in the fund financial statements for
proprietary funds. All capital assets are valued at historical cost or estimated historical
cost if actual historical cost is not available. Donated assets are valued at their fair
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
33
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Capital Assets – Continued
market value on the date donated. Repairs and maintenance are recorded as expenses.
Renewals and betterments are capitalized.
Assets capitalized, not including infrastructure assets, have an original cost of $5,000 or
more and over one year of useful life. Depreciation has been calculated on each class
of depreciable property using the straight-line method. Estimated useful lives are as
follows:
Buildings and improvements 5-50 years
Machinery and equipment 3-20 years
Infrastructure 10-30 years
Accumulated Vacation, Compensatory Time and Sick Leave
The amounts owed to employees for unpaid vacation and sick leave liabilities, including
the City’s share of employment-related taxes, are reported on the accrual basis of
accounting in the applicable governmental or business-type activity columns of the
government-wide statements and in the enterprise activities of the fund financial
statements. The liabilities and expenditures are reported on the modified accrual basis
in the governmental fund financial statements.
Nature and Purpose of Reservations and Designations of Fund Equity
The City implemented Governmental Accounting Standards Board Statement 54, Fund
Balance Reporting and Governmental Fund Type Definitions (GASB 54) during the year
ended September 30, 2011. This statement establishes fund balance classifications that
comprise a hierarchy based primarily on the extent to which a government is bound to
observe constraints imposed upon the use of the resources reported in governmental
funds. The objective of this statement is to enhance the usefulness of fund balance
information by providing clearer fund balance classifications that can be more
consistently applied and by clarifying the existing governmental fund type definitions.
Fund balance categories under GASB 54 are Nonspendable and Spendable.
Classifications under the Spendable category are Restricted, Committed, Assigned, and
Unassigned. These classifications reflect not only the nature of funds, but also provide
clarity to the level of restriction placed upon fund balance. Unassigned fund balance is a
residual classification within the General Fund. The General Fund should be the only
fund that reports a positive unassigned balance. In all other funds, unassigned is limited
to negative residual fund balance.
In accordance with GASB 54, the City classifies governmental fund balances in its
financial statements as follows:
1. Nonspendable Fund Balance – Includes fund balance amounts that cannot be
spent either because they are not in spendable form or because of legal or
contractual requirements. Examples include inventories, long-term receivables,
endowment principal, and/or prepaid/deferred items.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
34
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Nature and Purpose of Reservations and Designations of Fund Equity – Continued
2. Spendable Fund Balance
a. Restricted Fund Balance – Includes amounts that can be spent only for
the specific purposes as imposed by law, or imposed by creditors,
grantors, contributors, or other governments’ laws and regulations.
Examples include federal and state grant programs, retirement of long-
term debt, and construction.
i. The aggregate fund balance of the debt service fund is legally
restricted for payment of bonded indebtedness and is not available for
other purposes until all bonded indebtedness is liquidated.
ii. The fund balance of the capital projects fund reflects an amount
restricted for construction and major renovation projects, and it usually
represents unexpended proceeds from the sale of bonds, which
primarily have restricted use.
iii. The proceeds of specific revenue sources which are restricted to
expenditures for specified purposes as designated by grantors,
contributors, by vote of citizens, or governmental entities over state or
local program grants.
b. Committed Fund Balance – Includes amounts that can be used only for
the specific purposes as determined by the governing body by formal
action recorded in the minutes of the governing body. Commitments may
be changed or lifted only by the governing body taking the same formal
action that imposed the constraint originally. Examples include, but are
not specifically limited to, council action regarding construction, claims,
and judgments, retirement of loans/notes payable, and capital
expenditures. The City Council must take action to commit funds for a
specific purpose prior to the end of the fiscal year, but the amount of the
commitment may be determined after the end of the fiscal year.
c. Assigned Fund Balance – Includes amounts intended to be used by the
City for specific purposes. Pursuant to GASB 54, this intent can be
expressed by an official or body to which the governing body delegates
that authority. The City has delegated to the City Manager the ability to
determine and define the amounts of those components of fund balance
that are classified as Assigned. Examples take on the similar appearance
as those enumerated for committed fund balance, including the
appropriation of existing fund balance to eliminate a deficit in next year’s
budget.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
35
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
Nature and Purpose of Reservations and Designations of Fund Equity – Continued
d. Unassigned Fund Balance – Includes the residual classification of the
General Fund and includes all amounts not contained in other
classifications. By accounting for amounts in other funds, the City has
implicitly assigned the funds for the purposes of those particular funds.
In circumstances where an expenditure is to be made for a purpose for which amounts
are available in multiple fund balance classifications, the order in which resources will be
expended is as follows: restricted fund balance, followed by committed fund balance,
assigned fund balance, and lastly unassigned fund balance.
Net Position
Net position represents the difference between assets and liabilities. Net investment in
capital assets consists of capital assets, net of accumulated depreciation, reduced by
the outstanding balances of any borrowing used for the acquisition, construction or
improvements of those assets, and adding back unspent proceeds. Net position is
reported as restricted when there are limitations imposed on their use either through the
enabling legislations adopted by the City or through external restrictions imposed by
creditors, grantors or laws or regulations of other governments.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
financial statements and the reported amounts of revenues and expenditures during the
reporting period. Actual results could differ from those estimates.
NOTE 2. CASH AND INVESTMENTS
Cash and investments as of September 30, 2013 consist of the following:
Deposits with financial institutions 11,272,068$
Certificates of deposit 2,463,715
13,735,783$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
36
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Disclosures Relating to 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. One of the
ways that the City manages its exposure to interest rate risk is by investing mainly in
certificates of deposit which purchase a combination of shorter term investments with an
average maturity of less than 30 days thus reducing the interest rate risk. The City
monitors the interest rate risk inherent in its portfolio by measuring the weighted average
maturity of its portfolio. The City has no specific limitations with respect to this metric.
As of September 30, 2013, the City had the following investments:
Amount
Certificates of deposit 2,463,715$ 181 days
Investment Type
Weighted Average
Maturity
As of September 30, 2013 the City did not invest in any securities which are highly
sensitive to interest rate fluctuations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation
to the holder of the investment. This is measured by the assignment of a rating by a
nationally recognized statistical rating organization. Presented below is the minimum
rating required by (where applicable) the Public Funds Investment Act, the City’s
investment policy, or debt agreements, and the actual rating as of year-end for each
investment type.
Amount
Certificates of deposit 2,463,715$ N/A N/A
Investment Type
Minimum Legal
Rating
Rating as of
September 30, 2013
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be
invested in any one issuer. As of September 30, 2013, other than certificates of deposit,
the City did not have 5% or more of its investments with one issuer.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
37
NOTE 2. CASH AND INVESTMENTS – CONTINUED
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover its deposits or will not be
able to recover collateral securities that are in the possession of an outside party. The
custodial credit risk for investments is the risk that, in the event of the failure of the
counterparty to a transaction, a government will not be able to recover the value of its
investment or collateral securities that are in the possession of another party. The
Public Funds Investment Act and the City’s investment policy do not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or
investments, other than the following provision for deposits: The Public Funds
Investment Act requires that a financial institution secure deposits made by state or local
governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least the bank
balance less the FDIC insurance at all times.
At September 30, 2013, the carrying amount of the City’s cash on hand and deposits
was $11,272,068 and the bank balance was $11,251,634. The full bank balance was
covered by $250,000 in depository insurance under the FDIC and $15,319,958 in
pledged securities in the City’s name.
NOTE 3. RESTRICTED ASSETS
Restricted assets are held for the following purposes in accordance with bond ordinances or
other legal restrictions for the Proprietary Fund as follows:
Debt service - interest and sinking fund 1,222,245$
Capital improvements 6,107,025
Refundable utility deposits 337,603
7,666,873$
Restricted assets are held for the following purposes in accordance with bond ordinances or
other legal restrictions for the Governmental Funds as follows:
Debt service 56,567$
Capital improvements 715,176
Economic and community development 1,444,388
2,216,131$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
38
NOTE 4. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2013, was as follows:
Balance Balance
October 1, Additions/ Retirements/ September 30,
2012 Completions Adjustments 2013
Governmental activities
Capital assets not being depreciated
Land 862,307$ 44,000$ -$ 906,307$
Construction in progress 272,385 144,891 (374,505) 42,771
Total capital assets not
being depreciated 1,134,692 188,891 (374,505) 949,078
Capital assets being depreciated
Infrastructure 10,550,634 - 368,791 10,919,425
Buildings and improvements 7,120,825 167,227 (213,569) 7,074,483
Machinery and equipment 2,493,539 145,868 (129,208) 2,510,199
Total capital assets
being depreciated 20,164,998 313,095 26,014 20,504,107
Less accumulated depreciation
Infrastructure 3,886,045 623,408 - 4,509,453
Buildings and improvements 937,297 322,649 (219,283) 1,040,663
Machinery and equipment 1,502,725 238,964 (129,208) 1,612,481
Total accumulated depreciation 6,326,067 1,185,021 (348,491) 7,162,597
Total capital assets being
depreciated, net 13,838,931 (871,926) 374,505 13,341,510
Net governmental activities
capital assets 14,973,623$ (683,035)$ -$ 14,290,588$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
39
NOTE 4. CAPITAL ASSETS – CONTINUED
Balance Balance
October 1, Additions/ Retirements/ September 30,
2012 Completions Adjustments 2013
Business-type activities
Capital assets not being depreciated
Land 323,164$ -$ -$ 323,164$
Construction in progress 291,414 153,355 (312,464) 132,305
Total capital assets not
being depreciated 614,578 153,355 (312,464) 455,469
Capital assets being depreciated
Infrastructure 22,112,636 - 298,471 22,411,107
Buildings and improvements 860,132 - - 860,132
Machinery and equipment 1,599,309 143,717 (31,174) 1,711,852
Total capital assets
being depreciated 24,572,077 143,717 267,297 24,983,091
Less accumulated depreciation
Infrastructure 10,959,709 707,046 (13,993) 11,652,762
Buildings and improvements 216,804 52,239 - 269,043
Machinery and equipment 1,221,109 112,173 (31,174) 1,302,108
Total accumulated depreciation 12,397,622 871,458 (45,167) 13,223,913
Total capital assets being
depreciated, net 12,174,455 (727,741) 312,464 11,759,178
Net business-type activities
capital assets 12,789,033$ (574,386)$ -$ 12,214,647$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
40
NOTE 4. CAPITAL ASSETS – CONTINUED
Depreciation expense was charged as direct expense to programs of the primary
government as follows:
Governmental activities
General government 76,283$
Public safety 100,289
Streets and sanitation 645,988
Fire and rescue 114,710
Court 385
Culture and recreation 247,366
Total governmental activities 1,185,021$
Business-type activities
Water 272,720$
Sewer 229,781
Electric 351,051
Other 17,906
Total business-type activities 871,458$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
41
NOTE 5. LONG-TERM DEBT
At September 30, 2013, the City's bonds and notes payable consisted of the following:
Governmental Business-type
$6,500,000 Series 2006, Combination Tax and
Revenue Ceritifcates of Obligation, dated August 7,
2006, due in annual installments through 2022,
bearing interest rates of 4% to 5%.1,812,400$ 2,127,600$
$1,750,000 Series 2007, Combination Tax and
Revenue Certificates of Obligation, dated June 15,
2007, due in annual installments through 2027,
bearing interest at 4.4%.469,200 910,800
$3,200,000 Series 2009, Combination Tax and
Revenue Certificates of Obligation, dated July 30,
2009, due in annual installments through 2026,
bearing interest rates of 3% to 4.75%.2,615,000 -
$3,495,000 Series 2012, General Obligation
Refunding, dated March 20, 2012, due in annual
installments through 2021, bearing interest rates of
2% to 3%.1,331,000 1,694,000
$4,260,000 Series 2013, Combination Tax and
Revenue Ceritifcates of Obligation, dated June 17,
2013, due in annual installments through 2033,
bearing interest rates of 2% to 3.7%. 511,200 3,748,800
Note payable to a financial institution in monthly
installments of $5,106 including interest at 4.6%, due
June 5, 2024, secured by property financed.516,816 -
Premium on bonds 74,582 335,281
Discount on bonds (21,209) (21,209)
7,308,989$ 8,795,272$
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
42
NOTE 5. LONG-TERM DEBT – CONTINUED
The following is a summary of long-term debt transactions of the City for the year ended
September 30, 2013:
Balance Balance Due
Beginning End within
of Year Increases Decreases of Year One Year
Governmental activities
Compensated absences 110,404$ 84,064$ (99,400)$ 95,068$ 48,593$
Notes payable 553,391 - (36,575) 516,816 38,294
Certificates of obligation 6,768,800 511,200 (541,200) 6,738,800 575,000
Capital leases 340,119 - (102,755) 237,364 99,163
Premium on bonds 39,503 41,746 (6,667) 74,582 6,667
Discount on bonds (23,860) - 2,651 (21,209) (2,652)
Total governmental activities 7,788,357 637,010 (783,946) 7,641,421 765,065
Business-type activities
Compensated absences 67,973 95,214 (98,652) 64,535 39,014
Revenue bonds 5,221,200 3,748,800 (488,800) 8,481,200 635,000
Capital leases 370,401 - (198,534) 171,867 94,748
Premium on bonds 50,277 306,141 (21,137) 335,281 21,136
Discount on bonds (23,860) 2,651 (21,209) (2,652)
Total business-type activities 5,685,991 4,150,155 (804,472) 9,031,674 787,246
Total primary government 13,474,348$ 4,787,165$ (1,588,418)$ 16,673,095$ 1,552,311$
The City issues general obligation bonds, which are direct obligations of the City and pledge
the full faith and credit of the City.
For the governmental activities, compensated absences are generally liquidated with
resources of the General Fund.
General obligation bonds issued for governmental activity purposes are liquidated by the
debt service fund. Notes payable issued for governmental activity purposes are liquidated
by the General Fund. Revenue bonds and notes payable issued for business-type activities
are repaid from those activities.
As of September 30, 2013, the City had $3,080,000 of bonds outstanding that are
considered defeased.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
43
NOTE 5. LONG-TERM DEBT – CONTINUED
The annual requirements to amortize all debts outstanding as of September 30, 2013, are
as follows:
Revenue Bonds
Due Fiscal Year Ending September 30 Principal Interest Total
2014 635,000$ 325,546$ 960,546$
2015 664,700 298,289 962,989
2016 681,600 279,055 960,655
2017 663,600 254,352 917,952
2018 678,900 232,536 911,436
2019-2023 2,636,200 817,039 3,453,239
2024-2028 1,289,200 481,562 1,770,762
2029-2033 1,232,000 190,520 1,422,520
8,481,200$ 2,878,899$ 11,360,099$
Certificates of Obligation
Due Fiscal Year Ending September 30 Principal Interest Total
2014 575,000$ 261,548$ 836,548$
2015 595,300 241,929 837,229
2016 613,400 222,888 836,288
2017 601,400 199,221 800,621
2018 616,100 176,997 793,097
2019-2023 2,538,800 537,802 3,076,602
2024-2028 1,030,800 149,440 1,180,240
2029-2033 168,000 25,980 193,980
6,738,800$ 1,815,805$ 8,554,605$
Notes Payable
Due Fiscal Year Ending September 30 Principal Interest Total
2014 38,368$ 22,898$ 61,266$
2015 40,171 21,094 61,265
2016 42,058 19,209 61,267
2017 44,034 17,233 61,267
2018 46,103 15,164 61,267
2019-2023 265,114 41,221 306,335
2024 40,968 672 41,640
516,816$ 137,491$ 654,307$
Business-Type Activities
Governmental Activities
Governmental Activities
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
44
NOTE 6. CAPITAL LEASE OBLIGATIONS
The City has entered into capital lease agreements. The leased property under capital
leases is classified as machinery and equipment with a total capitalized cost of
approximately $948,989 and an amortized value of approximately $670,201 at
September 30, 2013. Amortization expense has been included in depreciation expense for
the year ended September 30, 2013.
The following is a schedule of future minimum payments under the capital leases together
with the present value of the net minimum lease payments as of September 30, 2013:
2014 211,451$
2015 187,149
2016 36,946
435,546
Less amount representing interest 26,315
Present value of net minimum lease payments 409,231$
NOTE 7. PENSION PLAN
Plan Description
The City of Sanger provides pension benefits for all of its full-time employees through a
non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas
Municipal Retirement System (TMRS), an agent multiple-employer public employee
retirement system. The plan provisions that have been adopted by the City are within
the options available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes
financial statements and required supplementary information (RSI) for TMRS; the report
also provides detailed explanations of the contributions, benefits and actuarial methods
and assumptions used by the System. The report may be obtained from TMRS’ website
at www.TMRS.com.
The plan provisions are adopted by the governing body of the City, within the options
available in the state statutes governing TMRS and within the actuarial constraints also
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
45
NOTE 7. PENSION PLAN – CONTINUED
Plan Description – Continued
in the statutes. Plan provisions for the City are as follows:
Deposit rate 6%
Matching ratio (City to employee) 2-1
A member is vested after 5 years
Updated service credit 100% repeating, transfers
Annuity increase (to retirees) 0% of CPI repeating
Benefits
Benefits depend upon the sum of the employee’s contributions to the plan, and City-
financed monetary credits, both with interest. At the date the plan began, the City
granted monetary credits for service rendered before the plan began of a theoretical
amount equal to two times what would have been contributed by the employee with
interest, prior to establishment of the plan. Monetary credits for service since the plan
began are a percent (100%, 150%, 200%) of the employee’s accumulated contributions.
In addition, the City can grant as often as annually another type of monetary credit
referred to as an updated service credit which is a theoretical amount which, when
added to the employee’s accumulated contributions and the monetary credits for service
since the plan began, would be the total monetary credits and employee contributions
accumulated with interest if the current employee contribution rate and the City matching
percent had always been in existence and if the employee’s salary had always been the
average of his salary in the last three years that are one year before the effective date.
At retirement, the benefit is calculated as if the sum of the employee’s accumulated
contributions with interest and the employer-financed monetary credits with interest were
used to purchase an annuity.
Members can retire at certain ages, based on the years of service with the City. The
Service Retirement Eligibilities for the City are 5 years at 60 years of age or 20 years at
any age.
Contributions
Under the state law governing TMRS, the contribution rate for each city is determined
annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate
consists of the normal cost contribution rate and the prior service cost contribution rate,
which is calculated to be a level percent of payroll from year to year. The normal cost
contribution rate finances the portion of an active member's projected benefit allocated
annually; the prior service contribution rate amortizes the unfunded (overfunded)
actuarial liability (asset) over the applicable period for the City. Both the normal cost and
prior service contribution rates include recognition of the projected impact of annually
repeating benefits, such as Updated Service Credits and Annuity Increases.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
46
NOTE 7. PENSION PLAN – CONTINUED
Contributions – Continued
The City contributes to the TMRS Plan at an actuarially determined rate. Both the
employees and the City make contributions monthly. Since the City needs to know its
contribution rate in advance for budgetary purposes, there is a one-year delay between
the actuarial valuation that serves as the basis for the rate and the calendar year when
the rate goes into effect (i.e., December 31, 2012 valuation is effective for rates
beginning January 2014). The annual pension cost is $196,672 for the year ended
September 30, 2013, and there is no net pension obligation as of September 30, 2013.
Trend information for the past three years for TMRS is as follows:
Annual Percentage Actual Amount Net
Pension Cost of APC of APC Pension
Year (APC) Contributed Contributed Obligation
2011 217,754$ 100% 217,754$ -$
2012 191,163 100% 191,163 -
2013 196,672 100% 196,672 -
The required contribution rates for fiscal year 2013 were determined as part of the
December 31, 2010 and 2011 actuarial valuations. Additional information as of the
latest actuarial valuation, December 31, 2012, also follows:
Valuation Date 12/31/10 12/31/11 12/31/12
Actuarial Cost Method Projected Unit Credit Projected Unit Credit Projected Unit Credit
Amortization Method Level Percent Level Percent Level Percent
of Payroll of Payroll of Payroll
GASB 25 Equivalent Single 22.7 years; 21.8 years; 21.1 years;
Amortization Period closed period closed period closed period
Amortization Period For New
Gains/Losses 25 years 25 years 25 years
Asset Valuation Method 10-Year Smoothed 10-Year Smoothed 10-Year Smoothed
Market Market Market
Actuarial Assumptions:
Investment Rate of Return* 7.0% 7.0% 7.0%
Projected Salary Increases* Varies by Varies by Varies by
age and service age and service age and service
* Includes inflation at 3.0% 3.0% 3.0%
cost of living adjustments 0.0% 0.0% 0.0%
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
47
NOTE 7. PENSION PLAN – CONTINUED
Contributions – Continued
The funded status as of December 31, 2012, the most recent actuarial valuation date, is
as follows:
Actuarial Actuarial Actuarial UAAL as a
Valuation Value of Accrued Funded Unfunded AAL Covered percentage of
Date Assets Liability (AAL) Ratio (UAAL) Payroll Covered Payroll
12/31/12 5,179,812$ 5,465,145$ 94.8% 285,333$ 2,626,335$ 10.9%
Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are
subject to continual revision as actual results are compared to past expectations and
new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the
substantive plan in effect at the time of each valuation, and reflect a long-term
perspective. Consistent with that perspective, actuarial methods and assumptions used
include techniques that are designed to reduce short-term volatility in actuarial accrued
liabilities and the actuarial value of assets. The schedule of funding progress, presented
as Required Supplementary Information following the notes to basic financial
statements, presents multi-year trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued liability
of benefits.
NOTE 8. COMMITMENTS
The City entered into a three year contract in 2009 with the AEP Energy Partners, Inc. for
the delivery of electricity. During 2012, this contract was extended for an additional seven
years to expire in 2019. Payments under this contract are based on meter readings charged
per month.
The City had outstanding encumbrances totaling $863,218 as of September 30, 2013.
At September 30, 2013, the City was committed to several long-term design and
construction projects. The General Fund and Enterprise Fund were contractually committed
to $259,127 and $300,961, respectively, under these contracts.
NOTE 9. RENTAL INCOME
On March 1, 2012, the City entered into a non-cancelable lease agreement with a
corporation of which a city council member is a principal member of management. The
leased property is owned by the 4A Fund and has a cost $1,083,797 with accumulated
depreciation of $138,065 as of September 30, 2013. The lease provides for a base rent and
an adjustment each year related to excess operating expenses (if any) incurred annually.
During the year ended September 30, 2013, the City received $78,677 in rental
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
48
NOTE 9. RENTAL INCOME – CONTINUED
revenue. Minimum future rentals on non-cancelable tenant operating leases at
September 30, 2013 are as follows for fiscal years ending September 30:
2014 78,667$
2015 45,889
Future minimum rentals 124,556$
NOTE 10. INTERFUND BALANCES AND TRANSFERS
The 4A Fund owes the General Fund $20,518 at September 30, 2013. The interfund
balance is related to a budgeted transfer for payment of administrative costs, and is to be
repaid or collected in the normal course of business, within one year of the fiscal year-end.
All interfund transfers between the various funds are approved supplements to the
operations of those funds.
Transfers In Transfers Out Amount
General fund 4A fund 20,500$
General fund 4B fund 20,500
General fund Debt service fund 110,000
General fund Enterprise fund 392,000
Capital projects fund Enterprise fund 638,497
Capital projects fund 4B fund 4,500
Debt service fund 4B fund 180,000
Enterprise fund 4A fund 300,000
Enterprise fund Capital projects fund 206,507
1,872,504$
Transfers are primarily used to move funds from:
4A and 4B funds to the general fund for payment of administrative costs.
Debt service fund to the general fund for reimbursements of lease payments made
by the fire department for an ambulance and brush truck.
Enterprise fund to the general fund budgeted to support ongoing operations.
Enterprise fund to the capital projects fund budgeted to support ongoing capital
projects and for bond reserves released by 2012 refunding.
4B fund to the capital projects fund for reimbursement of reconstruction of a brick
sidewalk in a downtown park.
4B fund to the debt service fund to service the debt related to the 4B fund.
4A fund to the enterprise fund to reimburse for project costs.
Capital projects fund to the enterprise fund to transfer the sewer CIP reserve.
CITY OF SANGER, TEXAS
NOTES TO BASIC FINANCIAL STATEMENTS
49
NOTE 11. RISK MANAGEMENT
The City is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
The City insures its buildings and contents, law enforcement liability, public officials' liability,
general liability and auto liability under a renewable one year policy with the Texas Municipal
League. The City insures its workers compensation risk by participating in the Texas
Municipal League Intergovernmental Risk Pool which is a self-insurance policy mechanism
for political subdivisions in Texas. Rates are set by the State Insurance Board. Each
participant's contribution to the pool is adjusted based on its workers' compensation history.
The City is responsible only to the extent of premiums paid and contributions made to
Texas Municipal League and the Intergovernmental Risk Pool. There have been no
significant changes in insurance coverage as compared to last year and settlements have
not exceeded coverage in each of the past three fiscal years.
NOTE 12. CONDUIT DEBT
The City issued notes payable totaling $230,461,407 for the purpose of assisting with
financing needed by not-for-profit organizations to promote their cause. Final maturities on
notes payable range from March 2017 through December 2041. The notes are secured by
various assets of the borrower.
The total amount outstanding on all of the notes payable is $228,307,732 as of
September 30, 2013. The City has no liability for the notes payable in the event of default
by the borrowers. Accordingly, the bonds are not reported as liabilities in the City’s financial
statements.
NOTE 13. PLEDGED REVENUES
The City has pledged revenues derived from the operation of the utility system, net of
operating and maintenance expenses, to repay $8,970,000 in utility revenue bonds. The
total amount of outstanding principal as of September 30, 2013 was $8,481,200. Proceeds
from the bonds provided financing for improvements to the utility system, as well as
refunding $1,900,000 in bonds. The bonds are payable solely from the net earnings of the
utility system and are payable through 2033. The total principal and interest remaining to be
paid on the bonds is $11,360,099. Principal and interest paid for the current year and net
utility system revenues were $674,326 and $1,316,658, respectively.
NOTE 14. PRIOR PERIOD ADJUSTMENT
As discussed in Note 1, the City has elected to early implement GASB Statement No. 65,
Items Previously Reported as Assets and Liabilities. In accordance with this statement, the
City has written off all previously capitalized debt issue costs and adjusted the impact
through beginning net position as shown on the Statement of Activities and the Statement of
Revenues, Expenses, and Changes in Net Position. These costs total $296,960 in the
governmental activities and $99,504 in the business-type activities. All current and future
debt issue costs will be expensed in the period incurred.
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF SANGER, TEXAS
SCHEDULE OF FUNDING PROGRESS FOR
PARTICIPATION IN TEXAS MUNICIPAL RETIREMENT SYSTEM
YEAR ENDED SEPTEMBER 30, 2013
50
Unfunded
Actuarial
Unfunded Accrued Liability
Actuarial Actuarial Actuarial Actuarial Annual as a
Valuation Value of Accrued Percentage Accrued Covered Percentage of
Date Assets Liability Funded Liability Payroll Covered Payroll
12/31/10 4,202,344$ 4,663,669$ 90.1% 461,325$ 2,454,429$ 18.8%
12/31/11 4,691,607 5,122,534 91.6% 430,927 2,662,684 16.2%
12/31/12 5,179,812 5,465,145 94.8% 285,333 2,626,335 10.9%
CITY OF SANGER, TEXAS
BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
YEAR ENDED SEPTEMBER 30, 2013
51
Variance with
Actual Final Budget
Original Final Amount Over / (Under)
Revenues
Property taxes 1,815,000$ 1,815,000$ 1,755,838$ (59,162)$
Sales taxes 603,500 603,500 631,812 28,312
Licenses and permits 86,210 86,210 94,934 8,724
Charges for services 676,900 676,900 785,922 109,022
Fire and rescue 466,500 466,500 530,810 64,310
Court 248,112 248,112 168,666 (79,446)
Franchise taxes 582,600 582,600 554,782 (27,818)
Intergovernmental revenues 120,600 120,600 133,427 12,827
Interest 5,500 5,500 1,200 (4,300)
Miscellaneous revenues 11,300 11,300 23,435 12,135
Total revenues 4,616,222 4,616,222 4,680,826 64,604
Expenditures
Current
General government 770,445 770,445 658,870 (111,575)
Public safety 1,059,591 1,239,591 1,478,058 238,467
Streets and sanitation 879,563 879,563 899,067 19,504
Fire and rescue 917,110 917,110 816,965 (100,145)
Court 210,193 210,193 201,942 (8,251)
Culture and recreation 709,985 709,985 434,364 (275,621)
Principal - - 102,755 102,755
Interest and other - - 4,240 4,240
Capital outlay 410,530 410,530 357,095 (53,435)
Total expenditures 4,957,417 5,137,417 4,953,356 (184,061)
Excess (deficiency) of revenues
over expenditures (341,195) (521,195) (272,530) 248,665
Other financing sources (uses)
Proceeds on sale of assets - - 31,028 31,028
Operating transfers in 351,000 531,000 543,000 12,000
Operating transfers out - - - -
Total other financing sources (uses)351,000 531,000 574,028 43,028
Excess (deficiency) of revenues and
other financing sources over expenditures
and other financing uses 9,805 9,805 301,498 291,693
FUND BALANCE, beginning of year 773,397 773,397 773,397 -
FUND BALANCE, end of year 783,202$ 783,202$ 1,074,895$ 291,693$
Budgeted Amounts
CITY OF SANGER, TEXAS
NOTES TO BUDGETARY COMPARISON SCHEDULE – GENERAL FUND
YEAR ENDED SEPTEMBER 30, 2013
52
Annual budgets are legally adopted for the General Fund.
The City adopts an “appropriated budget” of governmental fund types on the modified accrual
basis of accounting by department. The City is required to present the adopted and final
amended budgeted revenues and expenditures. The City compares the final amended budget to
actual revenues and expenditures.
SUPPLEMENTARY INFORMATION
CITY OF SANGER, TEXAS
COMBINING SCHEDULE OF REVENUES AND EXPENSES
PROPRIETARY FUND BY DEPARTMENT
YEAR ENDED SEPTEMBER 30, 2013
53
Water Sewer
OPERATING REVENUES
Charges for services 1,257,688$ 1,091,208$
Connection fees - -
Tap fees 170,300 226,000
Miscellaneous - -
Total operating revenue 1,427,988 1,317,208
OPERATING EXPENSES
Salaries and wages 268,930 124,606
Purchased professional and technical services 19,293 5,034
Utilities 155,975 165,261
Materials and supplies 13,136 11,752
Water and electric purchases 246,913 -
Franchise fees - -
Depreciation 290,627 229,780
Repairs and maintenance 314,312 167,145
Bad debt expense 8,976 5,292
Total operating expenses 1,318,162 708,870
Operating income (loss) 109,826 608,338
NONOPERATING REVENUES (EXPENSES)
Transfers in - -
Transfers out - -
Fiscal agent fees and debt issue costs
Interest and investment income - -
Interest and amortization expense (57,983) (33,729)
Total nonoperating revenues (expenses)(57,983) (33,729)
CHANGE IN NET POSITION 51,843$ 574,609$
54
Fleet Data
Electric Services Administration Processing Total
7,685,974$ -$ 945$ -$ 10,035,815$
62,527 - - - 62,527
- - - - 396,300
- - 59,166 - 59,166
7,748,501 - 60,111 - 10,553,808
496,341 51,338 229,456 250,808 1,421,479
55,781 1,594 56,291 59,144 197,137
10,754 4,239 4,857 5,101 346,187
28,841 4,677 11,219 29,532 99,157
4,929,097 - - - 5,176,010
387,288 - - - 387,288
351,051 - - - 871,458
181,005 7,314 7,804 18,878 696,458
27,708 - - - 41,976
6,467,866 69,162 309,627 363,463 9,237,150
1,280,635 (69,162) (249,516) (363,463) 1,316,658
- - 506,507 - 506,507
- - (1,030,497) - (1,030,497)
- (83,530) - (83,530)
- - 15,630 - 15,630
(85,672) - - - (177,384)
(85,672) - (591,890) - (769,274)
1,194,963$ (69,162)$ (841,406)$ (363,463)$ 547,384$
CITY OF SANGER, TEXAS
ANALYSIS OF PROPERTY TAXES RECEIVABLE
YEAR ENDED SEPTEMBER 30, 2013
WITH COMPARATIVE TOTALS FOR
FOUR YEARS PRIOR
55
2013 2012 2011 2010 2009
Adjusted tax roll 2,467,788$ 2,311,086$ 2,330,034$ 2,256,987$ 2,308,903$
Less collections 2,443,986 2,280,947 2,276,461 2,216,114 2,256,275
Current year property taxes receivable 23,802 30,139 53,573 40,873 52,628
Prior year property taxes receivable 101,158 111,435 86,871 79,796 74,407
Total property taxes receivable, gross (1) 124,960$ 141,574$ 140,444$ 120,669$ 127,035$
Total assessed property value 385,693,484$ 365,072,180$ 359,484,787$ 364,030,183$ 341,028,251$
Tax rate per $100 0.63305$ 0.63305$ 0.63305$ 0.62000$ 0.62000$
Percent of current taxes collected to billed 99.04% 98.70% 97.70% 98.19% 97.72%
(1) before deducting allowance for doubtful accounts
Fiscal Year